Food & Beverages in ArgentinaPremium quality + Expertise to meet global market needs

INVESTMENT OPPORTUNITIES

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Highlights

>> STRONG DRIVERS FOR DEMAND The steady economic growth of highly-populated emerging markets combined

with an increase in the number of middle- and high-income consumers in these countries is changing the global food and beverage industry. These factors have led to a strong increase in the volume of demand and in the consumption of traditional and high-end value-added products.

>> SOLID FOUNDATION FOR SUCCESS Argentina’s remarkable human and natural resources provide exceptional

competitive advantages in foods and beverages, making the country a global food supplier. Committed to high-quality standards, product innovation and aggressive export strategies, the industry is prepared to meet the challenge of an increasingly larger and more sophisticated global demand.

>> DIVERSE FIRM PROFILES AND PROFITABLE OPPORTUNITIES With over US$17 billion in food exports, Argentina’s food & beverage sector has

attracted some of the largest global players, as well as small entrepreneurial firms that have successfully built the capacity to take advantage of new opportunities. Along with the production of traditional food products, Argentine companies have broken into unique niches serving premium customers.

>> OUTSTANDING SECTOR PERFORMANCE The food & beverage sector in Argentina has a reputation for innovation

and quality, combining exceptional natural resources with a technologically advanced agro-industry. Attracting significant foreign and local investments, production in the sector grew over 10% a year since �00�.

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I. Why Invest in Food & Beverages in Argentina?

the basis of technological improvements and economies

of scale. The sector has seen important developments

in particular segments such as organic and functional

foods, where growth and innovation have resulted in

the success of entrepreneurial initiatives. In the last

five years, the sector has adopted aggressive export

strategies, particularly targeted to reach beyond the

regional market.

• INNOVATION. Technology will continue to play a key

role in the sector’s dynamics. The huge scope for the

application of biotechnology is expected to make a

contribution by providing nutritious foods to the growing

world population. Argentina’s natural resources are

backed by the significant stock of professionals trained

in disciplines related to the food and beverage industry,

and over 10 firms dedicated to the development of

biotechnology in the area of food ingredients.

• MAIN CHALLENGES. The current opportunity and

the sector’s success in recent years present important

challenges to the Argentine food and beverage industry.

Among other actions, the sector and relevant government

bodies will need to continue supporting the creation and

internationalization of entrepreneurial firms, leveraging

successfully the Argentine brand name and facilitating

the application of technology to the sector’s processes

and products.

• A GLOBAL OPPORTUNITY. A key industry in the world

economy, the global food and beverage (F&B) market is

valued at approximately US$4 trillion with food sales

accounting for 70% of the market. Overall demand is

driven mainly by the size of the world population, the

degree of urbanization and rising income levels. The

spectacular growth of emerging markets will continue

to contribute to expansion in demand in the future.

Simultaneous to this surge in volume, rising incomes

will increase the consumption of higher quality food

and food categories. These trends create a fast growing

export market for Argentina’s premium products, which

is reinforced by an attractive regional market and an

expanding domestic demand.

• WORLD LEADER. Argentina’s vast expanse of fertile

arable land, high productivity levels and developed

agro-industrial capacity shapes the country’s enormous

potential as a global food supplier. With over US$17

billion in exports, Argentina is currently one of the

world’s major food exporters. The Argentine food &

beverage sector is characterized by a combination of

leading firms -national and international- with global

presence and a number of smaller innovative companies

taking advantage of unique niches in the market.

• COMPETITIVENESS. Being the main recipient of Foreign

Direct Investment (FDI) during the 1990s, the Argentine

food-processing sector has become highly competitive on

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II. Sector Structure and Performance

INDUSTRY STRUCTURE

A key sector. The F&B sector is at the core of the

Argentine manufacturing industry. It is the country’s

largest manufacturing sector in both total sales and

value-added (33.1% and 25% of the manufacturing

sector, respectively). The sector’s performance is of vital

importance to the country’s sustainable growth trend

through its contribution to the country’s exports, and

therefore trade surplus.

Premium quality. Argentina has a significant

comparative and competitive advantage in food and

beverages resulting from the combination of abundant

and varied natural resources and highly qualified

human resources, driving the development of world

class products. Argentine food and beverage products

are present around the globe, advancing the country’s

reputation for innovation and quality. Committed to high-

quality health and environmental standards, the sector

is fully prepared to meet challenging and increasingly

sophisticated consumer demands.

Market. In addition to Argentine foremost firms– like

Arcor, Aceitera General Deheza (AGD), La Serenísima,

Refinerías de Maíz and Sancor, leading foreign

multinationals have long-standing operations in

Argentina– including Cargill, General Mills, Kraft Foods,

Louis Dreyfus, Nestlé, Quickfood and Unilever. There are

also a growing number of smaller firms, focused on high-

end products, which are making their mark in a variety

of segments and niches. These entrepreneurial firms are

taking advantage of profitable investment opportunities

arising in the premium products segment.

SECTOR PERFORMANCE

Top performance. In 2007, F&B exports amounted

to US$17.8 billion—32% of total exports and 44% of

manufacturing exports. The sector contributes around 5%

to the country’s GDP and exhibited a compound annual

growth rate of 10% between 2002 and 2007. The sector

accounts for 16% of the total expenditure on innovative

activities and 8% of the total R&D investments performed

in the manufacturing industry. Employing 30% of the

manufacturing industry’s workforce, its output per

employee grew 40% in the last five years.

Upgrading tradition. The F&B sector has a long

tradition in Argentina, and has undergone important

transformations during its history. Continuously

incorporating technological advances, the industry has

become increasingly competitive. During the 1990s, the

food-processing industry was the prime destination of FDI

in the country, receiving US$9 billion. During that decade,

United States firms were the largest investors, accounting

for almost one-quarter of FDI, followed by Chilean,

French, Brazilian, and Mexican firms. Beverage firms were

the largest recipients of FDI, accounting for over 40% of

the total (mainly beer and non-alcoholic beverages).

Dynamism. Currently, the sector shows strong dynamism,

recently reaching record production levels. Between 2002

and 2007 production increased 63%.

Profitable investments. The recent sustained

growth drove profitability and attracted local and foreign

investments. During 2007, investment announcements

in the sector reached US$774 millions, being the

most relevant those by Coca-Cola (US$289 millions)

and Cervecería Quilmes (US$109 millions) aimed at

strengthening logistics, acquiring production technology

and reducing environmental impact.

Food & Beverages Production Growth(Phisical production index 1997 = 100)

Food & Beverages Exports Growth (in US$ milllions)

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Source: National Institute of Statistics and Census (INDEC)

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INDUSTRY SEGMENTS

The food & beverage industry processes agriculture,

livestock and fishing products into food and drinks for

humans or animals, and includes the production of

various intermediate products that are not directly food.

The industry is traditionally classified into the following

five groups: meat, fish, fruit, vegetables, oils and fats; dairy

products; grain mill products and prepared animal feeds;

other food products; and beverages.

The country’s most important segment is production,

processing and preservation of meat, fish, fruit, vegetables,

oils and fats with sales of US$25 billion and exports of

US$15 billion. China, Spain, and the Netherlands are the

main export destinations. Employment in this segment

accounts for 35% of the sector’s total workforce.

Vegetable Oils. These products are one of Argentina’s

main export products. The oils are based on the abundant

offer of oilseeds, among which soybean stands out.

Argentina is the world leader in vegetable oils: the leading

producer and exporter of sunflower oil, first exporter

and third producer of soybean oil and second exporter of

peanut oil. The sector uses state-of-the-art technologies,

producing at competitive costs and reaching world-

class quality levels. Among other, the main players in

this segment are AGD, Cargill, Industrias de Maíz and

Refinerías de Maíz. Increasing investments over the past

five years led to an important expansion in production and

consolidated these firms’ roles as world players.

Cereals and mill products. This product category

is Argentina’s fifth main export, exhibiting the highest

export growth rates between 2002 and 2007 (198%).

Exports exceeded US$700 million in 2007. Argentina

CASE STUDY

ARCOR: Argentine Multinational with worldwide presence in the food & beverages industry

Arcor is an extraordinary example of an Argentine firm

with international presence and a culture of permanent

innovation, investment and the creation of competitive

advantages. Specialized in the production of candies,

cookies, chocolates, ice creams and other food products,

its wide offering reaches every consumer segment and

is in permanent expansion, with over 100 new products

developed each year. Founded in 19�1, Arcor is the

largest candy producer in the world. Arcor’s �1 industrial

plants (�0 in Argentina, � in Brazil, � in Chile, 1 in Mexico

and 1 in Peru) produce 1,�00 different products. The

company employs �0,000 people and has total sales of

US$1.8� billion of which US$�10 million were exports to

1�0 countries. Arcor has developed strategic alliances

with partners such as Bimbo (forming Mundo Dulce to

produce chocolates and candies in Mexico) and Danone

(establishing Bagley Latinoamerica, the biggest cookie

producing firm in South America). The permanent search

for new opportunities and markets led Arcor to enter

the ice cream market in �00�, reinforcing the reputation

of their chocolate lines. Additionally they have

strengthened their production of sauces, canned foods,

solid sweets, dessert mixes, jams, jellies and dressings

through its acquisition of Benvenuto, a traditional leader

in the production of these goods. Traditionally, Arcor has

used its well-gained reputation and brands to expand

its lines and reach. The company guarantees the quality

of its products and complies with the most demanding

international norms.

Sales in F&B by Segment (2007)

Source: National Institute of Statistics and Census (INDEC)

7

belongs to the group of countries with the highest yields

in corn and wheat. Currently 138 firms operate in the

milling industry, and develop high quality products

to supply both the internal and export markets. Corn

processing produces a wide array of products that are

directly consumed or serve as inputs for other industries,

such as oil, flours, yeast, starch, sweeteners and gluten,

among many others. Wheat and corn processing has

advanced towards a more diversified product offering,

with higher levels of differentiation and innovation. For

instance, fortified flours with minerals and vitamins

resulting from important R&D investments have external

markets as their main destination

Meat, fish, fruits and vegetables. Cattle meat

production is on its highest level and the value of meat

exports grew at an annual average rate of 35% between

2003 and 2006. Fish exports increased 14% and fruits and

vegetables expanded 17% during the same period.

Dairy Products. Sales in the dairy sector currently

exceed US$4 billion. This sector exports over 15% of its

production, with practically no imports. The main export

destinations are Brazil and Algeria. This sector has seen

a significant recovery recently, managing to surpass

its record production levels exhibited in 1998, with

cheese and milk growing at annual rates of 9% and 12%,

respectively since 2002.

Beverages. The beverage segment has exhibited the

most dynamic behavior in terms of production volumes:

its output volume grew 86% between 2002 and 2007. The

performance of some products, such as mineral waters,

flavored waters and sports drinks stand out as particularly

attractive.

CASE STUDY

Cepas Argentinas: consumer knowledge and permanent innovation

Cepas Argentinas is a business group specialized in the

production and distribution of foods and beverages.

With a turnover of US$1�0 million and exports of US$��

million, the company has managed to position its brands

(such as Dr. Lemon, El Noble Repulgue, Fernet Lusera,

Giacomo, Le Vignoble, Pronto, and Terma) as leaders

in their respective categories. Cepas Argentinas is the

first exporter of concentrated grape juice in the country

through Le Vignoble. With Bacardi-Martini as an inter-

national partner, is responsible for the marketing and

distribution of its products. The company has also market-

ing and distribution agreements for Cinzano and Campari

products, which include the distribution, marketing and,

in some cases, the production of these international

brands. In addition, Cepas Argentinas is in charge of the

distribution of Bodegas Bianchi’s wines. The company

owns five industrial plants (including plants for the

production of non-alcoholic and alcoholic herbal based

beverages, alcoholic beverages, grape concentrated juice,

stuffed pasta and fresh and frozen empanadas) and two

distribution centers. A distinctive aspect is the company

devotion to the continuous development of new products

and markets.

Cepas strongly believes that the driving forces of its

business are the value of its brands and its knowledge of

consumers’ needs. One of the company’s distinguishing

features is its ability to detect and generate new product

categories that are supported by significant investments

in R&D. Cepas Argentinas is known for its outstand-

ing performance in brand image-building, endorsed by

continuous investment in advertising and promotion. As a

result of this business vision, the group ranks among the

first fast moving consumer goods companies in Argentina.

Traditionally, the group’s exports were almost exclusively

focused on concentrated grape juice. In �00� Cepas Ar-

gentinas decided to focus its efforts on the development

of beverage and food brands abroad. This decision has

already produced encouraging results. Besides neighbor-

ing countries such as Uruguay and Paraguay, which have

always been supplied by the company, Cepas Argentinas

already exports products to an important number of

countries, including Australia, U.S., Canada, Italy, Japan,

Netherlands, Spain, U.K., among others.

Exports in F&B by Segment (2007)

Source: National Institute of Statistics and Census (INDEC)

8

Canada, Brazil and Russia the main destinations (together

representing over half of the exports). The most exported

variety corresponds to Malbec, the flagship wine for

Argentina. The five main wine exporters are Esmeralda

(Catena Zapata), La Agrícola (Zuccardi), Norton, Peñaflor

(Trapiche and Las Moras) and Trivento.

Significant investments. Both local and foreign

investment–mainly from the U.S., Chile, France, Spain

and Italy–have made possible the spectacular expansion

of productive capacity. During the past decade, the

sector received over US$1 billion in investments from

beverage companies and investment funds. These

investments have resulted in improved quality and

consistency, matching international standards. Cutting-

edge technology similar to the one used by other major

producing countries is now available in Argentina, and

the country boasts an immense offering of high quality

products at competitive prices. The growth of the wine

industry has also promoted the development of wine-

tourism, attracting an increasing number of tourists and

driving significant investments.

Alliances & associations. Sector participants are

organized in several associations and initiatives.

Beginning in the early 1900s, the Argentine Viticulture

Association and The Mendoza Chamber of Winemakers

first addressed the needs of an emerging group of

producers interested in global exposure. The two

organizations were independently responsible for

maintaining quality standards, establishing prices and

accounting for the needs of member companies. In

August �001, the two organizations united to form

Food & Beverages: Unique Opportunities

The sustained increase in income levels in Argentina

during recent years fostered the return of premium food

and beverage brands to center stage in the marketplace.

This domestic development is reinforced by a growing

global segment of middle- and high-income consumers.

In addition to these general trends, other factors such

as the rise of female participation in the labor force and

a growing number of health-conscious consumers have

created profitable investment opportunities.

WINES

The combination of soils, climates, altitudes and

topographies in Argentina provide excellent agro-

ecological conditions for the elaboration of different

types of grape and wine. Our wines are positioned among

the best in the world, certified by important international

awards. These endorsements have positively driven the

international demand for Argentine wines.

Growing demand and production. With a production

of 1,�00 million liters in �007, Argentina is the world’s

fifth major wine-producing country. Close to 80% of this

rampant production is intended for the domestic market,

which has become increasingly sophisticated over the

last years. Argentina’s domestic market–the seventh

largest wine market in the world–offers an important

stimulus for local production. There are currently over

700 wineries operating in the country, 70% of them in

the province of Mendoza, and the wine industry directly

employs more than ��,000 people.

Global presence. The rise of Argentine wine exports has

been driven not only by a strong increase in volume, but

by a significant increase in value. In the last 17 years,

while the volume exported of wines and must increased

seven-fold, the value of wine exports multiplied by

over �0 times. In �007, export volumes increased �0%

(� million hectoliters), with a �0% increase in export

value, reaching US$��� millions. Wines account for

7�% of this amount, with the remainder corresponding

to musts and sparkling wines. The industry goal to

reach US$900 million exported by �011 is expected

to be met well in advance. Last year, Argentine wines

reached 11� countries, being the U.S., United Kingdom,

1997 1998 1999 �000 �001 �00� �00� �00� �00� �00� �007

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in U

S$ m

illio

ns

in m

illio

ns li

ters

Wine Exports Growth

Source: National Viticulture Institute (INV)

9

“Wineries of Argentina” (Bodegas de Argentina) that

represents grape and fine wine producers accounting for

80% of exports in the industry.

Companies associated with “Wineries of Argentina”

account for almost �0% of the local table wine market

and almost 80% of the local fine wine market. In addition

to provincial representation, “Wineries of Argentina”

supports national efforts to regulate wine production and

its market on behalf of the government. This association

participated in MERCOSUR negotiations with member

countries to develop commercial regulations for the

wine industry in each country which went into effect in

199�. Today, the organization continues to participate in

periodic MERCOSUR meetings. Argentina’s Winegrowing

Association -now part of “Wineries of Argentina”- is a

collection of exporters whose aim is the promotion of

their members’ products in the export market.

Public-private cooperation. The sector has achieved an

important level of public-private coordination, which

resulted in the Strategic Plan Viticultural Argentina

�0�0 that sets global action strategies and goals for

both domestic and external markets. The Argentine

Viticultural Corporation is the public-private entity

gathering the major institutions in the sector, with the

mandate to manage and coordinate the implementation

of the Strategic Plan. The main overseeing public body

is the National Viticulture Institute (INV), a government

organization empowered to control all aspects of the

growing and production aspects of the industry. In

addition to drawing-up major rules and regulations, the

institute runs a large laboratory for quality control of

export wine. The INV also elaborates industry statistics.

10

SOFT DRINKS AND FLAVORED WATERS

The soft-drinks market is dominated by carbonated

drinks, followed by flavored waters and mineral waters.

Volumes of carbonated drinks experienced a significant

fall in �00� but have regained momentum since then,

with domestic market sales reaching ��.7 million

hectoliters in �00�. There are more than �00 new brands

in the market, although the sector remains dominated by

the product ranges of Coca-Cola and Pepsi (subsidiaries

of Mexico’s Coca-Cola Femsa and U.S.-based PepsiCo).

Rapidly growing product segments. Mineral water,

flavored waters and sports and energy drinks stand

out as attractive and rapidly growing segments.

The combination of rising incomes and increasingly

health-conscious consumers are driving demand. It is

expected that sustained increases in real incomes should

continue to drive sales at the high end of the hot drinks

market, such as cappuccino, specialty teas and flavored

“gourmet” yerba mate.

Mineral and flavored waters. Mineral water

consumption has recovered since the slump in �00�, and

the sector recently accounted for 1�% of the soft-drink

market, with sales reaching US$�80 million. In �00�,

the average domestic per capita consumption was ��

liters–similar to other countries in the region but well

below more developed markets such as France (11�

liters) or Germany (7� liters). Coca-Cola of Argentina is

one of the major players in the sector. Recently, there

has also been a huge growth in flavored mineral waters,

which aim to compete with diet sodas. In �00� sales of

flavored waters grew by ��% and this growth trend is

likely to continue.

Sports and energy drinks. Growth rates in the sports

and energy drinks (111% growth in �007) segment is

attracting new investments. Specifically, the isotonic

beverage market is also growing fast (�7% in �007),

with PepsiCo (U.S.) as the leader with its Gatorade brand,

accounting for 9�% of the market.

11

NUTRIFOODS

Consumers around the globe are increasingly interested

in the health benefits of particular foods, and look

beyond the basic nutritional benefits for food with

disease preventing and health enhancing properties.

A more widespread understanding of how diet affects

diseases, rising health-care costs and an aging

population have created a market for functional foods

and natural health products. According to market

statistics, the global functional food and nutraceutical

market is growing at a rate that is outpacing that of the

traditional processed food market. .

Huge Potential. Argentina has the potential to emerge

as a leading world supplier in this attractive market.

The impressive growth rates observed in the local

F&B industry and its propensity towards innovation

constitutes an important stimulus for the development

and attraction of local suppliers. Several domestic

firms are present in the bioactive food ingredients

industry and in that of food ingredients based on

bioprocesses. The local market for bio-produced

food ingredients is estimated at over US$100 million.

Some current developments include incorporating

functional ingredients into food products, such as

probiotic bacterial cultures; prebiotics (e.g. fructo-

oligosaccharides) from corn; bioactives concentrated

from berries and flax; and novel fibres from pulses.

1�

Phytochemicals in brightly coloured fruits and vegetables

are suggested to be the bioactive compounds associated

with reduced risk of cardiovascular disease and cancer.

Berry crops such as blueberries and cranberries have

high concentrations of these compounds, apart from

important vitamins and minerals. U.S. Department

of Agriculture (USDA) studies rank the blueberry as

the most important contributor of antioxidants, and

highlighted its antibiotics effects.

In the last decade, the Argentine production of berries

(comprising today �,000 hectares) increased greatly,

peaking at ��,000 tons and employing 70,000 people.

Its development has been mainly fostered by the rampant

increase in exports which grew at an average rate of ��%

during the last decade. Between �00� and �007 exports

grew ��%, reaching almost US$�0 millions. Estimations

suggest that exports of berries will reach 1�,000 tons in

�008, an increment of �9%. Strawberries occupy the first

place with �0,000 tons, followed by the rapidly growing

production of blueberries. Blueberry production reached

�,000 tons, of which 90% is exported, mainly to the U.S.

The local manufacturing industry is becoming increasingly

aware of the properties and potential of berries. More

and more blueberries and cranberries are processed into

jams, jellies, drinks (especially teas), concentrates, purees,

juices and syrups, pie fillings, dairy products and sauces.

They are canned and frozen in both retail and wholesale

packs. Fresh, frozen and dried berries are used in bakery

products, nutrition bars, trail and snack mixes, cereals and

muesli. Berry extracts are used as coloring and flavoring

agents, and dried concentrated extracts are being packed

into capsules for sale as natural health products.

Nutrifoods in the Spotlight: Berries

Berries Exports (in tons)

Source: Argentine Chamber of Blueberries and other Berries Producers (CAPAB)

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ORGANIC FOODS

Argentina presents natural and competitive advantages

for the production of organic foods. Currently, both the

production and exports (98% of total production) of

organic products is increasing strongly. This performance

is based mainly on the opportunity of exporting fresh

products by taking advantage of the counter-season

with respect to the Northern hemisphere added to the

confidence on Argentina’s organic product certification

acquired via its renowned and consolidated normative

and control systems. Last year, the surface allocated

to organic cattle increased 17% (reaching � million

hectares) and the one dedicated to organic food grew by

9% (�1,000 hectares).

Global presence. Exports of organic products increased

significantly and during �007 reached 118 billion tons.

Since its beginning, the activity’s main destination has

been the E.U., accounting for 7�% of total exports.

However, the U.S., presently accounting for 1�%, has been

increasing its demand. Among these exports, processed

products stand out: they represented almost �0,000

tons and grew �0% last year. Since 199�, Argentina

presents a specific regulatory framework for organic

vegetable production, which was completed in 199� with

the framework for animal organic production. This early

regulation allowed Argentina to be among the first in Latin

America to receive authorization to export to the E.U.

Domestic consumption, although still small, is rapidly

increasing, especially that of vegetables which currently

represent �0% of domestic consumption.

Organic Foods in the Spotlight: Premium Vegetables

An avid market for varied and high-quality vegetables

in the Northern hemisphere fostered the exports of

premium products, such as asparagus, cols and endives.

Argentina is currently experiencing a significant growth

in its exports, due to its work in cultivation technologies

and post-sown innovations. Several firms are increasingly

aiming at a product differentiation strategy. In this

regard, the “Argentine food: A Natural Choice” seal

constitutes an important strategy aimed at strengthening

its presence in these export markets. Fresh asparagus

reached exports of US$��0,000, with endives and cols

also registering important increases. The main markets

for these products are the U.S., Spain, France, Germany,

Switzerland, the Netherlands and neighboring countries.

1�

III. Foundation for Success

RESEARCH AND DEVELOPMENT

Technological assistance. The country has a wide

array of scientific and technical institutions dedicated

to upgrading and assisting the F&B industry. One of the

most renowned national industrial research centers, the

National Institute for Industrial Technology (INTI), has

a whole division dedicated to food production. Within

this division, four different areas are explored: Meat,

Diary products, Fruits and Vegetables, and Cereals

and Oilseeds. This center conducts valuable research

applied to the production, processing, packaging and

commercialization of existing products as well as

product development and upgrading.

Research capabilities. The National Council for

Scientific and Technical Research (CONICET) has

many research institutions devoted to the F&B industry.

These include the Research and Development Institute

in Food Cryogenic technology (CIDCA), the Center

for Lactobacillus (CERELA), the Industrial Lactology

Institute (INLAIN), and the Research and Development

Center in Industrial Fermentations (CINDEFI).

Funds for science and technology. The National

Fund for Scientific and Technological Research

(FONCYT) has supported 120 research projects in

the area of food technology between 1996 and 2004,

with average grants of US$50,000. Another relevant

public initiative, the Argentine Technological Fund

(FONTAR), sponsored the F&B industry with more than

US$13 million during the 2003-2006 period.

GROWING BIOTECH INTEGRATION

Biotechnology applications. More than 10

biotechnological firms in the country research and

produce food ingredients for the F&B industry, with

total sales bordering US$60 million. Among the main

users of these ingredients, five companies stand out.

Three of them are domestically-owned–Alimentaria

San Luis, Arcor and Georgalos–, and the other two–

Industrias de Maíz and Refinerías de Maíz–have been

acquired by global food companies. Two leading firms

in the dairy sector (SanCor and La Serenísima-Danone)

have recently launched their probiotic milk lines by

incorporating Lactobacillus and Bifidobacterium

strains that, as probiotic species, favor the intestinal

microbacterial ecosystem.

1�

LOCAL SKILLS AND TALENT

Attracting the brightest minds. Argentina

presents an abundant flow of university graduates

in diverse disciplines related to the food & beverage

industry. The federal government, through its

Ministry of Education, included “Food Engineering”

and “Bachelor in Science and Technology of Foods” as

priority disciplines. Students in those fields can enjoy

specially tailored scholarships aimed at increasing

the stock of educated professionals to meet a rising

sector demand. Two main associations, the Argentine

Association of Food Technologists (AATA) and the

Argentine Association of Food Industry Engineers

(AAIIA) represent industry professionals.

Entrepreneurship. The F&B sector has seen a

number of entrepreneurial firms penetrate attractive

niches. This is due to a large extent to the fact

that Argentina offers a pool of young, motivated

and talented entrepreneurs. More than 65,000

undergraduate and 4,600 graduate students from 103

universities across the country enter the labor market

each year and the country ranks tenth in the Global

Entrepreneurship Monitor (2007) and counts with

world-class business schools.

NATURAL RESOURCES

Naturally rich. Argentina is one of the most

geographically varied and resource rich territories

in the world. It is the second largest country in Latin

America and the eighth in the world. Along with its

2.8 million square kilometers Argentina is endowed

with extraordinary fertile agriculture lands - almost

32 million hectares of arable land- perfectly fitted for

agriculture and cattle production, and rich fisheries.

These resources endow Argentina with a remarkable

potential as a global food supplier.

1�

IV. Main Challenges

Industry players and government agencies face key

challenges to sustain growth and consolidate the sector’s

competitiveness. In themselves, these challenges present

attractive opportunities for the industry and Argentina.

• Support the creation and internalization of

entrepreneurial companies: the current scenario

presents outstanding opportunities for innovative

companies capable of developing differentiated products

for the world market. Encouraging the creation of

companies with a strong export focus to further develop

niche markets is a public sector priority.

• Facilitating the application of technology:

the industry will benefit greatly from a closer

integration between the F&B sector and knowledge-

intensive activities such as biotechnology. The

widespread use of technology across the productive

process has the potential to increase efficiency and

improve the quality and nutritional properties of food

production.

• Leverage the Argentine brand name: a closer

identification should be achieved between local

products and Argentina’s prestige as a global food

supplier. Progressively, Argentina’s reputation for

quality food and the export market penetration of local

products should reinforce each other, taking advantage

of mutual synergies.

OUR CHALLENGES ARE YOUR OPPORTUNITIES.

SOURCES: The trends, data and figures included in this material were elaborated by ProsperAr on the basis of: National Institute of Statistics and Census; Center of Studies for Production (CEP); Argentine Chamber of Blueberries and other Berries Producers (CAPAB); SAGPYA; National Viticulture Institute (INV); Bisang, Gutman, Lavarello, Sztulwark and Diaz (comp.) “Biotecnología y desarrollo. Un modelo para armar”, UNGS-Prometeo, Buenos Aires, �00�; National Fund for Sci-entific and Technological Research (FONCYT); Argentine Technological Fund (FONTAR); “World Consumer Goods and Retail Outlook”, The Economist Intelligence Unit; and “Global Food, Beverage and Tobacco. Industry Profile”, Datamonitor, �00�.

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The information provided through this brochure does not constitute legal or professional advice whatsoever. ProsperAr (Agencia Nacional de Desarrollo de Inversiones) reserves the right to revise, amend, alter or delete the information provided herein at any time, but shall not be responsible for or liable in respect of any such revisions, amendments, alterations or deletions.Photos: Photos: Argentinean Tourist Board, Stock Exchange and Pampa Gourmet.

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Argentina at a glance

Country profile

Official name República Argentina

Capital city Buenos Aires

Main cities Córdoba, La Plata, Mar del Plata, Mendoza, Rosario

Surface area �.7 million square kilometers

Population �0.� million inhabitants

Population growth 1.0% per year

Adult literacy rate 98%

Life expectancy at birth 7� years

GDP per capita (PPP) US$ 1�,�1�

Currency Argentine peso ($)

Form of government Federal Presidential Republic

Political division �� autonomous provinces and the Autonomous City of Buenos Aires

Time zone GMT-0�:00

Official language Spanish

�00� �00� �00� �00� �007 �008

GDP growth rate (annual %) 8.8% 9.0% 9.�% 8.�% 8.7% 7.0%

GDP (PPP) (millions of US$) ���,�99 �7�,0�1 �19,��8 ��9,7�0 ���,1�0 �7�,8�0

GDP (millions of US$) 1�8,078 1��,1�8 181,9�7 �1�,8�8 ��0,�8� ��8,�0�

Exports of goods and services (millions of US$) ��,��9 �9,8�� �7,0�� ��,��7 ��,088 8�,�08

Imports of goods and services (millions of US$) 18,8�7 �7,9�0 ��,9�9 �1,1�0 ��,��� �7,�9�

Balance of trade of goods and services (millions of US$) 1�,�1� 11,9�� 1�,08� 1�,��7 1�,7�� 1�,11�

Trade surplus (% of GDP) 1�.�% 7.8% �.�% �.�% �.9% �.�%

Current account surplus (% of GDP) �.�% �.1% �.9% �.�% �.7% �.�%

Primary fiscal surplus (% of GDP) �.�% �.9% �.7% �.�% �.�% �.1%

Gross capital formation (% of GDP, constant prices) 1�.�% 17.7% 19.8% �1.�% ��.�% ��.0%

Gross national savings (% of GDP, current prices) 19.�% �0.�% ��.7% ��.�% ��.�% ��.7%E

Foreign direct investment (millions of US$) 1,��� �,1�� �,��� �,��7 �,�7� 7,979

Exchange rate ($/US$) �.9� �.9� �.9� �.07 �.1� �.1�

Foreign reserves (millions of US$) 1�,119 19,��� �8,077 ��,0�7 ��,17� ��,�8�

Unemployment rate (% of EAP) 17.�% 1�.�% 11.�% 10.�% 8.�% 7.9%

Source: ProsperAr based on data provided by the Argentine National Institute of Statistics and Census, the Central Bank’s Market Expectations Survey (REM), the International Monetary Fund and the United Nations Conference on Trade and Development (as of April �0, �009).

Main Economic Indicators

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ProsperAr is Argentina’s National Investment Development Agency

Our mission is to develop direct foreign and domestic investment to contribute to Argentina’s competitiveness and sustainable development.

ProsperAr’s four main objectives are:

Provide services to investors ProsperAr provides investors with personalized professional services throughout the investment

process, from initial advisory services to investment facilitation and aftercare. The Agency’s team

assesses on investment projects, responds to queries from investors and provides key business

information. Leveraging the Agency’s cooperative relationships with different government bodies,

ProsperAr’s integral services offer investors a unified one-stop support system.

Attract and generate investment ProsperAr works in the promotion, attraction and expansion of both domestic and foreign investment.

We identify investment and innovation opportunities in high growth sectors, communicating

them to national and overseas investors through international missions, conferences, meetings and

publications. We work to build relationships that enable multinational companies to take advantage of

local, regional and global opportunities. We also encourage domestic firms to expand and develop their

businesses.

Boost the Investment EnvironmentProsperAr works to strengthen Argentina’s investment environment. We interact with local and

multinational companies, as well as potential investors, identifying and removing possible obstacles to

doing business in Argentina. Through active dialogue with the private sector, and in coordination with

other government departments, we advocate for the formulation of policies and programs to optimize

the investment and innovation environment.

Promote the internationalization of local companies ProsperAr promotes the growth and internationalization of Argentine firms. Fostering local vocation

for innovation and entrepreneurship and promoting overall competitiveness are key aspects of

the Agency’s strategy. Two programs “Entreprenuer Development” and “Pioneers” are in place to

strengthen local companies’ critical capacities in different growth phases. ProsperAr also assists

international companies to invest in and/or work with their local counterparts to form global joint

ventures.

ProsperAr is your strategic partner to invest and prosper in Argentina.

What ProsperAr can do for you:

>> Provide timely and relevant information on business sectors and geographical locations in Argentina.

>> Help identify investment and innovation opportunities in strategic sectors.>> Troubleshoot red tape and obstacles; facilitate the investment process and doing

business in Argentina.>> Assist in building partnerships between foreign investors and local companies.

To learn more about how investing in FOOD & BEVERAGES in Argentina can benefit you, please contact us:

www.prosperar.gov.arinfo@prosperar.gov.ar+54 11 4328 9510