Nov. 16, 2017
Nearly a year and a half after arriving in the Brazilian market, through the acquisition of Atanor and Consargo, American company Albaugh is reviewing part of its local strategy, reports Grupo Cultivar portal. The group, founded in Iowa in 1979 by Dennis Albaugh, hopes the 2018 sales in the Cerrado region of Brazil will represent 50% of the volume of generic pesticide sold by the brand in the country. The statement was made by Kurt Kaalund, chief executive officer (CEO) of Albaugh, who visited Brazil along with Todd Figley, chief financial operator (CFO), last week.
Last year, Albaugh’s sales in the Cerrado region accounted for 10% of the local revenue. In 2017, they jumped to nearly 30% of the value, which reached US$210 million by the end of the year, according to Renato Seraphim, president of the group in Brazil. According to him, half of the revenues of Albaugh Brasil this year will come from the south, while another 20% will come from the southeast.
Seraphim revealed that Albaugh Brasil expected to have a revenue of US$500 million until 2022 and make up 25% of the company’s global sales. Currently, the local unit contributes to around 15% of the global revenue.
In the Cerrado region, Albaugh is reviewing its strategy of input distribution, Seraphim added. “Until last year, we only served Mato Grosso do Sul and Goiás. Now, we have partnerships with dealers in Mato Grosso, Rondônia, Matopiba–Marnahã, Tocantins, Piauí, and Bahia,” the executive stressed. “We rely on a few distributors in each state, who will sell our portfolio exclusively. We are prioritizing quality and not quantity.”
Kurt Kaalund, CEO of Albaugh
The growth plans of the group in Brazil are anchored mainly on price supply, which are lower compared with the competition, and the portfolio supply of over 70 generic products. In its factory, located in the municipality of Resende, Albaugh produces acaricide, herbicide, insecticide and fungicide for citrus, coffee, sugarcane, pasture, corn and soybean, among others.
Albaugh is proposing that the Brazilian dealerships use the same model that the group follows in the United States, CEO Kaalund affirmed. “We do not want to sell directly to the consumer, respecting the relationship of the dealers with their customer. Our dealerships will rely on products, quick delivery and better prices than the competition,” Kaalund emphasized. “This formula is possible for us, because, while other companies spend 20% of the revenue on operational expenditures, we only spend around 6%. We will help the Brazilian farmer to reduce production costs.”
A study by Marketstrat showed that investments on acquisitions of pesticide for soybean in Brazil corresponde to 21% of the production cost, against 5% in the United States and 7% in Argentina. The consultancy demonstrated that the productivity of oilseed in the country had grown 28% in the last 18 years, while the input costs had grown 178%, while the price of pesticides jumped 234%.
Kaalund underlined that some 1,200 dealerships had sold generic products of Albaugh in the Brazilian market, which is expected to fall to close to 200. “We will reduce the network and operate with more strategic partners,” the executive remarked.
With nearly 1,600 employees in the world – 150 in Brazil – and eight industrial plants, Albaugh also operates in Central America, Europe and Asia. The company’s unit in Resende, Rio de Janeiro, has the capacity to produce 10,000 tons of copper fungicide per year and 54 million liters of selective herbicide and non-selective herbicides per year, among others.