SWEET SUCCESS

Ecuador 2013 | AGRICULTURE | VIP INTERVIEW

TBY talks to Ricardo Rivadeneira, President of Azucarera Valdez, on the Ecuadorean sugar industry, production and exports, and the growing importance of alcohol manufacturing.

What's the background story of Azucarera Valdez?

We are the oldest sugar mill in Ecuador, with 129 years of history behind us. We have wide experience and a strong tradition within the sugar production and commercialization industry. Some 21 years ago, Mr. Noboa took control of the shares of the company, and, in 1996-1997, Nobis Group took over as a parent company. Currently, Azucarera Valdez represents 30% of the country's overall sugar production, whereas the remaining 70% is controlled by five different sugar holdings, two of which are as large as we are. Therefore, we can say that 90% of the sugar production in Ecuador is controlled by three big holdings. We have a production plant with grinding capacity for 11,000 tons of sugar per day. Azucarera Valdez is the most reputable and innovative brand in the industry; we are a company with a presence across Ecuador, and our strength is based on individual consumers and their preference for our sugar. Innovation, for us, means diversification of products; currently, we have brown and white sugar, light brown and light white sugar, and we are conducting market research to launch other types of sugar, like flavored sugar and sugar with vitamins. We have also been launching new packaging modules in order to reach different consumer ends in the market. However, we have to keep in mind that this is an industry based on production costs, and the main aim of producers is efficiency and productivity. Azucarera Valdez has always been a pioneer when innovating in these fields. In terms of employees, some 3,000 people work here during the busiest time of the year.

What market trends have you observed lately?

The market tends to demand more natural and healthy products, like Stevia. We would like to stress that sugar is a very healthy product that sometimes is misunderstood by consumers, who think it contributes to developing diabetes and weight gain, but this is only in cases of excessive consumption. For that reason, we work on educating consumers of the benefits of sugar, and, at the same time, we launch products into the market that can meet consumers' demands. Stevia is set to play a greater role in the market in the near future; it is healthier and more intense in terms of flavor. We see some interesting market opportunities in this field, and we have already made some investments to determine the practicality of developing a small Stevia production plant in Ecuador, along with some crop fields.

“Right now, we are the most productive company in Ecuador's sugar industry."

What is your expected volume of production for 2013?

We believe we will finish the year with 3.5 million bags of sugar, which represents 4% growth when compared to 2012. To put these figures in context, Ecuador currently produces 11 million bags of sugar a year.

What role do exports play in your business activity?

Traditionally, Ecuador has not been a sugar exporter and it produces to meet the demands of the domestic market. However, we do supply sugar for the so-called “American Quota," a quota that the US allows to import, though it is a small amount in order not to damage its domestic sugar industry.

What are the company's future strategies?

We think we have some interesting growth opportunities as the population and their per capita sugar consumption increases. Ecuador has been growing in this context, and we think we can grab an interesting portion of this growth. We have to keep in mind the increased production and export figures in the sugar industry, making it very tough in terms of competitiveness. For example, Brazil, Colombia, and Guatemala are very important exporters within the regional sugar industry. In addition, the region sets up prices domestically, and that does not make us competitive at the international level. Overall, our main aim is to grow in related segments, especially the alcohol one, which needs significant amounts of sugar. For that reason, we will have to invest on several fronts: agricultural borders, crops, equipment, logistics, and so on.

How do you see the company in 10 years' time?

Right now, we are the most productive company in Ecuador's sugar industry. I hope that in 10 years we will also be the most efficient one. We can do this by reducing production costs and increasing the pride of not only our employees, but also the consumers of our products. For that reason, we need to invest in innovation, technology, diversification, and the training of our employees. I also hope that, in this period of time, the alcohol generation segment will become as relevant as the sugar one. The future growth of the company will be based on these elements.

What roles does Azucarera Valdez play in the group's overall operations?

Sugar production and electricity generation are the two main business areas of the group, and they are both linked to the sugar cane plantations. Currently, we have an installed capacity of 36 MW with biomass; we consume around 30%-35% of it, and we sell the remainder to the market. Alcohol production is also becoming very important for the group; we have to differentiate between ethylic alcohol, which is used for the beverage industry, and anhydrous alcohol, which is very useful for other sectors like art, painting, perfumes, and biodiesel. We also export some of this latter type of alcohol to other markets, like Colombia and Europe.

What are some of the most relevant projects you develop in terms of social responsibility?

We have always believed that our social responsibility has to do with making our farmers partakers of our growth and development, while providing them with the social, business, and financial tools to improve their situation and that of their families. For example, we talk about training families in order to make them productive units. By doing this, you can really make an impact on society. Apart from that, we also have a school for the children of our workers, complete with its own hospital and medical facilities.

© The Business Year - August 2013