Just Food

Daily Newsletter

14 November 2023

Daily Newsletter

Brazil’s BRF abandons planned sale of pet-food arm

The meat giant launched a disposal process for pet food in February.

Brazilian meat major BRF has abandoned a plan to sell its pet-food arm more than eight months after announcing the sale.

Publicly-listed BRF said the company’s management has “decided to maintain its pet-food business”, adding that the “competitive sale process” launched in February has been halted.

“As the third-ranked player in the pet-food market in Brazil and leader in super premium natural pet feed, the company will continue to drive growth in this segment by increasing distribution through specialised channels, strengthening [the] brand’s strategy by segment and channel, consolidating integration synergies, and advancing the export expansion strategy,” BRF said in a statement today (13 November).

BRF had hired Banco Santander as financial advisor for the sale of the pet-food business, noting in February that the company had entered early discussions with potential buyers. At the time, Bloomberg sources said a deal could fetch 2 billion reais ($405.5m today).

In 2021, BRF acquired two Brazil-based pet-food makers Mogiana Alimentos and Hercosul.

The company’s pet-food segment consists of BRF Pet, Mogiana Alimentos, Hercosul Alimentos, Hercosul Soluções em Transportes, Hercosul Distribuição and Hercosul International, according to BRF’s 2022 annual report, which did not provide a break down on revenues for the category.

BRF as a whole reported an 11.3% increase in revenue for the year to 53.8bn reais, with the announcement mentioning the pet-food brands GranPlus and Biofresh. The company said fourth-quarter pet-food sales volumes rose 9.9%.

For the 2022 year, group adjusted EBITDA fell 50.4% to 2.86bn reais. BRF’s net income from continuing operations turned to a 3.09bn reais loss from a 517m reais profit in the previous 12 months. On a consolidated basis, the loss was 3.10bn reais versus a 437m reais profit.

In its second-quarter results issued in August, BRF said pet sales volumes rose 5.3%, which included the lines Super Premium Naturals, Biofresh and Guabi Natural.
Revenue for the quarter fell 5.7% to 12.2bn reais, with adjusted EBITDA down 32.7% at 10.01bn reais.

Net income from continuing operations was a 1.34bn reais loss, compared to a 451m reais loss a year earlier. Consolidated net income was a 1.34bn reais loss versus a 468m reais loss.

Despite rising demand for vegan cheese, complex processes and high production costs could limit market growth

Per GlobalData, the global vegan cheese market will be valued at $1.4 billion in 2023 and is expected to grow at a CAGR of 16.7% by 2030, primarily driven by the rise in the vegan and vegetarian population. However, its production often involves more complex processes and expensive ingredients like nuts or plant-based proteins, leading to higher production costs, which are then passed on to consumers, making vegan cheese more expensive per unit compared to dairy cheese, which could thereby impede its widespread adoption.