This was prepared prior to 12-day Executive MBA Emerging Market Residency in South America, which included stops in Argentina (Buenos Aires), Brazil (Rio de Janeiro) and Chile (Santiago).

1. Consumer Behavior in Brazil
Presented to: Dr. Jasbir Dhaliwal
Presented By: Roderick Head
Date: 5/15/12

2. Did You Know?
Brazil, together with Mexico, has been at the
forefront of the Latin American multinationals
phenomenon by which, thanks to superior
technology and organization, local companies
have successfully turned global.

3. Key Insights
• English is the foreign language most used by the business community.
• Brazil has a young, rapidly expanding population; more than 60 percent is under the age of 39.
• The Brazilian economy is growing at a healthy rate, ensuring increasing numbers of middle class citizens while
the number of $ millionaires (assets equivalent to roughly $540,000) has reached 155,000.
• The consistently strong performance of the Brazillian economy over the past decade has helped to enrich the
wealthier classes and transform the middle class into the cornerstone of domestic consumption.
• Economy is world’s 6th largest by nominal GDP and poised to be 5th by end of 2012.
• An explicit economic policy stance designed to minimize risk of a return to the familiar ‘boom and bust’ cycle of
the past has delivered consistent growth in recent years and a broad range of trading partners, including China,
has helped Brazil avoid the worst of the global economic crisis.
• Has one of the most developed online banking systems in the world.
• Slow profit growth is prompting Brazillian commodities companies to slash capital spending plans, making
growth in Latin America’s largest economy even more dependent on consumer spending.
– Card payment processors, retailers and telecoms companies are picking up the slack.
– Planning to invest more in hopes that government steps to lower borrowing costs and taxes will revive Brazil’s economy later
this year.
“Brazil is becoming a consumption-based economy more rapidly than any of us thought.”
– Dany Rappaport (manages $150 million in assets at InvestPort in Sao Paulo)

4. “Five Things to Know About Brazil’s
Fast-Moving Consumer Market”
• Private consumption is growing steadily.
• Growth is broad-based.
• Households are getting smaller.
– Average household today is 3.4 people, compared to 3.9 in 1995, fueled by growth of single-person
households.
• The demographic profile is promising.
• Consumers shop differently, depending on income.
– Lower-income consumers tend to use smaller stores, comprising half of mom-and-pop consumers.
– Rich consumers do the lion’s share of their shopping at super – and hypermarkets.

5. Top 3 Retailers in Brazil
• Grupo Pão de Açúcar
• Carrefour
• Wal-Mart
Source: U.S. Agricultural Trade Office

6. Key Statistic
Brazil's savings rate is among the lowest in the developing world, where families save more to
insure against illness and disaster. Credit card balances increased 30 percent in Brazil between
2008 and 2009, as the country races to join the global middle class. If there is a credit crisis
building in the developing world, Brazil could take the hardest fall.
Monthly spending by category in Brazil:
• - Housing: ~14%
• - Food: ~17%
• - Entertainment: ~5%
• - Autos: ~6%
• - Healthcare: ~9%
• - Education ~4%
• - HPC: ~6%
• - Savings: ~10%
• - Mobile Phone: ~2%
• - Other: ~27%

7. Consumer Trends
• The middle class has become a leading consumer of products in industries as varied as
automobiles (sales forecast to increase by 40% to 4.8 million by 2015), electronics (ownership of
computers increased from 13% to 52% between 2002 and 2010) and the food industry.
• Businesses have shifted their marketing focus towards meeting the needs of the aforementioned
segment.
• Around 1/3 of all internet users now purchase items online, mainly books, DVDs and electronics.
• In a study by consultancy Accenture, Brazilian consumers led the purchase of mobile phones,
HDTVs, digital cameras and netbooks in 2010.
• On average, Brazilians spend about 31 percent of their income on groceries, compared with the
15 percent spent on groceries by U.S. consumers.
• Brazil is one of two countries (China) with the greatest accumulation of U.S. visas.
– Of the 820,000 Brazilians who asked permission to travel to the U.S. between 10/2010 and 9/2011, 791,000 approved.
– Demand has increased 40% in the previous year’s numbers.
– U.S. Dept. of Commerce estimates Brazilian tourists spend around $5,000 when travelling to the U.S.
• The growing spending capacity and improved financial status of developing countries such as
Brazil are increasing the demand for ATMs. The considerable number of cash transactions through
ATMs is directly proportional to the number of customers capable of making a huge amount of
frequent transactions.
• The 2014 World Cup and 2016 Olympics are expected to bring even more of a boom.
• Simon Property Group has teamed up with BR Malls Participacoes S.A., Brazil’s largest retail real
estate company, to develop and own outlet centers in Brazil. The first outlet center of the 50/50
joint venture agreement is expected to open in Brazil’s largest state, Sao Paolo, in 2013.

8. Q212 BMI Brazil Forecasts
• Country’s retail sales will grow by nearly 43% between 2012 and 2016, from BRL1.59trn
(US$866.36bn) to BRL2.27trn (US$1.24trn).
• Easier access to credit and the emergence of a wealthier middle class are also likely to help
the value of the retail segment increase during the forecast period.
• Average annual real GDP growth of 4.2% is predicted by BMI between 2012 and 2016.
• Automotive sales are forecast to increase by almost 29% during the same period to reach
5.0mn units sold in 2016, with domestic demand stimulated by government intervention,
tariff protection, tax concessions and preferential vehicle financing terms.
• Over-the-counter (OTC) pharmaceutical sales to increase from an expected US$5.53bn in
2012 to US$8.85bn by 2016, up by more than 60%.
• The consumer electronics sector offers growth potential in key digital products groups such
as computers, digital cameras (which both have less than 30% penetration) and LCD TV sets.
– It is predicted to grow by more than 43% between 2012 and 2016, from US$33.31bn to US$47.66bn.
• Retail sub-sectors that are expected to show strong growth over the forecast period include:
– Food and drink, with sales predicted to rise from an expected US$238.85bn in 2012 to US$384.0bn by 2016, a rise of
nearly 61%.
– Mass grocery retail (MGR) sales are forecast to rise from an expected US$97.44bn in 2012 to US$157.47bn, an
increase of 61.6%.
– Supermarkets will continue to take the lion’s share of sales by value, but of increasing importance are the
convenience, discount and hypermarket formats, which are all expected to register significantly more rapid growth
over the forecast period.

9. Reaching Consumers
• Media Landscape
– Broadcast
• TV Globo is the most watched and influential TV channel in Brazil.
• Other major TV channels are Record (exclusive rights-holding broadcaster for London 2012), SBT and Bandeirantes.
• Cable TV is well established in major urban centres.
• Radio is important for both entertainment and news reporting, which has more of a regional setup; each city or state
will have its own main stations.
– Print
• Newspaper circulation has been increasing as the economic situation in Brazil has improved.
• Circulation increased from 7.6 million daily copies in 2001 to 8.1 million in 2009.
• Newspaper scene is fairly fragmented with each state capital producing at least one major daily newspaper.
– Folha de Sao Paulo (circ. 294,498) & O Estado de Sao Paulo (circ. 236,369) in Sao Paulo
– O Globo (circ. 262,435) in Rio de Janeiro
– Zero Hora (circ. 184,663) & Correio do Povo (circ. 157,409) in Porto Alegre
– Estado de Minas (circ. 78,281) in Belo Horizonte
– Correio Brasiliense (circ. 57,300) in Brasilia
– Vailor Ecnomico (circ. 54,627 – economic & financial news)
– Lance (circ. 94,683 – football & sports news)
• There are approximately 1,200 magazine titles published regularly in Brazil.
– On-line
• Material seen on the internet exerts strong influence on destination choice, as well as airline specials.
• Agencia Click estimates 2.6 million Brazilians update their blogs daily, ranking the country as the world’s most active in
terms of blog activity.
• According to ComScore, blogs have an unusually high reach of 71% of the Brazilian internet audience.
– Mobile
• According to Nielsen, Brazil ranks second to Italy for multiple SIM card ownership in the 15-24 demo, but are less likely
than those in other countries surveyed to be using mobile phones for advanced data services.
• There are 998 devices per 1,000 of population in Brazil, with only one in five having landline telephone access.

10. Reaching Consumers
– Social Media
• Per PhocusWright, 85% of Brazil internet users do so for social networking via Orkut and Facebook.
• Females are estimated to represent a larger proportion of the social networking community.
• Brazil is home to the fifth highest number of Twitter users, and is the largest non-English speaking market for the site.
• Estimated that the average Brazilian internet user spends more than 30 hours per month on the internet, about five
more than the global average, with 8 of these 30 hours sent using Orkut.
• Citizens in Sao Paulo and Rio de Janeiro are more likely to be engaged in social networking than residents in other
regions of Brazil.

12. SAMBA BABY!!!