BASF Brazil sales grow regionally: BASF Brazil is increasing investments in its coatings operations due to increased demand.

Architectural segment paint and varnish sales for BASF Brazil are growing at a robust rate of between eight percent and nine percent this year, thanks to a construction and general economic boom in the country's Central West and North East regions. Given the high demand, which is expected to hold throughout 2008, BASF is investing more than $8 million in increased capacity at the company's Sao Bernardo do Campos plant in Sao Paulo state, and in improved logistics throughout the country, according to Marcelo Leonessa, the director of paint production for BASF in South America.

Sales of the company's Suvinil and Glasurit brands in Matto Grosso state, in the Central West, have doubled over the past year or so, and sales in North Eastern states like Pernambuco also are rising rapidly for BASF. The company also will improve efficiency for its Jaboatao dos Guararapes plant, in Pernambuco state, over the coming year. "Overall architectural paint sales increased 10% this year to R1 billion, or approximately $560 million," said Leonessa. "Automotive sales are growing only half as fast, between three and four percent."

To promote growth in the North East region, the company recently took a marketing caravan to several cities, visiting 50 resellers and 80 retail locations. Among the targeted cities were Belem, in Para state, Manaus, in Amazonas state, Porto Velho, in Rondonia state and Rio Branco, in Acre state. Sales in some of these areas, as in Matto Grosso state, are rising faster than the nationwide average rate of eight percent to nine percent, Leonessa noted.

As land available for new construction in the traditional business centers of Sao Paulo and Rio de Janeiro shrink, contractors are moving into the less expensive Central West and North East for new projects. Ready bank credit for construction also is helping the boom, according to Leonessa.

As part of its campaign to improve logistics, BASF is installing SAS software that is helping integrate sales, distribution, marketing and production data. The company has a fleet of 200 trucks, which carry two loads per day nationally, with the support of approximately 350 employees. "We studied logistics software for approximately a year and a half before deciding on SAS," Leonessa said.

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At the same time the capital investment program is unfolding, BASF is expanding its use of recycled polyethylene terepthalate, or PET bottles, in the production of its resins for varnishes and enamels. "We are pioneering this practice in Brazil and expect to increase our recycling to 60 million bottles this year from 40 million a year ago," said Leonessa.

Within the overall Brazilian architectural paint segment, BASF now holds a 35% market share, but in the top-tier premium paint segment, the company has a 60% share. "We are trying to demonstrate the cost benefit of using premium paints, which is the fastest growing segment in Brazil now," Leonessa said.

by Charles W. Thurston

Latin American Correspondent

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