Dolly's bankruptcy: Companies see change in consumption, says expert
The attorneys' offices of the State of São Paulo and the National Treasury filed, this Wednesday (1st), a joint request for bankruptcy of the companies that make up the Dolly Group. The action was forwarded to the second bankruptcy and judicial recovery court in São Paulo.
According to prosecutors, the company would have used the judicial recovery process to gain time without regularizing its tax debts, and all collection attempts would have been frustrated.
The group's tax liabilities are estimated at R$15.746 billion in active debt. The petition also points out alleged accounting manipulations, transfer of assets and equity confusion between the group's companies.
Next steps in the process
The bankruptcy petition is now in the hands of the judge, who may or may not accept it. If accepted, the Dolly Group can still appeal, returning the decision to the magistrate.
If bankruptcy is declared, the company's administrators will be removed and the assets sold to pay the debts. CNN Money tried to contact the company and keeps the space open for positioning.
Judicial recovery used inappropriately, according to expert
In an interview with CNN Money, Jessica Costa assessed that judicial recovery is a fundamental tool for preserving businesses and jobs, but that the problem arises when it stops being a reorganization mechanism and starts being used to postpone a definitive solution.
"This is what is filed in the bankruptcy petition filed by the Union and the State of São Paulo with the Dolly Group", he stated.
Costa also highlighted that Dolly's case shows that a recognized brand does not replace efficiency, solid business management or governance.
"A brand as strong as Dolly does not replace efficiency, does not replace soundness in business management, does not replace governance", said the expert.
Changes in the beverage market
The expert also pointed out that the beverage market is undergoing significant changes in consumer behavior.
According to her, companies in the soft drinks sector and products with more sugar began to compete with energy drinks, flavored waters, functional drinks, teas, isotonic drinks and ready-made juices.
"There is a change in consumption and companies need to adapt quickly to this change, also taking care of innovation", said Costa.
The expert recalled that Dolly's judicial recovery process began in 2018, a period in which the Selic rate was around 6.5%, compared to 14.25% currently.
For her, the company simultaneously faced changes in consumption, new competitors and a more adverse economic scenario, without bringing together the necessary pillars - such as innovation, logistics capacity, distribution and working capital - to reverse the situation.
"The strength of the Dolly brand, which continues to exist, in itself, is not enough to take the company forward", he concluded.
Future of the brand's assets
Regarding the future of the brand, Costa assessed that, initially, the consumer should not be directly affected, since the brand would continue in production and distribution.
She also mentioned the possibility of selling the brand's assets, and indicated that the most likely scenario would be the interest of a regional manufacturer in acquiring the operation.
"What I think is most likely is that we have some regional manufacturer with the willingness and appetite to enter this market", said the expert.
Lack of ESG policies is a reason for Brazilians not to consume brands
The texts generated by artificial intelligence on CNN Brasil are made based on video cuts from the newspapers in its programming. All information is investigated and checked by journalists. The final text is also reviewed by the CNN journalism team. Click here to find out more.
Source: CNN