Brazil 2013 luxury market intelligence report

1. Brazil 2013 - Luxury Market Intelligence Report
Valor LuxuryLab 1

2. 22013 Brazilian Market Overview2013 Brazilian Market Overview
According to the FMI’s expectation, Brazil will
become the fifth largest economy in the worldd
•3rd largest footwear producer
•3rd largest cosmetics market
•7th largest consumer market
•5th largest apparel industrial structure
Signs of prosperity

3. 3
Largest Seller of Ferraris in São Paulo Largest fleet of helicopters
Largest Consumer of Yachts Largest fleet of private jets
2013 Brazil Market Overview2013 Brazil Market Overview
Signs of prosperity

4. 4
Brazil continues to be a second Priority Investment Country
Multinational companies continue to regard China as a top investment
priority and Brazil a second
When asked which key markets they would invest in:
56% replied China
52% Brazil
35% India
34% US
26% Mexico
25% Turkey
* Survey conducted by PricewaterhouseCoopers with
227 chief executive officers from a cross-section of multinational
companies
2013 Brazil Market Overview2013 Brazil Market Overview
Signs of prosperity

5. 52013 Brazil Market Overview2013 Brazil Market Overview
Luxury Consumer’s Club
The penetration of luxury products and services in Brazil is oriented towards a 10%
of the population, this is in line with estimates by FGV, a Brazilian research institute,
which sized the A/B population at 20 million in 2010, with total income of $ 817billion
(36% of country total).
Billionaire’s Club
São Paulo has 21 billionaires with US$ 85 billions
Rio de Janeiro 3
Source: Forbes Mag
Millionaire’s Club
4,618 millionaires with total assets of US$ 865 (1,880 individuals with net assets of
$30 million or more)
One person in Brazil will become a millionaire every 27 minutes in 2013
78% of millionaires live in São Paulo and Rio de Janeiro
The number of millionaires in Brazil is on the rise, spurred by a commodities boom
and new oil discoveries, and is predicted to surpass 11,000 by 2020
Source: Wealth Report 2013 published by Wealth-X

6. 6
2014 Soccer World Cup * The impact over final demand R$ 29,6 billion
2016 Olympic Games
* More than one million visitors are expected to travel to Rio and São Paulo for each
event
According to The Economist, in recent years… “Brazil has been
transformed from 'country of tomorrow' to ’once-in-a-lifetime
opportunity.’”
* Ernst & Young Terco – Passport to Brazil
2013 Brazil Market Overview2013 Brazil Market Overview
Brazil’s pushing economy events

7. 7
2012 346 malls
2013 Projected to open + 73
• Retail Industry (Non Food) Us$ 110 Billion
• Apparel & Textiles and Footwear Industry Us$ 60 Billion
*(Doubled In 10 Years)
Luxury malls & areas - São PauloLuxury malls & areas - São Paulo
Cidade JardimCidade Jardim
Jk IguatemiJk Iguatemi
Shopping IguatemíShopping Iguatemí
Oscar Freire áreaOscar Freire área
Outlet PremiumOutlet Premium
Global Retail Development Index –Brasil is the best country in the world to
invest in retail industry
20132013 BrazilBrazil MarketMarket RetailRetail OverviewOverview

8. FROM THE BEGINING!

9. Due to the global crisis, many international luxury brands are trying to escape
from the European recession and are exploiting new areas by expanding their
businesses in the BRIC countries especially in Brazil, whose economy is among
the most promising in the world.
The most significant growth of the luxury market was due to the huge
investments in new shopping malls in São Paulo City. these investments focused
on luxury and high end markets like Shopping Cidade Jardim (2008), JK Iguatemi
(2012) and the existing Iguatemi Mall.
International luxury brands like Chanel, Gucci, Prada, Hermes, Bottega Veneta,
Miu Miu, and Tory Burch entered the Brazilian market with direct investment.
There have been another 90 new retail openings since 2008.
-from 2009 to 2010 sales increased 28%
-from 2010 to 2011 and increased 18%
In short time, the luxury retail landscape is being completely redefined
AT LEAST TWO DECADES!

10. The Brazilian high-income market reached more than R$ 20 billion in sales in 2011, based on
estimates by industry experts. Across the last five years, the market grew consistently at
rates above 20% (in nominal terms), outpacing both the overall retail sector (13%)and the
rapidly growing shopping mall industry (17%).
GS Economists estimate that the addressable market for luxury, defined as income above
US$30,000 per capita/annum, will reach 17% of the Brazilian population in 2025, up from 7%
in 2011, implying 22 million new consumers. Assuming that average spend rises in line with
inflation, this would suggest a more than five-fold increase, bringing the total market size to
R$110 billion (2011-25E CAGR 13%).
Classes A & B have an outsized share of purchasing power. According to the latest figures
of the Brazilian Economics and Statistics Office (IBGE 2008/09), classes A and B, defined as
earning more than US$3,500 in monthly household income, represent less than 10% of the
population, but earn almost 40% of total income. The much-discussed emerging middle
class, meanwhile, accounts for more than half of the Brazilian population and 54% of total
income. On IBGE’s numbers, the high-income group is comprised of 18 million people with
total income of R$760bn (2008/09). Adjusted for growth, this is in line with estimates by FGV,
a Brazilian research institute, which sized the A/B population at 20 million in 2010, with total
income of R$817billion (36% of country total)
Source: The Aspiration to Luxury in Brazil from Goldman Sachs Global Investment Research
BRAZIL’S LUXURY MARKET OVERVIEW

11. Store Openings
38 Flagship stores opened in São Paulo in the last two years
127 International Brands Intl entered Brazil in the last tree years
R$ 2 billion in investments for the opening of new stores in 2012
BRAZIL’S LUXURY MARKET OVERVIEW
São Paulo is the leading city in Brazilian luxury consumption, accounting for 66%
of the market. (São Paulo is the luxury capital of Latin America)
Luxury brands yet do not extend their business beyond three main cities:
São Paulo, Rio de Janeiro and Brasilia

12. Brazil is a complex market and requires expertise
The Brazilian economy has actually been slowing down, however the views about the
future therefore remain optimistic.
Barriers to entry
A staggering 35 % of Brazil’s GDP is comprised of taxes, higher than the United States
(24,8%) and Argentina (29%). Lower them France (43,1%) and (36,0%) England
Government bureaucracy an complex system of taxation will require local expertise
High import tariffs
Limited retail infrastructure as Brazil has very few high-end department/multibrand
stores. The majority of high-end brands sell through mall-based mono-brand stores
and e-commerce.
BRAZIL’S COMPETITIVE DYNAMICS

13. Brazilians are very brand conscious, well informed and traveled
They are very familiar with international luxury brands and they care about quality and
exclusivity
They are influenced by the European culture and style, and by the American Lifestyle
and consumption standards
Despite the Brazilians love casual fashion style, they like to dress up.
“Wealthy woman in Brazil is completely fashion oriented, follow American Vogue and
they know everything about fashion.”
WHO IS THE BRAZILIAN LUXURY CONSUMER?
Brazilians are fashion addicts

14. Brazilian consumers are increasingly sophisticated and opened to new consumer
experiences
Brazil has always had its selected group of “Nouveau riche”. This group of people is
distinguished by their extravagant tastes and for their tendency to emphasize their
social condition.
Over a half of Brazilians are internet users and on line shoppers
WHO IS THE BRAZILIAN LUXURY CONSUMER?

15. WHO IS THE BRAZILIAN LUXURY CONSUMER?
* Average total sale per total transactions
WEALTY WOMEN SPENDING São Paulo
US$ $ 3,500 a month on clothes
92% paid in credit card premium
47% has a paid job
Millionaire's club are big spenders
Source : La Clé

16. WHO IS THE BRAZILIAN LUXURY CONSUMER?
Source : Boston Consulting Group and Ipsos Institute

17. BraziliansloveCasualfashion.
BREAKDOWNOFFASHIONSEARCHES
BYCATEGORY
TOP3MOSTSEARCHEDFORBRANDSFOR APPAREL
#1
#2
#3

18. When it comes to purchasing expensive items, customer service is the key influential factor:
•Personal Shoppers
•Personalized Products
•Private Sales Events for Special Clients
SOME KEY FACTORS FOR BRAZILIANS BUYER
Regional Customization
Brazilian clients tend to develop a long term relationships with their favorite sales person
Customer service is also a magnet for shopping
Brazilians do shop abroad, usually on vacation or shopping trips. Miami and New York being the
two most frequented cities.

19. Credit facilities - In Brazil you can buy everything by payment plan, even luxury goods
(70% of purchases in the luxury sector are divided into installment payments on credit cards or
checks)
Customer’s recognition of the superiority of imported products
Many international luxury brands are repositioning their prices down to reflect similar prices to
other emerging markets
Despite this prices of luxury goods in Brazil, including those of local designers are already very
expensive comparing with other markets in the world
SOME KEY FACTORS FOR BRAZILIANS BUYER
Regional Customization

20. Brazil 2013 - Luxury Market Intelligence Report
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