Latin America Market for Canned Tuna: a New Era of Open Cooperation & Takeovers by Asia-Pacific?

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2 Latin America Market for Canned Tuna: a New Era of Open Cooperation & Takeovers by Asia-Pacific? DARIO CHEMERINSKI SENIOR PROJECT MANAGER Latin America & Asia brands Sao Paulo Office- Brazil dchemerinski@gmail.com

3 Main Concepts for today... WINDS: There are new winds of change in Latin America, as populism is being replaced by modern open trade policies and young politicians. TRENDS: We will review macro and micro trends towards 2020, that will affect the fish & tuna consumption. FOCUS: We will focus on the new reality uniting the 2 Blocs in Latin America.. LOOK: With a closer look at the Pacific Alliance countries + Ecuador, we will review implications in their relationship with Asia-Pacific This presentation will argue that cooperation intra-blocs has improved and is gaining speed. But a lot must be done, opening trade, reducing import tariffs and removing barriers.

4 Agenda Today 1. Latin America in International Perspective Recent Economic Performance 2. Trade Initiatives deepening Regional Integration 3. Strategic Issues affecting the Tuna Business 4. Consumption Trends & Habits Innovation as Engine for Growth in Latin America 5. Latin America Market for Canned Tuna: a New Era of Open Cooperation & Takeovers by Asia-Pacific? 6. Conclusions and final remarks/questions

5 Global Hunger is disappearing...

6 Latin America in International Perspective 1. 9% of World GDP >> usd 3.5 trn 2. Population 480m in 33 countries 3. Life expectancy to reach +80yrs 4. Urbanization already at 85% BUT...

7 Latin America... Still lagging behind in Reforms Rigid labour markets Insufficient financing Poor infrastructure Cumbersome tax systems Lack of skilled labour Poor competition Bureaucracy Source Ranking by EIU

8 Results so far... slow growth Source Bloomberg BUT...

9 Recent Economic Performance 1. South America, Central & Caribe growing at average 2% annually Champion is Paraguay at + 5% a year Worst is Venezuela -7% a year 2. Latin America s growth is highly dependent on Exports Commodities (Food, Minerals, Oil) dominate the trade United States buys approx 1/3 of total Asia-Pacific <10% 3. All countries are tackling corruption, crime and drugs

10 Latin Outlook for Liberal Governments are replacing Populist ones in Latin America 2.Population in Latin America will reach 500m 3.GDP will continue to grow at average 3%, low inflation rates 4.Middle class will become 50% of the total, thus surpassing the low class Union of all Latin American countries is in progress Brazil s and Mexico s continental relevance will rise. Latin economies such as Chile, Argentina, Colombia & Peru gaining global relevance Although Pacific countries will grow at faster rate than Atlantic ones

11 What about Tuna in Latin America?

12 Big business 1. Latin America produces 25% of global output 2. Ecuador is the second largest exporter in the world tns! 1. Latin America consumes 15% of all world s canned tuna 2. Imported TNS in Up 29% from 2010

13 Our star (tuna) is a...big business! TUNA CATCH BY FLAG 2015 % 1. ECUADOR tns 47% 2. MEXICO tns 21% 3. PANAMA tns 11% 4. VENEZUELA tns 5% 5. OTHERS tns 16 % TOTAL tns 100%

14 Ecuador- Transformation of Tuna TUNA INDUSTRY 2015 Use Processes tns RAW MATERIAL Exports tns FROZEN LOINS Produces tns CANNED TUNA Exports tns +90 countries Domestic.. TOTAL VALUE tns 2.8 kgs per capita! 1 BN DOLLAR

15 Catch in Latin America by Species YellowFin YELLOWFIN SKIPJACK BIGEYE OTHERS SKIPJACK

16 Quick Bloc Comparison Tuna 8 countries = 90% Latin America GDP Pacific Alliance BLOC Mexico-Colombia Peru- Chile Atlantic Mercosur BLOC Brazil-Argentina Uruguay- Paraguay 1. Consumption per capita +1kg below 350grs 2. Tuna catch Abundant Poor 3. Production Capacity - Canned Very High Very limited 4. Production Capacity- Loins High Limited 5. Species Skipjack & Yellowfin Skipjack mostly

17 Consumption Trends & Habits Innovation as engine for growth in Latin America

18 Innovation... as Engine for Growth in Latin America How to increase the low per capita consumption? How to get closer to new customers? How to benefit from the ready-to-eat trend? How to increase frequency of purchases How to make it all-year-round product? How to make tuna more attractive as protein? Let s check 5 (five) LATIN Examples...

19 ECUADOR BRANDING/ Premium IMAGE ECUADOR is #3 in the world in consumption per capita

20 MEXICO Plastic Coloured Cups/Young consumers MEXICO LARGEST YELLOWFIN CONSUMER IN THE AMERICAS

21 PERU Quality of the Oil/Health & Taste NEW BRAND LAUNCHED BY THE #1 VEGETABLE OIL COMPANY in PERU SOLID, CHUNK, FILLETS & Ventresca

22 CHILE Easy-peel cans/ Practicality CHILE HAS MORE THAN 40 TUNA BRANDS DIFFERENTIATION IS KEY

23 COSTA RICA Combination with Sauces/Eating Habits HOT SAUCES ARE VERY POPULAR ALL OVER CENTRAL AMERICA

24 BRAZIL Aluminum Pouches/Convenience ON- THE- GO FOOD IS GROWING FAST IN BRAZIL

25 Latin America Market for Canned Tuna: a New Era of Open Cooperation & Takeovers by Asia- Pacific?

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27 Latin America & Asia Pacific Closer Economic Ties... Economic relations between Latin America & Asia have strengthened significantly over the past 15 years. Gross trade flows regions have grown tenfold since 2000 The rise of China has been an important driver but other Asian countries too: For instance, Korea has moved to the top rankings as trading partners for Brazil, Chile & Peru Similarly, India & Japan are important trading partners for several countries in Latin America.

28 Latin America & Asia Pacific Investments Levels are high... Financial linkages are significant Japanese foreign direct investment into Latin America has exceeded $110 billion between 2005 and And Chinese foreign direct investment and loans to the region has increased sharply: From $6 billion during to an average of $10 billion per year between 2010 and 2012

29 Realizing the potential... QUESTION Why Latin America has failed to develop productive complementarities & deeper intraregional trade relations like the ones in Asia? Mostly supply-side bottlenecks Weak education systems Infrastructure gaps Difficult business environments and various non-tariff and trade barriers RESULTS? Productivity growth has been constrained Investment and Innovation have been held back

30 Realizing the potential with... SOLUTIONS The Asian way - Turn trade into a sustainable engine of growth Reduce the existing obstacles to trade (including high transport costs) in the region. Greater regional and bloc trade integration Stronger links with Asia to create better conditions for entrepreneurial initiative, innovation, and diversification. Broad political backing is crucial.

31 Regional Outlook ahead Canned Tuna Changes to happen quality-wise (less grated, more solid, more salads) Per capita consumption will grow in Colombia & Argentina mostly Brazil? A big market.when import taxes go down! Related to Asia.. As barriers go down, Thailand, Vietnam, China and possibly Philippines to challenge dominance of Ecuador Fact 1: Vietnam has doubled exports to Mexico in first half 2017 Fact 2: Thai Tuna Industry Association (TTIA) President declared Latin America as Emerging Market (source ATUNA) >> in 2017 big rise in thai exports to Peru & Chile. QUESTION: Shall we expect take overs soon?

32 Recommendations Latin America & Asia Pacific Latin America Revision of tariff structure with Asia Pacific is strongly recommended Asia Pacific Top exporters (Thailand, China, Vietnam) to apply pressure on their governments and ministries to help reduce/eliminate tariff & sanitary barriers by Latin America Develop a 3-5 years framework with mutual objectives >> increase trade between blocs! Encourage intra-regional cooperation to exploit synergies in international markets

33 THANK YOU INFOFISH! TENKIU PAPUA NEW GUINEA!