Brazil’s retail and consumer products sector reports 91.9% surge in foreign direct investment value
New York, 10 August 2012 – A stable economy and a burgeoning middle-class population has resulted in Brazil’s retail and consumer products (RCP) sector seeing a 91.9% increase in foreign direct investment (FDI) during 2011, compared with 2010, according to EY’s first annual Brazilian Attractiveness Survey.
With 44 FDI projects in 2011, representing 9% of the total projects for the country for the year, the RCP sector has seen strong investment levels in recent years. This has resulted in the country’s employment levels being boosted by the sector, with 23,051 jobs created during 2011, the second highest of all industries in Brazil.
Commenting on the findings, Emmanuelle Roman, EY’s Global Consumer Products Leader says, "Brazil offers significant growth prospects for RCP companies but it is a diverse market and competition has become more intense. Companies that are able to customize their approach to meet the needs of the different growth opportunities will be best positioned to win in this rapidly changing market."
Currently, more than 50% of Brazilians belong to the middle-class (C class — with a family income in the range of US$750 to US$3,229 per month). Almost 40 million Brazilians climbed to this class between 2003 and 2011 and Brazil’s economically active population (age group 20–54 years) has increased by 12.3% to reach 101.6 million in 2011 from 90.5 million in 2003.
Many RCP companies such as Nestlé, Danone and Kraft Foods have announced plans to penetrate the Brazilian market further and leading players, such as Carrefour of France and Wal-Mart of the US, have a strong presence in the country. Online marketing, with the growth of the e-commerce industry, has also contributed to the RCP industry in Brazil. The majority of RCP investments are concentrated in the southern region of the country; however, with upcoming growth in the northern part, companies plan to diversify their investments.
On the future outlook for the RCP sector in Brazil, Roman summarizes, "There is no doubt Brazil will remain an attractive market for RCP companies in the years ahead. Many challenges still exist. As companies expand in Brazil, they will need to manage rising costs and complexity and keep abreast of changing consumer and shopper preferences. Clarity of strategic choices and strong local execution will be critical."
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