Alicorp: Consumer goods

THE COMPANY: Alicorp is the leading consumer goods company of branded products in Peru. It is based in Peru with operations in Argentina, Colombia and Ecuador. Alicorp is listed on the Lima Stock Exchange, and represents 1.68% of the exchange’s total market capitalisation. The company has 106 family brands in 16 different categories in the consumer goods segment, 14 brands directed to the food industry and two brands of fish and shrimp feed. Its majority shareholder is the Peruvian Romero family, which owns 45% of the shares.

In the consumer goods unit Alicorp produces margarines, mayonnaise, sauces, biscuits, crackers, pasta, juices, baking flour, jelly, pet food, washing powder and laundry detergent. In the industrial products segment the firm’s products include flour, pre-mix, edible oil and shortening. In the animal nutrition unit Alicorp makes shrimp and fish food. Some 62.5% of the company’s revenues are derived from the consumer goods segment and 29.7% from the industrial products unit. Its main product categories by value are edible oil (14.9% of revenues), industrial baking flour (14.4%), laundry detergents (9.8%), pasta (9.8%) and animal nutrition (7.5%).

In 2011 the company’s revenues totalled $1.5786bn, 13.8% more than in 2010 due to the increase in product prices, given that the sales volume rose by only in 1.8%. Net income rose 16.1% year-on-year to $120.1m. Alicorp has a price-to-earnings ratio of 15.51x and it offers a dividend yield of 2.6%. In 2011 75.2% of company revenues came from Peru, and 24.8% from abroad, which is notably higher than the 7% that was seen in 2005. This result is in line with the geographical diversification of revenues targeted in the company’s strategy.

Alicorp is the leader in all its product categories in Peru. It has 97% of market share in mayonnaise, 75% in washing powder, 70% in animal nutrition, 62% in margarines, 58% in juice powder, 52% in industrial baking flour, 46% in pasta, 36% in pet food and 31% in biscuits and crackers. Thanks to its continued strategy of launching new products to the market, exploring new market segments and its capital expenditure programme, Alicorp is expected to maintain its leadership in the Peruvian consumer goods market where strong expansion of private consumption is forecast over the next few years. Key investments have been made in pasta ($22m allocated for a factory extension) and detergents ($22m to build a new factory).

DEVELOPMENT STRATEGY: Since 2007 Alicorp has been growing regionally. In that year the company acquired Helados Eskimo and renamed it Alicorp Ecuador, which produces and sells ice cream. This unit also imports, exports, produces and sells a range of other consumer goods. In 2008 Alicorp acquired the Value Brand Company in Argentina, a producer of personal care products that has a significant market share in Argentina. In the same year Alicorp also acquired Propersa, a Colombia-based company that produces personal care products. In 2010 the firm acquired Sanford in Argentina, a producer of biscuits and pound cakes. In 2011, meanwhile, the firm moved ahead with its expansion strategy and acquired Italo Manera y Pastas Especiales in Argentina. The company produces and sells pastas.

Due to its regional expansion and acquisitions, Alicorp has been able to increase its market share to 27% in hair care products, 18% in personal care soaps and 11% in pastas. In Ecuador the company has 32% of market share in animal nutrition, 23% in pet food, 14% in mayonnaise and 14% in pasta.

Alicorp plans to continue its aggressive regional expansion strategy over the coming years. This is in line with the company’s policy to diversify its geographical sources of revenues. The strategy outlined in Alicorp’s strategic goals is to generate some 40% of revenues from foreign markets in the long term, which is in line with Alicorp’s goals to achieve revenue of $2.5bn in 2015 and to become one of the 250 biggest companies operating in Latin America.