GIL 2013: Latin America - Chemicals, Materials & Food Track: 360 Degree Industry Perspective

GIL 2013: Latin AmericaThe Global Community of Growth, Innovation and Leadership

31 January 2013

Sao Paulo, Brazil

Alessandra Lancellotti, Business Unit Leader

360 Degree Industry PerspectiveChemicals, Materials & Food Industry Track

2

Track Agenda

1. The LATAM Chemical industry Outlook and its Growth Challenges

2. Mega Trends – The impact in Latin America

Urbanization

Social Trends

Infrastructure Development

Health, Wellness and Well-being

3. Growth Success Story – Dow Chemical

4. Panel Discussion – Are chemical companies prepared to grow in Latin

America?

3

Track Agenda



Urbanization

Social Trends





America?

4

The Latin America Chemical Industry is expected to grow by 6.0% from 2012 to

2020, being Brazil and Colombia the fastest growing countries in the region

2012 2020

153.0

260.0

6.9%

CAGR

5.9%

CAGR

2012 2020

23.0

33.2

2012 2020

10.5

17.0

4.7% CAGR

6.2% CAGR

Chemical Industry in Latin America: 2012 x 2020 (billion US dollars)

The LA chemical industry is

expected to grow from US$ 294

billion to US$ 466 billion in the

2012–2020 period.

2012 2020

35.0

55.2

5

Latam Chemical Industry Growth EnginesKey Sectors in 2020 and Growth Challenges

Challenges

High cost of raw materials –

energy, gas, naphtha

High investment costs – about

25% higher compared to Asia

Low level of public incentives to

the establishment of pilot plants –

crucial to boost opportunities in

the renewables sector

$ 12.1 B$ 2.7 B

$ 17.6 B

$ 3.8 B $ 2.0 B

Source: Frost & Sullivan analysis

6

Track Agenda



Urbanization

Social Trends





America?

7

Urbanization

8

Mega Cities: By 2020, it is expected that 83.5% of the population (about

500 million people) in Latin America will be living in urban areas

People per Square

Kilometre

Highly Urban Countries More than 200 people

Medium-High Urban Countries 100 – 200 people

Medium Urban Countries 50 – 100 people

Low-Medium Urban Countries 10 – 50 people

Low Urban Countries Less than 10 people

Mexico CityPopulation

2020:

22.9 million

Bogota

Population

2020:

10.2 million

Rio de

Janeiro

Population

2020:

12.9 million

Buenos

AiresPopulation

2020:

14.4 million

Sao PauloPopulation

2020:

22.0 million

Mega Cities (>8 million

population)

Emerging Mega Cities

(4-8 million

population)

SantiagoPopulation

2020:

6.4 million

Belo

HorizontePopulation

2020:

6.3 million

GuadalajaraPopulation

2020:

5.3 million

Source: United Nations, Department of Economic and Social Affairs Statistics, Frost & Sullivan and other regional and country level statistics bureau

Lima

Population

2020:

10.4 million

9

Macro to Micro Implications in the Civil Construction Industry: Construction sector is likely to grow at rates above 6% by 2020 in countries like Brazil

and Peru

Colombia

Argentina’s civil construction

industry is likely to grow at an

annual rate of 4.0%

Argentina

FIFA World Cup 2014 and the

Olympic Games 2016 will boost the

civil construction industry which will

grow at an annual average of

6.5%

2.1 billion sq. meters need to be

built in order to meet future

demands for 27.7 million new

dwellers

BrazilMexico’s civil construction industry

is likely to grow at an annual rate

of 6%

10 skyscrapers standing over

200m are planned or already under

construction

Mexico

Colombia’s civil construction

industry is likely to grow at an

annual rate of 5.8%

Peru

Peru’s civil construction industry is

likely to grow at an annual average

rate of 9.7%


10

Macro to Micro Implications in the Water & Sanitation Market:

Investments in this area are expected to reach $75.5 billion by 2020

>$10.0 billion Investment in the

country by 2020

Mexico

$1.7 billion Investment in

Lima by 2014

$370 million – waste water

treatment (16 plants) and

sewage

Peru

$25.0 billion investment in the country by 2020

Rio de Janeiro – From 56% to 80% of sewage

treatment

Sao Paulo – 100% Universalization in 2020 for

urban areas

Brazil

$9.5 billion Investment in Buenos Aires by 2020

Buenos Aires - 100% universalization by 2015

Sewage: from 59% to 95% coverage by 2020

Argentina


6.5% CAGR in industrial water

treatment chemicals by 2020

5.1% CAGR in municipal water

treatment chemicals by 2020

11

Social Trends

12

“She-conomy”: Women to Account for 50.0% of Latin American

Working Population and 28.0% of Directorship Positions in 2020

2011 2020

Total Female Decision Makers in

Public and Private Sectors (%)21.4 29.2

Women Professional, Scientists and

Intellectual (%)48.8 50.3

Average income Gap of Latin

American Urban Women versus

Men (%)

17 11.2

Percentage of Parliament Seats

Occupied by Women (%)23.0 31.1

Women Bank Account Holders

(Million)103.3 146.4

Women Empowerment, Latin America,

2011 and 2020

Source: CEPALSTAT; CELADE; Frost & Sullivan analysis.

Forecast Percent of Working Female

Population, Latin America, 2011–2020

113 Million

295 Million

145 Million

322 Million

Total Female Population Female Working Population

2020 2011

13

Women consumption is directly related to their empowerment, driving

sectors such as home and personal care, food and packaging

Personal Care

Convenience

Home Care

• $ 120.0 B market in 2020• Renewable-sourced raw materials

• Surfactants market expected to reach $ 2.0 billion by 2020 in Brazil

• Multifunctional formulations• DIY

• $ 35.0 B market in 2020• Liquid detergents formulations

Domestic work is reducing

especially in Brazil, driving

the development of

practical and easy-to-use

home care products.

14

The Middle Bulge: Middle Class Individuals to Account for 69% of

Latin America’s Population in 2020

Source: IADB, ECLAC, Frost & Sullivan Analysis.

Note: Figures in brackets are millions of individuals.

Poverty Line based on ECLAC definition of poverty - $2.5 US dollars per person per day in market prices

2020

631 million Individuals

2011

577 million Individuals

$32,000

$14,600

$60,000

$3,650

$100,000

10.8%

(62)

Below

Poverty

Line

Poor

Lower Middle

Class

Middle Class

Upper Middle

Class

Rich

31.6%

(200)

10.7%

(68)

15.5%

(98)

24.2%

(153)

11.1%

(70)

Income Per Annum

Poverty

Line

12.9%

(74)

32.6%

(188)

6.6%

(38)

19.2%

(111)

17.9%

(103)

6.8%

(43)

Income Pyramid, Latin America, 2010 and 2020

15


16

Airport Infrastructure: The major airport projects in Latin America are likely to boost

the flow of people between countries, and increase commercial trade with investments of

about $401.0 billion by 2020

Riviera Maya Airport $250 million

(Mexico)

Brasilia Airport$1.9 billion50 million

passengers by 2037

(Brazil)

Guarulhos (São Paulo) Airport

$3.8 billion52 million

passengers by 2032

(Brazil)

Viracopos Airport$6.9 billion90 million

passengers by 2042

(Brazil)

Silvio Pettirossi & Guarani AirportAirport (Luque)

$100 million(Paraguay)

Chinchero Airport (Cusco)

$389 million(Peru)

Source: Frost & Sullivan Analysis

17

Airports26.6%

Arenas24.6%Hotels

7.5%

Mobility41.3%

Source: Federal Government, Frost & Sullivan analysis.

Impact of World Cup on the Chemicals and

Materials Industry: Investment by

Area, Brazil, 2011–2014

Total World Cup Investment in Construction = $14.11

Billion

The huge infrastructure gap present in Latin America is expected to be

reduced in the next 5 years at least in Brazil, due to the Megaevents

China India Latin America

8.7%

4.7%

1.8%

Investments in Infrastructure as a % of GDP - average 2000-2011

18

Chemicals and Materials Industry: Percentage of Investment by

Select Chemicals, Brazil, 2011–2016

Source: Frost & Sullivan analysis.

5.0%

54.1%

4.7%

14.0%

22.2%

Adhesives

and Sealants

Cement

Concrete

Admixtures

Paints and

Coatings

Plastics

Cement and Plastics are the key components in the World Cup and

Olympic Games works investments in Brazil by 2016

19NAFD-MT

Health, Wellness, and Well-Being

20

The need for a change in the consumer behavior will enable the

appearance of new niche markets within the Food Industry

Peru:

15%

Note: Obesity percentage is defined in the population older

than 15 and with a BMI (body mass index) greater than 30Sources: Organization for Economic Co-operation and Development (OECD)

/ World Health Organization (WHO) / International Obesity Taskforce

Colombia:

16%

Bolivia:

18%

Brazil:

18%

Honduras:

19%

Chile:

25%

Argentina:

26%

Venezuela:

28%

Paraguay:

32%

Mexico:

33%

The rising of middle class and increasing urbanization is leading to higher obesity rates in Latin America.

Considering the current growth rate, Brazil will present in 2020 the same level of obesity presented by

the US today (34%)

From Fat to Fit…

Weight management ingredients

(fat burners, satiety

ingredients, metabolism

regulators) will grow at a 7.5%

CAGR by 2020

Obesity rate in Latin America countries (2010)

21

The functional food and beverages market will value US$ 21B in 2020 in

Latin America – 13% of the global market

Change in lifestyle and increasing of disorders such as diabetes and cardiovascular

diseases create opportunities for: stevia, amino

acids, antioxidants, enzymes, fibers, proteins, probiotics, prebiotics, phytosterols

and polyphenols.

• Ingredients for functional beverage

are the most promising category:

healthiness-on-the-go concept

Consumption of health ingredients and nutricosmetics will

become a way of life

Average Price, Natural X Synthetic

Food Ingredients

218.1%

276.5%

352.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

400.0%

NA EU BR

22NAFD-MT

Track Agenda



Urbanization

Social Trends




4. Panel Discussion – Are Latam chemical companies prepared for the

future?

23NAFD-MT

Track Agenda



Urbanization

Social Trends





America?

GIL 2013: Latin AmericaThe Global Community of Growth, Innovation and Leadership

Panel DiscussionChemicals, Materials & Food Industry Track

GIL 2013: Latin America - Chemicals, Materials & Food Track: 360 Degree Industry Perspective

Documents

Transcript of GIL 2013: Latin America - Chemicals, Materials & Food Track: 360 Degree Industry Perspective