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It’s not every day that we spot a Sean Kingston reference in our inbox, but we’re fairly sure that’s what’s happening here:
Anyone not now whistling “Fire Burning”…
…might well have the same question we had: what’s this all about then?
Well, Citi’s Brazilian pharma team have been investigating a local crime wave. They write:
This week’s Citi Friday Charts analyses the cases of drugstore thefts/robberies in the state of São Paulo, which have continued to accelerate at a fast clip over recent months… we filter for the number of robberies involving GLP-1 products, which have risen by over 4x in the past year
Some people are presumably living small off the proceeds of these crimes, but the phenomenon of drugstore robberies has corporate victims. In its first-quarter report, Brazilian’s largest chemist, Raia Drogasil, blamed store thefts for pinching its margins (our emphasis):
Our gross profit totaled R$ 2,881.3 million in the 1Q25, with a gross margin of 26.6%, a contraction of 0.6 pp when compared to the same period of the previous year. This contraction stems from a sales mix effect, an investment into pricing & promotions, a 0.3 pp pressure from inventory losses, mitigated by a 0.2 pp NPV increase.
The group said it expects a turnaround this quarter as it makes efforts to mitigate losses, which Valor Econômico reports include stock reductions and putting products in acrylic display cases. The financial paper quotes Renato Raduan, RD’s chief executive, as saying:
It might seem minor, but the acrylic cover makes looting harder. You need one hand to lift it and the other to grab the product—it complicates the quick grab-and-hide tactic.
On last month’s post-results call, Raduan added:
And of course, here at an earnings call, I’m not going to give you details of the tactical plan, but I just want you to know that we are not accepting this level with 30 bps in losses. We are putting in place actions to address that.
Citi’s Leandro Bastos and Renan Prata seem satisfied that RD will sort this issue out, although they strike a note of concern about how new security measures may be received:
concerns about a worse in-store experience and/or incremental costs could be undesired side effects.
It’s a moderately interesting insight into the intersection of consumer pressures, pharmaceutical developments, economic agency and crime, in an emerging-market context.
None of this, however, answers the real question here: should Citi be suggesting — as their title does — that Brazilians call 911 if their local chemist is being robbed? After all, the standard emergency number from police in Brazil is 190.
The answer: it’s fine. Calls placed to 911 (and 112, the European emergency services number) in Brazil have directed to 190 since 2013. The change was rolled out in anticipation of an influx of international visitors for the 2014 football World Cup, which Brazil hosted (and where they were memorably demolished by Germany in a semi-final clash known locally as the Agony of Mineirão).
Did all this play on Citi’s minds as they apparently chose to frame this analysis around the United States’ 33rd-most-popular song of 2009? We doubt it. Still, it’s probably more suitable advice than “Just Dance” or “Boom Boom Pow”.
