Kerry Group is likely to buy or build up to ten manufacturing plants in Brazil and Argentina over the next ten years, as part of a strategy to increase sales in South America to $200 million by 2004. Kerry's food ingredients sales in South America are currently $20 million.
Speaking after the formal opening of Kerry's $20 million food ingredients plant in Tres Coracoes north of Sao Paolo, Mr Denis Brosnan, Kerry's chief executive, said: "It's inconceivable that we won't have six to ten plants in South America in five years time. Whether we buy or build doesn't matter," he said, adding in the long-term Kerry's plans for additional manufacturing capacity in South America will be limited to Brazil and Argentina.
"There are many companies in this country we would like to acquire," he stated.
On acquisitions in the region, Mr Brosnan said that there are no major food ingredients companies in the region. There are a number with sales of $70 million to $80 million, he said. Kerry's initial investment in Brazil, the acquisition of Star & Arty Ingredients last year cost around $10 million.
Since then, Kerry has invested $20 million in the new plant - opened yesterday by the Minister for Agriculture, Mr Walsh - and intends to invest another $20 million in the plant in the next year. The original Star & Arty plant has been closed and its operations have been absorbed into the new Tres Coracoes plant.
Mr Brosnan said that, with a combined population of about 220 million people, and double digit growth forecast in the ready meals, added value poultry, chilled dairy, ice cream, snack, dry grocery and bakery sectors, the group expects to grow its sales in Mercosur markets from the current $20 million to over $200 million over the next five years.
Over that period, total sales by Kerry are targeted to double to $5 billion (£3.5 billion).
Mr Brosnan said that his only regret about investing in Brazil was that Kerry had not moved into the country earlier. He emphasised the size of the economy - the world's ninth biggest - and the fact that up to 80 million of Brazil's 166 million population have the spending capacity to support Kerry's business in the country.
He added that Burger King has recently set up operations in Brazil and that, as a global supplier to the fast food giant, Kerry had no option but to follow one of its biggest customers to its new market. As food companies go global, there are opportunities for ingredients suppliers to follow, he said.
Mr Brosnan also said that Brazil is currently the world's biggest exporter of raw poultry but that this is likely to change in the future to a situation where Brazilian companies will instead export seasoned and battered chicken portions. Kerry is one of the world's biggest suppliers of these seasonings and batters and there are major opportunities in this sector for the group, he said.
