MARKET WATCH BRAZIL’S TWO MARKETS 2/09 MEININGER’S WBI 2/09 MEININGER’S Considering that it’s one of the world’s most dynamic emerging economies, Brazil has yet to receive a lot of attention from the wine industry. But, reveals Graham Holter, recent Wine Intelligence research has revealed that now is the right time to get established in this tiny, but growing market. He presents the latest customer findings.

The Australian Trade Commission advises • Brazil is a 34m case market with a per head consumption of two litres. producers that the pricing structure is not par- • Imported wine is a recent phenomenon and locally produced ticularly helpful. “There is still a low con- include those made from non vinifera vines. sumption of wines in per capita terms, espe- cially if compared with the consumption of • There are clear differences between the way wine is consumed in Brazil’s beer (52 litres per year),” it says. “This is due two major cities. mainly to the price factor. For example, a • makes up 80% of the market. Chilean average wine is 10 times more expen- SUMMARY BOX SUMMARY sive than a 375ml bottle of beer.” uch has been made of the potential just under two litres, but that includes wine It would be wrong to suggest things are of India, China, Russia and even made with hybrids and . changing rapidly – but from a wine industry MJapan, but few have seriously Anything from is defined as a perspective, progress is being made. The wine explored what opportunities await exporters fine wine in Brazil and if you only count Vitis trade in Brazil is experiencing modest (though in South America’s largest country. Brazil is vinifera wines, per capita consumption is consistent) growth of 3.3% a year and there the world’s tenth largest economy, with even smaller: 0.427 litres.” are signs that, in the bigger cities, wine drink- almost 200m people, and a long history of domestic wine production. There’s a good reason for this. Brazil has São Paulo yet to open itself up to wine drinking gener- wine frequency of consumption by occasion Base = Affluent drinkers of imported wine (n=303) ally, or to imported wines, in any major way. It’s currently a 34m case market, with a per 100% 11% 4% 4% Most days/every day head consumption of two litres. Yet this rel- 90% 10% 10% 2 –5 times a week atively paltry per person consumption level, 18% 80% 15% 13% multiplied by a prodigious population, About once a week means that the market for wine is already 70% bigger than South Africa, Switzerland and 28% 16% 19% About once a month 60% Chile, and not far behind Canada and the Once every three months 2% Netherlands. This is a market with the word 50% 3% 8% 51% Once or twice a year ‘opportunity’ stamped all over it. 8% 40% 31% Who is drinking what 51% Never 30% Beer and cachaca remain the alcoholic beverages of choice. Traditionally, when 20% Brazilians have drunk wine, it has tended to 1% 10% 2% be of the domestic variety: imports are a fair- 9% 0% ly recent phenomenon. Brazilian-produced At home Bars or pubs Restaurants wine – most of it red – tends to have a sweet- SOURCE: WINE INTELLIGENCE, VINITRANC® BRAZIL, MAR’08, N=608 AFFLUENT DRINKERS OF IMPORTED WINE, SÃO PAULO AND RIO DE JANEIRO er profile than in most other producing nations, a factor that has hindered both exports and imports. Distell is achieving some success with ing is becoming more popular. In São Paulo, And, according to Dirceu Vianna Junior brands such as Two Oceans. Carina Gous, 69% of adults currently drink wine, and in Rio MW, a native Brazilian who is now wine general manager, for wine marketing, points de Janeiro the proportion is 53%. development director of Coe Vintners in the out that in 2008, imported wines made from Wine Intelligence has taken a closer look UK and who lectures regularly in Brazil, the Vitis vinifera accounted for 20% of the mar- at both cities as part of its Vinitrac Global issue is even more complicated. “People are ket and comfortably outsold native Vitis project, which analyses the habits of regular talking about per capita consumption being vinifera wines. wine consumers in 15 international markets.

38 SOURCE: WINE INTELLIGENCE, VINITRANC® BRAZIL, MAR’08, N=608 AFFLUENT DRINKERSOFIMPORTED WINE, SÃOPAULO AND RIODEJANEIRO Base =Affluent drinkersofimportedwine(n=305) wine frequency ofconsumptionbyoccasion Rio deJaneiro drinking is more common than on-premise on-premise commonthan ismore drinking at least citiesathome twiceaweek, andinboth wine drink between athird Around 25and44. males, andapproximately aged are halfofthem is just 12%.proportion inSãoPaulo, outsideBrazil; the produced wines inRioregularlyrespondents drink percentof on imported wine.Thirty-two tion was lower was question focused whenthe wineatleast monthly,drink propor- butthe 37% found researchers that Vinitrac ofadults RioandSão Paulo, Inboth tic products. choices to their and whodonot domes- restrict onabottlemore ofwineatleast onceamonth, whotypically spendR$10sumers ($4.40)or is,con- ofimported wines’ –that drinkers develops complexity. more market Brazilian research asthe further forpopulations, andalsoprovides aplatform between(and notable two similarities) the differences highlightsomeintriguing results geographically. results compared the The two biggest inthe cities,and wine drinkers atotalface to with of608 faceinterviews was conducted madesimpler: researchers survey what lessdeveloped this inBrazil, issome- wine. Butbecausewinedrinking andattitudesto based ondemographics intoits respondents discrete sub-groups, usually divides survey the countries In other 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% These consumers are more likely more are These consumers to be The research was to restricted ‘affluent At home 32% 28% 19% 14% 5% 2% 1% Bars orpubs 33% 29% 18% 5% 8% 5% 2% wine category is. As Brazil is a red winepro- isared is.AsBrazil wine category market ishow under-developed white the ure matchedure by sales. direct Internet andother 16%account for afurther ofallwinesold,afig- ience stores establishments (23%).On-premise market conven- issoldpredominantly through 51% remaining ofthe large proportion ofthe is soldinsupermarkets andhypermarkets. A sumption andrestaurants. inbars con- evidencemore ofmuch frequent more bestto bet. is bethe InRio,by contrast, there for supermarket now channel the would appear SãoPaulo though make on-trade, inthe inroads to wineindustry for the clearly anopportunity is There forpreference at-homewinedrinking. city’s orpubs,underlining the wine inbars inSãoPaulowine consumers have never drunk affluent usualinRio.Halfofthe ismore bration orcele- wineataparty Paulo, whiledrinking occasioninSão most commonwinedrinking consumption. the mealsathomeare Informal has been reported growth in the white inthe growth has beenreported nation.However wine-drinking other there marketthe almost every outofkilter with of 10 shoppingbaskets bottles intheir puts butto drinkers, account forregular eightout most popularchoice asthe see reds among toducing country, it’s perhaps nosurprise White opportunity Restaurants A striking feature of the Brazilian wine Brazilian featureofthe A striking Almost half(49%)ofallwinesoldinBrazil 31% 11% 31% 16% 6% 5% 1% About onceamonth About onceaweek Never Once ortwiceayear threemonths Once every 2 –5 timesaweek day Most days/every 39 100% Base =Affluent drinkersofimportedwine(n=608) red, whiteandrosé winesconsumed Proportion of 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% ing the imported wine league, with a33% imported wineleague,with ing the notable for itsfondness for Italianwines. especially inSãoPaulo, apparent acity colonialmaster atrend former Portugal, over Atlantic from flown the products seemto drinkers prefer Brazilian regular excited aboutChileanandArgentinewines, worldmany increasingly ofthe are parts At atimewhen countries. neighbouring winesof tive for lack the ofenthusiasm Rio’scompared 24% with and18%. of36%and33%respectively, scores with popularinSãoPaulo,be appreciably more Paulo). Rosé andsparkling winesappearto a littlelesswell (47% inRioand40%São inRio).ChampagneSão Paulo fared and44% weresaid they white (48%in winedrinkers cities inboth surveys Vinitrac tioned inthe comingyears. inthe generally market Brazilian ue to for actasadriver the 2003 and2007), which isexpected to contin- (9%betweendominated sparkling category from Argentinaand Chile.Currently from atlower mainlywine ofgoodquality prices, people haveBrazilian accessto imported atConchabrands yToro: andmore “More Bianchetti, director ofmarketing for global 16%.Italy with According to Giancarlo and 27% respectively, share followed by Red Box: This isdespite ChileandArgentinalead- rela- It’s alsointeresting the to observe ques- Fewer drinkers halfofthe than São Paulo 8% 13 city ata95%confidencelevel Significantly higherthantheother 78% Rio deJaneiro 79% 5% 15 BRAZIL % White % Red % Rose

2/09 MEININGER’S WBI MARKET WATCH

Argentina pays a duty of 0% for wine education, people are hungry to learn more, wine which has been recommended by exports to Brazil and Chile will do the same with plenty of wine clubs, magazines, tele- family or friends. Gous at Distell suggests in 2011, so imported wine is a segment that vision programmes and a wine column in the ‘conservative’ tag is misleading. will be increasing soon.” the prestigious magazine Veja. “The market “Actually, Brazilians are amongst the fastest 2/09 MEININGER’S WBI 2/09 MEININGER’S In terms of favoured grape varieties, is conservative but first and foremost it is in the world to adopt new trends,” she says. there is little to choose between the cities. price-sensitive.” “This is partially the result of the extremely When consumers were asked which vari- One easy bit of advice is: be wary of your high level of Internet penetration, with etals they had consumed in the past six choice of closure. The Vinitrac research Brazilian Internet access ranking amongst months, , and detected a strong preference for natural the top five countries in the world. However, topped the list in both areas. Among cork – it has an 88% approval rating in São imported wine remains the drink of the elite the white varietals, leads the Paulo and 91% in Rio. Wine drinkers were and more needs to be done to give it a more way, followed by . Chenin not merely indifferent to other closures; populist appeal, by demonstrating its versa- Blanc comes in third in São Paulo, a position they were openly hostile. In Rio, 83% of tility, showing that it can be enjoyed occupied by in Rio. those questioned said they did not like amongst friends on a variety of occasions, screwcaps, and 73% said they did not appre- not just when dining.” What motivates consumers ciate synthetics. In São Paulo, 69% opposed Wine origin Arguably the biggest question facing screwcaps while 65% gave synthetics the anyone wanting to sell wines in Brazil must thumbs-down. Yet consumers have been Although country and region of origin be: what motivates wine consumers? This is won over in supposedly entrenched markets are important buying cues, awareness and not (yet) a particularly sophisticated market like the UK, and indeed Concha y Toro says penetration of some of the world’s most pres- – according to some research there is con- screwcaps are quickly winning approval in tigious wine producing areas is noticeably fusion among some consumers between Brazil despite an initial resistance. low. For example, in Rio, only 47% of regular

Have you ever drunk wine from Important considerations when shopping for wine the following wine producing places Base = Affluent drinkers of imported wine (n=608) Base = Affluent drinkers of imported wine (n=608)

São Paulo Rio de Janeiro São Paulo Rio de Janeiro

Brazil 95% 96% Promotional offer 90% 85% Portugal 73% 64% A brand I am awar of 82% 82% Chile 41% 36% Country of origin 59% 77% Argentina 30% 25%

France 19% 14% Region of origin 58% 75% Italy 34% 14% Alcohol content 80% 72% Germany 9% 7% Recommendation by friend or family 79% 68% Spain 10% 7% South Africa 1% 2% Grape variety 49% 67% Australia 3% 2% Appeal of the bottle or label design 42% 55% Uruguay 4% 2% Recommendation by shop staff or shop leaflets 52% 47% New Zealand 2% 1% USA 1% 1% Medal or award 24% 44%

Significantly higher than the other city at a 95% confidence level Significantly higher than the other city at a 95% confidence level AND RIO DE JANEIRO SÃO PAULO WINE, AFFLUENT DRINKERS OF IMPORTED N=608 MAR’08, VINITRANC® BRAZIL, WINE INTELLIGENCE, SOURCE:

Champagne and cider – and there is clearly In Rio, wine drinkers are more likely to wine drinkers are aware of Bordeaux. And work to be done by marketers and retailers. be swayed by country and region of origin that was a high score: achieved Says Junior at Coe Vintners: “The vast than their counterparts in São Paulo, and a mere 35% awareness rating and Burgundy majority of consumers don’t make a distinc- more interested in the label design and the just 27%. scored even lower, with 18%. tion between a fine wine and a vitis labrus- awards a wine has won. In São Paulo, alco- Only 11% of Rio wine drinkers said they ca, or sangria, or any type of flavoured hol content is an important consideration, had actually bought in the drinks.” He says that while there is a lack of and consumers are more likely to select a previous six months, which seems

40 long this will take is difficult to guess.,” willtake adds long this isdifficult become amajor consumerofwinebuthow market.” toresources the andfinancial cate timeandeffort more goingto are dedi- suppliers on.Ithink carry anditwill process wine. It’s beenagradual interest andmore is more in can seethere exciting it’s avery everything, market. You should preoccupy marketers. that region contained andmanageablesouth-eastern more miles ofit–butrealistically it’s the inspection–all3.3msquare least onfirst to target, It’sat adauntingcountry them. hasdevotedretailing industry to educating wineand lack the ofattention the that with conservatively, itmust to besomething do tively unworldly, atendency to with behave still initsinfancy. rela- are Ifitsconsumers answer must be:not yet. blighted Western markets? Thehonest and plateauing recession- demandfrom ofwine, unsoldtanks saddledwith exporters of capacityto problems solvethe the havenational winebusinesses?DoesBrazil which isgoingto focus change ofmulti- the awarenessbrand table. whichbrand placeinthe beatitto first deBoi,the was slightly aheadofSangre Chateau Duvalier’sfound penetration that research the inRio,although holds true Thesame pastchased sixmonths. inthe most are likelyrespondents to have pur- ones which known alsothe are brands awareness top inSãoPaulo four best –the of penetration. awareness interms zero andanother rating a13%while, dideven inRio,with worse than achieved apenetration of5%.Rioja,mean- byrecognised 15% and ofrespondents, and14%rating, penetration; Burgundywas 10%. Champagne achieves a31% awareness penetration washigh: proportionately the Bordeaux’s awareness was rating just 26%, city inthis past. recent Although the lihood ofhaving boughtsomeof itswinein between awareness like- andthe ofaregion figure. round a single, Rioja’sconsidered. in canbemeasured score Champagne (4%)andBurgundy(3%)are for penetration scores whenthe respectable Junior at Coe Vintners says:Junior atCoeVintners “Despite asawineconsumingnation,is But Brazil, addupto amarketplaceDoes allthis between isasolidcorrelation brand There isaclosercorrelation In SãoPaulo, there “Ultimately, potential has the to Brazil next 10 years.” market] the if[the during trebles surprised established “Iwould winedrinkers. not be get isfor 10% populationto become ofthe amazing,” hesays, arealistic tar- addingthat marketupbeat. “Brazilian potential is growth anticipated.”was originally wine onawiderscalemay take longerthan which take Brazilians speed with to such wine isstill perceived asaluxury, sothe andimported ofprice, onpragmatics more to isforcing consumers focus crisis credit global Distell’s present the Gous.“Ofcourse, Base: Affluent drinkersofimportedwine(n=305) Rio deJaneiro –Top 10brands(awareness) Base: Affluent drinkersofimportedwine(n=303) São Paulo–Top 10brands(awareness) Casillero delDiablo Chateau Duvalier Chateau Duvalier Marcus James Bianchetti atConcha yToro ismore Sangre deBoi Sangre Marcus James Casai Garcia Sangre deBoi Sangre Gato Negro Casal Garcia Periquita Garibaldi Almaden Periquita Garbialdi Almaden Miolo Chalise Gallo Miolo 0% %2%4%6%8%100% 80% 60% 40% 20% 0% 41 20% 24% 25% 25% 26% 33% 40% 38% 37% 38% 42% market will be there for the taking. market for the willbethere topared invest intelligently, potent this new For winemarketersthings. pre- whoare for knowledge, new eagerto more grier try to –hun- isready emergeinBrazil drinkers anew ofwine impression generation that too.surely increase isadistinct There involvement country’s winewill the with world’splace amongthe elite, commercial 44% 46% As itseconomy takes grows andBrazil its 47% This article wassuppliedby Wine Intelligence. 54% 55% 60% 70% 71% 73% 0 100% 80% 78% BRAZIL 88% 90% 

SOURCE: WINE INTELLIGENCE, VINITRANC® BRAZIL, MAR’08, N=608 AFFLUENT DRINKERS OF IMPORTED WINE, SÃO PAULO AND RIO DE JANEIRO

2/09 MEININGER’S WBI