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BMI Industry View The opportunities present in Brazil have attracted significant interest, especially in the grocery sector, and the leading retailers continue Links of London expand. This rapid expansion has been good for topline growth, but with three powerful retailers all competing there has also been significant pressure on prices and margins and it is notable that margins at the country’s leading retailer, Companhia Brasileira de Distribuicao CBD, are well below both its developed and its emerging market peers.Over the past five years CBD’s margins have hovered around , while Tesco and WalMart Links of London k Charm both at and emerging market operators in Mexico and Russia regularly report margins above . This can also be attributed to the difficult logistics of the country, with transportation and distribution more expensive. We believe these low margins are likely to put off new entrants into the grocery sector and may partly explain CBD’s recent decision to diversify its operations into durable goods with the acquisition of a stake Links of London J Charm Casa Bahia in a noncash deal and the purchase of a stake in electronics retailer Globex Utilidades. This decision was also likely to be partly driven by the outperformance of the company’s non food segment during , with the category boosted by government initiatives to aid ownership of white goods by lowincome families. Headline Industry Data per capita food consumption forecast to alcoholic drink sales forecast to mass grocery retail sales MGR forecast to Key Company Trends Danone Targeting Ambitious Growth Levels In October , the Brazilian subsidiary of international food giant Danone announced an ambitious target Links of London I Charm revenue growth. Danone Brazil said that it expects to generate revenues of BRL.bn USmn in , which would represent a increase on the sales achieved in . It hopes to reach BRL.bn by , nearly doubling its revenues in just three years.