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Brazil
Infrastructure
When the crisis hit in 2008, many global companies began to change the way they viewed developing countries.
Brazil wasn't an exception to this rule. Companies began pressuring Brazilian distributors to invest in marketing and
generate more demand. This is still a reality today. This is also reflected on the structure of warehouses and sales
teams.
The recent article for the May-June issue of the journal Foreign Affairs portrays the situation of the Brazilian market
in 2012. The title "The Commodity Slowdown and the End of the Magic Moment" summarizes the dependence of
commodities consumption as they appear in significant numbers over the country in the world media.
A chief analyst at Citigroup, Willem Buiter, in an article on markets such as Brazil, China, Russia and India, said:
"The prospects for world economic growth are worsening, reflecting the crisis in the euro area and deceleration in
emerging markets", as he points out the report highlighting the outlook for 2012-2013.
Trends 2012-2013
The year 2012 has seen a visible change in the Brazilian retail market. Following the trends of the international
market, especially the American market, major chain stores in Brazil have invested substantially in virtual stores. A
survey conducted by the specialized magazine Latin America Música & Mercado (music & market), found that 42% of
Brazilian stores said they will invest in technology and build their online stores between 2012 and 2013.
Another factor is the continuous direct imports by major retailers. This movement, which created a self-sufficiency in
the supply of entry-level products has encouraged distributors and factories to start their own stores, in order to
expand the distribution of their product lines. It is believed that this scenario will be well established in 2013 and
beyond.
The price of products for the retailer has also been reduced- a new position given the price policy of the importers
and increased competitiveness in Brazil.
Over the past three years, the country has been constantly evaluated for the opening of subsidiaries by multinational
companies. In the areas of professional audio and musical instruments, some acquisitions have been completed
successfully, in addition to the opening of local offices, particularly among U.S. and German companies.
For many foreign companies, however, the greatest obstacle is to understand the Brazilian tax system and the rules
of retail. This is definitely true for the entertainment industry, where there is a lot yet to be conquered with the
coming of the Olympics and the World Cup to be held in Brazil.
Brazilian Real vs. American Dollar
The Brazilian real depreciated on average 20% since January 2012. This change caused a deceleration among
retailers and also a new price policy among distributors in the country. Economy specialists explain that the lowest
value the Brazilian real should have against the American dollar is: 1.90 reais (reais is plural for real).
The following charts are based on import data from the Brazilian Bureau of Business Development,
Industries and Trade, and the Ministry of Trade. Commentary by Daniel Neves, President of Música &
Mercado.
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Total Imports
Amount
2001 2003 2005 2007 2009 2011
0M
50M
100M
150M
200M
USDollars
Stringed Instruments
Imports
Amount
2005 2007 2009 2011
0M
20M
40M
60M
USDollars
Wind Instruments
Imports
Amount
2005 2007 2009 2011
0M
5M
10M
15M
20M
USDollars
Percussion
Imports
Amount
2005 2007 2009 2011
0M
5M
10M
15M
USDollars
Electric Guitars and Basses
Imports
Amount
2005 2007 2009 2011
0M
10M
20M
30M
USDollars
Synthesizers
Imports
Amount
2005 2007 2009 2011
0k
2500k
5000k
7500k
USDollars
Instrument Strings
Imports
Amount
2005 2007 2009 2011
0M
2M
4M
6M
USDollars

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