Peru FoodNews 2010 - GBR

A Global Business Reports publication 3
PERU
Conquering the world markets
With a number of competitive advantages and its impressive biodiversity, Peru is set to become one of the major food
suppliers to the world over the next years. This report is compiled and written by Alfonso Tejerina, Marina Borrell Falcó,
Sharon Saylor and Tom Willatt of Global Business Reports.
THE NEXT BIG FOOD
SUPPLIER
Peru has been exporting its products
since the Spaniards first arrived
five centuries ago. Indeed, Peru is
considered to be the birthplace of a number
of products that are part of peoples’ daily
diet worldwide, including staples such as
the potato.
Today the industry is entering a new
era as political stability encourages fresh
investments to exploit Peru’s enormous
natural riches.
Peru is the world’s largest exporter
of asparagus and an important source
for avocado, grapes and peppers, whilst
maintaining a strong position as a coffee
exporter (which remains the country’s main
agro export product).
Peru’s fishing sector is dominated by
fishmeal, of which Peru is the world’s
largest producer, but is now moving towards
more canned and frozen fish and seafood
for human consumption.
Finally, the emergence of Peru’s middle
classes coupled with numerous free-trade
agreements make Peru a very attractive
country to set up a factory for processed
foods that can be sold internally or abroad.
Agro in the spotlight
The development of ‘non-traditional’
agriculture (‘traditional’ in Peru includes
coffee, sugar, cotton, potato, corn, rice) has
been phenomenal over the past couple of
decades. Since 1990 the country has been
recovering from the agrarian reform of
1969. This reform was intended to promote a
fairer distribution of the land but, according
to many, instead caused the collapse of the
industry.
Guillermo van Oordt, President of the
Peruvian Association of Producers and
Agro-exporters Guilds (AGAP), explains:
“All the large farms were transformed
into cooperatives that proved to be very
inefficient, while small farms were given to
workers who would pass them on to their
Fabio Matarazzo,
CEO of Camposol
children, so, very rapidly, these properties
became tiny. Agriculture would only
become a viable business again in 1990,
thanks to the political reforms”.
The situation further improved in 1992
as the leaders of the Shining Path terrorist
organisation were finally captured, and
the U.S. passed the ATPDEA act (Andean
Trade Preference and Drug Eradication Act)
by which duties were lifted on U.S. imports
of many products from Peru, Colombia,
Ecuador and Bolivia. For Peru, this treaty
has remained in force until the recent
implementation of the free-trade agreement
with Washington. Other significant FTAs
Peru has in place today are with Canada,
China and most recently with the European
Union.
Today, the agribusiness is reaping the
fruits of this evolution. The Peruvian coast is
being transformed into a natural greenhouse
where productivity rates exceed the levels
of most other countries due to a favourable
climate and the latest irrigation techniques.
Corporate governance has improved leaps
and bounds and some exporters are even
listed on the stock exchange.
In a country where poverty rates are a
matter of national concern, agriculture has
enabled some provinces along the coast
to enjoy full employment. “Agriculture
accounts for 8% of the country’s GDP, but
in terms of employment the impact is much
bigger. 30% of Peru’s population is linked to
the agriculture sector,” points out Víctor M.
Noriega, the Director of Competitiveness at
the Peruvian Agriculture Ministry.
The Peruvian coast offers excellent conditions for
agriculture (Photo courtesy of Icatom)
Competitiveness is indeed a key word,
because it drives growth and promotes
employment. The authorities seem to have
realised that incentives work better than the
traditional subsidies.
According to Alfonso Velásquez, former
Minister of Production and currently the
President of Procesadora, an exporter of
beans and other products: “These are new
times for Peru. The government is changing
the way it supports the farmers. State
expenditure is not only dedicated to reduce
poverty directly with social programs, but
also to the improvement of competitiveness
of different industries”.
Peruvian fish: proteins
for the world
Peru is also blessed with one of the world’s
richest seas, thanks to a combination
of temperature and currents that result
in the presence of lots of plankton. The
availability of a large biomass has pushed
the development of a big fishmeal and fish
oils industry. In 2009, Peru produced 1.4
million tonnes of fish meal (it is the world’s
largest producer). Currently the business is
enormously profitable as the first months
of 2010 have witnessed unprecedented
high prices of over USD 1 700 per tonne
of fishmeal.
Yet, there is a growing trend in the
industry towards increasing the share of
the catch intended for human consumption.
In 2009, 84% of the total fish catch was
dedicated to fishmeal and fish oils, but some

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Alfonso Velásquez,
Former Minister of Production and
President of Procesadora SAC.
industry players believe that this needs to
change. It is not a question of fishing more
(the country already has a quotas system
that appears to be working well), but to
use a larger portion of the catch for food
products rather than animal nutrition. “Of a
12 million tonne biomass we are exploiting
about 60%. I think this is quite sustainable”,
affirms Hugo Vernal, General Manager of
Inversiones Prisco, an anchovy producer. “In
the next ten years we should see the share of
direct human consumption grow to 50% of
the total catch, which means the production
of fishmeal will have to decrease”.
The question is, will fishmeal producers
go down that route? “Peruvian anchovy is
one of the world’s largest biomass from one
single species. We therefore need to develop
a business based on frozen and canned
anchovy”, affirms Humberto Speziani,
Advisor to the Board at Tecnológica de
Alimentos (TASA), the world’s largest
fishmeal producer.
Other industry managers go as far as to say
that if all the anchovies dedicated to fishmeal
production were used as food, no-one in the
world would be starving. However, there are
cultural barriers that need to be overcome,
as Peruvians themselves generally dislike
the strong taste and colour that anchovies
have, and it is only in recent years that they
are starting to eat them.
According to Henry Quiroz, President
of the Fish Committee at the Exporters
Association (ADEX) and Manager at
Hayduk: “In Peru, most of the fishmeal is
used in the production of aquiculture items
for well-off consumers, whereas canned
anchovies would be more affordable. To
make one tonne of fishmeal you need over
4 tonnes of anchovy. Yet for 1 tonne of
conserves you only need 1.8-2.2 tonnes of
anchovy. The problem is the perception of
the people. They do not see anchovy as an
attractive product”.
Yet anchovy is very rich in proteins and
the Peruvian sea offers much more: giant
squid, chub mackerel, horse mackerel,
mahi-mahi (dolphin fish), hake, tuna fish
and scallop, just to name the most important
products are also found in abundance.
In spite of poor catch figures for the first
months of 2010 due to an El Niño-like
phenomenon (the waters have been warmer
than usual due to the arrival of Kelvin
waves), the richness of the Peruvian sea is
not in question.
More ambitious goals
“We still have a long way to go, as our current
export levels indicate. According to the
World Bank, sales abroad must be over 29%
of the GDP for a country to be considered
an exporting economy, and we are presently
at 20%”, affirms Peter Anders, President of
the Lima Chamber of Commerce. Anders
salutes the implementation of an everincreasing
number of FTAs, but warns
that the current growth in the economy
and, more specifically in the food industry,
is not being met with the development of
essential infrastructure: “In many cases,
the inefficiencies in the main infrastructure
sectors (telecommunications, transportation
and logistics services) increase the
exportation costs more than other barriers
to foreign trade”.
These other barriers can be the increasing
amount of compulsory certifications, says
Juan Carlos Mathews, Director of Exports
Promotion at Promperú, a governmental
body: “In order to export to certain countries,
we have to be approved by their national
certifications; sometimes by two different
bodies. Moreover, even if a product does not
require a certification, the buyer will always
favour any quality or social responsibility
assurances that competitors may offer”.
In the end it all comes down to
competitiveness, and while individual
companies can do their best to obtain the
needed certifications and to improve its
social responsibility standards, the country’s
big infrastructure deficit is a problem to be
addressed sooner rather than later, otherwise
the country will become a victim of its own
success. This situation is already improving,
but many argue that it is not changing at the
required pace.
Beyond this, the conditions for growth
elsewhere are generally met: there is
political stability; the rules of the game
for investments are clear; the country has
excellent conditions for agriculture as
well one of the world’s richest seas; and
its privileged location right on the Pacific
Ocean and in the middle of South America
can only make it easier and cheaper to reach
destination markets.
With an expected boom in demand
coming from Asia in the years to come, sea
links are essential. The markets are already
following Peru with a watchful eye, and with
good reason: its potential to become one of
the world’s key food suppliers is real.
PERU’S TOP
EXPORTERS
Diversification, quality, social
responsibility. Some of the key
exporters explain what it has taken
them to succeed in Peru’s food and
beverage sector.
“Don’t put all your eggs in one basket”. This
expression, that has become a cliché in the
world of business, is nevertheless pertinent
in Peru. Peruvian exporters are, to a large
extent, diversified businesses that are not
easily categorised under strict headers
such as “asparagus producer” or “anchovy
exporter”. In a global world where big
buyers and international distributors require
a wide range of products to serve their final
markets, sourcing from players that can
meet not just one, but a number of needs,
makes sense.
Camposol, Peru’s largest agro exporter,
currently has the world’s largest single
plantation of avocados, covering 2 400
hectares according to the company’s CEO
Fabio Matarazzo, who explains: “Camposol
based its initial success on asparagus.
Today, this market is not saturated yet, but
it is mature and now our company needs to
diversify. The advantage we have is that
decisions in this company are made very
fast. We have a good mix of scale on one
hand and flexibility on the other”.
Besides asparagus, peppers and avocados,
the company is producing new products
such as mango and table grapes which
should yield significant growth rates in
the years to come. This diversification
enables companies to tackle the effects of
potential price fluctuations and adverse
weather effects. However, offering many
product lines requires a strong focus on
quality on all fronts and presents the
challenge of having enough volume in the
different products to adequately serve the
clients. Managers at Agroindustrias AIB,
a company offering fresh, conserves, IQF,
juices and concentrates as well as essential
oils, adamantly reject the idea that you
cannot be very good in many things.
“We are the most diversified company in
Peru. We may not be very big in all our lines,
but being diversified gives us a competitive
advantage”, insists Roberto Falcone,
General Manager of Agroindustrias AIB.
“In 2009, even though our sales decreased
by 4% in volume with the crisis, we were
flexible enough to react and ended up
having bigger profits than in 2008”.
With regard to quality, Falcone insists
that the company’s aim is to reach 100%
traceability, which is not easy when sourcing
from third party producers. As part of this
strategy, the company has implemented
SAP. AIB is also diversified geographically,
operating both north and south of Lima in
order to offset possible climatic variations.
This is important in both the agro sector and
the fish industry, which relies entirely on
the biomass available.
Large fishmeal producers, for instance,
maintain plants all along the coast.
Concerning sea products for human
consumption, investing to adapt a plant so
that it can process a number of different
products can pay off, as is shown by the
example of Seafrost.
Based in Paita (northern Peru) and owned
by an Italian family, Seafrost transformed a
crisis into an opportunity in 1997-98 when
the El Niño phenomenon warmed up the
waters in the Pacific: “There was a crisis
of hake catch and many companies in Paita
went into bankruptcy because they were not
prepared to process other products”, explains
Antonio Bologna, General Manager,
Seafrost. The company designed its 40 000
square metre plant with a strategy in mind
to diversify as much as possible: “With El
Niño the species available change. If all
TOP EXPORTERS 2009 - AGRO INDUSTRY (NON-TRADITIONAL)*
TOP EXPORTERS 2009 - FISH (NON-TRADITIONAL)*
COMPANY
CAMPOSOL S.A.
SOCIEDAD AGRICOLA VIRU S.A.
ALICORP S.A.
DANPER TRUJILLO S.A.C.
GLORIA S A
SOCIEDAD AGRICOLA DROKASA S.A.
COMPLEJO AGROINDUSTRIAL BETA S.A.
GANDULES INC SAC
EL PEDREGAL S.A
AGROINDUSTRIAS AIB S.A.
FOB VALUE (USD)
105 million
84 million
83 million
56 million
51 million
40 million
38 million
38 million
30 million
30 million
COMPANY
FOB VALUE (USD)
CORPORACION REFRIGERADOS INY SA
34 million
SEAFROST S.A.C.
24 million
PACIFIC FREEZING COMPANY E.I.R.L.
20 million
PESQUERA HAYDUK S.A.
19 million
AUSTRAL GROUP S.A.A
17 million
INDUSTRIAL PESQUERA SANTA MONICA S.A. 13 million
INVERSIONES PRISCO S.A.C.
13 million
TECNOLOGICA DE ALIMENTOS S.A. (TASA) 12 million
C N C
11 million
CORP DE INGENIERIA DE REFRIGERACION SRL 11 million
Source: ADEX
*Excludes traditional products such as coffee, corn, rice, potato,
cotton, sugar.
Source: ADEX
*Generally refers to fish products for
direct human consumption

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of a sudden there is no hake, but there is
octopus, you need to be ready to process
it. Today, Seafrost works with 15 different
species, and each of them allows us to
offer a wide range of products”, Bologna
maintains.
Having a diversified portfolio of clients
and destination markets is also important.
Gandules, mainly a capsicum exporter that is
now heavily investing in grapes, is exploring
the potential of the Latin American region:
“We are now more diversified in products
and markets than in 2002, when the U.S.
represented 85-90% of our sales. This is
very important, because the crisis in the
U.S. has hit Peruvian exporters that were
relying solely on that market”, affirms Juan
Varilias, Executive President of Gandules.
In 2008 the company entered the
Argentinean market, which accounted for
5% of the company’s sales by 2009. “This
success has prompted us to look at other
countries such as Venezuela, Colombia and
Uruguay”, continues Varilias.
Adding value
While food processors are investing in
fresh products like avocado and grapes,
they are also going down the value chain
and preparing final products that go
beyond the simple jarred pepper or canned
sardine.
Sociedad Agrícola Virú, Peru’s second
largest agro exporter, is adding something
extra to its green and white asparagus,
artichokes and peppers. “Our new lines
include antipasti-style grilled products
and sauces. We are very excited about
these value-added foods. We can be very
competitive both in terms of quality and
price”, claims Miguel Nicolini, General
Manager, Virú. The company processes
and exports over 60,000 tonnes of produce
annually.
Danper, an exporter of asparagus,
artichokes, peppers and fruits based in
Trujillo, also has a line of specialty items
which include asparagus salad and artichoke
tapenade.
According to Mr Varilias of Gandules:
“Final consumers in today’s world are very
busy with work and do not have the time to
cook, so they need semi-processed products
that are easy to prepare”.
The trend is also seen in the fishing and
aquiculture industry. Iny, Peru’s largest
hydrobiologicals exporter, thought that
it would be a good idea to sell skewers
containing two shrimps and one scallop,
with weight and size as required by the
clients. The public in tapas bars in Spain
is demonstrating a good response to the
product according to Elie Barsimantov,
General Manager of Iny. For Barsimantov,
the future of the company relies on
products like these skewers: “In the past
we have produced up to 20,000 tonnes
per year. We are now at 12,000 tonnes
because we are increasingly switching
from commodity products to value-added
products. Nevertheless, our average sale
price has increased threefold, improving
our total income. Our new products require
less volumes, but are sold on a regular basis
rather than as one-off transactions and offer
better margins”, explains Barsimantov.
Another benefit is increasing client
loyalty. Creating a unique product that
cannot be easily replaced by cheaper
imitations is a good way in which to maintain
a regular flow of orders. For Matarazzo of
Camposol: “We want to invest in our own
brands, because in the private label business
the margins are lower and there is no client
loyalty. The idea is to increasingly move
into value-added products”.
Employing thousands
One defining feature of the agro industry
is that it requires an enormous human
effort to put the value chain in motion.
During high seasons, the largest producers
employ thousands of people in fields and
processing plants (Sociedad Agrícola Virú,
for instance, needs 6,500 people during the
peak season).
After coffee, asparagus is Peru’s main agro-export product.
(Photo courtesy of Icatom)
The same applies to the fishing industry,
which is highly dependent in Peru on
the catch brought to the coast by artisan
fishermen. While the fishmeal business
is highly automated, the production of
hydrobiologicals requires lots of hands to
ensure that the product is properly taken
care of.
In this context, food exporters have
a wide impact because of the fact that
thousands of people’s livelihoods depend
on them. The development of the industry
to process anchovy for human consumption
is one significant example of the benefits
that moving up the value chain can have on
jobs.
“In the last five years, the anchovies
business has generated over 2,000 new direct
jobs, out of which 90% are for women”,
emphasises Hugo Vernal, President of the
Association of Anchovies Producers of Peru
and General Manager of Inversiones Prisco,
an anchovies and scallops producer.
Besides providing jobs, companies
are actually in a position where they can
improve the lives of those participating in
the value chain: “We have to improve the
lives of artisan fishermen because there are
poverty levels that need to be addressed.
Luckily along the coast there are no hunger
problems, but we need to improve the
housing, the education and other aspects”,
affirms Humberto Speziani, Advisor to the
Board of Tecnológica de Alimentos and
Vice-President of the National Society of
Fishing (SNP).
Jorge Arangurí, Director of Sales and
Marketing at Danper, a large agro exporter
based in Trujillo, points out: “At some
instances we have up to 5 000 employees
and we aim to turn this human resource
into human capital by providing them with
education and health facilities. With human
capital you can build a society. Otherwise
in a hundred years you find yourself in the
same place; with low education, low health
and poor infrastructure”.
In the long run, it will be the companies
who will benefit from being good employers:
“Peru needs to grow and to develop, and
there is a big difference between these two.
We are a business, we need a margin in
order to make profit and fight in the market;
but at the same time we need a sense of
social responsibility. We have focused
the company to be sustainable”, Arangurí
concludes.
Exporter or
multinational?
There are a number of Peruvian companies
that have aggressively entered international
markets over recent years, not merely
exporting products, but also setting up plants
abroad via either organic growth or through
acquisitions. An example is Alicorp, Peru’s
mass consumption products giant. Alicorp
has grown its sales from USD 100 million
in 1991 to USD 1.2 billion in 2009. It has
operations in Argentina, Colombia and
Ecuador, while it also exports products
elsewhere from Peru, including Omega 3
concentrates.
Alicorp’s CEO, Leslie Pierce, affirms
that many mass consumption products are
already well served by strong players in
other countries and that therefore acquiring
operations can be the best option to grow
in other markets rather than introducing a
new, competing product. But on the other
hand, he sees opportunities in certain
Peruvian products: “Peruvian gastronomy
is experiencing a boom abroad, and the
ingredients required are unique to Peru. We
have products like rocoto and ají sauces
that are already consumed abroad by the
Peruvians that live overseas. We still do
not have a strategy to export these in large
volumes as the conditions for that are still
not met, but I see lots of potential for the
future”, he says.
An astonishing success story is Ajegroup,
a company born in Ayacucho in the 1990s
in the carbonated drinks business. Back
then, the Andean area was badly affected by
terrorism and the distribution of drinks from
the coast was very unreliable. What is said
to have started with an initial investment
of USD 30 000, is today one of the most
globalised Latin America’s corporations,
with revenues of around USD 1.3 billion,
10 000 employees and operations in a dozen
countries in Central and South America, as
well as Mexico and Thailand.
“Wherever we decide to go, we set up our
own plant and aim for substantial marketshare.
We are a true multinational”, affirms
Jorge López-Dóriga, Global Marketing
Director of Ajegroup. The company likes
to be seen as a producer of quality drinks
at fair prices: “In Thailand, for instance,
we have a 15% market share after just three
years in the country. We have achieved this
by expanding the market and democratising
the consumption”.
Finally, another example of a Peruvian
multinational company is Gloria. Since
buying a Nestlé-owned plant in the 1980s
the company has become a large food
company with revenues of $770 million
in Peru (2009). The Gloria Group also
owns separate sugar plants in Peru and
food operations in several Latin American
countries.
Like Ajegroup, which is identifying
the opportunities that countries with high
temperatures like Thailand or the Dominican
Republic have for carbonated drinks
consumption, Gloria has been actively
exporting canned evaporated milk, its star
product, in markets to which it adapts very
well.
As Fernando Devoto, Legal Corporate
Advisor of Gloria, explains: “We have a
small can, equivalent to a glass of milk,
that we call the baby can. It is the one we
export the most, to countries mainly in
Africa and the Middle East where there
are refrigeration issues and there is not a
cold chain. Our product is very suitable to
solve this problem”. Last year the company
exported evaporated milk worth over USD
50 million.
The companies mentioned in this article
are some of the most significant examples of
how the Peruvian food industry is prepared
to compete on the global market. It is not
just a question of availability of resources:
Peruvian entrepreneurs are proving that
although they have only truly entered
the market economy in the last couple of
decades, they are capable of implementing
the processes and obtaining the quality
certifications that buyers and governmental
bodies require anywhere in the world. It is
probable that more Peruvian companies will
follow their path.

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Juan Varilias, President of Peru’s Exporters Association (ADEX),
gives his views on the Peruvian food sector.
GBR: Mr Varilias, could you
give us some background
information about ADEX?
JV: ADEX has a history of 36
years in Peru’s institutional
life as an organisation that
represents the country’s
exporters. In recent years we
have worked very closely with
the public bodies promoting
entrepreneurship aiming at
the export markets.
We are always consulted
by the government in matters
related to industries’ export
activities. For instance,
we have participated very
actively in the negotiations of
Peru’s free-trade agreements
with different countries.
We have 24 committees
that cover activities such as
timber, fisheries, mining,
food, jewelry and many
others. We try to eliminate
barriers for Peru’s exports,
such as unfair exchange rates
or phytosanitary barriers.
GBR: The association is involved in numerous education
schemes. Could you give us some details?
JV: We have a vision that exports are the main growth driver of
the country’s economy.
For that reason, we strongly believe in education and have
a number of agreements with universities for degrees in
international trade. We want to spread an exporting culture all
around the country. ADEX intends to open regional offices in
the medium term. We want to help exporters all around the
country improve their quality and processes so that they can
benefit from the latest technologies and meet the world markets’
requirements. We are consistently supporting innovative
projects.
GBR: Where do you see the main advantages of Peru as a
global food supplier?
JV: Peru today enjoys a privileged situation as the link between
Latin America and the rest of the world thanks to its geographic
location and its FTAs. Through Peru, other Latin American
countries such as Ecuador, Bolivia and Brazil can reach a market
of 2 billion people, including China, the European Union and
the U.S.
Peru has great biodiversity with a large number of ecosystems
suitable for agricultural production, in numerous cases all year
long. These are found along the coast, in the Andes and the
jungle, as well as in a very rich sea. We have two of the richest
marine ecosystems in the world.
All of these conditions also make us an attractive country for
foreign investment. Indeed, companies from Colombia, Brazil,
Ecuador and other countries are already setting up their shops in
Peru in order to have an open door for the export markets.
GBR: Peru is the world’s
largest producer of fishmeal,
yet there is an increasing trend
to dedicate the country’s rich
resources for direct human
consumption. How can a
balance be reached between
the two industries?
JV: The fishing industry can
serve both the fishmeal and
the direct human consumption
markets. The fishmeal, which
absorbs most of the anchovy
resources, is very profitable but
not everything in a business is
just about the profits. Today,
businesses have increasing
social awareness and Peru’s
fish offers great opportunities
to feed the hungry. Moreover,
the country presents
exceptional conditions for
aquiculture.
GBR: What role can
technology play in increasing
efficiency in the food
industry?
J V : E x p o r t i n g - r e l a t e d
industries are big employers in Peru. Growing demand for
food worldwide will boost the country’s economy and push
down unemployment. The introduction of technology should
not really be seen as a method to decrease labor costs, because
large machines cannot be used in many of the country’s
agricultural areas. The latest technologies need to be seen as a
way of improving the quality and increasing competitiveness.
Notwithstanding the technologies introduced, there is always
going to be a shortage of hand labor because the country has
enormous possibilities for growth.
GBR: What is the potential for Peru’s strong growth in
organic products?
JV: Peru offers great opportunities for organic production.
Indeed, organic products are seeing their demand increase by
more than 10% annually. The country currently has 309 000
organic-certified hectares in production. We are the world’s
largest exporter of organic coffee and organic bananas. In
Expoalimentaria we will have a section called Peru Natura,
reflecting the importance that the organic market has for Peru.
GBR: Do you have a message for the readers of
FoodNews?
JV: Peruvian exports have greatly improved the country’s
position in foreign reserves in the last 5-6 years. ADEX has
been doing a great job promoting entrepreneurship. Peruvian
exporters have the latest technologies and can compete with
anyone in the world. It has been a great effort from all of the
companies and we are going to continue moving in the same
direction. By 2011 we should be very close to Chile’s figures in
non-traditional agro exports.
A BLESSED LOCATION FOR
AGRICULTURE
Peru has excellent conditions for the development of
agriculture and its related industries. From fresh to
processed vegetables and fruits, the sector is booming.
Beatriz Tubino, Manager of Agro-exports at ADEX, summarises
the unique advantages of Peru’s agro sector: “Due to its location
close to the equator, Peru receives intense solar radiation, which
results in products with great colour and flavour. The coast is a
natural greenhouse, without extreme temperatures or rains, so that
the country has long harvesting seasons. This is a mega-diverse
country, containing 84 of the 117 ecosystems existing in the world.
Finally, because of its strategic geographic location, Peru is a
regional logistics hub”.
Considering all of these factors, it is of no surprise that, in spite of
hiccups caused by the global crisis, the industry has been developing
steadily over the last years and that the value of agro exports has
increased by an average of 16.5% annually in the period between
2005 (when they amounted to USD 1.33 billion) and 2009 (USD
2.46 billion), according to ADEX data.
The asparagus example
The asparagus has been the foundation on which Peruvian
non-traditional agriculture has based its tremendous success.
Interestingly enough, asparagus is not originally a product from
Peru, yet Peruvians have invested and mastered this crop to become
the world’s largest exporters, in fresh, canned, jarred and frozen
formats.
2009 was not an easy year for asparagus, as the value of exports
decreased by 11% to USD 389 million FOB. With China (the world’s
largest producer, but not yet the largest exporter) to compete with,
how can Peru increase its asparagus exports? “The huge number
of small, unconsolidated Chinese producers creates a lot of price
volatility. Farmers focus on asparagus when prices are good but, if
a Chinese or a Peruvian farmer is pressed against the wall by low
prices, they will grow something else so that prices will improve
again. Prices seem to go in two-year cycles and we’re coming out
of a very deep valley at the moment”, maintains Jorge Arangurí,
Director of Sales and Marketing at Danper.
Ulises Quevedo, General Manager of Tal S.A. and Avo Peru,
producers of asparagus and avocado respectively, muses: “It is very
difficult to predict what is going to happen, because China is such
a big country and the information available is not very reliable.
What we have done during this period of crisis is to renew 30%
of the fields with alternative crops, and now we will replant these
areas with asparagus. This way we will have the same production
volumes that we had before the crisis, and with renewed fields”.
Looking for new products
For large players, avocados and table grapes (as well as other fruits
such as mango) seem to be good alternatives for growth rather than
planting more asparagus. Investments in these are popular at the
moment. But Peru offers many other possibilities. For instance,
Agroindustrias Josymar, a medium-sized producer in Trujillo, has
found a niche producing leek conserves: “We are the only company
processing leek in Peru. While asparagus is seen as the conserve
of the rich, leek is the conserve of the poor; but it is profitable
if you have the right volumes. We currently sell this product in
Spain and France”, relates Eduardo Zavaleta, General Manager

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of Agroindustrias Josymar, a company
that also offers asparagus, artichokes and
peppers conserves.
For many, fruits could be the next
Eldorado. Over the last years, the country
has become the world’s largest exporter of
organic banana. The production of grapes is
rocketing and tropical fruits offer enormous
opportunities: “There is more awareness
of the goodness of fruit. Passion fruit, for
instance, is known for its vitamin C content
and is now part of many juices in Europe and
North America”, explains Fabián Hidalgo,
General Manager of Agromar Industrial, a
processor of tropical fruits (mango, melon,
papaya and passion fruit among others) as
well as citrics.
Passion fruit is already known worldwide,
but thanks to its biodiversity, Peru offers
countless other fruits with excellent
qualities. Gonzalo Ezeta, General Manager
of Selva Industrial, a company exporting
pulps and concentrates, enthuses about
a fruit that could experience a boom in
the future: “Camu camu is unknown to
the world, but is the fruit with the highest
amount of vitamin C (around 1800 mg per
100 g)”. Hidalgo of Agromar agrees, but
recognises that exporting camu camu is not
a commercial option yet: “The country does
not have the volumes required, and it is a
fruit that grows mainly in the jungle where
infrastructure is scarce”. The fact that many
fruit producers are small farmers can create
a problem of volumes, but it does have an
advantage: “Many Peruvian farmers do not
have the capital to invest in pesticides. This
makes their business riskier, but with regard
to flavour this is a good thing. The fruits are
actually organic even if they do not have the
organic certification in most of the cases”,
reckons Ezeta of Selva Industrial.
An emerging industry
The agribusiness has grown very
significantly over the last decade, but there
is still so much that can be done. Provided
that the poor infrastructure is developed
to decent levels, Peru’s agro industry has
enormous growth opportunities. “When I
started exporting, I looked at Chile, at the
time a large exporter of beans with 180,000
tonnes per year. Peru is now at 60-70,000
tonnes”, explains Alfonso Velásquez,
President of Procesadora. “Chile is not
doing beans anymore, because they switched
to berries and other more value-added
products. Beans and other items that Peru
is currently producing are therefore a stage
in a country’s agro-industrial development
and we are still to complete this stage”.
Peruvians are anxious to introduce the
latest technologies, because even if the
Peruvian coast offers excellent climatic
conditions, it is also true that farming is
not challenge-free. For, instance Icatom,
a tomato paste producer based in Ica, was
bought by Chilean investors in the 1990s
with the idea that the fields would produce
tomatoes all year long. The presence of the
white fly, however, prevented that. The
company brought know-how from Spain and
built net greenhouses. Fernando Martínez,
General Manager of Icatom, explains the
results of this investment: “We realised
that the tomatoes grown under the metallic
nets were of better quality and since insects
could not reach them, we did not have to use
pesticides. We therefore decided to enter
the fresh tomato business”. Icatom now
produces paste for several months a year,
but fresh tomatoes are commercialised all
year long.
Besides insects, another challenge is
the lack of water in the desert regions. In
the north, large irrigation projects such as
Olmos and Chavimochic are responsible for
the phenomenal growth in agriculture there.
Nevertheless, companies also have to invest
in their land to ensure that the water systems
allow for the best productivity. “We started
cultivating sandy areas with special irrigation
systems following the Israeli model. We
were pioneers using this technique and the
experience was very successful, trebling the
existing productivity rates”, recalls Ulises
Quevedo of Tal S.A.
New investors in the field, especially
those looking for large volumes, are also
resorting to the latest technologies. Daniel
Bustamante, Commercial Manager of
Agrícola Cerro Prieto, provides more details
on the company’s development: “Our land is
based between Trujillo and Chiclayo. Water
is expensive and the interesting challenge is
that of conquering the desert. We needed
to add 27 km to an abandoned government
canal so that now we are able to irrigate
80% of the farm from natural pressure”.
Agro newcomers
While the agro sector maintains a good
number of small and medium sized family
companies, the industry increasingly
includes new investors that may or
may not have a background in the food
industry. Agriculture has simply become an
attractive investment option and the mix of
agro experts and business professionals is
proving to be very positive for the industry
as a whole.
Andrés Muñoz, Executive Vice-President
of Commercial Banking at Interbank,
elaborates: “Now the main economic groups
in Peru are investing in the food sector. This
means bringing capital and management
expertise to the industry”.
This is reflected by the fact that a number
of companies have been listing in stock
exchanges in Lima and abroad. When
Camposol, Peru’s largest agro exporter,
was acquired by the Dyer family, the new
owners decided to list the company in
Norway.
“The IPO of Camposol was a success
because, even though the Dyer Group did
not have experience in the agro industry, it
had a great reputation in Oslo after what was
done with [fishmeal producer] Copeinca”,
affirms Fabio Matarazzo, CEO of Camposol.
“Camposol was seen as a professional and
structured opportunity to exploit Peru’s
great potential. Today, the shareholder base
is evenly distributed among Peru, Europe
and North America”.
An example of a company with a
predominantly financial background is
Agrícola Cerro Prieto, a supplier of dried
peppers, beans and peas that is investing
in avocados planning to start production in
2011.
Commercial Manager Daniel Bustamante
emphasises that their approach to the business
is different to traditional agribusiness
players: “This company is formed by
Danper’s Compositán property, near Trujillo. Thanks to modern irrigation techniques,
desserts are being transformed into fertile land all along the Peruvian coast.

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One of Agronegocios Génesis’ nurseries in Peru. The production of
grape is booming in the country.
entrepreneurs from various industries with
a different way of thinking. Smaller players
are afraid of sharing their company, but we
are prepared for partnerships. It is not our
farm; it is a business. If we did not partner,
it would take us two years to get to know
this industry”.
Telling the world
about Peru
Working together is indeed something quite
new in the Peruvian agro industry. Unlike
Chile, until very recently the country had
not really managed to harness the sector to
aim at a common goal: to promote Peru as a
world-class food exporter.
PRODUCT
COFFEE
ASPARAGUS
GRAPE
PAPRIKA
MANGO
ARTICHOKE
CAPSICUM (EXCL. PAPRIKA)
COCOA AND DERIVATIVES
AVOCADO
Now the situation
is changing for
the better, with
an increasing
role played by
associations and
a more active
participation of the
industry leaders in marketing initiatives.
“At a company level, we need to work
together and be aware of the importance of
being united. We regularly meet to discuss
certain issues, but we are reluctant to act
as a country rather than as a company.
Luckily, the new generations have a
different mentality”, reckons Zavaleta of
Agroindustrias Josymar.
For Guillermo León, General Manager
of Ecoacuícola, a peppers, grapes and
shrimps producer in the north of Peru: “The
country is a bit behind in marketing its
own industry. The situation is improving
as the government increasingly facilitates
the participation of companies in trade
fairs, but a lot still needs to be done”.
TOP AGRO EXPORTS 2009
ANIMAL NUTRITION PRODUCTS
Source: ADEX
FOB VALUE (USD)
584 million
389 million
136 million
103 million
96 million
86 million
81 million
70 million
64 million
63 million
For his part, Alfonso Velásquez of
Procesadora believes that: “A strong,
dedicated and coordinated effort between
private and public institutions must be
made to open different markets for every
product that our country is developing”.
Indeed Peru needs to tell the world
about its realised and future potential in
the food sector. The Expoalimentaria fair,
a great success in 2009, and expected to be
even bigger in 2010, can play an important
role.
Companies will need to continue the
remarkable modernisation process of the
last years and the country will have to
invest heavily on infrastructure to support
the growth of the different industries and
avoid bottlenecks.
If these conditions are met, Peru will
be able to become what Miguel Nicolini,
General Manager of Agrícola Virú, calls
“the new Mediterranean in terms of food
supply”. Following the development of
the Peruvian industry over the next few
years will be exciting.
A SEA OF
OPPORTUNITIES
Peru’s fisheries industry is changing.
It continues to be world’s largest
producer of fishmeal, but it is
increasingly using its rich marine
resources for direct human
consumption products.
While Peru offers exceptional conditions
for the development of agriculture, it also
has one of the world’s richest seas. The
country’s fishing industry yields significant
export sales figures, mostly from fishmeal
and fish oils (USD 1.41 billion and USD
257 million in 2009 respectively), but also
from frozen fish (USD 398 million) and to
a lesser degree, conserves (USD 69 million)
(SNP data). In terms of catch, fishing boats
captured 5.9 million tonnes of anchovy last
year, most of which was absorbed by the
fishmeal and fish oils industry, while of the
species dedicated for human consumption,
the most important ones by volumes were:
giant squid (405 000 tonnes), chub mackerel
(105 000 tonnes), horse mackerel (76 000
tonnes), mahi mahi (50 000 tonnes) and
hake (36 000 tonnes).
2009 saw a contraction of exports in most
of the products due to the global financial
crisis, and the first months of 2010 have
been challenging in terms of catch due to the
Kelvin waves that have brought variations
in the species available, reminiscent of
the 1997-98 El Niño phenomenon. Those
processors that have invested in large
freezing and canning plants over the last
years have had to think out of the box.
Humberto Speziani, Advisor to the Board
at Tecnológica de Alimentos (TASA),
explains: “We have a state of the art plant
to freeze fish, which is one of the largest
in the continent with a production capacity
of 500 tonnes per day and frozen storage
facilities for up to 15 000 tonnes of fish.
The operation is catching up slowly this
year due to the scarcity of horse mackerel
and chub mackerel. We have even had to
import fish from Chile and the High Seas”.
It seems that the scarcity of resource
this year is not a phenomenon unique
to Peru. Giving his impressions on this
year’s European Seafood Exposition in
Brussels, the General Manager of Iny, Elie
Barsimantov, comments: “Catch has been
bad this year all around the world, and the
markets are buying any product that may be
offered”. For his part, Carlos Milanovitch,
Managing Director of Dexim, a company
producing frozen hydrobiologicals affirms:
“Currently the international demand for
hydrobiological products is so high that as
producers we do not really compete with
each other”.
Fishmeal vs. direct
human consumption
Considering the high demand for
hydrobiologicals around the world on one
side and the extremely profitable prices
of fishmeal on the other, which direction
should the industry take? Even the largest
fishmeal producers agree that more products
for direct human consumption is the answer
and are dedicating more fish oils to this
market. “Part of our oil production rich in
Omega3-EPA-DHA and other fatty acids is
now for direct human consumption. It is a
product that offers great opportunities for
the future”, maintains Speziani of TASA.
By law, nowadays only anchovy can be
used for the production of fishmeal (in the
case of other species, only the waste can be
used). Anchovy, traditionally disliked in
Peru and associated to a not very attractive
(and very stinky) industry in some Peruvian
coastal localities, is not seen as a delicacy
as in some European countries, but at least
people are starting to eat it – and like it.

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“The consumption of anchovy in Peru is
growing and the product is already exported.
In Europe, where consumption of anchovy
is high, there have been shortages of this
product and Peruvian anchovy has found
a market there. 10 years ago, anchovy was
exclusively used for fishmeal”, explains
Antonio Bologna, General Manager of
Seafrost.
Thus anchovy is increasingly exported,
frozen and canned, under the anchovy or
sardine denominations. This complements
other hydrobiological products in which
Peruvian producers are increasingly adding
value, such as giant squid. José Cuadros,
General Manager of Perú Pacífico, gives
more details: “Five years ago the industry
was exporting giant squid as raw material,
but now there is a lot more value added,
with breaded fillets, hamburgers and others”.
Perú Pacífico has just inaugurated a plant
in partnership with a Japanese company to
process giant squid. “From a point of view
of labour, we are still more expensive than
China, however doing the processing right at
the point of extraction saves on other costs”.
More plants
Investments like these show that processing
at the point of extraction can make sense.
The value chain is shortened and there is
no need for buyers to ship the raw material
(which includes waste) to processing plants
in China before sending the product to
attractive markets such as Russia. But to
set up new plants in certain areas of the
Peruvian coast, or to increase existing
capacities, is easier said than done due to
infrastructural limitations. “Water here
can be more expensive than petrol. We
sometimes pay USD 12-13 per cubic meter
of water, and we consume 1 200 cubic
meters per day. There is water, but there is
simply no infrastructure to bring it here. In
the end, we will probably install our own
desalination plant”, complains Antonio
Bologna of Seafrost, a company based in
Paita (northern Peru).
Carlos Milanovitch of Dexim, who
also chairs the Committee of Human
Consumption Fisheries of the National
Society of Industries (SNI), says the
problem is already being dealt with: “The
government is working to tackle the issue of
access to water in Paita. I believe it should
be solved within the next two years”. The
problem must definitely be surmountable,
because Dexim recently invested in the
expansion of its production capacity to the
current five tons per day of finished product.
The plant permanently employs 400 people
and processes mostly hake, giant squid and
scallops.
Aquaculture for
development
Peru also offers great opportunities in
aquaculture, which has the advantage of
more predictability in production than
marine catch in years such as this. Currently
the biggest export products in this field are
shrimp, scallop and trout. Elie Barsimantov
of Iny, a company that has its own shrimp
and scallop cultivation units, but also
freezes other species from marine catch,
explains: “The products that are cultivated,
such as shrimp and scallop, are important
for us because we mitigate the fluctuations
in the availability of other marine products.
Today, shrimp represents 20% of our sales,
but it is difficult to grow rapidly in this
business because the aquiculture-related
investments are high”.
With regard to trout, this is cultivated in
the highlands for temperature reasons, in
areas where there are a number of obstacles
to overcome. The main one is the lack of a
reliable infrastructure to take the products
to the coast where they can be exported.
Marcos Moya, Deputy General Manager at
Piscis Piscifactorías de los Andes, Peru’s
largest exporter of trout, elaborates on this
issue: “Our production centres are all higher
than 3 200 metres above sea level, and three
of them are only accessible from Lima
through one busy road. It has happened to
us in the past that due to road cuts we have
had to fly the product at enormous costs to
fulfil the commitments with our clients”.
Moya declares that the demand for
their trout is higher than the company’s
production capacity, and that Piscis plans to
grow in volumes by 35% annually through
an increase in its own production capacity
and also through sourcing more product
from smaller trout farmers in the Andean
areas where they operate.
Seeing the potential of aquaculture
and its positive impact in areas in high
need of investments such as the Andes
and the Amazon jungle, the government
is implementing the National Plan for the
Development of Aquaculture (PNDA)
which expects the industry to double its
current production by 2015.
Prospects
These are definitely interesting times for the
Peruvian fishing and aquaculture industries.
The former has tidied itself up with the
introduction of sustainable fishing quotas,
and it is transforming itself into a provider
of food for the international markets; the
latter has enormous potential for growth
and, more importantly, can be developed
in the areas that have not profited from the
agriculture boom along the coast, which
should help balance the big economic
inequalities the country suffers from.
For Henry Quiroz, Manager at Hayduk,
a strong player in fish conserves: “This
country has a very rich sea and the fishing
industry is very important for the economy.
For many species there are significant
growth expectations. In giant squid, hake or
anchovy, we can really grow the volumes
for human consumption. There is a sea of
opportunities”.
INDUSTRIAL FOODS:
AN EMERGING
CUSTOMER BASE
The phenomenal performance of the
Peruvian economy is providing great
opportunities for producers looking
to expand their customer base.
Between 2002 and 2009, the Peruvian
economy grew by an average 6% annually
according to IMF data. This is resulting in a
growing purchase power for the middle and
lower classes and the introduction of new
products in their weekly shopping cart.
Following closely this development,
several Peruvian companies have taken
advantage of their local market knowledge
to put some of their products as the product
of reference in the consumers’ mindsets,
and to leverage on this strength to enter the
international markets.
Take, for instance, the example
of mayonnaise. Previously led by
multinationals, the market is now dominated
by a Peruvian brand, Alacena. Leslie
Pierce, CEO of Alicorp, Peru’s largest food
company and owner of the Alacena brand,
explains: “When we introduced Alacena
in 1996, we competed with Unilever and
Nestlé, who back then controlled virtually
100% of the market. Today, Alacena has
a 93% share in the Peruvian mayonnaise
market, which today is probably 15 times
bigger than in 1996”.
According to Pierce, the secret for
this success was based on two factors:
firstly, Peruvians traditionally prepare a
mayonnaise with a touch of lemon, which
Alacena introduced; secondly, the market
expanded dramatically: “Our competitors
were maintaining similar levels of sales and
therefore did not realise how fast we were
gaining market-share. When they tried to
react, we already had 50% of the market”,
continues Pierce.
The business of breakfast cereals offers
some similarities. Today, the market
is dominated by local player Global
Alimentos, a company that also works as a
co-packer of oats for Quaker. Its Managing
Director, Luis Estrada, gives more details
on how the Angel brand has beaten the
main multinationals in the field: “Breakfast
cereals are an emerging business in Peru.
The global big players used to import their
products and centre the distribution in
Workers processing squid at Dexim’s plant in Paita, northern Peru.
Humberto Speziani, Advisor
to the Board at Tecnológica
de Alimentos (TASA) and
President of the International
Fishmeal and Fish Oil
Organization (IFFO)

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THE EXCELLENCE OF PERUVIAN COFFEE AND COCOA
Coffee is by far Peru’s most
important agro-export product, with a
total FOB value of USD 584 million
in 2009. Peruvian coffee is also one of
the world’s finest, as is demonstrated
by the fact that the 2010 People’s
Choice Award of the Specialty Coffee
Association of America (SCAA) went
to a Peruvian coffee from the area of
Puno. With regard to Peruvian cocoa, it
also enjoys an excellent reputation for
its quality among chocolate producers
in Europe and elsewhere. The altitude and the richness of the
Peruvian soil are defining factors.
The main recipient markets of Peruvian coffee are Europe,
buyer of 62.5% of the volumes exported, and North America
(24.5% 2009 data). Interestingly enough, Peru is also exporting
sizable amounts to Colombian buyers, who then re-export the
product as Colombian coffee. In 2009, Peru sold 55 000 tonnes
to Colombia for a value of USD 39 million.
The increasing demand for Peruvian coffee in Colombia
stems from a decrease in production in this country, as a result
of a Colombian government-promoted program to renew
the plantations. While some exporters have made money out
of this situation, Peru needs to look at the longer term and
modernising the sector is of great importance, otherwise the
very low productivity rates of about 500 kg per hectare will cast
a shadow over Peru’s distinctive advantages of low costs and
supermarkets rather than small shops. It was an
elitist product with a high price. What we have
done is to popularise the consumption of readyto-eat
cereals, increasing market penetration
with very high quality, a complete product mix,
accessible prices and nationwide distribution.
We calculate that we have 80% of the marketshare”.
Building upon its strength at a national
level, Global Alimentos is now exporting to
six Latin American countries. Last year the
company completed a USD 5 million expansion
investment to reach its current 13 000 tons per
year production capacity.
The democratisation of consumption is a
phenomenon also seen in the beverage market.
Peruvian multinational Ajegroup has managed
to take a substantial market share in the cola
drinks business in several countries (which
includes Mexico, the world’s second largest
carbonated drinks market) through its Big Cola
brand (known as Kola Real in Peru). Managers
at the company, which is also active in bottled
water, cold tea, beer and isotonic drinks, believe
that the company has expanded the customer
pie rather than fought for the existing one:
“Multinationals normally have a price strategy,
which, in certain countries, limits consumption
to the higher levels of society”, explains Jorge
López-Dóriga, Global Marketing Director
of Ajegroup. “What our company did was to
expand the market, offering quality products at
high quality.
According to Ricardo Huancaruna,
President of the Peruvian Chamber
of Coffee and Cocoa, and Managing
Director of Perales Huancaruna,
Peru’s largest coffee exporter: “For
the last 30 years, Peru has grown
thanks to the producers’ efforts. Even
if our productivity per hectare is low if
compared to Colombia, Guatemala or
Costa Rica, Peruvian producers have
managed to keep their costs down and
offer the highest value”.
According to Lorenzo Castillo, Manager of the Coffee National
Committee (JNC), a producers association: “We currently have
production in 480 000 hectares but we have a potential of 1
million hectares. Yet, the key issue is improving productivity:
70% of our fields have gone beyond their ideal production
period. We need financing to renew our plantations”.
Besides low productivity, the sector faces the challenge of
coping with the distortion and insecurity created by illegal coca
plantations in the area where coffee and cocoa are produced (and
where state authorities are frequently absent). Some industry
leaders complain that although coffee is the country’s largest
export, the government dedicates more attention and resources
to the coast’s agribusiness and to products like pisco. “We do
not want subsidies, we just need access to capital at fair rates”
affirms Castillo.
fair prices. People that had never consumed
carbonated drinks started doing so”.
López-Dóriga emphasises the importance
that innovation has had in Ajegroup’s
spectacular growth since the 1990s: “In
today’s post-modern world where the
choice of products is so large, the quality is
taken for granted. To say that your product
has good quality is equivalent to saying
that a plane can fly. So the critical point is
differentiation, to add value to it”.
López-Dóriga mentions Ajegroup’s
Cifrut brand (a light juice) as an example
of innovation, and reckons that in the future
the company will need to constantly create
new products.
Space for premium
products
The market is expanding at all levels: while
poorer people are starting to consume
products that they could not afford before,
Peru’s middle classes have some extra cash
that they are willing to spend on items with
higher quality and value. As sales of these
types of products increase, the companies
commercialising them are analysing new
opportunities in the exports markets.
Laive, Peru’s second largest dairy player
by volumes, is capitalising on this trend. Luis
Ferrand, Laive’s General Manager explains:
“Peru has very low dairy consumption
per capita, of about 60 litres, due to the
traditional scarcity of milk in the country.
However, there is a growing consumption
trend and there is lots of space for growth:
Ecuadoreans consume 120 litres per year,
Colombians and Chileans 150 litres and
Argentineans 200 litres”. Besides dairy
products, Laive also manufactures cold
meat products and juices. Ferrand believes
that there is a window for growth in all of
these business lines, and that the mindset of
Mexico is one of the main markets for Peruvian drinks
producer Ajegroup.
consumers in Peru is definitely changing:
“Ten years ago, everyone prepared juices at
home and no one wanted to buy processed
juices. Now, it is a very significant business
segment that continues to grow. In the same
manner, the resistance to buy processed
desserts will change”. Although Laive is
not a small player (it had sales of USD 100
million last year), Ferrand insists that the
company is focused more on innovation and
value rather than on offering cheap products
through economies of scale. The company
is celebrating its 100th anniversary and
planning to concentrate in the future on
exports: “We are making our first steps
in the international markets, with sales of
juices, cheeses and evaporated milk in the
Americas. We also see good opportunities
in Europe, especially in juices that are
highly valued there, like passion fruit” says
Ferrand, who expects export revenues to
reach 15% of the company’s total sales in
the short term.
Another company that is exploring
opportunities abroad after consolidating at
home is Producciones and Distribuciones
Andina, a player in dairy, sweets, juices
and the seasonal Christmas-cake panettone.
Similarly to Laive, the company wants to
Luis Ferrand,
General Manager of Laive
position itself as a producer of high quality
products rather than as a massive industrial
provider. In the words of Jorge García
Seminario, its General Manager: “Our
yoghurts are made with 100% fresh milk, and
we have the advantage that we are vertically
integrated with our own milk production. In
Selva, a brand we bought two years ago, the
products are made following the traditional
methods and with the highest quality
standards. Our sweets have been around
for 40 years and are trusted by the mothers.
All these factors help position ourselves
in different market niches that offer more
interesting margins than the mass products”.
With regard to panettone, a seasonal
business, P&D Andina manufactures the
product under several brands (including
the gourmet Kusi Raymi, positioned as an
ethnic Peruvian panettone) but also engages
in contract manufacturing relationships with
third parties. But it is in the Selva juices that
García Seminario sees the best opportunities
for growth overseas: “The Selva juices are
already reaching foreign markets, like the
U.S. and Spain, and we are in conversations
to export them to many other countries. It
is a very high quality brand that has grown
very significantly in Peru”, he concludes.

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SUPPORTING THE
INDUSTRY’S GROWTH
As the Peruvian food sector increases
in size and reach, it requires the
services of well-prepared and, in
some cases, global providers.
To plant asparagus seeds are required;
fertilizers might be added to the soil, and
pesticides may also be needed. Once harvest
time comes, the product might be processed,
which involves the related infrastructure and
machinery, and perhaps the asparagus might
be jarred or canned, for which a provider of
containers is necessary. In order to produce
an asparagus salad, a special flavour or
colour might be added. This will require
additional providers. Finally the product is
ready to be shipped overseas, for which the
help of a specialised transportation company
is needed. If the product is fresh or frozen,
this must be a logistics provider that knows
how to keep the cold chain door-to-door.
This example, although rather simplistic,
illustrates the plethora of related companies
that work hand in hand with food producers.
In parallel to the growth and modernisation
of exporters, their partners across the value
chain need to respond to the challenges of
globalised markets. While the country’s
infrastructure continues to be a headache
for the industry, at least producers can rely
on a number of high-quality providers.
Those service suppliers that have
understood the requirements of the market
are enjoying very good rates of growth.
Agronegocios Génesis, a provider of seeds
and seedlings for agribusiness companies,
expects to increase its turnover by 35%
in 2010. The company has a production
capacity of 1.2 billion seedlings per year,
thanks to a network of nurseries in Peruvian
locations such as Arequipa, Chincha,
Huaura and Motupe.
José Rosemberg, General Manager of
Agronegocios Génesis, comments that
the industry has evolved greatly over
the last decade with the introduction of
hybrid seeds, and stresses the importance
of the company’s work in research and
development: “We have tried to work
closely with experts in genetics in order to
bring the latest innovations to our clients.
About 20% of our resources are dedicated
to R&D, between innovation as such and
the development of the product together
with the client. Entering any of the new
product lines requires a lot of work and
testing, which can take years.”
The company has grown to participate
in many product lines over the last years,
including asparagus, table grapes, artichokes,
capsicums, bananas and avocados, and it is
currently looking for providers in the citrics
business. According to Rosemberg, the
advantage of Agronegocios Génesis is that
it can provide a complete solution in both
seeds and seedlings: “We are constantly
looking for new clients and new providers
whose products could be introduced in the
market. We offer a very complete package
with a comprehensive after sales service
and we can also provide financing to our
clients”.
Financing is actually a key issue.
Perhaps because the modern agribusiness
is relatively new in Peru, banks still see
the industry as ‘high risk’. After the global
economic crisis, raising funds in the agro
sector is not as easy as it would be in the
country’s very rich mining industry, for
example. In this context, one of the banks
that has moved more decidedly to support
agribusiness companies is Interbank.
“We look for sectors that show a big
deficit and important opportunities, and to
which other banks are more reluctant to
enter”, asserts Andrés Muñoz, Executive
Vice-President of Commercial Banking,
Interbank. “The agro industry accounts for
just 3.5% of the total financial placements.
It is an important business for Interbank,
because we have nearly 25% of this market,
but perhaps other banks don’t see it as being
very interesting”.
According to Muñoz, the placements
for the fishing industry are currently in the
region of USD 1.8-2 billion, while they
amount to roughly USD 900 million in the
agribusiness. Beyond financing, Muñoz
claims that the bank can also offer significant
advisory support to exporters. “We go
beyond a simple commercial relationship
between a bank and an institution. We need
to offer a bit more, because the competitors
are world-class. In this context, we are very
strong in consultancy services”, he says.
Flavours and
fragrances
As we have seen in the previous article, the
increasing affluence of Peruvians is pushing
up the consumption of processed foods. As
a result, the food additives business is also
growing, with players such as Montana,
Sensoria and Granotec ready to serve the
industry in its needs for colourants, flavours,
fragrances and tailor-made solutions.
Ofelia Carranza, General Manager of
Sensoria, a company which years ago was
mostly dedicated to distribution, explains
how her team is increasingly developing its
own products and solutions: “The flavours
and fragrances business, to a large extent,
has become very competitive; therefore
PISCO: PERU’S FLAGSHIP DRINK
Of all the quarrels in which Peru
and Chile have engaged in recent years
(which include a litigation at The Hague
over their common maritime border), the
argument about pisco is perhaps the one
that provokes the most passion among
Peruvians. In a nutshell, both countries
commercialise a liquor distilled from
grapes under the same name, and both
promote it as their national drink, with
assurances that it originated within their
respective borders.
This has translated into legal battles
over the registration of the Pisco
denomination in the international
markets. However, as the commercial ties between the two countries are stronger
than ever and the bilateral diplomatic relationships are substantially improving,
some industry leaders hope a deal will be struck at some point for the best interests
of everyone.
Leaving the disputes aside, what Peruvians and Chileans produce under the Pisco
name are essentially different drinks. “The first difference has to do with the type
of grape used”, explains James Bosworth, Manager at Viñas de Oro, Peru’s largest
exporter of Pisco by volumes with 38 000 litres (2009 figures). “The production
process is also different. In Chile they add water to obtain the percentage of alcohol
required, while in Peru the alcohol is directly obtained from the still, without altering
the organoleptic qualities of the product”, he adds.
Between 2002 and 2009 exports of Peruvian Pisco have increased twelvefold
in volumes, from 18 000 to 231 000 litres, and seventeen fold in value, from
USD 80 000 to nearly USD 1.4 million, according to the statistics of the Peruvian
National Commission of Pisco (CONAPISCO). Currently the main destination
markets are the United States, Chile, Colombia and Spain.
At a national level, thanks to a strong promotion effort by the industry and the
authorities, both the quality and the consumption levels of Pisco have increased.
Pisco sour, the country’s iconic cocktail, is widely served in restaurants and bars,
along with other tasty and colourful combinations. In many instances Pisco is
actually replacing whisky and other liquors as the drink of choice, claims Bosworth.
National production is expected to reach 7 million litres in 2010, a 5% increase on
2009’s output. If we compare this to 2000’s 1.6 million litres, we could say with
certainty that Pisco has potential.
Peruvian anchovy has enormous potential as a direct human consumption product
(Photo courtesy of TASA)

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you need to give something different to the
client. We are betting strongly on valueadded
products, and on solutions rather than
just commodities”.
Carranza asserts that its main clients are
in the dairy and bakery, carbonated drinks
and juices sectors. In a highly specialised
world of flavours, colours and fragrances,
the challenge is to make sure the formula
fits exactly the idea that the clients want to
materialise: “The development process of a
product can take a year. We incur a lot of
risk, therefore it is very important to monitor
the process very closely. Having a plant
where we can do pretty much everything,
from bread to ice creams, we can carry
out tests together with the client to ensure
that we are going in the right direction”,
Carranza adds.
For Federico Bauer, President of Montana,
this characteristic of the flavours business
places some limitations on how much the
companies in this field can export: “We sell
natural colorants to 40 countries and expect
exports to represent 20% of our sales by
2011. In the flavours market, however, we
need to be close to the customers with our
own laboratories. We cannot really develop
the export market from Lima as we need to
carry out tests and we cannot send samples
in and out”.
Giving a hand,
worldwide
A food product may be ready to be
consumed, but it will have no value for the
producer unless it reaches the customer in
perfect shape and on time. While problems
in this final link of the value chain may be
addressable in products like conserves, in
the case of perishables a mistake can be very
expensive, even disastrous. That is why the
companies taking care of this need to be
world-class. As Andrés Muñoz of Interbank
puts it: “I strongly believe that fresh
products offer great added value. If a final
consumer can buy a fruit in a supermarket
knowing that it has been recently taken
from the field, that’s fantastic technology
and logistics”.
The logistics process does not depend
solely on the efficiency of the provider,
but on external factors such as the state
of the country’s infrastructure and the
availability of cargo spaces in airplanes
and boats. Alberto Uribe, Director of
DHL’s Perishables Division, explains:
“In air transportation, Peru relies on the
connections made by passenger planes.
From Lima there are direct flights to
Miami, Los Angeles, New York, Madrid
and Amsterdam; there are no direct flights
to the other main markets. It is thanks to
the excellent quality of the different agro
products exported that they can reach final
markets in perfect condition in places like
South Africa, Australia or China after four
days of transit”.
Eduardo Rey, Managing Director of
Schenker, further develops on this issue:
“The Asian market is incredibly big and has
enormous potential, but right now there are
no direct flights. The four airlines currently
connecting Lima with Europe are sometimes
not enough for certain cargo requirements.
I addition to this, we are really behind in
ports: the Callao port has experienced some
critical moments”.
One thing is clear: logistics companies
need to be solid enough to overcome these
challenges. Emilio Fantozzi, General
Manager of Ransa, a Peruvian logistics
company operating since 1939, describes
the basics of success in this field: “If you do
not want the clients to do the job themselves,
you need to have better processes than
them; to offer more competitive costs that
they could have; and to make life simpler
for them”. No wonder having the latest
technology, software and a well-trained
workforce (Ransa employs over 4 000
people in Latin America) needs to be part
of the equation.
From machinery to logistics, food producers need the support of efficient providers.
(Photo courtesy of Ransa)

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Expoalimentaria: THE FAIR THE PERUVIAN INDUSTRY NEEDED
When the decision was
taken to organize a fair where
producers and professionals
of the Peruvian food sector
could meet, perhaps not many
people anticipated such a
success. The first edition of
Expoalimentaria, held last
year in Lima, attracted nearly
200 Peruvian exhibitors and
8,000 visitors. There was
definitely a latent need for
such a gathering in a sector
that is taking off.
“Expoalimentaria 2009
beat everyone’s expectations.
We attracted buyers from
all around the world, and
for 2010 the exhibition area
will be larger, there will be
more information and more
visitors will attend,” enthuses
Juan Varilias, President of
the Exporters Association
(ADEX) in charge of the organization. For the second edition
of the fair that will take place in Lima from the 22nd to the 24th
of September, the exhibition area will nearly double last year’s
(from 6,600 square metres to 12,000) to welcome 14,000 visitors,
and the number of non-Peruvian exhibitors will increase tenfold;
from 10 to 100. The organizers expect over 700 international
buyers to attend. “The idea is to transform Expoalimentaria into
a regional fair that will allow companies from all over Latin
America to gain visibility, replicating what has been done at
other fairs like SIAL and Alimentaria,” Varilias explains. This
would not have been possible without a joint industry effort,
something relatively new in the Peruvian food industry: “The
good thing is that Peruvian exporters are increasingly working
together to promote not just their individual companies, but the
country as a whole. The fair is led by ADEX, but it involves
many other institutions and governmental bodies”.
For Manuel Portugal, ADEX Central Export Manager and the
man in charge of the fair: “The emphasis is on having a diversified
offer of products, equipment and services, and with high levels
of innovation. With the presence of key importers, decisionmakers
and professionals of the Peruvian and international food
industries, Expoalimentaria positions itself as a great platform
of opportunities to do business”.
Within the fair’s framework, there will be a number of
international seminars, such as the International Convention
of Organic Products, the National Aquiculture Convention,
the International Seminar on Fresh and Processed Fruits and
Vegetables and an Innovations Hall. There will also be a
gastronomic festival, something not to be missed when Peruvian
cuisine is involved.
Acknowledgements
This report was compiled and written by
Alfonso Tejerina (alfonso@gbreports.com),
Marina B. Falcó (mfalco@gbreports.com),
Sharon Saylor (ssaylor@gbreports.com) and
Tom Willatt (twillatt@gbreports.com), of
Global Business Reports (www. gbreports.com)
Special thanks to:
Global Business Reports also thanks all
of the following companies and institutions
for participating in this report:
AGAP, Agrícola Cerro Prieto, Agrodata
Peru, Agroindustrias AIB, Agroindustrias
Josymar, Agromar Industrial, Agronegocios
Génesis, Ajegroup, Alicorp, Alitecno, Avo
Peru / Tal S.A., Bodegas Viñas de Oro,
Café Perú, Camposol, Cerper, Chocolates
Helena, Cocla, Consorcio Joaquín,
Danper, DB Shenker, Dexim, DHL, Eco
Acuícola, Frutos Tongorrape S.A., Gam
Corp, Gandules, Global Alimentos, Gloria,
Granotec, Hayduk, Icatom, Inka Crops,
Interbank, Inversiones Perú Pacífico,
Inversiones Prisco, Iny S.A., Junta Nacional
del Café (Coffee National Committee),
La Hanseática, Laive, Lima Chamber
of Commerce, Metalpren, Ministry of
Agriculture, Montana, NB Tealdo, Nutreina,
Olivos del Sur, Perales Huancaruna,
Peruplast, Peruvian Nature, Phoenix Foods,
Piscifactorías de los Andes, Procesadora
SAC, Producciones y Distribuciones Andina,
Productos Alimenticios Tresa, PromPerú,
Ransa, Seafrost, Selva Industrial, Sensoria,
Snacks Crickets, Sociedad Agrícola Virú,
Tecnológica de Alimentos, Terminales
Portuarios Euroandinos – Paita Port, TWS
Photo on this page is courtesy of Camposol.
Cover photos are courtesy of Dexim, Camposol and ADEX.
This report on Peru was prepared by Global Business Reports
and was distributed along with FoodNews.
For further information please contact info@gbreports.com