EMIS Insights - Colombia Food and Beverage Sector Report 2019 - 2020

COLOMBIA
FOOD & BEVERAGE

SECTOR 2019/2020
An EMIS Insights Industry Report
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ABBREVIATIONS
COP Colombian Peso
Corporation for Industrial Development of Biotechnology and
CORPODIB
Clean Production
DANE National Administrative Department of Statistics
DNP National Planning Department
FARC Revolutionary Armed Forces of Colombia
FEDEGAN Colombian Federation of Cattle Breeders
FEDEPALMA National Federation of Palm Oil Growers
FENAVI National Federation of Poultry Producers
FONADE Financial Fund for Development Projects
ICA Colombian Institute for Agriculture and Livestock
IDH Sustainable Trade Initiative

National Institute for the
INVIMA
Surveillance of Food and Medicines
MINAGRI Ministry of Agriculture and Rural Development
MinCIT Ministry of Commerce, Industry and Tourism
PGC Gradual Compliance Plan
PTP Productive Transformation Programme
SEPEC Colombian Fisheries Statistical Service Information System
SISPA Information System Palm Oil Sector
USDA United States Department of Agriculture
VAT Value-Added Tax


CONTENTS 01 EXECUTIVE SUMMARY
Sector in Numbers
Sector Overview
Sector Snapshot
Sector Outlook
p.5
Driving Forces
Restraining Forces
02 SECTOR IN FOCUS p.13

Main Economic Indicators
Main Sector Indicators
Production and Sales
Global Positioning
External Trade
Exports
Imports
Foreign Direct Investment
Enterprises and Employment
03 COMPETITIVE LANDSCAPE p.24

Timeline Colombia Food & Beverage
Highlights
Top Companies
Top M&A Deals 2017-2018
M&A Activity
04 COMPANIES IN FOCUS p.30

Bavaria SA
Grupo Nutresa SA
Colombina SA
Industria Nacional de Gaseosas SA
Riopailla Castillo SA
05 REGULATORY ENVIRONMENT p.41

Key Regulatory Bodies
Key Regulatory Requirements

CONTENTS 06 OILS & FATS
Highlights
Main Events
Production
Focus Point – Crude Palm Oil Production
p.45
Sales and Prices

External Trade
Exports
Imports
07 MEAT & FISH p.54

Highlights
Main Events
Beef
Poultry
Eggs
Pork
Fish (excl. aquaculture)
External Trade
08 DAIRY PRODUCTS p.64

Highlights
Main Events
Production and Consumption
External Trade
09 BEVERAGES p.70
Highlights
Main Events
External Trade

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020
An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2019 EMIS, all rights reserved. 5
O1 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
No.4 No.3 No.3

Palm Oil Producer Coffee Producer Coffee Exporter
Globally Globally Globally
COP COP COP

28.8tn 6.3tn 6.8tn
Food and Beverage Meat & Fish Value Beverage & Tobacco
Value Added** Added Value Added
USD
1,632 26.2%
594mn
Trade Surplus in Number of Share of Jobs in
Food and Enterprises Manufacturing
Beverage in Sector Industry
* Data for 2018.

** Includes tobacco.
Source: USDA, Kirin Institute, Central Bank of Colombia, DANE, EMIS Insights
COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 6

01 EXECUTIVE SUMMARY CONTENTS
Sector Overview
The food and beverage industry is one of the largest sectors in the Colombian economy, responsible
for 3.4% of the country’s GDP in 2018. Between 2013 and 2018, the sector’s GVA rose at a CAGR of 2.1%,
supported by growing domestic demand and higher household incomes. The best-performing segment
during this five-year period was coffee production, the GVA of which grew at a CAGR of 4.5%, followed
by the oils and fats segment with a CAGR of 3.4%. Other important areas include milling, bakery
products, confectionery, fruits and vegetables, meat and fish. In 2018, the industry was among the
major employers in the country, responsible for more than a quarter of all jobs in the manufacturing
industry. Moreover, in 2018 the sector was responsible for 10.8% of Colombia’s total export value.
Entry Modes
Big international conglomerates dominate Colombia’s food and beverages industry, with a
considerable share of the market and economic power. Foreign presence in the sector is significant,
leading to high market concentration, making it harder for small and medium-sized players to enter
the sector and survive. In addition, the difficulty in obtaining external financing for investment and
expansion of its operations makes it even harder for smaller players to overcome the existing
competition and avoid being absorbed by larger market participants.
Segment Opportunities
The rising middle class and the higher disposable incomes of the Colombian population as a result of
better macroeconomic conditions in the country in the last few years has created strong demand for
products from the food and beverage industry. The meat segment has registered considerable growth
rates with poultry and pork meat becoming a vital part of Colombians’ everyday diet. The country,
however, still relies on imports to satisfy the growing demand for these types of protein, as domestic
production remains insufficient. Significant opportunities exist in these meat segments, as demand is
projected to continue expanding in the near future. Moreover, growth opportunities exist in the
fisheries segment, which is dominated by small players and lacks investment in technological
development. In addition, rising demand from millennials for healthy food and drinks produced in a
sustainable way has created room for the introduction of new products that satisfy these
sophisticated demands.
Government Policy
The Colombian government’s main concern regarding the food and beverage industry is related to
sanitary conditions and the high informality of the meat and dairy segments. The production chains of
these segments remain incapable of meeting international health and sanitary standards, which
largely impedes Colombia’s access to foreign meat and milk markets. The government has been
adopting actions towards stimulating a healthier diet of the population. One such measure introduced
in 2019 was the increase in scope of the value-added tax on soft sugary drinks and beer, which is
expected to decrease demand.
Source: DANE, Central Bank of Colombia, Fitch Solutions

Sector Snapshot
Colombia Food
& Beverage Sector
PRODUCTION*
Food and Beverage Production: : COP 78,513bn
Food Production: COP 63,584bn
Beverage Production: COP 14,928bn
EXPORTS * Data based on individual financial results.
Food and Beverage: USD 4,517.2mn

Coffee Products: USD 2,568.4mn
Palm Oil: USD 618.9mn
IMPORTS
Food and Beverage: USD 3,923.7mn DOMESTIC MARKET**:
Oils and Fats: USD 857.9mn COP 120,745bn
Meat and Fish: USD 838.2mn
Food Products and Non-Alcoholic Beverages
Consumption: COP 103,549bn
Alcoholic Beverages and Tobacco
Consumption: COP 17,196bn
** Defined as final household
consumption
KEY PLAYERS REVENUES

1. Bavaria SA: COP 4,582.2bn
2. Cooperativa Colanta: COP 2,245.2bn
3. Alpina Productos Alimenticos AS: COP 2,104.0bn
4. Federacion Nacional de Cafeteros de Colombia: COP 1,845.2bn
5. Colombina AS: COP 1,839.3bn
Note: Grupo Nutresa not included as it presents only consolidated statements for the conglomerate.
Source: DANE, FEDEPALMA, EMIS Company Database

Sector Snapshot
Colombia Food and Beverage Sector
According to data from the Central Bank of Colombia, the value added of Colombia’s food and
beverage sector* stood at COP 28.8tn in 2018, up 3.2% y/y. The sector is dominated by beverage
production, which had a share of 24% in the industry’s value added, followed by the meat and fish
segment with a 22% share. As Colombia’s middle class continues to grow, animal protein has become
an important part of the population’s everyday diet, making the meat category one of the most
important in Colombia’s food and beverage industry. Hence, in 2018, the meat and fish segment was
the best-performing in terms of value added growth, recording a rise of 5.2% y/y. The observed
positive trend in the segment was driven by the record production of the poultry and pork meat
categories. Poultry meat output grew by 4.2% y/y in volume terms in 2018, while the segment
registered a CAGR of 5% over the last five years. Consumption also reached a record-high volume of
34.4kg per capita, up 4.2% y/y. Pork production rose by 7% y/y in 2018, while consumption surpassed
output growth, recording an increase of 12% y/y and making pork meat the most important segment
in the meat processing industry in terms of output growth. Beef, on the other hand, faced a hard year,
as a result of the foot-and-mouth disease outbreak in some regions, as well as a high level of
clandestine slaughtering. The dairy production segment performed well in 2018 thanks to favourable
weather conditions. Even though its value added rose by only 0.3% y/y, raw milk output reached 7.3bn
litres in 2018, up 2.3% y/y, while domestic raw milk consumption rose by 2.1% y/y to 148 litres per
capita. The segment, however, remains vulnerable to the high level of informality and the dependence
on imports of dairy products.
The oils and fats segment, one of the leading exporters of Colombia’s food and beverage industry,
was affected in 2018 by a decrease in international prices, thus its value added fell by 0.9% y/y. In
terms of production volume, output stagnated in 2018, posting only a slight growth of 0.15% y/y for
crude palm oil and 0.12% y/y for palm kernel oil. Despite the negligible rise, production remained at
record high levels. Domestic sales, on the other hand, registered a decrease of 5.3% y/y for crude palm
oil and 11% y/y for palm kernel oil.
After a year of unsatisfactory performance, in 2018 Colombia’s beverage sector recovered, registering
growth of 4.6% y/y in its value added. Real output increased by 5.2% y/y, while real sales rose by 6.7%
y/y. These positive results were associated with the higher economic growth of the country in 2018,
since beverage demand remains highly dependent on the disposable income of the population.
In 2018, the food and beverage sector recorded a trade surplus of USD 593.5mn, 47.3% less than in
2017, driven by a drop in export value by 2.6% y/y and a surge in import value by 11.7% y/y. The reason
behind this trend was the rise in meat imports, especially of poultry and pork meat, as domestic
supply remains insufficient to satisfy growing demand. In terms of exports, the beverage sector
performed the best, registering growth of 79.4% y/y and reaching USD 54.5mn.
* Includes tobacco.
Source: Central Bank of Colombia, FEDEPALMA, FEDEGAN, FENAVI, PorkColombia, DANE

Sector Outlook
2019f 2020f 2021f 2022f 2023f
Food Sales, COP bn 128,325.0 138,143.0 148,532.3 159,591.7 171,273.6
Food Sales, y/y change, % 7.6 7.7 7.5 7.4 7.3
Meat and Poultry Sales, COP bn 37,969.2 41,456.8 45,250.4 49,373.7 53,820.9
Meat and Poultry Sales, y/y change, % 12.2 9.2 9.2 9.1 9.0
Dairy Sales, COP bn 14,837.1 15,101.9 15,281.3 15,351.7 15,296.2
Dairy Sales, y/y change, % -14.5 1.8 1.2 0.5 -0.4
Sugar and Sugar Products Sales, COP bn 7,578.6 8,205.3 8,880.1 9,605.7 10,379.9
Sugar and Sugar Products Sales, y/y change, % 11.3 8.3 8.2 8.2 8.1
Oils and Fats Sales, COP bn 6,658.2 6,985.2 7,312.7 7,636.5 7,951.5
Oils and Fats Sales, y/y change, % 8.1 4.9 4.7 4.4 4.1
Non-alcoholic Drinks Sales, COP bn 6,024.1 6,439.5 6,879.1 7,347.0 7,841.3
Non-alcoholic Drinks Sales, y/y change, % 6.8 6.9 6.8 6.8 6.7
Alcoholic Drinks Spending, COP bn 6,064.8 6,603.9 7,177.9 7,781.5 8,419.7
Alcoholic Drinks Spending, y/y change, % -2.9 8.9 8.7 8.4 8.2
Fish and Fish Products Sales, COP bn 3,995.2 4,186.8 4,378.0 4,565.8 4,747.5
Fish and Fish Products Sales, y/y change, % 8.0 4.8 4.6 4.3 4.0
According to the Fitch Solutions forecast from March 2019, Colombia’s food and beverage sector is
expected to register strong growth rates over the period 2019-2023. Food sales are projected to
increase by an annual average of 7.5% by 2023. Fruits and vegetables, meat, sugar and sugar products
are expected to be the best performing segments in terms of sales value over the next four years. The
strongest contribution will come from the vegetables segment, projected to grow at a CAGR of 10.3%
between 2019 and 2023, while the meat and poultry segment will register a rise in sales value at a
CAGR of 9.1%. This growth will be supported by strong domestic demand for protein as the disposable
income of the population continues to rise. Fish is expected to increase its importance in Colombians’
everyday diet and to contribute to the country’s external trade. Sales value of the segment will
register an average growth of 4.4% between 2019 and 2023, according to Fitch Solutions. The beverage
sector will experience strong growth as well, both in alcoholic and non-alcoholic drinks. The former is
estimated to rise at a CAGR of 8.5%, while the latter at a CAGR of 6.8% by 2023.
Source: Fitch Solutions

Driving Forces
External
The major driving force of Colombia’s food and beverage sector remains the country’s economic
development. In 2018, the macroeconomic environment was more favourable than in 2017. GDP
increased by 2.6% y/y, while inflation and unemployment rates decreased. As a result, the food and
beverage sector performed well, boosted by higher domestic consumption and rising disposable
incomes of the population, which have fuelled demand for processed goods with higher value-added.
The meat segment, for instance, especially poultry and pork meat, has registered record growth rates
in the last few years, as protein has become an important part of Colombians’ everyday diet. The
beverages sector has also benefitted from the growing middle class in the country, and better
economic conditions. Demand for more sophisticated value-added drinks, such as wine among others,
has increased, while companies have started to introduce new healthy products on the market, such
as flavoured waters and teas. At the same time, the better security environment in Colombia, after
the signing of the peace deal with the FARC, has had a favourable effect on foreign investments in
the sector with some leading global manufacturers establishing themselves in the Colombian market
through the acquisition of smaller national players, especially in the meat and dairy segments.
Internal
The major internal driving force of Colombia’s food and beverage sector remains the well-developed
mass grocery retail system in the country. Food and beverage producers maintain tight relationships
with retailers, facilitating the further development of the sector, as well as the introduction of new
products. Moreover, the presence of large international players in the industry has brought know-how
and new technologies to the production process and has stimulated innovation. The beverage giant
Bavaria announced its intention to invest USD 95mn in innovation and technology in 2018 in order to
diversify and innovate its portfolio, to create new production lines, to install new infrastructure for
the optimization of the operational processes, and to boost the productivity of its plants. In addition,
companies from the sector have started to adapt to the new digital era through investment in e-
commerce and omni-channel sales strategies. Additional opportunities for the food and beverage
industry exist, targeting the low-income population through discount programmes. The locomotive of
the country’s food and beverage sector, however, remains coffee. The segment is highly export-
oriented, with an established production process and a strong reputation around the world.
Furthermore, domestic demand for coffee, especially for high quality blends, has grown in the last few
years, following the rise in disposable incomes.
Source: DANE, Fitch Solutions, EMIS Insights

Restraining Forces
External
One of the major challenges of Colombia’s food and beverage industry is its dependence on the
country’s economic development. In times of positive economic growth, the demand for food and
beverage products with high value-added increases, while in times of economic slowdown, the
industry gets hit by a drop in consumption and investment. Oil continues to be the major exported
commodity by Colombia, which makes the domestic economy highly dependent on trends on the
global oil market. Low international oil prices can dampen growth prospects for the domestic market,
which in turn can jeopardize food and beverage sector demand. Moreover, the industry is highly
vulnerable to weather conditions. The El Nino weather phenomenon, for instance, can cause extreme
temperatures and prolonged drought, which negatively affects the agriculture sector and, in turn,
food and beverage output. In terms of impediments related to government policy, the introduction of
a new way of taxing soft sugary drinks and beer has the potential to increase considerably the final
consumer price of these products, thus, jeopardising the performance of domestic beverage
producers. In particular, the new taxing policy will extend the value added tax from producers to
retailers and wholesalers from 1 March 2019.
Internal
The major internal challenge for the food and beverage sector in Colombia remains its high degree of
informality, especially in the dairy production and meat processing segments. The majority o
producers are unwilling to pay taxes, to register their farms and to vaccinate their cattle, due to lower
consumer prices and the higher production costs of certified products. These practices lead to
decreased competitiveness in production, risks related to public health and low access to
international markets. Moreover, Colombia’s food and beverage industry remains highly dependent on
imports, especially of pork and poultry meat. Domestic production is still insufficient to satisfy
growing demand, especially for more sophisticated products with high quality and sustainable
packaging. Moreover, the food and beverage industry is dominated by a number of conglomerates,
which creates significant barriers for the entry of new players on the market. Another challenge faced
by smaller and medium-sized companies in the sector is related to the difficulty in obtaining external
financial support. As a result, small and medium-sized market players lag behind in the
implementation of modern technologies, which impedes their further growth and competitiveness.
Moreover, the insufficient and underdeveloped infrastructure in the country makes access to remote
regions rather difficult.
Source: USDA, Fitch Solutions, EMIS Insights

02
SECTOR
IN FOCUS

02 SECTOR IN FOCUS CONTENTS
Main Economic Indicators
2013 2014 2015 2016 2017 2018
GDP, current prices, COP bn 713,627 762,903 804,692 863,782 920,194 978,477
GDP, constant prices 2015, y/y change, % 4.6 4.7 3.0 2.1 1.4 2.6
GDP per capita, USD 8,103 7,999 6,089 5,800 6,326 6,625
National Consumer Price Index, y/y change, % 1.9 3.7 6.8 5.8 4.1 3.2
Food and Beverage Consumer Price Index, y/y

0.9 4.7 10.9 7.2 1.9 2.4
change, %
Monetary Policy Rate, % pa, year-end 3.25 4.50 5.75 7.50 4.75 4.25
Exchange rate USD/COP, year-end 1,926.8 2,392.5 3,149.5 3,000.7 2,984.0 3,249.8
Food & Beverage Sector Trade Surplus, USD mn

782 1,325 1,303 681 1,126 594
Food & Beverage Sector Exports, USD mn

4,028.7 4,778.3 4,494.9 4,236.8 4,637.5 4,517.2
Food & Beverage Sector Exports, % of total 6.8 8.7 12.6 13.3 12.2 10.8
Food & Beverage Sector Imports, USD mn

3,246.8 3,453.6 3,192.3 3,555.6 3,511.6 3,923.7
Food & Beverage Sector Imports, % of total

5.7 5.7 6.2 8.3 8.0 8.0
Foreign Direct Investment Inflow in the Food &

Beverage Sector, USD mn 49 0 41 101 233 n/a
Foreign Direct Investment Inflow in the Food &

0.8 0.0 0.5 0.9 3.9 n/a
Beverage Sector, % of total non-oil FDI
Source: Central Bank of Colombia, DANE, CEIC, DNP

Main Sector Indicators
2013 2014 2015 2016 2017 2018
Food & Beverages Sector Value Added, constant 2015 prices, COP bn* 25,934 26,660 27,219 27,871 27,928 28,818
Food & Beverage Sector Value Added, constant prices, y/y change, % 3.50 2.80 2.10 2.40 0.20 3.20
Grain Milling, Pasta, Bakery Products & Animal Foods Value Added,
3,919 3,825 3,922 4,237 4,334 4,461
constant 2015 prices, COP bn
Grain Milling, Pasta, Bakery Products & Animal Foods Value Added,
-1.20 -2.40 2.50 8.00 2.30 2.90
constant prices, y/y change, %
Oils & Fats Value Added, constant 2015 prices, COP bn 1,314.4 1,382.4 1,506.0 1,508.0 1,570.0 1,555.7
Oils & Fats Value Added, constant prices, y/y change, % 5.10 5.20 8.90 0.10 4.10 -0.90
Meat & Fish Value Added, constant 2015 prices, COP bn 5,646.8 5,741.8 5,896.0 6,033.0 6,017.0 6,332.6
Meat & Fish Value Added, constant prices, y/y change, % 0.40 1.70 2.70 2.30 -0.30 5.20
Dairy Products Value Added, constant 2015 prices, COP bn 3,138.9 3,177.4 3,217.0 3,271.0 3,302.0 3,312.7
Dairy Products Value Added, constant prices, y/y change, % 5.30 1.20 1.20 1.70 0.90 0.30
Sugar Mills & Refineries Value Added, constant 2015 prices, COP bn 2,410.1 2,720.7 2,618.0 2,381.0 2,424.0 2,541.9
Sugar Mills & Refineries Value Added, constant prices, y/y change, % 5.00 12.90 -3.80 -9.10 1.80 4.90
Coffee Products Value Added, constant 2015 prices, COP bn 563.7 631.2 702.0 715.0 736.0 703.7
Coffee Products Value Added, constant prices, y/y change, % 34.70 12.00 11.20 1.90 2.90 -4.40
Beverages and Tobacco Value Added, constant 2015 prices, COP bn 6,109.4 6,274.3 6,394.0 6,695.0 6,495.0 6,790.9
Beverages and Tobacco Value Added, constant prices, y/y change, % 5.30 2.70 1.90 4.70 -3.00 4.60
Number of Enterprises in the Food & Beverage Sector, year end 1,783 1,790 1,769 1,679 1,655 1,632
Number of Employees in the Food & Beverage Sector, % of total 24.0 24.4 24.5 25.1 25.7 26.2
*Includes tobacco
Source: Central Bank of Colombia, DANE

Comments Food and Beverage Sector Value Added,

2018
In 2018, the production value of Colombia’s food
manufacturing performed better than in 2017,
Grain Milling, Pasta, Dairy
growing by 2.3% y/y and reflecting the higher Products
Bakery Products &
growth rate of the overall economy during the Animal Foods 15.5% 11.5%
last year. This positive result was driven by the Sugar Mills &
meat and fish segment, which rose by 5.5% y/y, Meat & Fish Refineries
22.0% 8.8%
accounting for 22% of the food and beverage GVA
in 2018. The beverage sector GVA posted a
significant increase of 5.2% y/y, after the 4.5% y/y Oils & Fats
decrease observed in 2017. In terms of sales, both 5.4%
food and beverage manufacturing registered

Coffee
significant positive performance. The beverage Beverages & Products
sector, in particular, rose by 6.7% y/y, reflecting Tobacco 2.4%
23.6%
intensified domestic demand for beverages.
Real Production Value Evolution, y/y Real Sales Value Evolution, y/y change
change
7.6%
14.3%
4.0% 4.7% 5.2%

3.8% 8.3%
2.6% 4.0% 6.7%
2.0% 2.3% 3.7% 4.1%
1.8% 4.5%
2.9% 2.8% 2.8%
0.3% 1.8%
0.3%
-4.7%
-4.5%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Foods Beverages Foods Beverages
Source: DANE, Central Bank of Colombia

Global Positioning
Comments Top 14 Global Beer Consumers, 2017

The major segment of the food and beverage Total
Global Market
Ranking Country Consumption,
manufacturing industry in Colombia remains the thou kl
Share
production of oils and fats. The country ranks 1 China 40,143 21.5%
fourth globally by volume of palm oil output as of 2 United States 23,956 12.8%
May 2019, according to estimates by the USDA, 3 Brazil 12,565 6.7%
being responsible for 2.2% of total production of 4 Mexico 8,532 4.6%
palm oil in the 2018-2019 crop season. Colombia 5 Germany 8,218 4.4%
is also among the top three coffee producers and 6 Russia 8,008 4.3%
exporters in the world, accounting for 9.7% of 7 Japan 5,116 2.7%
world exports as of December 2018/2019. In terms 8 United Kingdom 4,405 2.4%
of beef and dairy consumption, the country 9 Vietnam 4,356 2.3%

10 Spain 4,050 2.2%
consumes much less than its neighbours.
11 Poland 3,798 2.0%
Regarding the beverage sector, beer represents
12 South Africa 3,322 1.8%
75% of spending on alcoholic drinks in Colombia,
13 India 2,620 1.4%
making the country the 14th largest beer
14 Colombia 2,283 1.2%
consumer in the world.
Top Global Palm Oil Producers, Top 10 Global Coffee Exporters, Dec
2018/2019 season 2018/2019
Production Volume, Export Volume, thou
Ranking Country Ranking Country
mn tonnes 60kg bags
1 Brazil 35,330
1 Indonesia 41.50
2 Vietnam 28,200
3 Colombia 13,300
2 Malaysia 20.50
4 Indonesia 8,140
5 Honduras 7,300
3 Thailand 2.90
6 India 5,425
7 Uganda 4,600
4 Colombia 1.63
8 Peru 4,200
9 Ethiopia 3,980
5 Nigeria 1.02
10 Guatemala 3,605
Source: USDA, Kirin Institute

External Trade
Food and Beverage External Trade, USD mn, FOB

4,778
4,637
4,517
4,495
4,237
4,029
3,924
3,556
3,512
3,454
3,247
3,192
1,325 1,303
1,126
782 681 594
2013 2014 2015 2016 2017 2018
Exports Imports Trade Balance
Food and Beverage Share in Total Comments

Exports and Imports
The food and beverage sector in Colombia
registered sustainable trade surpluses over the
2013-2018 period, due to the high external demand
13.3%
12.6% for products from the coffee and palm oil
12.2%
segments. After Venezuela closed its border in
10.8%
2015 in an attempt to prevent the smuggling of
8.7% 8.3% 8.0% 8.0%
subsidised food, fuels and other essential products
6.8% from its neighbour, the trade surplus of the food
6.2%
5.7% 5.7% and beverage sector in Colombia fell significantly.
Even though the sector’s trade balance recovered
in 2017, the jump in imports by 11.7% y/y and the
drop in exports by 2.6% y/y in 2018 led to a trade
surplus of USD 593.5mn, 47.3% less y/y. The
2013 2014 2015 2016 2017 2018
sector’s participation in Colombia’s external trade
remains low, with exports accounting for 10.8% of
total export value and imports for 8% of total
Exports Imports import value in 2018.
Source: DANE

External Trade
(cont’d)
Trade Balance by Segment, USD mn, FOB, 2018
2,455.5 Coffee
288.6 Sugar Mills & Preparations
-84.3 Dairy
-123.1 Pr ocessed and Canned of Fruits, Vegetables, and Tubers
-156.7 Flour Products & Starch
-427.1 Beverages
-523.0 Pr eparation of Oils and Fats of Vegetable and Animal Origin
-576.3 Meat & Fish
Comments
Even though Colombia’s food and beverage sector records sustainable overall trade surpluses, the
country remains a net importer of a number of key products for the food processing industry. In 2018,
the meat and fish segment registered a trade deficit of USD 576.3mn, driven mainly by imports of
poultry and pork meat, as domestic production remains insufficient to satisfy the growing demand.
The imports of meat and fish accounted for 21.4% of the food and beverage sector total import value
in 2018. The production of beverages is another segment characterised by chronic trade deficits.
Colombia imports a significant amount of alcoholic drinks – wine and liquors, as well as soft drinks
and bottled water. Despite a jump in beverage exports in 2018 by a record 79.4% y/y, reaching USD
54mn, the sector remains dependent on imports. Even though Colombia is the fourth major producer
of palm oil in the world, the country still has to import considerable quantities of unrefined soybean
oil, sunflower oil and some oil seeds in order to meet domestic demand. In 2018, there was an
increase in the imports of crude and refined palm oil from Ecuador, due to the distortions existing on
the local market in that country and the better selling conditions for palm oil products in Colombia. In
terms of exports, the food and beverage sector in Colombia remains highly dependent on the coffee
manufacturing segment. In 2018, the surplus of the segment reached USD 2,455.5mn, while exports
accounted for 57% of the total export value of the food and beverage sector.
Source: DANE, FEDEPALMA

Exports
Exports Evolution, USD mn, FOB Exports Evolution, y/y change

4,746
4,607
4,467 4,463
4,217
3,994 79.4%
51.7%
18.8%
9.3%
1.6%
-6.8% -5.9% -5.6% -3.1%
-13.1%
-25.6% -28.4%
35 32 28 20 30 54 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
Food Beverages Food Beverages
Exports by Type of Product, USD mn, Main Export Destinations in Value Terms,*
2018 2018
Coffee 2,568
United States 336.4
Pr eparation of Oils and Fats of
608 Netherlands 227.3
Vegetable and Animal Origin
Ecuador 187.9
Sugar Mills & Preparations 334 Peru 169.0
Mexico 94.1
Meat & Fish 262
Germany 82.7
Pr ocessed and Canned of Fruits,
99 Venezuela 56.6
Vegetables, and Tubers
Panama 49.9
Beverages 54 China 22.8
Belgium 14.5
Flour Products & Starch 47
Japan 14.1
Dairy 24 France 12.0
India 1.8
Other Food Pr oducts 521 Others 745.2
* Includes food, beverages and tobacco
Source: DANE

Imports
Imports Evolution, USD mn, FOB Imports Evolution, y/y change
3,442 43.3%
3,222 3,136
3,046 3,082
2,899
26.3%
12.0%
15.6%
11.7%
8.2% 2.4%
5.8%
-1.3% -1.7%
-10.0%
420 430 482 -22.0%

201 232 293
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Food Beverages Food Beverages
Imports by Type of Product, 2018, USD mn, FOB
Pr eparation of Oils and Fats of Vegetable and Animal Origin 1,131.1
Meat & Fish 838.2
Beverages 481.6
Pr ocessed and Canned of Fruits, Vegetables, and Tubers 221.9
Flour Products & Starch 203.3
Coffee 112.9
Dairy 107.8
Sugar Mills & Preparations 45.9
Other Food Pr oducts 781.0
Source: DANE

Foreign Direct Investment
Comments FDI Inflow in Food & Beverage Sector,

USD mn
The food and beverage sector in Colombia is
233.0
characterised by a strong international presence.
Global conglomerates, mainly from North America
and the EMEA region, participate on the
Colombian food and drink market and continue to
increase their market share through acquiring
100.5
national players. In November 2018, the US food
giant Cargill acquired the Colombian poultry
49.0
49.3
40.9
producer Campollo SA for an undisclosed amount,
28.4
after buying another poultry producer, Polos de

Bucanero, in 2017. Moreover, the Swiss
conglomerate Nestle bought the operations of
-0.3
the natural and organic food producer Terrafertil

SA in Colombia. 2011 2012 2013 2014 2015 2016 2017
FDI Inflow in Food & Beverage Sector, Breakdown of FDI Inflow in Food
share of total non-oil FDI and Beverage Sector, 2017
3.9%
Beverages
32.4%
1.3%
0.9%
0.8%
0.5% 0.5%
0.0%
Food Manufacturing
2011 2012 2013 2014 2015 2016 2017
67.6%
Source: DNP, Central Bank of Colombia, EMIS DealWatch

Enterprises and Employment
Comments Number of Enterprises, year-end

Traditionally, the food and beverage sector is
1,654
1,649
1,631
among the largest employers in Colombia and,
1,548
1,524
1,501
according to EMIS Insights estimates, it
accounted for about 26.2% of all jobs in the
manufacturing industry at the end of 2018. During
20.3%
the year, employment in the sector rose by 3.5% 20.1%
19.8%
y/y, much above the 1.3% y/y growth in 19.5% 19.6%
19.3%
employment in the overall manufacturing
industry. About 90% of the people working in the
sector were engaged in food products 138
134
136
131
131
131
manufacturing, with the remainder employed in
the beverage sector. Regarding the number of
2013 2014 2015 2016 2017 2018e
enterprises, there were 1,632 companies in the
sector in 2018, accounting for 20% of all Food Production
operating units in the manufacturing industry, Beverage Production
according to EMIS Insights estimates. Share of Total Number of Manufacturing Enter prises
Number of Employees, year-end Employment Breakdown by Segment, 2017

172,163
166,220
163,497
158,008
151,707
Meat & Fish 36,370

146,973
Dairy 21,943
25.7% 26.2% Beverages 17,948

24.0% 24.4% 24.5% 25.1%
Flour Milling & Baker y 11,310
Oils & Fats 9,814

19,069
18,395
17,948
16,384
15,410
15,342
Sugar & Sugar Refineries 9,343
Fodder Manufacturing 8,720
2013 2014 2015 2016 2017 2018e Coffee Products 5,155
Food Production Fruits & Vegetables 4,224

Beverage Production Other Food Pr oducts 59,341
Share of Total Manufacturing Employment
Source: DANE, EMIS Insights

03
COMPETITIVE
LANDSCAPE

03 COMPETITIVE LANDSCAPE CONTENTS
Timeline Colombia
Food & Beverage 1889 Market Players
Bavaria SA was established.
1920 Market Players
Grupo Nutresa was founded

in Medellin.
1922 Market Players
Nestle entered Colombia.
1962 Development Milestones
Creation of Colombia's Agriculture

Institute (ICA).
1969 Market Players
Avidesa Mac Pollo SA is founded.
1976 Market Players
Agroguachal and INESA are founded.

1986 Market Players
Pollos el Bucanero is founded.
1993
INVIMA was created.
2003 Market Players
Development Milestones
Industria Nacional de Gaseosas was acquired
by the Mexican Coca Cola FEMSA.
2012 2013
FTA with the US. FTA with the EU.
Development Milestones Peace agreement with FARC.
The government starts the implementation of

the last phase of a strict sanitary regulation
2017 Market Players
introduced by Decree 1,500 of 2007, Decree
2,270 of 2012 and Decree 1,282 of 2016.
Cargill acquires Bucanero.
Cargill acquires Campollo SA.

2018 Implementation of multi-phase VAT

taxation on beer and soft drinks.
Source: MINAGRI, EMIS DealWatch, Company Data, International Centre for Trade and Sustainable Development, La Nacion,
Alimentos

Highlights
Highlights
Colombia’s food and beverage sector offers strong growth opportunities, benefitting from the better
macroeconomic conditions in the country, growing disposable incomes, and higher spending by the
rising middle class. Market players are looking not only at increasing their gains on the domestic
market through diversification and introduction of new products in order to satisfy the emerging
sophisticated demands of the population, but also at expanding their operations internationally. The
most attractive foreign markets remain the countries from Latin America, but some companies are
looking also at countries in Europe, Asia and North America.
Market Structure
The level of concentration in the food and beverage sector in Colombia differs depending on the
specific segment. In general, the industry is dominated by large international conglomerates, which
experience significant gains from economies of scale. Five companies – Nutresa, Bavaria, Postobon,
Coca Cola Femsa and Colanta – were responsible for 40.7% of total sales of the food and beverage
sector in Colombia, according to a May 2018 report of the Superintendence of Companies. The
beverage segment in particular is highly concentrated, with Bavaria SA controlling more than 95% of
the domestic beer market as of March 2019, according to BMI research. Moreover, the company owns
45% of the country’s second largest brewery – Leona – which has operations in Ecuador, Peru, Panama
and Venezuela. The least concentrated segment in Colombia’s food and beverage industry remains
fisheries production, which is dominated by small family producers that lack resources for expansion
and investment in new technologies.
Market Players
Among the top 15 companies by operating revenues in the sector in 2018, four were beverage
producers. Bavaria SA, a unit of the UK-based group SABMiller, remained the largest entity, generating
COP 4.6tn in operating revenues in 2018. It was the only company in the food and beverage industry to
generate revenues above COP 2.2tn. The dairy segment is also dominated by a few large players,
among which are Alpina Productos Alimenticos SA and Cooperativa Colanta. Together, the two
companies control about 60% of the Colombian yoghurt market.
Market Entry
The Colombian food and beverage market is characterised by a significant foreign presence. The US-
based food conglomerate Cargill, for instance, has increased its presence on the domestic poultry
market in the last couple of years. After acquiring the Colombian producer Pollos el Bucanero SA in
June 2017, Cargill continued with the acquisition of the poultry processor Campollo in November 2018
for an undisclosed amount. Other international investors in the food and beverage industry include
Nestle, Danone, AB InBev, Mondelez International, and Minerva Foods, among others.
Source: Fitch Solutions, EMIS Insights, La Republica

Top Companies
Top Companies in Colombia’s Food and Beverage Sector by Operating Revenues,*
2018
Operating Revenues 2018,

Ranking Company Main Activity
COP bn
1 Bavaria SA Breweries 4,582.2
2 Cooperativa Colanta Dairy Product Manufacturing 2,245.2
Beverage Manufacturing, Dairy Product

3 Alpina Productos Alimenticos SA 2,104.0
Manufacturing
4 Federacion Nacional de Cafeteros de Colombia Coffee and Tea Manufacturing 1,845.2
5 Colombina AS Chocolate and Confectionery Manufacturing 1,839.3
6 Riopaila Castilla AS Chocolate and Confectionery Manufacturing 901.4
7 Compania Nacional De Chocolates SAS Chocolate and Confectionery Manufacturing 894.0
8 Mayaguez AS Sugar Manufacturing 806.0
9 Compania De Galletas Noel SAS Other Food Manufacturing 784.9
10 Industria Colombiana De Café SAS Coffee and Tea Manufacturing 763.9
11 Gaseosas Hipinto SAS Soft Drink Manufacturing 494.8
Starch and Vegetable Fats and Oils

12 Oleoflores SAS 406.3
Manufacturing
13 Grasas Y Aceites Vegetales Limitada Other Food Manufacturing 333.0
14 Industria Licorera De Caldas Distilleries 214.7
Cooperativa de Productores de Leche de la Costa

15 Food Manufacturing 203.8
Atlantica Ltda
* NAICS codes: 311, 3121
Data based on individual financial results. Grupo Nutresa not included as it presents only consolidated statements
for the conglomerate.
Source: EMIS Insights

M&A Deals 2017-2018

M&A Deals in Colombia’s Food and Beverage Sector,* 2017-2018
Country of Deal Value, Stake,

Date Target Company Deal Type Buyer
Buyer USD mn %
Productos Naturales de la Sabana SA International Finance 20.0

Oct 2017 Minority stake United States n/a
(Alqueria) Corporation (IFC) (Official data)
1.07
Aug 2018 Productos Naturela SAS Acquisition Grupo Nutresa SA Colombia 60.0
(Official data)
Dec 2018 Mezclas Biomix SA Acquisition Neovia France n/a n/a
Nov 2018 Campollo SA Acquisition Cargill Inc United States n/a n/a
Oct 2018 Inversiones Vallejuelo SAS Acquisition Griffith Foods International Inc United States n/a 60.0
Alpina Productos Alimenticios

Sep 2018 Azul Nevado SAS Minority stake Colombia n/a n/a
AS
The operations of Terrafertil AS in Chile,

Feb 2018 Acquisition Nestle SA Switzerland n/a n/a
Colombia, Ecuador, Mexico
United Arab
Oct 17 QBCo SAS Acquisition The Abraaj Group Ltd n/a n/a
Emirates
Bodegas Las Copas; Emperador Spain,

Jun 2017 Brandy business of Pernod Ricard Acquisition n/a 100.0
Inc; Gonzalez Byass AS Phillippines
Jun 2017 Pollos el Bucanero SA (Bucanero Chicken) Acquisition Cargill Inc United States n/a n/a
Alpina Productos Alimenticios

May 2017 Don Maiz SA Acquisition Colombia n/a n/a
SA
Apr 2017 Certain assets of Indagro SA Acquisition Quimpac de Colombia SA Colombia n/a 100.0
Bimbo de Colombia SA; Grupo Colombia,

Jan 2017 Frescongelados Panettiere SA Acquisition n/a 100.0
Bimbo SAB de CV Mexico
*NAICS codes: 311, 3121
Source: EMIS DealWatch

M&A Activity, 2017-2018
Number and Value of Deals,* 2017-2018 Deals by Deal Type
7
6
Acquisition
84.6%
20
Minority
Stake
Purchase
15.4%
1
2017 2018
Value of Deals, USD mn Number of Deals
* NAICS codes: 311, 3121
Deals by Region of Investor Deals by Deal Value, USD
EMEA 30.8%
0-50mn;
15.4%
North
America
30.8%
Undisclosed;
84.6%
Colombia
38.5%
Source: EMIS DealWatch

04
COMPANIES
IN FOCUS

04 COMPANIES IN FOCUS CONTENTS
Bavaria SA
Highlights Income Statement, Consolidated, COP bn

Bavaria SA was established in 1889 by Leo
Sigfried Kopp and the Castello brothers as a beer 45.0%
producing company. The UK-based beer and soft 38.7%

drinks group SABMiller acquired a controlling
stake in the company in 2005. In 2016, the group 31.7%
was bought by the Belgian-Brazilian brewing
3,328
7,387
group Anheuser-Busch InBev SA (AB InBev), which
6,729
2,607
2,531
became the owner of Bavaria SA with a share of
1,932
5,179
1,640
1,321
99.1% in the company’s capital.
Bavaria’s operations are mainly focused on the

production of beer. The company is also active in
the soft drinks, juices and water bottling 2016 2017 2018
segments. Bavaria is engaged in the acquisition, Net Revenues EBITDA

Net Pr ofit EBITDA Margin
marketing, distribution, export, storage and sale
of its own products and those of other beverage
manufacturers. The company’s brands include Balance Sheet, Consolidated, COP bn
Aquila, Budweiser, Corona, Pilsen, poker, Stella
Artois, Cola & Pola, and Pony Malta. In Colombia,
the company owns six brewing plants and two
malt plants. In 2018, the company had 4,000
direct employees.
11,529
10,985
In 2018, Bavaria remained the leader in the

7,412
6,490
beverage segment in Colombia and the largest

4,347
4,062
company in the food and beverage sector in

terms of operating revenues. The company
-39
-303
-1,049
registered net revenues of COP 7.4tn, an increase 2016 2017 2018

of 9.8% y/y, while its net profit grew by 31% in
comparison to 2017, reaching COP 2.5tn.
Total Assets Shareholders' Equity
Net Debt Net Debt/EBITDA
Source: Company Data, EMIS Company Database

Bavaria SA
(cont’d)
Highlights Net Revenues Evolution, y/y change

In 2018, Bavaria’s sales costs registered a
decrease of 20.2% y/y, while its operating 95.0%
expenses fell by 37.8% y/y, mainly due to lower
distribution and merchandise costs and a more
efficient organisation structure derived from the
integration processes of the company. The total
sales volume of Bavaria grew by 5.8% y/y in 2018,
driven by an increase in the beer segment of 8.1%
y/y, while the malt segment registered a fall of 29.9%
12.6% y/y in sales volume. An improving

9.8%
macroeconomic environment in 2018 in terms of
higher GDP growth, lower inflation and decrease 2016 2017 2018
in the Central Bank’s monetary policy rate were
among the main driving factors for Bavaria’s rise
in volumes sold. Net sales on the other hand, fell
by 11.5% y/y, due to the higher discounts granted
to related companies. In September 2018, Bavaria Net Sales by Type of Product in Value
announced an investment of USD 95mn in Terms, 2018
innovation and technology in each of the regions
it operates in order to diversify and innovate its
Beer 90.1%
product portfolio, create new production lines,
install new infrastructure to optimise operational
processes, and boost plant productivity. The
highest investment of USD 31.8mn will go to
Cerveceria Aguila de Barranquilla for the Malt 6.5%
construction of a new production line. The

Tibasosa Brewery in Boyaca will receive an
investment of USD 17mn for the creation of the Services and
largest can line in Colombia. The plants in Others 3.5%
Tocancipa and Bucaramanga will receive
investments in upgraded equipment.
Source: Company Data, Semana, Dinero

Grupo Nutresa SA

Grupo Nutresa is a food manufacturing company
established in 1920 in the city of Medellin. In 12.5%
2018, the company had a 59.2% share of the

domestic food market in value terms, according
to the company’s own estimates. Grupo Nutresa
8,696
operates as a holding comprised of nine business
9,016
12.0%
8,677
divisions – cold cuts, biscuits, chocolates, coffee,

ice cream, pasta, food retail and the subsidiary 11.9%
Tresmontes Lucchetti, a food and beverage
1,126
1,044
1,029
producer located in Chile.
509
424
400
At the end of 2018, Grupo Nutresa had 46

production plants, 30 of them in Colombia, five in 2016 2017 2018
Central America, three in Chile, two in the United Net Revenues EBITDA
States, two in Mexico, and one unit in each of the
Dominican Republic, Venezuela, Peru and
Malaysia. In 2018, the company had direct Balance Sheet, Consolidated, COP bn
presence in 14 countries, and 44,999 employees
around the world, of which 72.6% were in 2.8
Colombia. 2.5
The company’s shares are traded on the 2.2
Colombian Stock Exchange. Its market

capitalisation stood at COP 11.4tn as of May 2019.
14,310
13,700
13,524
In 2018, the net revenues of Nutresa stood at COP

8,950
8,335
9tn, an increase of 3.7% compared to 2017, as a

8,385
result of the better economic conditions in

2,906
2,596
2,441
Colombia. The best-performing segment in 2018

was the chocolates category, registering a 6.1% 2016 2017 2018
y/y increase in sales value, followed by the food Total Assets Shareholders' Equity
retail segment with a 5.8% y/y growth.
Source: Company Data

Grupo Nutresa SA
(cont’d)
Highlights Sales Value by Product Type, 2018

Nutresa’s sales on the domestic market in 2018 Beverages
reached COP 5,737bn, rising by 4.4% in 22.7%
comparison to the previous year, following a 2.1%
y/y increase in the volume sold and a 2.0% y/y
rise in prices. In 2018, 63.6% of Grupo Nutresa’s Sweets and
total sales were on the internal Colombian Snacks
17.3%
market.
The international sales of the company totalled

COP 1,109bn in 2018, an increase of 2.3% y/y,
accounting for 36.4% of the company’s total sales
value that year. Others 6.0%
Food 54.0%
In 2018, in line with a significant growth of 3.7%
y/y in its net revenues and a favourable
macroeconomic environment, the company’s
EBITDA rose by 7.9% y/y, reaching COP 1,126bn.
Sales by Country, 2018
In March 2018, Nutresa, together with the
Central America
domestic dairy firm Alpina, confirmed the
9.6%
acquisition of a majority stake in food
Chile 8.1%
distribution company Atlantic Food Service.
Nutresa will enter the deal with COP 42bn,
acquiring a share of 51%, while Alpina will United States
7.3%
contribute with COP 15.6bn, securing a stake of
19%. Atlantic Food Service has warehousing Mexico 3.6%
capacity that exceeds 1,600 tonnes for cold Peru 2.3%
storage products and 500 tonnes for dry storage
Colombia
products in Colombia, and has operations in more Others 5.5%
63.6%
than 20 countries around the world.
Moreover, in 2019, the group intends to invest

USD 50mn in the first stage of the Nutresa
Ventures initiative aimed at funding small
businesses.

Colombina SA

Colombina SA was established in 1927 as a
company specialising in the production of sweets 12.5%
11.8% 11.9%
and chocolates. In 1986, Colombina entered the
biscuit manufacturing segment through the
acquisition of the domestic company Splendid.
In 2013, Colombina acquired another local player,
1,810
1,749
1,727
C.I. Comexa SA, owner of the Amazon brand for
spicy products registered in 40 countries. During
the same year, Colombina signed a strategic
219
216
205
agreement with Liv-Smart, a manufacturer
57
41
33
headquartered in Guatemala and focused on the
production of healthy drinks, for the 2016 2017 2018
development, manufacturing, marketing and Net Revenues EBITDA

distribution of Liv-Smart branded drinks in
Colombia.
At the end of 2018, Colombina owned five Balance Sheet, Consolidated, COP bn
production plants in Colombia – for candies,
biscuits and pastry, sauces and canned food, ice 3.76 3.75
creams, and for Amazon-branded sauces. The
company also has a manufacturing plant in
Guatemala, which was established in 2001. Since
2016, Colombina controls 100% of this plant.
1,517
1,427
1,416
In 2018, Colombina’s net revenues stood at COP

1.8tn, an increase of 4.8% compared to 2017, 3.3
mainly driven by the revival of the Colombian
809
769
732
economy. Domestic sales grew by 4% y/y in

volume terms. In line with the increase in net
237
209
218
revenues of the company during 2018, its EBITDA

2016 2017 2018
rose by 5.4% y/y, reaching COP 215.5bn.
Total Assets Shareholders' Equity

Colombina SA
(cont’)
Highlights Net Sales Evolution, y/y change

Ice cream was the best performing product group
in 2018 with a 7% y/y rise in net sales, followed 8.6%
by biscuits whose sales value grew by 6% y/y. The
worst performing segment was the canned food
category, registering a drop of 7% y/y in net sales,
4.8%
driven mainly by the lower volumes sold on the
domestic market.
In 2018, the company made a strategic decision

to diversify its operations by entering the energy
trading business through a new company – -1.3%
Colombina Energia SASESP – with an investment 2016 2017 2018
of COP 500bn. The newly created distribution
company will be 100% controlled by Colombina,
and will be devoted to the generation and
commercialisation of all kinds of energy.
Moreover, the Colombina continued its Colombina Net Sales by Market, 2018
100% campaign – products free of dyes, artificial
flavours and rich in nutritional benefits. The
consolidated sales of these products recorded a
Foreign
growth of 9% y/y in 2018 (26% y/y on the
Market
international market and 7% y/y in Colombia). 39.4%
In 2018, the company was recognised as one of

the most sustainable firms in the world for the
sixth consecutive year. More specifically,
Colombina ranked seventh out of 91 companies in
Domestic
the global food industry in the RobecoSAM 2019
Market
sustainability report, which assessed 2,686 60.6%
companies from 60 industries on criteria related
to corporate sustainability.
Source: Company Data, RobecoSAM

Industria Nacional
de Gaseosas SA
Highlights Income Statement, Individual, COP bn

Industria Nacional de Gaseosas was founded in
1940 as a producer of soft drinks. In 2003, the 8.9%
company was acquired by the Mexican bottling
company Coca-Cola FEMSA.
Industria Nacional de Gaseosas ended 2018 with 5.8%

1,762
1,523
1,486
a total of seven bottling plants in Colombia – in
Bogota, Medellin, Bucaramanga, Barranquilla, Cali
133
and La Calera – as well as 24 distribution centres,
89
376,042 sales points, and 5,182 employees. In
2017, the company invested USD 340mn in a new
-19
-108
-144
-181
bottling plant in Tocacipa, one of the most
modern plants in Latin America. As of October 2016 2017 2018
2018, the plant was responsible for 40% of Coca- Net Revenues EBITDA
Cola FEMSA’s sales in Colombia.
The portfolio of Industria Nacional de Gaseosas

includes soft drinks under the brands of Coca- Balance Sheet, Individual, COP bn
Cola, Coca-Cola Light, Coca-Cola Vanilla, Fanta,
Kola Roman, Lift, Premio, Quatro and Sprite as 4.1
well as bottled waters under the brands of Club K,
Manantial, Santa Clara and Soda Clausen.
In 2018, soft drinks accounted for 76.5% of total

2,081
1,954
1,908
production, followed by bottled and flavoured

361
waters at 17% and non-carbonated drinks with a

1,022
943
190
762
share of 6.5%. In 2018, the net revenues of

Industria Nacional de Gaseosas stood at COP
-11
-0.1
1,486bn, a decrease of 2.4% compared to 2017.
This fall was much less than the observed 2016 2017 2018
negative performance of the company’s net Total Assets Shareholders' Equity
revenues in 2017, which registered a fall of 13.6%
y/y, driven by lower domestic demand for
beverages.
Source: EMIS Company Database, Coca-Cola FEMSA

Industria Nacional
de Gaseosas SA
(cont’d)
Highlights Profitability Ratios
The overall performance of Industria Nacional de
Gaseosa in 2018 was slightly better than in 2017.
In 2018, the company registered a net loss of COP
107.7bn, after a loss of COP 180.8bn in 2017.
-5.5%
-6.9%
-7.3%
-8.2%
In 2018, Industria Nacional de Gaseosas started a
-9.5%
-10.5%
sustainability-oriented campaign to encourage
-11.9%
Colombians to adopt the culture of returnable
-15.3%
packaging. The company introduced the use of

returnable bottles, which can be refilled
approximately 10 to 15 times in the case of -23.7%
returnable plastic bottles and up to 50 times for
returnable glass bottles. Currently, this type of 2016 2017 2018
packaging represents 33% of total Coca-Cola Return on Assets Return on Equity Return on Sales
beverage transactions sales in Colombia. The

company's goal is to collect and recycle 100% of
its bottles by 2030. Net Revenues Evolution, y/y change
Moreover, in 2018, the company continued with
its strategy of adopting sustainable practices and
-2.4%
reducing power consumption in its seven
Colombian plants. Industria Nacioal de Gaseosas
signed a 15-year supply contract with the
Colombian public utilities company Empresas -8.6%
Publicas de Medellin for equipping its plants with
renewable energy sources. The goal of the
bottling firm is to decrease its carbon footprint -13.6%
and energy consumption in Colombia by 28%,
reaching the sustainability levels of its 2016 2017 2018
operations in Argentina, Brazil, Mexico and
Panama.
Source: Company Data, Coca-Cola FEMSA

Riopaila Castilla SA

Riopaila Castilla was established in 2007 after the
merger of the domestic sugar mills Riopaila
16.1%
Industrial SA and Castilla Industrial SA. The
company concentrates on the manufacturing and
11.0%
sale of sugar, sweeteners, syrups and alcohol
fuel. It had 2,430 employees at the end of 2018.
1,119
931
886
Since 2015, Riopaila Castilla has also been active
180
in the segments of biofuel manufacturing and
102
power generation, through its cogeneration plant
60
in Valle del Cauca department. The construction
-3
of the plant required an investment of USD 59mn.
-41
-86
In 2018, it produced 293,829 MW of energy. In 2016 2017 2018
2018, the net revenues of Riopaila Castilla stood Net Revenues EBITDA
at COP 886.2bn, 4.8% less than in 2017. The Net Pr ofit EBITDA Margin
negative performance in 2018 also materialised
as a net loss of COP 86bn, while in 2017 the net
loss was COP 40.5bn. According to company data, Balance Sheet, Consolidated, COP bn
the net loss was due to lower international and
national sugar prices, unfavourable weather 5.5
conditions and higher costs.
In November 2018, Riopaila Castilla announced

the start of the Riopaila-Castilla Organic Sugar
1,507
1,345
1,298
project in the department of Valle del Cauca in 2.4
the Castilla Plants located in Pradera, and in the

Riopaila plant in La Paila, department of Zarzal. A
589
561
520
487
441
393
total area of 180ha will be dedicated to the

organic project. According to the estimates for 2016 2017 2018
the first stage of the project, 2,000 tonnes of
organic sugar will be produced per year. The Total Assets Shareholders' Equity
initiative is part of the company’s commitment to
sustainability and its aim to enter the European
sugar market by 2021.

Riopaila Castilla SA
(cont’d)
Highlights Profitability Ratios

Riopaila’s goal for the next few years is to
11.5%
11.5%
continue growing, with the intention to diversify
4.5%
its portfolio of products with bioenergy,
0.3%
commodities, and fruits and vegetables markets
by 2025, which will be managed through
specialist business units.
-2.7%
-21.9%
-6.6%
In 2018, Riopaila implemented the “Integral
-7.7%
-8.3%
Development and Commercialisation of Family
Farming Production of the Producers of Pueblo
Nuevo” project to support economic development
2016 2017 2018
and family farming in the rural area of the
municipality of Florida in the department of Valle
del Cauca. The project was developed together Return on Assets Return on Equity Return on Sales
with the Caicedo Gonzalez Riopaila Castilla

Foundation and involves the construction of a
collection centre for the production of bananas Net Revenues Evolution, y/y change
and plantains. The total investment for the
project is valued at USD 450mn, of which USD
385mn was provided by the Colombian
15.3%
government, while Riopaila entered with an
investment of USD 64mn.
-4.8%
-16.9%
2016 2017 2018

05
REGULATORY
ENVIRONMENT

05 REGULATORY ENVIRONMENT CONTENTS
Key Regulatory Bodies
National Institute for the Surveillance of Food and Medicine (INVIMA)

The National Institute for the Surveillance of Food and Medicine (INVIMA) was established in 1993. Its
main function is to monitor and control the quality of food for human consumption and to verify the
sanitary conditions in which it was produced and/or processed. It also has to certify the good
practices and sanitary conditions of the establishments producing food for human consumption,
provide technical assistance and advise national entities in the proper application of standards and
procedures related to health surveillance and quality control, conduct control over the advertising of
food products, carry out health awareness campaigns for consumers, harmonise and establish
equivalence of standards with countries with which Colombia has commercial relations in the food
industry, and grant sanitary approvals for the import and export of food products. All food products
for direct sale to end consumers in Colombia must have a sanitary registration with INVIMA, except
for products that have not been processed, for example fresh fruits and vegetables, grains, raw
materials for food preparation and food products of animal origin that have not been processed, such
as chilled or frozen meat. Product registration is also mandatory for imported food products.
Colombian Institute for Agriculture and Livestock (ICA)

The Colombian Institute for Agriculture and Livestock (ICA) was created in 1962 with the objective to
coordinate and intensify the research and development of the agriculture sector in the country in
order to boost all activities in the sector and facilitate agrarian social reform. Currently, the ICA is the
entity in charge of the implementation of policies and practices related to the eradication of diseases
in animal herds and agricultural crops in the country. In addition, ICA performs inspections of all
imported products of animal and plant origin. The Plant Protection Division of the ICA is responsible
for guaranteeing agricultural health in the country and for reducing the risk of the emergence and
dissemination of pests and diseases in order to ensure phytosanitary quality and safety of products
of plant origin. The Division establishes the phytosanitary status of the country and coordinates
programmes related to this status. The Animal Protection Division is responsible for the formulation,
preparation and development of plans and programmes related to the protection of animal health in
order to ensure the safe use of animal inputs, to promote safety in the manufacturing process of
products of animal origin, and to improve the productivity of the domestic livestock sector. The
Sanitary and Phytosanitary Division establishes the guidelines for all risk assessment studies on all
animal and plant products intended for the market.
Source: INVIMA, ICA, USDA

Key Regulatory Requirements
Value Added Tax

Value added tax (VAT) was introduced in Colombia in 1963. It is an indirect national tax on the
consumption of goods and services applied at different stages of the production value chain. As of
February 2017, the general VAT rate in the country is 19%. There are a number of goods with a lower
VAT rate or that are fully exempt from it. Currently, there is no VAT on the sale of live animals, live
and unprocessed fish and fish products, fresh fruits and vegetables, fresh or refrigerated meat, eggs,
cheese, unroasted coffee, and some selected handmade food products. Some goods and services fall
under special VAT rates. Roasted and decaffeinated coffee, wheat, oats, maize and rice for industrial
uses, sausages and mortadella are taxed at a VAT rate of 5%.
In November 2018, the Colombian government announced a change in the value added tax on beer
and fizzy drinks. The measure was approved by the Joint Economic Commissions of the Colombian
Congress (Senate and Congress) in December 2018 and was established to come into effect on 1
March 2019. Until then, the VAT on beer and soft drinks was a single-phase tax, imposed on the
produced beverages when they were leaving the factory. The change, however, implies a multi-phase
VAT, which will be extended to all stages of the supply chain – from production to final consumption,
extending the tax burden to wholesalers and retailers.
The tax policy change is expected to increase costs for end consumers. According to the financial
auditor Tributar Consultores, this increase could reach between 10% and 15%, depending on the
characteristics of the supply chain. Coca-Cola FEMSA estimates a decrease in sales by 20% due to the
new VAT legislation. The government projected an increase in tax revenues of COP 960bn. The
measure was approved after the rejection of a bill suggesting an increase of VAT rates on many basic
products from the consumer basket.
Foreign Trade
According to the Colombian Ministry for Agriculture, as of June 2018, Colombia has preferential tariff
access for food with 60 countries, 35 more than in 2010. In May 2018, the Food and Agriculture
Sanitary and Quality Control Service of Argentina (SENASA) allowed the import of Colombian
pineapple and in June 2018 included bananas to the permitted imports from Colombia. Moreover,
foot-and-mouth free beef can be exported from Colombia to China. In March 2018,
the Israeli State Veterinary Services and Animal Health (VSAH) confirmed the approval of the official
inspection system of Colombian meat, which authorised Colombian beef producers to export meat
products to Israel. The approval of beef access to Israel is the result of six years of work and
negotiations by the Colombian authorities and increases the total number of open markets for the
export of Colombian beef to 16 countries.
Source: INVIMA, El Espectador, El Colombiano

Key Regulatory Requirements (cont'd)
Sanitary Regulation
In August 2016, Colombia’s government began the implementation of the last phase of the strict
sanitary regulation introduced by Decree 1,500 of 2007, Decree 2,270 of 2012 and Decree 1,282 of 2016.
The goal of the regulation is to modernise the domestic meat segment and to improve sanitary
standards in order to stimulate exports. Decree 1,500, in particular, establishes the sanitary and safety
requirements that must be met by meat and edible meat products destined for human consumption
in its primary production, processing, storage, transport, commercialisation, sale, import or export.
The final phase of implementation seeks to reduce the cases of diseases transmitted by food and the
cases of acute and chronic poisoning with chemicals, including antibiotics, anabolic and heavy metals
associated with the consumption of meat. INVIMA is the entity in charge of monitoring and
controlling the transformation process of the meat production chain in the country. In June 2018,
INVIMA estimated that there are 240,000 cases of diseases transmitted by food and cases of
poisoning with antibiotics and heavy metals associated with the consumption of meat in Colombia
per year.
According to the legislation, all establishments dedicated to animal slaughtering, production and
processing of meat and meat derivatives must be registered with INVIMA. They are also required to
submit a Gradual Compliance Plan (PGC) that will be evaluated through a visit from representatives of
INVIMA. The PGC is a technical document that determines the initial state of the animal processing
plant and proposed projects for its further development. It must include technical designs, plans,
specifications of construction, budget and execution schedules, to be made available to INVIMA. In
addition, these establishments must create a Safety Assurance System that consists of requirements
such as health performance standards, standardised operating procedures for sanitation (POES),
hazard analysis and critical control point systems.
Since the beginning of the implementation of the last phase of Decree 1,500 in 2016, establishments
that did not comply with the requirements had a maximum period of two years for the fulfillment of
the Decree, which expired at the end of 2018. According to the legislation, if the deadline was not
fulfilled, the production unit will have to cease operations. In 2018, as a result of the actions of
INVIMA against illegal slaughtering and meat production, 41% of the plants dedicated to cattle
slaughter (or 218 slaughterhouses) were closed in accordance with Decree 1,500. The initiative,
however, led to even higher informality in the segment, causing an increase in clandestine animal
slaughter and meat processing. Thus, the informal domestic meat production remains a considerable
challenge for the Colombian government.
Source: INVIMA, CCB

06
OILS
& FATS

06 OILS & FATS CONTENTS
Highlights
Overview
Colombia remains the fourth largest palm oil producer in the world after Indonesia, Malaysia and
Thailand, according to May 2019 estimates by the USDA. Over the period 2013-2018, Colombia’s crude
palm oil production grew at a CAGR of 9.4%, while palm kernel oil output registered a CAGR of 7.8%.
After a year of record output of the segment, in 2018 production volumes remained stable. Crude palm
oil production remained at 1.6mn tonnes, registering a slight increase of 0.09% y/y, as a result of the
delayed negative impact of the El Nino phenomenon observed in 2015 and 2016. The Central, North
and South-West regions registered growth in crude palm oil production volumes in 2018, while there
was a decrease in output in the East region, whose participation in total domestic production fell
from 44% in 2017 to 41% in 2018. In terms of domestic sales, both crude palm oil and palm kernel oil
registered a drop in 2018 of 5.89% y/y and 10.77% y/y, respectively.
Challenges
The challenges that Colombia’s palm oil sector faced in 2018 were related to the drop in international
prices, the devaluation of the COP against the USD, the disorder in local marketing due to new
regulatory provisions, and increased imports from Ecuador. After losing access to the Venezuelan
market, Colombia was the next best option for Ecuadorian palm oil, considering the better market
conditions and the higher prices of this product. Another challenge for the Colombian oils and fats
segment is related to campaigns against its edible consumption in some European countries, such as
France, Italy, Spain, and England, where products appear with labels stating it is "palm oil free".
Moreover, the new Renewable Energy Directive of the European Union, approved in January 2018,
qualifies palm oil as "high risk" of indirect change in land use and bans its use for the production of
biodiesel.
Outlook
According to a Fitch Solutions forecast from March 2019, Colombia’s oils and fats segment will reach
sales value of COP 7,841bn in 2023, increasing at a CAGR of 4.5% between 2019 and 2023. The
consultancy estimates sales value to reach COP 6,658bn in 2019, registering an increase of 8.1% y/y,
driven mainly by the expected increase in prices. In terms of production, FEDEPALMA projects it to
exceed 1.7mn tonnes in 2019, registering a growth of 5% y/y. The federation also estimates that, in
2019, global supply of oils and fats will drop as a result of a fall in output from Malaysia and
Indonesia, while global demand is expected to grow due to the higher consumption of palm oil
directed to the biodiesel industry, especially in China.
Source: FEDEPALMA, USDA, Fitch Solutions, La Opinion

Main Events
§ In April 2019, the Colombian company Castor Oil announced its intention to raise USD 10mn in
order to invest in the construction of a new industrial complex for castor oil to start operating in
the second half of 2021. The crushing plant is estimated to process 600 tonnes of grains per day
and construction is expected to be initiated at the beginning of 2020. The project is part of the
company’s goal to plant 10,000ha of area and process 20,000 tonnes of grains in the period 2020-
2021. Previously, Castor Oil made three rounds of investment worth USD 1.1mn in research and
development.
§ In March 2019, the Agrarian University of Colombia (Uniagria), with the support of the Corporation
for Industrial Development of Biotechnology and Clean Production (CORPODIB), implemented a
revolutionary project in the biodiesel sector. The project involved the construction of a biodiesel
production plant, using palm oil as the main raw material. The plant will be available to students
on campus, to learn and make fuel from palm oil, as part of the country’s efforts to take advantage
of different sources of fats and oils to produce cleaner fuels.
§ In November 2018, FEDEPALMA, the Netherlands Oils and Fats Industry (MVO), the Solidarity
Network, and the Sustainable Trade Initiative (IDH) signed an agreement to gradually increase
production and international trade in sustainable palm oil between Colombia and the Netherlands.
The agreement accompanies the goal of using 100% sustainable palm oil in Europe by 2021. The
document establishes a bilateral cooperation to increase Colombian exports of sustainable palm
oil. The Netherlands is the largest importer of palm oil in Europe, while about 70% of Colombia's
palm oil exports have this continent as their main destination.
§ In October 2018, FEDEPALMA, in collaboration with its research unit CENIPALMA, launched a
research centre in the department of Magdalena. The initial investment required for the new
facility was valued at COP 16bn and an additional investment of COP 13bn will be necessary in the
mid-term. The plant has 410ha of plantations, where research will be conducted on water
management, irrigation and palm oil productivity.
Source: La Republica, Agronegocios, FEDEPALMA

Production
Production Evolution, thou tonnes
7,531
7,524
5,937
5,423
5,212
4,843
1,628
1,629
1,275
1,146
1,111
1,041
328
329
270
242
238
226
2013 2014 2015 2016 2017 2018

Pr ocessed Fruit Crude Palm O il Palm Kernel Oil
Production Value, current prices, COP Comments

mn After a year of record palm oil production, in 2018
the oils and fats segment in Colombia remained
3,726
stable. Crude palm oil output increased by a
419
negligible 0.09% y/y, while palm kernel oil grew by
2,702 2,664 2,644
2,461 2,431 0.12% y/y. The lack of significant upward
174
movement in the segment’s production was the
232 291
161 217 result of atypical growth observed in the previous
year and the delayed negative impact from the El
3,307
Nino phenomenon of 2015 and 2016. In terms of
productivity, both crude palm oil and palm kernel
2,528 2,432
2,300 2,214 2,353 oil yields fell by 7% y/y in 2018. The negative
impact of this decrease in production, however,
was outweighed by an increase in the planted area
by 4% y/y. Domestic sales of crude palm oil, on the
2012 2013 2014 2015 2016 2017 other hand, fell by 5.3% y/y, while that of palm
kernel oil decreased by 11% y/y. This negative
Crude Palm O il Palm Kernel Oil Total performance was driven mainly by a significant
drop of 22% y/y in sales to the food segment.
Source: FEDEPALMA/SISPA

FOCUS POINT
Crude Palm Oil Production by Region, 2018
North Region
Central Region
Production: 421,368 tonnes
Share of Total: 25.9% Production: 498,755 tonnes
Share of Total: 30.6%
East Region
South-West Region

An EMIS Insights Industry Report from 104.207.138.102 on 2020-03-09 20:34:40 GMT. DownloadPDF.
EMISPDF co-externadouniv
Sales and Prices
Domestic Sales Evolution, thou tonnes Sales by Region in Volume Terms, 2018
2.3%
874
858
848
815
30.0%
767
748
31.0%
25.8% 35.9%
40.8%
34.1%
39
35
26
24
20
17
2013 2014 2015 2016 2017 2018 Crude Palm O il Palm Kernel Oil
Crude Palm O il Palm Kernel Oil East Nor th Central South-W est
Average Price of Crude Palm Oil Average Price of Palm Kernel Oil
2,357
2,207 2,266 4,458
2,185 4,245
1,788
1,670 23.4% 3,346
3,159
2,282
7.1% 6.8% 1,637 39.4% 38.4% 41.1%
-4.0% -4.0% -5.0%

-22.7% -20.0%
-14.1%
2013 2014 2015 2016 2017 Jan-Sep
2013 2014 2015 2016 2017 2018 2018
Value, COP/thou tonnes y/y change Value, COP/thou tonnes y/y change

External Trade
External Trade in Oils and Fats, USD mn
893
876
858
820
810
802
723
722
718
698
647
524
65 35
-4
-122 -155
-199
2013 2014 2015 2016 2017 2018
Exports Imports Trade Balance
Comments
Oils and fats production is one of the major exporting segments of Colombia’s food and beverage
industry. In 2018, export volume reached 884,654 tonnes, registering an increase of 23% y/y. Export
value, however, grew by just 2% y/y, reaching USD 893mn as a result of the falling international prices
of palm oil. Crude palm oil remains the main export product for the segment, responsible for 43% of
total export value in 2018. The EU countries are the main destination for Colombian palm oil, with the
Netherlands being the leading importer with a 23% share of Colombia’s palm oil exports in value
terms. Although Colombian palm oil has traditionally experienced preferential treatment in the
countries from the EU, the product is facing difficulties in the region due to campaigns against the
consumption of palm oil in some European countries, such as France, Italy, Spain and England.
Imports also increased in 2018, both in value and in volume terms, pushing the trade surplus of the
segment down by 46% y/y. The rise in imports was caused by growing imports of crude and refined
palm oil from Ecuador, due to the distortions existing on the local market in this country and the
better selling conditions for palm oil products in Colombia. Ecuador, however, was responsible for
only 19.6% of the total imported value of the oils and fats segment in 2018. The US was the main
country of origin of imports, accounting for 41.8% of the total imported value, while Bolivia increased
its participation from 19% in 2017 to 21% in 2018. Soybean oil was the most imported edible oil in
Colombia in 2018, responsible for 27.6% of total oil and fat import value.

Exports
Exports Evolution Exports by Product Type in Value Terms,

2018
884.7
875.5 893.1
718.9
718.0 Other
697.9
647.4 Vegetables
545.0 Oils 7.40%
501.7
524.2
366.2
285.5 Oil Palm
Products
85.50%
Animal Oils
and Fats
2013 2014 2015 2016 2017 2018 7.20%
Volume, thou tonnes Value, USD mn
Exports by Destination in Value Terms, Exports by Type in Value Terms, 2018

2018
Animal Oils & Other Refined
Spain 7.5% Mexico 5.9% Palm Kernel
Fats 7.20% Vegetable
Oil 7.10%
Oils 7.10%
Palm Oil in
Peru 8.2% Cookies Refined Palm
10.40% Oil 6.70%
Palm Kernel
Oil in
Brazil 10.4% Others Processed
33.2% Products
6.50%
Others 12%
Ecuador
11.5%
Crude Palm
Netherlands Oil 43.20%
23.3%

Imports
Imports Evolution Imports by Product Type in Value Terms,

2018
898.4
810.0
778.2
662.9 Crude Refined

651.5
Vegetable Vegetable
857.9 Oils 78.7% Oils 15.8%
525.2 819.5 801.9 810.4
722.7 721.7
Animal Oils &

2013 2014 2015 2016 2017 2018 Fats 5.4%
Volume, thou tonnes Value, USD mn
Imports by Country of Origin in Value Imports by Product in Value Terms, 2018

Terms, 2018
Crude Palm Refined
Ecuador Oil 18.0% Soybean Oil
19.6% 5.5%
Animal Oils
Bolivia
Crude and Fats 5.4%
21.0%
Soybean Oil
24.4%
Refined Palm
Oil 5.1%
Peru 4.3%
Brazil
Others
3.6%
14.0%
Others 9.7%
United States
41.8% Soybean Oil
27.6%

07
MEAT
& FISH

07 MEAT & FISH CONTENTS
Highlights
Overview
Over the period 2013-2018, the value of Colombia’s meat and fish production rose at an average
annual rate of 2.8%, while its sales value registered a slightly higher average growth of 2.9%. Pork
meat was the fastest growing category between 2013 and 2018, with an impressive CAGR of 7.8% in
terms of production and a CAGR of 9% in terms of consumption. Pork meat has become an important
part of Colombians’ everyday diet, driven by the competitive price of this type of protein and the
growing supply, coming from both domestic production and imports. At the same time, between 2013
and 2018, Colombia’s fish capture fell at a CAGR of 7.7%, because of the significant drop in 2016
caused by unfavourable weather conditions. As for external trade, the Colombian meat and fish
segment has a history of chronic trade deficit, driven mainly by the poultry and pork meat categories.
Drivers and Challenges

The major challenge for Colombia’s meat segment is the high degree of informality and the issues
related to health and sanitary standards. In 2018, 41% of the plants dedicated to cattle slaughter (or
218 slaughterhouses) were closed following the implementation of Decree 1,500, which aimed to
increase safety levels during the animal sacrifice process in order to prepare domestic production for
the international market. This Decree, however, led to an increase in clandestine slaughter and
pushed up the informality of the segment, which was already at a high level. Another impediment
facing Colombia’s meat segment continues to be its high dependence on imports, especially for
poultry and pork meat, as domestic demand goes on rising while production remains insufficient. On
the positive side, the economic stability of the country and growing consumer income have driven the
consumption of meat and fish products up, as animal protein has become an essential part of
Colombians’ diet.
Outlook
According to a Fitch Solutions forecast released in March 2019, the meat segment is projected to grow
at a CAGR of 9.1% between 2019 and 2023, and reach a sales value of COP 53,821bn in 2023. The
poultry and pork meat segments, as well as egg production, are expected to continue growing in
importance as part of the population’s diet, as disposable income increases following the projected
expansion of the domestic economy in 2019. The government, however, should take measures to
stimulate exports, especially of pork meat, in order to compensate for the chronic trade deficit in the
meat segment. Regarding the fisheries category, Fitch Solutions forecasts that fish sales will reach
COP 4,748bn in 2023, growing at a CAGR of 4.4% over the next four years.
Source: FEDEGAN, FENAVI, DANE, Fitch Solutions

Main Events
§ In April 2019, the Colombian fish and seafood company Antillana announced an alliance with the
Chilean smoking house South Wind. The partnership has the objective of promoting the
consumption of smoked fish in Colombia. Following the alliance, Antillana is expected to include
between 11 and 15 new products in its portfolio. The company currently holds a 45% share in the
smoked fish and carpaccio category in Colombia. Moreover, Antillana plans to launch a new
production plant in Cartagena in 2020, which will have a packaging capacity of 240,000kg of fish
per month and is expected to stimulate innovation and exports.
§ In December 2018, the Latin American protein division of the American agriculture and food
producer Cargill announced an investment of USD 500mn in Colombia by 2020. The investment
plan includes the acquisition of the Colombian poultry producers Bucanero and Campollo, as well
as allocation of resources to technology, capacity increase, and production improvement. Cargill’s
goal is to raise its current production capacity in Colombia of 100mn chickens per year by 50% by
2020. The two acquisitions gave Cargill a 15% share in Colombia’s poultry market, making it the
second biggest producer after Mac Pollo.
§ In June 2018, the Danish government announced an investment of more than COP 3bn to promote
Colombian pork production and open opportunities for reaching new international markets. The
investment is part of the second phase of an agreement signed by the Colombian Agriculture
Institute (ICA), the National Food and Drug Surveillance Institute (INVIMA) and the Danish
government. The first phase was executed between 2015 and 2018 and involved a technical
cooperation project on different health aspects of Colombia’s pork production. The second phase
includes a pilot programme for small-scale producers in rural areas, aimed at increasing their
productivity, stimulating the use of good production practices, and solving veterinary and sanitary
issues.
§ In March 2018, the Colombian government announced that cattle producers in the department of
Norte de Santander will receive support of COP 300mn to promote commercialisation of meat from
the region. The resources will be delivered by the Ministry of Agriculture and Rural Development
and are part of the government’s plan to boost livestock production in this department. Moreover,
in February 2018, the Project for the Improvement of the National Food Control and Safety System
was announced with the goal to improve beef production standards and boost Colombian beef
exports to the US. The project is being conducted by INVIMA, the Productive Transformation
Programme (PTP), and the Financial Fund for Development Projects (FONADE) and involves an
investment of COP 30,000mn.
Source: El Espectador, La Republica, Legis News, Ministry of Agriculture and Rural Development

Comments
In 2018, the meat and fish segment in Colombia performed better than the overall food and beverage
industry, with its real value added expanding by 5.5% y/y. In terms of real sales, the segment
registered a 4% y/y growth, reflecting the increasing importance of animal and fish protein for
Colombian consumers. The faster economic growth of the domestic economy in 2018 in comparison to
2017 led to a higher disposable income of the population and, in turn, a rise in the consumption of
animal protein. All meat sub-segments registered positive performance in 2018 in terms of both
production and sales. The best-performing category was pig production, registering growth of 7.6% y/y
in output and 12% y/y in consumption, driven by the high competitiveness of this type of protein on
the Colombian market. Poultry meat is gaining popularity among Colombians as well, with production
reaching 1.6mn tonnes in 2018. The lowest growth rates were registered in the beef category, the
output of which rose by 3.2% y/y, due to the difficulties related to an outbreak of foot-and-mouth
disease in some producing regions. Beef consumption has been losing popularity among consumers,
with a mere increase of 0.6% y/y. The fisheries segment, on the other hand, registered a significant
decrease in marine capture, while inland capture rose by 31.1% y/y in 2018.
Meat and Fish Production and Sales, y/y Meat and Fish Consumer Price Index, y/y
change change
6.6% 12.9%
12.2%
5.6% 5.5%
9.8%
3.5% 4.0%
3.4%
2.5% 4.8% 4.6%
1.8% 2.8% 3.6% 3.5%
1.3% 2.7% 1.4%
0.8% 1.3% 0.9%
-0.4% 2013 2014 2015 2016 2017 2018
-0.6%
2013 2014 2015 2016 2017 2018
Real Production Real Sales Meat & Meat Pr oducts Fish & Seafood
Source: DANE, Fitch Solutions

Beef
Comments Beef Production Evolution

The year 2018 was a hard period for the 955.9 941.3 942.3 910.1 905.6 935.0
Colombian beef segment. Health issues, including
4.4
an outbreak of the foot-and-mouth disease in
4.3
three producing departments across the country, 4.3
and various structural problems related to

smuggling and clandestine cattle slaughter, were 4.2 4.2
among the main issues faced by cattle producers.
The formal slaughter of beef cattle recorded a
4.1
growth of 3.1% y/y in terms of number of heads
and of 3.2% y/y in terms of volume. Nevertheless,
the number of slaughtered animals remains lower
than the record of 4.4mn heads of 2013. Apparent
consumption of beef meat, on the other hand,
registered a very slight increase of only 0.6% y/y, 2013 2014 2015 2016 2017 2018
affected negatively by the growing share of
Cattle Slaughtered, mn head
illegal meat production consumed domestically.
Beef Production, thou tonnes
Beef Meat Production by Department, Beef Consumption Evolution

2018
Cundinamarca 5.8% 19.7
0.6%
19.3 19.1
Caldas 5.4%
-1.0%
Others 18.6
42.1% -2.0%
-2.6% -2.7% 18.2
Santander
7.6%
18.1
-5.1%
Cordoba
7.6% 2013 2014 2015 2016 2017 2018
Beef Consumption, kg per capita y/y change

Bogota
15.8% Antioquia
15.7%
Source: FEDEGAN, DANE

Poultry
Poultry Meat Production
1,629.6
14.6% 1,563.6
1,478.9
1,424.4
1,359.2
1,274.3
6.7%
5.7%
4.8%
3.8% 4.2%
2013 2014 2015 2016 2017 2018
Poultry Meat Production, thou tonnes y/y change
Poultry Meat Consumption Comments

The poultry meat sub-segment in Colombia has
13.0% 34.4 gained importance in the last few years, driven by
33.0
30.4 31.1 the rising middle class and the growing disposable
29.3
27.8 income of the population. Domestic poultry meat
production rose at a CAGR of 5% between 2013 and
2018, reaching record levels in 2017. In 2018, the
category’s output registered a new record of 1.6mn
6.1%
5.4% tonnes, up 4.2% y/y. Domestic consumption of
4.2% poultry meat grew at a CAGR of 4.4% between 2013
3.8%
and 2018, reflecting the rising demand for this
2.3% type of meat among the population and the shift
towards a protein-rich diet. In 2018, consumption
reached 34.4kg per capita, 4.2% y/y more than in
2013 2014 2015 2016 2017 2018
2017, and is expected to continue rising in the next
Poultry Meat Consumption, kg per capita y/y change
few years.
Source: FENAVI

Eggs
Eggs Production
13,827.9 14,606.4
12,029.1 12,817.3
11,127.5 11,529.2 876.4
828.3
769.0
721.7
668.0 691.8
2013 2014 2015 2016 2017 2018
Volume, thou tonnes Volume, mn units
Annual Eggs Consumption Comments

The production of eggs in Colombia followed the
growth path of the poultry category, with the
293
279 number of eggs produced expanding at a strong
262
252 CAGR of 5.6% over the period 2013-2018. Eggs have
236 242
6.5% become an important part of Colombians’ diet due
to their high nutrition properties. In 2018, eggs
5.0% production reached a record 14.6bn units, 5.6%
4.1% 4.0% more than in 2017, while domestic eggs
3.5%
consumption was 293 units per capita per year, 5%
2.5% y/y more. These numbers make Colombia the
second largest egg consumer in Latin America,
after Mexico. Production remains concentrated in
the Valle del Cauca department, followed by the
2013 2014 2015 2016 2017 2018
Central region of the country.
Eggs Consumption, units per capita y/y change
Source: FENAVI

Pork
Comments Pork Production Evolution

Colombia’s pork meat category has been steadily
growing since 2010. Over the period 2013-2018 the 4,136.0 4,427.3
4,070.4
number of pigs slaughtered rose at a CAGR of
7.8%, reaching 4.4mn heads in 2018. In terms of 3,622.4
weight, output growth was 10.3% y/y, as the
3,227.7
average weight of pigs slaughtered was 3kg more 3,047.4
12.2% 12.4%
in comparison to 2017. There was a decrease in
2018 in average prices paid to producers of 8.1%
y/y, which generated concern amongst producers
and reduced their earnings. Domestic pig meat 7.0%
consumption rose by 12% y/y in 2018 and 5.9%
established itself at 10.3kg per capita. This
increase reflects the growing competitiveness of 2.8%
this type of protein in Colombia. The Antioquia 1.6%
region is the major consumer of pork meat in the

2013 2014 2015 2016 2017 2018
country, as well as the major producing region,
responsible for 45% of pork output. Pigs Slaughter ed, thou head y/y change
Pork Meat Production by Department, Pork Consumption Evolution

2018
Antioquia 44.8% 10.3
9.2
8.6
7.8
Bogota 17.5% 7.2
6.7
11.7% 12.0%
10.3%
Valle del Cauca 15.1% 8.3%
7.5% 7.0%
Meta 5.6%
Risaralda 5.1% 2013 2014 2015 2016 2017 2018
Pork Consumption, kg per capita y/y change

Others 11.8%
Source: DANE, PorkColombia

Fish (excl. Aquaculture)
Comments Fish Capture by Location, thou tonnes

In 2018, total fish capture in Colombia fell by 16%
y/y, registering 29,900 tonnes. This drop was 47.5
44.5 44.1
driven by the 22.8% y/y decrease in marine 9.1
35.6
9.1 9.2
capture, while inland capture recorded a growth 29.9
4.5
of 31.1% y/y. These numbers reflect the 17.9
importance of inland capture for Colombia’s 5.9
fisheries segment, while marine capture has
38.4
remained in second place, due to the more 35.4 34.9
5.8 31.1
complicated conditions related to waves, depth 24.0
and area, among others. Domestic consumption
12.1
of fishery products remains quite low (6.86kg per
capita/year) in comparison to the global average
2013 2014 2015 2016 2017 2018
(20kg per capita/year). Tilapia is the most popular
Marine Inland Total
fish produced in Colombia, mainly in the Huila
and Antioquia departments.
Marine Capture by Department, 2018 Inland Capture by Department, 2018
Bolivar 35.9% Ar auca 15.5%

Nar ino 32.9% Cor doba 11.1%
Valle del Cauca 11.4% Antioquia 11.0%
Atlantico 4.3%
Bolivar 9.8%
Choco 3.6%
Vichada 8.8%
La Guajir a 2.4%
Santander 5.5%
Cauca 2.3%
Sucre 4.6%
Magdalena 2.3%
Cesar 4.6%
Antioquia 1.5%
Cor doba 0.5% Amazonas 8.4%
Sucre 2.9% Others 20.7%
Source: SEPEC

External Trade
Comments
Colombia’s meat and fish segment has recorded consistent trade deficits, as national production has
been insufficient to meet the growing domestic demand for protein. In 2018, the segment’s deficit
reached USD 576mn, an increase of 20.3% y/y, driven by a 20% y/y increase in both export and import
value.
Fish products play a significant role in the segment’s export. According to DANE, in 2018, international
sales of Colombian fish fillets increased by 34% y/y, from USD 41.3mn to USD 55.2mn. The category of
other fresh, frozen or chilled fish also registered accelerated growth rates in terms of sales abroad of
50% y/y. Moreover, in 2018, Colombia positioned itself as the major supplier of fresh tilapia in the US.
Peru and Canada represent other markets where the demand for Colombian tilapia has been steadily
increasing.
Beef meat export volumes in 2018 totalled 18,100 tonnes, up 5% y/y, valued at USD 71.1mn. Russia
accounted for 63% of the exported value, followed by Lebanon. Beef meat imports totalled 3,500
tonnes, originating mainly from the US. Regarding the pork meat category, imported pork meat
exceeded 106,000 tonnes, growing by 30.2% y/y. The large imported volumes negatively impacted
domestic producers as local supply increased and pushed prices down.
Meat and Fish External Trade, USD mn, Share of Meat and Fish in Total Sector
FOB Exports and Imports
838
770
698
666
652
652
22.3%
20.4% 21.4%
20.5% 19.9%
471
18.3%
315
262
245
242
219
11.7%
2013 2014 2015 2016 2017 2018

-195 6.6%
5.5% 5.7% 5.8%
4.7%
-407 -410
-454 -479
-576
2013 2014 2015 2016 2017 2018
Exports Imports Trade Balance Exports Imports

08
DAIRY
PRODUCTS

08 DAIRY PRODUCTS CONTENTS
Highlights
Overview
Colombian raw milk production grew at a CAGR of 1.9% between 2013 and 2018. The low growth rate is
related to a decline in output in 2015 and 2016, caused by the negative impact from the El Nino
weather phenomenon. In 2017 and 2018, however, domestic production recovered thanks to improved
weather conditions. Raw milk output reached 7.3bn litres in 2018, up 2.3% y/y, while domestic raw milk
consumption rose by 2.1% y/y to 148 litres per capita per year. In terms of external trade, Colombia’s
dairy sector is characterised by chronic trade deficits. In 2018, the segment’s deficit valued USD
84.3mn, 1.3% less than in 2017. Russia became the major buyer of Colombia’s dairy products, with a
share of 31% of the segment’s export value, while the major imported product in 2018 was powdered
milk, due to its lower international price.
Challenges
The high degree of informality in Colombia’s dairy production remains the main challenge faced by
the segment. Most producers are unwilling to pay taxes, to register their farms and to vaccinate their
cattle, due to low consumer prices and the higher production costs of certified products. In 2018, more
than 42% of the raw milk produced in the country was collected through informal channels, meaning
that purchases are made below the market price of the product and processed under inadequate
conditions in terms of health and sanitary standards. This informality leads to low levels of
investment in the segment, lack of automation in production, and limited participation on the
international market. Other issues that the segment is facing relate to the relatively low domestic
consumption of dairy products, especially in comparison to other countries in the Latin American
region.
Outlook
According to the Fitch Solutions forecast from March 2019, the dairy segment in Colombia is expected
to register the weakest growth rates within the food and beverage industry over the period 2019-2023.
The segment’s sales are projected to reach COP 15,296bn in 2023, growing at a CAGR of just 0.8%. In
the short term, the consultancy estimates a significant drop of 12.2% y/y in 2019 in terms of dairy
sales, caused by a predicted fall in international and domestic dairy prices. Another factor
contributing to the expected negative trend is the high informality of the segment, which pushes
down the statistics for formal sales. In addition, the low consumption of dairy products in Colombia
relative to other Latin American countries, mainly caused by income inequality, is likely to remain a
significant bottleneck for the future development of the segment.
Source: FEDEGAN, Fitch Solutions, Portfolio

Main Events
§ In March 2019, the Colombian dairy multinational Alpina announced its plan to invest COP 90bn in
an equipment upgrade in order to increase efficiency and innovation. In 2018, the company
invested COP 17bn to launch its Quesito Alpina production line, a fresh cheese with low salt
content that has newly entered the Colombian cheese market. Quesito Alpina was chosen as the
Product of the Year in the category of cheeses and derivatives. The Product of the Year is a prize
for innovation awarded to products in 44 countries. In 2018, the US consultancy Nielsen carried out
research among 5,000 Colombians, which determined the winners of the Product of the Year
award. Currently, Alpina receives an average of 1.05mn litres of milk per day and manufactures up
to 40,000 tonnes of dairy products per month. Its market share is 50% in the yoghurts category
and 13% in the milk segment.
§ In October 2018, the Colombian dairy producer Alqueria announced an investment of COP 3bn in
social responsibility projects. These projects are managed by the company’s foundation Fundacion
Vavelier Lozeno and are part of Alqueria’s social responsibility strategy for the promotion of talent
development and education improvement. The resources benefited 25 schools and 25,000 students
in the department of Cundinamarca.
§ In August 2018, the Colombian dairy producer El Polmar announced that it had invested COP 11bn
in machinery to almost triple its production capacity from 6mn litres of milk per month to 16mn
litres. In addition, the company intends to expand its presence outside its current headquarters in
the department of Cundinamarca in the medium-term. Currently, El Pomar has a market share of
3% to 4% and aims at increasing it to 7% in 2019.
§ In June 2018, the Colombian Ministry of Agriculture and Rural Development announced that it had
invested COP 4.5bn in programmes during the first six months of 2018 to support dairy production
in the country. One of the priorities of the investment is the commercialisation of the powdered
milk category. Through public auctions, more than 2,580 tonnes of powder milk were sold,
favouring smaller producers by allowing them access to the market.
§ In April 2018, the Colombian Ministry of Commerce, Industry and Tourism (MinCIT) launched the
Productive Transformation Programme (PTP) with the objective to enable domestic dairy
companies to reduce the amount of time, distance and costs involved in the production process.
The programme is expected to help process optimisation, which will allow producers to save about
COP 20bn per day and reduce their journey times by up to 35km per 100km travelled. During the
first phase of the project, seven companies from the departments of Antioquia and Cundinamarca
took part, including Alqueria, Alpina Colanta, and Lacteos El Llina, among others.
Source: La Republica, EMIS Insights

Production and Consumption
Comments Raw Milk Production Evolution

Following the growth trend that started in 2017 as
7,257
a result of favourable weather conditions, raw
7,094
milk production in Colombia increased by 2.3%
y/y in 2018, reaching a new record of 7,257mn 11.0%
litres. The positive performance was due to the 6,718
6,617 6,623
calm weather throughout the year with the
exception of the entry of the El Nino phenomenon 6,391
close to the end of 2018, affecting specifically 1.5% 1.5%
2.3%
production on the Caribbean Coast. Apparent

-1.4%
annual milk consumption in the country rose by -3.5%
2.1% y/y in 2018 to 148 litres per capita. According
to FEDEGAN, this increase is explained by the
2013 2014 2015 2016 2017 2018
higher supply of dairy products, due to the rise in
Milk Production, mn litres y/y change
domestic output and in imports.
.
Raw Milk Annual Apparent Consumption, Dairy Products Consumer Price Index, y/y
litres per capita change
11.1%
148
145
143 143
3.7%
3.2%
140 140
2.1%
0.3% 0.5%
2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
Source: FEDEGAN, DANE, CEIC

External Trade
Comments
Colombia’s dairy segment has a history of chronic trade deficits. In 2018, imports valued USD 107.8mn,
1.4% y/y less than in 2017, while export value fell by 1.7% y/y, registering USD 23.5mn. The segment’s
0.5% share in the total export value of Colombia’s food and beverage industry remained unchanged in
2018, while the share of dairy imports in the food and beverage import value fell from 3.1% to 2.7%.
Despite the decrease, imports continue to threaten domestic dairy production, especially in periods of
low international prices. In 2018, the amount imported by the segment was equal to approximately
7.6% of national dairy production.
Once again, in 2018, the main origin for Colombian dairy imports was the US, with a share of 47% of
the segment’s import value, while the major destination for Colombian dairy became Russia,
responsible for 31% of the value of the country’s dairy sold abroad. In 2017, the number one
destination for Colombian dairy was the US, accounting for 54%.
Colombia imports mainly powdered milk, whey and cheese. In 2018, the powdered milk group was
responsible for 63% of the total import value of the dairy segment, explained by the lower price of
products from this group on the international market. Powdered milk was also the major exported
product in 2018, followed by butter and cheese.
Dairy Products External Trade, USD mn Share of Dairy Products in Total Sector’s
Exports and Imports
139
3.9%
109
108
105
87
3.0% 3.1%
56
2.7% 2.7%
37
25
24
24
15
-19 1.7%
-61
0.9%
-90 -85 -84
0.6% 0.5% 0.5%
0.3% 0.2%
-132
2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
Source: DANE, FEDEGAN, CNL

External Trade (cont’d)
Imports by Country of Origin in Value Imports by Product in Value Terms, 2018

Terms, Nov 2018
Bolivia 8.0%
France 5.0% Cheese
Mexico 24.0%
Poland 4.0%
12.0%
Spain 3.0%
Others
21.0%
Whey 11.0%
Powdered
Milk 63.0%
United States Others 2.0%
47.0%
Exports by Destination in Value Terms, Exports by Product in Value Terms, 2018

2018
Venezuela
23.0% Butter 20.0% Cheese
19.0%
Ecuador
United States 10.0%
24.0%
Chile 4.0%
Others
Others 8.0%
11.0%
Powdered
Russia Milk 50.0%
31.0%
Source: DANE, CNL

09
BEVERAGES

09 BEVERAGES CONTENTS
Highlights
Overview
Colombia’s beverage segment has posted stable growth in production value over the last few years,
rising by 3.2% on average between 2013 and 2018, mainly thanks to stable domestic demand. Over the
same period, beverage sales expanded faster than output, at an average rate of 5.2%. The price index
of non-alcoholic beverages increased at a CAGR of 3% over the period 2013-2018, while the price index
of alcoholic beverages registered a CAGR of 4.6%. In the last few years, as the population has shifted
towards healthier diets, Colombian beverage producers have started to invest in developing products
with special characteristics, such as flavoured drinks without sugar, without sweeteners and without
preservatives. In the alcoholic beverages segment, beer remains the preferred alcoholic drink among
the population, representing 75% of total spending on alcoholic drinks in Colombia, according to
Euromonitor.
Drivers and Challenges

The major challenge to Colombia’s beverage sector remains its high dependence on the country’s
economic development, given that non-essential spending, including on beverages, is tightly linked to
consumers’ disposable income. Another challenge is related to the change in taxation on beer and
soft drinks, which was extended to retailers and wholesalers as of 1 March 2019, thus increasing costs
for end consumers. Domestic producers fear that the new tax policy might have a negative impact on
consumption. In terms of opportunities, the high level of industrial concentration is stimulating
innovation in Colombia’s beverage sector. Market players are experimenting with new and healthier
drinks in order to satisfy the sophisticated demands of consumers and are adapting to the new digital
environment by adopting strategies for e-commerce.
Outlook
According to a Fitch Solutions forecast from March 2019, the beverages sector in Colombia will
register positive performance by 2023, stimulated by both the alcoholic and non-alcoholic drink
segments. Between 2019 and 2023, alcoholic drink sales are projected to rise on average by 8.5%,
while the estimated CAGR over this period for non-alcoholic drinks sales is 6.8%. The expected rising
demand for beverages in Colombia is associated with the higher disposable income of the population
and the growing middle class. In terms of different categories, Fitch Solutions estimates that
spending on carbonated drinks will register a CAGR of 11.9% over the next four years, supported by a
10.3% average annual growth in the soft drinks segment. Wine and spirits consumption is expected to
fall by 2023, while beer consumption is projected to grow at a CAGR of 3.5% between 2019 and 2023.

Main Events
§ In April 2019, Colombian spirits manufacturer Empresa de Licores de Cundinamarca (ELC)

announced an investment of over COP 70bn in plant automation technology. The company’s
intention is to complete the modernisation of its plant by August 2019, which will make it one of
the most modern in Latin America. It is expected that the investment will allow the company to
measure water and alcohol quality during the production process, to improve efficiency, and to
contribute to energy savings.
§ In April 2019, Central Cervecera de Colombia (CCC) born as a partnership between the Colombian
beverage producer Postobon and its Chilean peer Compania Cervecerias Unidad (CCU), announced
the official opening of its production plant and headquarters in the municipality of Sesquile,
department of Cundinamarca. The new plant is considered one of the most modern in Latin
America, has capacity of 300mn litres and required an investment of USD 400mn. With this
infrastructure CCC aims to reach a 13% share of the beer market in Colombia.
§ In September 2018, Colombian brewery Bavaria announced its intention to invest USD 95mn in
innovation and technology by the end of 2018. The Cerveceria Aguila brewery in Barranquilla
received the largest investment of USD 31mn for the creation of a new production line. A further
USD 17mn was directed to its subsidiary Cerveceria Tibasosa in Boyaca, while the beer producer in
Tocancipa (Cundinamarca) was assigned USD 13.4mn for equipment modernisation. The plant in
Bucaramanga (Santander) received USD 8.7mn for purchasing state-of-the-art equipment. In
addition, Bavaria plans to invest USD 5mn into programmes related to sustainability, communities
and responsible consumption of alcohol in Colombia.
§ Again in September 2018, Colombian alcoholic drinks producer Industria de Licores del Valle (ILV)
signed a distribution contract with the consortium Sociedad Futura Disblanco. The contract has a
duration of five years and is expected to gradually increase sales to 9.62mn bottles by 2023. ILV’s
projections are for an income of COP 73.76bn at the end of the first year of the contract with the
potential to expand to COP 97.25bn by the end of the fifth year.
§ In April 2018, the French industrial gases company Air Liquide, together with Coca-Cola FEMSA
Colombia, developed a new plant located in Tocancipa, department of Cundinamarca. The unit
provides carbon dioxide, nitrogen, electricity, chilled water, compressed air and steam for the
production processes of Coca-Cola FEMSA’s bottling plant, thus making the Tocancipa industry park
one of the most modern in Latin America. As of October 2018, the bottling plant was responsible
for 40% of Coca-Cola FEMSA’s sales in Colombia.
Source: La Republica, Portafolio, El Pais, Dinero

Production and Sales Value, y/y change Consumer Price Index Evolution
14.3% 9.7%
8.3%
7.6% 6.7%
5.2% 5.3%
3.7% 4.7% 5.1%
4.0% 4.6%
2.0% 2.8% 3.7% 3.7%
-4.5% 2.5% 2.4%
2.2%
1.7% 1.6%
-4.7% 1.4%
2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
Real Production Real Sales Non-Alcoholic Beverages Alcoholic Beverages
Comments
After a year of negative performance in terms of both production and consumption, in 2018
Colombia’s beverage sector recovered, registering a 5.2% y/y growth in real output and a 6.7% y/y
increase in real sales. These positive results are associated with the higher economic growth of the
country observed in 2018, as the beverage sector remains highly dependent on the disposable income
of the population. In terms of employment, the beverage industry marked a decline in 2018 of 2.5%
y/y, as increased automation in production processes led to a drop in the number of employees.
Companies from the sector are investing heavily in new technologies that will optimise and automate
the production process. Moreover, as a result of high concentration in the market, differentiation in
products, and the exploitation of economies of scale, beverage companies are innovating and
introducing new products in order to respond to the changing domestic demand for value-added and
healthy drinks. The beer segment remains one of the strongest in Colombia’s beverage industry, as
consumption has grown at a rapid pace over the past decade with the entry of the UK-based beer and
soft drinks group SABMiller in 2005, now part of AB InBev. In the non-alcoholic segment, carbonated
drinks make up the largest category in terms of consumption in Colombia. Cola drinks are particularly
popular, similar to other countries in the Latin American region.
Source: DANE, CEIC, Fitch Solutions

External Trade
Comments
Colombia’s chronic trade deficits in the beverage segment have gradually increased. Over the period
2013-2018, the deficit of the sector has expanded at a CAGR of 20.8%, driven by rising imports of
beverages, which reported a CAGR of 19.1% over the same five-year period, while exports grew at a
CAGR of only 9.6%. This trend is related to increasing domestic demand for both alcoholic and non-
alcoholic drinks, as a result of the growing disposable income of the population and its expanding
middle class. In 2018, the import value of the beverage sector reached USD 481.5mn, an increase of
12% y/y, accounting for 12.3% of the food and beverage industry import value. From the alcoholic
drinks category, Colombia imports mainly wine and high quality premium liqueurs, while from the
non-alcoholic category, soft drinks, mineral and bottled waters represent the main imported product
groups. Exports, on the other hand, grew much more than imports in 2018, by 79.4% y/y, reaching a
record of USD 54.5mn. Currently, Colombia exports different alcoholic and non-alcoholic beverages to
several markets in the world. Within the non-alcoholic beverages category, the country sells soft
drinks, water, flavoured water, juices, teas, energy drinks and diet drinks abroad. For the international
alcoholic drinks segment, Colombia produces distilled liquors, fermented beverages and beers.
Colombian rum and brandy are also recognised on the international market for their high quality.
External Trade in Beverages, USD mn Share of Beverages in Sector’s Total

Exports and Imports
482
430
420
12.2% 12.3%
11.8%
293
232
201
9.2%
54
35
32
30
28
20
6.7%
6.2%
2013 2014 2015 2016 2017 2018
-166
-200
-265
0.9% 1.2%
0.7% 0.6% 0.5% 0.7%
-400 -400 -427
2013 2014 2015 2016 2017 2018
Source: DANE

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FOOD & BEVERAGE

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DNP National Planning Department

FARC Revolutionary Armed Forces of Colombia

FEDEGAN Colombian Federation of Cattle Breeders

FEDEPALMA National Federation of Palm Oil Growers

FENAVI National Federation of Poultry Producers

FONADE Financial Fund for Development Projects

ICA Colombian Institute for Agriculture and Livestock

IDH Sustainable Trade Initiative

MinCIT Ministry of Commerce, Industry and Tourism

PGC Gradual Compliance Plan

PTP Productive Transformation Programme

SEPEC Colombian Fisheries Statistical Service Information System

SISPA Information System Palm Oil Sector

USDA United States Department of Agriculture

VAT Value-Added Tax

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02 SECTOR IN FOCUS p.13

03 COMPETITIVE LANDSCAPE p.24

04 COMPANIES IN FOCUS p.30

05 REGULATORY ENVIRONMENT p.41

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Sales and Prices

07 MEAT & FISH p.54

08 DAIRY PRODUCTS p.64

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No.4 No.3 No.3

COP COP COP

* Data for 2018.

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 6

Source: DANE, Central Bank of Colombia, Fitch Solutions

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 7

Food and Beverage: USD 4,517.2mn

KEY PLAYERS REVENUES

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 8

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 9

2019f 2020f 2021f 2022f 2023f

Food Sales, COP bn 128,325.0 138,143.0 148,532.3 159,591.7 171,273.6

Food Sales, y/y change, % 7.6 7.7 7.5 7.4 7.3

Dairy Sales, COP bn 14,837.1 15,101.9 15,281.3 15,351.7 15,296.2

Dairy Sales, y/y change, % -14.5 1.8 1.2 0.5 -0.4

Non-alcoholic Drinks Sales, COP bn 6,024.1 6,439.5 6,879.1 7,347.0 7,841.3

Alcoholic Drinks Spending, COP bn 6,064.8 6,603.9 7,177.9 7,781.5 8,419.7

Source: Fitch Solutions

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 10

Source: DANE, Fitch Solutions, EMIS Insights

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 11

Source: USDA, Fitch Solutions, EMIS Insights

COLOMBIA FOOD & BEVERAGE SECTOR 2019/2020 12

Any redistribution of this information is strictly prohibited.

Main Economic Indicators

2013 2014 2015 2016 2017 2018

Food and Beverage Consumer Price Index, y/y

Food & Beverage Sector Trade Surplus, USD mn

Food & Beverage Sector Exports, USD mn

Food & Beverage Sector Imports, USD mn

Food & Beverage Sector Imports, % of total

Foreign Direct Investment Inflow in the Food &