About BRF

BRF S.A. (BRF) produces fresh and frozen protein foods. The company had a portfolio of approximately 5,500 stock keeping units (SKUs), as of December 31, 2022. The company is committed to operating its business and delivering products to its global customer base in line with its core values: quality, safety and integrity. The company’s processed products include marinated and frozen chicken, Chester rooster and turkey meats, specialty meats, frozen processed meats, frozen prepared entrees, portioned products and sliced products. The company also sells margarine, butter, cream cheese, sweet specialties, sandwiches, plant-based products, animal feed and pet food. The company is the holder of brands, such as Sadia, Perdigão, Qualy, Perdix, Confidence and Hilal. The company’s portfolio strategy focuses on creating new, convenient, practical and healthy products for its consumers based on their preferences. A breakdown of the company’s products is as follows, which are sold both in Brazil and to its international customers: Market Goods, including the following: in natura meat, which the company defines as frozen whole chicken and cut chicken, as well as frozen pork and turkey; and Halal products for Islamic markets in accordance with the Halal method of animal slaughtering. Processed Food Products, including the following: marinated, frozen, seasoned whole chicken and cut chicken, roosters (sold under the Chester brand); specialty meats, such as sausages, ham products, bologna, frankfurters, salami, bacon and other smoked products; snacks (salamitos); frozen processed meats, such as hamburgers, steaks, breaded meat products, kibbeh and meatballs; frozen prepared meals, such as lasagna, macaroni and cheese, pies, ready-to-eat meals and pizzas, as well as other frozen foods; plant-based products, such as nuggets, pies, vegetables and burgers; frozen desserts and cheese bread; and spreads, like margarine, butter, cream cheese and pate. Other, consisting of soy meal, refined soy flour, animal feed and pet food. The company is a fully integrated food platform present in all stages of the complex value chain in which it operates, involving a number of partners selected based on sustainable criteria as well as its integrated farmers and outgrowers, production facilities, distribution centers, and omnichannel sales. Strategy The company aims to continuously improve its collaborations with brick-and-mortar and digital initiatives, while advancing with its marketplace, bringing custom-made solutions to improve its level of service. By understanding its customers even more and exceeding their expectations, the company intends to provide the best experience with its products, services and brands. As an example of such initiatives for greater proximity with customers, the company opened a concept store (the Mercato Sadia) with digital solutions and a completely integrated online brand. Ultimately, the company aims for the consumer to be the central point of its sales strategy not only by being provided with added-value products, but also by having a stronger direct-to-consumer relationship through its own channels, whether digital or physical. In addition to Mercato Sadia and Mercato em Casa, the company expects its partnerships with online marketplaces to play a key role in leveraging their current number of customers into having exposure to the BRF brands. Ongoing partnerships include iFood, Rappi, Magalu, Bees and others. Products The company is a food company that focuses on the production and sale of branded processed food, poultry and pork products. Poultry Most of the company’s poultry sales are to uts export markets. Pork and Beef The company raises hogs. The company produces frozen pork and beef cuts, such as loins and ribs, and whole carcasses. The company is developing its international customer base for pork and beef cuts. Processed Food Products The company produces processed foods, such as marinated and frozen chicken, Chester rooster and turkey meat, specialty meats, frozen processed foods, frozen prepared entrees, portioned products and sliced products. Part of the company’s strategy is to develop additional processed food products in these and other categories because these products tend to be less price-sensitive than its frozen poultry and pork products. Specialty Meats The company processes pork to produce specialty meats, such as sausages, ham products, bologna, frankfurters, salami, bacon and cold meats. The company also processes chicken and other poultry to produce specialty meats, such as chicken sausages, chicken hot dogs and chicken bologna. Frozen Processed Meats The company produces a range of frozen processed poultry, pork and beef products, including hamburgers, steaks, breaded meat products, kibbeh and meatballs. Marinated Poultry The company produces marinated and seasoned chickens, roosters (under the Chester brand) and turkeys. The company originally developed the Chester breed of rooster to maximize the yield of breast and leg cuts. In 2004, the company sold its rights to the Chester breed of rooster to Cobb Vantress, a U.S. poultry research and development company engaged in the production, improvement and sale of broiler breeding stock, and it entered into a technology agreement under which Cobb Vantress manages the Chester breed of rooster. The company continues to oversee the production of Chester roosters in Brazil from hatching to distribution, and it owns the trademarks for the Chester line of products. In 2020, Perdigão launched a new edition of Chester to celebrate the brand’s 40th anniversary. Halal Products The company offers poultry products for Islamic markets in accordance with the Halal method of animal slaughtering. Margarine The company sells margarine under the Qualy, Deline and Claybom brands and also distribute margarine products of the third-party brand Becel. The company maintains its leading market position with the Qualy brand by bringing innovation to the Brazilian market. For example, in 2014, the company introduced the first aerated margarine in Brazil and, in 2016, it improved the Qualy portfolio by adding a proprietary mix of vitamins and minerals to its products, which is called the Q-Mix. Additionally, in 2017, the company introduced the first margarine with whole grains, Qualy Multigrãos. This technology to add grains inside the margarine is protected under a patent in partnership with its equipment supplier. In 2018, the company launched Qualy Light Zero Lactose, the first zero lactose margarine in the Brazilian market. Butter, Cream cheese and Cheese bread Qualy, a notable margarine brand in Brazil, expanded its portfolio in 2020 by offering new products, such as butter and curd and introducing a line of cheese breads. These new products have been available since December 2020 and are consistent with Qualy’s pursuit to become the leading brand in breakfast and afternoon meals, which are relevant markets for the brand. Qualy’s cheese bread line also offers the options of buttered cheese bread and buttered cheese bread with pieces of Sadia ham. Frozen Prepared Entrees The company produces a range of frozen prepared entrees, some of which contain poultry, beef and pork meat that it produces, including those listed below. Pastas and Pizzas: The company produces several varieties of lasagna, pizza and other ready-to-eat meals. The company produces the meat used in these products and buy other raw materials in the domestic market. In 2019, the company expanded its portfolio in this category by launching new products, such as the Mac’n Cheese under the Sadia brand. This new product is an innovative product in the Brazilian market, with greater added value to the ready-to-eat meals sub-category. Inspired by one of the favorite dishes in the United States, the Sadia Mac’n Cheese was launched in October 2019 with three variants: Mac’n Cheese Cheddar, Mac’n Cheese Cheddar with Bacon and Mac’n Cheese Cheddar with Sausage. French Fries: The company sells frozen French fries, which are imported from Belgium where they are produced and packaged for it by third parties. Pies and Pastries: The company produces a variety of pies and pastries, such as chicken and heart-of-palm pies. The company produces the meat, sauces and toppings used in its pies and pastries, and it purchases other raw materials, such as heart-of-palm, lime and other fillings from third parties. Plant-based products In 2020, the company launched Sadia Veg&Tal, its brand for vegan and vegetarian frozen food, including hamburgers, nuggets and pies categories. The company also started to expand the Veg&Tal frozen food portfolio in 2020 and launched frozen vegetables, including broccoli, cauliflower, peas and French beans. The company’s sales represented 0.01% of the vegan nuggets sales in Brazil in 2022. It is officially the first line of plant-based carbon neutral chickens on the Brazilian market, and the totality of the production chain emission is neutralized through the purchase of carbon credits from forest conservation projects. Ready Meals In 2021, the company launched Sadia Livre&Lev a sub-brand of Sadia, which focuses on well-being and is characterized as a line free of excesses and light in ingredients, specially developed to deliver more naturalness through fewer, well-known ingredients, free of additives. Livre&lev is composed of cold cuts (ham and turkey breast) and ready meals (portioned meals, which allow for different combinations and wraps). Frozen Desserts The Miss Daisy brand has a leading market position and has been highly resilient to market changes. The company offers a wide variety of products under the Miss Daisy brand, including Mousse pie, lemon pie, chocolate and vanilla pie, and mousse pie with chocolate shavings; and Dutch pie. Inspired by seasonal flavors, the Miss Daisy brand also launched three new flavors as a limited edition: condensed milk fudge mousse pie with caramelized nuts and two new hot pie desserts, hazelnut cream and guava paste with cream cheese. Pet Products In 2021, the company concluded the acquisition of Mogiana and Hercosul, adding strong and traditional brands, robust industrial facilities and expertise in the specialized pet products. With these acquisitions, the company became top three in market share in terms of revenue in Brazil’s pet food segment, market leaders in Uruguay and the number two player in Paraguay, according to estimates based on Brazilian Association of Pet Products Industry (Associação Brasileira da Indústria de Produtos para Animais de Estimação), or ABINPET, data. The company’s portfolio includes dry and wet food, snacks in a wide range of standard to super premium brands, such as Biofresh, Guabi Natural, GranPlus, Three Dogs, Three cats, Faro e Primocão and its native brand Balance. The company announced the engagement of Banco Santander (Brasil) S.A. to be its financial advisor for the sale of its pet food operation. Other The company produces animal feed mainly to feed poultry and hogs raised by it, although it also sells a small portion to its integrated outgrowers and to unaffiliated customers. In 2022, the company produced 9,088 thousand tons of feed and PREMIX in Brazil. The company also produces a limited range of soy-based products, including soy meal and refined soy flour. Sales The company sells its products both in the domestic and export markets around the world. Net sales to the Brazilian market, including most of the company’s processed foods, accounted for 50.2% of its net sales in 2022. Net sales to international markets, including most of the company’s frozen whole and cut chickens and other poultry and frozen pork cuts and beef cuts, accounted for 44.8% of its net sales in 2022. Brazil In the domestic market, the company sells its products directly to supermarkets, wholesalers, retail stores, food services and other institutional buyers. The company’s domestic distribution network consists of 23 distribution centers in several Brazilian states. Refrigerated trucks transport the company’s products from its processing plants to the distribution centers and from the distribution centers to its customers. The company has 30 transit points, previously referred as cross-docking points, in several areas of the country that enable it to unload products from large refrigerated trucks onto smaller trucks or vans for transportation to its customers. International The company operates in three business segments, which primarily reflect its geographical structure: Brazil, International (including Halal markets in the Middle East, North Africa, Malaysia and Eastern Europe, as well as Africa, Asia, Europe, Eurasia and the Americas) and Other Segments. Seasonality Brazil The company’s net sales of meat and processed products in the Brazilian market are not subject to large seasonal fluctuations. However, the company’s fourth quarter is generally slightly stronger than other quarters due to increased demand for its products during the holiday season, particularly turkeys, Chester roosters, ham and pork loins. The company also markets certain products specifically for the holiday season, such as gift packages of its products that some employers distribute to their employees. The company’s results are also affected by the dry and rainy seasons for corn, soybeans and soy meal, which are its primary raw materials in feed production. International The company’s sales to international markets as a whole are not materially affected by seasonality, partly because seasonal buying patterns vary according to its international markets. However, net sales in specific markets sometimes vary with the season. In the Halal market, for example, the company experiences lower net sales during Ramadan and the summer months. In 2022, total International sales by quarter were as follows: 22.8% for the first quarter, 23.8% for the second quarter, 27.2% for the third quarter and 26.2% for the fourth quarter. Competition Brazil Nationally, the company’s main competitor within the Brazilian market for the processed meat segment is JBS (which owns the brands Seara and Rezende) followed by Aurora. The remainder of the market is represented by several small producers, such as Pif Paf Alimentos S.A. and Frimesa, which have relevant performance in the Southeastern and Southern regions of the country, respectively. The company’s main competitor is also JBS, which acquired Bunge’s margarine operation (consequently becoming the owner of the brands Delicia and Primor, as well as their previous brands, such as Doriana) followed by Vigor Alimentos S.A. International In addition, JBS is one of the company’s direct competitors in the international market that has many of the same competitive advantages that it has over producers in other countries. Distribution of Products Brazilian Market As of December 31, 2022, the company operated 23 distribution centers and 30 transit points. International Markets The company exports its products mainly through the ports of Itajaí, Navegantes and Itapoá, in the Brazilian state of Santa Catarina. The company also exports its products through Rio Grande, in the Brazilian state of Rio Grande do Sul and Paranaguá, in the Brazilian state of Paraná. The company stores its products in refrigerated storages that are owned and operated mainly by third parties located at ports in the Brazilian states of Paraná, Santa Catarina and Rio Grande do Sul. In 2022, the company packed more than 57.2% of its export containers at plants, referred to as loading fresh frozen products. The company contracts with exclusive third-party carriers to transport its products from its production facilities to the ports, and it ships its products to export markets through independent shipping companies. The company’s sales and distribution efforts abroad are coordinated through offices in Austria, Russia, Singapore, South Korea, China, Japan, Vietnam, Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait, South Africa, Uruguay, Chile, and Turkey. The company coordinates its marketing efforts and provide sales support to customers in its main international markets through these offices. The company’s distribution arrangements in its international markets vary according to the market. Europe: The European Union suspension on certain products from Brazilian producers caused challenges for the company’s operations in Europe and required it to reorganize its sales and distribution network by strengthening its partnerships with other food processors, food service operators and local distributors. On February 7, 2019, the company agreed to sell to Tyson International Holding Co. most of its subsidiaries in Europe, including its Wrexham (UK) and Oosterwolde (Netherlands) processing plants, and its food processing and poultry slaughtering operation in Thailand. This transaction closed on June 3, 2019. The company sells only chicken breast and raw material for the pet food industry in Europe. Asia: The company serves 13 countries, from mainland China to the islands in the South Pacific region. In 2022, Japan was the company’s largest market in Asia, where its local level of service, coupled with quality standards and product range have made it a preferred supplier of chicken products in the market. In 2022, the company closed its local distribution operation in Shanghai. China was the company’s second largest market in 2022. In South Korea, the company was the first Brazilian producer to export pork cut providing new business opportunities. In Singapore, the company consolidated the Sadia brand with a diverse portfolio and brand campaigns, maintaining its presence in modern retails in key products categories. Furthermore, the company started its own local distribution model to strengthen even more its brand presence in Singapore. Additionally, in Southeast Asia, the company expanded to new countries and clients, serving these markets with a diverse portfolio of chicken, pork and processed meat. In 2020, the company concluded the sale of its stake in the joint venture FFM Further Processing Sdn. Bhd., in Malaysia, while maintaining the export leadership to this country. Middle East: In the Middle East and Turkey, the company sells to wholesalers, retailers, small stores (traditional trade), food service providers and processors. In these markets, the company primarily sells frozen chicken in three categories: whole, cuts and processed products. The company has as well launched new products adjacent of the chicken category, such as Frozen French Fries and Frozen Vegetables. The company is one of the preferred suppliers of these products in this region due to its quality standards and its long-standing customer relationships. The company’s biggest brand, Sadia is recognized as the leading food brand in the Middle East and has the highest preference level within the poultry category, according to a study made by Ipsos Research, a third-party consulting firm in 2022. In 2017, the company created separate Halal business operations, which was focused 100% in the Halal market. The company also announced the completion of the acquisition of Banvit in Turkey, through TBQ Foods GmbH, a joint venture formed with the Qatar Investment Authority in May 2017. Banvit is the number one brand in Turkey in the chicken category, leading with a preference score of 49% according to a study made by Ipsos in 2022. In December 2021, the company and QIA have agreed on the termination of the put option available to QIA under the original shareholders’ agreement and agreed to provide QIA with further alternatives to liquidate its investment in Banvit. In 2021, the company concluded the acquisition of a food processing plant in Dammam, Saudi Arabia. Africa: The company’s strategy in Africa has focused on unlocking a number of in-market opportunities that fall under the attractive and affordable processed foods category, but also value-added opportunities in key markets. In 2021 and 2022, the company focused on strengthening its partnerships in the region, further improving its leadership position in exports of processed foods to the continent. The company’s approach to exports in Africa targets sales to distributors with the widest possible distribution. The Sadia and Perdix brands are the primary brands that the company has focused on distributing in the region. Angola remains the company’s main market for chicken cuts and processed food, such as franks and mortadella. The company also expanded the supply of processed food to South Africa and Mauritius through its facilities in Turkey. Going forward, it will continue to carefully consider future growth markets. Furthermore, the company’s next phase of development will emphasize more control over the interactions between the brands and the consumers by gaining additional insight into consumer preferences to strengthen its value proposition and distribution opportunities, for example by expanding its portfolio of breaded items in South Africa’s main retailers, which it started in 2020. Americas and Other Countries: The company sells its products in the Americas through direct sales to key distributors. Additionally, in 2022, the company continued selling chicken cuts, including breasts and wings, to processing companies in Canada, and processed items to the Caribbean. Additionally, Sadia and Qualy are established brands that enjoy significant market shares in Chile and Uruguay, where it maintain local distribution operations, and in Paraguay, where the company operates through consolidated local distributors. An example of its commercial strength in the Americas is its leadership in the margarine segment in Chile with its brand Qualy and in the breaded and ready meals segments in Chile and Uruguay with Sadia. Intellectual Property The company’s principal intellectual property consists of its domestic and international brands. The company sells its products mainly under the Sadia, Qualy and Perdigão brands in the Brazilian market and mainly under the BRF Ingredients, Perdix, Perdigão, Sadia, Confidence, Qualy, Borella, Hilal, Balance, Onefoods, and Deline brands in its international markets. The company also owns several brands for specific products or product lines. In the Brazilian market, these brands include, but are not limited to, Sadia Bio, Sadia Salamitos, Sadia Veg&Tal, Sadia Livre&Lev, Sadia Hot Pocket, Perdigão Ouro, Chester Perdigão, Perdigão NaBrasa, Kidelli and Claybom. The Sadia trademark is registered in various forms in more than 110 countries. In the Middle East, Sadia is registered in various forms in countries such as Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Bahrain, Yemen, Iran, Lebanon, Qatar, Kuwait, and Oman, as well as in countries in Europe, the Caucasus, Asia, Africa and Latin America. The Sadia mascot is protected both as a registered trademark and copyright pursuant to a registration with the Brazilian National Library, and such protection extends to countries other than Brazil. In addition, the company has patents registered in Brazil and more than 10 other countries. The company has applied to have the Sadia, Perdigão and Qualy trademarks recognized as well known trademarks by the Brazilian National Institute for Industrial Property (Instituto Nacional de Propriedade Industrial – INPI), which granted it that recognition for Sadia and Perdigão in June 2011, renewed the recognition in September 2018 and for Qualy in August 2019. The company has also applied for its corporate trademark BRF (and accompanying design) to be registered in over 100 countries in North and South America, Europe, Asia, Africa and the Middle East. Lastly, the company owns several internet domain names, registered with the competent authorities, such as perdigao.com.br, claybom.com.br, qualy.com.br, sadia.com.br, brf.com, brf-global.com, banvit.com, banvitas.com, deline.com.br and kidelli.com.br. Marketing The company intends to consolidate its brands, while continuing to tailor its appeal to specific export markets and domestic market segments. The company also has an active marketing program using several channels, including television, video, digital, print and brand experiences. In the Brazilian market, the company sells its products primarily under the Sadia, Perdigão and Qualy master brands. Apart from these major brands, the company also sells its products under various Sadia lines, including: Sadia Veg&Tal, Sadia Bio, Sadia Orgânico and Sadia Speciale. Additionally, the company sells products under various Perdigão lines, including Chester, Ouro, Na Brasa and Meu Menu. Sadia is the Brazilian most valuable food brand according to Kantar - Brand Z 2022 and holds a leading position in the market. Perdigão leads core volumetric occasions in the Brazilian food market, including in the processed food segment. Chester is a Perdigão line well-known for its Christmas products. The company sells spreads under the Qualy, Deline and Claybom brands. The company maintains its leading market position with Qualy by pioneering the margarine market for the last 30 years with consumer centric innovations and progressive positioning that generates consumer connection. In the past decade, the company has introduced the first aerated margarine in Brazil, improved the Qualy Cremosa by adding a proprietary mix of vitamins and minerals to its products (Q-Mix), the company launched the first zero lactose margarine in the Brazilian market, Qualy Vita, a margarine enriched with Omega 6 and vitamins A, D and E, among others. In 2019, the company introduced a new positioning concept for its Sadia brand based on consumer perception of quality, superiority and transparency. Sadia is the preferred protein brand in the Brazilian food market according to Kantar Insights – Brand Equity Tracking 2022. Sadia and Perdigão, together, hold 43.2% of the food market preference in Brazil. Qualy, Deline and Claybom together have more than 60% of the margarine market preference in Brazil, also according to Kantar Insights – Brand Equity Tracking 2022. The company’s brands are also amongst the consumers most chosen FMCG brands, Perdigão holds the 4th most preferred position (1st in protein brands), Sadia 7th and Qualy 15th according to Kantar Brand Footprint 2022. In 2022, Sadia launched new products to enhance occasions for culinary indulgence, Empanadíssimo (Breaded Chicken Breast), expanded the line of pies with two new flavors, entered the special sausage market with three German inspired products and entered in a new protein market launching two types of fish cuts and two types of shrimp. To help consumers in their daily routine, Sadia continued to improve its recipe platform in television and digital. The brand is also continued as sponsor of the National Basketball Association, or NBA. Research and Development The company incurred in expenses with internal research and development of new products of R$33,389 for the year ended December 31, 2022. Regulation The Ministry of Agriculture, Livestock and Food Supply (MAPA), which is the principal governmental authority overseeing the company’s business, is responsible for the regulation and inspection of activities related to animal health, technical components (including labeling) and quality criteria related to the production of animal food products in all industrial units in Brazil. MAPA also oversees the company’s activities through the Department of Agriculture Defense (Secretaria de Defesa Agropecuária) and the Department of Inspection of Animal Products (Departamento de Inspeção de Produtos Animais). The inspection activity is performed by placing teams from Serviço de Inspeção Federal/ Ministerio da Agricultura, Pecuária e Abastecimento (SIF/MAPA) in the company’s facilities. The company is also subject to oversight from a number of other international and Brazilian governmental authorities at the federal, state and municipal levels, which include multiple environmental agencies and the National Agency for Sanitary Surveillance (Agência Nacional de Vigilância Sanitária, or ANVISA), which is responsible for supervising, among other matters, the food safety of products sold across Brazil. The company is subject to the requirements of Brazilian Corporate Law and the rules and regulations of the Comissão de Valores Mobiliários (CVM) and B3 S.A. – Brasil, Bolsa, Balcão (the B3). History The company was founded in 1934. It was incorporated under Brazilian law in 1997. The company was formerly known as BRF – Brasil Foods S.A. and changed its name to BRF S.A. in 2013.