According to Fabio Nunes, consultant and expert on the Brazilian poultry industry, “I think that the Brazilian meat companies – poultry, pork and beef – are still trying to figure out what the short-, mid-, and long-term effects will be of these acquisitions for the Brazilian and the international markets.
“Presently the only press/public ‘reaction’ has come from the government side, due to its promising domestic and international perspectives.
“If we take a look at the production portfolio of JBS/Pilgrim’s only, the Brazilian companies dealing with chicken and pork seem to be immune locally, but may well be affected by Pilgrim’s presence in the international chicken meat market.
“However, when you add Bertin’s portfolio to JBS’, then you are looking at competing in other market segments, like dairy, where poultry companies like Brasil Foods (Perdigao) are also very active. This seems to forecast a future guerrilla war in different segments with different competitors,” Nunes says.
Regarding the possibility of JBS getting into the poultry sector in Brazil, Nunes observes, “JBS is a very low-profile company. Investing in the chicken business in Brazil is a real possibility, but we’ll only know of the deal at the very last moment.
“Among the top local poultry companies only Doux Frangosul has some attractiveness, holding about 6% to 7% of Brazil’s annual slaughter. However, Doux made it clear recently that it is not for sale.”
As to the reaction from Brazilian consumers, Nunes says, “I don’t think Brazilian consumers are aware of what happened in terms of business magnitude, or the impact on the market. Beef in Brazil still is massively sold in butcher shops or meat counters in supermarkets and mostly tray-packed and unbranded. They may well come from these big guys, but it is unknown to the regular consumers.
“However, the supermarket sector is very much aware of the impact of these mergers in the long run. The increased concentration of these businesses on all fronts – chicken, pork, beef, dairy, further processed products - will narrow their portfolio of high- and mid-end suppliers in Brazil that may well reduce their negotiation power,” he says.