TRADE PROMOTION SECTION Quarterly Business Newsletter | Issue No. 22 | 1st Quarter 2020

This is a quarterly publication by the Embassy of in Nairobi which aims to create awareness of existing trade and investment opportunities between Brazil and Kenya, Uganda, Rwanda, Somalia and Burundi.

Quarterly Business Newsletter | Issue No. 22 | 1st Quarter 2020 CONFECTIONERY SECTOR IN BRAZIL 3 Chocolate Confectionery 3 Chocolate Consumption 4 Sugar Confectionery 4

TRADE FAIRS 5 THE STATE OF ESPÍRITO SANTO 6 Economy of Espírito Santo 8 Tourist attractions in Espírito Santo 10

RECENT HIGHLIGHTS 11

BRAZIL’S DEMOGRAPHIC AND ECONOMIC DATA

Surface area (Sq. Km) 8,510,820,623 km2

DEMOGRAPHIC DATA (WORLD BANK/IBGE) Total Population (Oct 2019- estimate) 210,981,325 Population growth rate (2018) 0.78% per annum Population density (2018) 24 inhabitants/km2 Urban population growth rate (2018) 1.09% per annum

ECONOMIC DATA (IBGE DATA) GDP (2018 in US$) 1.885 Trillion Inflation target 2019 4.25% ± 1.5% Inflation (IPCA) December 2019 1.15% 12-month cumulative inflation (Dec 2019) 4.31%

Trade Balance (BCB Data) Exports (Jan-Dec 2019) USD 224.0 billion Imports (Jan-Dec 2019) USD 177.3 billion Trade surplus (Jan-Dec 2019) USD 46.7 billion Total trade flow between Brazil USD 58.25 million and Kenya (2019)

Financial and Capital Markets – (BCB Data) Base Lending Rate (Selic Rate – (Dec 2019) 4.59 %p.a Long-term lending rate (TJLP – (Dec 2019) 5.57 %p.a Stock Market Value (IBOVESPA) (DEC 2019) USD 1.256 trillion Number of companies listed in BOVESPA 325 Embassy of Brazil in Nairobi

CONFECTIONERY SECTOR IN BRAZIL It is typical to see a chocolate store in almost every Chocolate Confectionary neighborhood in Brazil. The only other place in the world where there is this much chocolate is Brussels. Brazil has an incredibly deep and intense relationship with cacao and chocolate. Brazil is the world’s fifth-largest producer of cocoa and has long been a fundamental part of the worldwide chocolate supply chain. Brazil’s production was at 195 thousand tons in 2019 generating revenues of US$ 811.2m domestically and US$ 290.4m internationally. Main producing areas of chocolate in Brazil are from Bahia, Espirito Santo, the upper Amazon and lower Amazon, near the border of Bolivia, Peru, Ecuador, Colombia or Venezuela. There are about 50 thousand cocoa farmers in Brazil and 50% of them are located in the state of Bahia, which produces about 95% of Brazilian cocoa. The state of Espírito Santo produces 3.5% Brazil is among the six countries that lead the and the Amazon produces 1.5%. The sector volume of chocolate retail sales. The others include represents more than 4,000 direct and indirect jobs, the United States, Germany, Switzerland, Belgium, and is one of the links of a chain of more than 120 United Kingdom and France. Brazil chocolate thousand people, including farmers and chocolate market recorded revenues worth US$ 3.2billion industries. Brazilian confectionary revenues in 2018. The industry is concentrated especially in amounted to US $ 429.6 million from January to São Paulo, but there are also important producers October 2019, according to data available on the in Bahia, Espírito Santo, Paraná and Rio Grande do Federal Government Statistics Portal, ComexStat. Sul.

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Gourmet chocolate recently emerged in Brazil, but The consumption of chocolate per inhabitant still only represents 3% of the domestic production. in Brazil has grown a lot since the 1970s. At that This segment is expanding in the Brazilian chocolate time, the consumption was around 300g per year. market to meet export demands. Gourmet Nowadays the annual average is 2.5 kilograms chocolate uses more cocoa than normal chocolate per person annually. One of the reason for this making it taste bitter. The production of fine cocoa, increase is that Brazilian is increasingly identifying which is used in gourmet chocolate production, is chocolate as a food type. The highest consumption concentrated in the state of Bahia. of chocolate is in the southern states. Surveys indicate that the volume of chocolate consumption Brazil can supply the right chocolate for all kinds is strongly related to the income per capita of the of audiences, from the luxury market to the more population. popular kinds. Nevertheless, what sets Brazil apart is the fact that Brazilian producers have state-of- The purchase of chocolate is more concentrated in the-art technology. Increasingly, specialist and supermarkets, where people can find many flavors artisanal chocolate has been Brazil’s chosen target, and brands with lower prices. A box of bonbons allowing for high-quality production from cocoa are the most popular option for the lower income farming to squares, slabs and bars of finished earners while middle and high income earners chocolate. This niche slice of the market also allows consume the most chocolate and prefer buying it producers to experiment, making use of other in specialized stores. ingredients only found in Brazil. The consumption of chocolate has increased more Chocolate Consumption than the production; therefore, the country has are chocolate lovers. According to ABICAB, reduced exports and increased imports in order to (Brazilian Association of the Chocolate Peanut and supply domestic demands. The main sources for Sweets Industry), 75% of the population consume Brazil are Peru, Chile, Argentina, South Korea and chocolate and 35% would choose chocolate over Japan. any other food or drink.

Main Players The major brands like Mondélez, Garoto and The other main players in the market are Amma Nestlé have greater prominence in the market, Chocolate, Mendoá, Chor and Nugali, which are but specialized stores such as Cacau Show and all Brazilian chocolate producers that have seen Kopenhagen also have a considerable market significant growth over the last few years. Nugali’s share, mainly in the Southeast and in the capitals. chocolates won the Silver Medal in the prestigious The three largest companies that are responsible International Chocolate Awards, which recognizes for 76% of all sales in Brazil are: excellence in the business. The company in Santa • Mondélez: this company has 32% market Catarina state began introducing acai, Brazil share and produces some of the most nuts and other unique ingredients, which has traditional chocolates brands in Brazil increasingly piqued foreign interest in its products. such as Bis and Sonho de Valsa, under Other players include Hershey’s, Arcor, Mars and the brand Lacta. In addition to leading the Ferrero. market, it is also the number one in the sale of chocolate Easter eggs, which are the Sugar Confectionery favorite for children Abicab represents 93% of the candy market in • Garoto: has 22% market share and Brazil. Brazil is the sixth country with the largest produces popular chocolates such as retail sales of sugar confectionery and chewing gum, Batom and Serenata de Amor reaching a production volume of 278000 tons, in 2018. The volume exported was 88 thousand tons, • Nestlé: used to lead the market, but an increase of 13% compared to the previous year slipped to third place with results while imports reached 13,000 tons in 2018. Top compared to Garoto. Currently has 21% destinations include the United States, Paraguay, market share. Argentina, Mexico, Uruguay, and Canada.

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The national average consumption is 1.4 kg natural colors and flavors are already being per inhabitant / year. According to a research developed and used by the sector. commissioned by Abicab, 55% of Brazilians Associação Brasileira da Indústria de Chocolates, consume candy & gums at least 3 to 5 times a week, Amendoim e Balas (ABICAB) mainly motivated by the taste and pleasure they offer. Mint and fruit flavors, caramels and toffees The Brazilian Cocoa, Chocolates, Peanuts, Candies are more appreciated. Gum pellets and candies and Byproducts Industry Association (ABICAB), are also very popular. represents the Brazilian confectionery and chocolates industry and works to support both Today, Brazilian companies are working on innovation and sustainable practices within the developing products that meet these new markets. sector. ABICAB manages the ‘Brasil Sweets and To this end, they are modernizing and improving Snacks’ exportation program, in partnership with production lines to achieve the minimum quality The Brazilian Trade and Investment Promotion required especially for healthiness. In this sense, Agency (Apex-Brasil)

TRADE FAIRS

Candy Show Date: 16 - 19 Apr 2020 Venue: Expo Center Norte, São Paulo, Brazil

Candy Show brings together hall and candy shops, confectionery & snacks born from the need of Brazilian industry and provides them with the opportunity to display their range of products, releases and mainly expand their business.

Fipan Date: 21 - 24 Jul 2020 Venue: Expo Center Norte, São Paulo, Brazil

“International Bakery, Confectionery and Independent Food Retail Trade Fair” Fipan is Latin America’s largest Bakery & Confectionery trade fair and one of the key ones to be intended for food service operators. It focuses on Bakery, confectionery and other establishment operating in the food service, its outstanding characteristic is the significant business making during its production, being a leader in the visitation of owners, directors, and managers.

ANUFOOD Brazil Date: 09 – 11 March 2020 Venue: São Paulo – SP, Brasil

ANUFOOD Brazil – Exclusive Trade Show for the Food and Beverage Sector – Powered by Anuga – is the only event in Latin America totally dedicated to the companies of various segments of the food and beverage sector, as well as pioneering in enhancing the agribusiness sector and its natural products.

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THE STATE OF ESPÍRITO SANTO

Espírito Santo Brazil

Vitória

Atlantic Ocean

Espírito Santo, directly translated to “Holy Spirit” in English, is a Brazilian state situated in the southeast of Brazil. It was given this name in reference to the Holy Ghost, believed by some Christian religions to be the third part of a trinity God (along with God himself and His son Jesus Christ). This is in response to the Catholic religion, introduced by the Europeans during the 16th century, which taught the locals Christian doctrines and methods of worship. Espírito Santo covers a total area of 46,180 square kilometers which is slightly large than Garissa County. It has a population of 4.02 million inhabitants. The capital of Espírito Santo is Vitória, which is located on an island. The state is well known for its sand dunes, ports and beaches due to an extensive coastline. Because of its positioning, this state enjoys many different types of vegetation and habitats, which are home to an array of wildlife. These habitats range from lakes and forests to coastal stretches and mangroves. It is also acclaimed for the forró, a unique style of dance. Espírito Santo enjoys a tropical climate along the coast, with dry winters and wet summers.

Economy of Espirito Santo Espirito Santo is one of the fastest growing Pulp and Paper Products states in Brazil. The state plays a significant role The state has several reserves of eucalyptus in contributing towards the National economy. plantations, which is the principal resource for the Espirito Santo accounts for about 2.5% of the total production of pulp. The pulp production industry National GDP. The GDP was US$308.8 million in is very well established thus having a robust 2016 according to reports by the Government of skilled labour. In addition, the region’s ports are the State of Espirito Santo. Some of the reasons well adapted for the export to the world’s largest that make the state an ideal investment destination consumers’ market such as China. include strategic location in the Southern parts of Brazil with access to extensive coastlines and Equipment for power generation one of Brazil’s largest ports, a well-developed The local government has a clear strategy to infrastructure system, qualified professionals diversify the energy matrix of the state. The state as well as investment incentives provided by the currently imports 2/3 of the energy consumed. Government of the State of Espirito Santo. Therefore, incentives are given for installation of renewable sources of energy such as wind farms

6 Quarterly Business Newsletter | Issue No. 22 | 1st Quarter 2020 and solar energy especially for the poor communities. The production and distribution of natural gas is constantly evolving, requiring large investments. The development of this sector is considered crucial for industrial development of the state. Metal mechanics Eucalyptus trees  This sector has evolved to supply not only the construction sector but also in the production of parts for the energy industry. With the clear expansion policy on the energy matrix of in the state, the sector holds potential growth. Iron Ore Espírito Santo plays a key role in the production chain of iron ore in Brazil. In addition to being very close to the largest producing region, Minas Gerais, it has ports connected by rail network. Among them, the Port of Tubarão near Victoria, which is considered the most efficient in the world for shipping commodities. Oil refining and coke The Espírito Santo’s Basin already appears as the second most productive in Brazil, and has reserves Coffee beans estimated at over 50 million cubic meters of oil. Currently, there is a gap in oil refinement with minimal Gas Chemical Complex  investments in this. Most of the oil produced is for the export market. Food and Beverages This sector offers a lot of potential both in the domestic and foreign market. Most of the tea and coffee production is done for the export market, especially to Asian markets. Chocolate production is high and its quality recognized internationally because of a very skilled labour and technology available for this sector. Clothing and Accessories Articles of clothing and accessories is one of the sectors that provides the most employment in the state. Two specialized industry centers were created between and São Miguel da Palha and in Vila Velha to encourage the growth of this sector. However, the market is highly fragmented and Wind farm  provides opportunities in the manufacturing value chain. Resin and elastomers manufacturing In tandem with the national plan to reduce the importation of chemical resources, Gas- Chemical Complex was created. Espírito Santo is specialized in the production of the fertilizer sector. There are also aims to explore the potential of expansion of the natural gas chain in the state.

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Tourist attractions in Espirito Santos Metropolitan Cathedral Santo Antonio Sanctuary: Built in the 1960s, the sanctuary has three domes. The architecture is in Baroque style, being a replica of a 16th century Italian temple dedicated to Mary in the city of Todi.

Palacio Anchieta

Palacio Anchieta: Jesuit building of the 16th century, houses since the 18th century the seat of the State Government. Facing the sea, overlooking Victoria Harbor, the building houses the tomb of Metropolitan Cathedral: The Cathedral was built Father José de Anchieta and is one of the oldest in the twentieth century in a neo-Gothic style, with government headquarters in Brazil. valuable stained glass. In its basement, there is a chapel where the bishops of the Holy Spirit are Carlos Gomes Theater buried.

Santo Antonio Sanctuary

Carlos Gomes Theater: Built in 1927 and designed by Italian architect André Carloni, who was inspired by the Scala theater in Milan, Italy. Capixaba artist Homero Massena made the Italian neo- Renaissance style dome.

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Camburi Beach Pedra da Cebola Municipal Park: Great for walks and contact with nature. At the site was a quarry, turned into a park thanks to a community action. The park also has a cultural space, meditation house, oriental garden and gazebo on a rocky wall, used for climbing.

Panela de Barro

Camburi Beach: Best known in the city, with about 5km, is ideal for sports such as sailing, kite surfing and ocean fishing.

Curve da Jurema

Curve da Jurema: Along the 800m of its sandy strip, visitors can admire the landscape, comfortably installed in one of the many kiosks with covered areas, serving delicious appetizers of capixaba cuisine.

Pedra da Cebola Municipal Park

Best representation of indigenous handicraft from Espírito Santo. A tradition that is passed from mother to daughter for at least 400 years. The pans makes typical seafood dishes more delicious, such as moqueca and capixaba pie. The Associação das Paneleiras (Cookware Association) works in the neighborhood of Goiabeiras and sells the pans.

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Caieiras Island

Caieiras Island: Surrounded by mangroves, the town is home to fishermen, crab pickers, shellfish gatherers and crab shredders. In its border, besides the beautiful landscape of the bay of Vitória, there are restaurants where you can try traditional dishes of the gastronomy of Espírito Santo, such as moqueca and the capixaba pie. Panela de Barro: Best representation of indigenous handicraft from Espírito Santo. A tradition that is passed from mother to daughter for at least 400 years. The pans makes typical seafood dishes more delicious, such as moqueca and capixaba pie. The Associação das Paneleiras (Cookware Association) works in the neighborhood of Goiabeiras and sells the pans.

Old Village The history of Espírito Santo began in Vila Velha, the oldest city in the state, which stands out for the beauty of its 32 km of beach. Founded in 1535 by Vasco Fernandes Coutinho, when it was still a captaincy, today the municipality has its main economic base in port activities. On the beautiful beaches of the city, you can stroll the boardwalk and taste delicious dishes in the kiosks. Famous for the song Madalena, written by singer and songwriter Martinho da Vila, Barra do Jucu is a place full of attractions, such as cuisine, which reveal the strong folk traditions.

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RECENT HIGHLIGHTS Brazilian Agribusiness Export Revenue Reached US$96.8 Billion in 2019 Agribusiness exports totaled US$96.8 (R$388) billion last year. That amount represents 43.2 percent of Brazil’s total exports, according to the Secretariat of Trade and International Relations of the Ministry of Agriculture, Livestock, and Supply. Full story here

Brazilian confectionery exports rise ahead of ISM 2020 A new report has highlighted 32% growth in Brazilian confectionery exports since 2015, as the country prepares its delegation for ISM 2020. Full story here

Brazilian Shares worth Buying in 2020, Says US Banking Giant JP Morgan JP Morgan reiterated its recommendation of overweight (above market average performance) for Brazil and signaled that the country is among the best countries to invest in Latin America in 2020. Full story here

São Paulo Is World’s Second-Most Desired Travel Destination in 2020 São Paulo is the second most desired city, sought by tourists from around the world to travel in 2020, beating destinations such as Tokyo, Tel Aviv, Vienna, and Dubai. Full story here

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INVEST & EXPORT

Trade and Investment Guide

BRAZIL’S TRADE PORTAL: INVEST EXPORT BRAZIL The Invest & Export Brazil website is a unique initiative of the Federal Government of Brazil, which brings together, on a single platform, information from various Brazilian agencies dedicated to trade promotion and investment attraction. A publication by the Trade Promotion and Commercial Section, Invest & Export Brazil is an efficient, coordinated Embassy of Brazil in Nairobi. government website highlighting Brazil’s business United Nations Crescent, and investment opportunities, promoting foreign No. 121, Gigiri. trade and attracting international investors to the country’s dynamic domestic economy. This P.O. Box 30754-00100 Nairobi, Kenya. informative website is a joint effort of Brazil’s Tel: +254 (0) 20 712 5765/6 Ministries of External Relations (MRE), Development, Industry and Foreign Trade (MDIC), Agriculture, Fax: +254 (0) 20 7125767 Livestock and Food Supply (MAPA) and the Brazilian Cellphone: +254 733 606460 Trade and Investment Promotion Agency (APEX- Brasil). [email protected] The platform brings together information on investment and business opportunities, presenting, www.apexbrasil.com in a structured and thematic manner, Brazil’s major industries and the institutions supporting www.nairobi.itamaraty.gov.br them. The Trade and Investment Guide follows the international trend towards cooperating organizations sharing products and services in a single, standardized electronic environment. The innovative web interface enhances the user experience, optimizing access to information, quickly answering key questions and offering services that BrazilEmbassyKE simplify import, export and investment activities.

BrazilianEmbassyKenya

BrazilEmbassyKenya

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