For a variety of reasons, wine in Brazil most often means wine made in Brazil. Will this phenomenon continue?
Consumers around the world don’t look for Brazilian wine on the shelves of their local supermarkets. Most of them don’t even know that Brazil has produced wine since 1532. They don’t look for it in the wine lists of the restaurants they usually go and have probably never heard of Vale dos Vinhedos or Rio de São Francisco. Of course, things are different from the perspective of Brazilians in Brazil.
In the 7th largest economy in the world (IMF, World Economic Outlook 2014), domestic wine accounts for 76% of total wine consumption (IWSR, 2013) benefiting from internal promotion and no import duties. Domestic wine consumption has been growing faster than imported wine and specifically Brazilian sparkling wine registers an impressive compound annual growth rate of 7% since 2009 (IWSR, 2013). Domestic sparkling wine is, at the moment, the 4th most relevant drink on Brazilians’ beverage repertoire, where red wine is dominant (Wine Intelligence, Vinitrac® Brazil, Oct ‘14, n=707 Brazilian imported wine drinkers).
A recent Wine intelligence calibration study tells us that only 37% of Brazilian adults drink wine, revealing significant growth potential. It is expected that, if trends remain consistent, in a near future Brazil will benefit from a strong internal market and will therefore be able to create stronger producing companies and stronger brands – and we know Brazilians are good brand builders.
With such a domestic threat, how can international producers create their own profitable space in the Brazilian market and take over its potential? In our Brazil Landscapes 2015 study we found out that although domestic wine has been growing faster, Brazilians are looking to other producing countries, driven by growth in the middle class; and especially towards wines from outside of South America. But, we also found that if until now growth has been driven mostly by value rather than by volume, it is now expectable that a drop in value may occur due both to the devaluation of the Real and the fear of spending – Brazil has been going through political issues that can undermine all the market potential.
The big events, first the World Cup and next year the Olympics, are attracting the attention of international wine companies and competition has been increasing. Natasha, on her recent trip to Brazil, found out a cover story of Californian wines (a very niche category in Brazil) on her Brazilian airline inflight magazine.
With the world’s fifth biggest population and established domestic wine production and consumer bases, Brazil has the potential to be a powerhouse for the global wine market, but what will happen next is still very uncertain. Who knows; may one day consumers around the world find Brazilian wine in their local supermarkets and restaurants?
Author: Luis Osorio