Fórum Econômico Brasil-Japão

The Brazilian

Supermarket Sector

02/08/2014

Sector sold R$ 272.2 billions (US$ 121 billions) in 2013

SUPPLY OF FOOD

AND BEVERAGES IN

BRAZIL 83%

Supermarkets is

responsible for 2012 2013 2014

Revenues: R$ 242.9 billions R$ 272.2 billions R$ 296.7 billions

Stores number: 83,6 mil 83,9 mil 84,3 mil

Employee: 986,1 mil 988,5 mil 991,5 mil

Evolution of the sector's

revenues - index number

(deflated by IPCA)

100 101 102 98 101 102 102 109

120 128

139 145 148

157 162

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Índice de faturamento do setor - R$ deflacionados pelo IPCA médio em cada ano - Base 100 = 2000

Source: Abras/Nielsen

* Valores atuais– PIB com deflator (2011)

** Renda Mensal Familiar

Sector performance is directly related to the populations´s

income: continuous improvement in recent years

Fonte: NSCN/IBGE e PNAD/IBGE

0.558

0.532

0.513

0.498 16,482

17,689

19,844

22,402

16000

17000

18000

19000

20000

21000

22000

23000

0.490

0.500

0.510

0.520

0.530

0.540

0.550

0.560

0.570

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Gini

Renda perCapita (R$ real)

Renda per capita real* e Índice de Gini

-1.65

5.92

8.98

5.51

4.20 3.71

5.30 5.36

3,0

2006 2007 2008 2009 2010 2011 2012 2013 2014*

Índice Nacional de Vendas (% ano)

Fonte: Abras 2014 Projeções

Gini´s Index: social

inequality is decreasing in

Brazil

Total share of processed

products= 74,7%

The industry is a great partner: almost 75% of sold products are processed

Sector´s revenue must to reach R$ 466

billions (US$ 209 billions) in 2020

Optimistic* Moderate*2013 (R$

billions)

2020 (R$

billions)

2020 (R$

billions)

272,2 466,3 422,7

Cereals/Fruits and vegetables 12,0 32,7 56,0 50,8

Bakery 2,7 7,3 12,6 11,4

Butchery 8,4 22,9 39,2 35,5

Fish Store 1,1 3,0 5,1 4,6

Ready to eat 1,0 2,7 4,7 4,2

Alcoholic Beverages 7,7 20,9 35,8 32,5

Non-Alcoholic Beverages 9,1 24,8 42,4 38,5

Health and Beauty Products 9,0 24,5 42,0 38,0

Household products 6,5 17,7 30,3 27,5

Grocery 17,9 48,8 83,6 75,8

Sauvory grocery 7,1 19,2 32,9 29,8

Perishable products 7,0 19,0 32,6 29,5

Eletronic products 5,6 15,2 26,1 23,7

Textile 1,9 5,2 8,9 8,0

Furniture 0,2 0,5 0,9 0,8

Others 2,8 7,6 13,1 11,8

Total 100,0 272,1 466,1 422,6

Fonte : Ranking Abras 2012/Índice de Volume Nielsen 2012/POF-IBGE/ Elaboração Departamento de Economia e Pesquisa da Abras

* 6,5% nominal, IPCA=4,5%; 8% nominal, IPCA=4,5%

Nat

ura

l p

rod

uct

sP

roce

ssed

pro

du

cts

Potential revenue of supermarkets for sections/productsShare by section

Share section/segment

in the sector´s

revenues (%)17.9

9.1 9.0 7.7 7.1 7.0 6.5

5.6

2.8 1.9

0.2

Share of processed products in the sector´s revenue (%)

Source: Departamento de Economia e Pesquisa da Abras

In 2013, the share of imported products accounted for only 2.8% of sector´s revenue –R$ 7,6 billlions (US$ 3,4 billlions)

Share of imported products in the sector is not significantly: potential opportunities for Japanese Products

Infrastructure

Tax Reform

Inflation

Brazil´s challenges

6

6.50

5.84 5.91

6.40

3.80

7.26

5.43

4.67

2011 2012 2013 2014

IPCA Abrasmercado

Source: Abras e IBGE

Evolução do IPCA e Abrasmercado - % a.a.

Inflation in

supermarkets was

overcome by the

IPCA in 2013 and

2014

Abras works for solving structural problems of the Brazilian Economy

What Abras ever made

1.Non-taxation of the basic goods (cesta básica)

2.Non-taxation of meat

3.Means of payment (regulamentation);

4.Refis (fiscal debt renegotiation) – Lei 12.865

5.More funding mechanisms – FINAME´s extension

6.RAMA (Pesticide monitoring)

7.“Pecuária Sustentável” – Sustainable Livestock –

with Ministry of Agriculture

8.“Lixo Zero” (Zero Waste)

9.Wine Program

10.Sectoral Agreement for Solid Waste (until dec/14) –

with Ministry of Environment (MMA)

What Abras pleads

1.Funding for new stores construction, by

BNDES

2.Equipments non-taxation: IPI, PIS and COFINS

(exemption)

3.Lower taxation on payroll

4.ICMS´s credits of consumer goods (telephony,

electric energy)

5.Increase in “Cesta Básica” (more products)

8

Fernando T. Yamada Presidente

Associação Brasileira de Supermercados