Could you introduce Brenntag’s Brazil operations and the impact of the recent Gafor Distribuidora acquisition (2014)?

Brenntag started in Brazil through acquisitions, which is how most global distributors started developing their networks in emerging markets. The acquisition of Gafor Distribuidora was aimed at bringing some of ExxonMobil Chemical’s solvents and other specialty products into our portfolio and reflects Brenntag´s goal to continuously optimize our product portfolio in line with market needs. This means we need to be close to our clients to understand how their demands are changing and is the reason for our corporate philosophy of ‘Connecting Chemistry’.

Our main warehouse is in Guarulhos, located close to São Paulo’s international airport, which offers easy access to the city of São Paulo and to surrounding states. We also have warehouse capabilities in Esteio, Joinville, Recife and Jaboatão and, through the acquisition of Gafor, we now have a site in Jundiaí.

What are the most important end-industries for Brenntag  in Brazil at the moment and the drivers of those industries?

We serve many industries: coatings, polymers, household, personal care, oil & gas, mining, agro-chemicals.  In coatings, which are used in the architectural and automotive industries, customers are demanding more environmentally-friendly materials. Although the green trend is much more noticeable in markets such as in Europe, we are starting to notice it in Brazil. Personal care is another highly important market for Brenntag in Brazil. In this market we are seeing the development of new products, especially for men and older consumers. As the economy improves, demand for coatings and beauty products will rise and this will have a significant impact given Brazil’s population of over 200 million. We are also working on new platforms development, such as food and feed.

How much of its chemicals portfolio does Brenntag import?

Three years ago, our suppliers were heavily skewed towards domestic producers. However, about two years ago we started to import much more chemicals as we increased the amount of specialty chemicals in our portfolio. Most multinational companies have not invested in specialty chemicals production in Brazil due to the lack of critical mass in this area. Furthermore, other countries such as those in Europe, Asia and even the United States have a better cost position and logistics set-up. Nevertheless, we still have some key domestic suppliers in our portfolio such as Dow Chemical and Oxiteno.

What do you see as the main infrastructure challenges in Brazil?

Port congestion is the number one issue which means additional costs for the entire value chain for both imports and exports. The situation is challenging, but we look forward to improvements in the future. We rely a lot on road transport for chemicals.

Consolidation among distributors was a big trend in 2013. How has this trend evolved since then?

Around 2013, multinational distributors came to Brazil. Despite the recession years, Brazil’s economy continues to be a powerhouse and will continue to attract foreign players. This, plus the fact that the chemicals distribution market in Brazil is very fragmented, means consolidation will increase in the future. The ten largest distributors currently have less than 40% of the market, so there is plenty of room for more mergers and acquisitions. With regards to Brenntag, we are continuously evaluating potential acquisitions, continuing a long history of growth in this way.

End-users of speciality chemicals require not just delivery of chemicals but technical know-how. How does Brenntag ensure it provides both?

For speciality chemicals, simply competing on price is not the right strategy. In addition to our highly qualified and experienced technical personnel, we have a very well-equipped application laboratory for coatings which we have been told by industry analysts is the best one they have seen among distributors. This reflects Brenntag´s value proposition for specialties which is that we can recommend chemicals for different needs, compared to commodity chemicals where operational efficiency is our main value-add. We also have an application laboratory for agro-chemicals and are building one for home and personal care.

What are your key goals in the next few years?

Brenntag has a 2020 vision which foresees growth for the company after two years of recession in Brazil. We are developing new markets, such as food and feed, enhancing our strategy in the oil and gas market and increasing our presence in agro-chemicals. We already produce liquid fertilizers with our own technology which we want to sell more of and we also want to distribute more chemicals used in agro-chemicals formulations. Acquisition is in the Brenntag DNA and we may make an acquisition to help growth in these areas. Furthermore, we will continue to invest in our people, our most important asset.