Food & Beverage Processing Equipment

An Expert's View about Food, Beverage and Tobacco Processing Machinery in Colombia

Posted on: 25 May 2012

The Colombian Processed Food and Beverage Equipment market caters to an industry that produces approximately US$ 22 billion in revenue per year. The food industry is comprised of 10 sub sectors: Sugar mills, rice mill, cereal mills, oils and fats, dairy products, chocolates and candy, meat products, animal food products, bread and pasta and others. The beverage industry is also comprised of three subsectors: Beer, Carbonated Soft Drinks & Juices and spirits.
In 2010 the Food Industry grew on a whole (+ 6.31% from ‘09) while the beverage industry decreased in sales (- 9.63%), driven in part by an unprecedented tax increase imposed on the beer market, to cover the cost of an emergency relief program. Within these industries, the Dairy, Animal Food and Carbonated Soft Drinks & Juices were the three markets highlighted as the most attractive in terms of supply machinery and equipment. To put into perspective the importance of the Food and Beverage import market, this industry accounts for 5.4% of all the Colombian imports. In other words, if Colombia imported approximately US$ 40 billion in 2010, US$ 2.16 billion is the amount of imported goods that came into the country to supply the food and beverage companies.
The Colombian sugar mills sold approximately 2.1 million tons of sugar in 2010, of which 1.4 million was sold for domestic use. According to the Colombian Association of Sugar Cane Growers (Asocañas), Colombia exported 828.752 tons of sugar and sold 1.1 million tons to the local market during 2011. Production in 2010 registered a 38.5% decrease from 2009 figures, as production was negatively impacted by the strong rainy season that hit Colombia in 2010.
The Colombian Rice Mill sector is the third largest in America, after Brazil and United States. This sector was also negatively impacted by the rainy season in 2010, as many of the crops were flooded. The Colombian Cereal Mill sector is probably the Food sector that most depends on imports in the form of raw material for processing finished goods. Colombia currently doesn’t produce enough wheat to cover its cereal output, which forces the industry to import 99% of its wheat consumption. According to The National Federation of Farmers Grain and Legumes (Fenalce), during 2011 Colombia imported 1.1 million tons of wheat.
The Oil & Fats sector in Colombia has benefited from a stable growth, which has led to a 5% annual increase in net sales. Within this sector, approximately 66% of the production is used to make table and cooking oils, while 23% is used to make margarine. The Dairy products market in Colombia has been witnessing a modernization in terms of production and commercialization of various innovative products. In preparations for the Free Trade Agreement (FTA), this sector has been making technical improvement to the farmer production process, and developing more added value products.
Despite the harsh conditions that affected the crops, in terms of winter and fungus, the overall production of cacao (chocolate) grew 17% from 2009 comparisons. This is a sign of the growing trend in the Chocolates and Candy industry, which estimates that 2011’s production will have an increase of 45,000 tons.
The overall processed Meat products sales fell roughly, -4% in 2010. The loss in sales were attributed to the lower meat prices, and at the same time a loss in export revenue, as the Venezuelan government blocked imports coming from Colombia for part of 2010. The animal food industry was seriously impacted by the change in trade benefits that Colombia faced in 2010. As almost all the raw material for animal food products produced in Colombia comes from imports, the delay in extending the Andean Trade Promotion and Drug Eradication Act (ATPDEA) - a trade preference system by which the U.S. grants duty-free access to a wide range of exports from four Andean countries: Bolivia, Colombia, Ecuador, and Peru - hurt the balance sheet for many of these companies.
For almost 45 years, the Colombian beverage industry has been characterized by the rivalry of two domestic conglomerates (Postobon and Bavaria), which faced each other in the carbonate soft drinks, water, juices and even beer sectors. The beer industry was affected in 2010 by new tax imposed by the government but it remains a very profitable industry dominated by SABMiller. In terms of demand, the Soft Drinks and Juices sector saw an overall growth of approximately 17% from 2009 to 2010. The domestic spirit production is 100% owned by the government, and more specifically 100% produced by the individual Colombian States. Each state has autonomy over the spirits sold in their territory, and imposes the quotas and tariffs that each out-of-state spirit has to pay to enter this market. There has been a long-standing war between state spirits to protect each other’s market and liquor brands.

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Posted: 25 May 2012

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