Ernst & Young: Brazil’s retail and consumer products sector sees foreign investment surge

By Rob Starr, Content Manager, Big4.com

According to Ernst & Young’s first annual Brazilian Attractiveness Survey,  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.  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.

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.

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.