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Jaime E. Fensterseifer School of Management and Agribusiness Research Center

The Brazilian Wine Sector in Perspective. Jaime E. Fensterseifer School of Management and Agribusiness Research Center Federal University of Rio Grande do Sul Porto Alegre - RS, Brazil. The Emerging Brazilian Wine Industry Wine Market , Imports, Exports

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Jaime E. Fensterseifer School of Management and Agribusiness Research Center

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  1. The Brazilian Wine Sector in Perspective Jaime E. Fensterseifer School of Management and Agribusiness Research Center Federal Universityof Rio Grande do Sul Porto Alegre - RS, Brazil The Emerging Brazilian Wine Industry Wine Market, Imports, Exports Characteristics of Consumption Behaviour Concluding Remarks Eiswein Grapes

  2. Viticulture Regions

  3. Evolution of Areas under Vines in Selected Countries (In 1000Ha) * Provisional ** Forecast *** Data from INAVI (www.vinosdeluruguay.com) Source: OIV State of the VitivinicultureWorldMarket 2009

  4. Evolution of the Brazilian Wine Industry Source: Adapted from Tonietto & Mello (2001)

  5. Distribution of Wineries by State Total: 1162 RS: 60.4% Source: MAPA, IBRAVIN, 2007

  6. Salient Features of the Brazilian Wine Industry... • Concerted efforts towards upgrading wine quality • Strong entrepreneurial spirit • Development of regional identity for the different terroirs • Good research, laboratorial, technical assistance and training infra-structure • Enotourism: it is well developed in the Serra Gaúcha region and begins to spread to other regions of the country • Investments in new grape growing areas with favourable soil and climatic conditions • The synergistic effects and positive externalities arising from the existence of an institutionally developed wine “cluster” (Serra Gaúcha) …

  7. …Salient Features of the Brazilian Wine Industry • An export consortium involving 38 important wineries (collective entrance in the export market “learning curve”) • A consistent and significant increase in exports (although still extremely low) resulting from the collective learning process • A consistent increase in commercialization of fine sparkling wines (a high potential and fast growing segment, where the local product has succeeded in maintaining a 2/3 market share) • Important wineries are in the process of “active internationalization” process • Collective planning capability: a 20-year horizon and collectively formulated Strategic Development Plan for the wine sector (Vision 2025), among other projects.

  8. Competitive environment and limiting factors faced by the Brazilian wine industry • Aggressive export strategies on the part of established as well as emergent wine-producing countries • Excess global supply • Rather stagnant worldwide consumption • Low per capita wine consumption (2 litres, compared with around 30 litres for Argentina and Uruguay, its neighbours and Mercosur partners) • Absence of a culture of regular and moderate wine consumption during meals • Lack of image as a wine-producing country • Low importance of the sector for the national economy (although it is economically important for Rio Grande do Sul, where it is concentrated) • High incidence of taxes (they represent over 42% of the consumer price, compared with approximately half of that for Argentina and even less for Chile, currently the two largest wine exporters to Brazil)

  9. Table(non-vinifera)andFine(vinifera)Brazilian Wines Commercialized in the Domestic Market(Still Wines, in Millions of Litres) Production Base(Average for 2006 to 2008): Grape Production (Millions of Kg ) Vinifera: 70.8 Non-vinifera:471.9 TOTAL Table Wine Wine Production (Millions of Litres) Fine wine: 40.9 Table wine: 249.3 Derived products*:74.5 Fine Wine *Includes sparkling wines (17.5 M. Litres) Source: Compiled from UVIBRA (2009)

  10. Fine Still and Sparkling WinesMarket (2001-2008) Sparkling Wines (Thousands of Litres) Still Wines (Millions of Litres) Source: UVIBRA (2009), elaboration by the author.

  11. Fine Still WinesMarket: Brazil vs Imports (2001-2008) (Millions of Litres) (% Market share) Vol. % Imports TOTAL Imports Brazil Brazil

  12. Fine Sparkling Wine Market : Brazil vs Imports (2001-2008) (Thousands of Litres) (% Market share) Vol. % Brazil Total Brazil Imports Imports

  13. Imported Still Wines: Top 5 Origins (OW vs NW) (% of Imported Volume, 2001-2008) % % Chile C+A Argentina Italy I+P+F Portugal France

  14. Imported Sparkling Wines: Top 4 Origins(OW vs NW)(% of Imported Volume,2001-2008) % % F+I+S Italy Argent. France Argentina Spain

  15. Effervescents du Monde®(Sum of Medals: 2003-2008) Source: Compiled from www.effervescents-du-monde.com<Accessed 15/06/2009>

  16. BrazilianWines (Still plus Sparkling)Exports (In 1000L, ranked by value exported in 2008) *First year after creation of Wines from Brazil **In 2008 exported to 41 countries Source: Compiled from MDIC/SECEX

  17. Some General Characteristics of Wine Consumption Behaviour • Growing interest in wines in general (wine is “in”) • Increasing interest in learning about wine • As consumers increase their knowledge about wine there is a tendency to consume more wines from traditional European countries(Argentine and Chilean wines are considered, however, more price-competitive) • Imported wines are perceived as being of a higher quality than Brazilian wines (although steady improvements in the quality of Brazilian wines are generally recognized) • Brazilian sparkling wines are considered price-competitive and there is, in general, a preference for the national product • Preponderant preference for red wines (66.9 %), followed by white (31.3 %) and rosé (1.8 %)(based on consumption data for 2008) • Substitute products annual per capita consumption: Beer (56 L) and Cachaça (11 L)(compared to 2 L for Wine)

  18. Concluding Remarks ►It is a market to be developed ! ◄ ▼ High growth potential: • 190 million inhabitants • 2nd largest wine consumer in Latin America • growing interest in wine • low per capita wine consumption • tendency for wine to partly substitute the two highly consumed alcoholic beverages (beer and cachaça) • increasing purchasing power and growing middle class • favourable economic outlook ▼ Partenariats, Joint-ventures, Joint promotion (Cooperation and Competition!)

  19. Me r c i! jaime.ef@terra.com.br

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