One of the largest beverage manufacturers in Brazil, Grupo Imperial was the first company in the state of Goiás to begin producing soft drinks. Forty years later, president Maurício Mercado discusses with Michael Sommers his plans to go full juice ahead.
Over the last 44 years, soft drink brands such as Goianinho, Orange Fruit, American Cola, and Imperial have become best-sellers in the Brazilian Central-West, a vast area that constitutes Brazil’s third-largest region (of five) in terms of territory. These days, however, Grupo Imperial, the manufacturer of these popular beverages, is focusing far less on fizz than on fruit – or, to be more specific, on La Fruit.
The brand name given to Imperial’s line of fruit juices, La Fruit is Imperial’s current best seller, representing 45 percent of its volume and 47 percent of its sales revenues. In terms of market share, the brand ranks first in the Brazilian Central-West and North – which together comprise Imperial’s main markets – and third overall in Brazil.
“Brazilians are being swept up by the trend towards healthy beverages,” explains Maurício Mercado, Grupo Imperial’s president. “This is a tendency that’s really catching on in our region. Having identified the opportunities for growth, we’ve decided to really invest in terms of this segment.”
Such investments are sweeping and all-encompassing. They include the adoption of more efficient production methods and the development of new packaging – both with the assistance of long-term partner, Tetra Pak. While La Fruit’s packaging is undergoing a major redesign – “to make it more upbeat and festive,” says Mercado – the products themselves are being revamped with added-value features such as extra vitamins.
Perhaps most ambitious, however, has been Imperial’s recent decision to expand into the neighboring South-East. Brazil’s largest region (in terms of population) and, by far, its wealthiest, the South-East embraces the states of Espírito Santo, Rio de Janeiro, and São Paulo. “The average per capita income in the South-East is much higher than the regions in which we already operate,” says Mercado. “By breaking into this market, we hope to increase our total production output by 20 percent and to ultimately have this region account for 40 percent of our total juice sales by volume.”
As it is, business is already booming for Imperial. Last year, the group took in average monthly revenues of R$17 million (roughly US$8.5 million) and ended the year with earnings of R$204 million (US$102 million). So far, figures for 2013 have been extremely encouraging. Monthly revenues have averaged R$19 million (US$ 9.5 million) and Mercado predicts the company will end the year with a projected R$235 million (US$167.5 million) in earnings.
Although juices comprise close to half of all Imperial’s sales, the group hasn’t forsaken the other products in its portfolio. Its traditional lines of soft drinks represent 20 percent of total sales. Meanwhile, Birinight, a fizzy alcohol-based flavored beverage – a market leader in the Central-West – and Velho Barreiro cachaça (Brazil’s national spirit made from fermented sugar cane, which Imperial only distributes) are each responsible for 5 percent of revenues.
Another traditional Imperial item is beer. The group manufactures and distributes several brands including its own light (Imperial) and dark (Mulata) pilsners. Presently, beer represents only 5 percent of sales. However, the group has plans to expand in the near future with the launch of an innovative line of gourmet beers, scheduled to be rolled out in 2014.
“The Brazilian beer market is dominated by one very strong player, AmBev, which controls 70 percent of the national market for everyday beers,” explains Mercado. “But the swelling ranks of Brazil’s B and C middle classes has created a demand for premium beers with higher prices. We’ve carried out research studies that show an increasing number of Brazilians are willing to pay more for different flavored, high quality beers that can be savored. And we intend to take advantage of this emerging segment.”
A Matter of Taste
Imperial is also looking to expand into the opposite end of the economic spectrum – by beefing up its line of fruit juice-based beverages. Sold under the brand name Tampico, these mixed drinks currently account for 11 percent of sales. “Because they contain fruit juice, these mixed drinks are nutritious – and increasingly popular,” says Mercado. “At the same time, the reduced quantity of juice means products can be sold at a price that’s considerably less than the premium prices we charge for La Fruit. This is particularly crucial in the North of Brazil, a key market for us (representing 30 percent of our business), where per capita income is among the lowest in Brazil.”
The group has plans to roll out new lines of mixed fruit juice drinks that will feature new packaging as well as new flavors – including Amazonian fruits such as açai and graviola to seduce consumers in the North – by 2014. “The price of our fruit juices is not cheap for the average consumer in the Central-West and North. In order to compete with us, new players entering these markets are adopting lower prices,” admits Mercado. “We don’t want to sacrifice the purity of our nectars; instead, we are investing in these mixed fruit juice drinks, which we view as our ‘combat juices’.”
In terms of competition, Imperial has a lot of factors in its favor. One of them is the company’s longevity and solid reputation. Imperial was founded in 1972, when a quintet of entrepreneurial families banded together to start making beverages in Brasília. Although it later moved to the neighboring state of Goiás, three of the five founding families still own and help run the business. Since 2000, Imperial has been headquartered in Trindade, a town strategically located 15 kilometers from the state capital of Goiânia, That Goiânia is one of the most fastest growing cities in the thriving Central-West, not to mention Brazil, is also an important factor in the company’s success.
In addition to its strategic location is Imperial’s excellent distribution network. “The number one manufacturer of juices in Brazil is Del Valle. Owned by Coca-Cola, it controls 20 pecent of the national market,” says Mercado. “But because Del Valle is distributed by Coca-Cola, it doesn’t have a plant in the Central-West. Moreover, Coca-Cola places less emphasis on juice than it does on soft drinks.”
Ultimately, Mercado believes the main reason for both its present and future success in the juice segment comes down to the crucial matter of taste. “Taste can vary considerably and for this reason, we use a top supplier, the German-based Döhler, which harvests the best fruits. Our mango juice, for instance, is made with four different types of mangos to ensure optimal flavor and color, not to mention consistency. As a result, our products maintain the same high quality regardless of harvests or changes in season. Not all of our competitors can make the same claim. Over the years, we’ve spent a lot of time and effort tasting our own product. In doing so, we’ve built up a loyal customer base that knows they depend upon their juice being delicious all year round.”