Interview with Emerson de Melo Tenório, President of Sococo

Can you tell us how you intend to reach the level of a global company?

Throughout the years Sococo has always been a company that has focused on the local/domestic market. We are the absolute leaders in products that are made from coconuts in Brazil, and we have made incursions in the market abroad. Brazil is not considered a large producer of coconuts on a global level. The largest producers are Indonesia and the Philippines. Just so you understand how things work, in the Philippines and Indonesia there are approximately 4 to 4.5 million hectares of coconut palm trees, and in Brazil, there are only about 300 thousand hectares of coconut palm trees. Brazil is not a big player in that area of the coconut industry on a global level.

However, we are growing a lot worldwide with our coconut water, which is a healthy drink and is following the world tendencies. And that is exactly where we are going to place most of our focus on. We strategically decided a while back to increasingly become a company that provides healthy beverages. We understand that the Brazilian market is still huge in this area, and that there is still a lot of room for growth, but we also envision doing consistent and permanent work in the international market. Until recently, we had a contractual agreement with a multinational company that was taking care of this area with their own brand. However, as of February 2013, we will have to take the company in a new direction and we have already started to focus on the international sector.

What is going to change for the company in February 2013?

At the moment, Sococo is extremely geared towards coconut food products; and the coconut water market and the beverages market have other formats, other focuses. We have worked very hard in the last few months to build a structure for this purpose, so as of February 2013, this structure should be completely set up so we can start focusing greatly on the beverages segment.

I imagine that there are going to be a lot of changes in terms of industrial production. Are you going to have to make investments?

We have already made these investments, it’s a bit difficult to explain, but we had to make these investments in advance. The main factory that is going to be in charge of this vast production of coconut water is in Belém, in the state of Pará, where at the moment we have our largest quantity of coconut plantations. This part is already in its final phase; by February we will already have the whole industrial part installed and we are already advancing a lot in the commercial structure and in the distributing structure.

What does Sococo need in terms of gaining international appeal? For example, technology, lines of credit, investments, etc.

Sococo has always been a worldwide leader regarding coconut technology. 90% of the coconuts produced in the world are for the production of coconut oil, which is used for food, but even more so for cosmetics. 10% or a little bit less are targeted for food, and without a doubt we are the leaders in this sector. There is a vast array of products developed here. Brazil is the worldwide leader in coconut foodstuff and products deriving from coconut. In the last 10-15 years, all of the new products that were launched in the market of coconut derivatives are from this factory/company. Today we already have a very well developed technological platform, and above all, a platform of great quality which is extremely consolidated. I am not trying to dazzle you, but we have no trouble in advancing in this area in the global market because we have been preparing for this throughout the years. Here in Brazil we have a company that is in a very good position in terms of quality, no one can argue about Sococo’s quality standards.

Would you say that the goal is to double your production?

Let’s go back a bit. The markets of food products deriving from coconuts, such as grated coconut, candied coconut, coconut milk, coconut flakes, are markets with a very slow growth rate. The growth rate is almost stagnant, about 5-6% per year; however we are able to maintain this growth. The market in which we foresee vast growth, is the beverage market, the coconut water market. Coconuts things are slow; if you plant a coconut palm tree today, you will only harvest the coconuts in 4-5 years. We have already done this step, we have a large coconut plantation that will start producing in 2 years and then we will keep moving on. It’s exactly in the area of coconut water that we are going to focus on.

It seems like the future of the company is going to be very positive, like you are going to be multiplying a lot in this area.

In four years, our coconut company intends to produce more coconut water than all of the national coconut market today. Today we produce approximately 30 to 32 million litres of coconut water and in four years our goal is to produce 70 to 72 million litres of coconut water, and that is more than the national market of coconut water at the moment.

What are the challenges that you will have to face in the near future?

Our greatest challenge today is not related to production, we don’t have to worry about raw materials like our competitors do. Our greatest challenge is going to be distribution. That is where we are going to focus most of our efforts.

I imagine that your presence is greater in the Northeast of Brazil, and that below Mato Grosso you aren’t yet well distributed. Would this be correct?

I think that today, about 35% of our production is going to the Centro-Sul (south-central region), this is the area of greater consumption, the North and Northeast are about 26%, and the rest is distributed throughout the South and Southeast regions of Brazil. We are present in all of the Brazilian states. We have representatives and distributors in all of the Brazilian states, so the brand has totally infiltrated the national market.

We know that in the United States Madonna is a partner in a coconut water company. Since it’s a natural and healthy product are you going to try and do the same with coconut water as what has been done with açaí? What is the philosophy or image you plan to depict?

We’re going to focus on the fact that coconut water is extremely healthy and that we are a supplier that can be trusted. Yes, there is the açaí phenomenon, açaí is a success, but it doesn’t have the production volume to guarantee this success. The international markets, especially the coconut markets are huge, if you don’t guarantee an increasing supply, your market ends up losing out to international companies. Our greatest concern is to get into the market steadily and increasingly; and to not go in with small quantities, be successful and have to back track because we haven’t reached a reasonable level of growth.

When you talk about entering the international market, what are the main countries you are focusing on?

At the moment, our greatest focus is on Brazil. We know that the local market is fantastic; it isn’t by chance that the whole world is coming to Brazil. We are growing, our people are earning higher wages, people are consuming more, our people know what coconut water is, coconut water is accepted in an extraordinarily good manner amongst Brazilians, it’s something that has been worked on for about 16 years. This market is gradually opening up abroad but there is still a lot of work to be done. We are going to concentrate on the international market, but the majority of our focus right now is on the Brazilian market.

In terms of technology and in terms of the actual coconuts, nowadays everything can be transformed, I believe there is a partnership with a Spanish company called Amafibra that has the technology and resources to reuse what is left-over from the coconuts. Would you say that’s right?

You’re just a little bit off there… Amafibra is a company in our group. The technology that you are talking about is from a company called Projar, it is the leader of vegetable substructures in the Iberian Peninsula. Nowadays, we always use a very Brazilian expression at Sococo, ‘Do boi só se perde o berro’, meaning we use everything but the oink. I don’t know if you’ve heard that expression before. We like to say that we use everything but the oink from the coconuts, but since coconuts don’t oink, it means we ultimately use everything from the coconuts, nothing goes to waste. Today we make use of almost 100% of our coconuts. At the moment there is still a little bit of fibre that can't be used, so we are building a new unit together with Projar and we are going to do a lot of geo-tests so we can make full use of the coconuts.

Are there any other work exchanges with other foreign companies or with foreign countries at the moment?

As I had mentioned, the world of coconuts is geared mainly towards coconut oil. The technology for coconut that is intended for food is mostly Brazilian, so almost all of that kind of technology was developed here. We have a lot of equipment that we’ve built ourselves and other equipment that we developed with international or national partners. Today there is a lot of equipment in our factories from Canada, Argentina, Germany, Sweden and Italy. I would say that our company is cosmopolitan, there’s a bit of every part of the world, and there is a lot of our own technology. Right now, we are developing technology with Finland and we are always researching and contacting companies since our development area is very robust.

To conclude this interview I would like you to give your opinion on the State of Alagoas in terms of business and I would like you to pass on a message for other businessmen that would like to invest in the State of Alagoas. How can businessmen develop here? What is the State like?

Sococo is a 46 year old company from Alagoas. It was founded here and developed here. Like the rest of Brazil, Alagoas went through several phases and several periods, and around here in particular, there was a certain delay in terms of development when we compare it to some units in the South-Central and South of the country and until recently with the rest of the Northeast. Nevertheless, not too long ago Alagoas took a very steady course. Like I mentioned earlier, we have investments here, in Pará and in São Paulo. We had an investment in Petrolina, Pernambuco and we also had an investment in Espirito Santo, São Matheus. We had two coconut factories in each of these States; we still have factories in Pará and in São Paulo. Today, the business environment in the State of Alagoas is as good as in the States I just mentioned or perhaps even better.

Today, as opposed to in the past, when we talk to the authorities from the State of Alagoas, when we interact with the people, we get a sense that their intentions are solid and also the commitments are honoured 100%. I can bear witness to our fellow businessmen that they can invest in Alagoas with safety. It’s a beautiful State, with beautiful terrain and great people, the northeastern market is growing rapidly and the geographic position is also very central in terms of the great construction areas in the Northeast. We have extremely interesting conditions for the serious investor that wants to bring his business or his company to the State of Alagoas.