M Dias Branco SA Industria e Comercio de Alimentos
BOVESPA:MDIA3
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M Dias Branco SA Industria e Comercio de Alimentos
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Good morning, ladies and gentlemen, and welcome, everyone, to the M. Dias Branco First Quarter 2020 Results Conference Call. Today with us, we have Mr. Gustavo Lopes Theodozio, Vice President of Investments and Controllership; and Fábio Cefaly, Business and IRO. We would like to inform you that this event is being recorded. [Operator Instructions] Today's live webcast may be accessed through the Internet at www.mdiasbranco.com.br/ir.
Before proceeding, let me mention that forward-looking statements
are based on the beliefs and assumptions of M. Dias Branco management and on information currently available to the company. They involve risks, uncertainties and assumptions as they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could affect the future results of M. Dias Branco and lead to results that differ materially from such forward-looking statements.
We would now like to turn the floor over to Mr. Gustavo Theodozio who will begin the presentation. You may proceed, sir.
A good day to all of you, and welcome to the M. Dias Branco conference call to release results for the first quarter of 2020. I would like to thank all of you for your participation and hope that you are all well.
Faced with the COVID-19 pandemic, I would like to begin this conversation speaking about the efforts and commitment with our associates. They are working arduously at our plants, at our mills, at our distribution centers and also in their homes throughout all the regions of Brazil to ensure the supply of the food that we produce to maintain our quality standards.
In the month of March, when we had the first case of COVID-19 in Brazil, we created a Central Crisis Committee made up of members of top management in our Executive Board. Every day, they meet virtually, and this includes Saturday, Sunday and holidays, so that they can expeditiously and technically deal with the issues of the pandemic. We have organized discussions in 4 different working groups, led by executive directors and with the reinforcement of the Crisis Commitment (sic) [ Committee ]. We have the People Committees of brands and Client Committee, the Operations Committee and the Production Committee. We have adopted safety measures indicated by World Health Organization and the Health Ministry of Brazil, with which we have permanent [ contact ] among the set of measures adopted. It is important to include the distribution of masks and hand sanitizers for our employees. We reinforce sanitation, and we have a medical team at our units. We have 24/7 medical assistance for all employees and their family members. And we follow all the orientations and measures to ensure the health of all.
Besides the issues relating to COVID-19, these multifunctional committees have suggested a series of initiatives with results that of course will go beyond the present day crisis. We are convinced that as a company, we will come out of this crisis even stronger than when we went in. Regarding the first quarter 2020, the results reflect our continued focus on execution with discipline and our strategic plan.
As a result of this work, I would like to underscore some highlights: the EBITDA and the net income that has more than doubled; we generated BRL 67 million (sic) [ BRL 77 million ] in cash; we reduced our leverage. Our volumes had a 2-digit growth with the highlight for the cookies and pasta categories. We have maintained the leadership with cookies and crackers in the Brazilian market. We have grown our market share in cookies vis-à-vis the previous year. Categories where we have the greatest margin, we have increased the wheat flour vertical integration that stands at 96.7%, thus contributing to an enhancement in our production costs. And we had positive evolution in our sustainability indicators, for example, a reduction of 15% in water consumption per ton per day.
Other highlights have been our exports that totaled BRL 25 million, double the sales of the first quarter in 2019, thanks to the good performance of the sales to North America, South America, Africa and Asia.
To conclude this part, I would like to reiterate that we continue to work arduously, adopting all of the necessary care to guarantee the health and safety of our employees and the supply of healthy, tasty food at competitive prices for our consumers.
Thank you very much, and I would now like to give the floor to Fábio, who will speak about details. And soon, we'll go on to the Q&A session.
Thank you, Gustavo, and a good day to all of you. Please go to the presentation that has been available on our site. We will begin on Slide #3. When we compare from the first quarter 2019, our net income was 140% higher, our net revenue 24% higher. The total sales volume was 22.4% higher than in the first quarter, with a highlight for 25% growth in cookies and crackers and 27% in pasta. We have a sustained leadership in this category. EBITDA was 103.8% higher. The production capacity utilization rate was also higher than the first quarter '19. We have increased the level of vertical integration of wheat flour that reached 96.7%. We invested BRL 56.3 million in our infrastructure. Exports grew 103%. And as Gustavo mentioned, we had a reduction of 15% in water consumption vis-à-vis the first quarter '19.
Let us now go on to Slide #5. We can observe that net revenue of BRL 1.6 billion in the first quarter '20 is 24.3% higher than last year, thanks to the growth of 22.4% in volume and 1.5% in our average price. A highlight for the 2-digit growth of volumes in all categories is that the cookies and pasta that had the greatest margins.
We will now go on to Slide #6 to speak about net revenue per region. We observed that the volumes had a 2-digit growth in our 2 commercial areas: in the Attack Area (sic) [ Defense Area ] that includes the North and Northeast; and then the Attack Area with the South, Southeast and Central West (sic) [ Midwest ] areas.
In the Attack Area, the growth was 34.5%. And we have a share in our total volumes very much in line with our strategy.
Let us now go on to Slide #7 to speak about exports. As Gustavo mentioned, exports were a special highlight this quarter, thanks to the work carried out since 2016 when we created an exclusive Board for the foreign market. This quarter, we doubled the volumes with exports with a strong growth of volume. In the photo, you can see the ships loaded with M. Dias Branco products head towards South and Central America. We also had very good results in the U.S.A. and Asia.
Let us now go on to Slide #8 and speak about discounts. As we had observed in the fourth quarter '19, we continued to have a growth in volumes with adequate levels. And this is the result of the commercial measures put in place throughout last year, for example, the new pricing model, which is much more granular and efficient.
We will now go on to Slide #9 to speak about inventory levels at our clients. As we have seen in the last 2 quarters, we had a growth in volume without having an overstocking in our clients. We see a highlight for the month of March 2020. Despite the strong increase in demand led by end consumers, we ended the year with adequate levels of stock coverage.
We go on to Slide #10 to speak about client coverage. This is the only slide in the presentation that does not include Piraquê. The M. Dias Branco and Piraquê bases are being consolidated for this information. Now for M. Dias Branco, thanks to a broader go-to-market and a closer follow-up of the sales team and by including this metric in our [ database ], we maintained client coverage above 70%, better than the first quarter 2019.
We will now go on to Slide #11 to speak about market share. We remind you that the market share is measured by Nielsen. Although we have our share lower than during the same period last year, in the comparison with the fourth quarter '19, we record a market share recovery of 1 percentage point in the cookies category. This is where we have the greatest margin.
We'll now go on to Slide #13 to speak about EBITDA. The EBITDA for the first quarter '20 was at BRL 228.5 million, 103% higher than the first quarter '19. This growth is mainly the result of an increase in volume of the ascertained wheat purchases and the strict follow-up of expenses significantly from other quarters than the first quarter '20. We practically did not have nonrecurring effects in our results. We will now begin to explain to you what led to this increase, and that is besides that of volume.
We go on to Slide 14 to speak about verticalization. Here, we observe a significant increase in the level of wheat flour verticalization, thanks to the beginning of operations of the new mill of Bento Gonçalves, which also contributed to a margin improvement.
We go on to Slide 15 to speak about production. In the first quarter '20, we produced 742,000 tons, 18.5% higher than the volume produced in the first quarter '19. This enabled us to face demand, have greater dilution of discounts and improve our margin.
We go on to Slide 16 to speak about flour. The ascertained flour purchases at the end of 2019 and beginning of this year have contributed to reducing the cost of this input. As a percentage of net revenue, it was 28% in the first quarter of '20, vis-à-vis 31% in the first quarter '19.
We now go on to Slide 17 and speak about our EBITDA margin. Here, we observe that the margin went from 8.5% in the first quarter '19 to 14% in the first quarter '20. This margin improvement results from the cost of wheat, 1.9% (sic) [ 6.9% ] lower in the first quarter of '20 compared to the first quarter '19, as mentioned in the previous slide, and also thanks to the dilution of sales and expenses and an increase in the volume sold.
We now go on to Slide 18 to speak about net income. Q-on-Q net income of BRL 137 million in the first quarter '20, 140% higher than last year due to a growth in volume and 100% increase in EBITDA.
We go on to Slide 20 to speak about our investments. Investments in the first quarter '20 totaled BRL 56.3 million, with a highlight of the acquisition of equipment for the Bento Gonçalves milling unit; a new distribution center to support growth, especially in the Attack Area; and installation of wheat flour silos in the state of Ceará, in Maracanaú unit. As we saw in the production slide, we are using 71% of our installed capacity. That enables us to fulfill demand, although presently, we do have a capacity reserve.
We now go on to Slide #22 to speak about our cash. The availability given by our operational activity totaled BRL 77 million during the quarter. We carried out fundraising to reinforce our cash. Our net debt remained stable, around BRL 678 million. And leverage, which is net debt over EBITDA was up 0.7, better than the first quarter '19 and lower than the fourth quarter '19. It is important to underscore that for the third consecutive year, M. Dias has a stable AAA rating from Fitch.
We now go on to Slide 24 to speak about innovation and our launches, a highlight for Type 1 wheat flour in the 1 and 5 kilo packages of the Isabela brand present in the south of Brazil and for the Piraquê tartlets. This is one of the launches of Piraquê, which is very strong in Rio de Janeiro, and we're working on it so that it will become a nationwide brand for M. Dias Branco.
We now go on the Slide #25 to deal with some of our activities since the beginning of the health crisis. Once this crisis was onset, we devoted BRL 2.4 million to support the hematology centers throughout Brazil. We have observed a significant drop in their blood inventory. For each blood bag, we will donate 500 products of one of our brands. All of these initiatives are additional to the donations that we carry out for the community works around our industrial unit.
We now go on to Slide 26, still speaking about our donations. We participated in Tirulive and have contributed with the donation of food. As you can see on the screen, there were 5 tons of the Richester brand products donated.
Let us now go on to Slide #27. To make sure that our products get the -- to the end consumers, we're making partnerships with digital platforms like Rappi activating and distributing with brands like Piraquê, Adria, Vitarella, Fortaleza, Treloso, Richester, Finna and Isabela with sales growing month after month. This is a very promising channel to market the M. Dias Branco products.
To close, we would now like to go on to Slide 29 and speak about social and environmental activities, which are a priority. We observed lower water consumption per ton of minus 15%; lower waste recycling index, and this is something that we have been working on to have an evolution; a lower generation of solid waste that dropped 7.8%, a very positive action; and a lower frequency of work accidents, there was a drop of 0.4 (sic) [0.5] percentage points.
With this, we would like to close the -- our introduction and presentations, and we can go on to the question-and-answer session.
[Operator Instructions] The first question is from Thiago Duarte from BTG Pactual.
I would like to touch upon 3 questions. First of all, understand better volumes, especially in cookies and pasta. I know that you showed us a graph with an increase in the volumes. And -- how would you describe the evolution of the volumes throughout the quarter, especially with the change mentioned by Fábio, the change in the consumption patterns that began in March once we had the onset of COVID-19? This would be interesting.
The second point, if you could speak about the dynamic of average prices. I think that the new pricing platform is more granular, more assertive. But average prices in cookies and pasta seemed to have a slight drop in the first quarter. Therefore, which is your outlook in terms of this indicator going forward, considering the need to transfer prices and when you change channels?
And the last question is a structural question. And what has been made very clear during this quarter is a growth of the wholesale retail sector, what we call [Foreign Language] we -- especially in what you have described as the Attack Areas in Brazil and the Southeast of Brazil. I would like to know which is your understanding of how this will impact the structural margins of the company. When you look at the historic EBITDA margin of around 17%, how will these changes in channels and geography impact this figure when we think of medium and long-term margins?
I think this would be an interesting discussion.
Thiago, this is Fábio and I'm going to begin the answer. When it comes to volumes of cookies, crackers and pasta this quarter, when we compare it with the first quarter 2019 and the first quarter of 2018 and '17, this was a quarter where we had the best distributed volumes month-after-month. When we look at the growth of volume for the first quarter '20 and compare it with the first quarter '19 month-after-month, January, February -- February [indiscernible] (00:23:43), we have a 2-digit growth during all of the month. And yes, there was an increase in demand in the second fortnight of March. But in January, February and in the first fortnight of March, our volumes were already growing by 2 digits in the year-on-year comparison. And this, of course, as we said during the presentation and during Gustavo's speech, we talked about better pricing model, a expanded go-to-market strategy.
We have revisited the entire commercial structure in the Attack Area, the Central East, South and Southeast, [indiscernible] and set in place throughout 2019, began to show results in the fourth quarter '19 as well as in the first quarter 2020.
Regarding the question on price, there truly was a slight drop in the average price. And what we observed then, there was a greater concentration at the end of March in the consumer opting for lower-priced products.
As M. Dias Branco has a broad hallmark of products, we have cookies and pastas, we have 19 different brands. And we probably more than 90% of the prices available in the market, this enabled us to capture a steady volume in consumers if they do a trade-up or a trade-down. It's easier to buy products with a lower price. And at this point in time, we see consumers selecting lower-priced products.
If we go the third part of your question, the structural question, we have observed an increase in volume in the cash and sales channel at present. And beginning with the crisis, the consumers have reduced the number of visits at supermarkets and have begun to make larger purchases. And we could stimulate this channel.
Our growth in the Attack Area is due to anything that was [indiscernible] structured in the company during the last few years, and we have been able to capture volume.
Another highlight referred to distributor, something that we have already mentioned, was the great opportunity in the Investor Day of 2019, a new channel for M. Dias. We began to work with this channel in the month of January, and we see increase in the omnis in this channel, especially in regions where we don't have a strong presence of our sales force, differently from the Northeast.
This is a channel that will bring us volume and contribute positively to our margins. We will be ever more efficient in capturing volumes. Therefore, this entire commercial strategy will not dilute the margin. There will be an eventual investment in logistics of course, where we're enforcing our logistic structure with partners. While there is an overlapping initially, but this is something that will be diluted during the coming months and quarters.
Fábio, allow me to speak about a point referring to Thiago's question. As a concept, it is important to make clear that despite the movement that Fábio mentioned of a choice for cash-and-carry when we look towards the future, we have a pricing policy described by Fábio and that we had mentioned in the last call.
The assumption of course is search for profitability, and this concludes the work of the commercial area. And it involves several levers: new channels, a portfolio with higher added-value products and a faster price transfer to increase our margins. This is the path we are following in new regions where we can sell with a different mix.
And speaking conceptually, when we look at the structural margins, the company is heading towards a path that will allow us to increase the structural margin, while we observe that present is somewhat atypical because of the COVID-19 pandemic.
I'm going to continue here. We have a question that came from e-mail from [ Juan ] and [ Felipe ], they are analysts. And this is the question, "You have had very good results for exports. They grew more than your sales in Brazil. " And the question is, "Is this the result of an opportunity that arose because of the pandemic? Or is it a sign of new agreements including private labels in the United States?"
I'd just like to go back to what I said in the presentation. And this is Fábio speaking. The value of exports that more than doubled year-on-year, so this is the result of the work that began way back in 2016 when we created a specific Board for exports. We reinforced our team and where we have the involvement of several areas for M. Dias Branco, the innovation team, for example. We have the thermal research for [indiscernible] for Africa that does not have refrigerated transport, the logistics team [indiscernible] carried out import for wheat flour and the involvement of the marketing team.
In the month of March, we observed an increase in demand, but exports were already with an upfront to South America, to Central America. We had private label agreements that we have carried out in the United States. The Vitarella brand in the United States has had very good results. And the Piraquê brand as well is among the large wholesalers in New York, Massachusetts, California and other states.
This of course is the result of something that was built during the last few years. And this is the main message: M. Dias Branco has structured itself to be able to export, and results are beginning to appear.
This is Gustavo, and let me complement this. We're speaking of the long term here. We presented at the last Investor Day that the international expansion process for the internationalization of our company is part of our strategic plan. It is one of the pillars. We have a pillar to occupy new spaces with our present new business [indiscernible] and the creation of new avenues. Now when you think about this pillar of new avenues, there is [indiscernible] for internalization (sic) internationalization. It increases the customer base. We have the expansion of private label. We have campaigns. We have a commercial structuring.
This quarter, we hired a specific director to focus on the regions that are closer to the group, Uruguay, Paraguay and Argentina, and eventually to pave the way for our road towards the company's internalization (sic) internationalization. This can be done through organic growth, which is what has happened, and also, perhaps not at this moment, an inorganic growth.
So it's much more than [indiscernible] exports that happened during the quarter. It is something that is inherent part of our long-term strategic plan. We already disclosed it in the plan. We have a goal of doubling our export business in 3 years. And the company is structuring itself to be able to comply with this goal that was agreed in-house. Once again, this is work that began at the end of 2019. We began to harvest the results now in the first quarter '20, and the [indiscernible] continue improving.
The next question comes from Luciana Carvalho from Banco do Brasil.
I would like to go back to speak about volume. You presented an evolution, which is a result of your pricing strategy and the stock-up at client. What can we expect for the coming quarters? We see that with the quarantine, we have had atypical movement. If you could speak about your inventories among clients. In April, for example, you spoke about an inventory limit of 35 to 40 days. In terms of color, what do you see going forward? Is there any strategic trend that you could see? This is my first question.
If you allow me to begin answering this question, there are some details that are important. First of all, it's important to highlight that we don't give guidance which were made within the company. Now what can we say about this year? First of all, that the demand continues to be very strong, and the growth of the first quarter is not purely the effect of the pandemic. We got 10 or 12 days since the arrival of the first cases in Brazil. It is the result of our execution and of our strategy, commercial strategy. And this was mentioned during the last call. Now when we look forward, when we look toward the future, we have seen a forecast of [indiscernible] present here. We begin to see that everything points towards a recession, a drop of 3.5% up to 5%, which means that at some point in time, there will be a loss of revenue. And this will lead to retraction in consumption. What we believe is that as we will grow acceptable standard volumes, the pasta, the Cream Cracker, the Maria biscuit -- it could happen because of the problem with income, especially in the Brazilian market.
With the difference in the mix, the population will choose lower added-value products. So we don't think we will have specific volume losses. Now notwithstanding this and as we think of the Brazilian economy this year, the company has protected itself. There is a great deal of uncertainty at present in terms of what is happening not only in Brazil but worldwide. And that is why we have [indiscernible] by working with special funding, making more investments, ensuring new hirings and investment latency that will happen. I think this is what we are thinking at present.
This is [ follow ] what we have seen is the increase in demand was caused by the end consumer. This does not involve an open stocking with clients. The inventory of M. Dias Branco among clients remains at 35% to [ 40% ]. And this is what we continue to observe. The volumes are growing, all of this triggered by consumption of the end consumers. And we do have added inventory levels. Now this is a metric that we began to follow up on since last year, and it has been very useful. We work client-by-client to identify opportunity.
Now to refer back to another question about demand being stronger, we are able to fulfill the demand. And we have several industrial units for the -- who are operating at present using 71% of our capacity, which means that we have the capacity to face this increase in demand.
Thank you, Gustavo. Now my next question refers to cost. If you could remark on your vision about costs going forward. You did benefit from some purchases at more favorable prices. And we would like to gain an understanding of what has happened with the foreign exchange and the purchase of commodity, we perceived it in your cost line item. [indiscernible]
Should I respond to that, Gustavo?
Yes.
Luciana, I think it is important to see what happened in the first quarter, and then we'll go on to the other scenario. When we carried out the right purchases that we began in 2019, the beginning of 2020. And we compare the price of wheat in our results, it was 7% lower the first quarter vis-à-vis the first quarter '19. Part of the reason is yet to be delivered. So this a very gradual movement [indiscernible] our cost provided the decreases. There are other commodities that have a lower price at present, and we have to see them as a whole. We are assessing price readjustment to recompose our margin in January of this year. We have a productivity program that is called multifleet that goes through all areas. And now with our cost packages in the company, there's a great opportunity to capture new opportunities. Some have already been captured. We're working very stringently on our expenses, which means that we could have the impact of foreign exchange. It's at [indiscernible], but we're also assessing opportunities in price that do not include only readjustment in our price mix but includes the new pricing dynamics that began last year and has already given us good results. And in expenses, we have a very encompassing program with great details so that's when we capture opportunities. So we believe that as a whole, we will have very positive results in the coming period, the quarter.
One more question referring to your CapEx. There was a reduction of almost 20%. If you could give us some more color, which is a decrease that we can expect for the year as a whole? And which are the investments that you have postponed?
Now year-on-year and for the coming quarters then, [indiscernible] in 2019, we still have relevant investments that have been [indiscernible] new. In the first quarter, we purchased some equipment for the Bento Gonçalves mill, but that amount was much lower than that of last year.
As I mentioned previously, we do have a capacity with this to be able to face demand and in a scenario of crisis, the priority are investments in CapEx. It does make sense to consider that the total CapEx for this year will be lower than that of 2019.
The next question is from Lucas Ferreira from JPMorgan.
My first question in truth is a follow-up and also refers to cost. Fábio and Gustavo, do you already have an outlook or a budget for the noncommodity part of your revenue? And this of course includes expenses. How much lower will it be vis-à-vis 2019 or what you already have? You have already made a review of your ex-commodity prices. And I would like to gain a better understanding in terms of prices, Fábio, [indiscernible] that did not have the same opportunities, that's why that you must already be suffering from foreign exchange rate. So besides that price increase that you had in March that was announced before the foreign crunch, is there still any room to make adjustments in this category? We talked about this some time ago about the decision and the formula that you use in your calculation in Ceará to know which will be the impact on the company -- on net income, and if there is a retro offsetting that could [indiscernible]
Let me begin with the expenses, and then you can respond to the other 2 questions, Meanwhile, the prices and the issue of Ceará. Look, we begin with expenses, and thank you for your question. The answer is yes, we have reviewed our budget. We did this at the end of 2019. And despite the review of expenses, we are working quite extensively. We have 200 initiatives in the most diverse areas and with a focus on total execution. And with our total hands on, we're trying to capture all opportunities for this year.
We have also intensified our follow-up on the meetings, the virtual meetings on expenses in the company. We have redivided the packages. We're putting more [indiscernible] people come to the company to come up with [indiscernible] package-by-package in the company. And we should have a new revised budget at the end of this month. Now all of this because of the more difficult times, because of the change in the Brazilian economic scenario, we tend to feel that this is something that we cannot control. And we cannot control the price of commodity either. So we have to make sure that we can focus on cost and expenses. This is something that we can control, and this is what we are doing. Now [indiscernible] that we [indiscernible] managing in terms of thinking coming from this revision, we already have several initiatives coming up from this project. We still do not have a reduction in expenses. And we're making great efforts in how to neutralize the effects of this potential economic crisis because of the pandemic.
Okay. Very well, let me go on to the price issue. We had a price increase of about 6% that was announced in February before the crisis with a focus on recomposing our margins. And from then onward, we have not had any price adjustment, and we are facing a new price increase because of the foreign exchange scenarios. As we had good purchases at the end of 2019 and the beginning of this year, we can't carry out this assessment at the right time, but yes, we are assessing that. Now when it comes to Ceará, we already have the assessment of our attorneys, and there will be no impact. There will be no impact on this issue of Ceará.
The next question is from Luca from Goldman Sachs.
And for the first quarter, this is a general question. This is not the first time where the company has benefited from a trade-down with consumers. And you have had an increase in net income. The question is which are your references from the past or other benchmarks so that we can understand this evolution. Is there going to be an evolution? And which are the differences in portfolio that you have at present or other strategies that could help you navigate through this new period? And to conclude, it is happening with the competitive scenario? Is there present-day scenario changes in demand in channel and foreign exchange? [indiscernible] speak about the present but also make comparisons with the past.
[indiscernible] you can make a comment, Fábio? That is important because you have touched upon a very important topic, which is an economic recession and for consumer goods resulting in trade-down. What have you observed in M. Dias?
Obviously, M. Dias has a consolidated leadership in the North East and an expansion plan that is called an Attack Area focused on the South and Southeast. And we have some important movements there to be able to put in place our expansion plan in the Attack Area.
First of all, we have Piraquê that we purchased 2 years ago, it has a very rich portfolio. When we compare this with the portfolio of [indiscernible] in the Northeast, it has greater added value. It is also a brand that equals to greater value in the mind of the consumer, so we're focused on that idea of mix. And our growth is happening more strongly in South and Southeast, where the purchasing power of consumers is higher.
We perceived that the trade-down is being neutralized because of the regional expansion of Piraquê in the South and Southeast -- sorry, not Piraquê but M. Dias. And also because of an increase in capacity of the Bento Gonçalves mill that will increase our production capacity. So it -- this offsetting, the trade-down in the Northeast with the growth in the South and Southeast where there is greater purchasing power and where consumers buy higher added-value products.
So I think that we have referred to all of the questions. We also have quantitative data when we speak about Piraquê, when we look at the cookies category that represents more than 50% of our sales. Nowadays, we cover more than 90% of all of the prices available in the market. With lower products, intermediately priced products and the higher priced products at higher added value. Since the acquisition of Piraquê, we cover 70% of those prices. So Piraquê, has increased the breadth of our price offshore.
And M. Dias Branco has a good performance in terms of trade-off. We have a broader portfolio. And also when consumers are working with trade-down, opt in for cheaper products. And to add an important point among the different networks that we are assessing in terms of price, the portfolio review channel. We also have important work that the company has done to transform our packaging and to make possible a reduction in the consumer spend in this new economic scenario. This has been one of the levers that will enable us to maintain our products in the consumers' mindset. Thank you.
Thank you. I would now like to give the floor to Gustavo for the closing remarks. You may proceed.
I would like to thank all of you for your participation. The company is at your entire disposal [indiscernible] team of Fábio [indiscernible]. I am also at your disposal. Through this crisis, we are trying to have a closer communication with greater transparency. We have material facts to speak about how the company is working with the pandemic and how it is working with the community. And we're quite confident that we will overcome this crisis stronger than when it began. Thank you very much.
Thank you. The earnings conference call for M. Dias Branco ends here. You can disconnect your lines.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]