In an interview, Rubén Sánchez, CEO of the Paramonga Group, explains the outlook for 2023, a year in which business and experience in the agro-industrial sector have allowed growth to be sustained. The executive, with five months in office, is cautious about the possibilities of growth in 2024, but warns that there are possibilities for growth in the sugar market.

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– Has the Paramonga Group already been formally established?

Yes. In fact, it is an initiative that has started since I joined approximately 5 months ago. What is sought is to provide corporate governance to this group of companies that were separate and that today seek synergies by integrating vertically.

– What are the companies that make up the holding company after the reorganization?

We participate in four industries: agroindustrial, fishing, pure industrial and retail. I would say that the most significant is Industrial Paramonga and we have a ‘spin off’ that is a consequence of our knowledge in agriculture that is leading us to diversify in the countryside through crops such as avocado in the North of Lima.

– The El Niño Phenomenon is something that will transversally affect almost all sectors. Given your diversification, what impact do you expect?

Well, with fishing we have been suffering the ravages of a migration of the mass of fish for approximately 15 years. The quotas are increasingly lower and the replenishment of the dough is not moving at the pace that the industry needs. Losses are constantly reported. In the case of agriculture, we are beginning to see a pre-El Niño that is beginning to vary temperatures. In our case, for agriculture, what he has done is cause two things to happen: the productivity of the field decreases in terms of tons of cane per hectare and the loss of sucrose. We have compensated for this by expanding our agricultural frontier, acquiring more hectares to be able to plant more so that the factory meets its production objectives. But we are already feeling that difference. There are 5 degrees of thermal difference that we have seen prior to another campaign.

– And that is reflected in lower sugar cane production.

Yes. With lower production in the field, what we have left is to expand our hectares to compensate for it.

– Is fishing the business hardest hit by this year’s situation?

Yes. There are many factors that impact. We are in the canning and semi-canning industry and we are also in the cultivation of fan shells. This, for example, is one of the hardest hit industries. It suffers a lot from any type of variation, not only in temperature, but also from landslides. This is causing us to drain money that is moving in the group and leading us to refocus our efforts on other items such as squid flour.

– Is growth expected to moderate next year?

I believe that as a group we are going to see significant growth in sugar as a ‘commodity’, it is gaining a lot of value. The wars in Ukraine and the conflicts in the Middle East are impacting some markets that are, first of all, limiting their exports and retaining the product for their own consumption. In addition, there are markets where the El Niño Phenomenon and climate changes are causing them to export less. With this, sugar begins to rise in price and in the case of Peruvian sugar, it begins to be exported at historical high levels. So for us it is going to be a good year and that once again compensates for any imbalances that may exist in other industries.

– What are the main sugar export destinations?

The United States is an important destination. This quota that was previously supplied by Mexico has increased and is quite affected by the loss of productivity.

– Do you think that, given the international geopolitical situation, sugar prices will continue to rise during 2024?

I think so, I think we know how to have it at least in 2024. But we have to be cautious because, like a good commodity, if this is regulated or if the temperature is modulated, what will happen is that it will return to previous levels. With that, it could return to an industry that is not prepared or at least maintains levels of efficiency.

– As a group, do you expect to grow in 2023?

Yes, we are growing again with Agroindustrial Paramonga at the helm. But in the rest of the industries with quite slow growth. In retail we are seeing a significant contraction, despite the fact that we participate in premium retail. We have Lima Wine, Aston Martin, we have marketing of high-end vehicles. What we see is a contraction with respect to our forecast. We are going to grow, but not at the levels we project.

– Double-digit growth?

Not in any way. We saw it in the first half of the year, we had double-digit growth. But in the second semester, they are contracting. There will be a balance, but with slower growth at the end of the year.

– And do you expect growth in 2024?

I am cautious regarding my predictions, I believe that we are going to look at the first semester with a magnifying glass. In retail, specifically, it is not going to be auspicious. Summer comes with an assumption that the El Niño phenomenon is going to impact us. But above all we see a loss of purchasing power in the consumer. More credit card consumption and less cash. An average ticket that has been contracting little.

-And does the retail public that you serve tend to use cash a lot?

No. They tend to use credit cards a lot. One begins to notice it in the mix of card sales versus cash. At the beginning of the year we had a mix of 60% with card and 40% with cash and today it is 80% with card and 20% with cash.

– Okay, is there any launch that can be brought forward? By 2024.

Not for now. We are, I would go in terms of our retail unit, focusing on giving it, I would say, a much more corporate nuance, as I told you in this spirit of group integration to prepare ourselves, yes, for growth in a more auspicious context, but above all when the Interest rates allow us to finance these growth projects with more profitability.



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