December 19, 2016 Rio Chicken

Volume 19 | Issue 5

Since inauguration over 40 years ago, Rio de Janeiro State’s best-known chicken products has invested in consolidating both brand and market share. As Brazil shows signs of emerging from arguably the biggest economic crisis in its history, this market leader continuous to hatch new plans. Reuben Ford takes a closer look at the company that grew against all odds.

All Cariocas, people from Rio de Janeiro (99 percent of consumers – according to a recent survey) immediately recognize the state’s leading fresh and frozen chicken, Rica Alimentos. What they might not realize is that the company has been constantly working on improvements and growth from the very start.

Flying High

Founded in 1972, Rica Alimentos began as a small poultry farm, which produced and slaughtered chickens for the company Granja Regininha, which had been operating since 1960. The same family, led by the patriarch, Iracy Igayara, ran both companies. Igayara’s children entered the family business – the eldest, Luis Alexandre, was the first. He joined his father’s company as soon as he graduated and his siblings followed. Within a decade, all Igayara’s children were partners working on key areas in the company’s development.

Throughout the 1980s, Rica Alimentos grew quickly and intensely. The strategy was simple: “…a focus on professionalizing the company – hiring experienced market executives with the technical knowledge and know-how that the growing business had come to demand,” explains Luis Alexandre Igayara, CEO.

The carefully chosen team proved to be just the ticket, with wise acquisitions over the course of the decade contributing to increased vertical integration, profit and market share. In 1985, the company bought the (formerly named) COPAVE processing plant in Rio’s Jacarépagua neighborhood.

Rica Alimentos was also securing its place on the shelves of supermarkets in Rio de Janeiro and on the tables of its consumers. With constant drive toward being the local market leader, the first marketing campaigns were launched on the radio, with leading advertising agencies. Almost immediately, advertisements were extended to billboards and television. By the 1990s, the brand was known across the state as “Frangos RICA” (RICA chicken), the name of its leading product, fresh chicken, which was sold in all major Carioca food retailers.

Today, Rica Alimentos is producing chicken and chicken derivatives to its full capacity. The company supplies the state’s leading supermarket chains as well as smaller stores, using diverse distribution methods – all adhering to rigorous quality standards.

Timely Transport

Rica Alimentos has a production capacity of 160,000 chickens a day. A 150-vehicle fleet of trucks delivers the products to all locations in Rio de Janeiro. “Company activity has expanded and diversified to achieve the best possible customer service and make the most of our efficient sales teams and logistics,” says Igayara. In fact, one of the qualities retailers associate with the brand is rapid, on-time delivery. “We operate according to OTIF (On Time In Full) principles, processing orders within 24 hours of receipt,” Igayara continues.

The company now has in the region of 7,000 clients a month, facilitated by speedy logistics and production efficiency that reaches 1,200 tons of products a month. According to Igayara, annual revenue has risen proportionately to expansion.

Re-investment of profits is a policy that has served the company well. “Our company is always investing in improvements… in processing and internal procedures. One of the latest investments is the renewal of processing technology, including a new processing room with specialized evisceration equipment, which has increased quality and production capacity,” Igayara reveals. Another is the construction of a new plant in Queimados, Rio de Janeiro. Although to date all expansion has been achieved with its own capital, Igayara does not rule out the possibility of a new investor/partner for this new phase in Rica’s growth; “The possibility of new investment is totally viable.”

Today, thanks to this investment, Rica Alimentos has a well-developed and vertically integrated structure; consisting of its own farms and hatcheries. The fattening plants are also owned by Rica, which marks an important differential for the company, as most competitors work with partners. Rica Alimentos has three chicken feed factories, a processed meat production facility and slaughtering plant that houses the company headquarters and distribution center.

Rica Alimentos is the largest Carioca chicken producer and is positioned third in the region, behind industry giants, BRF (Brazil Foods SA) and Seara.

In Spite of Adversity

Maintaining market position is of particular note as Brazil struggles to the end of a difficult economic and political year. While many companies limp towards 2017, Rica Alimentos struts forward with new investment ideas and leading products.

It has not been easy. With poultry the major product of the company, the vicissitudes affecting chicken production and sales obviously created challenges. Igayara explains: “One of the most important problems is internal supply of chicken products, which can often surpass demand. This causes a fall in prices and puts pressure on controlled production and increased exports.”

Another variable is the oscillating value of the Brazilian Real, which suffered at the hands of a crash in investors and consumer confidence in Brazil. The lower the cost of the real the more competitive the market.

Igayara outlines a third factor that has played an important role in managing growth: the price of corn and soya. As the main ingredients in chicken feed, for raising and producing birds, their prices influence the segment. “High prices and excess supply have been a constant concern in our business this year. They were the most influential variables in our finances, especially in the first semester of 2016.”

Navigating through difficult times, Rica Alimentos, unlike so many not only survived challenges, but also managed consistent growth. Market confidence in the company has not wavered and the state’s leading supermarkets (Grupo Pão de Açucar, Supermercados Mundial, Casas Guanabara, Rede SuperMarket, Prezunic Cencosud, Supermercados Mundial, Makro, Atacadão, Assai, Carrefour and Costa Azul Multimercados among others) continue to replenish their shelves with Rica chicken.

Rising above the challenges of a difficult year, Rica Alimentos successfully aims high, remaining a constant in an economy unsteadied by change. Unquestionable quality and continued expansion point to an excellent future for the Carioca Chicken.

Early Birds

Rica Alimentos distinguishes itself as the freshest chicken on Rio supermarket shelves. Many retailers receive products that have been made and packages that very day, thanks to nocturnal production and ‘same day’ morning deliveries.

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