ECUADOR Trends and Developments Contributed by: Félix Reyes, Lorena Barrazueta, Jorge Sicouret Zea and Karla Condo, Coronel & Pérez
new investment. This exemption applies to new productive investments focused on transitioning to non-conventional renewable energy generation, as well as the production, industrialisation, trans - portation, supply and commercialisation of natural gas and green hydrogen in Ecuador. As private companies must be legally established in Ecuador to participate in electricity generation and transmission, the sector is expected to see a surge in M&A activity, with both local and inter - national players seeking strategic acquisitions to enter or expand in the market. Food and beverages The food and beverage industry is one of the largest and most important industries in Ecua - dor, contributing 6% to the gross domestic product (GDP). In fact, companies in this sector account for half of the 20 largest companies in the country by revenue. This industry has experienced steady growth in recent years, with key products including fish, shrimp, bananas, meat, dairy products, cocoa and chocolate. Additionally, several M&A trans - actions have taken place in 2023 and 2024 with - in this sector, reflecting its dynamism. Key trends in the industry include the rapid expansion of private-label brands by retailers, the growing importance of retail channels such as discounters, minimarkets and hypermarkets, and the integration of technology, particularly through apps that have driven online sales. M&A transactions in this sector are generally subject to regulations on antitrust law, new ESG-related rules and phytosanitary controls. The national sanitary agency has intensified its regulatory actions to uphold food safety and quality standards. The industry is expected
to continue growing, with further M&A activity anticipated, driven by the benefits derived from the trade agreement with the EU as well as high expectations surrounding trade agreements with China and Canada. Outlook Continuous growth of M&A activity is expected in Ecuador, as it has demonstrated resilience even through unforeseen circumstances. The outcome of the presidential elections will have a profound impact on the country’s direction in 2025. The food and beverage sector, which has remained robust with consistent growth, is anticipated to maintain this momentum in 2025, buoyed by the numerous trade agreements Ecuador has recently secured. Resurgence of the mining sector is also anticipated, driven by the recently approved trade agreement with Canada. Moreover, foreign investment is set to rise, driven by recent legislative reforms and tax incentives introduced in the past two years. Notably, these reforms include provisions for the energy sector, which were implemented following the 2024 ener - gy crisis. These measures allow private entities to engage in activities within the energy sector that were previously reserved for state-run enterpris - es, and provide a ten-year income tax exemption for those investing in clean energy projects. Finally, the unwavering respect for arbitration and the absence of the need to homologate international awards, reinforced by recent rul - ings from the Constitutional Court, aim to pro - vide investors with confidence in their ability to seek redress in the event of disputes. Overall, with the numerous regulatory changes that favour foreign investment, M&A activity in Ecuador is expected to grow.
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