LATAM’s food opportunity: overview
- Grupo Bimbo is extending climate resilience beyond its factories and into the farms supplying its ingredients
- Nestlé is expanding Brazilian production, while General Mills is retreating from parts of the market despite sizeable sales
- Manufacturers will need local capacity and market knowledge to navigate the region’s climate, currency, infrastructure and security risks
Rich in agricultural land, water and raw materials, close to the US and home to a young, increasingly connected population, Latin America appears to have nearly everything a food manufacturer could want. Yet political volatility, weak infrastructure, inequality, crime and stop-start economic growth have repeatedly prevented that potential from becoming consistent commercial performance.
Climate change is making that uneven performance more consequential for food manufacturers as drought, heat and water stress threaten the agricultural resources that make the region so valuable. Companies need resilient ingredient supplies, but they also need affordable energy, reliable transport and consumer markets large enough to justify substantial investment.
The region accounts for around 16% of global food and agricultural exports and has the highest share of net agricultural exports worldwide. It contains more than five million square kilometres of arable land, receives 29% of global rainfall and holds about 30% of the world’s renewable water resources.
Brazil, Argentina, Paraguay and Uruguay already command significant positions in soybeans, maize, sugar and beef, giving the region influence far beyond its roughly 7.1% share of global GDP.
Nestlé and General Mills have operated across LATAM for years, but their latest moves reveal sharply different priorities. Nestlé is investing heavily in Brazilian nutrition manufacturing, while General Mills has sold a Brazilian operation generating $350m in annual sales.
Meanwhile, Mexican giant Grupo Bimbo is extending its sustainability programmes from factories into the farms supplying its ingredients. These contrasting strategies show how climate exposure, currency movements and infrastructure constraints are reshaping investment across the region.
Bimbo takes climate risk back to the farm
The biggest threat to a bakery may never reach the production line. Drought, degraded soil and water shortages can disrupt ingredient supplies long before energy-efficient ovens or lower-emission delivery vehicles have a chance to make a difference.
Grupo Bimbo is responding by pushing its sustainability strategy further upstream. The Mexican group, the world’s largest bakery manufacturer, increased the farmland covered by its regenerative agriculture programme by almost 73% in 2025, taking the total from more than 290,000 hectares to over 500,000 hectares.
The commercial rationale matters as much as the scale. Farming practices that improve soil structure and moisture retention could help protect supplies of wheat and other crops as Latin American agriculture faces more erratic rainfall, drought and extreme heat. Bimbo has also expanded water-stress assessments across its sourcing regions and is developing mitigation plans for strategically important ingredients.
This approach broadens the role of sustainability in manufacturing. Environmental programmes have traditionally concentrated on impacts that companies directly control, such as factory energy, water consumption, packaging and transport. Bimbo’s strategy recognises that an efficient bakery still can’t operate without a dependable supply of ingredients.
The company hasn’t abandoned those factory and logistics targets. Its Mexican operations reused 97% of conditioned water during 2025, while its fleet included 3,991 electric vehicles and another 263 vehicles powered by alternative fuels. Bimbo also reported that 99.6% of its Mexican packaging was recyclable and that 97% of operational waste was diverted from landfill.
Recovered material is being fed back into the business, with more than 800,000kg of flexible plastic and around 540,000kg of industrial plastic waste converted into over 1.8 million crates and 250,000 pallets. This internal use reduces Bimbo’s dependence on external recycling systems that may lack the capacity or financial incentive to process the material.
The missing piece, however, is evidence of how its agricultural programme is affecting production. Bimbo’s disclosures provide the acreage covered, but don’t quantify changes in yields, procurement costs, soil condition or supply chain emissions. Manufacturers need that outcome data to determine whether regenerative agriculture is protecting ingredient supplies or simply expanding the area attached to a corporate commitment.
Bimbo’s experience also exposes the limits of individual corporate action. Mexico aims to generate 45% of its electricity from clean sources by 2030, yet wind and solar currently contribute only around 13%. Reaching that target would require approximately 46GW of new renewable capacity within four years. Businesses participating in the RE100 initiative currently source 38% of their Mexican electricity from renewables, compared with 53% across members globally.
JPMorgan Private Bank captured the broader challenge in its 2026 regional outlook, arguing that “sustainable growth requires not just resources, but also security, governance and human capital”. Bimbo can invest in farms, factories and vehicles, but its progress will remain constrained if energy infrastructure and public policy don’t keep pace.
Nestlé invests as General Mills pares back
Nestlé, meanwhile, plans to invest CHF310m (approximately $384m) in its Brazilian nutrition and health business by 2028, including around CHF94m for an infant formula factory in Ituiutaba, Minas Gerais.
Scheduled to begin operating during the second quarter of 2028, the automated and digitally enabled facility will manufacture infant formula for Brazil and export markets. It will become Nestlé’s second infant nutrition factory in the country and is expected to create approximately 100 jobs.
Investment will also go into the company’s Araçatuba factory, its main Brazilian production hub for infant, medical and adult nutrition. Nestlé intends to increase whey output by 15% by 2029, providing more locally produced ingredients for its expanding nutrition operation.
“Nutrition is one of Nestlé’s key categories globally today, and accounts for around 20% of Group sales,” said Jeff Hamilton, CEO of Nestlé Zone Americas. “Brazil is a strategic market for this business, and this investment will expand local production capabilities while increasing access to high-quality, science-based nutrition products.”
Producing more formula and whey within Brazil should place manufacturing closer to consumers, reduce some dependence on imported inputs and create additional export capacity. It also embeds more of Nestlé’s supply chain in a country where enormous agricultural capacity is accompanied by exposure to extreme weather, water pressure and transport bottlenecks.
Minnesota-headquartered General Mills is moving in the opposite direction, having completed the $153m sale of its Brazilian business to Grupo 3corações, the country’s largest coffee company.
The decision wasn’t driven by a lack of scale: the operation generated $350m in net sales during General Mills’ 2025 financial year. Instead, the company said the divestment would improve its operating margin and allow its international division to concentrate investment on platforms offering stronger prospects for profitable growth.
The portfolio sold to Grupo 3corações includes brands embedded in everyday Brazilian eating. Yoki operates across 21 categories, selling microwave popcorn, potato sticks, desserts, grains, flour and meal accompaniments. Kitano is an established herbs, spices and seasonings brand, while Mais Vita produces soy-based drinks. The transaction also includes two factories and an administrative office in São Paulo.
General Mills deepened its retreat on 24 August by confirming it would end Häagen-Dazs distribution in Brazil after 29 years, with retailers selling the remaining stock until it runs out. Häagen-Dazs wasn’t included in the sale to Grupo 3corações, and General Mills hasn’t explained why it chose to withdraw the brand. The decision is particularly notable because premium ice cream remains one of its priority international platforms.
Grupo 3corações sees an opportunity to grow the local brands General Mills has relinquished. They significantly broaden its business beyond coffee, taking its production network to 15 Brazilian facilities and extending its commercial presence to more than 600,000 points of sale. “We are bringing together strong brands, talented people, expertise and complementary capabilities – an important step toward establishing ourselves as one of Brazil’s leading food companies,” said Grupo 3corações president Pedro Lima.
Why going local matters in LATAM
These contrasting strategies reflect a wider redistribution of power within Latin American food.
While multinationals are narrowing their portfolios around the brands and markets most closely aligned with global priorities, well-capitalised regional companies are using local distribution, consumer knowledge and manufacturing infrastructure to enter the categories being left behind.
Consumer scale strengthens the case for investment. LATAM’s median age is 31.3, compared with 39.6 in China and 42.5 in Europe, while internet penetration has risen from 49% to 82% in a decade. Manufacturers aren’t simply looking at a large population; they’re looking at younger consumers who are increasingly accessible through digital retail, payment and delivery channels. Success, however, will depend on understanding local tastes and price sensitivities rather than transferring a global portfolio unchanged.
Mexico offers a different advantage as production can be located closer to the US. Goods can reach the US from Mexico within one or two days by road or rail, compared with approximately 20 to 40 days by sea from China. That can reduce inventory, accelerate replenishment and make manufacturers more responsive to demand.
However, with more than 80% of Mexican exports heading to the US, the same proximity leaves businesses heavily exposed to American trade policy and currency movements. The peso’s near-20% appreciation against the dollar since January 2025 has already weighed on exporters including Grupo Bimbo.
Manufacturers sourcing locally must also prepare for the possibility that LATAM’s greatest advantage – its agricultural resources – becomes a source of disruption. JPMorgan has warned that a very strong El Niño, combined with elevated energy prices, could push global food inflation towards an annualised 5% during the first half of 2027. Brazil and Colombia are considered particularly exposed, while higher diesel, fertiliser, processing and packaging costs could spread the pressure far beyond the farm.
Operating costs extend beyond commodities and energy. Crime and violence cost Latin America and the Caribbean an estimated 3.4% of GDP annually, according to the Inter-American Development Bank, with private companies absorbing nearly 47% of that burden through security and mitigation spending. Manufacturers assessing a new factory or distribution network must therefore calculate the cost of protecting people, products and transport alongside labour, land and ingredients.
The attraction of LATAM doesn’t rest on explosive economic growth, with the region forecast to expand by only 2.1% in 2026. But it does lie in the chance to combine local production, agricultural supply and consumer demand within the same market, while Mexico also provides rapid access to the US.
Grupo Bimbo, Nestlé and Grupo 3corações are backing that opportunity with investment in farms, factories and distribution, while General Mills has decided that parts of its Brazilian portfolio no longer justify the commitment. Their choices suggest LATAM’s strongest returns will go to manufacturers prepared to build local knowledge and capacity, rather than treating the region principally as somewhere to sell products made elsewhere.
