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ALABC's monthly newsletter, "Latam News," keeps members and supporters abreast of developments taking place in the Latin American markets. Locked articles can be read by paid ALABC members, including Individual, SME, Corporate and Patron.
LATAM News February 2014
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In February's LATAM News: Mexico shines at G20 Finance Ministers' meeting Door open for Air NZ in Latin America Etihad looks for partnerships for Latin America Patrick Lawless appointed Ambassador to Brazil Perth Dinner close to sell out Queensland announces new leaders for Americas Proinversion roadshow to hit ... Sign-in to read

29

Brazil Develops a Taste for Premium Beer

While total lager sales across Brazil rose 92 per cent from 2007 to US$44.37bn in 2012, premium lager sales jumped 131 per cent over the same period. Imported premium lager sales surged 184 per cent.

For investors, the niche market offers one of the few remaining bright spots in Brazil, where slowing economic growth and rising indebtedness have cast a shadow over mainstream beer sales and many other previously buoyant consumer industries.

Lauren Torres, a beverage analyst at HSBC, estimates that premium beer still only accounts for 5 to 6 per cent of the market, compared with around 15 per cent in countries such as the US, leaving vast room for growth in Brazil – the world’s third-largest beer consumer and producer.

After acquiring Brazil’s second-largest beer group, Schincariol, for R$6.3bn in 2011, Japan’s Kirin is expected to start brewing its Kirin Ichiban beer in the country early this year.

Smaller craft producers such as Scotland’s BrewDog are also planning to try their luck in Brazil. The Aberdeen-based producer and pub operator is planning to open its first bar in São Paulo this month, selling local beers from the Brazilian craft brewery Way Beer alongside its own.

Ambev, the Latin American arm of Anheuser-Busch InBev and the region’s biggest brewer by sales with around 70 per cent of the Brazilian beer market, has also pursued the premium sector. It has boosted the marketing of its more expensive beers such as Bohemia and launched an even more upmarket version – Bohemia Royale. “We saw the same trend in the US and Europe years ago but the Brazilians and Latin Americans in general were always very brand-loyal,” says HSBC’s Ms Torres. “However, over the last five years Brazil has really started opening up,” she says, pointing to similar moves in Chile, where foreign brands such as Corona have found success.

Almost 40m people have risen from poverty into the lower middle classes over the past decade in Brazil, creating a large mark et for aspirational brands as Brazilians look for ways to show off their new status.

Pernod Ricard’s Chivas whisky, for example, recently ranked Brazil’s north- eastern city of Recife as the top market in the world in terms of per capita whisky consumption.

However, the growth of Brazil’s premium beer industry comes just as the wider market braces itself for a slowdown. According to data this month from the Brazilian beer industry association Cervbrasil, beer production fell 2 per cent last year – the first decline in at least three years. Ambev has said that it expects consumption to have also dropped last year for the first time in a decade. “There was a  reduction in  consumers’ disposable income as  people had to spend more paying back debt,” says Paulo Petroni, head of Cervbrasil, adding that the 2 per cent decline was equivalent to one fewer can of beer per person per month.

However, the World Cup and the late timing of Brazil’s Carnival this year should help boost sales through to July, even as the weather begins to get colder.

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Chairman's Message January 2014

Welcome to 2014 and what promises to be a significant and historic year in Australia’s
engagement with Latin America. Not only will the Australia-Latin America Business Council be celebrating the 25th   anniversary of  its  foundation, but the conditions are there for Australia to make important strides in deepening its links with Latin America. 2014 promises to be a year of celebration and of more significant events than have ever taken place in the
Australia-Latin America relationship.

Since 1989, the ALABC has grown into an over 200 member strong entity that has carved
out for itself an enviable reputation for the quality of the work that it does in promoting Latin America in Australia, and f or the successful relationships that it has forged with key allies and stakeholders, both in Australia and in Latin America. 2014 will be a year when the Council and its members – led by the growing number of Patron Members – will showcase Latin America to Australia as never before.

Our capital city dinners will take on special significance this year and the Perth one scheduled for March 18 has already rec eived a very strong response. It is well on the way to being the most successful one ever.

Thanks to a special sponsorship arrangement that we have entered into with Latam Airlines Group for 2014, we will be bringing 3 high-profile guests from Latin America to Australia to feature in events that we will hold throughout Australia. The first of these will be Pedro Pablo Kuczynski, who was Prime Minister of Perú in 2005-2006, after having served as Finance Minister since 2001, and previously as Minister of Energy and Mines and Deputy Director of the Central Reserve Bank.

Mr. Kuczynski was a candidate in Peru’s last presidential election and is Senior Advisor and Partner of the Rohatyn Group, a firm specializing in emerging market investments.  He is also Chairman of AMG, a company in special metals related to solar energy, and of Agualimpia, an organization in Perú that helps poor towns and villages set up their water systems. His visit will take place in August and details of his schedule will be made available in coming months.

Details of the other guests and of all events will be announced as we move further into 2014, but there should be no doubt that Latin America will figure prominently on the Australian agenda throughout the year.

In economic terms, the outlook for Latin America in 2014 is a balance of optimism and risk. The slowdown in global trade, the difficult financial market conditions and less favorable commodity scenario in 2013, have left many countries in Latin America struggling with a relatively weak growth. The World Bank estimates that Latin America will grow 2.9% in 2014 and 3.1% in 2015, while it will accelerate to 3.7% in 2016. The agency notes that the domestic demand has moderated notably in Brazil, although the activity is starting to recover in Mexico and exports are recovering in Central America, in part because of the expansion of the Panama Canal. Even so, the agency estimates that the region’s GDP will have a "sustained strengthening" in the coming years.

Despite the relatively low-growth estimates, optimism about developments in Latin America this year is widespread. The World Economic Report 2014 of the Spanish business school ESADE, states that "It is necessary for the economy of the region to strengthen the internal engines of growth to offset the more hesitant evolution of household consumption. It is important to keep encouraging private investment that has grown in recent years".

The risk factors that must be taken into account include the impact of the withdrawal of stimulus by the Federal Reserve in the U.S. and the possible slowing of growth in China.

Beyond the international factors, the region faces potential higher volatility, a reduced contribution of consumption to GDP growth, a slowdown in wages and credit, and lower fiscal impulse. To address these challenges, countries in the region need to increase competitiveness through diversification of their economies, improved logistics performance and higher positioning within the value chain.

The ongoing evolution of the Latin American economies is not without its challenges and not everything will go smoothly. However, the same can be said of any market, and the reality is that Australian business has a great deal to gain from being active in the region and from participating in the process. Success in Latin America requires astute planning and long -term commitment, both of which Australian companies can deliver. Join us to make 2014 Australia’s best ever year in Latin America!

Jose Blanco, Chairman

LATAM News January 2014
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In January's LATAM News: CSIRO Technology to benefit Chilean mining Goodman secures regulatory approval in Brazil Productora ready to deliver Hot Chili Peru's PROINVERSION's roadshow to Australia Perth Anniversary Dinner - Tickets selling fast! Expomin to be centre of attention in April Chairman's message R... Sign-in to read

Chairman's Message December 2013
14

Chairman's Message December 2013

As 2013 comes to an end, we can look back at a very successful year for the ALABC and look forward with excitement to the year ahead, which will mark the 25th  anniversary of the Council’s establishment. An important milestone in the Council’s history and a great opportunity to reflect and to celebrate the deepening of Australia’s engagement with Latin America that has taken place over the past quarter century.

From modest beginnings, the Council has grown into an over 200 member strong entity that has carved out for itself an enviable reputation for the quality of the work that it does in

promoting Latin America in Australia, and for the successful relationships that it has forged with key allies and stakeholder s, both in Australia and in Latin America. It has survived the test of time and can look forward to the next 25 years with enthusiasm and optimism.

As satisfying and rewarding as the past 25 years have been, the Council readily acknowledges that much remains to be done if Australia is to extract maximum benefit from its relationship with Latin America. The challenges are extensive and daunting, and time is of the essence, for opportunities are never permanent and must be seized as fast as possible. That said, we can draw encouragement from the solid platform that has been established and from the progress that a growing number of countries in Latin America have made in building their economies.

Amongst the highlights that 2014 holds in store are Brazil’s hosting of the football World Cup, the start of a new presidency in Chile and the expected flow on effects from the historic reforms introduced in Mexico by President Enrique Peña Nieto. At the same time, countries such as Peru, Colombia and Uruguay are expected to continue growing and to offer increasing opportunities for Australia.

As is explained in this newsletter, Austrade has broadened its focus on Latin America and this should ensure that more Austra lian companies are able to access a greater number of the region’s markets. This is welcome news and will hopefully, in time, be reinforced by the strengthening of our diplomatic representation in the region. An embassy in Colombia should be our next priority, in recognition of that country’s growing economy and considerable interest in forging closer ties with Australia.

Similarly, we should take note of the recommendations contained in the recently -published book, ‘Trading Nation’, which is also reported on in this newsletter. Amongst the conclusions expressed by the book’s authors are that ‘. . . Latin America and Australia need to see each other in new ways and be more certain about what each can offer the other. At a strategic level, the politic al and global weight of Latin America, especially of Brazil and Mexico, needs to be more fully understood and acted upon by Australia’s leaders’. ‘At a commercial level, relationships with Latin American countries also need to be seen in new ways. Bilateral trade and investment relationships can go much further than the current focus on mining and spread beyond their epicentre in Chile.’

The key message is that Australia should not focus exclusively on China and the Asia region, and that there is an important role for Latin America to play in Australia’s political and commercial strategy.

On the home front, the Council will be striving to host even more events than in any previous year and to bring to Australia 2 or 3 high profile visitors from the region, around whom it plans to schedule nationwide ‘roadshows’ that should help to reach an even wider audience and to thus draw greater interest to engaging with Latin America. In this regard, we are delighted that  the Latam Airlines Group,  which  comprises LAN  and  TAM  and operates the largest airline in South America, has agreed to partner with the Council to bring these high profile visitors to Australia. Other partners will be sought so as to give the visits maximum impact.

All companies that are engaged in doing business in Latin America are encouraged to see 2014 as their year of celebration. An opportunity to wave the corporate flag on behalf of Latin America and to support activities that acknowledge the growing importance that the region has for them.

On behalf of everyone at the ALABC I extend to all of you our best wishes for the festive season and for a successful and memorable 2014.


Austrade Defines its 2014-17 Strategic Vision for Latin America
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Austrade Defines its 2014-17 Strategic Vision for Latin America

Austrade’s Latin American senior management team met in Sao Paulo, Brazil, in November to shape a new framework to position 
Australian capability in Latin America. Grame Barty, General Manager, Growth and Emerging Markets, led the discussion that highlighted the Australia-Latin America trade success story, particularly in education, training and the export of services across a range of sectors.

The Latin American story continues to evolve with many more Latin American economies aligning themselves closer to, and more competitively with, the world’s leading economies and Institutions. “As a result, our previous strategy of focussing on six Latin economies (Brazil, Argentina, Peru, Colombia, Chile, Mexico) has now expanded this twelve Latin American economies (including Uruguay, Paraguay, Bolivia, Ecuador, Costa Rica and Panama)” said Barty.

As a result of recent rapid economic development many Latin American nations are now moving ahead on the prosperity in dex, with most countries in the world’s top 50 ‘most prosperous’, and their citizens are seeking a social and personal dividend fr om this economic progress.

‘Every government wants to makes a positive impact towards improving the standard of living for their people that will allow for a better quality of life through new services, stability and effective management of the country. Australia is seen to be a glo bal benchmark to prosperity because of those very systems and frameworks that underpin its society and way of living.’

Austrade also sees education in all its forms – graduate, post graduate, scholarships, vocational training, English as a second language, transnational research links - as a key strategic driver and focal point for deepening Latam links through the development of human capital across a range of sectors including mining, environmental management and water sustainability, agribusiness, health and well-being and financial services and wealth management.

‘Austrade is focused on broadening and deepening our services and investment relationship with Latin America. In addition to finalising formal trade and investment agreements the most effective way for this happen is by creating within our Austrade t rade promotion team a comprehensive methodology to understand all of the issues affecting a market from policy and regulation, to research or equipment, technology, skilling and services. We call this internally the PRETSS approach’ said Mr Barty.

‘Our 2014 – 2017 strategic focus then could be simply summarised as L6 to L12; Economic Development to Quality of Life; and

implemented through a PRETSS approach and we look forward to working with ALABAC members to make this happen.’

Austrade has six trade and investment offices in Latin America located in Brazil, Chile, Argentina, Peru, Colombia and Mexico.


06
In December's LATAM News: Goodman’s new deal in Brazil  Modernizing Brazil’s mining sector  Austrade’s 2014-17 strategy for Latin America  Chile, Peru and Colombia lead growth  Austin Engineering wins new work in Chile NZ meat gains access to Peru Hot Rock departs Chile and ... Sign-in to read

18

Second Australia Latin America Leadership Program Delivers Results

A highly successful second Australia Latin America Leadership Program (ALALP) took place during October when 38 emerging leaders from Australia and  nine Latin  American countries came together for  12  days to  collaborate on  an  action-oriented examination of ‘Sustainability in the Context of the Australia Latin America Business Relationship’.

The participants were  selected from approximately 380  applicants who were mid-career professionals from business, government, non- government  organisations  and  educational  institutions  in  Australia  and Latin America.

The primary purpose of the ALALP is to assist in the development of future leaders from Australia and Latin America and to develop strong networks between participants which will benefit both the individuals, organisations and nations from which they are drawn.

Participants met together for the first two days at the University of Technology Sydney (UTS) where they interacted with experts in fields related to the sustainability theme.  Speakers were drawn from business, government,  universities  and  trade  unions.  

They  included  Jose  Blanco, Chairman of ALABC, who was the opening speaker on the first day, and three Latin American ambassadors from Brazil, Colombia and Mexico, as well as a former Australian ambassador to Chile.

Three equally-sized groups comprising a mixture of Australian and Latin American then embarked on week-long field trips to examine the theme of sustainability in a variety of geographic and economic contexts. One group travelled to Queensland where they studied challenges facing mining and energy, among other issues, in cities as diverse as Townsville and Mt Isa.

A second group travelled throughout New South Wales, including the Riverina and Murray regions where they focused on agribusiness and other industries. A third group visited Victoria where they investigated technology-based industries such as windfarms. They also visited the regional centres of Ararat and Bendigo, as well as various research and educational institutions around the state.

The closing two days were at RMIT University in Melbourne where each group made a presentation on their field trip observations to an expert panel and submitted their final reports. Discussions based on the field trip reports enabled participants to draw comparisons between Australia and Latin American experiences in addressing issues of sustainability in a range of different contexts.

Many participants expressed the view that   their experiences in Australia could be usefully transposed to Latin America. Conversely, the Australian based participants were able to gain insights from the Latin American perspectives and experience of facing similar issues in their home countries.

Funding for the ALALP in cash and kind was received from 10 business, government and educational institution sponsors in Australia.

These included Mt Isa Mines – Glencore, the Australian Department of Foreign Affairs, through the Council on Latin American Relations (COALAR),  RMIT University, University of Technology Sydney, the Australian Department of Education, Innovia Security, Pacific Hydro, the University of Melbourne, Austrade and the State Government of Victoria.

The ALALP Steering Committee was chaired by  RFE  (Dick) Warburton and  the Co-Directors were Brian Pickett and  Russell Lansbury. Further details about the program can be found on the webpage:  www.alalp.com.


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