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Arcor Group diversifies into healthy, lucrative Argentina cereal sector

By Kacey Culliney , 25-Jul-2012
Last updated on 25-Jul-2012 at 16:00 GMT

A surging Argentinian cereal market, underpinned by a health shift among consumers has prompted food group Arcor to launch a new cereal line in the country via its Danone joint venture company Bagley.

The Argentina-based group has injected $10m into the launch of seven cereal varieties, including cornflakes, sweetened cornflakes and granola types. The products have been designed for the whole family, it said. 

Argentina has one of the lowest per capita cereal consumption in the world, at 0.4kg per year, according to Euromonitor, suggesting real growth opportunities.

There is a clear family trend towards healthier breakfasts, the research firm said, and for 2011-2016 it will be children and teenagers predominantly driving an increase in cereal consumption.

“This is why the leading companies focus their promotional efforts on the growth of children’s breakfast cereals, with the aim of changing their breakfast habits,” it added.

Andrew Kroyer, business manager at Bagley, made clear that its venture into the market was in light of this underlying consumer trend.

“Today we face a well-informed public that demands not only rich products, but also health and nutritious products,” Kroyer said.

Arcor is constantly seeking new challenges to cater to new trends and consumer taste preferences, he said, and this launch marks part of this drive.

Delving into a surging market

Argentina’s cereal market is worth around $360m with “great growth potential”, Arcor said. The market has surged 45% over the past six years, it added.

As it attempts to tap into the vast opportunities the sector presents, Arcor said it will leverage “one of its main competitive advantages” – its sales force – to push the cereal line out across 250,000 outlets, including supermarkets and wholesalers.

However, it will face competition from big brands like Nestlé and Kellogg who hold strong market share in Argentina’s cereal segment. Its biggest competitor though will be leading local Argentinian cereal firm Laso that held a 21% market value share in 2010, according to Euromonitor.

Laso has a low-pricing strategy but maintains quality products, on a par with the international brands, Euromonitor said.

Arcor’s Bagley business, formed with Danone in 2004, is dedicated to cookies, alfajores (Spanish confectionery) and cereals. It has seven manufacturing plants across Latin America and holds a strong presence in Argentina, Brazil and has growing participation in Chile. 

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