Brazil Wine Market Report JBC EMP July 2011 - California Wine ...

Executive Summary
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Brazilian Wine Market Report
As a member of the BRIC countries, Brazil is a target market for increasing U.S. wine
exports. BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India and
China, which are all deemed to be at a similar stage of newly advanced economic
development. The acronym has come into widespread use as a symbol of the shift in global
economic power away from the developed G7 economies towards the developing world. The
BRIC economies are promising engines of global economic growth and development. For the
first time, helped along by the “Great Recession,” consumers from the BRIC emerging
markets are outspending U.S. consumers. With real wages on the rise and middle classes
forming, emerging market consumers now account for 34 percent of global consumption
versus 27 percent for their U.S. counterparts. Families around the developing world now
have disposable income. Instead of saving their newfound wealth, they are increasingly
spending and putting money back into the local economy.
A U.S.-based multinational such as Coca-Cola generates three-quarters of its sales overseas
and already reflects the new reality. Revenues are booming for Coke in places like China and
Brazil. For Brazil, Claudia Penteado of AdvertisingAge explains: “Much of Brazil’s explosive
growth is being fueled by an emerging lower middle class that has grown to 95.4 million
people. As they snap up cars, cell phones and new homes, this group is quickly becoming a
prime target for marketers. The group, called the Class C, earns between $600 and $2,600 a
month and, through upward mobility in a growing economy, has become Brazil’s largest
consumer group in a population of 200 million people.”
Recent data on BRIC countries’ consumer spending habits reveal interesting insights about
consumer behavior and priorities in emerging markets. Brazilians put a higher priority on
living for the present by devoting a considerably larger share of income to discretionary
spending. Brazilians report saving a relatively modest 10 percent, the lowest level of the
four BRIC countries.
Per capita wine consumption lags considerably behind its neighbors Argentina and Chile.
Wine has not been the alcoholic beverage of choice for Brazilian consumers. Those
preferences are beginning to change with the new found disposable income of the emerging
middle class who are willing to try new products, including wine. The elements are in place
for significant growth in wine consumption over the next ten years.
The Brazilian market has been difficult to penetrate for all consumer goods. Previous
government policy has supported exports and restricted imports to maintain and increase its
foreign exchange. With the new-found wealth and balance of payments surplus those
policies are changing. While still difficult to navigate, the labyrinth of import regulations,
congestion in customs clearance processes and multiple taxes have become more
transparent. This report describes many of those challenges and provides advice to achieve
compliance.
Hosting of the 2014 FIFA World Cup and the 2016 Olympics will bring tens of thousands of
foreign visitors to Brazil’s event venues. Such events engender a social environment
conducive to on-premise wine consumption. As described in this study, the distribution and