October 4, 2011
Cargill and General Mills monitor Brazilian growth
Cargill and General Mills have staff in Brazil monitoring acquisition opportunities in domestic food production, but it is unlikely that they will explore the assets of Brasil Foods in the near future, according to O Estado de S. Paulo newspaper.
"We don't rule out the possibility of entering the protein (meat) industry in Brazil, but Brazilian companies seem very strong in this sector," said Thomas Forsythe, vice president of corporate communications at General Mills, a company traditionally focused more on grain-based products than meat production.
Mike Fernandez, vice president for corporate affairs at Cargill, said that assets of BRF Brasil Foods have their interest, but admits that Brazilian players like JBS SA and Marfrig are more likely to get them. "The issue is not our interest, which is great in this sector, but at what price the assets are being made available," he said.
Cargill invests heavily in animal protein in the US and China, but moved out of that market in Brazil when it sold the Seara brand to Marfrig in 2009. Cargill felt it had little chance to keep up with Brazilian meat processors, and sold its meat assets to reinvest in other domestic growth markets, like processing corn and sugarcane.
"The truth is, we didn't know how to manage Seara very well," said Pat Bowe, vice president of ingredients at Cargill. "If we had the chance to buy Perdigao or Sadia, we would have achieved better results."
Bowe doesn't rule out Cargill's return to the Brazilian meat sector, but says the company's plans for now are to ride that sector's growth as a feed supplier.
General Mills is focussing on Brazil, Russia, India and China as priorities for its overseas growth, but with different strategies for each. It wants to build its own factories in China, but in a more mature market like Brazil in order to acquire local brands.