Brazil

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E-ssentials Online

PMA Members now have direct access to the retail produce training courses online at PMA.com. This educational training is called E-ssentials and is available in both English and Spanish.

Market Dynamics Country Overview

Research completed by Euromonitor International for PMA

September 2010

Background on Brazil

The Brazilian economy is already recovering from a mild recession and should enjoy steady growth in 2010. Investment is expected to be the main economic driver. Brazil is set to become the world's fifth largest economy in the medium term. Tourism should benefit from the World Cup in 2014 and the Olympics in 2016. Brazil plans to invest US$236 billion by 2011 to improve infrastructure. Crude oil reserves have increased significantly, raising hopes that Brazil could soon become an oil exporter.

Brazil has a vibrant agricultural sector, driven by increases in both productivity and in cultivated area. The country presently has 152 million acres under cultivation but the government claims that this can easily be more than doubled. Vast tracts of arable land (up to 50 million hectares) are not farmed. Yet Brazil produces 40% of the sugar traded on world markets and output is increasing by nearly 20% per year.

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Market Dynamics Local Production

Fruits help Brazil to be a global leader in produce production

The breakdown of production of fresh products in Brazil has remained relatively constant in the 2004 to 2008 period. Fruits are the leading sector (with 39% of total volume production), and are followed by starchy roots, vegetables, pulses and nuts. The top ten specialty commodities accounted for approximately 87% of total production in 2008. Of these ten commodities, cassava, other fruits and beans have gained market share over the 2004 to 2008, whereas all other commodities have lost market shares. With these products historically having low prices compared to other products, the rise in unit prices over the period has caused producers to increase production.

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Market Dynamics Retail Environment

Supermarkets and hypermarkets account for almost 50% of the retail market

Supermarkets and hypermarkets use a variety of strategies to compete in fresh produce. Key strategies include providing a variety of high quality products, being supplied from the domestic market or from imports. Pricing is also important in driving sales, particularly through marketed promotions.

In recent years fresh produce received better exposure in retail outlets, and this is today seen as an important sales instrument. Also, according to research conducted by the trade magazine Supermercado Moderno, one of the reasons why leading retailers have performed well is their ability to offer consumers financial services such as consumer credit, insurance and extended product warranties.

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Market Dynamics Regulatory Issues

Most Regulations are for export, not domestically used products

International trade in food produce is heavily conditioned by the various sanitary regulation mechanisms, with the strictest regulations being found in the US and in the European Union.

In addition to sanitary restrictions, Brazilian exports to these countries are subject to a series of tariff and non-tariff barriers, which limit the opportunities in selling to these countries. In Brazil, the Brazilian Ministry of Health and the Ministry of Agriculture and Supply (MAA) are the two official entities responsible for overseeing food safety regulation.

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Assessing the Supply Chain / Retail Distribution Environment