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IEG Vu
Chile 2019
Chile’s food processing industry is world class!
Chile-2019-cover.indd 1 25/09/2019 12:04:42
IEG Vu | Chile 2019 / 3www.ieg-vu.com
IEG Vu
Contents04 Vertically integrated
07 Zero waste goal
08 Climate friendly cans
10 Move into vegetable
13 The dry season
14 Production up: energy use down
17 Frozen for export
18 Quality rather than quantity
19 Purple Days
20 Quinoa and inulin
21 Fresh approach for Patagonia
22 Riding the organic boom
By Neil Murray
It is not often that one has the chance to watch a huge step-change in anything, let alone the food and beverage industry, yet that is what is happening in Chile right now and its progress so fast, or the Chileans so modest about it (or possibly both) that few appear to have noticed.
What are the major issues in the developed world today (leaving aside the obvious ones such as war and politics)? The environment; pollution; global warming; energy; vegetarianism/veganism; waste…. All these are issues being tackled by the world’s food and drink industries, but in the southern hemisphere they are being approached with a single-mindedness that is unequalled by any other nation.
Chile’s food industry has long been admired for the way it does business. Quality is taken for granted – problems of adulteration or other fraud do not seem to occur. Companies are efficient in their contracts (whoever heard of a Chilean company reneging on a deal?). The paperwork is always in order. In many respects, Chilean food and drink processors rank among the world’s best.
Now they are entering a new phase. Energy
use is being slashed. The Clean Production Agreement has companies united behind it and has proved that elimination of waste and programmes to reduce reliance on fossil fuels do not have to have a cost: on the contrary, properly implemented, they can bring cash savings. Water, becoming an ever more scarce commodity in parts of the world, is being efficiently managed, and will be even better managed in the near future. Solar energy, provided by the almost limitless Atacama desert sun, is going to be widespread.
What makes all this even more unusual is that it is the product of cooperation between the processing industries themselves, a truly dynamic trade association in the form of Chilealimentos, and a helpful government that completely understands the difference between support and interference. There are local and provincial examples of this elsewhere in the world, but in Chile this is not a phenomenon on a local scale: it is a national endeavour.
In this supplement, you can read of the leading companies at the forefront of this revolution. If Chile is the best, here we present the best of the best.
Revolution in the southern hemisphere
Publishing Director IEG Vu & IEG Policy Adam Sharpe Tel: +44 20 7017 7587 Email: [email protected]
Senior Analyst: Dried Fruit & Nuts/ Spices & Exotics Julian Gale Tel: +44 20 7017 7539 Email: [email protected]
Agribusiness Intelligence | IHS Markit | The Blue Fin Building | 110 Southwark Street | London SE1 0TA | UK | Telephone: +44 20 7017 7500IEG Vu
Principal Analyst: Beverages Neil Murray Tel: +44 20 7017 7553 Email: [email protected]
Head of Advertising Sales Ben Watkins Tel: +44 20 3377 3911 Email: [email protected]
Subscription & Marketing Enquiries Email: [email protected]
Agribusiness Intelligence Client Services Team EMEA: +44 20 7017 6242 (9am-5pm BST) APAC: +61 287 056 966 (9am-5pm AEST) NORTH AMERICA and LATAM: +1 21 26 52 53 22 (9am-5pm EDT) Email: [email protected]
www.ieg-vu.com © IHS Markit 2019
News Analyst: Canned Products Estela Cuesta Tel: +44 20 7017 4549 Email: [email protected]
News Analyst: Dairy/Tomato/Frozen Jana Sutenko Tel: +44 20 7017 4990 Email: [email protected]
News Analyst: Tomato Products/Frozen Foods Cristina Nanni Tel: +44 20 7017 5174 Email: [email protected]
News Analyst: Dried Fruit & Nuts/ Spices & Exotics Jose Gutierrez Tel: +44 20 3377 3704 Email: [email protected]
“Quote here” or a sentence from the article with no full point at the end
www.ieg-vu.com4 / Chile 2019 | IEG Vu
IEG Vu | Chile 2019 / 5
If you’re a large supplier of organic fruits and vegetables, like any fresh produce supplier, you will have some product that is not suitable for retail sale. Perhaps it does not meet size requirements or has more discolouration than consumers will accept.
A lot of Chilean processing depends on product that does not make its way onto the fresh market and organics are just the same.
The Guilisasti family that part owns AMA with a private equity company is already heavily involved in agro-industry with the Concha y Toro wine brand. As far back as 2007, it farmed half its 3,500 hectares organically and launched Chile’s first biodynamic wine.
Twenty years ago, it entered the organic fresh produce sector with a company called Comercial Greenvic.
Marketing and sales manager Pedro Pablo Sepulveda describes the family as “very emotionally involved” in organics.
It is not just emotional involvement – 60-70% of the organic land that Greenvic farms it owns itself. AMA’s processing plant is right next door to the fresh fruit operation, and from which it takes its raw material (about one-third of Greenvic’s total fruit intake). This means some 20,000 tonnes of fresh fruit crushed for organic juice and purées each year. These are quite big numbers.
AMA has two main operations: bulk and retail. The first is supplying organic baby food manufacturers in the US and Europe with juice and purées as raw materials for their own blends (the US is the biggest destination country followed by Germany and France) and the second its retail brand focused on Latin America and Asia.
A large organic manufacturer of fruit juices and purées sources its raw material from its adjacent parent company.
By Neil Murray
Vertically integrated
20,000 tonnes of fresh fruit crushed for organic juice every year. These are quite big numbers
“We started with apple,” says Sepulveda. “And now we also do peach, plum, prune and all the berries. “Now we are starting with vegetables: zucchini, beetroot, carrot, butternut squash and sweet potato.”
The company is developing a global retail brand in Latin America and Asia, meanwhile the main markets for their bulk ingredient business are still the US and Europe. Retail products comprise only 10% of AMA’s production, at present and the plan is to increse this percentage as the target markets evolve.
When Ama started, Chilean consumers knew very little about organics, says Sepulveda. “Now, one-third of the total pouch purée market in Chile is organic, and we have half of that.”
Furthermore, Ama has penetrated the Chinese market with organic purée products that deliberately play on their western origin.
Sepulveda highlighted to IEG Vu what he calls the ‘China-free’ products trend. Discerning Chinese consumers prize some Western products and there remains some suspicion of Chinese products following the much-publicised dairy product scandals.
Accordingly, the packs carry labelling in both Spanish and Chinese and the packs depict a clearly Occidental face, as well as the hard-to-obtain Chinese organic accreditation stamp.
“In my opinion, the best markets we will have in Asia are China and South Korea,” adds Sepulveda. We have a unique selling proposition in these specific markets. We are also entering at the right time as the organic trend is in the early stage of development. Besides the quality of our products, another advantage is that the freight rates from Latin America to China and the Far East are very low, as many of the vessels are effectively salling back empty.
6 www.ieg-vu.com/ Half Year Outlook 2019 | IEG Vu
The company is developing a global brand in Latin America and also in Asia
“Now, one-third of the total pouch purée market in Chile is organic, and we have half of that”
IEG Vu | Anuga 2019 / 7www.ieg-vu.com
It is the first company in Chile to do this and, unsurprisingly, the service has proved highly popular. The company tries to work very closely with the local communities around its factories and plants and, in a country where access to sufficient water is almost an obsession, this is a phenomenal gesture.
Alifrut is a major participant in the Clean Production Agreement (CPA) set up between Chilean food and beverage processors, the Chilealimentos trade association, and the country’s government.
It is the country’s largest frozen food processor and one of the biggest in Latin America. Water is a serious issue in Chile; agriculture in the central part of the country depends on irrigation and the water is essentially snowmelt from the Andes. A poor winter snowfall means less water in summer, unless the summer proves exceptionally wet.
Water levels in Chile’s rivers are 50% down on last year and, as the climate changes, the outlook is for a continued decrease in the amount of water available. Water also has a price, and so a saving in water use has a financial as well as an environmental benefit.
It has a second plant in Chillan, to the south, which (inter alia) processes frozen asparagus for customers in Japan: the only plant in Chile to make frozen foods for Japan. Then there are plants in San Carlos and Parral plus, most recently, a new facility in Rengo. This last handles the retail packaging of products and storage. It carries out no processing, but is highly automated with robotised packing. In keeping with the CPA, it is very energy efficient.
Rodrigo Fernandez, manager of the company’s northern plant in Santa Cruz is wildly enthusiastic about the CPA and Chilealimentos advised IEG Vu to see the company as an exemplar of how the project is being implemented.
“It is very important for everything,” says Fernandez. “Not just processing. It is a global concept. It applies to the farmers, factory staff and all stakeholders.” To give an idea of how thoroughly the company takes the themes of energy and waste reduction, it is changing all, repeat all, the lights used in its buildings with LED illumination.
Like the wastewater treatment unit, this is a serious investment, but the payback is in reduced costs further down the line, and the more energy costs rise, the more significant the savings.
Elsewhere, all the plastic bags used to pack its retail products are now recyclable and 10% of the energy used in its San Fernando plant is from renewable sources.
In a document presented at Chile’s Water Congress last month, Alifut was able to show that it had reduced the amount of water used in its San Fernando plant by 37% between 2015 and 2018. On its growing areas, it has reduced the water use by 35-45%.
The next step is experimental. Almost all of Chile’s water comes from Andean snowmelt. It runs off the mountains, into the rivers, and then irrigation networks distribute it to agriculture and private smallholdings before, eventually, the last of it runs into the Pacific.
The idea now is to use a network of terraces to hold the water at different points on its descent from mountains to ocean and reduce the loss due to run-off.
Alifrut, a major Chilean supplier of frozen fruits and vegetables, is cleaning its wastewater and delivering it by truck to the local community for watering its private plots and smallholdings.
By Neil Murray
Zero waste goal
Alifrut is a major participant in the Clean Production Agreement
“It is a global concept. It applies to the farmers, factory staff and all stakeholders”
8 www.ieg-vu.com/ Chile 2019 | IEG Vu
Aconcagua Foods of Chile is acutely aware of how seriously this shift from single use packaging is being taken. The trick is to make consumers aware that canned foods have a built-in advantage.
As one of the two main Chilean food canners – Pentzke and Agrofoods are the other two, but the latter is in the throes of a restructuring and reorganisation – Aconcagua can clearly see how the humble steel food can should be presented as a perfect recyclable package.
“This industry will be in a very good position, compared with plastics,” commented Héctor Arriagada Commercial Manager International Markets of Aconcagua “We see this as a very good opportunity.”
Chile already has excellent environmental credentials. The country sources much of its electricity from hydro-electric power stations in the Andes, it has huge plans to develop solar energy stations in the Atacama in the north of the country, and it is moving to sustainable and organic fruit and vegetable production extremely quickly. Even in conventional agriculture, its use of chemical fertilisers and pesticides is very low compared with that of other countries.
It will also be carbon-neutral in 2030. By way of comparison, the UK’s target date for becoming a zero-carbon state, which includes offsetting some of its emissions, is 20 years beyond Chile’s. Solar panels will be put on all roofs (it has always been slightly odd that Chile has hitherto not adopted solar panels on its dwellings to
Consumers are looking at suppliers’ environmental footprint. Chile has a head start on the competition.
By Neil Murray
Climate friendly cans
“This industry will be in a very good position, compared with plastics”
IEG Vu | Chile 2019 / 9www.ieg-vu.com
the extent seen in countries like Greece or Turkey).
“Chile is ahead, environmentally, of many other countries,” Arriagada points out. “That is something that is good for us and good for the future. Don’t forget that we have a very long coastline and we have experienced the problem of plastic waste on the seashore.” Aconcagua did have a plan for moving into plastic tub packaging, but has now shelved it.
“Cans are still a good way to pack foods,”
added Arriagada. “They’re not sexy but they’re good. This industry will have a very good [environmental] position in its recycling, compared with plastics.” As part of its environmental programme, Aconcagua is now recycling a given percentage of its packaging.
The company is working on cutting its costs, and one way is to integrate vertically. “We have bought a peach farm from Agrofoods,” confirms Arriagada. “We want to be more efficient in what we do. We still buy raw material from our usual growers, though.” And Aconcagua’s growing fields are now GAP certified.
Another way of cutting costs is by turning
to renewable energy sources. As with the Clean Production initiative that Chilealimentos is championing, Aconcagua has seen the advantages of reducing its dependence on fossil fuels. “This is not only a political issue, but it is in people’s minds,” continues Arriagada. “We have been able to break the trend of higher energy costs – and those costs were rising fast. So going green is cheaper.”
“We want to be more efficient in what we do. We still buy raw material from our usual growers”
Héctor Arriagada Commercial Manager International Markets of Aconcagua Foods
WE GROW, PRODUCE AND PROCESS: FROZEN, ASEPTIC PUREE & CANNED FRUITS.
Visit: www.frucol.com & www.agrocolchile.cl Contact: [email protected] & [email protected]
Phone: +56 75 2431299 - Address: Longitudinal Sur Km 172, Teno, Curicó, Chile.
CONVENTIONAL & ORGANIC
10 www.ieg-vu.com/ Chile 2019 | IEG Vu
Carozzi of Chile, one of the largest fruit juice and purée manufacturers in the southern hemisphere, has recently launched NFC apple, pear, peach and cherry juices to bolster its portfolio of juice concentrates.
These are presently packed in drums or bins, but Cristian Alemparte of Carozzi told IEG Vu, in an exclusive interview, that the company is also considering offering the products in aseptic flexi-tanks.
“This will allow us to export to the northern hemisphere in affordable packaging,” he said.
Carozzi is also expanding its organic offerings by (for example) converting its industrial apple orchards from conventional to organic, to feed markets in the US and Europe that are showing double-digit growth.
Chilean apple production is declining. Many orchards are quite old, but the real issue is that the fresh apple sector is not as strong as it was, and the juice industry depends on surplus fresh market fruit.
Farmers are switching to other, more lucrative, crops such as walnuts and
cherries. For Alemparte, the solution would seem to be the establishment of high-density, high-yielding orchards, which will cut costs and improve efficiency.
“We need to move to less commoditised products. AJC, for example, is a commodity in which we are facing competition from everywhere. We are good at developing and we need to develop new products.”
These are likely to include more vegetable juices. Carozzi is developing zucchini, beetroot and spinach juices. “We are looking at organic vegetables for processing,” Alemparte acknowledged. “We are always looking for new opportunities and new varieties.” This would be a move that is similar to those taken by other large Chilean companies: into more specialised high-value items.
The company has also moved into the pouch pack market for fruit purées and is now the country’s market leader. “We have 80% of the market,” says Alemparte. “We are now looking to grow as a co-packer, serving different Latin American countries and also the US.
“We are good at developing, but we need to keep on developing new products.”
Carozzi is entering market niches that used to be occupied by specialist processors.
By Neil Murray
Move into vegetable
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Policy change can have major impacts on the agri-food and bioenergy sectors, as well as on the overall macro economy. In the EU, policy makers must address the direct impact of Brexit as well as the shape of the Common Agricultural Policy post-2020. This will be impacted by the post-2020 EU budget agreement as the EU loses its second largest net contributor.
A host of policy issues – both directly and indirectly impacting agriculture – are being discussed around the world. These involve trade agreements, environmental regulations, climate change and renewable fuels/bioenergy, approach to GMOs.
There is considerable uncertainty about what the new agri-food and bioenergy policies might look like and what they may mean for businesses operating along the value chain. Are you prepared for these changes and how they will impact your business?
Informa’s Agribusiness Consulting provides agricultural policy and economic consulting services that can help you understand the impact of policy on your business. We offer a range of services, including:
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IEG Vu | Chile 2019 / 13www.ieg-vu.com
“The colour and sweetness of Chilean strawberries is superior to European and Middle Eastern fruit”
Diana Foods of Chile is successfully diversifying from juices and concentrates into powders and flake products. Jorge Olle, the company’s general manager, used to work for Invertec and so has considerable experience in the dehydrates sector.
While purées and juices are still a big part (about 40%) of the company’s operations, powders and flakes now account for 30% each. That said, celery juice is a recent addition to the portfolio. It’s mainly sold to the US, which uses it as a preservative for meat. There is a strong shift to all-natural preservation methods instead of using chemicals – in fact, Brazil bans the use of chemicals altogether.
Equipped with spray dryers, the company makes flakes for baby foods, dried soups, inclusions, cookies, vegetable bars and more.
Diana Foods, previously French-owned and now owned by Symrise of Germany, has long been an established part of the Chilean
processed fruit and vegetable scene. Diana has operations in other countries: its plant in Ecuador is already in the ultra-discerning baby food sector with banana and pineapple purées. The Chilean company is preparing to enter the market.
Diana Foods is now working to produce strawberry purée as a baby food in Chile. “The colour and sweetness of Chilean strawberries is superior to European and Middle Eastern fruit,” claims Olle.
The very high standards needed to produce baby food are already being addressed. The first step is to secure long-term contracts with farmers. Then the chemical fertilisers and pesticides that are permitted for use on fruit destined for baby food need to be defined. And this will be followed by “a lot of analysis”, as Olle puts it.
The company is very, very export oriented. Only 5% of its production stays in Latin America, and 60% of production sold in Latin America comes from Diana’s sites elsewhere. Most of its products go to Europe and Asia. To a certain extent this is because the domestic Chilean market is still quite price-driven, and all-natural production carries a price premium.
A Chilean processor of dehydrated fruits and vegetables is targeting industrial markets in the Far East
By Neil Murray
The dry season
There is a strong shift to all-natural preservation methods instead of using chemicals
14 www.ieg-vu.com/ Chile 2019 | IEG Vu
NM: What percentage of the Chilean processed food and beverages industry does Chilealimentos represent? What is the value in US dollars?
AM: Chilealimentos members’ businesses reached USD3.877 billion in 2018, representing 21% of all Chilean annual food commodities exports. The bulk of the exports traditionally consists of processed fruit and vegetables, grains, food preparations, oil and sweetener products, as well as prepared seafood.
NM: How much money were Chile’s food and drink exports worth last year? The forecast was USD19 billion. Does that include the wine industry?
Exports totalled USD18.695 mln, including those food commodities represented by Chilealimentos plus fresh fruit, salmon and trout, meat, wines and dairy products, among others. In 10 years, Chilean exports have increased by 65%.
NM: Great progress is being made in Chilealimentos’s Clean Production Agreement initiative. What is the next stage? (I understand there will be an announcement in August)
AM: Chilealimentos has been working on such agreement over a decade. Initially, the industry was mainly concerned with matters such as rationalisation of agricultural production, energy efficiency,
Chilealimentos is at the forefront of a new trend in clean and environmentally friendly production. Chilealimentos president Alberto Montanari explains all to IEG Vu editor Neil Murray.
By Neil Murray
Production up: energy use down
The bulk of the exports traditionally consists of processed fruit and vegetables, grains, food preparations, oil and sweetener products, as well as prepared seafood
IEG Vu | Chile 2019 / 15www.ieg-vu.com
water usage, professional training and machinery investments. Lately, we are making progress evaluating photovoltaic solar energy use, measuring industrial water footprints, improving the use of refrigerant gases and reporting about sustainability on a regular basis.
The agribusiness industry has reduced its total energy consumption by 25% iduring the last seven years. Gas is the main energy source and the less polluting fuel, representing 73% of the total energy; carbon represents only 0.5% of the total energy consumed by the industry; with regard to electricity increases, it was sourced from renewable energy such as the solar or wind.
Water usage has decreased by 31% per product unit, from 26m3 per tonne in 2012 to 18m3/tonne in 2018.
In terms of recycling, the agribusiness industry represented by Chilealimentos recycles 98% of organic residues, which are converted to energy. A circular economy is the most efficient way to get a sustainable production.
NM: Are Chile’s international customers supporting the Clean Production initiative?
AM: Not directly, because the success reached is according to international law. However, international markets are even more concerned with sustainability, so they demand to learn the sustainability guidelines applied to the production process. For this reason, within the Clean Production initiative, we require our members to release sustainability reports related to their own production process, according to the Chilean ruling in force and the international patterns.
NM: In our office, when the Brexit vote was announced, we all said that Chile would be the first country to negotiate a free trade agreement with the UK. And it was! Has this had any effect on UK purchases from Chile, or is it still too early?
AM: The UK is our second-largest market within the EU – after Holland – and the seventh top global market for Chilean agribusiness exports. Chilean exports to the UK decreased 16% from USD594 mln in 2014 to USD497 mln in 2017. Within
the same period, exports to the EU only fell by 5%. Trade recovered in 2018, when exports to the UK went up by 14%, worth USD566 mln, while those to the EU only increased by 5%.
Although these fluctuations are not just due to Brexit uncertainty, the recent trade agreement reached with the EU truly relieved the Chilean industry from major Brexit concerns, fortunately
resulting in a trade improvement between the two countries.
NM: How many Chilean companies are establishing factories and operations outside Chile, or collaborating with companies in other countries? And where?
AM: We don’t have the precise number, as those processes are confidential and information is released once the investments are materialised.
I want to highlight that both foreign companies investing in Chile, and Chilean investments in other countries, is a widespread tendency within the Chilean agribusiness industry. Our country takes advantage of its location when supplying to international markets and top global producing companies usually operate from Chile. Similarly, Chilean companies expand into other countries such as Argentina, Peru, Colombia, Ecuador, Mexico, with recent investments in China.
NM: What progress has been made by Chilealimentos in agreeing multilateral or bilateral agreements with other countries for organic foods and beverages? I note that the agreement with the EU came into force last year.
AM: We recently created a business committee for organic food importing and exporting companies, working together with the government in order to reach agreements and commit with organic certification protocols requested
The UK is our second-largest market within the EU – after Holland – and the seventh top global market
Alberto Montanari
16 www.ieg-vu.com/ Chile 2019 | IEG Vu
by the international markets we supply. The EU agreement is working positively and there is a second one starting to be implemented with Brazil. There are currently ongoing talks with the US, Switzerland and Korea.
Chile’s foreign trade for organic food commodities is worth USD300 mln, of which 95% consist of exports. We are aware that this market is expected to increase by two digits globally, so we are working to increase our export share and expand into new markets.
NM: What sectors, governed by Chilealimentos, are expanding fastest? Are any contracting?
AM: In the last 10 years, Chilealimentos members’ overall export growth increased by 70%, and the same share applies to each company. One of the main commodities exported is berries, global demand for which is increasing day by day. Nuts follow suit, including walnuts, almonds and hazelnuts. Then there is also a big share for other products such as organic fruits (mainly berries and blueberries), fresh and dehydrated apple, pulps, olive oil and wines.
We recently noted that Chilean food processing companies are evolving from
just food processing operations to contract packaging supplying the retail chain, with either private label or branded products. This is an upward trend by which Chilean companies supply global markets and secure growth.
NM: Many people have mentioned the issue of water supplies to me, and the problem of diminishing supplies. Water use comes under the Clean Production Agreement, of course, but what is Chile doing, at the national level, to guarantee water supplies for agriculture?
AM: In Chilealimentos, we continue making efforts to reduce water consumption in processing operations. The industrial water availability issue is a matter of concern in the country and there is a public ruling initiative currently being discussed in the Parliament, with no agreement at the moment. Chilean agricultural activity is mainly irrigated, with that of dry land representing just a small part of the products we export.
I believe the main water issue in the country is not the lack of water as much as the lack of water reservoirs and an adequate irrigation infrastructure, as a big share of the water available is lost in the sea: from the Andes mountains, water volumes quickly descend to the sea in winter. Keeping that water safe for agricultural uses would increase the offer, and this is something the country is currently working on.
NM: Is Mercosur a threat to Chilean companies and operations?
AM: As the EU recently signed the Mercosur agreement, the competitive advantage Chilean companies traditionally enjoyed when exporting to the EU will be impacted.
However, Chile’s strength in supplying international markets is not only based on preferential tariffs but also on other factors. One is the crop security allowed by stable weather conditions; Also, there is a macro-economic stability that benefits international buyers and local exporters, guaranteeing smooth fluctuations; and finally, our agriculture production is similar to that of a Mediterranean environment, with high yields and export efficiency, resulting in a high quality agricultural product offering and economically efficient.
Chile’s foreign trade for organic food commodities is worth USD300 mln, of which 95% consist of exports
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IEG Vu | Chile 2019 / 17www.ieg-vu.com
Frucol, based in Curico, some 200 kilometres south of Santiago, processes fruits into purées, and also operates canning and frozen production lines. Previously, the company operated more than one plant, but a new USD5.0 million plant near Curico will process everything under one roof.
Felipe Llancapan, Frucol’s export manager, told IEG Vu that the purée lines will open first, in August, and the frozen plant will be ready for processing fruit in Chile’s summer, which means at the end of this year. It will start with frozen cherries, which Frucol also produces for the domestic retail market. The canning line will process peaches, maraschino cherries and cherries in natural syrup, and will also make fruit preparations for the bakery and other sectors.
The plant will mainly produce for export markets. The most important destination is the US, which is a target market for the fruit purées and frozen fruits. Europe is the second destination, with France, Poland and Germany identified as the key markets for Frucol’s products.
Frucol is also looking at the Netherlands as a point of entry for its fresh fruit operation: the company can supply organic and conventional cherries, blueberries, raspberries, apples, kiwifruit and wild blackberry.
Regarding purée, “we are are going to compete with the big boys on smaller items,” explained Llancapan. “Everyone is racing towards organic products: baby food especially.”
Once established, the next phase will involve expanding the plant, and enough land has been acquired to permit this. The company will also have a new name: Agrocol.
All the supervisors and mangers from the old plant have been retained for the new, and there will be no problem with labour. Chile has had an influx of immigrant workers, many from Venezuela and many from Haiti.
“There is no problem of language with the Venezuelans,” smiles Llancapan. “And now the Haitians have learned Spanish!”
A new freezing and puree plant under construction in Chile will make products for the US and Europe.
By Neil Murray
Frozen for export
The purée line will process organic apple, raspberry and blueberry. The canning line will process peaches, maraschino cherries and cherries in natural syrup and will also make fruit preparations for the bakery and other sectors
18 www.ieg-vu.com/ Chile 2019 | IEG Vu
“The kernel yield was 25% last year,” he said. “We were expecting better this year, but by the second or third week in March we realised that the yield was going to be lower. We got 21-23%.
“I don’t know why. We had very high temperatures in January: 38-40°C for a week. Maybe the trees were unable to get enough water? Everyone was expecting 18/20/22 sizes but they turned out to be 23/25.”
Parmex supplies industrial companies: ice cream manufacturers, confectioners,
bakery companies and the like. Its customers have very demanding specifications. Interestingly, so does Russia these days. Parmex adds value for ice cream makers by blending nuts with honey or caramel, while in the Middle East, buyers prefer raw almonds and add value themselves. That said, the snacking category is growing.
“What we sell to Russia is mainly the large sizes. Russia is demanding more and more.” Sales to Russia are duty-free. Unfortunately, the lack of large sizes this year has meant a cut in shipments to
Russia. But this is only a temporary setback. “We have been working with them for 10 years,” says Manterola, “and the customers request Parmex product.”
What makes Chilean walnuts so special? Manterola explains: “It’s the environment: like a terroir. If you go to Germany, Italy or the UK (all customers of Parmex), the buyers will say that Chilean nuts taste different. These are top quality customers. They want those white boxes. (Parmex packs in snow-white cardboard boxes).
“There is a big, big demand for this product: a 5.7% annual growth rate.”
For the future, almond milk is seen as being a big seller – the almond content is only 3% but the sector still absorbs almonds. And Millennials are proving avid consumers of almonds. “They are really changing the pattern of consumption.”
Chile is forecast to produce 3.0 million pounds of almonds by 2021. “I am quite sure the market will absorb that. There were 5,600 nut products launched last year, and 65% of those were almonds. We are basically oversold.”
Chile is a minnow in almond production, compared with the whale that is California, but the quality of its products draw customers. Cristian Manterola of Parmex told IEG Vu that early expectations were for a good harvest, but the yield turned out to be smaller than expected.
By Neil Murray
Quality rather than quantity
Parmex adds value for ice cream makers by blending nuts with honey or caramel
IEG Vu | Chile 2019 / 19www.ieg-vu.com
The magic maqui berry is sufficiently important for the future for Chilealimentos to get involved in its cultivation and processing.
By Neil Murray
Purple Days
Maqui is probably synonymous with Chile. The superfruit is gathered from the wild in Patagonia. Its incredibly high ORAC antioxidant properties (thanks to its unparalleled concentration of Delphinidina) are making it a favouritefor all manner of healthy beverages, supplements and food products.
Maqui´s scientific name is even Aristotelia chilensis.
Chile’s annual production is around 2,000 tonnes, although the mountains where it grows are estimated to contain 40,000-50,000 tonnes of the berries. Once commercial cultivation and mechanised harvesting is established, the market for the fruit is going to explode. The parallels with Brazilian açaí are unavoidable.
Miguel Angel Montes, general manager of Patagonian fruit processor Bayas del Sur, following the Brazilian açaí model is exactly what Chile intends to do. A working group has been established with the Chilealimentos trade association and future plans include the establishment of the Chile Maqui Berry brand and the development of “some form of certificate of origin”.
ProChile is working with the maqui industry: providing market intelligence, and focusing on the European market, where maqui is less well-known than in the US. “We are close to novel food approval in Europe,” adds Montes.
The health benefits of maqui, particularly its extraordinarily high anti-oxidant content, are well known. Maqui is well-known in the US; not quite so well-known in Europe. It is fairly commonplace in health supplements but a greater supply of the fruit will see it
becoming an ingredient in a wide variety of food and drink products.
Consumption of just two grams of the fruit supplies all one’s daily requirements of Vitamin D, and maqui is also claimed to relieve dryness of the eyes. The whole focus of the campaign to promote maqui is linked around the concept that maqui, especially maqui from Chile (which is pretty much the world’s only major producer anyway) drives human health.
Bayas del Sur, located in southern Chile, is probably the country’s largest maqui processor and has already extended its use into 65 brix juice concentrate, 16-18 brix purée, freeze-dried powders and pieces and spray-dried powders. Nativ for Life
(according to its executive Isabel Lecaros) offers small sachets of powdered maqui for use in drinks, dairy products, frozen foods, desserts, breakfast cereals and the like. It also offers processed calafate, cranberry, blueberry, plums and other fruits for similar applications.
All organic maqui (which means most of it) is monitored by inspectors. Nativ for Life, Bayas del Sur maintain painstaking records themselves. Mixing wild and cultivated maqui is not permitted. Obviously, once volume production of cultivated maqui is achieved, the job of the organic inspectors will become more arduous, but that is still something for the future. As is the concept of ‘single estate’ maqui, which would be an irresistible marking hook, but which also requires much higher volumes than are presently achieved.
Before maqui can be cultivated though, a means of pruning and harvesting needs to be developed. Irrigation is also important, and above all, Nativ for Life, Bayas del Sur and Chilealimentos itself recognise the need to keep it organic. It has the potential to be a flagship product for Chile, but it still needs time to be developed.
Today there is enough raw material (Maqui) in native forests to supply the current demand of the world (USA, Europe and Asia). The industry is prepared to supply the current and future demand, with products of high standards of quality and safety that it can be used in a wide range of formats such as supplements and ingredients and nutraceuticals.
Future commercial plantations will be responsible for the massive explosion and at lower costs surely.
20 www.ieg-vu.com/ Chile 2019 | IEG Vu
The fashionable grain is not well-known in Chile, unlike in Peru and Bolivia where it is grown.
By Neil Murray
Beneo, a diversified nutrition company owned by Sudzucker, the south German sugar giant, is already present in Chile where its plant makes inulin annually, using chicory as the raw material. Now the company is diversifying into quinoa, which is finding its way onto menus and into all manner of food products.
“We are convinced that quinoa is a crop that will not only be fashionable but big in the market,” said Peter Guhl, agronomic director of Beneo-Orafti, Beneo’s Chilean operation. “We have to not only develop the crop, but add value to the processing.”
Initial plans are to expand the company’s growing area in Chile from its present 600 hectares to some 3,000 ha. Orafti will transform the grain into functional ingredients, such as quinoa pasta and protein (separated from the grain). “This is a very high value protein. We will be able to sell industry what it wants,” added Guhl.
“Quinoa will be totally industrialised.
Present yields are around 900 kilos per hectare. We know we can reach 5,000kg/ha: we want 3,000kg/ha.”
To be popular on an industrial scale, it needs to be gluten-free, which means either building a new plant or processing it in a rice plant, of which there is only one in the country.
The project started 18 months ago and needs another 18 months of work. If the capital expenditure of USD5.0 million is approved for commercialisation, then production will start in two years after that. Assuming the project is successful, then quinoa will form a vital part of Beneo’s product portfolio.
Inulin, derived from chicory, is the other growth market for the Chilean operation. Inulin, prebiotic fibre with powerful health benefits, is used to reduce high blood fats, including cholesterol and triglycerides. It is also used for weight loss, constipation, and as a food additive to improve taste.
Its main applications, however, are as a fat replacer in bakery and dairy products (but not in beverages) as, like fat, it carries flavour, and it adds sweetness to low-sugar products.
Beneo has an inulin plant in Belgium which serves the European market. Its plant in Chile supplies the US (it has no plant there) and Asia. The main market for inulin is as a supplement in dairy products, but Guhl adds: “Every year, we see more inulin going into other markets besides dairy”.
This means good growth rates, as the dairy sector is already fairly mature.
Beverages is one such fast-growing sector. Chile already has a bottled water brand, Cachantun, produced by CCU, which has a sub-brand called Cachantun Woman, and this contains inulin.
While Beneo already supplies the US, Latin America is seen as an interesting potential market in its own right. Some countries simply don’t have the disposable income for inulin products (“It is not a low-cost solution,” says Guhl), but Chile has. The Asian market is growing, as is the Russian, but both from a low base. The Middle East buys, and can afford, inulin products. China is a market all its own, but sales are mainly made to Occidental companies that have operations there.
Organic chicory exists, and has a higher value, but the problem is that chicory needs to be rotated with organic wheat or maize, and there is no organic production of these in Chile. There is a move towards organic meat, and for that the animal feed has to be organic, so chicory can be rotated with the animal feed. So that is something for the future.
Quinoa and inulin
www.ieg-vu.com 21IEG Vu | Chile 2019 /
Last year, Patagoniafresh started processing hot and cold break tomato paste on a complete line, from unloading to aseptic filling, thanks to new equipment from CFT Group. The project started four years ago, when CFT and Patagoniafresh started working together.
The line can also produce apple, peach and pear natural purées as well as concentrates.
CFT says the line can produce a product with colour up to value 62 Hunterlab L-value on peach concentrate and consistency of up to 5-6 cm Bostwick.
This is all part of a restructuring plan by the company, initiated two years ago. The full effects have taken place in the last year and so 2019 has been the first full year of production from (for example) the Icatom tomato paste plant in Peru. This now produces 18,000 tonnes of tomato paste annually, in addition to the 20,000 tonnes that come from the plant in Chile. It gives Patagoniafresh access to two different types and specifications of tomato product.
In Molina, Patagoniafresh has two plants, one for AJC production and the other for tomato paste. A plant in San Fernando handles ‘smaller’ fruit juices and red grape juice, giving the company a well diversified production. New juices available from Patagoniafresh include raspberry, strawberry and stone fruits.
Further recent diversification includes a move into fruit purées, which makes perfect sense as so many such products can be made on the new CFT production lines. Arturo Cerda, commercial manager of Patagoniafresh told IEG Vu: “We are juice experts and our customers know it. Now we are producing purées. We have a strong commercial team. Every year our clients are more consolidated and concentrated and they have more power.
“Now we have a synergy that generates extra sales to our clients and our diversificationmeans we do more business with different clients.”
Does this mean that more new products are on the way? Cerda refuses to be drawn on this, but it seems likely, given Patagoniafresh’s new versatility. “We are analysing that,” he told IEG Vu, carefully. “Chile is a very good grower, and Iansa (Patagoniafresh’s parent company) is a good industrial processor with a lot of agricultural experience.”
Matthew Lornie, the company’s export manager, adds: “We know a lot of countries and have a lot of products, and we can put these together.”
And finally, the trend-setting Chilealimentos Clean Production Agreement: Patagoniafresh was one of the early adopters and the first food company to sign up to ISO5000, which governs energy management. There are no government subsidies in Chile for this sort of thing, but it has to be done.
In a country as ecologically minded as Chile, social responsibility and sustainability are not just needed: they are actually desired.
One of Chile’s biggest processors has diversified.
By Neil Murray
Fresh approach for Patagonia
“We know a lot of countries and have a lot of products, and we can put these together”
22 www.ieg-vu.com/ Chile 2019 | IEG Vu
However, there is one company that saw the way the market was moving several years ago and planned accordingly. Surfrut and its associated company, Purefruit has been heavily involved in organic production for some years now.
Surfrut also has a talent for innovation. Its dried apple clusters have found supermarket listings in retail packaging as well as contracts with further-processed food and snack manufacturers.
Besides apples, Purefruit´s purées include pear, raspberry, blueberry, strawberry, blackberry and cherries, among others, available in aseptic drums and pouches. For industrial use, Purefruit supplies prestigious baby food and beverage
industries, not only in North America, but in Europe and Latin America as well. On the retail side, Purefruit has been a key player in the US and Canada for the better part of a decade, successfully supplying organic baby food pouches to some of the biggest retailers in both countries.
“We cannot compete with other large origins such as China through low prices. The Chilean dehydrated industry offers reliability in service commitments, excellent organoleptic properties and a consistent high quality, honouring contracts whatever changing conditions we may suffer,” the sales manager of Surfrut, of the main Chilean apple and cherry processors, Joyce Abrahams, told IEG Vu earlier this year.
Purefruit has also developed functional ingredient additions to the standard purées. These include chia and ancient grains, vegetables and functional fruit such as maqui berry and pomegranate. These are used to make blends in purées and for healthy snacks production for babies and adults.
“Jaime Crispi of Surfrut wants to extend the company’s range. “We are looking to develop other powders,” he said. “We already do powdered apple, and we are doing some pear this year and also looking at pumpkin powder.
“We want to have a wider product range, both organic and conventional. We are evaluating the development of baby food powders, too. We are not in that sector at the moment, and we will have to see whether we need to buy new equipment.”
Like other companies featured in this supplement, Surfrut has signed up to Chilealimentos’s Clean Production Agreement. All its waste is now used as fertiliser and an agronomist is working on how to treat residues in an effective manner.
Chilean companies are rapidly shifting to organic production as a means of adding value and also of tapping into the move towards sourcing food and drink that is not only good for one but helpful to the planet.
By Neil Murray
Riding the organic boom
We want to have a wider product range, both organic and conventional. We need to develop baby food powders, too
