Perspectives - Brazil

Less than a decade ago, there were high hopes for the so-called BRIC markets of Brazil, Russia, India and China. Since then, China has boomed, Russia is improving, India is still difficult, and Brazil remains promising. It has a wine-loving population, but economic challenges. James Lawrence speaks to experts who work in the market.

Luis Osório, Guy Shingles, Pedro Calheiros Lobo, Dirk Niepoort
Luis Osório, Guy Shingles, Pedro Calheiros Lobo, Dirk Niepoort

Luis Osório

Research Manager, Wine Intelligence (Brazil office)

The economic recession in Brazil hit the imported wine market relatively hard — in 2016, still wine consumption fell by more than 13%. Nevertheless, more qualitative evidence suggests that the market is now recovering, having undergone important structural changes in terms of consumer behaviour. 

Indeed, evidence suggests that Brazilian wine drinkers are now (slightly) more quality-driven, with the average spend rising as middle-class consumers turn away from mainstream brands. The negative aspect, of course, is that they are probably drinking a little less than before, as the volume data shows. This is a trend we see in many other markets, driven by younger and less-conservative (more adventurous) groups of consumers.

In addition, Brazilian wine is starting to be taken seriously — especially in the sparkling category. Higher-quality sparkling wine brands are changing the way Brazilians look at domestic production, traditionally associated with poor quality. But there are definitely opportunities for global sparkling wine brands as well: wealthier Brazilians are passionate consumers of fizz.

The Brazilian wine market is still immature from a global perspective but, at the same time, especially in the main cities, there are now a lot of innovative restaurant concepts, wine education and even wine production (for instance in São Paulo). As you’d expect, the majority of wine is sold in the southern states (retail dominates), below Brasilia, where historically the Portuguese and Italian communities have been established. The northern states are still at a very early stage. São Paulo (both city and state) drives the category as Brazil’s key urban centre.

Quality brands must therefore focus their efforts in Brazil’s few major urban centres — in rural Brazil, cheap domestic wine dominates. Also be aware that listings can be hard to get at the moment and that logistics can be a nightmare in Brazil, as the sector is painfully underdeveloped. There are opportunities here for brands willing to put in the groundwork, but equally this is not an easy market to conquer.

Guy Shingles  

Brazilian Market Analyst, IWSR [International Wine & Spirits Research]

Although wine imports grew by around 15% last year, actual consumption is believed to have increased only marginally. As this suggests, inventory levels are very high as importers look to protect themselves against the volatile prices of the past two years. The main trend in imported wine last year was a dramatic shift to the lower end of the market, as rising prices led cash-strapped consumers to trade down. This affected all quality segments and countries of origin, with distributors seeking out the cheapest products available to cater for demand.

Chilean wines continue to gain market share thanks to aggressive pricing and now account for nearly half of all imports. Growth came largely at the expense of the Italian segment, while second-ranked Argentina remained relatively stable. In European wines, Spain performed strongest thanks to its reputation for good quality and low prices. However, low-end French wines were also increasingly conspicuous in the market during the year.

The wine market is currently underdeveloped and per capita consumption remains low compared with beer and spirits, meaning there is significant potential for growth. Volume growth is expected to pick up again as the economy recovers, prices stabilise and consumers regain confidence. Imported wines are predicted to benefit most from this recovery due to their superior price-to-quality ratio compared with local wines. Consumers will remain cautious, however, so the majority of growth is likely to come from the lower end of the market, especially in the short-term.


Pedro Calheiros Lobo

Export Manager, Quinta do Vale Meão

Quinta do Vale Meão entered the Brazilian market about 15 years ago, during which time there have been considerable changes. I have observed the increasing saturation in the major cities, while opportunities continue to present themselves in the smaller ones. The number of retailers/distributors has not increased; in fact, some have gone out of business since we arrived. Traditionally, Chile and Argentina have dominated the imported wine market, but Portugal is gaining market share each year. 

Today Brazil is very much a nation divided; the wine market in the south could reasonably be described as dynamic, while consumption in the north remains very low. Indeed, the north has an infrastructure comparable to Africa, while the south is very European in attitudes and culture, and boasts a relatively developed infrastructure. Overall, though, this is a market with a low per capita consumption (two litres per person per year), although there is potential, with more than 190m inhabitants. The market grew steadily from 2004 to 2014 but since then has been flat. Premium wines have been the worst hit by the economic recession, as you’d imagine. In addition, the exchange rate is a difficult issue to overcome, as the BRL (Brazilian real) has devalued a lot in the past year. Fortunately we work with a company (Mistral) that operates in US dollars, which makes life easier — I’d advise any prospective brand to do the same. Otherwise, my advice is to monitor the volatile political and economic situation and choose your partners wisely. Finding an importer/distributor and jumping through the bureaucratic hoops is a slow process, so plenty of patience is essential in Brazil.


Dirk Niepoort

Owner, Niepoort

Niepoort first started trading in Brazil in the 1980s when the market looked promising; today the market is stable for us, unfortunately, with little growth seen at all in recent times. The establishment of the trading bloc Mercosur (full members Argentina, Brazil, Paraguay and Uruguay) has naturally ensured that neighbouring countries dominate the imported wine market, although the consumption of local wines has also increased dramatically over the past five years. 

Moreover, in our experience, retail is increasingly an important channel for wine sales, while on-trade revenues are decreasing. Today the three key urban centres for imported wine are São Paulo, Rio Janeiro and Pernambuco, while smaller/rural areas in the north account for very little. Taxes on wine keep increasing, however, which may threaten consumption even in Brazil’s wealthier areas. There is also the ongoing risk of the political instability inherent to this part of the world. 

As ever, my advice to prospective brands is to seek out good partners — in this case, small importers in each state that understood the local conditions. A “one size fits all” approach is never going to work in Brazil.




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