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
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?
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
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?
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%
Source: Frost & Sullivan analysis
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
Source: Frost & Sullivan analysis
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
Infrastructure Development
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
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 Latam chemical companies prepared for the
future?
23NAFD-MT
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?
GIL 2013: Latin AmericaThe Global Community of Growth, Innovation and Leadership
Panel DiscussionChemicals, Materials & Food Industry Track