Feature: Brazil ??? An Eye Opener for Barbadian Businesses

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Brazil has been an eye-opener for business persons who recently travelled there as part of a September 14 to 21 Political/Commercial Mission, led by this island???s Minister of Foreign Affairs and Foreign Trade, Senator Maxine McClean.

A diverse economy with climatic conditions to match, Brazil was considered by many as offering several opportunities and challenges, with its ???bigger economy??? and ???bigger sectors in respect of agriculture, commerce, industry and housing???.

The group focussed their attention on Sao Paulo, and it was there that Director of Solaris Energy and Chief Innovation Officer, Vincent McClean, like the other business persons, made contact with several entities and found the situation favourable, despite the challenges.

???What we have seen is that the solar water heaters sold here [in Brazil] are similar in price and sometimes a bit higher than what we sell ours for in Barbados, and what that means is that if there are no serious tariff barriers that our manufacturing sector would be capable of competing favourably with what exists here,??? he said.

Referring to the fact that tariff barriers ranged from 25 to 30 per cent, Mr. McClean, who has been in the solar energy business for over 30 years, stated: ???We have to find a means of getting our product in the market at the right price in spite of that barrier or find the means of resolving that tariff barrier problem.

???The other matters, like competing products, are not of any serious consequence because the quality of our product is quite high and it matches favourably with what I have seen in this market.

So, we think we can compete, quality wise, but we have to look carefully at what exists as far as those tariff barriers are concerned.???

He highlighted other obstacles which could hinder his company venturing into Brazil, adding: ???One of the drawbacks is that in the metropolitan areas you will not be able to install solar water heating because of the fact that high rise buildings do not allow or lend themselves to solar water heating.???

He said he had been told that the outlying areas, in the smaller towns, offered much potential for his products. ???There are many areas, similar to Barbados, in terms of its residential structure and lay-out [and], I think that there will be great opportunities there,??? he noted.

Mr. McClean, accompanied by his Sales and Marketing Officer, Arit Okey, was encouraged by the Brazilians to find a joint venture partner, something that the Director admitted called for careful scrutiny. Emphasising that this required ???lots of due diligence??? and ???a right match has to be identified???, he stressed: ???You do not want to align yourself with someone who is much more powerful than you are; nor do you want to match yourself with a company that does not have the infrastructure that can develop your industry. So, I would think that after an exhaustive and evaluative look at some of the prospective partners we would have to determine who is best suited for Solaris.???

He also mentioned a more appealing strategy alluded to by the Brazilians, where if Solaris Energy bought and sourced its raw material from Brazil, then it would be possible, under certain conditions, to have the Barbadian product ???come back into the market with reduced duties???.

???Having some of the tariff barriers relaxed??? that is very interesting and I think we will pursue that for sure. We are not sure how it will play out, but since we buy our raw materials from China, it is possible if we could change our source of supply, with the same prices that we get from China, or even if they are a bit higher, it would not matter, once we are able to get back in the [Brazilian] market. So, that is something we will look at,??? he stressed.

While indicating that further market research would be undertaken by his company, Mr. McClean acknowledged that Brazil, now in its infancy in the area of solar energy, provided opportunities for all those interested in solar water heating and other forms of renewable energy.

These, he said, extended to photovoltaic electricity, as well as agriculture crop drying, fish drying and timber drying ??? which are offshoots of the renewable energy business that use solar thermal energy.

Chief Commercial Officer of Banks Holdings Limited, Ray Chee-A-Tow, described the beer market in Brazil as ???huge???. ???Beer is one of the fastest growing businesses, per capita [and] single beverage consumed in the alcoholic arena??? It is dominated by local, domestic brewers and some of the largest in the world. But there is a growth on the imported side and that has us very excited,??? he exclaimed.

Chief Commercial Officer of Banks Holdings Limited, Ray Chee-A-Tow. (Photograph compliments The BHL Group).


Mr. Chee-A-Tow was not only excited about having made business contacts, but to have discovered that consumers were keen to see his product [Banks Beer] come into the marketplace. ???We have talked to a few distributors??? and so far the demand for imported beer is quite good ??? meaning that people are interested in seeking out new, exciting [and] different products from different parts of the world???

???…There is an established channel where there are imported brands of beers selling at three times the [price of the] domestic market and there are people with disposable income willing to consume them. There are actually established places [where] you go, with eight and 10 fridges. There are shelves of imported beer and it???s really a place where you go and consume imported beers. So, with that???we are really excited,??? he declared.

With a brand new brewery with excess capacity and the ability to produce for the international export market, Mr. Chee-A-Tow said that the next steps for Banks Holdings Limited would be to identify a route to market. He added that the company would also need a distributor that understands the imported beer market and could find a niche for them as well as a cost structure that would allow his company to maximise its returns and build on the shipping routes into Brazil.

Stating that the biggest hurdle would be to ???trade where there was a duty???, Mr. Chee-A-Tow noted the role Government was playing by assisting businesses, saying: ???I know the Minister met with several parties on this visit as this was a political/commercial mission ??? and there is room for bilateral trade negotiation and I think once those come into play it makes our product more competitive??????

He acknowledged that the prospect of promoting Banks Beer in Brazil, a country with over 191 million people and in the preparatory stages of FIFA World Cup 2014 and the 2016 Olympics, would not be problematic. ???Beer is a big ticket item in Brazil,??? he gushed, adding that his company would focus first on the Sao Paulo area before expanding into other territories across Brazil, with the appointment of a distributor, very soon.

???But beer will be our brand and that will be the flagship that we will be seeking to expose to this market because of its sheer size and per capita consumption of beer???

Along with our flagship, there are products like Tiger Malt and Twist that may find favour with the buyers and hopefully the palates of the Brazilian consumer,??? Mr. Chee-A-Tow said.

Meanwhile, General Manager of WIBISCO, Adrian Padmore, had a chance to visit several supermarkets and small shops while in Sao Paulo. Accompanied by Brand Manager, Lisa Murray, they saw exactly what consumers were buying; what products were available; their prices and how they were presented. And, this allowed them, prior to sitting down with buyers or manufacturers, to have a clear sense of how to approach the Brazilian market.

???I see potential, but the first thing I realised is that the Brazil market is a very developed market for sweet biscuits and crackers. Brazil is the second largest producer of biscuits in the world, so almost every category of biscuit is represented ??? many, many brands. So, what we have done is, we???ve looked to find where there are opportunities; where there are niches that WIBISCO products could fit into and we think we have found one niche,??? he disclosed.

Stating that there were prospects for soda crackers, Mr. Padmore said: ???The cracker market in Brazil is a cream cracker, water cracker and a savoury cracker market. There aren???t any soda crackers being seen in a significant way. So, we had discussions on whether they were suited to the palate of the Brazilian consumer.???

He revealed that as a first step, samples of WIBISCO???s soda cracker would be sent to Brazil to be tested and evaluated. And, he noted that while his company upgraded its packaging every two or three years, they would still have to assess this since ???the level of packaging sophistication in Brazil was quite high???.

???In order to compete, what we are going to have to do is to look again at our packaging and make sure that we use the latest technology and materials, but attractiveness of packaging and functionality of packaging are two important things that we have to look at closely,??? he said.

He, like the other businessmen also spoke about the need to examine freight weights, and duties and undertake some market research and consumer testing in order to confirm whether opportunities presented to his company would develop into tangible trade of products to Brazil ??? one of the major objectives of the 2013 Political/Commercial Mission.

joy-ann.gill@barbados.gov.bb

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