PETpla.net Insider 12 / 2013

EDITOUR REPORTS 12 PET planet insider Vol. 14 No. 12/13 www.petpla.net A logistics centre Uruguay regards itself as the logistics centre for the area and new legislation is being introduced to underpin efforts to press ahead with building up the appropriate infrastructure. Key priorities are harbours, airports and transport routes. The capital city of Montevideo is also the headquarters of the South American trade organisation Mercosur, and under its umbrella, Uruguay is actively campaigning for the extension of the trading relationships with its South Ameri- can partners. Economy is driving forward The Uruguayan economy is closely linked to, and affected by, what is happening in the rest of Latin America. Uruguay endured weak economic conditions from the 60s onwards, and when the Argentinian economy collapsed in 2002, the effect on Uruguay was severe. However, since the start of the new millennium, the Uruguayan economy has recorded remarkable growth (2010: 8.5%; 2011: 5.5%, 2012: 3.8%, forecast for 2013: 4.0%). Poverty levels have been reduced dramatically, from 30% in 2006, to 10% by 2012. Unemploy- ment in the country stands at 5.5%, the lowest level ever recorded, and there is a burgeoning middle class. These encouraging economic trends are attracting for- eign investors, particularly from China, but also from other countries.In 2012, Brazil was Uruguay’s biggest export market accounting for 18.5%, followed closely by China with 17.9%. In that same year, 16.1% of Uruguay’s imports came from China. It is not all good news. The national currency, the peso, has strengthened, making Uruguayan exports more expensive, and domestically, the 8.1% infla- tion rate is causing problems. Both issues will need to be addressed sooner rather than later. The PETplanet insider team had first hand experience of Uruguay as a logistics centre when we took the decision to ship the Editourmobil to Montevideo to launch our Latin American tour. Our discussions with Cristalpet also empha- sised the effects this government decision was having on companies in the 76,000t strong Uruguayan PET industry. The focus on establishing the country as a logistics centre is likely to support and benefit the PET industry. (Sources: Wikipedia, German Federal Foreign Office, 2013 Index of Economic Freedom) The soft drinks market This brief review gives an idea of what is currently hap- pening in the Uruguayan soft drinks market. According to Canadean Limited, approx. 76.5% of the volume of soft drinks in Uruguay was packaged in PET products in 2012. This is in contrast to the beer market in the country, which currently stands at approximately 12% of the size of the soft drink market, although it has been growing consistently during the past five years. Obviously the PET industry in Uruguay and the devel- opment of the logistics centre policy is heavily dependent on what is happening elsewhere, especially in Brazil and Argentina. It therefore makes sense for us to compare the market trends in Uruguay with trends in the Latin American market generally. In 2007, 400 million l of soft drinks were sold in Uruguay, namely bottled water, carbonated drinks, concentrates, fruit/ vegetable juices and sports and energy drinks. By 2012 this figure had increased by 22.5% to 490 million litres. Although the growth of the Uruguayan soft drinks market between 2007 and 2012 was 2.5% higher than in the rest of Latin America, Uruguayans actually consumed 10 litres fewer (at 150 litres per head) in 2012 than the average for Latin America. With a difference of almost 10% from the average in Latin America, relatively large numbers of carbonates are sold in Uruguay, representing 60% of sales volume. By contrast, the market for bottled water and juices is some- what smaller than the average. Carbonates Bottled Water Fruit/Vegetable Juice Drinks 0% 20% 40% 60% 80% Uruguay Latin America Volume share of soft drinks in percent Diagram 1: Sales volume in relation to the most important beverages among the soft drinks in Uruguay and Latin Amer- ica 2012 It is becoming clear that, since 2007, the market for carbonates,with an annual decrease in its rate of growth (less than 1% from 2011 to 2012), has been approaching a saturation volume of approximately 300m litres. In Latin America generally, growth rates are only slightly higher. However, in the past few years these have been grow- ing every year. There is no saturation effect similar to that in Uruguay to be observed on the Latin American market. Over the past five years the annual rate of growth of bottled water in Uruguay has stayed relatively constant at 1.5%; from 2007 to 2012 the market grew by 11.8m litres to 172m litres. This is in contrast to the remainder of Latin America. Here the annual rate of growth of bottled water has been in excess of 5% continuously since 2009. 350 300 250 200 150 100 50 Carbonates Bottled Water Trading volume in millions of litres 2007 2008 2009 2010 2011 2012 Diagram 2: Trend in sales volumes for the two most important types of carbonates and bottled water.