Sara Lee Sees Organic Growth In Brazilian Coffee Business
May 21 2012 - 6:53PM
Dow Jones News
Sara Lee Corp.'s (SLE) Brazilian coffee business plans to focus
on innovation and developing its existing brands as it seeks to
consolidate its leading share of the world's No. 2 coffee
market.
Coffee demand in Brazil is seen rising faster during coming
years than in other consumption hot-spots such as the U.S. and
Europe. The domestic coffee market has been growing 3% to 5% per
year, a pace that should continue as the economy grows and incomes
rise, said Ricardo Souza, Sara Lee's local marketing director, in a
phone interview.
But the company, which bought up a slew of major coffee brands
since arriving to the South American country in 1998, now expects
innovation and organic growth to lead the way forward. Sara Lee
currently claims a 22% share of the domestic coffee market and owns
Brazil's top-selling brand, Pilao.
"We have a size that allows us to be sophisticated and bring
novelties to the portfolio of brands that we already have," Souza
said.
Brazil, the world's largest coffee grower by far, has long
exported its best product to high-paying consumers in Europe and
the U.S., leaving the lower-quality "surplus" coffee at home.
But while retail coffee remains cheaper in Brazil than
elsewhere, and roasters' margins have been squeezed in the past
couple of years by the rising cost of raw beans, the domestic
market has potential to add value as it expands in scale.
With unemployment at record lows, Brazilians are buying more
coffee outside their homes--in restaurants and cafes--than ever
before. They are also looking for better quality.
"The highest-quality segment of coffees, the premium segment,
has been growing faster than the cheapest brands," Souza said.
He added that Sara Lee's Sensao brand of single-dose coffee
machines, which the company recently launched in Brazil via its
partnership with Dutch electronics maker Philips (PHG), has been
well received.
"We're having great success with this product," Souza said.
"It's a segment that has been growing a lot and has helped to
recover profitability in the market."
-By Paul Kiernan, Dow Jones Newswires; (+55)11-3544-7074;
paul.kiernan@dowjones.com
Sara Lee (NYSE:SLE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Sara Lee (NYSE:SLE)
Historical Stock Chart
From Apr 2023 to Apr 2024