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News Article

Bread and Milk: Winning Combo in the Food Sector

By Alessa Flores | Tue, 08/04/2020 - 10:12

At the beginning of the pandemic, there were concerns about possible food shortages in Mexico derived from the pandemic. The effects of COVID-19 on food trade were uncertain at the time and certainly hard to quantify in the short term. However, food supply was guaranteed, as well as exports that continued to flow to the US given aggressive supply policies in both counties, explained in March Juan Carlos Anaya, Director of the Agricultural Markets Consulting Group (GCMA), in an interview with Forbes.

However, today the outlook is much more encouraging than at the beginning of the pandemic. According to América Retail, companies in the basic consumption sector and that are characterized by little contact with customers were those that reported an increase in their income. For example, Bimbo has been one of the winners in the food industry, having reported a net profit of MX$2.6 billion (US$113.2 million) between April and June, which symbolized an increase of 107.8 percent against the same period last year. Bimbo currently operates in more than 32 countries, has more than 100 brands and more than 13,000 products that are sold at more than 3 million points of sale, according to Grupo Bimbo's 2019 Annual Report.

Another pandemic winner was Grupo Lala. The Mexican company revealed a 5.1 percent increase in sales of its branded products and all plants continue to produce uninterruptedly, according to Grupo Lala's 1Q2O Report. The company explained that the increase in net sales for 1Q20 was 3.7 percent, reaching MX$19.4 billion (US$850 million). Sales growth was driven by Mexico, Brazil and Central America; the adverse effect of the depreciation the Brazilian real of 12.0 percent and the dollar’s appreciation of 3.9 percent against the Mexican peso and the 21.6 percent increase in sales of raw milk in Mexico due to a seasonal excess of milk collected from suppliers. Branded sales in Mexico alone increased 5.2 percent during 1Q20 compared to last year's same period and totaled MX$14.4 billion (US$630 million), says the report.
 

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Alessa Flores Alessa Flores Senior Journalist and Industry Analyst