Competition / Competitors
The sugar industry in Brazil has experienced increased consolidation through
merger and acquisition activity during the last several years. Most of this
activity has involved companies and facilities located in the Center-South
region of Brazil, one of the most productive sugar producing regions in the
world. Despite this recent wave of consolidation, the industry remains highly
fragmented with more than 320 sugar mills and 100 company groups participating.
We are the largest ethanol and sugar producer in Brazil in terms of production
volume and sales, with 36.2 million tons of crushed sugarcane in fiscal year
2007, more than three times the amount of sugarcane crushed by Grupo Louis
Dreyfus, the second largest ethanol and sugar producer in Brazil. Our crushing
capacity is nearly four times that of Grupo Vale do Rosário.
Many ethanol and sugar producers in Brazil, including Grupo Zillo Lorenzetti,
Grupo São Martinho and Grupo Irmãos Biagi, market their ethanol and sugar
products through the Copersucar cooperative. Copersucar is a private cooperative
that was created in 1959 by 10 sugar mills in the State of São Paulo in order to
provide a shared commercial distribution for their ethanol and sugar production.
Currently, Copersucar is comprised of 28 producers in the states of São Paulo,
Minas Gerais and Paraná. During the 2006/2007 harvest, Copersucar's affiliated
mills crushed approximately 55 million tons of sugarcane.
The following table sets forth the number of mills, the amount of sugarcane
crushed by us and the quantities of sugarcane crushed and ethanol and sugar sold
by us, compared to our main Brazilian competitors during the 2006/2007 harvest.
Mills Sugarcane Crushed Ethanol Sales Sugar Sales
(in millions of tons) (in millions of liters) (in thousands of tons)
Cosan 17 36.6 1,282 3,258
Louis Dreyfus 7 10.8 305 620
Carlos Lyra 5 9.5 197 614
Vale do Rosário 3 9.4 421 619
São Martinho 2 9.2 393 677
Tércio Wanderley 4 8.7 267 500
Guarani 3 8.3 164 890
Zillo 3 8.3 402 596
Oscar Figueiredo 3 8.2 203 809
Santa Terezinha 5 8.1 206 835
Santa Elisa 3 7.6 346 482
Source: UNICA, except for Cosan figures (leased mills included).
We also face competition from international sugar producers. We are the third
largest sugar producer in the world, behind Südzucker AG of Germany (with
4.6 million tons of sugar sold in the 2006/2007 harvest) and Tereos of France
(with 4.1 million tons of sugar sold in the 2006/2007 harvest). These producers,
however, are the beneficiaries of considerable governmental subsidies in their
principal sales markets.
We also face competition from international ethanol producers that use other
ethanol sources, such as corn and sugarbeet for the generation of fuel ethanol.