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20 Nov 2012

2020 projections indicate large consumption

The Brazilian consumer market continues to attract international entrepreneurs and investors.

By 2020, Brazil will be the 5thlargest consumer market in the globe, overtaking France, Italy and England reducing its international dependence on external economic crises. In order to reach that level, Brazilians are expected to spend 1,3 trillion BRL until the end of the decade. During the next decade, Brazilians will consume as much pasta as the Italians according to projections made by the U.S. consulting firm McKinsey and published by the Brazilian magazine Exame.The country will be the third largest market of cars. Beer consumption, which by 2005 accounted for half of the Germans, is expected to be three times higher. The price for hair and beauty products in the city of São Paulo will increase two times faster than in France.  Consumption in the country will account for 65%, out if a 5 trillion BRL GDP.

The Brazilian consumption has been mainly driven by the increase in the amount of middle class people, the Class C. But besides that, the increase in the credit offer and income levels has played a key role in such development. By 2020, the Brazilian GDP per capita is expected to rise 37%. And the good news won't stop. In 2020, Brazil will be experiencing a "demographic bonus"; six in every ten inhabitants will be in the job market.

Consumer Market

 

Why now and not later
The current moment of Brazil is compared to the American consumption boom in the fifties. At that time, the GDP per capital in the USA was 13000 USD. It is 12000 in Brazil now. Studies indicate that when the GDP per capita reaches a level ranging from 12000 to 17000 USD, there is a real explosion in consumption levels, with several new product categories incorporated to the domestic budget. It is also important to acknowledge that companies entering an unexplored market have significantly higher chances of success. In England, the supermarket chain Tesco has been leading the market for over three decades. The company is a result of the expansion that occurred in the 50s and 60s. It is fair to say that the companies that manage to establish in the Brazilian market in this decade have chances of leading the market for the next three decades. The Brazilian market, however, is not an obvious market. Hence, the companies have to move outside comfort zones, such as the big capitals, if they want to reach a status of uniqueness and, possibly, become a market leader. Brazil is no longer only about São Paulo, Rio de Janeiro and Bahia. Brazil is also about São Bernardo do Campo, Campinas and Maranguape, São José de Ribamar and Paço do Lumiar. Don't worry if you have never heard these names. If you get involved with Brazil, you probably will. With the right strategy, being part of the Brazilian market means adding another dimension to business activities.