EMIS Insights - Colombia Food and Beverage Sector Report 2018-2019 PDF

COLOMBIA
FOOD & BEVERAGE

SECTOR 2018/2019
An EMIS Insights Industry Report
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ABBREVIATIONS
ACIL National Association of Distilleries
COP Colombian Peso
DANE National Administrative Department of Statistics
DNP National Planning Department
FARC Revolutionary Armed Forces of Colombia
FEDEACUA Colombian Federation of Aquacultures
FEDEGAN Colombian Federation of Cattle Breeders
FEDEPALMA National Federation of Palm Oil Growers
FENAVI National Federation of Poultry Producers
ICA Colombian Institute for Agriculture and Livestock

National Institute for the
INVIMA
Surveillance of Food and Medicines
OIE World Organization for Animal Health
SIC Superintendence of Industry and Commerce
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 2015-2017
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 AND FATS
Highlights
Main Events
Production
Sales and Prices
p.45
External Trade
Exports
Imports
07 MEAT AND FISH p.53

Highlights
Main Events
Beef
Poultry Meat
Focus Point - Poultry Production by Region
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 2018/2019
An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2018 EMIS, all rights reserved. 5
01 EXECUTIVE SUMMARY CONTENTS
Sector in Numbers
No. 4 No. 3 No. 14

Palm Oil Producer Coffee Exporter Beer Market
Globally Globally Globally
COP COP COP

14tn 10.3tn 3.7tn
Food and Beverage Food Value Beverage Value
Value Added Added Added
USD
871mn
1,656 25.7%
Number of Share of Jobs in
Trade Surplus in Enterprises Manufacturing
Food & Beverage in Sector Industry
Note: Data for 2017.

Source: USDA, Kirin Institute, Central Bank of Colombia, DANE
COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 6

Sector Overview
Colombia’s food and beverage sector is a major contributor to the country’s economy. The domestic
GDP growth is highly dependent on household consumption. According to data from the Central Bank
of Colombia, in 2017, 62.9% of the country’s GDP was generated by household consumption. Between
2012 and 2017, the domestic food and beverage sector GVA grew at a CAGR of 2.1%, supported by the
increasing household income and the expanding product portfolio of the local producers. The sector
remains among the major employers in the country, accounting for about a quarter of all jobs in the
manufacturing industry. In addition, it is a major exporter with a 12.5% share of the total export value
of Colombia in 2017, the coffee and the oils and fats being the leading export segments. The country,
however, remains dependent on the imports of poultry, pork and beverages.
Entry Modes
Colombia’s food and beverages industry is characterised by the significant involvement of foreign
companies and the participation of major global players, including Nestle, Mondelez, Coca-Cola,
PepsiCo and SABMiller. The presence of these conglomerates increases the market concentration and
makes it harder for small and medium-sized players to enter the sector and survive. In recent years, a
process of consolidation was initiated in the sector and a number of small and medium-sized
producers were absorbed by larger market participants. The presence of foreign players is expected to
grow in the following years as a result of the signing of the peace agreement with the FARC guerilla
group in 2016, which is considered an important step towards boosting the inflow of foreign capital to
Colombia.
Segment Opportunities
The economic growth over the last decade, as well as the process of urbanisation in Colombia, created
strong demand for non-essential products, such as chocolate, ice-cream, yoghurt, coffee, and
alcoholic drinks associated with the middle and higher income classes. This created significant
opportunities for growth in the respective segments. Moreover, the growing household incomes
resulted in a shift in the diet from vegetable to animal and marine protein foods. The poultry segment
offers significant opportunities for development due to the strong domestic demand. The rising health
awareness of the population has led to the emergence of initiatives related to eradication of bad
dietary habits associated with obesity and heart disease, opening significant opportunities for the
development of healthier food and beverage products.
Government Policy
The main role of the government with respect to the food and beverage sector in Colombia is related
to the regulation of the sanitary standards of all products for human consumption, as well as the
control over the food and beverage labelling and packaging. The major concern of the government is
the improvement of the sanitary conditions of the domestic meat and dairy production in order to
meet the international standards and expand the export potential of these segments.
Source: DANE, Central Bank of Colombia

Sector Snapshot
Colombia Food
& Beverage Sector
PRODUCTION*
Food and Beverage Production: COP 77,281bn
Food Production: COP 64,307bn
Beverage Production: COP 12,973bn
EXPORTS * EMIS Insights estimates
Food and Beverage: USD 4,629.8mn

Coffee Products: USD 2807.4mn
Palm Oil: USD 583,641mn
IMPORTS
Food and Beverage: USD 3,759mn DOMESTIC MARKET**:
Oils and Fats: USD 810,4mn COP 69,009bn
Meat and Fish: USD 737,6mn
Food Products and Non-Alcoholic Beverages
Consumption: COP 59,425bn
Alcoholic Beverages and Tobacco
Consumption: COP 9,584bn
** Defined as final household
consumption
KEY PLAYERS REVENUES

1. Bavaria SA: COP 5,475.6bn
2. Alpina Prpductos Alimenticos SA: COP 2,164.1bn
3. Copperativa Colanta: COP 2,081.7bn
4. Colombina SA: COP 1,768.6bn
5. Alimentos Carnicos SAS: COP 1,668.5bn
Source: DANE, CEIC, EMIS Company Database

Sector Snapshot
Colombia Food and Beverage Sector
According to data by the Central Bank of Colombia, the value added of Colombia’s food and beverage
sector stood at COP 13,963bn in 2017, responsible for 23.2% of the generated value of Colombia’s
manufacturing industry. The sector is dominated by the beverage segment, which had a share of
26.5% in the industry’s value added, followed by the segment of flour milling, pasta, bakery and
fodders with a 25% share.
The oils and fats segment was the best-performing in terms of value added growth in 2017, registering
a rise of 3.62% y/y. Both crude palm oil and palm kernel oil reached record-high production volumes in
2017, increasing by 42% y/y and 37% y/y, respectively. The main drivers of this positive performance
were the favourable weather conditions and the higher yields. The domestic sales volume hit a record
high as well, with crude palm oil sales expanding by 41% y/y and those of palm kernel oil – by 26% y/y.
In 2017, the meat and fish segment grew by 1.8% y/y in terms of value added, generating COP 1,415bn.
The growing disposable income of Colombia’s population in the last decade has led to higher demand
for animal and marine protein, which boosted the development of the segment. Poultry meat has
become the favourite protein of Colombians. The production of poultry meat grew at a CAGR of 7.1%
between 2012 and 2017, while the consumption registered a CAGR of 6.5% for the same period. The
production of eggs reached the record of almost 14bn units in 2017, while the consumption grew by
6.5% y/y. The pork meat segment also performed well from 2012 to 2017 with the number of pigs
slaughtered expanding at a CAGR of 6.9%. The production of beef, on the other hand, has been
decreasing since 2012, with this meat losing its importance in the protein preferences of the
Colombians.
The value added of the dairy segment fell by 0.65% y/y in 2017. The raw milk production, however,
registered an increase of 7% y/y in volume terms after two consecutive years of negative growth. This
increase was driven by the improvement of the weather conditions in 2017, combined with the
increase in domestic raw milk consumption.
In 2017, the performance of the beverage segment in Colombia was unsatisfactory. The value added of
the segment fell by approximately 4% y/y, driven by the lower domestic demand as the Colombian
economy has been slowing down. The real sales fell by 4.7% y/y, after a record 14.3% y/y increase in
2016 when the higher temperatures boosted domestic consumption.
During 2017, the food and beverage sector recorded a trade surplus of USD 870.8mn, supported by the
exports of coffee products, oils and fats and refined sugar, which had a combined share of 82% in the
overall value of sector’s exports. In terms of import value, the oils and fats were the most imported
product group with a share of 33%. The prevalence of oils and fats in the sector’s imports derives
largely from Colombia’s dependence on foreign purchases of soybean oil. The beverage segment was
the second most imported product group in 2017 with a share of 14.7% in total sector’s import value.
Source: Central Bank of Colombia, FEDEPALMA, FEDEGAN, FENAVI, PorkColombia, DANE

Sector Outlook
Comments
Like in previous years, the food and beverages sector is expected to remain among the main drivers of
the domestic manufacturing industry and the entire economy, supported by growing household
demand and favourable government policies aimed at increasing the sector’s penetration in foreign
markets. According to BMI Research forecast, the food sales value will grow at a CAGR of 7.3% over
the period 2018-2022. The fruits and vegetables, meat, sugar and sugar products are expected to be
the best performing segments in terms of sales value during this five-year period. The vegetable sales
are projected to grow at a CAGR of 10.5%, the fruits at a CAGR of 10%, and meat at a CAGR of 9.4%. As
for the spending on beverages in Colombia over the period 2018-2022, BMI Research estimates lower
annual average growth rate for the non-alcoholic drinks than for the alcoholic - 6.7% vs 8.04%,
respectively. The spending on carbonated drinks is expected to register the highest CAGR in the
beverage segment, 11.3% through 2022. Wine will have the lead in the alcoholic segment, with a CAGR
of 6.1%. In the long run, the expected population growth and the urbanisation process will support the
development of the food and beverage sector. The population is forecast to increase steadily through
2022, reaching 50.6mn people, and the share of urban citizens is estimated to reach 78% by the same
time.
2018f 2019f 2020f 2021f 2022f
Total Food Sales, COP bn 112,595.2 121,199.9 130,373.7 139,876.1 150,047.5
Total Food Sales, y/y change, % 6.7 7.6 7.6 7.3 7.3
Meat Sales, COP bn 31,602.8 35,466.2 38,672.4 42,084.2 45,810.2
Meat Sales, y/y change, % 8 12.2 9 8.8 8.9
Dairy Sales, COP bn 16,884.8 14,572.5 14,893.6 15,139.6 15,298.2
Dairy Sales, y/y change, % 3.4 -13.7 2.2 1.7 1
Sugar and Sugar Product Sales, COP bn 6,398.8 7,124.2 7,705.2 8,317.4 8,979.1
Sugar and Sugar Product Sales, y/y change, % 7.3 11.3 8.2 7.9 8
Oil and Fat Sales, COP bn 5,914.4 6,404.2 6,724.9 7,041.4 7,385.6
Oil and Fat Sales, y/y change, % 4.8 8.3 5 4.7 4.5
Non-Alcoholic Drink Sales, COP bn 5,496.9 5,880.4 6,289.4 6,712.9 7,166.3
Non-Alcoholic Drink Sales, y/y change, % 6.1 7 7 6.7 6.8
Alcoholic Drink Sales, COP bn 4,443.4 4,820.5 5,223 5,640.2 6,087
Alcoholic Drink Sales, y/y change, % 7.5 8.5 8.4 8.0 7.9
Fish and Fish Product Sales, COP bn 3,554.8 3,845.7 4,034.3 4,219.7 4,404.6
Fish and Fish Product Sales, y/y change, % 4.7 8.2 4.9 4.6 4.4
Source: BMI Research

Driving Forces
External
The major driving force for the domestic food and beverage industry is Colombia’s economic
development. During the last decade, the country’s economy has been registering positive growth
rates, even though after 2015 a slowdown trend started. In 2017, the country’s real GDP increased by
1.8% y/y - slower than the 2.2% y/y in the previous year. The positive trend has resulted in
socioeconomic restructuring, with a lot of Colombians moving out of poverty, the creation of a stable
middle class and the increase of the households’ disposable income. As a consequence, the food and
beverage sector registered positive performance over the five years prior to 2018. The meat segment
benefitted the most from these recent developments, as more and more Colombians shifted towards
a diet rich in protein, replacing the vegetables with poultry and pork meat. Moreover, the signing of
the peace agreement with the major guerilla group FARC at the end of 2016 represented a significant
step forward in the future development of the country’s economy. It is expected that the calming of
the conflict will attract significant amount of foreign investment in all industries and especially in the
food and beverage sector which is characterised by strong international presence.
Internal
The strong relationship existing between the food and beverage producers in Colombia and the
country’s mass grocery retailers represents one of the major advantages driving the development of
the industry. In addition, the strong presence of foreign players in the sector has made distribution
channels more efficient and has brought know-how and new technologies to the production process
of food and beverage products. The growing middle class in the country generates greater domestic
demand for higher quality products, resulting in the introduction of new and more sophisticated
product portfolios by some of the major players in the sector, which in turn produces higher value
added. In addition, the accelerating trend of healthier lifestyle boosted the production of a variety of
products with no preservatives and lower content of salt, sugar and saturated fats. The Colombian
dairy producer Alpina, for instance, introduced new products in 2017, such as whey-based milk,
beverages based on aloe and fitness Greek yoghurts, in addition to investing in environment-friendly
packaging. The locomotive of the food and beverage sector in Colombia remains the coffee production
in which the country has a comparative advantage. The segment is highly export-oriented and
remains the main driver of the trade surplus of the food and beverage industry. Colombia has long-
lasting traditions in the coffee production, developed infrastructure and supply chains, environment-
friendly production processes, globally recognized brand and high quality reputation.
Source: DANE, BMI Research

Restraining Forces
External
A major challenge for Colombia’s food and beverage sector is the global process of climate change. In
2016, the strong presence of the El Niño phenomenon led to extremely high temperatures and
prolonged droughts. As a result, Colombia’s agriculture, as well as all segments of the food sector
were negatively affected. The volume and the quality of agricultural crops and pastures were reduced,
which forced the omestic food industry to increase the imports of raw materials. There was a drop in
the output of the oils and fats and the dairy segments, a significant decrease in the inland and
marine fish catch, as well as a slowdown in the production of the meat segment. The reduced supply
led to higher domestic prices of food products. In addition, the undervalued Colombian peso,
following the persisting low global prices of mineral commodities, made the imports of raw materials
more expensive, affecting indirectly the entire food value chain. The consumer price index of the fish
products segment, for instance, which was deeply affected by the unfavourable weather conditions,
registered an increase of 12.9% in 2016. Another limitation for the food and beverage sector are the
income disparities that still exist in the country in spite of the recent urbanisation process and the
increase of the middle class population. A large proportion of the Colombians remain quite price-
conscious and domestic demand for a large number of food and beverages products is highly price-
elastic.
Internal
One of the major challenges for the food and beverage sector in Colombia is related to the high levels
of informality, mainly in the segments of dairy products and meat processing, which lowers its overall
competitiveness and poses significant risks to public health. The general unsatisfactory sanitary
conditions at domestic plants also hamper the expansion of domestic meat and dairy product exports.
Moreover, the food and beverage sector faces challenges related to the insufficient and
underdeveloped distribution infrastructure. This results in elevated final consumer prices driven by
the elevated transportation costs, and hinders the distribution of the production to remote regions.
Another challenge is related to the fact that most segments of the food and beverage industry are
dominated by a small number of large conglomerates, raising the barriers for entry to the sector for
small and medium-sized players. In addition, Colombia remains a net importer of many agricultural
products. Thus, the country is still unable to provide domestic supply of certain raw materials and
ingredients for the food and beverage industry, which is facing growing demand. In terms of
international competitiveness, Colombia’s food and beverage sector remains behind other countries
from the Latin American region, mainly due to the existing problems with sanitary standards in the
country.
Source: USDA, BMI Research

02
SECTOR
IN FOCUS

02 SECTOR IN FOCUS CONTENTS
2012 2013 2014 2015 2016 2017
GDP, current prices, COP bn 664,240 710,497 757,065 799,312 855,432 912,525
GDP, constant prices 2005, y/y change, % 4 4.9 4.4 3.1 2 1.8
GDP per capita, USD 7,930 8,068 7,939 6,038 5,848 6,204
National Consumer Price Index, y/y change, % 2.4 1.9 3.7 6.8 5.8 4.1
Food and Beverage Consumer Price Index, y/y

4 1.3 3.2 7.4 11.6 2.6
change, %
Monetary Policy Rate, % pa, year-end 4.25 3.25 4.5 5.75 7.5 4.75
Exchange rate USD/COP, year-end 1,768 1,927 2,393 3,150 3,001 2,984
Food & Beverage Sector Trade Surplus, USD mn 429 476 1,044 1,056 477 871
Food and Beverage Sector Exports, USD mn 3,976 4,007 4,755 4,478 4,260 4,630
Food and Beverage Sector Exports, % of total 6.6 6.8 8.7 12.5 13.4 12.2
Food and Beverage Sector Imports, USD mn 3,547 3,531 3,711 3,422 3,783 3,759
Food and Beverage Sector Imports, % of total 6 5.9 5.8 6.3 8.4 8.2
Foreign Direct Investment Inflow in Food and

49.0 49.3 0 40.9 100.5 233
Beverage Sector, USD mn
Foreign Direct Investment Inflow in Food and

0.5 0.8 0 0.5 0.9 3.9
Beverage Sector, % of total non-oil FDI
Source: Central Bank of Colombia, DANE, CEIC, DNP

2012 2013 2014 2015 2016 2017
Food and Beverage Sector Value Added, constant 2005 prices, COP bn 12,594 12,902 13,257 13,636 13,916 13,963
Food and Beverage Sector Value Added, constant 2005 prices, y/y change, % 0.9 2.4 2.8 2.9 2.1 0.3
Flour Milling, Pasta, Bakery & Fodders Value Added,

3,183 3,105 3,031 3,166 3,409 3,487
constant 2005 prices, COP bn
Flour Milling, Pasta, Bakery & Fodders Value Added,

-1.61 -2.45 -2.38 4.45 7.68 2.29
constant 2005 prices, y/y change, %
Oils and Fats, Cocoa, Chocolate and Confectionery Value Added,

2,471 2,544 2,652 2,790 2,816 2,918
constant 2005 prices, COP bn
Oils and Fats, Cocoa, Chocolate and Confectionery Value Added, constant 2005
0.90 2.95 4.25 5.20 0.93 3.62
prices, y/y change, %
Meat and Fish Value Added, constant 2005 prices, COP bn 1,331 1,318 1,340 1,377 1,390 1,415
Meat and Fish Value Added, constant 2005 prices, y/y change, % 4.07 -0.98 1.67 2.76 0.94 1.8
Dairy Products Value Added, constant 2005 prices, COP bn 996 1,038 1,051 1,066 1,078 1,071
Dairy Products Value Added, constant 2005 prices, y/y change, % 1.22 4.22 1.25 1.43 1.13 -0.65
Sugar Mills and Refineries Value Added, constant 2005 prices, COP bn 725 755 852 862 779 784
Sugar Mills and Refineries Value Added, constant 2005 prices, y/y change, % -1.36 4.14 12.85 1.17 -9.63 0.64
Coffee Products Value Added, constant 2005 prices, COP bn 357 461 516 586 587 584
Coffee Products Value Added, constant 2005 prices, y/y change, % -7.75 29.13 11.93 13.57 0.17 -0.51
Beverages Value Added, constant 2005 prices, COP bn 3,531 3,681 3,815 3,789 3,857 3,704
Beverages Value Added, constant 2005 prices, y/y change, % 3.52 4.25 3.64 -0.68 1.79 -3.97
Number of Enterprises in Food and Beverage Sector, year-end 1,776 1,783 1,790 1,769 1,679 1,656.2*
Number of Employees in Food and Beverage Sector, % of total 23.2 24 24.4 24.5 25.1 25.7*
*EMIS Insights estimate
Source: Central Bank of Colombia

Comments Food and Beverage Sector Value Added,

2017
In 2017, the production value of Colombia’s food
manufacturing performed better than in 2016, Oils & Fats,
Cocoa, Chocolate
growing by 1.8% y/y. This positive result was & Confectionery Meat & Fish
20.9% 10.1%
driven by the growth of the oil and fat segment,
which rose by 3.6% y/y, accounting for 21% of the Dairy
food and beverage GVA in 2017. The beverage Products
Flour Milling,
7.7%
segment GVA, on the other hand, posted a Pasta,
Bakery &
significant drop of 4.5% y/y, after the 7.6% y/y Fodders
increase observed in 2016. The intensified 25.0% Sugar Mills &
Refineries
domestic demand for beverages in 2016 stemming 5.6%
from the extreme temperatures caused by the El
Coffee
Niño phenomenon stimulated the domestic Products
output. Yet, in 2017 the beverage sales value Beverages 4.2%
26.5%
followed the decreasing trend of the production
and fell by 4.7% y/y.
Real Production Value Evolution, y/y Real Sales Value Evolution, y/y change
change
7.6%
14.3%
6.0%
4.0% 4.7%
3.8% 8.3%
2.6% 4.0%
2.5% 5.5%
2.0% 1.8% 3.7% 4.1% 4.5%
0.3% 2.9% 2.8% 1.8%
1.2%
0.3%
-4.7%
-4.5%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Foods Beverages Foods Beverages
Source: Central Bank of Colombia, DANE

Global Positioning
Comments Top 14 Global Beer Consumers, 2016

The economic growth and the increasing middle Total
Global Market
Ranking Country Consumption,
class in Colombia during the last decade were the thou kl
Share
key drivers for the growth of the domestic food 1 China 41,772 22.4%
and beverage consumer market. The country’s 2 United States 24,245 13%
consumption of meat and beverages, however, 3 Brazil 12,654 6.8%
4 Germany 8,412 4.5%
still lags behind the largest economies in the
5 Russia 8,405 4.5%
region, such as Brazil, Mexico and Argentina. The
6 Mexico 7,988 4.3%
major opportunities for future growth in
7 Japan 5,251 2.8%
Colombia are related to the poultry and pork 8 United Kingdom 4,373 2.3%
meat segments, while in terms of beef, the 9 Vietnam 4,117 2.2%
country consumes much less than its neighbours. 10 Spain 3,909 2.1%
The domestic beer demand has been expanding 11 Poland 3,892 2.1%
during the last few years and in 2016, the country 12 South Africa 3,145 1.7%
ranked the 14th largets beer consumer in the 13 India 2,701 1.4%
world. 14 Colombia 2,357 1.3%
Top 10 Global Palm Oil Producers, Dec Top 10 Global Coffee Exporters, Dec 2017
2017
Production Volume, mn Export Volume, thou
Ranking Country Ranking Country
tonnes 60-kg bags
1 Indonesia 38.5 1 Brazil 30,430

2 Malaysia 20.5 2 Vietnam 28,150
3 Thailand 2.7 3 Colombia 13,600
4 Colombia 1.27 4 Indonesia 8,310
5 Nigeria 0.97 5 Honduras 7,100
6 Guatemala 0.74 6 India 5,550
7 Ecuador 0.59 7 Uganda 4,000
8 Honduras 0.55 8 Peru 3,600
9 Papua New Guinea 0.53 9 Ethiopia 3,310
10 Ghana 0.52 10 Guatemala 3,110
Source: USDA, Kirin Institute

External Trade
Food and Beverage External Trade, USD mn

4,755
4,630
4,478
4,260
4,007
3,976
3,783
3,759
3,711
3,547
3,531
3,422
1,044 1,056
871
429 476 477
2012 2013 2014 2015 2016 2017
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
13.4% period 2012-2017, due to the high external demand
12.5% 12.2% for the products of the coffee and palm oil
segments. After two consecutive years of record
8.7%
trade surplus, 2016 was characterised by a
8.4% 8.2%
6.6% 6.8%
significant drop of 54.9% y/y. In 2015 Venezuela
6.0% 5.9% 5.8% 6.3% closed its border with Colombia, in an attempt to
prevent the smuggling of subsidised food, fuels
and other essential products to its neighbour. In
2017, the sector’s trade balance recovered,
registering a 82.6% growth y/y, driven by the
2012 2013 2014 2015 2016 2017
higher export value which reached USD 4,630mn,
Exports Imports almost as much as in 2014.
Source: DANE

External Trade
(cont’d)
Trade Balance by Segment, USD mn, 2017
2,757.3 Coffee
274.3 Sugar Mills & Refineries Products
28.6 Pasta & Bakery Products
-90.7 Dairy
-172.4 Other Food Products
-255.8 Flour Milling & Fodders
-520.8 Beverages
-524.9 Meat & Fish
-624.8 Fruits, Vegetables, Oils & Fats
Comments
Even though Colombia’s food and beverage sector records sustainable overall trade surpluses, the
country still remains a net importer of some key products for the food processing industry. The meat
and fish segment, for instance, is highly dependent on imports, since the domestic production is
insufficient to satisfy the growing demand for poultry and pork meat. In 2017, the imports of meat and
fish accounted for 19.6% of the sector’s import value. The production of beverages is another segment
characterised by chronic trade deficits. Colombia imports significant amount of alcoholic drinks – wine
and liquors, as well as soft drinks and bottled water. Moreover, the overall exports of the sector are
still mainly supported by the coffee manufacturing segment. In 2017, this segment was responsible for
61% of the total food and beverage export value. This high dependence on one segment makes the
sector extremely vulnerable to price and demand volatilities on the global coffee market, which may
have the same negative effect on the country’s economy as the one stemming from the price
volatilities of mineral commodities between 2014 and 2017. 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 the domestic demand.
Source: DANE

Exports
Exports Evolution, USD mn Exports Evolution, y/y change
4,723 4,599
4,450 52.2%
4,240
3,930 3,973
18.9%
14.0%
8.5%
1.1%
-6.9% -5.8% -4.7%
-13.0%
-17.4%
-25.4% -28.2%
46 35 32 28 20 31
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Food Beverages Food Beverages
Exports by Type of Product, USD mn, Main Export Destinations in Value Terms,*
2017 2017
Coffee 2,807
United States 310.7
Fruits, Vegetables, Oils & Fats 619 Netherlands 249.6
Peru 180.3
Sugar Mills & Refineries Products 382 Venezuela 76.7
Ecuador 168.7
Meat & Fish 213
Mexico 97.6
Pasta & Bakery Products 102 Germany 63.7
Panama 47.4
Flour Milling & Fodders 93 Belgium 24.5
Japan 19.0
Beverages 31
China 11.7
Dairy 24 France 16.0
India 1.1
Other Food Products 359 Others 660.0
* Includes food, beverages and tobacco

Source: DANE

Imports
Imports Evolution, USD mn Imports Evolution, thou tonnes
3,552
3,388
3,348
3,279
3,274
3,208
3,208
3,038
2,985
2,877
2,866
2,816
1,174
1,060
630
551
504
384
324
323
309
289
273
222
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Food Beverages Food Beverages
Imports by Type of Product, USD mn, Imports by Type of Product, thou tonnes,
2017 2017
Fruits, Vegetables, Oils & Fats 1,243.5 Fruits, Vegetables, Oils & Fats 2,111.1
Beverages 551.4 Beverages 1,174.4
Flour Milling & Fodders 348.8 Flour Milling & Fodders 454.7
Meat & Fish 737.6 Meat & Fish 357.2
Sugar Mills & Refineries Products 108.1 Sugar Mills & Refineries Products 198.4
Dairy 114.5 Dairy 47.1
Pasta & Bakery Products 73.5 Pasta & Bakery Products 37.0
Coffee 50.1 Coffee 23.9
Other Food Products 531.4 Other Food Products 118.9
Source: DANE

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

USD mn
In 2017, the manufacturing industry ranked third
233.0
in Colombia in terms of foreign direct investment
inflow, after the oil sector and the transport,
warehousing and communications sector.
Although the total non-oil FDI inflow in Colombia
decelerated by 5.9% y/y in 2017, affected by weak
100.5
economic growth over the period and the political
instability stemming from the forthcoming
49.3
49.0
40.9
presidential elections in 2018, the food and
28.4
beverage sector performed extremely well,

reporting a two-fold increase in foreign
investments compared to 2016. The key driver for
-0.3
the expansion of the FDI to the sector was the

acquisition of one of the leading domestic 2011 2012 2013 2014 2015 2016 2017
poultry processors Pollos de Bucanero by the US
conglomerate Cargill.
FDI Inflow in Food & Beverage Sector,* Breakdown of FDI Inflow in Food and
share of total non-oil FDI Beverage Sector, 2017
3.9%
Beverages
32.4%
1.3%
0.9%
0.8%
0.5% 0.5%
0.0%
Food
2011 2012 2013 2014 2015 2016 2017 Manufacturing
67.6%
* Values from 2015 onwards in accordance with CIIU Revision 4

Source: DNP, Central Bank of Colombia

Enterprises and Employment
Comments Number of Enterprises, year-end

Traditionally, the food and beverage sector is
1,644
1,649
1,654
1,631
1,525
1,548
among the largest employers in Colombia and,
20.1%
according to EMIS Insights estimates, it
accounted for about 25.7% of all jobs in the 19.8%
manufacturing industry at the end of 2017. During 19.6%
19.5%
the year, the employment in the sector rose by
19.3%
3.6% y/y, much above the 1.3% y/y growth of 19.2%
employment in the overall manufacturing
138
136
134
132
131
131
industry. About 90% of the people working in the
sector were engaged in food products
2012 2013 2014 2015 2016 2017e
manufacturing, with the rest being employed in
the beverage subsector. Regarding the number of Food Production
enterprises in the sector, they accounted for 20% Beverage Production
Share of Total Number of Manufacturing Enterprises
of all companies operating in the manufacturing
industry.
Number of Employees, year-end Employment Breakdown by Segment, 2016

169,343
163,497
158,008
151,707
146,973
Meat & Fish 35,062

139,815
Dairy 22,493
25.7%
25.1% Beverages 19,069
24.4% 24.5% Flour Milling & Bakery 11,090

24.0%
23.2% Oils & Fats 9,394
19,544
19,069
16,384
15,410
15,342
Sugar & Sugar Refineries 9,065

17,057
Fodder Manufacturing 8,129
2012 2013 2014 2015 2016 2017e Coffee Products 4,830
Fruits & Vegetables 3,807

Food Production
Beverage Production Other Food Products 59,627
Share of Total Manufacturing Employment
Source: DANE

03
COMPETITIVE
LANDSCAPE

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

1922 Market Players
Grupo Nutresa was founded
Nestle entered Colombia.
in Medellin.
1927 Market Players

1962 Development Milestones
Colombina SA was created. Creation of Colombia's Agriculture

Institute (ICA).

1993
The value added tax was introduced
in Colombia. INVIMA was created.
Development Milestones
2003 Market Players

Industria Nacional de Gaseosas was acquired
by the Mexican Coca Cola FEMSA. Colombia's food labelling regulation was
established with Resolution 5,109.
2012 2013 2015 Market Players
FTA with the US. FTA with the EU. SABMiller PLC was acquired by the
Belgian-Brazilian brewing group
Development Milestones Anheuser-Busch InBev AS
Law 1,500 establishing sanitary condition standards for

domestic meat processing plants entered into force.
2017 Market Players
Pollos de Bucanero was acquired by Cargill.
Source: MINAGRI, EMIS DealWatch, Company Data, Internation Centre for Trade and Sustainable Development, La Nacion,
Alimentos

Highlights
Overview
Colombia’s food and beverage sector offers strong growth opportunities due to the continuing
process of urbanisation and the creation of a stable middle class. Moreover, the current levels of
domestic consumption remain lower than those in other countries in the region. The potential of the
sector is underlined by the strong interest of foreign investors with the FDI inflows more than
doubling in 2016 and 2017, despite the overall economic slowdown that affected the country during
the period.
Market Structure
In recent years, the food and beverage sector in Colombia has undergone a consolidation and
restructuring process through mergers, acquisitions and the entry of new foreign players, driven by
expected gains from economies of scale. The competition in the sector is based on quality, price and
service. The level of concentration differs depending on the specific segment. The dairy segment, for
instance, is dominated by two big dairy producers – Colanta and Alpina, which control 60% of the
market, the rest being in the hands of small domestic producers organised in cooperatives. The
beverage market is highly concentrated too with Bavaria SA accounting for more than half of the
domestic sales of beer in 2017.
Main Players
Among the top 15 companies in terms of operating revenues in the food and beverage sector in
Colombia in 2017, four were beverage producers. Bavaria SA, a unit of the UK-based group SABMiller,
was the largest entity in terms of operating revenues in 2017, generating COP 5.5tn. It was the only
company in the food and beverage industry to generate revenues of above COP 2.2tn. The second and
third largest players in 2017 were Colombia’s two major dairy producers - Alpina Productos Alimenticos
SA and Cooperativa Colanta – each with operating revenues of about COP 2.1tn.
Market Entry
The Colombian food and beverage market is characterised by significant foreign presence. The major
recent entry in the sector was the acquisition of the Colombian poultry producer Pollos el Bucanero
SA by the US agriculture conglomerate Cargill in June 2017. Cargill plans to invest between USD 300mn
and USD 500mn in its new subsidiary over the period 2017-2022, in order to increase its market
penetration, improve its infrastructure and expand its distribution chain.
Source: BMI Research, EMIS DealWatch

Top Companies
Top Companies in Colombia’s Food and Beverage Sector by Operating Revenues,
2017
Ranking Company Core Business Operating Revenues, COP bn
1 Bavaria SA Breweries 5,475.6
Beverage manufacturing; Dairy product

2 Alpina Productos Alimenticos SA 2,164.1
manufacturing
3 Cooperativa Colanta Dairy product manufacturing 2,081.7
Bakery and tortilla manufacturing; Sugar and

4 Colombina SA 1,768.6
confectionery products manufacturing
5 Alimentos Carnicos SAS Animal slaughter and processing 1,668.5
Productora de Alimentos Concentrados para

6 Fodder manufacturing 1,656.2
Animales Cointegral SA
7 Industria Nacional de Gaseosas SA Beverage manufacturing 1,625.6
8 Gaseosas Posada Tobon SA Soft drinks and ice manufacturing 1,625
9 Nestle de Colombia SA Other food manufacturing 1,543.8
10 Solla SA Fodder manufacturing 1,418.6
11 Quala SA Other food manufacturing 1,347.9
12 Italcol SA Fodder manufacturing 1,228.7
13 Organizacion Roa Florhuila SA Grain and oilseed milling 1,228
14 Embotelladora de La Sabana SAS Soft drinks and ice manufacturing 1,056.4
15 Diana Corporacion SAS Grain and oilseed milling 1,047.2
*NAICS codes: 311, 3115, 312
Source: EMIS Insights

M&A Deals 2016-Q1 2018

Top M&A Deals in Colombia’s Food and Beverage Sector,* 2016-Q1 2018
Country of Deal Value,

Date Target Company Deal Type Buyer Stake, %
Buyer USD mn
Mexico,
AdeS soy beverage business of Unilever in Coca-Cola FEMSA SAB de CV; The 575
Jun 2016 Acquisition United 100
Latin America Coca-Cola Co (Official data)
States
Productos Naturales de la Sabana SA International Finance Corporation 20

Oct 2017 Minority stake US n/a
(Alqueria) (IFC) (Official data)
Terrafertil SA businesses in Chile, Colombia,

Feb 2018 Acquisition Nestle SA Switzerland n/a n/a
Ecuador and Mexico
United Arab
Oct 2017 QBCo SAS Acquisition The Abraaj Group Ltd n/a n/a
Emirates
Bodegas Las Copas; Emperador Inc; Spain,

Jun 2017 Brandy business of Pernod Ricard Acquisition n/a 100
Gonzalez Byass SA Philippines
Jun 2017 Pollos el Bucanero SA (Bucanero Chicken) Acquisition Cargill Inc US n/a n/a
May 2017 Don Maiz SA Acquisition Alpina Productos Alimenticios SA Colombia n/a n/a
Apr 2017 Certain Assets of Indagro SA Acquisition Quimpac de Colombia SA Colombia n/a 100
Bimbo de Colombia SA; Grupo Bimbo Colombia,

Jan 2017 Frescongelados Panettiere SA Acquisition n/a 100
SAB de CV Mexico
Productos Naturales de la Sabana SA

Oct 2016 Danone Alqueria SAS Acquisition Colombia n/a 31
(Alqueria)
Industria de Cervezas y Bebidas SAS

Jul 2016 Acquisition Central Cervecera de Colombia SAS Colombia n/a n/a
(Inducerv)
The operations of Ambev in Colombia,

May 2016 Acquisition Anheuser-Busch InBev SA Belgium n/a 100
Ecuador and Peru
*NAICS codes: 311, 312
Source: EMIS Company Database

M&A Activity 2016-Q1 2018
Number and Value of Deals,* 2016-Q1 Deals by Deal Type

2018
7
4
Acquisition
91.7%
575
1
20 0
Minority Stake
Purchase
2016 2017 Q1 2018 8.3%
Value of Deals, USD mn Number of Deals
* NAICS codes: 311, 312
Deals by Region of Investor Deals by Deal Value, USD
EMEA 33.3%
North 0-50mn;
America 8.3%
25.0%
Undisclosed; 500.1-1000
83.3% ; 8.3%
Colombia
41.7%
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 59.9%
producing company. In 2005, the UK-based beer
5,179
and soft drinks group SABMiller acquired a
controlling stake of the company (71.8%) for USD
7.8bn. At the end of 2015, SABMiller already 34.9%
31.7%
controlled 99.1% of Bavaria’s capital.
1,844
1,807
5,177
1,591
1,321
1,111
In November 2015, SABMiller PLC was acquired by

2,655
the Belgian-Brazilian brewing group Anheuser-

Busch InBev SA (AB InBev) for USD 103.8bn. After 1,640
the acquisition, a restructuring process was
2015 2016 2017
initiated in Bavaria with a focus on strengthening
the position of the existing brands and Net Revenues EBITDA
Net Profit EBITDA Margin
introducing new brands in the mid-price and
premium segments.
Bavaria’s operations are mainly focused on the Balance Sheet, Consolidated, COP bn
production of beer. The company is also active in
the segments of soft drinks, juices and water
bottling. Bavaria is engaged in the acquisition,
sale, marketing, distribution, exports, storage and
sale of its own products and those of other
beverage manufacturers. The company’s main
9,747
brand in the malt-based carbonates, Pony Malta,

7,860.1
7,412
has a long-standing presence in Colombia.

5,012
6,163
4,347
In Colombia, the company owns six brewing

plants, two malt plants, a printing and a
transportation services companies. It also has
-46
-39
-653
brewing plants in Panama.

2015 2016 2017
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 2017, Bavaria remained the leader in the
beverage segment in Colombia and the largest 95.0%
company in the food and beverage sector in

terms of operating revenues. The company
registered net revenues of COP 5,2bn, a slight
decrease of 0.03% y/y, while its net profit grew by
39.6% in comparison to 2016, reaching COP 1.8tn.
The company’s production costs registered an 10.6%

increase of 0.7% y/y, while the distribution costs -0.03%
grew by 6.8% y/y. The wages and salaries costs,
on the other hand, grew with the significant
2015 2016 2017
share of 49.3% y/y in 2017.
In 2017, Bavaria’s plant in Tocancipa in

Cundinamarca department, delivered 120,000 beer
bottles per hour, accounting for about 40% of the
domestic beer consumption. Net sales by Market in Value Terms, 2016
In April 2018, Bavaria was recognised as the

company with the highest investments in
Colombia for 2017, according to the annual
ranking of private social investment elaborated
by the domestic consultancy Jaime Arteaga &
Asociados and the media outlet Semana
Sostenible. The ranking evaluates the relation Colombia
Panama
88.6%
between social investment and the business 11.4%
model of the respective entity, and focuses on
the investment in vulnerable communities and
regions.
Source: Company Data, Semana, Dinero

Grupo Nutresa SA

Grupo Nutresa was established in 1920 in the city
of Medellin. In 2017, it was the largest food
12.3%
manufacturing company in Colombia, with more
than 59.8% share of the domestic food market in
value terms, according to the company’s own
estimates. Grupo Nutresa operates as a holding 12.0%
8,677
comprised of eight business divisions – cold cuts,
7,945
biscuits, chocolates, coffee, ice cream, pasta, 11.9%

food retail and the subsidiary Tresmontes
1,044
1,029
976
Lucchetti, a food and beverage producer located

431
424
400
8,696
in Chile.
At the end of 2017, Grupo Nutresa had 46 2015 2016 2017
production plants, 30 of them in Colombia, five in Net Revenues EBITDA

Central America, two in the United States, three
in Chile, two in Mexico, and one unit in each of
the Dominican Republic, Venezuela, Peru and
Balance Sheet, Consolidated, COP bn
Malaysia. In 2017, the company had direct
presence in 14 countries, and 46,577 employees
around the world, of which 72.4% in Colombia. 2.9
2.8
The company’s shares are traded on the
Colombian Stock Exchange. Its market
capitalisation stood at COP 11.9bn as of May 2018.
14,310
13,700
13,178
In 2013, Nutresa set a goal to reach total revenues 2.5

2,906
2,808
2,596
8,385
of COP 11.9tn in 2020 and remains firm in pursuing

7,955
that goal.
8,950
2015 2016 2017

Source: Company Data

Grupo Nutresa SA
(cont’d)
Highlights Sales Value by Product Group, 2017

In 2017, the net revenues of Nutresa stood at COP
Coffee 11.5%
8.7tn, an increase of 0.2% compared to 2016. The
Chocolates Tresmontes
most relevant segments in terms of sales value 16.8% Lucchetti
during the period were the cold cuts with a 21% 11.2%
share, followed by the biscuits with a share of
Retail Food
20.3%. The best performing segment was the 8.0%
retail food group, registering a 6.1% y/y increase
Ice Cream
in the sales value. 4.9%
The sales on the domestic market in 2017 reached Pasta 3.4%

Biscuits
COP 5,495bn, rising by 2.5% in comparison to the 20.3%
previous year, following a 2.6% y/y decrease in Others 2.8%
the volume sold and 5.2% y/y rise in prices. In

2017, 63.2% of Grupo Nutresa’s total sales were Cold Cuts
21.0%
om the internal Colombian market.
The international sales of the company totalled

COP 1,084bn in 2017, a decrease of 0.3% y/y, Sales by Country, 2017
accounting for 36.8% of the company’s total sales Central
United States
value that year. America
8.2%
9.5%
Chile 8.1%
In 2017, in line with the slight growth of 0.2% y/y
in the net revenues, the company’s EBITDA rose
Mexico 3.6%
by only 1.5% y/y, reaching COP 1,044bn.
Peru 2.3%
Nutresa’s investment planned for 2018 exceeds
the investment for the previous year by about Dominican
10%. The company intends to open 50 restaurants Republic
1.8%
and ice-cream parlors in 2018, investing USD Colombia
94mn. In addition, the company is considering the 63.2% Ecuador
1.4%
possibilities for expansion in the 14 countries
Others 1.9%
where it has direct presence, most likely through
mergers or acquisitions.

Colombina SA

Colombina SA was established in 1927 as a
12.5%
company specialised in the production of sweets
and chocolates. In 1986, Colombina entered the
biscuit manufacturing segment through the
acquisition of the domestic company Splendid.
11.8%
1,611
In 2013, Colombina acquired another local player,
1,749
1,727
C.I. Comexa SA, owner of the Amazon brand for
11.5%
spicy products registered in 40 countries. During
the same year, Colombina signed a strategic
219
205
186
agreement with Liv-Smart, a manufacturer
57
51
33
headquartered in Guatemala and focused on the
production of healthy drinks, for the 2015 2016 2017
development, manufacture, marketing and Net Revenues EBITDA

distribution of Liv-Smart branded drinks in
Colombia.
At the end of 2017, Colombina owned five Balance Sheet, Consolidated, COP bn
production plants in Colombia – for candies,
biscuits and pastry, sauces and canned food, ice 3.8
creams, and for Amazon-branded sauces. The 3.3

company also has a manufacturing plant in 3.0
Guatemala which was established in 2001 and is
operated in cooperation with the local company
769
732
Pantaleon Concepcion.
1,427
1,416
564
1,320
In February 2016, Colombina announced the

305
acquisition of the Spanish candy maker Compania

237
209
Fiesta SA for EUR 16.8mn. Moreover, in 2016, the

company acquired 50% of the Guatemala-based
Compania de Alimentos del Pacifico SA for USD
2015 2016 2017
33.9mn, with which Colombina became the 100%
owner of CASPA.

Colombina SA
(cont’s)
Highlights Net Sales by Product, 2017

In 2017, Colombina continued with its strategic
projects Colombina 100% and SIGMA. The Cakes &
Canned
Colombina 100% was launched in 2015. The brand Biscuits
Foods 9.2%
22.2%
includes 32 products with no dyes and artificial
flavours added, with the objective to enter the
expanding market of healthy food products. The Ice Creams
6.8%
SIGMA project was initiated in September 2015,
aiming at transforming the retail sales of
Colombina’s products. It features the
implementation of on-line catalogues for
confectionery, biscuits, canned foods and ice Others
14.0%
cream.
Candies
47.8%
In 2017, the net revenues of Colombina stood at
COP 1.7tn, a decrease of 1.3% compared to 2016,
due to the slowdown in the Colombian economy.
The domestic market net revenues amounted to
Net Sales by Market, 2017
COP 1,066bn, a decrease of 4% y/y, while the
revenues from operations on the international
market reached COP 661.1bn - a 4% growth in
comparison to 2016.
Foreign
Candies was the best performing product in 2017 Market
with a 6% y/y rise of the net sales on the 38.4%
domestic market and 4% y/y on the international,

followed by ice cream manufacturing whose sales
value grew by 113% y/y on the domestic and by
7% on the foreign market. In line with the Domestic
decrease of the net revenues of the company Market
61.6%
during 2017, the EBITDA fell by 6.6% y/y, to COP
204.5bn.

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 12.8%
company was acquired by the Mexican bottling

company Coca-Cola FEMSA. At the end of 2015,
Coca-Cola FEMSA was the world’s largest
independent bottling company of the Coca-Cola
1,927
1,762
group.
1,523
5.8%
246
Industria Nacional de Gaseosas ended 2017 with a
89
34
total of 7 bottling plants in Colombia – in Bogota,

Medellin, Bucaramanga, Barranquilla, Cali and La
-19
-144
Calera - 24 distribution centres and 401,234 sales
-181
points. In 2017, the company invested USD 340mn 2015 2016 2017
in a new bottling plant in Tocacipa, which Net Revenues EBITDA

represents one of the largest projects of Coca-
Cola FEMSA in Latin America.
The portfolio of Industria Nacional de Gaseosas Balance Sheet, Individual, COP bn

includes soft drinks under the brands of Coca-
Cola, Coca-Cola Light, Coca-Cola Vanilla, Fanta, 4.1
Kola Roman, Lift, Premio, Quatro and Sprite as
well as bottled waters under the brands of Club K,
Manantial, Santa Clara and Soda Clausen. In 2017,
the company had 2,214 employees.
1,100
In 2017, the soft drinks accounted for 75.4% of the

2,081
1,971
1,908
total production, followed by bottled waters with

9.8% and non-carbonated drinks with a share of
361
943
8.4%.
190
762
159
0.6
2015 2016 2017

Source: EMIS Company Database, Coca-Cola FEMSA

Industria Nacional
de Gaseosas SA (cont’d)
Highlights Profitability Ratios

In 2017, the net revenues of Industria Nacional de
3.1%
1.8%
1.7%
Gaseosas stood at COP 1.5tn, a decrease by 13.6%
compared to 2016. This fall followed the negative
performance of the company’s net revenues that
started in 2015 with a decrease of 2.1% y/y.
-6.9%
-8.2%
-9.5%
The overall performance of Industria Nacional de
-11.9%
Gaseosa for 2017 was affected by the decrease in
-15.3%
net revenues and the company ended the
financial year with a net loss of COP 180.8bn.
-23.7%
During 2017, the total volume of sales in Colombia 2015 2016 2017
decreased by 413.7% y/y, reaching 265mn box
units. Return on Assets Return on Equity Return on Sales
Industria Nacional de Gaseosas has been

following the trend of the beverage and dairy
companies in Colombia towards adapting their Net Revenues Evolution, y/y change
portfolios to the higher consumer preferences for
healthier products. In order to satisfy the demand
2015 2016 2017
of consumers for drinks with no calories, in 2017
the company launched sugar free Coca Cola in
-2.1%
Colombia, as well as in Argentina, Costa Rica,
Guatemala, Mexico and Panama. In addition, the
Del Valle Fresh brand expanded in Colombia with
the launch of a new tropical juice with only five
-8.6%
calories and no sugar, in order to satisfy the
continuing increase in demand for juice-based
natural drinks in the country. -13.6%
Source: Company Data, Coca-Cola FEMSA

Riopaila Castilla
SA

Riopaila Castilla was established in 2007 after the
merger of the domestic sugar mills Riopaila
15.5%
Industrial SA and Castilla Industrial SA.
11.2%
The company deals in the manufacturing and sale
of sugar, sweeteners, syrups and alcohol fuel.
1,119
5.0%
971
931
Since 2015, Riopaila Castilla has also been active
173
in the segments of biofuel manufacturing and
109
power generation, through its cogeneration
54
47
16
plants in Valle del Cauca department.
-41
In 2015, the board of directors of the company
2015 2016 2017
approved the construction of a palm oil
extraction plant, located in the Vichada Net Revenues EBITDA
department. The move is in line with Riopaila
Castilla’s strategic diversification policy,
according to which 50% of Riopaila’s revenues in Balance Sheet, Consolidated, COP bn
2020 should come from activities not related to
sugar manufacturing.
12.1
In December 2017, Riopaila Castilla inaugurated a
palm oil complex in the municipality of Santa
Rosalia, Vichada department, with a capacity to
process 10 tonnes of palm fruits per hour.
1,507
1,367
1,345
4.4
566
2.5
487
483
475
435
520
2015 2016 2017


Riopaila Castilla
SA (cont’d)
Highlights Revenues by Segment, 2017

In 2017, the net revenues of Riopaila Castilla
stood at COP 930.5bnn, 16.9% less than in 2016.
The negative performance in 2017 also Alcohol
15.5%
materialised as a net loss of COP 40.5bn, while in
2016 Riopaila Castilla registered a record-high net
profit of COP 59.9bn.
In 2017, the company announced its goal to

achieve an average annual growth of 5% and to
generate revenues of COP 1.7tn by 2025. For this Energy 1.0%
purpose, the company went through a
restructuring process featuring the
Sugar 81.1%
implementation of a new organisational structure
with five divisions - sugar, ethanol and bioenergy Others 4.6%
unit, fruits and vegetables unit, other
commodities unit (dealing with the trade of palm
oil, timber, livestock and grains), agribusiness
Net Revenues Evolution, y/y change
services centre and a shared services centre. Mr.
Djalma Teixeira de Lima Filho was named CEO of
the restructured Riopaila Castilla. In December
31.7%
2017, however, Djalma Teixeira resigned from his
position at the company.
During 2017, the planted area of Riopaila Castilla

15.3%
was 6,238 ha and the harvest reached 151,534
tonnes. The palm oil cultivated area in 2017 was
2,027 ha.
-16.9%
2015 2016 2017
Source: Company Data, EMIS Company Database

05
REGULATORY
ENVIRONMENT

05 REGULATORY ENVIRONMENT CONTENTS
Key Regulatory Bodies
National Institute for the Surveillance of Food and Medicines (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 the 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 the 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 campaigns for the health awareness of 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 imports and exports 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. The product registration requirement 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 the agrarian social reform. Currently, ICA is the
entity in charge of the implementation of policies and practices related to the eradication of diseases
on the animal herds and the agricultural crops in the country. In addition, ICA performs inspection of
all imported products of animal and plant origin. The Plant Protection Division of ICA is responsible
for guaranteeing the agricultural health in the country and for reducing the risks of the emergence
and dissemination of pests and diseases in order to ensure phytosanitary quality and safety of the
products of plant origin. The Division establishes the phytosanitary status of the country and
coordinates the 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 the 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 established the guidelines for all risk
assessment studies on all animal and plant products intended for the market.
Source: ICA, USDA

Value Added Tax

The 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%. The increase from 16% to 19% was
introduced by a tax reform approved by the Congress in December 2016. However, there are a number
of goods with lower VAT rate or 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 decaffeinate coffee, wheat, oats, corn and rice for
industrial uses, sausages and mortadella are taxed at a VAT rate of 5%. A special rate of 14% applies
to the sale of domestic and imported beers.
Alcohol Tax Reform

The tax reform on the alcoholic beverages in Colombia proposed by the Ministry of Finance was
approved by the president Juan Manuel Santos in December 2016, and took effect immediately. By the
reform, the duty on alcoholic drinks was raised by 20%. The Association of Distilleries (ACIL) estimated
that the annual contributions to the government budget are to increase from COP 1.4tn to COP 1.8tn in
2017 as a result of the reform. In general, all domestic or imported alcoholic drinks are subject to a tax
rate of COP 220 per unit of alcohol, an ad valorem stamp duty of 25% of the final value of the product
and an additional 5% VAT rate. Wines are subject to a preferential rate of COP 150 per unit of alcohol
and an ad valorem stamp duty of 20%, considering the lower alcohol content of this beverage.
Food Labelling
The food labelling requirements in Colombia were established by Resolution 5,109 of 2005. All food
products and raw materials used for human consumption must have comprehensive and not
misleading information for the end user, with all ingredients contained in the product, as well as
information on the respective weight, the name and address of the producer, expiration date and
INVIMA’s sanitary registration number. All food products containing genetically modified organisms
must have this information clearly indicated on the label. The requirement also refers to all products
with saturated and/or trans fats in quantities equal to or exceeding 0.5 grammes per serving.
Source: El telegrafo, EMIS Insights


(cont’d)
Sanitary Regulation
In August 2016, Colombia’s government began the implementation of the last phase of a 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 the sanitary
standards in order to stimulate the exports. This phase seeks to reduce the cases of diseases
transmitted by food and the cases of acute and chronic poisoning with chemicals, including
antibiotics, anabolics 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. So far, the implementation of the regulation has led to a reduction of the
number of authorised slaughterhouses, a rise in the number of authorised cutting and packaging
facilities, more frequent inspections by INVIMA, and a general increase of the possible export
destinations for Colombian meat.
Moreover, ICA continues working with the country’s producers of animal products in order to increase
the quality, health and safety of production. In December 2017, ICA delivered 38 sanitary and animal
safety certifications for the use of good livestock practices in the Norte de Santander department,
including certificates for goat and sheep production in the municipalities of Villa Rosario and
Bochalema, for milk production in the municipalities of Santiago, Salazar and Gramalote, and for
herds free of tuberculosis and brucellosis in the municipalities of Gramalote, Santiago and Salazar.
The majority of the producers that received those certifications were small and medium-sized milk
and meat producers.
In December 2017, the World Organization for Animal Health (OIE) restored Colombia’s status of a
foot-and-mouth disease free country, after overcoming the outbreak of the disease from the
beginning of the year. As a result, Russia reopened its market to Colombian meat.
In 2014, Colombia had access to only four foreign markets for beef meat. As of December 2017, the
country exports beef meat to 15 countries, including Russia, Angola, Jordan, Lebanon, Georgia, Egypt,
Cuba and Peru, and the government continues working on expanding to other countries, with the
focus currently on China and Israel. In 2017, Colombia started its exports of beef to the United Arab
Emirates, with the shipment of 25 tonnes of the product by the Colombian subsidiary of Brazil’s
Minerva Foods.
Source: INVIMA, EMIS Insights

06
OILS
AND FATS

06 OILS AND FATS CONTENTS
Highlights
Overview
According to the USDA, Colombia is the fourth largest palm oil producer in the world after Indonesia,
Malaysia and Thailand as of 2017. During the period, the crude palm oil output reached record-high
levels, rising by 42% y/y to 1.6mn tonnes, driven by the favourable weather conditions and the growing
yields. The main palm oil production centres are located in the east region of Colombia, which
accounted for 44% of the total domestic crude palm oil output in 2017, followed by the central region
with a share of 29%. The central region registered an increase in the crude palm oil output of 50% in
comparison to 2016, driven by the better weather conditions and the higher yields. In 2017, other oils,
such as the olive oil and rapeseed oil, have recorded growth in sales due to the increasing consumer
preferences for healthier foods.
Challenges
The major challenge to Colombia’s oils and fats segment remains its high dependence on the weather
conditions. The prolonged droughts caused by the natural phenomenon El Nino, in particular, have
significant negative impact on production volumes and yields. Another challenge to the segment is
related to the obtaining of a RSPO certificate, which is a global standard for sustainable palm oil
production. Only two out of the 69 extraction plants in the country hold this certificate. The
possession of such a certificate is crucial for preserving Colombia’s position on the global palm oil
market. Moreover, the increasing pressure against the use of palm oil coming from the European
market, represents another challenge to the segment in Colombia. In January 2018, the EU approved a
ban on the use of palm oil in motor fuels from 2021.
Outlook
According to BMI Research, Colombia’s oils and fats segment will reach sales value of COP 7,358.6bn
in 2022, increasing at a CAGR of 5.7% between 2018 and 2022, driven by the growing domestic demand
as the households’ disposable income continues to rise as well. The short-term forecast is for a 8.2%
y/y growth in sales value for 2018. Regarding palm oil production, the segment is expected to
continue expanding. BMI Research estimates that palm oil volume will be the best performer of the
agriculture sector by output, with production rising at a CAGR of 9% over the period 2018-2021. For
2018, the expected production volume growth is of 10.6% y/y, indicating a slowdown in output after
the record volumes achieved in 2017.
Source: FEDEPALMA, BMI Research

Main Events
§ In September 2017, the Colombian scientific and technical corporation for palm oil research
Cinepalma, together with palm oil growers, announced a shock plan for fighting the outbreak of
the phytoplasma disease Pudricion del cogollo in Magdalena department, where about 700 ha
planted with palms were infected. The shock plan includes measures related to the maintenance of
drainages, adequate soil management and nutrition, and elimination of the disease sources
through the eradication of the infected trees. Cinepalma and FEDEPALMA estimate that the losses
caused by the outbreak of the disease in the north region of the country amounted to COP 141bn,
of which COP 50bn only in Magdalena department.
§ In June 2017, Oleic Group, a group of five companies led by the local branch of the Italian-Spanish
palm oil producer Poligrow, announced an investment of USD 100mn in the construction of a plant
in Colombia for the processing of crude palm oil and palm kernel oil. The location of the facility is
in the south of the Bolivar department. The engineering and construction are assigned to a German
contractor and the plant is expected to be completed and to start operations in 2019. It will have a
capacity to process 300,000 tonnes of oil per year, which accounts to 25% of the total domestic
production. In addition, Poligrow is planning to expand its planted area of oil palms from 7,000 to
15,000 ha and is investing USD 18mn in expanding and modernising its palm oil production unit in
Mapiripan.
§ In March 2017, the US-based QED Connect, focused on the harvesting, roasting and packaging of
Sacha Inchi seeds, acquired a controlling stake in the Colombian oilseed producer Colombina de
Combustibles that specialises in research and production of Sachi Inchi seeds, caster oil and
Jatropha. No financial details about the deal were disclosed. The expertise of Colbio lies in more
than 14 years of experience in the research of the specific types of seeds. Moreover, the company
is the only one to have a research unit under the Colombian Institute for Agriculture and Livestock
and is one of the main research companies in the world with a focus on the Sacha Inchi. The
acquisition gives QED Connect a full competitive advantage in the market of Sachi Inchi seeds and
other oils produced specifically for biofuel manufacturing.
Source: EMIS Insights, La Republica

Production
Comments Production Evolution, thou tonnes

In 2017, the domestic production of crude palm oil
8,037.0
exceeded 1.6mn tonnes, registering a record
growth of 42% y/y as a result of the favourable
6,292.0
climate and the recovery in yields, which have
5,641.0
5,532.0
5,053.0
been growing steadily since 2010, with the only
4,674.0
exception of 2016. In 2017, Colombia’s average

crude palm oil yield of 3.8 tonnes/ha surpassed
that of Indonesia, 3.7 tonnes/ha, and Malaysia, 3.5
tonnes/ha, for the first time in 12 years. In terms
1,628
of production value, it reached COP 3.7bn,
1,275
1,146
1,111
1,041
974
including both crude palm oil and palm kernel oil.
326.0
270.0
242.0
238.0
226.0
216.0
The domestic sales of palm oil registered a record

increase of 41% y/y in volume, driven by the
2012 2013 2014 2015 2016 2017
increased supply of the product and the
competitive prices in comparison to other oils FFB* of Palm Oil Crude Palm Oil Palm Kernel Oil
and imported substitutes. * Fresh fruit bunches
Production Value, current prices, Crude Palm Oil Production by Region,

COP mn 2017
2,729 2,709 2,637 2,628

2,468 2,439 Cetral 29.3%
276 174 229
161 290
218
2,453 2,535 2,307 2,408 2,338 North 24.2%

2,221
2011 2012 2013 2014 2015 2016

East 44.5% South-West
Crude Palm Oil Palm Kernel Oil Total 2.1%
Source: FEDEPALMA

Sales and Prices
Sales Evolution, thou tonnes 1,618 Sales by Region in Volume Terms, 2017
0.5%
15.3%
23.5%
1,264
1,151
1,116
22.2%
1,027
18.4%
976
942
57.5% 62.5%
121
104
96
96
90
81
80
2011 2012 2013 2014 2015 2016 2017 Crude Palm Oil Palm Kernel Oil
Crude Palm Oil Palm Kernel Oil East North Central South-West
Average Price of Crude Palm Oil Average Price of Palm Kernel Oil
2,357
4,458
2,207 2,266
41.1% 4,245
23.4% 39.4% 38.4%
1,944
1,788
1,670 3,159
7.1% 6.8% 2,282

2,118
1,637 -5.0%
-4.0%
-8.3%
-22.7%
-14.1% -30.3%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Value, COP/thou tonnes y/y change Value, COP/thou tonnes y/y change
Source: FEDEPALMA

External Trade
External Trade in Oils and Fats, USD mn
876
820
810
802
787
723
722
718
698
647
524
509
65
-4
-122 -155
-199
-279
2012 2013 2014 2015 2016 2017
Comments
In Colombia, the export value of palm oil is the second highest in the overall food and beverage sector
after only that of the coffee. In 2017, the exports reached 749,400 tonnes, an increase of 80.8% y/y. The
record-high production boosted the country’s sales on the international market of both crude and
kernel palm oil. Moreover, the government support and the trade policy instruments, such as the FEP
Palmero – a price stabilisation fund for palm oil, which aims at balancing the income of domestic
producers - had an additional positive impact on the export volumes. The palm oil products remain
the major export group, accounting for 84.7% of the total export value of the oils and fats segment,
with crude palm oil being the leader in the exports. The countries from the EU remain the main export
destination for Colombian palm oil, as a result of the preferential treatment of the product under the
free trade agreements signed with the countries of the Union. In 2017, the Netherlands was the
destination for 25% of the total exports of oils and fats in terms of value, followed by Peru with 10.8%.
In terms of imports, Colombia imported a total of 778,000 tonnes of oils and fats in 2017, down by 4%
y/y, as the significant domestic supply and the competitive domestic price of palm oil suppressed the
demand for its imported substitutes. Once again, in 2017 the crude soybean oil was the most imported
edible oil in Colombia, responsible for 26% of total oil and fat import value. The US was the main
import counterparty in the segment, accounting for 39.2% of the import value, followed by Bolivia
with a 19.2% share.
Source: FEDEPALMA

Exports
Exports Evolution Exports by Product Group in Value

Terms, 2017
875.5
718.9
697.9 718.0
647.4
545.0
501.7
524.2 Animal Oils
508.5
and Fats
366.2 9.1%
263.4 285.5
Palm Oil
Products
84.7%
Other
Vegetable
2012 2013 2014 2015 2016 2017 Oils 6.2%
Volume, thou tonnes Value, USD mn
Exports by Destination in Value Terms, Exports by Type in Value Terms, 2017

2017
United States Palm Kernel Oil in Processed
3.6% Products 8.3%
Animal Oils & Palm Oil
Ecuador Soaps 7.5%
3.9% Fats 9.1%
Others
46.1% Crude Palm
Kernel Oil
Mexico 5.2% Palm Oil in 7.2%
Cookies
11.3%
Refined Palm
Oil 2.5%
Brazil 5.4%
Other
Refined
Vegetable
Peru 10.8% Oils 6.1%
Netherlands Crude Palm

25.0% Oil 38.0% Others
10.0%
Source: FEDEPALMA

Imports
Imports Evolution Imports by Product Group in Value

Terms, 2017
819.5 801.9 810.4

787.0
722.7 721.7
Refined
Vegetable
Oils 18.9%
810.0
778.2
662.9
651.5
538.9
525.2
Crude
Vegetable
Oils 74.3% Animal Oils &
Fats 6.8%
2012 2013 2014 2015 2016 2017
Volume, thou tonnes Value, USD mn
Imports by Country of Origin in Value Imports by Product in Value Terms, 2017

Terms, 2017
Ecuador Crude Palm Refined
16.2% Oil 15.0% Soybean Oil Animal Oils
Argentina 8.9% and Fats
Bolivia 4.7% 6.8%
19.2% Mixtures of
Vegetable
Oils 4.0%
Others Soybean Oil
20.7% 25.2% Crude Olive
Oil 2.3%
Crude
Sunflower Oil
2.2%
Refined Palm
Oil 2.0%
United States
39.2% Crude Others 7.6%
Soybean Oil
26.0%
Source: FEDEPALMA

07
MEAT
AND FISH

07 MEAT AND FISH CONTENTS
Highlights
Overview
Over the period 2012-2017, Colombia’s meat and fish segment production value rose at an average rate
of 2.7%, while the sales value registered a slower average growth of 2%. The production of chicken
meat has been the fastest growing category, posting an impressive CAGR of 7.1% between 2012 and
2017. The fast growth of the sub-segment resulted in steady increase of the production of eggs. At the
same time, the fish capture fell at a CAGR of 6.4% between 2012 and 2017, mainly due to the
significant drop in 2016 caused by the unfavourable weather conditions during the period. As for the
external trade, the Colombian meat and fish segment has a history of chronic trade deficit, which has
been expanding since 2013, due to the country’s rising deficit in poultry and pork meat.
Drivers and Challenges

The major challenge for Colombia’s domestic meat segment remains the limited access to foreign
markets due to sanitary issues and inability to meet the international phytosanitary standards. Only a
few processing plants are certified to export meat products to the US, one of the leading global meat
markets. The segment experienced a foot-and-mouth disease crisis in 2017, which affected negatively
some of the major market players, including the largest domestic meat producer and processor
Frigorificos Ganaderos de Colombia (Friogan). In the case of fisheries, the weather plays an important
role for the volume of production, which has been significantly affected by the El Niño phenomenon
in recent years.
On the positive side, the economic stability of the country and the growing consumer income have
driven the demand for meat and fish products up.
Outlook
According to BMI Research, the meat segment is projected to grow at a CAGR of 9.4% between 2018
and 2022, and reach sales value of COP 45,810bn in 2022. The increasing disposable income of the
country’s population will be the major driver of the positive performance. Fish is also likely to remain
an important element of the diet of the Colombians. BMI Research forecasts that fish sales will reach
COP 4,405bn in 2022, growing at a CAGR of 5.4% between 2018 and 2022. The estimated positive growth
will be supported by improvements in the fish farming and processing technologies on the supply
side, and by growing demand for healthier diet based on increased consumption of marine protein on
the demand side.
Source: BMI Research

Main Events
§ In December 2017, the Colombian Federation of Aquacultures (FEDEACUA) entered in partnership

with the Ministry of Agriculture and Rural Development and established an alliance called El Agro
Axporta, meaning the agriculture exports, focused on the promotion of fish production in five
departments across the country. The ministry, through its Productive Transformation Programme
(PTP) and FEDEACUA will jointly allocate COP 6,390mn to support small and medium-sized fish
farms and help them resolve issues related to safety and compliance with international quality
standards.
§ In November 2017, the Colombian seafood producer Pesquera Jaramillo was fined COP 440mn by
the Superintendence of Industry and Commerce (SIC) for using misleading information on the
packages of its products sold on the domestic market. The company’s plant in Bogota was
examined by representatives of the SIC, who carried out a number weight tests of the products. It
was discovered that the weight of squid ring and shrimp packages was lower than the one
indicated on the labels.
§ In November 2017, the Superintendence of Corporations in Colombia announced a reorganisation of

one of the biggest meat producers and processors in the country - Frigorificos Ganaderos de
Colombia (Friogan). The process will have a duration of ten years and has as an objective
preserving the company and normalising its commercial and credit relationships. Friogan was
about to enter a liquidation process due to its debt valued at more than COP 44,000mn as a result
of the liquidation of its major shareholder – the National Livestock Fund.
§ In June 2017, the US agriculture conglomerate Cargill acquired the Colombian poultry producer
Pollos El Bucanero, situated in Valle del Cauca department for an undisclosed amount. Cargill plans
to invest between USD 300mn and USD 500mn in its new subsidiary over the period 2017-2022, in
order to increase its market penetration, improve its infrastructure and expand its distribution
chain.
§ In April 2017, the Colombian poultry meat and egg producer Incubadora Santander launched four
new investment projects in Cauca department. The company invested USD 24.2mn in the expansion
of its production plant Las Palmas in Caloto municipality, USD 4.6mn in the construction of the
Gallina Kampeona facility for slaughter and processing of poultry in Puerto Tejada, USD 9.3mn in a
new egg processing plant in Villa Rica with capacity to produce 600 tonnes of egg liquid and 8mn
pasteurised eggs per month, and injected money in the construction of the first-of-its-kind system
for power generation from chicken manure of laying hens with an energy capacity of 4.4 MWh, to
be installed on the site of the Las Palmas production plant.
Source: SIC, EMIS Insights, Dinero, Agronegocio, El Tiempo

Comments
In 2017, the meat and fish production and processing segment in Colombia performed better that the
overall food and beverage sector. Its value added expanded by 1.8% y/y, compared to the mere 0.3%
y/y growth of the food and beverage GVA. Even though the beef production fell by 3.3% y/y in 2017, the
poultry and hog and pig segments registered positive performance, reflecting the rising demand for
these types of animal protein by the Colombian population. In the case of fisheries, they have
importance in both the domestic consumption and the exports. In 2017, the production of fish
recovered from the crisis in 2016, expanding by 98.9% y/y to 35,534 tonnes.
The increase of the disposable income, coupled with the continuing urbanisation process in Colombia,
were the key factors for the 2.5% y/t rise of the real domestic sales of meat and fish in 2017. The
growth of sales exceeded the one of the output of the segment which indicates the increasing
importance of the animal and fish protein for the Colombian consumers. The best-performing sub-
segments in terms of sales remained the poultry and hog and pig categories, which registered growth
of 3.8% y/y and 7% y/y, respectively. Beef consumption, on the other hand, has been losing popularity
among consumers, registering a fall in sales of 2.7% y/y.
Meat and Fish Production and Sales, y/y Meat and Fish Consumer Price Index, y/y
change change
6.6% 12.9%
5.6% 12.2%
5.0% 9.8%
3.5%
3.4%
2.5% 4.8%
1.8% 3.9% 4.6%
1.3% 2.8% 3.6% 3.5%
3.7%
0.8% 2.7%
1.3%
-0.4%
-0.6% 2012 2013 2014 2015 2016 2017
-1.2%
2012 2013 2014 2015 2016 2017
Real Production Real Sales Meat & Meat Products Fish & Seafood
Source: DANE, GlobalData, BMI Research

Beef
Comments Beef Production Evolution

In 2016, the beef cattle inventory in Colombia
973.3 955.9 941.3 942.3 910.1 905.6
grew by 11.5% y/y, rising for the first time since 4.4
2013. The positive performance in 2016 was driven 4.3
4.3
by the incentives related to the programme
4.3
Colombia Siembra. The beef cattle slaughter has
4.2
been decreasing since 2013, due to the smuggling
of animals from Venezuela, the high share of
4.1
illegal slaughter and the growth in beef prices as
a result of the decreasing inventory between 2013
and 2016. In 2017, the beef cattle slaughtered fell
by 3.3% y/y. The domestic beef consumption, on
the other hand, is rather low in comparison to
other countries in Latin America. The beef 2012 2013 2014 2015 2016 2017
consumption per capita has been falling steadily Cattle Slaughtered, mn head
since 2012, registering a decrease of 2.7% y/y in
Beef Production, thou tonnes
2017.
Beef Consumption Evolution Beef Cattle Inventory

22.9
20.8
11.5%
3.7% 19.7
19.3 19.1
18.6
20.9
2.4% 20.9
20.6
18.1 20.4 0.1%
-1.0%
-2.0% -1.9%
-2.6% -2.7%
-7.4%
-5.1%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016
Beef Consumption, kg per capita y/y change Beef Cattle Inventory, mn head y/y change
Source: FEDEGAN, DANE

Poultry Meat
Comments Poultry Meat Production

The poultry segment has become one of the
major driving forces of the domestic meat 14.6%
1,478.9 1,563.6
1,424.4
segment. In 2017, the poultry output reached a 1,359.2
1,274.3
new record of 1.6mn tonnes, as a result of the
1,112.2
significant investment in capacity increase and
the rising demand. The country’s internal poultry
consumption almost doubled from 2007 to 2017, 6.7%
due to the shift of the Colombians towards a 5.7%
4.8%
protein rich diet, on the way out of poverty. 3.5% 3.8%
Poultry substituted beef as Colombia’s favourite
meat due to its competitive price. In 2017, the
consumption recorded an increase of 3.8% y/y, 2012 2013 2014 2015 2016 2017
reaching 32.7kg per capita.
Poultry Meat Production, thou tonnes y/y change
Poultry Meat Production by Region, 2017 Poultry Meat Consumption

31.5 32.7
30.2
Valle 20.7% 27.1 29.5
13.4%
Central 23.9
Atlantic 9.4%
Eje Cafetero 8.9%

Santander 8.3%
24.6%
Antioquia
7.3% 4.3%
3.8%
Eastern 2.9% 2.4%
0.4%
2012 2013 2014 2015 2016 2017
Central
26.9% Poultry Meat Consumption, kg per capita y/y change
Source: FENAVI

FOCUS POINT
Poultry Production by Region, Jan-Jul 2017
3.5%
3.7%
Bolivar
Atlantico
7.3%
Antioquia 24.8%
Santander
6.8% 3.0%
Quindio Boyaca
20.8%
16.6% Cundinamarca
Valle
1.9% 2.7%
Narino Meta
2.4%
Cauca
2.3%
Tolima
4.2%
Others
Source: FENAVI

Eggs
Comments Egg Production

The production of eggs in Colombia followed the
828.3
growth path of the poultry sub-segment, with the
769.0
number of eggs produced expanding at a strong 668.0 691.8 721.7
636.0 13,828
CAGR of 5.4% over the period 2012-2017. The 12,817
12,029
output growth was supported mainly by strong 11,128 11,529
10,606
domestic demand and high investments. In 2017,
the production of eggs in the country reached the
record 828,337 tonnes, an increase of 7.7% y/y. The
domestic egg consumption per capita recorded
an increase of 6.5% y/y in 2017, driven by the
continuing change of the consumer patterns in
the country, as the middle class is growing and 2012 2013 2014 2015 2016 2017
the disposable household incomes are increasing.
Volume, thou tonnes Volume, mn units
Egg Production by Department, 2017 Egg Consumption

Santander 279.0
262.0
20.2% 252.0 6.5%
236.0 242.0
228.0
Central Antioquia 4.1% 4.0%

3.5%
29.0% 9.3%
2.5%
Eje Cafetero
5.5%
Central -2.6%
Atlantic 4.0%
Eastern 1.3% 2012 2013 2014 2015 2016 2017
Valle 30.8% Eggs Consumption, units per capita y/y change
Source: FENAVI

Pork
Comments Pork Production Evolution

Colombia’s pig and hog sub-segment has been
4,070.3 4,134.8
growing since 2013, driven by the increased
3,622.0
investment and the automation of the production
3,228.4
process, making it the third most important meat 2,964.0 3,046.5 12.2% 12.4%
sub-segment in the country in terms of
production and consumption volumes. After two
7.5%
consecutive years of double-digit growth, in 2017
6.0%
the number of pigs slaughtered registered an
increase of only 1.6% y/y, as a result of a natural 2.8%
slowdown in pork production cycle. The domestic 1.6%
consumption, on the other hand, reached the
record 9.2 kg per capita in 2017, an increase of 7% 2012 2013 2014 2015 2016 2017
y/y, meaning that 7 out of 10 families in Colombia
Pigs Slaughtered, thou head y/y change
include pork in their animal protein intake.
Pork Production by Department, 2017 Pork Consumption Evolution
8.6 9.2
Antioquia 45.7% 7.8

7.2
Bogota 21.9% 6.7
6.0
Valle del Cauca 16.2% 11.7%
10.3%
Risaralda 4.4% 9.1%
8.3%
Atlantico 2.6% 7.5% 7.0%
Caldas 2.0%
Quindio 1.4%
Narino 1.0% 2012 2013 2014 2015 2016 2017

Others 4.8%
Pork Consumption, kg per capita y/y change
Source: PorkColombia

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

Following the severe negative effects from the El
Niño weather phenomenon that led to higher 48.6 47.5
44.5 44.1
water temperatures in 2016, Colombia’s total fish
35.6
capture during that year plunged by 59.4% y/y - 7.1
9.1
the marine capture fell by 65.3% y/y, while the 9.1 9.2 17.9
inland capture decreased by 37.1% y/y. The better 4.5
climate in 2017 supported the recovery of

Colombia’s fish segment, yet, the total capture 41.5 38.4
35.4 34.9
remained below its previous levels of above 5.8 31.1
44,000 tonnes registered between 2012 and 2015.

12.1
The marine capture is concentrated in Bolivar
department, which accounted for 45.9% of the 2012 2013 2014 2015 2016 2017
total marine output in 2017, followed by Narino
Marine Inland Total
department with a 33.1% share, while Vichada
department was the leader in inland capture.
Marine Capture by Department, 2017 Inland Capture by Department, 2017
Bolivar 45.9% Vichada 15.7%

Narino 33.1% Cordoba 10.5%
Valle del Cauca 8.0% Antioquia 9.6%
Atlantico 4.7%
Sucre 9.5%
La Guajira 2.2%
Cesar 7.6%
Choco 1.6%
Santander 7.4%
Magdalena 1.4%
Bolivar 7.2%
Cordoba 0.9%
Antioquia 0.9% Guiania 6.7%
Cauca 0.9% Amazonas 6.2%
Sucre 0.3% Others 19.6%
Source: SEPEC

External Trade
Comments
Colombia’s meat and fish segment recorded constant trade deficit between 2012 and 2017, as the
domestic production was insufficient to meet the growing demand in the country. In 2017, the
segment’s deficit reached USD 525mn, an increase of 13.6% y/y, driven by a 7.3% y/y decrease in
exports and a 6.7% y/y growth of imports.
The fish and fish products play a significant role in the segment’s exports, as frozen fish and fish
fillets accounted for more than a third of the total value of its foreign sales in 2017. A major challenge
for the country’s meat segment remains the smuggling of animals from Venezuela, which affects
negatively the production of meat and the trade balance of the entire food and beverages sector.
In terms of imports, Colombia buys abroad mainly canned fish, frozen fish and pork, coming from the
US and the neighbouring countries in South America. According to BMI Research, Colombia’s trade
deficit in pork and poultry meat will increase through 2021 as a result of the growing domestic
demand, while the country will remain relatively self-sufficient in beef production.
Meat and Fish External Trade, USD mn Share of Meat and Fish in Total Sector
Exports and Imports
844
738
715
699
691
22.7%
562
452
20.2% 20.4%
19.6%
297
18.3%
274
232
229
213
15.8%
11.3%
2012 2013 2014 2015 2016 2017
-288 -263 6.9% 6.2%
5.2% 5.4%
-467 -462 4.6%
-548 -525
2012 2013 2014 2015 2016 2017
Exports Imports Trade Balance Exports Imports
Source: DANE, BMI Research

08
DAIRY
PRODUCTS

08 DAIRY PRODUCTS CONTENTS
Highlights
Overview
After two consecutive years of contraction of the domestic milk production, in 2017 Colombia’s milk
output reached 6.8bn litres, up by 7% y/y, driven by the better weather conditions during this year. The
severe negative impacts of the prolonged droughts caused by the El Niño phenomenon in 2016, led to
a 3.5% y/y decrease of production. The Andean region concentrates most of the output and accounts
for 60.6% of the total raw milk production in 2016, Antioquia department being the leading producer
with a 20.6% share of the total milk output in 2016. Between 2012 and 2016, the domestic dairy
consumption was constantly decreasing but this trend was reversed in 2017, as a result of the changes
in the consumption patterns relating to the to shift of the Colombians to a healthier diet. In 2017, the
domestic raw milk consumption reached 145 litres per capita, an increase of 3.5% y/y.
Challenges
The major challenge to the diary segment in Colombia is the fact that it remains mostly informal. The
majority of the producers are unwilling to pay taxes, register their farms and vaccinate the cattle, due
to the lower consumer prices of milk and the higher production costs of certified products. This
informality leads to low levels of automation of the segment and to limited participation of
Colombia’s dairy producers on the international market. Moreover, the potential cheap imports of
dairy products can jeopardise the domestic producers. In early 2018, members of the local dairy
industry have called upon the government to exclude milk from the possible trade agreements with
New Zealand, Singapore and Australia and to increase the existing import tariffs.
Outlook
According to the BMI Research forecast, the dairy segment in Colombia will register the smallest
growth rates within the food and beverage industry over the period between 2018 and 2022. The
Colombian dairy consumption is lower than that in other Latin American countries, as a result of the
large income inequality. The dairy sales are expected to register growth of 3.4% y/y in 2018, followed
by a sharp decrease of 13.7% y/y in 2019, driven by the expected fall in international and domestic
dairy prices. In 2018, Colombians are expected to spend USD 100.4 per capita on dairy products, which
is set to fall to only USD 82.6 per capita in 2022. The total sales of the segment are projected to reach
COP 15,298.2bn by 2022, growing at a CAGR of only 1.6%.
Source: FEDEGAN, BMI Research

Main Events
§ In March 2018, the International Financial Corporation (IFC), the financing and asset management
body of the World Bank, announced an investment of USD 20mn in Colombia’s dairy producer
Alqueria and acquired an 18% stake in the company. The purpose of the capital injection is to
support the sustainable development of the agriculture sector in Colombia and allow Alqueria to
grow through the development of new business lines and products. This is the second investment
of IFC in the dairy producer after the capitalisation and corporate loan provided in 2010, which
allowed Alqueria to expand its presence in several regions across Colombia.
§ In June 2017, Alqueria announced an innovation plan and its entry in the powder milk market,
where the goal is to become a major domestic player and a pioneer in exports. This measure is
considered an important step for the development of the company. It is also likely to have a
favourable impact on the country’s trade deficit in the dairy segment, since milk powder is one of
the most imported dairy products in Colombia. Alqueria’s plan for 2018 is to continue the pace of
innovation and expand its portfolio by adding products such as yoghurt, oats, chocolate, cream,
whey and orange juice to its production lines. The company will invest between COP 15,000mn and
COP 20,000mn in 2018 for the maintenance of its production plants.
§ In May 2017, the Colombian dairy producer Lacteos El Pomar announced an investment of COP 7bn
for the purchase of equipment and for optimisation of the production process at its production
plants in Cajica, Cundinamarca department. The company seeks to increase its dairy output from
3.2mn to 4mn kg/month and to expand its storage capacity. As of January 2018, the company has
completed investments of COP 9bn in expansion and modernisation of its production capacity and
is expected to end 2018 with 40% annual growth in sales.
§ In March 2017, the domestic dairy company Alpina disclosed plans to invest COP 70bn to finance
research, development and innovation projects at its own research centre. The goal of the company
is to adapt its products to the changing preferences of the customers, which are migrating towards
a healthier lifestyle. By August 2017, the company had already exceeded the planned investment
for 2017, fuelling a total of COP 105bn in its production plants. The funds were used for expanding
the production capacity of the factories and for the purchase of equipment for the production of
milk and cheese.
Source: La Republica, EMIS Insights, Revista Alimentos, Portafolio

Production and Consumption
Comments Raw Milk Production Evolution

Between 2014 and 2016, raw milk production in
6,838
Colombia fell by 2.5%. In 2017, however, the milk
output grew by 7% y/y driven by the favourable 6,718
7.0%
weather conditions. The growth in 2017 was much 6,617 6,623
higher compared to that in the previous years,
6,520
and could be also explained with the low
2.0%
1.5% 1.5%
comparison baseline, as in 2016 the extreme 6,391
drought caused by the El Niño affected
-1.4%
significantly the output of raw milk. In terms of
consumption, it did not exceed the 144 litres per -3.5%
capita recorded in 2012. In 2017, however, the

consumption reached 145 litres per capita, 2012 2013 2014 2015 2016 2017
exceeding the value of 2012, driven by the stable
Milk Production, mn litres y/y change
consumer prices and the increased demand as a
result of the changing diet preferences of the
population.
Raw Milk Production by Department, Raw Milk Annual Apparent Consumption,

2016 litres per capita
Antioquia 20.6% 145

Cundinamarca 16.3%
144
Boyaca 9.9%
Narino 5.9% 143
143
Cordoba 4.6%
Cesar 4.4%
Magdalena 4.4%
Caqueta 4.3% 140
140
Bolivar 3.3%
Huila 3.2%
Sucre 2.9%
Santander 2.5%
Caldas 1.1%
Others 16.5%
2012 2013 2014 2015 2016 2017
Source: FEDEGAN, DANE

External Trade
Comments
The dairy segment in Colombia has a history of trade deficits. In 2017, the exports of the segment
reached USD 24mn, recording an increase of 260% y/y in comparison to the USD 7mn in 2016. This jump
was caused mainly by the higher international prices of milk and the depreciation of the COP. Despite
the impressive growth of dairy products exports in 2017, their share in the total food and beverage
export value remained insignificant, accounting for merely 0.5% of the total. Once again, in 2017 the
US was the main destination for Colombian dairy products with a 55% share in the export value,
followed by Peru with 13.9%. Cheese and curd were the most exported dairy products in 2017. Colombia
imports mainly cream, whey protein, milk powder and some food ingredients such as casein. The
group of concentrated, powdered or sweetened milk accounted for 63% of the total import value of
the dairy segment in 2017. That year, the imports fell in both value and volume terms, by 21.4% y/y and
by 24% y//y, respectively. The main reason for the decrease of imports is related to the higher
domestic supply, which managed to partially satisfy the growing demand for dairy products in 2017.
Dairy Products External Trade, USD mn Share of Dairy Products in Total Sector’s
Exports and Imports
146
123
123
115
3.8%
91
3.5% 3.3%
59
3.0%
37
25
24
15
2.7%
7
6
-22
1.7%
-66
-91
-117 -108
0.9%
-139
0.6% 0.5%
0.3%
0.1% 0.2%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Exports Imports
Source: DANE, FEDEGAN

External Trade (con’t)
Imports by Country of Origin in Value Imports by Product in Value Terms, 2017

Terms, 2017
Cheese &
Mexico Curd 20.4%
Bolivia 4.5%
22.4%
Whey 11.5%
Others
24.7%
Others 5.4%
United States Concentrated,
48.4% Powdered or Sweetened
Milk 62.7%
Exports by Destination in Value Terms, Exports by Product in Value Terms, 2017

2017
Malt Extracts
Peru 13.9%
Chile 12.0% 19.5% Infant Milk
10.5%
Others
19.3% Others
16.3%
United States Cheese &

54.7% Curd 53.7%
Source: DANE, FEDEGAN

09
BEVERAGES

09 BEVERAGES CONTENTS
Highlights
Overview
Colombia’s beverage sector production value grew by 3.3% on average between 2012 and 2017, driven
mainly by the stable domestic demand. Over the same period, the sales expanded by an average of
5%. Although sodas remain the preferred non-alcoholic beverage for the Colombians, in the last years
the demand for flavoured water, teas, and vitamin juices with low sugar content has been expanding
at a fast rate, as the population is shifting towards healthier diets. In terms of alcoholic drinks, the
growing middle class and the rising consumer incomes have led to increase in the demand for
sophisticated drinks, such as wine. However, beer remains the preferred alcoholic beverage among
the population. In terms of prices, the price index of both the alcoholic and non-alcoholic beverages
has been increasing at a CAGR of 4% over the period 2012-2017.
Challenges
The major challenge to Colombia’s beverage subsector is its high dependence on the country’s
economic development, given that the non-essential spending, including the one on beverages, is
tightly linked to the consumers’ disposable income. Moreover, the big amount of fake alcoholic drinks
distributed on the Colombian market also poses a significant challenge to the segment. According to
Euromonitor International, the fake alcoholic drinks in 2017 represented more than 20% of the market,
although about 300,000 units of such products were seized during the year and have not entered the
market. The low quality of transport infrastructure in the country is another challenge to the segment
with a direct effect in terms of high transportation costs.
Outlook
Overall, the beverage subsector in Colombia is expected to follow the global trends focused on the
implementation of environment-friendly practices. In an interview for the domestic online portal La
Republica published in September 2017, Carlos Herrera, vice president for the sustainable
development at the National Business Association of Colombia, informed that the investments of the
domestic beverage companies in the next years will be oriented towards the implementation of
practices for package recycling and CO2 emission reduction in the production process. Some of the
leading domestic companies, such as the non-alcoholic drinks manufacturers Postobon and Femsa,
have already announced plans to increase the share of recycled packages in their production. At the
same time, the growing concerns about health and well-being will continue to drive the demand for
natural beverages and bottled water up.
Source: DANE, Euromonitor International, BMI Research, Sectorial

Main Events
§ In October 2017, the Colombian alcoholic beverages producer Industria Licorera de Caldas
announced that it invested COP 12bn in the improvement and modernisation of its packaging
solutions and the increase of the efficiency of its production plant. The company upgraded its main
packaging line, and installed a new line for the premium products, such as yellow aguardiente,
premium rum and liqueurs, including the brands Cheers and Kaldi. By this investment the company
aims at increasing its efficiency and significantly reducing its production costs.
§ In September 2017, the Colombian dairy producer Alqueria announced its entry into the vegetable
drinks market, with the production of beverages based on almonds, rice, and soybeans. With this
initiative, Alqueria aims at gaining from the growing domestic demand for drinks related to
healthier lifestyle and a plant-based diet.
§ In August 2017, the glass bottling company Vichisa, partner of the Mexican Crown Brand-Building
Packaging and supplier of bottles for the beer brand Heineken, signed an agreement with the
government of Chihuahua for the construction of a glass bottle factory to supply the adjacent
Heineken brewery in the municipality of Meoqui. Vichisa plans to invest USD 120mn at the first
stage of the construction of the factory, which is expected to generate more than 200 direct and
indirect jobs. For the second stage, more than USD 80mn are going to be invested in the project.
The factory is Vichisa’s ninth plant for the manufacture of glass bottles in Colombia and will have
a capacity to produce 145,000 tonnes of glass per year, equivalent to 750mn bottles.
§ In June 2017, the 50/50 joint venture between the Philippine brandy producer Emperador and the
Spanish winery Gonzalez Byass – Bodega Las Copas, aqcuired 100% of the capital of the Colombian
brandy business of the French spirits group Pernod Ricard. The financial information of the deal
was not disclosed.
§ In March 2017, the Colombian brewery Central Cervecera de Colombia (CCC), a joint venture
between the Chilean Compania Cervecerias Unidas SA and the Colombian Postobon SA, announced
the construction of a new production plant for beers and malts in the municipality of Sesquile to
be ready in the first half of 2018. The project will involve an investment of about USD 400mn and
the plant will have production capacity of 3mn hectolitres per year. It is estimated that the plant
construction will generate 1,800 direct and indirect jobs.
Source: El Financiero, Dinero, La Republica, EMIS Insights, ILC, EMIS DealWatch

Comments Production and Sales Value, y/y change

After a year of significant positive performance
driven by increased consumer potential, product
innovation and opening to new markets, in 2017
Colombia’s beverage production value registered 14.3%
a decrease of 4.5% y/y, while the sales value of

6.0% 8.3%
the segment fell by 4.7% y/y. These unsatisfactory 7.6%
5.5% 4.0%
results of the segment are related to the overall 3.7% 4.7%
2.0% 2.8%
slowdown of the Colombian economy in 2017,
when the GDP rose by a humble 1.8% y/y. In terms
-4.5%
of employment, the beverage subsector marked a
-4.7%
decline, as the increased automation in the
production processes led to the decrease of the 2012 2013 2014 2015 2016 2017
number of employees in the segment.
Real Production Real Sales
Consumer Price Index Evolution Consumer Price Index, y/y change

146.5
145.3
138.2
132.2
128.3
130.1
133.5
126.7
123.8
123.6
120.9
118.8
9.7%
7.4%
5.3% 5.1%
4.6%
3.7%
2.8% 2.5%
2.2%
1.7% 1.6%
1.4%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Non-Alcoholic Beverages Alcoholic Beverages Non-Alcoholic Beverages Alcoholic Beverages
Source: DANE, CEIC

External Trade
Comments
Colombia has a history of chronic trade deficits in the beverage subsector, which have been gradually
increasing since 2012. The country’s trade deficit in the subsector has grown at a CAGR of 18.2% over
the period 2012-2017, driven by the rising imports of beverages, which registered a CAGR of 15.1% over
the same five-year period. This trend is related to the increasing domestic demand for both alcoholic
and non-alcoholic drinks, as a result of the growing disposable income of the population. In 2017, the
import value of the beverage segment reached USD 551.4mn, an increase of 9.4% y/y, accounting for
14.7% of the food and beverage industry import value. From the alcoholic category, Colombia imports
mainly wine and high quality and premium liqueurs. From the non-alcoholic category the soft drinks,
mineral and bottled waters represent the main import product group. According to the UN Comtrade,
in 2016, Bolivia, Brazil, Peru and Ecuador were the major suppliers of ethyl alcohol for Colombia, while
for wine the most important suppliers are Chile, Argentina, France and Spain. In terms of mineral
water, Italy and France were the major suppliers for Colombia in 2016. Exports, on the other hand,
grew much more than imports in 2017, by 52.2% y/y, reaching USD 30.6mn. The main export products
remain the soft drinks, mineral and bottled water.
External Trade in Beverages, USD mn Share of Beverages in Sector’s Total

Exports and Imports
551
14.7%
504
13.3%
384
324
323
273
11.2%
9.1% 8.7%
46
35
32
31
28
20
7.7%
2012 2013 2014 2015 2016 2017

-226
-288 -291
-356
1.2%
-484 0.9% 0.7% 0.6% 0.5% 0.7%
-521
2012 2013 2014 2015 2016 2017
Exports Imports Trade Balance Exports Imports
Source: DANE

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COLOMBIA

FOOD & BEVERAGE

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COP Colombian Peso

DANE National Administrative Department of Statistics

DNP National Planning Department

FARC Revolutionary Armed Forces of Colombia

FEDEACUA Colombian Federation of Aquacultures

FEDEGAN Colombian Federation of Cattle Breeders

FEDEPALMA National Federation of Palm Oil Growers

FENAVI National Federation of Poultry Producers

ICA Colombian Institute for Agriculture and Livestock

SIC Superintendence of Industry and Commerce

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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07 MEAT AND FISH p.53

08 DAIRY PRODUCTS p.64

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No. 4 No. 3 No. 14

COP COP COP

Note: Data for 2017.

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 6

Source: DANE, Central Bank of Colombia

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 7

Food and Beverage: USD 4,629.8mn

KEY PLAYERS REVENUES

Source: DANE, CEIC, EMIS Company Database

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 8

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 9

2018f 2019f 2020f 2021f 2022f

Total Food Sales, COP bn 112,595.2 121,199.9 130,373.7 139,876.1 150,047.5

Meat Sales, COP bn 31,602.8 35,466.2 38,672.4 42,084.2 45,810.2

Meat Sales, y/y change, % 8 12.2 9 8.8 8.9

Dairy Sales, COP bn 16,884.8 14,572.5 14,893.6 15,139.6 15,298.2

Dairy Sales, y/y change, % 3.4 -13.7 2.2 1.7 1

Non-Alcoholic Drink Sales, COP bn 5,496.9 5,880.4 6,289.4 6,712.9 7,166.3

Non-Alcoholic Drink Sales, y/y change, % 6.1 7 7 6.7 6.8

Alcoholic Drink Sales, COP bn 4,443.4 4,820.5 5,223 5,640.2 6,087

Source: BMI Research

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 10

Source: DANE, BMI Research

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 11

Source: USDA, BMI Research

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 12

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Main Economic Indicators

2012 2013 2014 2015 2016 2017

Food and Beverage Consumer Price Index, y/y

Foreign Direct Investment Inflow in Food and

Foreign Direct Investment Inflow in Food and

Source: Central Bank of Colombia, DANE, CEIC, DNP

COLOMBIA FOOD & BEVERAGE SECTOR 2018/2019 14

Main Economic Indicators

2012 2013 2014 2015 2016 2017