Luis Osorio, Country Manager for Portugal, reflects on his recent trip to Brazil and what the wine sector in the country needs to do to succeed
‘Ordem e Progresso’ (Order and Progress) is the motto inscribed across the national flag of Brazil. It is a shortening of one of the teachings of the positivist philosopher Auguste Comte, who was very much in the minds of the original founders of the Republic of Brazil when they overthrew the monarchy. In some ways it couldn’t be a better fit for the country as the first highly depends on the second. As a Portuguese that deeply loves Brazil and has often visited it, I couldn’t agree more that if ‘order’ and ‘progress’ are somehow correlated, Brazil is the perfect example, in both a good and bad way.
I remember the first time I went to Brazil – It was over 15 years ago on a family trip to Rio. Back then, I decided I had to live there sometime. A couple of years later, I landed in Rio again, this time for a year-long university exchange program. I guess I fell in love with the way Brazilians express their love for life. While in many societies people waste a lot of time highlighting differences, Brazilians instead celebrate them – this country is home to almost all races. On a short walk in Ipanema or Avenida Paulista, one finds the same faces found in Amazonia, the Andes, Portugal, Italy, Germany, Angola, Japan, Lebanon, etc. São Paulo alone has the largest Japanese and Lebanese immigrant communities around the world.
Since my life in Rio, a lot of things have changed. Back then, the Olympics and the World Cup had just been announced and the country was still living the ‘economic miracle’. These great sports events, planned to boost the country’s much needed ‘progress’, made Brazil’s deep structural problems emerge at a social, economic and political levels. Disorder, corruption scandals and violence stormed Brazil’s lush landscape over the past 5 years, resulting in an economic crisis.
But we are now at what it seems to be the end of the crisis – Brazil’s economy is (slowly) recovering. And during recovery, opportunities arise. What will happen is still highly unpredictable and key risk factors will dictate the near future, such as the upcoming presidential elections, the outcome of Rio’s increasing violence, the outcome of the most recent political and corruption scandals, the likely Mercosur / EU trade agreement, and the proposed changes in the tax system.
On a more sensorial level, on my most recent visit to Brazil three weeks ago, I particularly liked what I came across. Of course, I found the same love for life and easy happiness with which Brazilians keep going. (This way of life, I think, will never see a crisis strong enough to affect it). But more than that, I much enjoyed the Comte-like positivity of those I visited and talked to for business, particularly within the wine sector.
For the wine sector, I felt that there is a general confidence that things will be brighter: for example, the optimism expressed by importers and retailers, the dynamism of the new generation of wine producers in the South, and the innovation in the on-trade in São Paulo. There is also the increasing interest from consumers for new and different wines with new wine regions and countries of origin starting to occupy new space in the market place via incredibly creative events and engagement activities, as well as the surprisingly high importance of the digital with very successful e-commerce and other digital related startups (see Wine Intelligence’s recent article on the digital buzz in Brazil).
I felt, essentially, that wine businesses currently have good momentum, and somehow this is a key period for those aiming for long term success – we could even call it ‘progress’. On the other hand, the wine sector remains somewhat short of ‘order’. As a humble observer, my prescription for reform comes in 3 dimensions:
- General stability in economic terms, and more specifically at a tax level – Businesses need a business-friendly and predictable system, which is not currently the case. At Wine Intelligence, we are developing a Brazil Routes to Market report that will explore this topic in more detail. It is currently due to be published in May 2018.
- Convergence in terms of wine industry against competitor industries (e.g. beer). 100% of those I talked to agree that wine urgently needs to gather key industry stakeholders – importers, retailers, online retailers, domestic producers and the international brand owners (particularly the Chileans and the Portuguese) – around a table and make them drink a glass together rather than focusing on competing against one another. With such a low wine consumption per capita (1.8 litres against 45 in Portugal), it is clear that the current opportunity is bringing new consumers to the category. Wine has strong arguments to compete against beer and spirits, who are the real competitors – though it can only do so successfully if all of those interested take part.
- Increased access to insights. 100% of those I spoke with mourn the fact that there are very limited market insights available. Marketing decisions aren’t being driven by insights apart from, maybe, the very successful e-commerce businesses from the past few years whom can create their own data digitally. Who are our consumers? What do they like? Where do they buy? And how? What should packaging look like? What are the packaging requirements? Where are the main opportunities? These are everyday questions that need urgent answers. (See more on how Wine Intelligence can help in the posts What is Vinitrac®? and exploring our website).
Wine Intelligence, through its Reports Shop and worldwide industry experience, is committed to bring more light into this fascinating market. Currently available are Brazil Landscapes 2017 and Online Retail and Communications in the Brazilian Market 2018 reports. Over the next few months, we will be publishing Brazil Sparkling, Brazil Routes to Market and Brazil Landscapes 2018 reports. We will keep you informed!
Author: Luis Osorio