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in Latin America

Food Retail Map. in Latin America. Objectives and Study Methodology. Objetives. Generate a portrait of Latin America’s Food Retail situation, with an emphasis on the modern channel and fast moving consumer goods.

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in Latin America

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  1. Food Retail Map in Latin America

  2. Objectives and Study Methodology Objetives • Generate a portrait of Latin America’s Food Retail situation, with an emphasis on the modern channel and fast moving consumer goods. • Portray the specific characteristics of each market by country in addition to the most relevant events. • Present the Top 10 ranking of the most important retailers, offering key figures and store network. Methodology • Gather information of the sector through the crossing of different sources: Government agencies, retail associations, consulting firms and retailers informations. • Synthesize this data taking into account the different specifications in each market. • Collect main information of retailers through information gathered by our Annual Census, which is directed to this sector, in addition to estimations where data is no available of sales and selling surface. 2

  3. Regional Retail Panorama 3

  4. Latin America Food Retail 2010 • During 2010 Latin America’s food retail business was crossed by several simultaneous phenomenon that include: the expansion of small surfaces, the growth of the wholesale business and the internationalization of retailers to less developed markets such as Peru, market that offers attractive growth potential. • The expansion of the Wholesale business in Latin America The expansion of the wholesale business in Latin America during 2010 responds to several factors in which we can include the shift in consumer habits, inflation and the expansion of small surfaces that shop in these formats in order to obtain their stock. During 2010 the number of Cash & Carry stores in the region grew by 127 stores, some of which were launched in new markets, such as Carrefour’s Atacadao, that announced the launch of its first store under this banner in Argentina in 2010 and that finally opened in April 2011. The largest portion of this growth, however, comes as a result of a redefinition of banners in Chile, undertaken by SMU Group, that shifted 59 stores to the Mayorista 10 banner. Carrefour also launched its Atacadao format in Colombia during last year, with the launch of two cash & carry outlets by the end of 2010, and the promise of an additional four stores during 2011. 4

  5. Makro Argentina also invested during 2010, with the acquisition of 100% of the cleaning product company Basualdo, with operations in several provinces in the country, and the acquisition of Cordoba’s firm, Tarquino. • The latest event in this direction happened in early 2011, following the announcements that took place during 2010, with the confirmation by Chilean SMU Group, property of Saieh-Rendic Group, of the acquisition of 100% of wholesaler ALVI, which until that moment belonged in 35% to Walmart Chile and 65% to the Villablanca family.   • Small Surface Growth: In the other end of the spectrum, during 2010 we also witnessed the growth of smaller commercial surfaces, mainly of the bodegas and mini markets formats. In Mexico, for instance, the Bodega format added 215 new stores during last year, driven mainly by the North American retailer Walmart that, in addition, also bet strongly on the Bodega Express format, that launched 142 new stores in the country.   Also in Mexico, Soriana began operating the Soriana Express banner that, with the objective to compete with Walmart’s bodegas, opened 20 new stores. Colombia was another market in which the tendency of opening small store formats became apparent, with the launch of Exito’s convenience store banner, Exito Express, a format of an average 200 square meters. During 2010 the company opened nine stores and announced the plans for expanding this format during 2011. 5

  6. Another retailer that began operating the Express format was Carrefour, with the launch of its first two stores under this banner in Bogotá, Colombia’s capital city. • In Argentina the French retailer launched Carrefour Market, and announced that it will convert all Express stores to this banner, while all Carrefour mini markets, launched in 2008, will be converted into the Express banner. Meanwhile, the retailer announced that it will continue to grow in this format with the launch of 20 new Express stores. • Internationalization of retailers to high potential markets: Large retail groups have extended their regional reach during 2010 entering new markets or strengthening its presence in markets where they have been operating for a short period of time. This was the case of Dutch retailer Makro, which extended its presence to the Peruvian market with the launch of two additional stores, adding a total of four stores in the country. Also, making its debut entrance to Peru is the Chilean SMU Group that, following the acquisition of Chilean retailer Alvi, has become the owner of eleven stores that operated in the country under the Mayorsa banner. The Chilean retailer Cencosud reaffirmed its presence in Brazil with the acquisition of three new stores wich include Super Familia, Perini and Bretas.   The convenience store retailer Oxxo also extended its presence in Colombia, where the group launched twelve new stores. Strong rumors also suggest that the retailer could enter Peru and Chile in the next two years. 6

  7. Key Country Data (1) Source: IMF- Annual Average * The total GDP was taken in million US$ at current market value ** Numbers are expressed in dollars at current prices 7

  8. GDP Evolution by Country Latin America: Estimated GDP 2008-2010 (Annual percentage variation) Source: IMF 8

  9. Share Traditional Channel vs. Modern Channel (%)Distribution of sales of fast moving consumer goods Source: Information provided by official government organisms (2008-2010) and retailer information 9

  10. Participation of International and Regional Chains Latin America Mexico Central America Venezuela Colombia Brazil Peru Uruguay Chile Argentina Regional Retailer Source: ILACAD World Retail 10

  11. Concentration Top 3 Retailers Central America (Country average) Mexico Wal-MartSorianaComercial Mexicana 74,5% 87,7% Venezuela CativenMakroCentral Madeirense 29,1% Colombia ÉxitoCarrefourOlímpica 62,8% Brasil CBDCarrefourWal-Mart 55,2% Peru CencosudSPSAFalabella 91,9% Chile D&SCencosudGrupo SMU Argentina CarrefourCencosudCoto 84,0% 57,2% Source: ILACAD World Retail 11

  12. Key Country Data in LatinAmerica Mexico USD M.46,824.0 +8.4% SqM2 Venezuela USD M.10,921(official rate) USD M.5,076(parallel rate) +0.4% SqM2 ColombiaUSD M.12,548+7.4% SqM2 Brazil USD M. 90,038 + 23.3% SqM2 Peru USD M. 2,674 +12.5% SqM2 Chile USD M. 12,500 + 21.0% SqM2 Argentina USD M. 16,244+ 4.7% Sq:2 Total sales modern channel (in million US$) Square Meter Evolution (2009/2010) Source:ILACAD World Retail 12

  13. Top 3 Concentration by Country Honduras WalmartLa ColoniaJunior Guatemala WalmartUnisuperPricesmart 77.7% 95.7% Nicaragua WalmartLa coloniaPricesmart 98.0% Panamá Súper 99Súper ReyEl Machetazo 71.1% El Salvador Grupo CallejaWalmartPricesmart 95.1% Costa Rica WalmartMegasuperPerimercados 88.6% Source: ILACAD World Retail 13

  14. Key Country Data Central America USD 782.6 + 7.7%SqM26,528 (+4.2%) Total sales of modern channel (in million) Square Meter Evolution Sales by square meter in USD (Annual variation of sales by SqM in local currency) USD M1,335.3 + 4.5%SqM24,580 (-1.3%) USD 344.8 + 11.8%SqM24,548 (+9.0%) USD 1,269.5 4.8% SqM25,613 (+5.4%) USD 847.3 - 6.3% SqM23,224 (8.6%) USD 2,020.6 + 2.0%SqM24,446 (-1.60%) Source: ILACAD World Retail 14

  15. Sales of Modern Channel and Share by Country 2010 Sales of Modern Channel Share by Country 15

  16. Mergers and Acquisitions 2010 Source: ILACAD World Retail 16

  17. Mergers and Acquisitions 2010 Source: ILACAD World Retail 17

  18. Mergers and Acquisitions 2010 Mergers and Acquisitions 2011 Source: ILACAD World Retail 18

  19. MERGERS AND ACQUISITIONS 2010 • Last 2010 was characterized, among other things, by the internationalization of retailers towards fast moving markets with big potential, in addition to mergers and acquisitions that aimed at strengthening positions and easing the entry to new markets. • One of the most notorious cases in this regard were Walmart’s operations in Central America which underwent a strategic expansion plan that helped develop and grow in the countries in Central America where the retailer operates. • The retailer that did the largest number of acquisitions during 2010 was the Chilean Cencosud, that purchased the Brazilian firms Bretas, Perini and Supemercados Familia, becoming the largest supermarket operator in the northereastern region of the country, strengthening its presence in a market where the three top retailers are giants of the likes of Grupo Pão de Açucar, Carrefour and Walmart. • An important event that took place in Latin American during 2010 was the expropiation of Cativen stores in Venezuela, which belonged to the French Casino Group, done by the Venezuelan Government of Hugo Chávez. During an early stage, Chavez had said that the Casino stores would become part of a gonvernments retailing chain, however, and after a long negotiation process, the parties agreed that Casino would remain with 20% of the company’s shares that, from that moment on, were to be known as Red de Abastos Bicentenario. • After years of intense movements in terms of mergers and acquisitions by Chilean retailer SMU Group, during 2010 these activities slowed their pace. The young retailer did however acquire wholesaler Alvi, wich enable its entrance to Peru, through the Mayorsa banner in the country, in addition to strengthening its position in the Chilean retailer industry. 19

  20. MERGERS AND ACQUISITIONS 2010 • In line with the tendency of joining forces, Exito Group underwent a process of commercial alliance with the Caja de Compensación Familiar, CAFAM, in Colombia, which lead to Exito operate 31 Cafam stores, and the latter 91 pharmacies of Exito, Ley and Pomona. In addition to this alliance, in 2010 the merger between Almacenes Exito and Carulla Vivero was completed. • Another retailer that added stores during 2010 in Colombia was Olimpica, that acquired three Merkepaisa stores and the whole of the Megasuper store network. • In Argentina, one of the most relevant events was the exit of hard discount stores, Leader Price, of French Casino Group, who sold its operations to the national retailer Super Eki which, in turn, converted them into the Super Eki Plus banner. • In addition, Carrefour Argentina acquired nine Best stores of the national retailer La Anónima. Jumbo Retail named a new partner, UBS Bank, that now operates 38.6% of the Cencosud branch. In response to the reactivation of the wholesale segment in the country, Makro bought Cordoba’s company Tarquino, strengthening its leading position in the Argentine market. • Lastly, one the most important acquisitions in the region took place in the pharmaceutical segment, with the purchase of Farmacias Ahumada S.A (FASA) by Casa Saba in Mexico which also acquired its operations in Mexico, Peru and Chile. 20

  21. Top 10 Latin America’s Food Retailers Food distribution formats, consolidated sales in the region Source: ILACAD World Retail • Revenues of each group include 100% of sales of each branch in wichithe retailer has participation. ** Excludes its Venezuela’s branch following the 2010 expropiation *** Includes the recently acquired Bretas of Brazil **** Cash & Carry Format **** * Convenience Store Formats 21

  22. In 2010 Walmart was once again the leader in Latin America’s food retail segment, finding itself like previous years at the top of the chart. The retailer grew at similar levels than in 2009, reaching during 2010 annual gross sales of 15.7%. The consolidation of these positive results in the region, which according to the retailer “is one of the main growth drivers of the company”, is in part consequence to the performance in markets such as Brazil and Mexico, in addition to the consolidation of its operations in Central America as a result of the culmination of the acquisition process. The French retailer Carrefour was knocked out of the second place place by Casino that, despite of having suffered a backlash in its operation is Venezuela, was able to secure the second place in the Top 10 Ranking of the region, leaving Carrefour at number 3. The most important movements in the chart with regards to the retailers total sales during the year were Walmarts 15.7% rise, Group Casino with 37%, Carrefour with 15.1%, Cencosud (21.4%), Soriana (11.4%), Comercial Mexicana (7.3%), Oxxo (22.5%), Grupo Chedraui (13.2%) and Grupo SMU with 33,1%. The Dutch retailer Makro suffered a decrease of 3% during the period, due in part to the strong invesments the retailer underwent during 2010. Makro also managed to grow two positions in the ranking, placing itself in 2010 at number six, driven by its Brazilian sales. Top 10 Retailers in Latin America Source: ILACAD World Retail 22

  23. Top 10 Ranking Evolution in America Latina (Net sales expressed in millions of dollars) Source: ILACAD World Retail 23

  24. Autoservice Store Format Evolution in Latin America • During 2010 a total of 2,803 food stores openened in Latin America, which represented an increase of 151.1% in comparison to the 1,116 stores the retailer opened in 2009. This reaffirms the region as one of great potential. • As in 2009, the format that grew the most during the period was the Supermarket format, which includes Mini and Convenience, both formats that grew at good pace during the last year. These are followed by the Discount format which includes the Bodegas and whose growth was propelled by its performance in Mexico. Source: ILACAD World Retail 24

  25. Top 10 Retailers 25

  26. Walmart 1 • Walmart is the leading retailers in Latin America taking into account the group’s sales in the region that, during 2010, reached 45,299 million dollars, representing a 15.7% increase in regional sales in comparison to the previous year, including the markets of Argentina, Brazil, Mexico, Puerto Rico, Chile and Central America. • Mexico represents 50.22% of the group’s revenues in Latin America, equivalent to a total of 22.753.5 million dollars in 2010. Brazil follows, representing 29.52% of the group’s sales in the region, these two becoming the two most important markets in the region. • In 2010, Walmart presented a firm tendency towards opening Bodegas and discount stores in Latin America, with Mexico being the most emblematic market, where the retailer opened 215 Bodega Aurrerá or Brazil, Chile and Central America where the company opened other 90 stores under these banners. NOTE: The countries where the retailer operates in Central America include: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Sales correspond to 100% of the revenues generated by each country branch. Source: ILACAD World Retail – Annual Walmart Report 2010 26

  27. Wal-Mart Store Network operated in the region Source: Annual report Walmart 2010 27

  28. 2 Grupo Casino • Casino escalated one place in the Top 10 Retailer Ranking, coming at number 2, leaving Carrefour in the third place. • Brazil and Colombia were once again the countries that most contributed to the group’s revenues in the region, representing a 80.04% and 15.8% of the group’s sales respectively. • In Brazil, Grupo Pão de Açúcar stood out both in sales of food and non food categories, driven the latter by the operations of Ponto Frio and Casas Bahia. • In Argentina, Casino Group sold its 26 Leader Price stores to the national Super Eki chain, keeping only the operation of the Libertad hypermarkets. • In Venezuela Casino suffered the most radical change, with the expropiation of Exito and Cada stores, that in total came to 41 stores, making the group remain with only 20% of company shares following a period of negotiations with the government of Hugo Chavez. • In Colombia, Grupo Exito launched a new convenience format, Exito Express, which is intended to expand strongly in 2011 in addition to the formats of Exito Super, Exito Vecino and Carulla Express. All these stores go in line with a regional trend of opening smaller surfaces. Also, during 2010 Casino reached a commercial alliance with CAFAM by which Droguerías Cafam began operating 91 pharmacies of Exito, Ley and Pomona, and Exito began operating 31 Cafam stores. Share of Casino in local branches Source: Annual report Casino 2010 28

  29. Store Network in the Region Source: Annual report Casino 2010 * In 2010 the retailer was expropiated by the Venezuelan government retaining only 18.9% of total shares. 29

  30. Carrefour 3 • During 2010 Carrefour Group moved down one spot from number 2 to number 3 in the ranking of Latin America’s top 10 Retailers. During this period the retailer reached sales for 23,825 million dollars. • Carrefour managed to increase its sales by 15.1% in 2010 in Latin America, becoming one of the most dynamic markets in the group’s international operations. • Out of all the countries in the region, Brazil represents the most important for Carrefour, with 69.14% of the group’s revenues in the region belonging to this market. During 2010, sales in this country grew 11%, and registered 124 store openings, with 46.7% belonging to the Discount emblem, Dia%. • The retailer took the Brazilian Atacadao format to Colombia, where it opened three stores and plans to continue growing in 2011. In addition, the retailer launched the Express format in the country, as another alternative to win space facing the traditional channel. • Carrefour also introduced new formats in Argentina, taking the Carrefour Market banner and launching the first Atacadao at the beginning of 2011. Source: Annual Report Carrefour Group 2010 30

  31. 4 Cencosud • Total sales for the supermarket division of the group rose to USD$ 9,198 million, signifying an important 21.4% rise in comparison to the previous year. • In Cencosud’s supermarket division, Chile represents 35.9% of total sales, while Argentina finds itself at second place with 29%. Concentrating both markets they represent 65% of the total sales for the group. • In 2010 the retailer focused on the search of a different strategy in Chile, focusing on its low prices and quality service, in addition to expanding and centralizing in urban arear of lesser income. • In Brazil Cencosud responded to the on going market trend of acquiring smaller stores, hence the acquisition of Bretas, Perini and Super Familia, becoming the largest operator in the northeast of the country. Source: Annual Report Cencosud 2010 • In Peru, Cencosud continued being the main retailer with its Wong and Metro stores, in addition to being awarded the price for leading the e-commerce strategy in the country with Wong, as well as launching itw own credit card to be used in all super and hypermarkets in the country. • For 2011, Cencosud announced that the main focus will be set in the launch of new stores, adding thus 36 stores in Chile, 25 in Brazil, 21 in Argentina and 20 in Peru. 31

  32. Store Network in the Region Source: Annual Cencosud report 2010 32

  33. Organización Soriana 5 • Organización Soriana, is a Mexican company that once again reached number five in the regions retail ranking and, among the regional chains, was once again in second place after Cencosud. • Sales for the group by the end of 2010 reached a total of USD$ 7,593.2 million, an 11.45% increase compared to the previous year. • During 2010 the retailer launched a new format, Soriana Express, opening 20 new stores, representing 53% of the total openings in the country, competing directly with the Bodega Aurrerá format of Walmart. This format was the most succesful of the group. • For 2011, Soriana will continue betting on Soriana Express stores since, with a forecast of 50 openings with an investment of 242 million dollars, 30 will belong to the new mexican emblem. Source: Annual report Soriana 2010 33

  34. 6 Makro • During 2010 Makro, one of the most important wholesalers with presence in Latin America and Asia, incorporated a new country to the list of markets where it operates, adding Peru to the list that was already made up of Argentina, Brazil, Colombia and Venezuela. • As for the groups plans of expanding in the Peruvian market, the retailer announced that during 2010 launched 4 new stores in the country and began the construction of its first store in the interior of the country , in Arequipa. • By the end of 2010 sales of the group in the region rose to USD$ 5,087 million, with a total of 162 stores. • In Argentina, the retailer announced that it plans to invest in the launch of new stores Basualdo, destined to sell hygiene and cleaning products, which acquisition process finished in 2009 and of which it intends to operate close to 20 stores by 2015. In March 2010, the retailer also received the approval of Argentinean law for the acquisition of Tarquino company, in Cordoba. • In 2010 the group also announced its plans to expand in Colombia, with the opening of 12 stores to 2015. Source: ILACAD – Annual report Grupo SHV 2010 34

  35. 7 Oxxo • Oxxo stores continue to be leaders in the convenience segment. • In 2010 total sales of Oxxo rose 16.2%, to Mx$62,259 million (USD$5,045 million), finding themselves ahead of Comercial Mexicana. • Oxxocontinued growing during 2010 at a similar rhythm than in 2009 launching a total of 1.092 new stores in the two markets where it operates. • In Colombia, where the retailer began operating in 2009, Oxxo launched 12 new stores, elevating the total number in the country ton 17, while in Mexico the group opened a total of 1.080 stores, surpassing their initial objetive of 850 new stores. • For 2011 the group announced it intends to invest over 900 million dollars in the launch of new stores in both operating markets where it intends to launch over 1.100 new stores. • Likewise the retailer reiterated their intention to enter in new markets in the region, as is the case of Brazil. Source: Annual group report FEMSA 2010 - ILACAD 35

  36. 8 Comercial Mexicana • Comercial Mexicana autoservice sales rose to Mx$54,869 million (USD$4,446.4 million). This numbers are lagging behind the top positions in the chart, seeing as sales of Comercial Mexicana represent only 19.5% of the first retailer in the ranking. • The retailer offers a multiformat strategy that has from hypermarkets to price clubs. • By the end of 2009 the retailer launched a new banner called Fresko, a store directed to clients of a segment of high income, with a less gourmet approach than the City Market banner but larger and moret attractive than the Sumesa banner, traditional supermarket format. Source: Annual report Comercial Mexicana 2010 36

  37. 9 Chedraui • Grupo Chedraui kept a firm presence in the ninth position of the ranking of Latin American retailers, same as in the previous year. • The group has a wide extension in Mexico, mainly in the center and south of the country, and has, in addition stores in the United States in the states of California, Arizona and Nevada. • By the end of 2010 the groups revenues of autoservice rose to Mx$43,022 million (USD$3,486 million) which meant an increase of 13% compared to the previous year. • During 2010 Chedraui launched 13 stores and acquired three, reaching a total of 156 in the whole of country. Hypermarkets launched several stores increasing its number from 109 in 2009 to 120 in 2010. • Early in 2010 the retailer entered de Mexican Stock Exchange thanks to their IPO. • To 2014 the retailer aims to open an additional 160 stores, mainly in the smaller format stores of Super Chedraui. Source: ILACAD – Annual report Chedraui 4T 2010 37

  38. 10 Grupo SMU • During 2010 Grupo SMU consolidated its presence in Chile and continued betting on new formats in the country, this time with the launch of the new Food Market stores, a new supermarket concept tha enhances the shoppers experience in a modern and comfortable ambience. • The new format aims to have seven such stores in the country during the next two years. • During 2010 the group also began negotiations to enter into the Peruvian market, fact that they finalized early in 2011 through the acquisition of 100% of ALVI, the Chilean retailer with presence in the neighbouring country through Mayorsa. • The group also confirmed that, during 2011, it is set to open five supermarkets in Peru which will extend its current reach in this segment. • The retailer also began unifying its banners in 2008, and finished it last year having now all its stores under the Unimarc, Mayorista 10, and OK Market banners. Fuente: ILACAD World Retail 38

  39. Country Panorama 39

  40. Argentina Retail Market Facts – Modern Channel 40,519,000 8,662.9 10.7% Population GDP per capita Inflation Sources: ILACAD World Retail - INDEC 40

  41. Argentina : Denomination of Retail Formats Modern Wholesale/Cash & Carry: Stores of over 9,000 square meters that sell products by bulk. They are used by smaller stores to supply their stock. Kioscs: Small independent stores that sell cigarettes, candy and drinks for the most part. This format expanded strongly during the 90’s. Hypermarkets: Stores of between 4,500 and 15,000 square meters with an assortment of between 30,000 and 50,000 references. Supermarkets: Divided in Supermarkets (of between 850 and 1,200 square meters) and mini hypermarkets of Between 1,200 and 4,500 square meters. They offer the same products as a hypermarket but in a smaller surface. Specialized Formats Traditional Pharmacies: Traditional or autoservice, they sell medicine and hygiene products, and can in some cases incorporate some food categories. Autoservice: Mini Supermarkets where Asian stores concentrate a large portion of the market. They are considered proximity stores. Minimarkets: Stores similar to neighborhood autoservice stores with an average selling space of 250 and 500 square meters. Gas Stations: Convenience format under developed in Argentina. Almacén: Traditional neighborhood stores with assisted shopping done through a counter. Source: ILACAD World Retail 41

  42. Argentineretail in 2010 Small Surfaces: The new trend in Argentina’sfoodretail sector • Big hypermarkets have been left in a second place in the food retail sector in Argentina given the fact that, during 2010, the great bet was set in the opening of smaller formats aimed at satisfying daily shopping needs, closer to home or the office, in order to compete with the traditional channel giving the client a more efficient use of their time. • In this new era of openings, launches are concentrated in small stores such as Carrefour Express or Carrefour Market, or the Super Vea stores of Chilean group Cencosud, the Minimarkets of national store Coto and even the new Chinxpress of Asian autoservice segment, of close to 300 square meters of selling surface, that aims to establish close to 350 stores in 2011. • During 2010 there were also several proyects that aimed at slowing the expansion of large retailers in the country with the objective of ensuring the survival of the small and medium retailer, in addition to stopping the expansion of Asian autoservice stores. • Carrefour, once more the leading retailer in the country, not only acquired nine Best stores, property of La Anonima, but also launched the new Carrefour Market beginning a conversion plan that is set to finish in 2011 and that aims at coming closer to the image of its French headquarters. Unifying both their banners, colors and image, in addition to changing all Express stores to Market, and all mini markets to Express. Source: ILACAD World Retail 42

  43. During 2010 there was activity in the wholesale sector, with the acquisition of Tarquino by Makro (that during 2010 announced the opening of 20 Basualdo stores to 2015). In addition to the launch of new stores by Yaguar, Makro, Diarco and Vital, and the arrival of the first Atacadado, property of Carrefour, to Argentina in 2011. • Walmart launched 14 new Changomás stores in several points of the country, faced with the opening of only 3 • hypermarkets in the same period. In addition, the retailer began operating in the e-commerce division, allowing them to compete with retailers such as Coto Digital, Disco Virtual, Jumbo a Casa or LeShop. • There were also clear advances in Asian autoservice stores, through different initiatives that, in order to compete with large retail chains, have included: a)the launch of the new Chinxpress format that will begin operating in 2011; b) the creation of 150 private labels; c) the launch of a new and own credit card. • During 2010 there were also changes in consumer habits among argentineans that, driven by inflation of close to 25%, now have begun planning their shopping in advance, using special offers by retailers, banks etc. Another tendency experienced by shoppers includes the use of e-commerce given the lack of time and the search for comfort. This is why sales of e-commerce hace grown by 50% in 2010. Source: ILACAD World Retail 43

  44. Retailer Ranking Argentina • Sales include food retail and excludes home improvement • ** Includes Mini Hypermarkets (83 stores) of an average surface of 4,500 Square meters. Source: Information of retailers, INDEC –ILACAD World Retail 44

  45. Bolivia Retail Market Facts – Modern Channel 10,426,000 1,839.70 7.18% Source: ILACAD World Retail Population GDP per capita Inflation 45

  46. Foodretail in Bolivia 2010 A marketwithlittlechange in 2010 • Once more the retail chain of Hyper and Supermarkets Hipermaxi held the number one spot in the country’s retail ranking, followed by Fidalga company which only operates supermarkets in the country. • During 2010 Hipermaxi launched the new Mega Hipermaxi Norte, with an investment of 1.2 million dollars and a selling surface of 10.000 square meters. Fidalga also launched a new shopping mall, Shopping Norte, with an investment of 1.5 million dollars in addition to opening a store of three stories in the country. Meanwhile, IC Norte opened a new mega store in February 2011 with an investment of 11 million dollars and a selling space of 19.000 square meters. Bolivia : Denomination of Retail Formats Ranking Retailers Bolivia Modern Hypermarkets: Stores of between 2,500 and 3,000 square meters. These are smaller compared to the same format elsewhere in Latin America. Supermarkets : Selling surface of between 800 and 1,000 square meters. Wide assortment of food products and basic categories. Source:Retailer Data 46

  47. Brazil Retail Market Facts – Modern Channel 193,253,000 10,816 5.91% *NOTE: It is considered Modern Channel the autoservice stores of more than 2 check outs. Having into account the 500 retailers that make the ABRAS. Cash & Carry: Includes the wholesale formats and incluye los formatos mayoristas y de atacarejo Source: ILACAD World Retail - ABRAS Population GDP per capita Inflation 47

  48. Brasil: Denomination of Retail Formats Modern Traditional Hypermarket: Stores of over 5,000 square meters and 50 check outs and 45,000 references. Offers a wide assortment of food and non-food items. We can also find electronic products and small household appliances. Supermarket: Stores of between 750 and 5,000 square meters, that offer between 7,000 and 20,000 references. Depending in the size of the store they can a wide range of non food products. Neighborhood Store Small businesesses based in proximity of an average of 100 square meters. Limited offer. Specialized Stores: Butchers, Bakers, etc. Price Clubs: Format that sells in large volumes through a membership strategy. Low operational cost. Hard Discount: Stores of between 200 and 400 square meters. Basic assortment at low prices. Wide selection of private labels. It is considered modern channel autoservice stores of more than 1 check outs and having into account the 500 retailers that make up the whole of the ABRAS, with a total of 7,565 stores. The total number of stores taken into consideration by ABRAS includes traditional autoservice, with 73,563 stores, which leaves a rest of 81,128 stores. Convenience Stores: Selling surface of an average 250 square meters. These stores offer an average of 1,000 references, mainly of the food categories. They place great emphasis on service. Atacarejo: Stores where retail meets wholesale and welcomes both big clients as well as supplies for households. Fuentes: ILACAD World Retail - ABRAS 48

  49. Brazilian Retail in 2010 Historic Growth of the retail sector in Brazil in 2010 • Retail sales in Brazil grew in volume by 10.9% during 2010, becoming the largest growth experienced in a decade, according to the Brazilian Institute of Geography and Statistics (IBGE for its Spanish acronym). Meanwhile, in value, sales rose by 23,2% during the last year, reflecting a positive economic context taking place in Brazil, characterized by an increase in spending money and access to credit. • The Brazilian retail market is still dominated by the informal channel, which comprises almost 60% of the sector. Within the 40% of the modern channel, the main retailer during 2010, and second year round, was Grupo Pao de Acúcar, with 22.1% of market share followed closely by Group Carrefour and Walmart Brazil. • While Pao de Acúcar stood out for its strong growth, not only in the food categories but also in the non-food categories thanks to the help of its Ponto Frio and Casas Bahía stores. Cencosud was another stores that gained in the spotlight with the acquisition of three retailers during 2010, including: Super Familia, Perini Comercial de Alimentos and Supermercados Bretas. Source: ILACAD World Retail 49

  50. Brazilian middle class has grown consistently during the past couple of years, as has been the trend in the rest of Latin America. During 2010 we witnessed the search of clients of a convenience option, reason why chains in Brazil announced they would bet on smaller format stores working with a low prices. • On the other hand, segments A and B of the population of an age range of between 25 and 45 years have shifted towards e-commerce, a business model in which Carrefour has made its debut early in 2010. Source: ILACAD World Retail 50

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