Thursday, June 30, 2016

Keurig Mysterously Quiet in Brazilian Market

For much of its history, Brazil has been known as one of the major producers of coffee in the world. Brazilians are also big consumers of the perky beverage. As such, several companies including Nestle (Nespresso and Nescafe) and Três Corações have become major sellers of at home coffee machines and coffee capsules. These machines and capsules can be found regularly at supermarkets across the company. Both companies also invest heavily in TV and other advertising to entice consumers.


One name that is strangely absent is Keurig. What's so strange is that Keurig has Coca-Cola as a 10% owner. Given Coca-Cola's brand recognition and distribution power, why hasn't the company tried to make inroads in a country of over 200 million. The company will surely face strong competition, but since when has that scared away Coca-Cola companies in the past?

A quick online search found Keurig machines and capsules only on online shops and not at major retailers. From the company's website, Brazil was not one of the drop down options of country's where the company operates.

Foreign Ownership of Air Companies on Hold

Interim president, Michel Temer, has decided to hold off on deciding whether or not foreigners can own 100% of air companies in the country.


Currently, foreign companies can only own up to 20% of air companies in Brazil. Examples of foreign companies with ownership of Brazilian air companies include Delta and Air France owning shares of Gol and HNA of China and United Airlines possessing shares of Azul.


China has already invested in a highway linking Guyana and Brazil. See our piece on that Chinese to Invest in Brazilian Roadways

Read more from Folha de Sao Paulo Interim President Temer Reconsiders Decision Regarding Air Companies and Foreign Ownership

Heineken Closes Factory in Bahia

Dutch brewer, Heineken, announced June 15 that it will be closing its factory in Feira de Santana. In addition to Heineken, the company produces Brazilian brands Kaiser and Bavaria. Kaiser was produced in bottles, while Bavaria was produced in cans at the factory.



According to the Union of Workers of the Beer and Other Drinks Industry (SINDIBEB), 126 employees were let go.

In an official statement, Heineken claimed the decision was based on viability studies and the necessity to take the operation of the company to another standard of excellence.

The company's breweries in Ceara and Sao Paulo will now meet the needs in Bahia, Goias and Amazonas that were previously served by the factory in Feira de Santana.

For more visit Correio Feirense (in Portuguese) Heineken Closes Shop in Bahia

Liquid Soap Sales Up 7% in 2015

Today, Brazilian retail is facing a lot of setbacks; low consumer confidence, rampant inflation and high unemployment. Even so, liquid soap sales grew 7.4% in volume in 2015 compared to 2014, according to Nielsen. This growth comes at the same time that sales of bar soaps dropped 1.6%.



The biggest winner in the growth of liquid soap sales were cheaper brands, which saw an increase of 11.3%.

According to Unilever, scented liquid soaps account for 56.4% in volume of liquid soap sales. Next, are anti-bacterial liquid soaps, which represented 25.4% of the market.

The main market for liquid soap are social classes A and B, which purchased 44% of the market in volume.

To read more check out this link from Supermercado Moderno (in Portuguese) Liquid Soap Sales Increase in 2015

British Mining Company Looks to Sell

British mining company, Anglo American is looking to sell one more of its businesses in Brazil as the country spirals further downward. The company previously sold its niobium and phosphate operations. Now, it is looking to get rid of its nickel business.





So far, the company has not received offers it believes represents the value of the business or that appeals to shareholders.

According to the Brazilian Institute of Mining, Brazil is the seventh largest nickel producer in the world.

For more read this article from O Valor Anglo American Seeks Buyers

Opinion: Waive US Visa Restrictions for Good

Earlier this year, the Brazilian government announced that it would waive visa restrictions for Americans traveling to this summer's Olympic games in Rio de Janeiro. The effort will allow Americans to travel to Brazil for up to 90 days (the same amount that a tourist visa would permit). The Brazilian government announced a similar waive of visas for Canadian, Australian and Japanese citizens.



To better understand Brazil's stance on visas, the country's law states that travel restriction rules for Americans are based on a concept of reciprocity. This means for any travel restriction that the US government imposes on Brazilian travelers, the Brazilian government will impose on American travelers. Sounds fair, right? Perhaps, but should pride get in the way of such great potential for foreign revenues?

A few years after I moved to Brazil, my wife and I opened a travel agency. We lived near an environmental jewel called the Pantanal. After contemplating with my father-in-law and others, we decided that the market would definitely be strong for travel packages to this destination. I was sure that with the right marketing Americans would flock there.

Maybe I was naive. However, soon after opening up for business we found that our packages were significantly more expensive than for other similar destinations like Costa Rica. Now, we weren't being greedy. Our markups weren't that high, and we kept our costs low by using freelancers as opposed to full-time employees. Even so, the restrictions and added costs were a clear deterrent for us to make sales. One of the main deterrents were travel visas.

Besides the costs of visas, which are actually small when compared to the cost of 7 or 10 day all-inclusive nature packages, getting a visa can be complicated and time consuming. In some regions, travelers need to physically travel to a consulate for approval. Others need to fill out forms and pay additional mailing fees.

Temporary waiving of visa restrictions for a one off sporting event is short term thinking. In order for Brazil to prop up its tourist business - a business that could be worth billions more if done correctly - it must suck up its pride and make traveling to its country cheaper. Despite the stereotypes of American travelers, the population of no other country travels as much as the United States. Furthermore, Americans love to spend money and do so in the world's most fungible currency.

Recently, I attended a travel fair and read and heard many people discussing how to attract more travelers. By the end of the day, I came to the same conclusion I had come to years before, while operating my travel agency.

It's all about the money. Make it cheaper - and less cumbersome - and you'll see the travelers start flocking in.

Here's to hoping that temporary benefits bring permanent changes in Brazil's travel restrictions on Americans.

Read more about Brazil waiving visas for the Olympics at Conde Nast Traveler 





Doing Business in Brazil Tip: Unintended Consequences

Your product and service is killing it in your home country. You've taken it to some foreign markets and it was well received. Now, you're thinking about bringing it to Brazil, so like any good organization or entrepreneur you decide you are going to test the market before spending millions.



Many things can happen at this stage and beyond, and there is one thing that I wanted to touch on. When I first moved to Brazil, I remembered noticing a lot of familiar products and brand names. Despite the cultural shock, American and Brazilian cultures were close enough that I didn't make too much of a fool of myself. 

Then, someone offered me a Halls cough drop. Or at least that's what I thought it was.

The person took the cough drop and tossed it in their mouth. I couldn't remember them coughing a few minutes ago. That's when I learned similar products don't mean similar uses.

In Brazil, Halls cough drops are actually used as breath fresheners with black Halls being the most popular given their strength. In fact, Halls are so popular as breath fresheners that they can be found in supermarkets, gas stations, bakeries and are even sold by street vendors.

The example above proves that when testing marketing your product or service be open to discover new and different uses of your product or service. Not only will it allow you to avoid massive amounts of advertising in educational campaigns, but it could help bring in revenue streams from unexpected sources.


Wednesday, June 29, 2016

Opportunity: Become a Hired Killer

The famous phrase goes that "necessity is the mother of invention."

Seeing the daily headlines of brain defects and deaths caused by Zika and dengue in Brazil, I wonder if the phrase was ever translated into Portuguese.



You would have to be leaving under a rock to not have heard of Zika and the impending health disaster the media, health officials and the US government is bracing for, however, it is dengue that has caused the most deaths over the last few years. In 2015, the cases of dengue rose 178% causing 843 deaths.

Don't forget that mosquitoes are also responsible for other deadly diseases, such as yellow fever, malaria and chikungunya. In a country that is home to poisonous snakes and painted jaguars, mosquitoes take the top spot as most deadly.

Given the seriousness of the situation, I wonder why I don't hear much regarding technologies to fight mosquitoes. In fact, most of what I have heard is actually the US government's efforts to create a vaccine. One Brazilian university research department is also working on a vaccine, but considering the degree that these diseases have wrecked havoc, there doesn't seem to be enough urgency. This is not to mention that research money is scarce in the country at the moment.

Granted, the country is facing an unprecedented economic crisis, cash strapped state governments and other issues including a wave of swine flu deaths.

So, why haven't private businesses picked up the slack?

Sure, money is tight, but I see dozens of people using their pensions and retirement money to open restaurants and other high risk ventures. I don't see people investing in selling citronella plants or other natural deterrents. A popular tool for killing mosquitoes in homes are tennis rackets with mesh that zap the bugs. The tennis racket offers an option without harsh chemicals. But, why isn't the mesh from these tennis rackets being used to cover windows?

My idea may be silly, but remember that what were once silly ideas are now commonly used technologies. The fact is that creativity may just be the solution to a problem that isn't going away anytime soon. Furthermore, this problem could be a major opportunity for companies abroad to make healthy profits with different technologies, such as genetically altered mosquitoes, which is actually being tested by Brazilian biofactory, Moscamed.

Other interesting technologies that could be used to combat mosquitoes include Microsoft's Mosquito Trap, "ovillanta" a low-tech invention from Canadian and Mexican researchers and ultrasonic devices designed to kill mosquito larvae in sitting water.

So the question is, international companies looking to make a buck in Brazil, why aren't you looking to make a killing by doing a little killing?

Read more about Microsoft's mosquito trap from the BBC  Microsoft Mosquito Trap

Read more about the low-tech solution from Canadian and Mexican researchers at Eurekalert
Low-tech Mosquito Solution


Is AT&T Leaving Brazil?

BTIG Research believes that AT&T could be selling its DirecTV satellite television business in Brazil to Spanish telecommunications company, Telefonica.



The speculation follows news on Monday that one of the country's largest wireless firms, Oi, filed for bankruptcy.

AT&T has had success in another Latin American market, Mexico, but with expansion plans in doubt due to the country's economic crisis, BTIG believes the company may just pull the plug.


Read more at Investor's Business Daily Will AT&T Exit Brazil?




Intern Government Looks to Change Retirement Age

Argued as a way to control growing social security costs, the intern government in Brazil has proposed the retirement age at 65 years. The government also plans to shorten the difference between men and women.


Currently, women can retire after contributing for 30 years, while men need to contribute for 35 years. In addition to the number of years of contribution, women can request social security payment at 60 years of age, while men must wait until they are 65 years old. The intern government proposes increasing the age for women to 62 years.

For more read this Reuters article via Yahoo Intern Government Hopes Retirement Changes Will Save Money

Test Marketing Tip: Online Marketplaces

Yesterday, I wrote about testing the market of potential employees in Brazil by utilizing websites, such as Fiverr. But, what would testing the market for a product you would like to sell in the country? What if you're a small company that doesn't have the money or resources to hire importing companies and distributors?

That's where online marketplaces come in.


In particular, I would like to discuss Dafiti's online marketplace. According to Alexa, the online retailer of clothes, accessories and jewelry is the 78th most popular website in Brazil. Among online retailers, it is the 9th most popular with 8 million visitors per month.

Why use Dafiti besides its popularity?

By partnering with Dafiti, the company provides you with a personalized online store, customer service and back end support. The company also advertises products of partners to millions via newsletters and social media websites. Finally, customers can purchase your products easily by utilizing Dafiti's wide range of payment options.

To learn more visit Dafiti's marketplace (in Portuguese) Dafiti Marketplace


Drought Could Be What Coffee Producers Needed

Sometimes inclement weather can have unexpected results.

In the case of Brazilian coffee, a sweeter bean, caused by drought, is producing a more expensive commodity. In fact, the weather has caused Brazilian coffee beans to be priced higher than high-end Arabica coffee beans.



Improving coffee quality can produce drinks that have more complex tastes and aromas.

With a strong dollar, exports of a high quality coffee bean with no capital investments could be everything that coffee producers in the country could wish for this year.



Read more at Journal Sentinel Weather Turns Brazil's Coffee Market Upside-down

Top American Airlines to Get Breathing Room

The top three airlines flying to and from Brazil, American Airlines, Delta and United Continental, are expected to see improvements in revenue as the Brazilian real strengthens against the dollar and the airlines cut capacity.




Times have been tough for airlines in Latin American and Brazil over the last year. Passenger revenue dropped 17.1% for American Airlines over the past year, while Delta saw decreases of 9.2% and United Continental 14.5%.

Even LATAM, the Latin American airline giant, is expected to  35 in second hald of 2016


Read more from investment website The Motley Fool Airlines to Cut Capacity, Bet on Stronger Real

Chinese to Invest in Brazilian Roadways

China is Brazil's largest trade partner. Now, the Asian powerhouse is set to finance a highway project to connect the South American nation with the tiny country of Guyana.




The highway plan will be financed via China's $10 billion Latin American infrastructure fund.


Read more from CTV News in Canada Highway to Connect Brazil with Tiny Neighbor

Brazil Oil Research Park Attracts New Tenants

It's easy to see country's like Venezuela, Saudi Arabia and Nigeria suffering from the drop in oil prices as the commodity represents a significant amount of their revenues.

Brazil has also suffered from the drop in oil prices.



As such, Rio de Janeiro's Technology Park is looking to a more diverse group of tenants to reverse fortunes. More specifically, cosmetics brand, L'Oreal, and brewer, Inbev, have decided to set up shop in the technology park.


Rio de Janeiro's Technology Park is home to over 50 companies, including General Electric Co., and independent research labs, including Fundação Oswaldo Cruz, which is looking for a cure to the Zika virus.

Read more from CNBC Brazil Oil Research Park


Tuesday, June 28, 2016

Mouthwash Sees Strong Growth in 2015

According to consumer retail giant, Johnson & Johnson, mouthwash is a R$368 million business in Brazil. Brazil has the third largest oral hygiene market following the United States and China. Sales of mouthwash grew 4.6% in 2015 compared to the year before.



The main buyers of mouthwash are women 30 to 49 years of age, which represented 66% of sales. Social class B is the largest consumer of this product, while consumers typically buy the product once a month. The most important factors for consumers when purchasing mouthwash are brand and benefits, such as whitening or treatment of sensitive teeth.

Read more at Supermercado Moderno (in Portuguese) Mouthwash Sales Up





Brazil's Economy Slides Further

For the fifth straight quarter, Brazil's economy has shrunk.

The good news is that the contraction of the economy in the first quarter was only 0.3%, lower than the 0.8% economists expected. Furthermore, the Brazilian Institute of Geography and Statistics found that the year-on-year decline was just 5.4% compared to an earlier findings of 6.1%.



Production fell in all the three main economic sectors; agriculture, industry and services. The fall in agriculture is particularly startling considering how much the nation's economy relies on it, especially through exports of commodities. Surprinsingly, exports actually increased in the first quarter by 6.5% compared to the fourth quarter of 2015.

Read more from the BBC For Fifth Consecutive Quarter Brazilian Economy Falls

Solar Energy Shines in Some of Brazil's Darkest Places

Thanks to co-operatives, social startups and small businesses, solar energy may finally become a reality in Brazil. The country has long been considered a high potential location for solar energy considering its solar radiance levels.




A 10-year energy plan estimates that solar panels installed in some of Brazil's poorest areas, known as favelas, could produce up to 7GW of energy. Currently, more than half of the country's energy comes from hydro power.

Besides the potential for solar energy based on environmental factors, this type of energy could reduce the costs of energy for citizens and businesses suffering from an economic crisis. The price of electric energy for consumers rose around 50% in 2015, while in the last quarter of 2015 prices rose 43.9% for businesses in comparison to the same time period the year before.

Read more at The Guardian Solar Energy Projects in Brazil

Find out more about Bras Research's Solar Energy in Brazi 2015 at Bras Research


Coca-Cola to Release Vanilla and Cherry Flavors

Starting this Wednesday, June 29, Coca-Cola will start producing and selling vanilla and cherry Coke in Brazil.

Currently, these flavors are available in only four states.



The price of the cans of these flavors will be R$4.65. Cans of soda typically range between R$2.50 and R$3.50.

This will be the second time Coca-Cola will introduce cherry Coke to Brazilian consumers. The company sold the flavor in the 1990s. This will be the first time vanilla Coke is introduced to the country's consumers.

To read more visit Folha de Sao Paulo Cherry and Vanilla Coke Come to Brazil

Gigs: A Way to Test the Waters

Need to translate your website, app or book into Portuguese?

Need to send out a survey to know if your product or service would sell?

Need a business question answered by an experienced, knowledgeable professional?

Need a Portuguese voice over for your online video?



One increasingly popular way to do so is by buying gigs on websites like Fiverr. Gigs include everything from Portuguese voice overs for your online video, social media marketing and more. By hiring for a specific task at a super low price, you can reduce your risk and discover important insights saving you thousands or even millions of dollars.

Brazil is a country with complex laws and a unique economy. By not doing your homework first, you could be setting yourself up for future problems.

One of our favorite freelancers on Fiverr provides a wide range of services including survey translation, design, distribution and analysis, web research, company reports, and content creator and researcher. Check him out at Fiverr Freelancer

Could Brazilian Waxing Be a Thing of the Past?

Brazil is known for many things; soccer, Copacabana and attractive women populating that beach.

Along with women, Brazil is also famous for Brazilian waxing. This may be a thing of the past.

Over the past decade or so, laser hair removal businesses have sprouted up across the country. In fact, they are among the most popular franchises now. Franchising grew 8.3% in 2015, despite a poor economy.

Hair removal is popular among men and women in Brazil with the most popular body parts being legs, armpits, bikini area and necks. The promise of permanent hair removal and thus no future costs for hair removal is the reason for the sector's popularity.



Some of the most popular laser hair removal franchises are:

Espaço Laser: Started in 2002, this company is perhaps most famous for its spokeswoman, Xuxa, the popular TV presenter. The company owns 51 locations and has 7 franchises across the country. Most locations are located in shopping malls. Bras Research estimates the company has revenues of R$93 million per year. Costs for opening a franchise are approximately R$800,00.

GiOLaser: This company also benefits from a popular spokeswoman, actress, Giovanni Antonelli. Currently, the company owns 1 location and has 5 franchises. Bras Research estimates the company's revenues at R$7.2 million. Costs of opening a location range from R$400,000 to R$500,000.

Other popular laser hair removal locations include Dr. Laser and Nao + Pelo.

For more information visit Bras Research's website Bras Research


Could American Football Flourish in the Land of Soccer?

As a kid in the United States, I was an avid soccer fan. As such, at the time, the sport was ridiculed. It was a sport for little kids and wimps. A sport of phantom fouls and skimpy shorts. More than once I heard that it was a Communist sport, despite the fact that no Communist country ever won the World Cup and that several Communist countries, most notably Venezuela and Cuba, had baseball as their national sports.

Eventually, soccer grew. The 1994 World Cup, and the fact that the Americans made it to the second round, grabbed the attention of millions of kids like myself. In 1996 the Atlanta Olympics saw Nigeria beat Brazil in one of the most famous upsets. That same year Major League Soccer began. Despite early troubles, the league has grown to twenty teams and attracts some of the most famous players around the world.



Over 15,000 football fans attended the game between Cuiaba Arsenal and Coritiba Crocodiles at Arena Pantanal.


Now, living in Brazil I wonder if any American sports could take off in similar fashion. Basketball is already popular with many Brazilian born players practicing their craft in the NBA.

However, there is another sport that is making surprising inroads in the South American nation; American Football.

To demonstrate how far the sport has come, I attended the semifinal of the country's championship between Cuiaba Arsenal and Coritiba Crocodiles. The game was played in Arena Pantanal, a stadium, which hosted 4 World Cup games in 2014. The game didn't attract 5 or 10 thousand. Nope, it brought in over 15,000 fans, the largest crowd to ever witness an American football game in Brazil.

Attracting 15,000 people to an event in a city with average temperatures over 100 degrees and asking them to part with their money is quite a feat. This was also done in a metropolitan area of just 800,000 during an economic crisis.

Even more impressive is that the team, Cuiaba Arsenal, has no paid staff. The team, and the league as a whole uses social media and word of mouth marketing to bring people in. Of course approval from the state's governor for the use of the stadium and beer sales helped.

On the positive side, the game attracted a young population that is more worldly and open to sports and culture from other countries. Furthermore, ESPN covers games on a weekly basis during the NFL and NCAA seasons. The Superbowl has been covered for many years now.

One should be cautious to get too excited though. It is important to remember that teams like Cuiaba Arsenal don't pay their staff or players anything. Any profit is spent on road trips. Moreover, the sport is complicated and requires educating a population. Additionally, football is expensive with pads, helmets and footballs needing to be purchased. Soccer requires simply a ball and anything that can be used for goal posts. Finally, Brazil does not have the level of expatriates (Americans living in Brazil) that help prop up soccer in its early days. Being the land of immigration, soccer was imported by group after group over a period of a century.



Despite the uphill battle, it will be interesting to see how the sport grows in the country. It will be particularly interesting to see if the sport can takeover markets like Cuiaba, which has a weak soccer presence. Another thing the team did, which brought it success was by adopting the whole package of the American sport. The team has cheerleaders, a female team, runs flag football tournaments and even co-promotes halftime shows with popular musical acts.

On July 9, Cuiaba Arsenal will take the field again in Arena Pantanal against the popular Corintians Steamrollers. If the team attracts the crowd it was able to late last year, it will be a good sign of continued success. After all, who doesn't like a winner?


Lava Jato Investigation Reaches Hypermarcas

Leading the way among losers on the Bovespa Tuesday morning, was Hypermarcas. Hypermarcas is a Brazilian brand that produces and sells a wide range of consumer products, particularly pharmaceutical products. The company's stock dropped more than 5% on Tuesday morning. 

The reason for the fall is the deposition given by former executive, Nelson Mello. Mr. Mello claims to have paid bribes to high profile politicians including the head of the Senate, Renan Calheiros.
Mr. Mello's deposition was part of the Lava Jato investigation, which has investigated and imprisoned many of the country's politicians and businessmen.
Hypermarcas denies the accusations.
For more visit Exame (in Portuguese) Hypermarcas Shares Drop More than 5%

Debt Could Make Brazil Less Sweet

Sugarcane in Brazil is used for everything from ethanol alcohol to table sugar. However, a US fund believes that many sugar cane mills will be closing due to stifling debt, a problem suffered by many industries across the country.




The lack of credit, no new investments and the end of the government's subsidized energy policies were the impetus for the decline of the market. However, a strong dollar and potential for demand of sugar and ethanol could be attractive for foreign investors.

Read more from Reuters Brazil Sugar Restructuring



Doing Business in Brazil Tip: Monthly Salaries

Unlike in the United States, where employees may receive their salary on a bi-monthly or weekly basis, all workers in Brazil receive a monthly salary. This difference may seem like nothing more than a difference in preference, but it actually is an important fact to take notice of for businesses.

More specifically, government workers typically receive their payments by the first of the month, while all others receive payments normally by the fifth of the month.



What does this mean?

1: Companies should look to sell products and services at their highest prices at the beginning of the month.

2: More expensive products or events should be scheduled for the beginning of the month when consumers have recently received their payments.

3: Companies should expect account receivables to increase at the beginning of the month.

4: Payment plans are common in Brazil. Forcing consumers to choose a payment day in the beginning of the month will more likely ensure payment, while placing this date at the end of the month could mean rejection of payments.

5: Promotions should be more common at the end of the month when consumers pockets are tighter.


Food and Housing Legal Ways for Politicians to Steal from Populace in Brazil

Can one really call themselves one of the people when they spend nearly US$18 thousand a month on food?

Well, that's exactly how much suspended president, Dilma Rousseff, spent from January to May 2016. Of course, Rousseff's use of populism should have been put into question earlier as her popularity hovered around 10% before her ouster.



It's bad enough that the president and her Worker's Party (PT) claim to fight for the downtrodden and weak, but to spend the equivalent of 77 minimum salaries on her own food budget is just ridiculous.

Ms. Rousseff's food budget was recently suspended by intern president, Michael Temer. 

Not surprisingly, Ms. Rousseff is not alone. Nor is this something new in Brazil, though, these are far from justifications for Ms. Rousseff's abuse of the taxpayer money. Judges, magistrates and politicians regularly receive thousands of reais per month for food and housing, even though, they are the members of society least in need of the money.

The issue of using taxpayer money when it is not needed is more than a moral issue. These "perks" cost taxpayers billions of reais per year meaning less and less money is spent on needed social services, such as health care and security. Moreover, the diversion of government monies for those least in the need of them means less money for investments in research and development and entreprenauership.

Read more about Dilma Rousseff's abuse of public money at InfoMoney (in Portuguese) Suspended President Has Big Appetite


Intern Government Looks for Ways to Reduce Price of Beans

Inflation is bad enough when it affects imported and specialty goods. Still, one can survive. What about when it affects food staples like beans?

Through May of this year, the price of beans have risen 33.49%. In the past 12 months, bean prices have risen 41.62%.



While the main ingredient in perhaps Brazil's most famous dish, feijoada, beans are eaten daily by a large portion of Brazilians.

Last week, the country's intern president, Michel Temer announced plans to import beans to lower prices. More specifically, the government is studying ways of reducing taxes and fees of imported beans from China and Mexico.

For more read this article from Globo (in Portuguese) Bean Prices Way Up








11 Years Later Informal Sector Rises

Leia Mais:http://economia.estadao.com.br/noticias/geral,apos-11-anos-participacao-da-economia-informal-volta-a-crescer-no-pib,10000059570
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After 11 years, Brazil's informal economy has grown and become a larger part of the country's GDP. According to Fundação Getulio Vargas, the country's informal sector represented 16.2% of the GDP in 2015. The main reasons for this growth are jumps in unemployment and the high costs of products. In actual numbers the informal sector equals US$281.4 billion.



The informal sector includes vendors of foods, toys, electronics and much more.

This rise is particularly important for consumers and competitors alike. Products sold by these vendors, often at locations known as camelos, usually are not regularly regulated. That means that potentially unsafe products are sold to consumers. Competitors with business licenses and following regulations are forced to sell more expensive products as informal vendors typically do not pay taxes. Furthermore, these vendors often use city services, such as electricity without paying for them. Finally, some informal vendors are known to sell stolen goods.

To read more visit Estadao (in Portuguese) Informal Sector Grows
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Monday, June 27, 2016

Netflix Looks to Invest in Brazilian Cinema

In a recent interview with Globo, Ted Sarandos, head of content for Netflix, announced the company will begin to invest in Brazilian production. The objective of the investment is to have Brazilian movies reach worldwide audiences. 

Netflix, which started as a mail order business for DVDs, is now a powerhouse of creative, profitable content. The company has produced award winning television shows, such as House of Cards and Orange is the New Black as well as movies. One of the company's most recent successes is Narcos, a show about the notorious Colombian drug lord Pablo Escobar played by Brazilian actor, Wagner Moura. 
For more information visit Brasil Business Review. Netflix Wants Brazilian Production
The original article was written by Ellen Mason. Her LinkedIn page is LinkedIn - Ellen Mason

Travel Tip: Know Your Rights

Here's a travel tip for those traveling to Brazil for the first time or returning. Unlike in other countries, such as the United States where baggage restrictions and fees have become the norm, Brazil has a generous policy that allows for larger and more baggage and not additional fees.



American Airlines, which has several daily routes to and from Brazil, allows up to 5 checked bags with a fee being incurred only on the third bag. While checked baggage for all other countries is limited to 50 lbs (23 kg), the weight limit is 70 lbs (32 kg) for travelers to Brazil. Azul Airlines, a preferred airline of this author, provides the same allowances.

Before your next trip make sure you have a printout or the airline link available on your smartphone. From personal experience, airline employees may not believe you until you prove it in print.

For more on American Airlines baggage allowances to Brazil see  American Airlines

For more on Azul Airlines baggage allowances to Brazil see (in Portuguese) Azul Airlines


Brexit Could Speed Up Deal Between UK and Brazil

Everyone is talking about Brexit. 
The United Kingdom's exit from the European Union could be a good thing for Brazil, even though the Mercosul's negotiations with the EU is likely to suffer setbacks. Suffering an unprecedented economic crisis, a speed up in talks could be a sign of hope for the South American nation. The UK was behind a speed up in talks before leaving the EU last week.


Of particular interest to Brazil is the possibility of exporting agricultural products and beef to British consumers. Currently, Brazilian exports to the United Kingdom equal just 1.5% of total exports, however, the actual numbers are nothing to ignore. In 2015, Brazil exported more than US$2.9 billion worth of goods, while through May of this year they have exported more than US$1.1 billion. 
In contrast, Brazil imported just over US$2.8 billion in 2015 and just under US$1 billion so far in 2016, according to government data.
To read more visit Folha de Sao Paulo (in Portuguese) Brazil Looks to Negotiate with British Post Brexit

Brazil and Argentina Renew Automotive Deal Through 2020

A deal between the South American giants, which was to expire this Friday, June 30, has been renewed through 2020, according to the country's Minister of Industry, Commerce and Services.



The deal predicts that for each untaxed dollar that Argentina exports to Brazil in auto parts and vehicles, the country can import 1.5 dollars in Brazilian products.

Both countries are members of Mercosul and are major trade partners.

Read more at Globo (in Portuguese) Brazil and Argentina Continue Automotive Agreement


Telecom Oi's Life Line Severed

Economic crises are like tornadoes; they destroy nearly everything in their wake.




However, in most cases, the largest number of victims are small and medium businesses. These businesses suffer from increases in prices, scared consumers and predatory competitors.

In the case of telecom giant Oi, its size wasn't enough protection against the economic crisis crippling Brazil. On June 20, the company filed bankruptcy. To make things worse for the company, Brazil's intern government does not have plans for bailing out the company and its $19 billion in debt.


To read more visit The Economist Oi Latest Victim of Crisis

SEEK Bets on Brazil

SEEK, an Australian employment group, announced that it has purchased the remaining share of its Brazil business for $104 million. A poor economy actually helped the company's main brand, Catho, as unemployed Brazilians visit the site to find new employment.




SEEK purchased Catho in 2012 for $78.8 million. According to  Alexa, Catho is ranked 192 among websites in Brazil. The company's website claims to host over 200,000 jobs in Brazil.

For more visit The Sydney Morning Herald SEEK Buys Out Brazil Business


Wendy's Wants Piece of Brazilian Appetite for Fast Food

A few days after Taco Bell announced it will be entering the Brazilian market, Ohio hamburger fast food chain, Wendy's, announced similar news today, June 27.



Similar to Taco Bell, the restaurant will open two stores in Sao Paulo before looking to further expansion. Wendy's, the world's third largest hamburger chain, will enter the market via Sao Paulo based, Infinity Services. Currently, Infinity Services operates the Benihana and Hooters chains in Brazil.

The company plans to expand rapidly over the next few years.

Read more at Globo (in Portuguese)  Wendy's Enters Brazil

Is TAM Merger Best For Consumers?

Recently, I took a trip to Rio de Janeiro and was surprised by something that has been apparently four years in the making. As a market research analyst and business intelligence professional, you would think that I would be aware of everything going on in the market. Sometimes things simply slip through the cracks.



Four years ago, Brazil's largest airline, TAM, signed a joint-venture with Chilean airline, LAN. This business agreement effectively made the group the largest airline in Latin America. In April of this year, the integration of these companies took full effect by the roll-out of LATAM airlines.

Major questions remain following the full integration of the two airline powerhouses.

Will consumers see lower prices and fees as a result of economies of scale?

Will the airline's wide reach provide more domestic and international routes?

Will the consolidation of power result in consumers being forced to buy at inflated prices or be charged extra fees?

The last question is particularly important considering that Brazil's second largest airline, GOL, recently ceased 40% of its operations in the country's Northeast region causing more and more travelers to inconveniently go through hubs in Brasilia, Rio de Janeiro or Sao Paulo.

Read more at Globo (in Portuguese) Major Airline Merger Leaves Some Questions Unanswered

Consumer Confidence Hits One Year High

Finally, some good news!

Living in Brazil these days can be depressing, however, a new study by Fundação Getulio Vargas, FGV, showed that consumer confidence hit a one year high in June. In fact, June marked the second month in a row in which consumer confidence grew.



For more information read the article from Exame (in Portuguese) Consumer Confidence Hits One Year High

Sunday, June 26, 2016

Taco Bell Sets Foot Inside Brazil

Over the last decade, American fast food chains have setup shop or expanded in Brazil. In the last couple of years, expansion has been particularly strong, despite a poor economy. Three examples include Subway, Domino's Pizza, and Pizza Hut, which have increased the number of units and have expanded to smaller markets outside of Sao Paulo and Rio de Janeiro. This expansion of units was designed to not only increase revenues, but also to gobble up market share as other franchises suffered.

Fast food franchise expansion coincides with an overall growth in the sector. Franchises grew 8.3% in 2015. Currently, Subway is the largest fast food franchise in Brazil with nearly 2,000 stores.



Recently, the owner of Wizard, the country's largest chain of English schools, announced the entrance of Taco Bell. Formerly, Taco Bell was one of the largest American fast food chains with no presence in Brazil. The restaurant plans on opening three stores in Sao Paulo by the end of 2016. Expansion is expected to continue to Rio de Janeiro, Minas Gerais and Parana the following year.

The fast food chain plans on opening 100 Taco Bell locations in the country by 2020. 25 stores are expected to be owned by the fund group in Brazil, while 75 will be franchises.

To read more about the entrance of Taco Bell in Brazil visit (in Portuguese) Taco Bell Enters Brazil

For more about the fast food market in Brazil Bras Research has produced the Fast Food in Brazil 2015 industry report. The report covers the top fast food and QSR chains in the country in 2015 including the companies' operational indicators, geographical reach, retail presence and product lines. For more information visit Fast Food in Brazil 2015

Rio Anti-Doping Lab Loses Accreditation Weeks Before Games

An economic crisis the size that hasn't been seen since the 1930's.

Rampant violence including a takeover by gunmen of an Olympic designated hospital minutes away from the Maracana Stadium.

A mosquito born disease that can cause devastating brain defects in newborns.

A bike path eaten up by the sea that killed two.

Sewage filled waterways that have caused the US rowing team to decide to use anti-microbial suits.

Famous athletes like Lebron James and Stephan Curry pulling out of the games.



It couldn't get worse, right?

Wrong.

Approximately, six weeks from the start of the Olympic Games in Rio de Janeiro, WADA, The World Anti-Doping Agency, has stripped an agency in Rio de Janeiro of its accreditation.

Read more at Los Angeles Times Rio Lab Loses Accreditation

Could Corruption Be Causing Brazil to Lose Important Business?

Usually when one speaks about corruption and its effects on society, one talks about issues of morality and ethics. Some economists have been able to quantify losses due to corruption through the diversion of money to non-valuing added activities.



This week corruption cost Brazil business in a way obvious to anyone.

The former CEO of Ryanair, the Irish low-cost airline, announced they will begin service in Argentina. The company already sells flights in Mexico and Colombia. However, Declan Ryan made it clear it was the rampant corruption in Brazil that will keep it off the list of the airline's future plans.

Read more at Plus 55 (in Portuguese) Ryanair Avoiding Brazil

Friday, June 24, 2016

Don't Overlook Brazil Quite Yet

If you have picked up a newspaper or checked your online feed recently, you probably haven't seen any flattering news about Brazil. Since 2014, when the country hosted the FIFA World Cup, things have seemed to spiral downward. Lava Jato, an overarching criminal investigation, has put away dozens of politicians and businessmen including the leader of one of the country's largest enterprise's, Odebrecht. The investigation is so far-reaching that the country's president, Dilma Rousseff, has been suspended and will face an impeachment trial later this year. The head of the country's Chamber of Deputies, Eduardo Cunha, has also been removed from his post and is under trial. The popular former president, Lula, is also likely to be investigated in the near future.

On top of the political scandal, the company's economy is in shambles with over 100,000 closed businesses, rampant unemployment, crumbling government services and increasing crime. In less than two months, the country will host the Olympics, despite, Zika, a wave of crime and the refusal of many athletes from participating in the games.

To jaded Brazilians, it doesn't look like it could get any worse.

The facts remain that Brazil is one of the largest economies in the world with a population over 200 million. The country is also an agricultural powerhouse.

For seven more reasons why Brazil should still be considered by businesses and investors check out this article Fast Company & Inc. 7 Reasons to Invest in Brazil

FDI in Brazil 2015

It would seem to make sense that when a country is experiencing as destructive of an economic crisis as is Brazil, that foreign investors would treat that country like a plague. However, the opposite is true as the country has been able to continually bring in foreign direct investment. Of course, this doesn't mean the country's leaders should feel too optimistic. In fact, FDI dropped 23% between 2014 and 2015. One of the main reasons is that multinational companies like Whirlpool are bringing in substantially lower revenues as a result of lower consumer spending and confidence and a devalued Real. Despite the decline in FDI, Brazil was still eighth among countries attracting FDI having brought in US$56 billion in 2015.

For more information regarding acquisitions and fusions in Brazil read PricewaterhouseCoppers most recent report on the country (in Portuguese).

Acquisitions and Fusions in Brazil in 2015 - PWC



Brazil Falters When It Comes to Doing Business

According to The World Bank, among 189 countries Brazil ranked 111 in doing business in 2015. The country is expected to drop five spots between 2015 and 2016. When it comes to starting a business, the country, which ranked 166 in 2015, falls below regional counterparts Chile (62), Colombia (84) and Mexico (65). Brazil is expected to drop to 174 in 2016. Currently, the country`s economic woes have made starting and doing business a difficult task. In 2015, Brazil lost nearly 100,000 stores or 13% of total stores in the country.



For more information read The World Bank's report. Doing Business in Brazil - The World Bank

Franchising Bucks Downward Trend

Despite experiencing the worst economic crisis since the 1930's, one area of the Brazilian economy that is still doing well are franchises. Over the past five years, the demand for franchises, both domestic and international, has been proven by the sector's strong revenue and unit growth. In 2015, the sector grew 8.3% increasing in value to R$138.593 billion. Franchises are expected to continue growing as companies look to expand into areas outside of the metropolitan areas of Sao Paulo and Rio de Janeiro.

Bras Research, a market research firm specialized in the Brazilian market, has recently released its Franchising in Brazil 2015 report, which covers the sectors historical periods, trends, operational indicators and more.

For more information visit Franchising in Brazil 2015

Whatsapp An Important Business Tool

Whatsapp is a messaging service with over 1 billion users around the world. The company was purchased by Facebook in 2014. In Brazil, this service is incredibly popular across all social classes. In fact, the country went into a collective shock when a court order brought the service down for 48 hours in late 2015. Jokes and memes populated social media websites poking fun at how people would have to go back to old fashioned face-to-face conversation. One popular meme showed a crying son and mother hugging each other with the tagline, "Mother and Son Living in the Same Home Reunited After Whatsapp Blocked."


On a serious note, though, Whatsapp has become an important tool for business, especially small businesses. With Whatsapp consumers can contact businesses and get information regarding the businesses location, daily specials and promotions, estimated costs on projects and much more. One particularly popular usage of the messaging app is in food delivery, in which food stands and fast food giants alike can take orders and deliver the food at no cost and without bulky computer consoles taking up room in their retail space.

For more information on Whatsapp and business in Brazil check out this article from Harvard Business Review.

The Rise of WhatsApp in Brazil Is About More than Just Messaging

Welcome to Brazil Business News

Welcome to Brazil Business New! The objective of this blog was to share business news about Brazil to an English reading audience.  The impetus of the blog is my experience in market research and marketing in the country, and the need to clarify and make business news from Brazil more understandable to the rest of the world. I hope to achieve my goals by providing historical and cultural context to how business is done in Latin America's largest economy. I plan to regularly update this blog with information from a wide range of topics that can be used by business owners already operating in Brazil or those curious about entering the notoriously bureaucratic nation. Please enjoy and feel free to participate in what I hope to be fruitful and enjoyable experience.