Minerva said the fall, by six percentage points from 20% of its exports to just 14%, was mostly down to Iran’s shift away from eating beef. As a result, the company has shifted its investment strategy away from the region.
“The share of the Middle East in Minerva’s exports fell … due to the reduction in exports to Iran in the second half of 2014, as a result of the migration of consumption to chicken, which is produced domestically. This effect was normalised in 1Q15. In addition, the Company has redirected part of its exports to other regions, such as Asia and Northern Africa, due to these markets' strong consumption and higher profitability,” said Minerva in its first quarter earnings statement.
Boom times for BRF
In contrast, BRF saw a much more positive quarter in the region – although it too saw export volumes to the Middle East and Africa fall. BRF attributed the decline mostly to Africa, rather than the Middle East, singling out Angola as particularly problematic, and countries such as Saudi Arabia and the UAE as strong growth markets.
BRF’s revenue from MEA totalled US$513.7m, up 15% year-on-year, and triple the company’s overall revenue growth of 5%. Currency fluctuation played a significant factor in the growth, with Middle East and Africa prices up 1.5% in US dollars, but 23% in Brazilian reais.
“This performance was mainly due to the higher revenues obtained in relevant markets such as Saudi Arabia and the United Arab Emirates, resulting from the company ́s strategy of acquiring distributors in the Middle East,” said BRF in its earnings statement.
Regional acquisitions
BRF has been highly active in the Middle East, with its new US$160m Abu Dhabi factory opened in December. In October the firm bought a 75% stake in its main Kuwaiti distributor, Al Yasra, and fended off rumours it was in the running to buy Americana.
While BRF has seen success in the Middle East, the region has been buying less of its food from Brazil in recent months. Trade figures from the Brazilian Ministry of Agriculture revealed exports to the Middle East fell 4.3% by value in March, compared to the same month a year before.
Some markets, such as Saudi Arabia, bucked this trend, with the Gulf state importing 30% more food from Brazil in March. Egypt also saw growth, with Brazilian imports up 5%.