"Across the entire region, the personal care, food and beverage, and agro markets have been consistently growing, and in 2021 we have seen a good recovery in the oil and gas industry as well."
How have the last 12 months been for Brenntag in Latin America?
2020 and also 2021 so far have been challenging for reason well known like the Covid pandemic and global supply chain disruptions. Our first priority has been making sure we operate safely. Business wise, Brenntag’s performance in Latin America has been outstanding, especially in the largest markets like Mexico, Brazil, Colombia and Argentina. In general, across the entire region, the personal care, food and beverage, and agro markets have been consistently growing, and in 2021 we have seen a good recovery in the oil and gas industry as well. And while keeping our business fully operational and achieving excellent results, we continued with the implementation of our new operating model with the two global divisions: Brenntag Essentials and Brenntag Specialties.
Considering the challenges for smaller companies over the last two years, do you see this as an opportunity for larger players to grow through acquisitions?
In terms of the chemical distribution business, Latin America is a geography driven by distribution market. Thus, you can have small, medium, or large markets in specific geographies performing well. We are seeing increased M&A interest from different players due to the current market dynamics. I believe that this trend is going to continue as everyone is looking to grow faster. For sure it will accelerate to consolidate the industry, consequently, having critical mass will make the industry more efficient.
Why do you think the Latin America region is well suited to chemical distributors?
The complexity of the region in terms of distances is a great advantage for distributors. There are approximately 20 countries in which a distributor can operate with vast distances within and between countries. Here it is very important to have good local services to be efficient as well as to reach high levels of services, which is the expectation of our clients. With the exceptions of Brazil and Mexico, Latin America does not have a very strong industrialized base and a significant amount of product must come from other regions in the world. Dependency on imports implies a need for logistics, storage, technical and value-added service.
Furthermore, international manufacturers want to sell in Latin America, but do not necessarily want a physical presence in the region because, from a macro standpoint, Latam is not stable and currencies are volatile. They are thus reliant on distributors’ capabilities and knowledge in the region to move forward and consolidate the products they offer the market. Small and medium sized companies that are growing in local markets also need the reach and network that distributors offer. Thanks to Brenntag’s long presence in the region and global scope, we offer all of that – global supplier relations combined with region-wide network and local execution and expertise.
How has Brenntag dealt with supply chain and logistics disruptions that have persisted in 2021?
The pandemic brought about many challenges, and on top of that, 2021 saw several events which impacted the global supply chains as well as our industry. The combination of disastrous climate events, geo-political tension, shipping delays and issues with availability of equipment has resulted in extreme increases in logistics costs. Furthermore, chemical prices have risen due to supply chain disruptions and product shortages and a consequent increased tension between supply and demand. We believe that the situation will normalize, but it is surprising how long the disruptions have lasted thus far. The uncertainties are not over, it might take several more quarters to be corrected. Securing product inventory and reliable delivery have been and will be the key task as well as key to success for distributors like Brenntag in these challenging times.
Can you explain the significance of sustainability to Brenntag and the customers you serve?
Brenntag has set goals, among others, to reduce its carbon footprint and aims to achieve 100% electricity consumption through green power by 2025.
We are a member of the chemical industry’s “Together for Sustainability” initiative, which has the goal of establishing a uniform global program for the responsible procurement of goods and services in the chemical industry, to achieve transparency in relation to sustainability performance throughout the supply chain and to make further improvements to its suppliers’ ecological and social standards.