Issue link: https://tradeshowexecutive.epubxp.com/i/65565
INTERNATIONAL NEWS Building a Brazilian Business Reed Exhibitions Stakes its Claim in Latin America BY DANICA TORMOHLEN, contributing editor IN FIVE YEARS, Reed Exhibitions has gone from a small presence in an emerg- ing market to building a powerhouse in one of the world's fastest-growing economies. When some other companies were holding the line during the reces- sion, Reed was investing significant funds and resources in the developing Brazilian trade show industry. "In 2007, we acquired a majority stake in Alcantara Machado, the largest exhibi- tion organizer in Brazil, and purchased the remaining interest earlier this year," said Chet Burchett, president, Reed Exhi- bitions Americas, who oversees the com- pany's operations in the U.S., Canada, Mexico and Latin America. "When I took over responsibility for Latin Amer- ica in 2006, we made a decision to build a business with scale in Brazil. We knew it would require a significant investment, and that investment has paid off." Indeed, this year Reed Exhibitions Alcantara Machado (RXAM) will produce more than 40 annual and biennial events, serving the automotive, agribusiness, construction, beauty, energy, packag- ing, image, real estate, manufacturing, mechanical, plastic, consumer electron- ics, security, sanitation and environment, safety, transportation and logistics, textiles and tourism industries. In odd-numbered years, the trade shows attract a total of 700,000 attendees and, in even years, that number increases to 1.4 million. "In terms of scale, Reed Exhibitions Alcantara Machado will contribute nearly 40% to the revenue and profit of the Reed Americas division in 2013," said Burchett. "Five years ago, it was less than 5%. It will potentially rank among the world's top 25 event organizers in its own right." And that's no small feat. In 2011, Reed Exhibitions Global reported $261.6 mil- lion in financial earnings. Te company's events division revenues were up to $1.1 billion, a 2% increase of $21.9 million 18 May 2012 | Trade Show Executive over 2010. Reed Elsevier, Reed's Exhibi- tions parent company, said it cannot provide divisional breakouts of revenue. So how did RXAM become such a dominant force in Latin America in such a short span? To find out, Trade Show Execu- tive interviewed Burchett about the compa- ny's strategy to build a Brazilian business through a balanced approach that included acquiring local companies, launching new shows and developing partnerships. Reed Exhibitions Alcantara Machado in its own right will potentially rank among the world's top 25 event organizers. largest by nominal GDP, is expected to become fiſth largest by the end of 2012. Te service sector represents the largest component of GDP at 66.8%, followed by the industrial sector at 29.7%. Reed has had a presence in Brazil since 1997, when it launched an event for the aerospace and defense sector. A key turning point for the company was in 2006, when Reed partnered with Alcantara Machado (AM) to produce Feicon Batimat, the International Construc- tion Salon, which combined AM's exist- ing Feicon event with a launch of Reed's Batimat brand in San Paulo. Last year, the annual event attracted 125,732 attendees and 750 exhibitors covering 39,000 net square meters (about 417,000 nsf). [Note: In Latin America, booths, or stands, are typically much larger than in the U.S. because they includes offices and/or large gathering areas.] Following the successful joint venture, Reed acquired a majority stake in AM in 2007. "Overnight, we went from a small operation with five events and 23 employ- ees to the largest show producer in Brazil with 100+ employees," said Burchett. "Al- cantara Machado, which was founded in 1956, was an established trade show player in many of the traditional industries." José Rafael Guagliardi, former owner Chet Burchett, PRESIDENT, REED EXHIBITIONS AMERICAS One BRIC at a Time According to the World Bank, BRIC countries — which includes Brazil, Rus- sia, India and China — accounted for 53% of global GDP growth from 2007 to 2010, reaching $7.3 trillion. Among these developing markets, the Brazil- ian economy, which is the world's sixth of Alcantara Machado, continued to serve as chairman of RXAM during the joint venture's five-year tenure, which concluded this year. Juan Pablo de Vera, senior execu- tive for RX Brazil, managed the joint ven- ture and is now president of RXAM and Reed's consolidated Brazilian business. "We prefer to buy companies and keep principals involved in the business for a period of time," said Burchett. "Typically, we will partner initially. Our approach has been to grow with local support. We don't come in and bring in a group of ex-pats to run things." Today, RXAM employs 250 people and continues to grow.