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Ranking Latin America’s Most Global Companies

Bolivia may be South America’s poorest country, but it now boasts the region’s most global firm, according to AméricaEconomía’s annual “Multilatinas” list. Another surprise? Brazilian’s Petrobras struck oil last year, but fell in the ranking.

Article illustrative image Partner logo Concha del Toro, a Chilean wine producer, moved up in the ranking after buying vineyards in California.

SANTIAGO -- Chile's anti-trust authority this week approved a much-heralded merger between Chile’s Lan and Brazil’s Tam airlines – albeit with a lengthy list of conditions. The decision brings an end to what had been months of uncertainty that began when the same body – the Tribunal de Defensa de Libre Competencia – froze the planned fusion over concerns about how it might affect passengers in the Chilean domestic market, where Lan is a dominant player.

Between the two rulings, Lan stocks took something of a hit. Yet neither the stock dip nor the uncertainty surrounding its precarious deal with Tam stopped the successful Chilean airline from rising in AméricaEconomía’s annual Multilatinas List, which ranks Latin American firms in terms of their global reach.

This year, Lan sits in the No. 5 spot, just behind Argentina’s Tenaris; the Mexican cement company Cemex; Grupo JBS (Friboi), a Brazilian food supplier; and the cellular company Brightstar, which for the first time occupies the list’s top spot. Brightstar is owned by the Bolivian economist Marcel Claure.

The Multilatinas ranking, published annually since 2006, looks to measure, compare and register just how international the region’s firms are. To do so, we take into account a company’s reach, in terms of the number of countries and global regions in which it operates. A company that operates in 10 countries in the same region, for example in Latin America, scores lower on our ranking system than one that operates in 10 countries spread throughout Europe and Asia. 

The methodology also takes into account what percentage of a company’s accounts, investments and human resources are outside the country of origin. This explains, for example, why a company the size of Petrobras dropped in this year’s ranking: despite having operations on various continents, the company’s offshore oil discoveries have meant that much of its resources are now being refocused on the domestic market. Most of the 70 billion dollars the oil company raised from investors in 2010 will go toward extracting these new domestic oil reserves.

When, as in Petrobras’ case, a company focuses its growth domestically, it can drop in the Multilatinas ranking.  The opposite is true as well. The more a company invests abroad – particularly through mergers and acquisitions – the higher it is likely to rise on the list. That was the case of the Colombian airline Avianca, which jumped 10 spots on the Multilatinas list after absorbing its Central American rival Taca. Other examples are Mexico’s Grupo Casa Saba, which rose 26 places on the ranking thanks to its acquisition of Fasa, a Chilean pharmacy chain; and Chile’s Concha y Toro, which moved up 10 spots after buying Fetzer Vineyards of California for 238 million dollars. Fetzer had been linked to Brown-Forman, a alcoholic beverage conglomerate that also owns Jack Daniels.

Like in the highly dynamic industries in which these companies operate, not advancing in the Multilatinas ranking is the same as losing ground. Companies that failed to expand into new, especially foreign markets over the course of the year dropped on the list. The Guatemala fast food company Pollo Campero, which has opened fried chicken restaurants in China, Indonesia, Spain, the United States and elsewhere in Central America, did not expand in 2010. A more extreme case is Ripley, the Chilean department store chain. A pioneer in terms of crossing borders, Ripley entered the Peruvian market as far back as 1997. But unlike rivals Falabella and Cencosud – which after breaking into Peru moved on to Colombia – it’s done little to expand since.

High-tech starting to hum

AméricaEconomía first came up with the Multilatinas concept 25 years ago as a way to describe companies that were beginning to expand into other parts of the Americas. Nowadays, thanks to the way financing, production and distribution have evolved, the concept refers often to companies whose operations extend not only to other counties in the hemisphere, but to the rest of the world as well. Of the 66 companies on this year’s list, 53 operate outside of Latin America – particularly in Asia. More than half of the 2011 Multilatinas firms began operations in Asia in just the last couple of years.

Another relatively new trend is the rise of high-tech companies, which are beginning to appear on the Multilatinas list alongside cement companies, brewers and other more traditional industry firms. Brightstar, a logistical company that has moved into cell phone manufacturing, is a good example, as are the firms Sonda, a Chilean firm that provides technological services throughout the region, and Bematch and Totvs, both from Brazil.

Mexico’s Cinepolis is a bright spot as well. The world’s third leading chain of movie theaters, Cinepolis operates throughout Latin America, as well as in India, where it first gained a foothold in 2009. It began operating in Brazil just last year.

Changes are clearly taking place – not only in how Latin Americans do business, but what businesses they pursue, says Lourdes Casanova, author of a recent study on the region’s economy, funded by the OECD and carried out by Insead, a French university. The study found that there are three highly innovative sectors where Multilatinas have made inroads and can expect to continue excelling internationally: telecommunications; green technologies, such as biofuels; and the so-called creative industries, which include fashion, industrial design, cinematography, audiovisual products and cultural tourism.

More news in Spanish from AMÉRICA ECONOMÍA

Photo -  Eneas


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America Economi­a is Latin America's leading business magazine, founded in 1986 by Elias Selman and Nils Strandberg. Headquartered in Santiago, Chile, it features a region-wide monthly edition and regularly updated articles online, as well as country-specific editions in Chile, Brazil, Ecuador and Mexico.

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