Brazil 2013 - Luxury Market Intelligence Report
Valor LuxuryLab
1
2013 Brazilian Market Overview2 Signs of prosperity
According to the FMI’s expectation, Brazil will become the fifth largest economy in the world
•3rd largest footwear producer •3rd largest cosmetics market •7th largest consumer market •5th largest apparel industrial structure
2013 Brazil Market Overview Signs of prosperity Largest Seller of Ferraris in S達o Paulo
Largest Consumer of Yachts
3
Largest fleet of helicopters
Largest fleet of private jets
2013 Brazil Market Overview
4
Signs of prosperity 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 Overview
5
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 $30 million or more) One person in Brazil will become a millionaire every 27 minutes in 2013 78% of millionaires live in São Paulo and Rio de Janeiro The number of millionaires in Brazil is on the rise, spurred by a commodities boom and new oil discoveries, and is predicted to surpass 11,000 by 2020 Source: Wealth Report 2013 published by Wealth-X
2013 Brazil Market Overview
6
Brazil’s pushing economy events 2014 Soccer World Cup
* The impact over final demand R$ 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 Retail Overview 7 2012 2013
•
346 malls 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 Paulo Cidade Jardim Jk Iguatemi Shopping Iguatemí Oscar Freire área Outlet Premium Global Retail Development Index –Brasil is the best country in the world to invest in retail industry
FROM THE BEGINING!
AT LEAST TWO DECADES! 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 S達o 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
BRAZIL’S LUXURY MARKET OVERVIEW 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$817billion (36% of country total) Source: The Aspiration to Luxury in Brazil from Goldman Sachs Global Investment Research
BRAZIL’S LUXURY MARKET OVERVIEW São Paulo is the leading city in Brazilian luxury consumption, accounting for 66% of the market. (São Paulo is the luxury capital of Latin America)
Luxury brands yet do not extend their business beyond three main cities: São Paulo, Rio de Janeiro and Brasilia Store Openings 38 Flagship stores opened in São Paulo in the last two years 127 International Brands Intl entered Brazil in the last tree years R$ 2 billion in investments for the opening of new stores in 2012
BRAZIL’S COMPETITIVE DYNAMICS 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.
WHO IS THE BRAZILIAN LUXURY CONSUMER?
Brazilians are fashion addicts 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 of the 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?
Brazilian consumers are 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?
WEALTY WOMEN SPENDING São Paulo US$ $ 3,500 a month on clothes 92% paid in credit card premium 47% are working professionals Millionaire's club are big spenders Source : La Clé
* Average total sale per total transactions
WHO IS THE BRAZILIAN LUXURY CONSUMER?
Source : Boston Consulting Group and Ipsos Institute
BraziliansloveCasual fashion.
BREAKDOWNOFFASHIONSEARCHES BYCATEGORY
TOP3MOSTSEARCHEDFORBRANDSFORAPPAREL
#1 #2 #3
SOME KEY FACTORS FOR BRAZILIANS BUYER Regional Customization
When it comes to purchasing expensive items, customer service is the key influential factor: •Personal Shoppers •Personalized Products •Private Sales Events for Special Clients
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.
SOME KEY FACTORS FOR BRAZILIANS BUYER Regional Customization
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, they are already very expensive compared to other markets in the world
Brazil 2013 - Luxury Market Intelligence Report Contact
luz@luxurylab.com.br
www.luxurylab.com.br
Valor LuxuryLab