1. RISI Latin America
Miami, Nov. 20, 2013
Setting Up a Business Operation in Latin America: Brazil
& Mexico
Scheibe, RISI, Miami Nov. 20, 2013

2. RISI Latin America
 All Abroad
 Stephen Scheibe – Managing Director
 30 plus years of hands on experience in Brazil
 15 years in Mexico in packaging business mainly with
Landsberg/AMCOR
 An Insider/Outsider (Latin America/Industry)
Scheibe, RISI, Miami Nov. 20, 2013

3. RISI Latin America
 THE PROGRAM PROMISE
 An insight into the practicalities of establishing your
presence in the market, including identifying your
manufacturing site, local demand, pitfalls and
opportunities.
Scheibe, RISI, Miami Nov. 20, 2013

4. RISI Latin America
 Peril
 Uncertainty
A PUDDLE or
 Doubt
 Danger
 Lacking information
 Exposed
An unknown and unforgiving world?
Scheibe, RISI, Miami Nov. 20, 2013

5. RISI Latin America
 Profits
 Opportunity
A POODLE?
 Open for business
 Demand
 Large
 Enchanting
Hey, Let’s go!!!
Scheibe, RISI, Miami Nov. 20, 2013

6. RISI Latin America
Where? Location, Location, Location ???
Scheibe, RISI, Miami Nov. 20, 2013

7. S
a
m
b
a
RISI Latin America
GDP-Brazil No. 6
• Over 2 Trillion
GDP – Mexico No. 12
• About 2 Trillion
• Together- 70% of LATAM
Scheibe, RISI, Miami Nov. 20, 2013

8. RISI Latin America
Growth
, yet
erratic
Big Market,
Big Events
Scheibe, RISI, Miami Nov. 20, 2013
Growth
Tied to
NAFTA –
US
Economic
Integration

9. RISI Latin America
PUSH ME – PULL YOU
Scheibe, RISI, Miami Nov. 20, 2013

10. RISI Latin America
 Mexico-A PULL
 Clients under NAFTA have moved production to
Mexico
 Corrugators and Box Plants have followed; they are
pulled in
 Geography – Along the border, “twin plants”, in central
Mexico, in Guadalajara and Monterey following
industries: food, auto, electronics
Scheibe, RISI, Miami Nov. 20, 2013

11. RISI Latin America
 Mexico Market Growth: Steady but not spectacular
 But near shoring and middle class consumption add
promise
 Is the Mexican market saturated?
Scheibe, RISI, Miami Nov. 20, 2013

12. RISI Latin America
 Brazil: A PUSH
 Wants investments & too big to neglect
Scheibe, RISI, Miami Nov. 20, 2013

13. RISI Latin America
 New Brazilian middle class and better income
distribution (around 50 million new
consumersintegrated into the market)
 Desire to affirm new status through consumption
 Major online shopping driving brown box packaging
 New demand in Northeast of Brazil and midsize
cities, both are underserved
Scheibe, RISI, Miami Nov. 20, 2013

14. RISI Latin America
 Business Opportunities
 Concentrated (especially for kraftliner) and yet spread out
(for medium, test liner and boxes).
 In Brazil top 10 producers have almost 50% market share
in paper and top 3 have 33% in boxes
 Bottom of the market held by many small “factories” with old
and inefficient machinery
 Growth of corrugated higher in Mexico and Brazil than in
USA
 Mexico tied to US performance (improving)
Scheibe, RISI, Miami Nov. 20, 2013

15. RISI Latin America
 Business opportunities
 NAFTA drew US producers to Mexico in the 90’s and
first decade of 21st century
 What’s next? Growth in both Brazil and Mexico at 2 to
4% per year with further consolidation
 Brazil will add almost 1 Billion and Mexico 600 million
cubic meters paper between 2010 and 2015
Scheibe, RISI, Miami Nov. 20, 2013

16. RISI Latin America
 A Tale of Two Cities: Belo Horizonte and Tijuana
 Tijuana: Kappa Smurfit, CECSO, Harbor, Reliable, plus
distributors like AMCOR/Landsberg, XPEDEX (IP),
ULINE, very competitive market.
 Belo Horizonte: Approximately 2 x’s larger with less
corrugated capacity and limited distribution: thus less
competition and more opportunity.
Scheibe, RISI, Miami Nov. 20, 2013

17. RISI Latin America
 MARKET ENTRY
 Mergers and Acquisitions – An Industry Tradition
Brazil, i.e. IP-ORSA, Klabin-Igaras, MWV-Rigesa,
Irani-Sao Roberto; Mexico: Kappa-Smurfit-OCC, Rock
Tenn-Smurfit Stone, etc.
 Greenfield international investment (more common in
Mexican case for corrugators & boxes)
Scheibe, RISI, Miami Nov. 20, 2013

18. RISI Latin America
 The Pitfalls and Problems
 The Cartels and the Cartels
 Bureaucracy/Legal/Taxes/High Cost (custoBrasil)
 Corruption
 Learning Curve
 Finding the right place/right people
 Details, details!!! Taking care of the little stuff
Scheibe, RISI, Miami Nov. 20, 2013

19. RISI Latin America
 Is the hour glass running out?
 Is our cup half empty, half full or full?
 Tequila or Cachaca or both?
Scheibe, RISI, Miami Nov. 20, 2013

20. RISI Latin America
References
ABPO, Relatorio Annual, 2012
AMEE, AnuarioEstadistico, 2013
Bohm, Carl, Reunion de AICC, Mexico, May 17, 2012,
http://www.aiccbox.org/region/meeting_data/Mexico/2012/Carl_Bohm_ICCA.pdf
Foster Vidal, Andre Carvalho, “O mercado de papelaoonduladoeosdesafiosdacompetividadedaindustriabrasileira”,
BNDES Setorial 35
http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/conhecimento/bnset/set35
01.pdf
KPMG:http://www.kpmg.com/BR/PT/Estudos_Analises/artigosepublicacoes/Documents/Fusoes%20e%20Aquisicoes
/2013/Pesquisa-FA1-trimestre-2013.pdf
Scheibe, RISI, Miami Nov. 20, 2013