Investments will reshape de industry

To meet global demand for sugar and ethanol, Brazil will have to invest US$ 15 billion in the sector over the next 5 years.

Due to its leading competitive position, Brazil should capture a sizeable market share of the increase in global demand:

• Based on conservative assumptions, Brazil should capture approximately 40% share on the additional global demand for ethanol and 60% share on the additional global demand for sugar

• To supply the additional sugar and ethanol demand, Brazil will have to increase its sugarcane crushing capacity by 11.5% per year in the period 2005-2010

• Brazil will have to increase sugar cane planted area by 3.7 MM ha, and will need to built approximately 80 new plants in a 5-year period

New investments will consolidate and professionalize the industry

• The industry is highly fragmented, with the top 5 producers having a 20% market share.

• More than 80% of the industry is composed of family-owned companies and cooperatives, ownership models that present serious management challenges.

• Most companies lack the size and the structure to access the capital markets. With limited access to capital in a capital-intensive industry, companies will have difficulties to maintain market share in a growing market.