Table of Contents:

Economic Classes

Brazil divides its classes into categories:

Class A&B:  monthly earn more than R$ 4.591

Class C:  monthly earnings between  R$ 1.064 and R$ 4.591

Class D&E:  less than R$1064

source:  http://www1.folha.uol.com.br/folha/dinheiro/ult91u429888.shtml

Demographic shifts

Increasing population size:

Expectation are that Brazil will increase from 190 million to over 250 million by 2050.

Consumer Classes in Brazil change

According to research conducted by Bain (consulting) and Euromonitor, the Brazilian economy can be divided into three distinct sections.  At the top of the consumer pyramid, are classes A&B which combined constitutes 15% of the Brazilian population (2007).  In the middle is class C with 46% in 2007, up from just 34% in 2005.  And, below are classes D&E which constitutes 39% in 2007, down from 51% in 2005.

Rise in Purchasing power of lower/ middle class

One example is the regional Economic Development boom that is planned between 2008-2010 in the Brazilian NE state of Pernambuco.  As a result of rising incomes, available credit, the "Bolsa Familia" program, and of the strengthening currency (vs the weak dollar), suddenly Brazilian consumers are feeling wealthy as never before, and they are buying cars, and commercial goods like never before.   In response, you see massive developments in and around the port of Suape, such as the massive wheat mill from Bunge, or the auto distributors, oil refineries, ship building, steel mills, etc.  (see more in our coverage of Pernambuco).   See more in our discusson: Rise of purchasing power in emerging markets

Major trends in Brazilian consumer market:

1. Increased number of women in the marketplace.  The percentage of women active in the economy in Brazil has increased from 41.4% in 1999 to 43.8% in 2006, and is expected to continue increasing to 45% by 2010.   The 3.2% increase in women in the marketplace is compared to just a 1.7% increase in men.  In addition, the money available to spend for women increased 7.1% vs just 2.6% for men (from 200-06)
   • market opportunities:  soaps, sun protectors, appliances, beauty, baby products, checking accounts, more...
2. More couples without children:  there is a trend for young couples to postpone having children till later.  First spending money on travel and enjoyment.  The estimated number of couples without children in Brazil has increased from 5.2 million in 1996 to 8.6 million in 2006, and is expected to increase up to 16 million by 2016.
   • market opportunities:  increased demand for e-commerce, credit, ready to eat meals, furniture, decoration
3. Increased number of singles living away from their parents.   In order to understand this trend, you first must understand the cultural tendency for Brazilians to live with their parents until they are married.   This is a very well documented historical difference between Brazil and the USA.  But, what is changing is that as young people find better jobs, and delay marrying, they are also leaving home and living alone more frequently in Brazil.  This has a huge impact on they types of products that are sold in mass in Brazil.  According to Euromonitor (and Bain) research, the number of singles living alone in Brazil increased from just 3.2 million in 1996 to 6 million in 2006, and is expected to increase further to 12 million by  2016.
   • market opportunities:  more broadband internet, iPods, cellphones, beer, automotive electronics
4. Aging population of consumers:  Brazil is traditionally thought of as a very young nation, but expectations are that this will change soon, as Brazilian consumers will start to move into middle age.  In addition to having more elderly Brazilians, the expectation is that they will live longer lives.  The population over 60 was just 14.1 million in 2000, but is expected to swell to over 41 million by 2030.   Also, the age group from 40-60 is expected to also grow from 32 million in 2000 to over 60 million in 2030.   With more purchasing power on average, this class of consumers is one to watch
   • market opportunities:  wine, travel, beauty products, etc

Hot Sectors - industries that should benefit from demographic trends:

• Automobiles:  2.5 million units sold in 2007.  Expect 60% growth till 2016
• Bottled water:  $1.1 billion dollars sold in 2007.  Expect 82% growth till 2012
• Televisions
• Toys:  $800 million dollars sold in 2007.  Expect 50% growth till 2012
• Frozen food: $1.4 billion dollars sold in 2007.  Expect 50% growth till 2012.
• Alcohol drinks: $7.9 billion dollars sold in 2007.  Expect 43% growth till 2012
• Perfumes:  $3.3 billion dollars sold in 2007.  Expect 24% growth till 2012.
• Computers:  $15.1 billion dollars sold in 2007.  Expect 23% growth till 2012.
• Appliances: $5.8 billion dollars sold in 2007.  Expect 36% growth till 2012.
• Banking accounts:  103 million accounts open in 2007.  Expect 46% growth till 2012.
• e-commerce: $6.4 billion reais spent online in 2007.   Expect 145% till 2010.
• credit (to consumers):  $250 billion reais in credit offered in 2007.  Expect growth of 60% till 2012.
• Furniture & Decoration:  R$17.5 billion reais spent in 2007.  Expect 23% growth till 2012.
• Internet Broadband connections:  just 8 million connections in 2007.  Expect 30 million by 2012 (275% growth)
• Portable music players:  $99 million dollars spent in 2007.  Expect 105% growth till 2012.
• Cell phones:  $3.2 billion dollars spent in 2007.  Expect 69% growth till 2012.
• Beer:  $4.4 billion dollars spent in 2007.  Expect growth of 55% till 2012
• Travel - air:  there were 50 million air trips taken in 2007.  Expect 100% growth till 2012.  (need extra infrastructure, planes, etc!)
• Wine:  $1.9 billion dollars spent in 2007.  Expect growth of 32% till 2012.

Source:  Exame, 04/2008

So many more women on the beach than men

AS ONE observes the economical use of fabric to contain flesh as it wiggles from one posto to the next on Rio de Janeiro's Ipanema beach, thoughts turn immediately to demography. Like other countries where the population is ageing, Brazil has more women than men. But in Rio the imbalance is particularly marked: for every 100 females in the city there are only 86.4 males, according to IBGE, the national statistics agency. That is far lower than the 95 males per 100 females that is the average for Brazil's big cities. What is going on? And does this explain the size of the bikinis?

The answer lies partly in three forces that have shaped Brazil over the past few decades. First, like the rest of the country, Rio has undergone an extraordinary transition in its birthrate. Although the Catholic church and the government discouraged contraception for decades, Brazilian women decided to have fewer babies. Many opted for sterilisation. One study suggests up to 40% of women aged 15-49 have been sterilised. “You find some families where three generations of women have been sterilised after childbirth,” says José de Carvalho, a demographer at the Federal University of Minas Gerais.

As a result the fertility rate dropped from 6.2 live births per woman in 1960 to around two today, while people are living longer. In the past ten years, life expectancy has risen from 68.9 years to 72.4 years. An older population means more women in relation to men, because women tend to live longer.

Second, during the past 50 years millions of women have moved away from rural areas and towards cities, where they often find jobs in domestic service. This has further skewed the sex ratio in cities compared with the countryside. Copacabana, just down the beach from Ipanema, is one of the most imbalanced places in the whole of the country, thanks to a heavy concentration of the (disproportionately female) over-65s and their maids. The third factor is violence. Rio's murder rate, at 40 per 100,000 people, is shockingly high, and most of the victims are young men.

Evolutionary biologists would draw a straight line between the declining number of potential mates, the need for female cariocas to go to greater lengths to win them, and those small bikinis. But that seems far-fetched, given that much of the imbalance is down to simple ageing. Rio's grannies, who are the most affected, are—by and large—a demure lot. The problem of the bikini is going to require some further study.