May 29, 2012
Brazil's dairy market is expected to grow by about 10% next year, according to advisers from JBS's Vigor business, whose revenues are set to increase at a quicker rate.
Cheese, with growth of 14.0% a year, is to lead the Brazilian dairy boom, although in size, at BRL5.63 billion (US$2.8 billion), it will still lag the yoghurt market, which will grow by 10.0% a year, bankers at Banco Bradseco said.
The overall dairy market will expand to BRL39.9 billion (US$20 billion), they added, quoting private reports from Nielsen, Abia and Euromonitor.
The forecasts reflect assumptions that Brazilians, whose milk consumption per capita is half the world average, will continue to close the gap.
"Brazilian per capita consumption is still low when compared to developed countries," Banco Bradseco said.
"Such low per capita consumption is expected to drive further growth of the sector in coming years."
The comments came in a report which Brazil-based JBS, the world's biggest meat group, released to investors considering participating in a flotation of the Vigor dairy business.
The flotation is being structured as a spin-off, in which JBS investors are able to exchange their shares for those in Vigor, with a deadline of June 15.
The price of BRL7.96 (US$4.01) apiece set for the swapped shares values Vigor's equity at nearly BRL1.2 billion (US$650 million).
Vigor's own revenues will more than double between 2011 and 2016, according to Banco Bradseco, assuming they "grow at an average rate of 16.3% a year, from 2012 to 2015 in line with historical averages".
"Beginning in 2015, net revenue growth begins to stabilise until it reaches 8.0% in 2020, reflecting the company's forecasts," the report says.
Vigor, founded 95 years ago, was acquired by JBS thought its 2009 purchase of Bertin, which had acquired the dairy group two years before.
The group is particularly strong in Brazil's Sao Paulo region, where, according to Nielsen, it has a 17.0% share of the dairy market.
