Latin America has its own version of corporations that do business cross-nationally. Called "multi-Latinas," these corporations start in one Latin American country and spread throughout the region. At Chicago Booth's 8th annual Vale Latin American Business Conference, leaders from two multi-Latina corporations discussed how they achieved regional success with panel moderator Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance.
The event, The Decade of Latin America, was held at Gleacher Center in May and was hosted by Booth's Latin American Business Group. The daylong conference had support from several sponsoring organizations: Vale, the largest private mining company in Latin America; Itaú, one of Latin America's largest banks, investment firm DLJ South American Partners; McDonald's; Grupo Nutresa, a prepared food manufacturer; Celulosa Argentina, a wood and paper producer; and the Latin American Venture Capital Association.
Tapping new markets
When Colombia opened its markets in the 1990s, processed food conglomerate Grupo Nutresa took advantage of the new international opportunities. The company's strategy shifted from sales by order to mass distribution. The international expansion happened in several phases, explained Grupo Nutresa CEO Carlos Enrique Piedrahita. It started with exploring the new markets surrounding Colombia, building alliances with businesses in other countries, and forming reciprocal agreements. Then, Grupo Nutresa began developing a better understanding of international consumers and creating its own distribution channels to boost sales.
"Each market is different, especially when talking about food," Piedrahita said. "For example, the level of sweetness or spiciness varies. It needs a lot of insight from multicultural teams."
Most recently, Grupo Nutresa has been taking advantage of free trade agreements and acquiring other companies. Today, the conglomerate contains 44 companies and exports to 75 different countries, mainly in North, South, and Central America. It boasts $2.4 billion in annual revenue and has created 7,000 new jobs in the last five years.
Though more multinational food companies are coming into Latin America, Piedrahita said Grupo Nutresa has homecourt advantage. "Our marketing and distribution is our advantage over the multinationals. We are closer to the markets. We do not rely on consumer panels; we live with the consumers and observe their eating habits. And even though Grupo Nutresa is not as well-known as Mars, we have acquired well-known companies."
Celulosa Argentina, a wood and paper production company founded 80 years ago, has also successfully pursued other markets in Latin America. The company showed steady growth until widespread inflation drove it to bankruptcy in 1980. The crediting bank, which took over the company until 1991, forced Celulosa to sell a large portion of its forestry lands.
"In the 1970s we were equal with competitors in Brazil," explained Matias Brea, a member of Celulosa's board of directors. "Now we're one-third of what they are, and have 20 percent of the amount of land we had before selling."
Despite the abrupt recoil, Celulosa began to bounce back by 2000. Today, the company has distribution channels in Chile and Argentina and is considering a facility in Brazil. It is the leading paper and forest products producer in Uruguay, and its reported annual revenue is nearly $350 million.
Brea said the company's resilience is because of a stable customer base, conservative financial position, and a strong management team. "And Argentina is blessed with agriculture," Brea added. "It's one of the best places to grow trees." Latin American countries also are projected to increase paper and wood consumption faster than countries in other regions.
One of the main challenges, Brea said, is strict regulation and the varied integration of technology in some Latin American societies. "The mix of what you can sell is different because the consumption is different. Many years ago, we would have to have a complete set of types and sizes. Now, some counties with a bigger concentration of computers just want letter A4."
Rajan challenged the panelists on why Booth students should consider their companies for future opportunities. Both said their companies are dedicated to hiring young professionals and offering growth opportunities.
Making such connections between Booth students and opportunities in Latin America is one of the conference's main missions, said Felipe Valencia, a second-year student in Booth's Full-Time MBA Program from Colombia. "The objective is to bring Latin American commercial figures to Booth, and to let Booth students know what's going on in the region," Valencia said. "Now when you start to understand the region, you want to do business there because it has a lot of opportunities. It's about boosting the network."