Heinz Brazinino Final

Heinz Brazinino
Baby Food in Brazil
Luis Domenge Amber Fawbush Karina Nolan Mary Urdaneta
Cultural Analysis
Heinz Brazinino: Baby Food in Brazil 2
Executive Summary
Brazil is a very diverse culture in terms of the heritage of its people. Its culture is heavily influenced by European, Africa, and Native Indian cultures. Brazilians are very family-oriented. They tend to make collectivist decisions and they tend to have a positive outlook on life.
Brazil is one of the worlds fastest growing major economies. In the past two decades the economy has greatly expanded, and thus more women have entered the workforce. Consequently, an increase in demand for baby food has resulted. This has increased household income and families ability to purchase these items.
Introduction The main purpose of this cultural analysis is to develop a marketing plan that can guide us into a successful launch of baby food in Brazil. Throughout this analysis we will be conducting secondary research about the cultural and economic ways of Brazil. After the completion of this analysis we should have the adequate information to successfully launch a new baby food brand in Brazil. Understanding the culture of Brazil will help us understand business customs and other important features of the country. The history of Brazil The first people to arrive to brazil where indigenous peoples, even though the exact date is not known, they arrived thousands of years ago by crossing the Bering land bridge into Alaska and then entering the rest of North and Central America. It is widely accepted that the European first to discover Brazil was Portuguese Pedro lvares Cabral on April 22, 1500. From the 16th to the 19th centuries, Brazil was a colony of Portugal. It was on September 7, 1822, that Brazil declared its independence from Portugal and became a constitutional monarchy, the Empire of Brazil. A military coup in 1889 established a republican government. The country has seen a dictatorship (19301934 and 19371945) and a period of military rule (19641985). The civil rule was restored in 1985 with the election of the first democratic leader, Tancredo Neves. Geographic Setting Brazil is located in Eastern South America, bordering the Atlantic Ocean and ten other South American countries. Brazil is the fifth largest country in the world with a total area of 8,514,876.599 km2. People in Brazil enjoy a mainly tropical climate. However, Brazil also has a very diverse variety of weather conditions: equatorial, semiarid, highland tropical, temperate and subtropical. Just like their climate, the topography in Brazil varies as well. It includes hills, mountains, plains, highlands and scrublands. Social Institutions: Family While the typical household in Brazil may consist of parents and children, this is not the isolated nuclear family unit familiar to Americans. Brazilian culture puts a high emphasis on extended family ties and Brazilians, regardless of social class, do not like to live any distance from their family. Grown sons and daughters almost always remain at home until they marry and ideally live near their parents after marriage. Brazilians normally interact weekly, if not daily, with members of their extended family group, cousins, aunts and uncles, married children and their spouses, and in-laws. Among the urban middle class it is not uncommon for members of an extended family to live in separate apartments in the same building. The model of a Brazilian contemporary family includes a hierarchical structure, with husband/father exerting authority and power over the wife and children, a work division separating 'masculine' from 'feminine' tasks, and attribution and the bigger proximity between the
mother and the children. This traditional way of life is slowly changing as women begin to enter the workforce. When it comes to marriage, both civil and religious marriage exists in Brazil but the number of religious marriages is on the decline especially in urban areas. The poor continue to cohabit and are less likely to legalize their unions than those of higher social status. Despite the strong opposition of the Catholic Church, divorce was made legal in Brazil in 1977. The female role in Brazil is quickly changing, with an increasing number of women participating in the workforce, and spending less time away from home. Because of changes in the typical female role within the family, it is becoming common for mothers to provide their babies with milk formula since they cannot breastfeed them for long periods. As a result, sales of milk formula experienced robust growth in 2010 Education Educational opportunities are tied to social class. Brazil has never invested heavily in public education and most middle-class and elite families send their children to private school. Education is also linked to race and geography. A white person in the Southeast has an average of 6.6 years of schooling, whereas a person of color living in the Northeast has spent an average of just 3.5 years in school. Two-thirds of all public funds spent on education in Brazil go to universities, the other third to public primary and secondary schools. While public universities in Brazil widely considered superior to their private counterparts charge no tuition, they have very competitive entrance exams which generally favor students who have attended costly private schools with high academic standards. The total population literacy rate is 88.6% (Male: 88.4%, Female: 88.8%, 2004 est.) Political system Brazil is a Federal republic, multi-party system with three branches of government: Executive, legislative, and Judicial. Some of the main political parties in Brazil are: Brazilian Democratic Movement Party or PMDB, Brazilian Labor Party, Brazilian Renewal Labor Party, Brazilian Republican Party, Brazilian Social Democracy Party, Brazilian Socialist Party, Christian Labor Party, Communist Party of Brazil, Democratic Labor Party. After decades of government turmoil, the government is Brazil has been stabilizing and becoming more efficient. However, corruption is still existent and a major complaint of the Brazilian people. The Brazilian tax system is highly regulated and extremely complex. Different taxes/rates on the federal, states or municipalities levels have become a key theme in all sectors and for most companies that operate in Brazil. The Brazilian federation is composed of 26 state, one federal district and municipalities. States have autonomous administrations, collect their own taxes and receive a share of taxes collected by the Federal government. They have a governor and a unicameral legislative body elected directly by their voters. They also have independent Courts of Law for common justice.
Municipalities, as the states, have autonomous administrations, collect their own taxes and receive a share of taxes collected by the Union and state government. Legal System Brazilian law is based on Roman-Germanic traditions and civil law. The judiciary system is organized by a Supreme Federal Tribunal, which is composed by 11 ministers. These ministers are appointed for life by the president and confirmed by the Senate. Judges are also appointed for life at higher Tribunal of Justice and regional federal tribunals. Given the nation's stark economic inequalities, social control in Brazil has long been problematic, even more so at the end of the twentieth century than in the past. High rates of crime, particularly in large urban areas, are a frequent topic of conversation; kidnappings, assaults, and murder receive wide media coverage Brazil's current foreign policy is based on the country's position as a regional power in Latin America, a leader among developing countries, and an emerging world power. In general, current Brazilian foreign policy reflects multilateralism, peaceful dispute settlement, and nonintervention in the affairs of other countries. The Brazilian Constitution also determines that the country shall seek the economic, political and cultural integration of the nations of Latin America. Foreign enterprises intellectual assets are for the most part protected in the country. Brazil is a signatory to the Paris Convention (protection of patents and trademarks) and the Berne Convention (protection of copyrights). Brazil also signed the Universal Convention on Copyrights, which protects works of literature and art. Article 5 of the Federal Constitution guarantees the right to private property and the Civil Code guarantees its use and enjoyment. The INPI (Federal Intellectual Property Agency) governs and regulates trademark, patent and copyright law.
Social Organizations In general, Brazilian society ranks high in the uncertainty avoidance index. This indicates a high concern for rules, regulations, controls and issues with career security. Brazil also has a high Uncertainty Avoidance index, reflecting that as society they are risk adverse and not always readily accept. A large power distance indicates that inequalities of power and wealth have been allowed to grow with Brazilian society. High long-term orientation ranking signifies Brazil has respect for tradition and supports a strong work ethic where long term rewards are expected as a result of todays work. Compare to other Latin American countries, Brazil has a slightly higher Individualism (IDV) rank of 38. However, virtually Brazil still is considered to be collectivist society. This is evident in a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. Brazil stands out for its regional and social disparities. Brazil is noted for having one of the most unequal income distributions of any country. In the rural Northeast, there is poverty similar to that found in some African and Asian countries. Although increased urbanization has accompanied economic development, it also has created serious social problems in the cities.
Even the wealthiest cities contain numerous shantytowns called favelas. These inequalities are reflected in the Brazilian class system. Overall, class is determined by economic status and skin color. Generally, people with darker brown skin are economically and socially disadvantaged. The middle and upper classes often have only brief interaction with the lower classes, usually maids, drivers, etc. Although few Brazilians could be described as racist, social discrimination on the basis of skin color is a daily occurrence. Arguably the most visible nongovernmental organization (NGO) in Brazil today is the Movimento dos Trabalhadores Rurais Sem Terra (MST), or Movement of Landless Rural Workers, now with some 500,000 member. Other groups include Sole Group of Labor Unions (CUT), the General Confederation of Workers (CGT) and the Labor Union Forum, National Union of Indigenous Peoples (UNI), an association of Brazils different indigenous groups. Pastoral Commission of the Earth (CPT) and Indigenous Missionary Council (CIMI), pastoral groups of the Catholic Church involved in social action in these areas, Defense Network of the Human Race (REDEH), an eco-feminist organization. "Torture Never More", state groups committed to the defense of human rights. Brazil is a mixture of races and ethnicities, resulting in rich diversity. Many original Portuguese settlers married native women, which created a new race, called 'mestizos'. 'Mulattoes' are descendants of the Portuguese and African slaves. This mixing of races over time has created a further blurring of racial lines. Unlike many other Latin American countries where there is a distinct Indian population, Brazilians have intermarried to the point that it sometimes seems that almost everyone has a combination of European, African and indigenous ancestry. Brazilian ethnic make-up white (includes Portuguese, German, Italian, Spanish, Polish) 55%, mixed white and black 38%, black 6%, other (includes Japanese, Arab, Amerindian) 1% Business customs and Practices Brazil is generally open to and encourages foreign investment. It is the largest recipient of foreign direct investment (FDI) in Latin America, and the United States is traditionally the top foreign investor in Brazil. While Brazilians are used to dealing with foreigners, but there are still business customs and practices to keep in mind. Brazilians likes to know who they are doing business with before they can work effectively. They prefer face-to-face meetings to written communication as it allows them to better know the person with whom they are doing business. For them, the individual they deal with is more important than the company. Since this is a group culture, it is important that you avoid embarrassing or criticizing a Brazilian, especially in front of others. Communication is often informal and does not rely on strict rules of protocol, anyone who feels they have something to say will generally add their opinion, it is considered acceptable to interrupt someone who is speaking. Even though Face-to-face and oral communication is preferred over written communication, when it comes to business agreements, Brazilians insist on drawing up detailed legal contracts. Religion and other Belief Systems Approximate 74% of the Brazilian population is Roman Catholic and although most Brazilian considered themselves Roman Catholics they dont regularly attend mass. Other religion
practices consist of Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census). Non-conventional religions are also part of the Brazilian society. Some of the better known ones are Spiritists or Kardescist, followers of Allan Karder, and followers of candomble and umbanda.
Aesthetics Brazil has an extensive and sophisticated art history. Brazilian Art is a unique combination of ingenious, classical and contemporary creativities. The ingenious Art of Brazil speaks a lot about the nature and lifestyles of the so-called original inhabitants of the country. Today, the art scene in Brazil is self-assured. Brazil's painters, sculptors, engravers and lithographers show their works both within Brazil and in museums and galleries throughout the world. Classical music is present in the Brazilian culture and it has a Brazilian touch to it. The classical composer Heitoe Villa-Lobos was a powerful force in breaking with tradition to create distinctively Brazilian compositions by merging folk themes and rhythms of Portuguese, Indian, and African origins into his music. In contemporary music, Joo Gilberto and Antonio Carlos Jobim introduced the world to bossa nova rhythms by blending samba rhythms with cool Jazz . Francisco Buarque de Hollanda composed a wide range of popular music including ballads and socially relevant light opera. The poet-songwriter Vinicius de Moraes caught the urban Brazilian spirit in his memorable lyrics, and the pop singer Roberto Carlos Braga built up a considerable following throughout Latin America in the latter part of the 20th century. Other popular musical styles include sertanejo, especially in the South and Central-West, ax, which is a blend of samba and reggae often heard in the Northeast, and pagde, an energetic samba style that developed in urban areas. Musical influences from Brazil, North America, and Europe have been blended to create the tropiclia style. The larger Brazilian cities periodically host contemporary musical shows, and free outdoor concerts of classical that attract multitudes of listeners in Rio de Janeiro, So Paulo, Belo Horizonte, and elsewhere. Brazil also has a long tradition of folk music. Theatrical productions are widespread and well attended, from the bawdy regional comedies in neighborhoods theatres to lavish classical productions in Rio de Janeiros opera house. Brazilian theatre has reached international audiences through playwrights such as Alfredo Dias Gomes, author of RoqueSanteiro (Roque, the Saint Maker). Motion pictures are enormously popular in Brazil, with offerings for popular and sophisticated audiences. However, imported North American and European films are the most popular movie fare in Brazil. Due to its great diversity, Brazil has numerous folklore symbols. It includes stories, legends, dances, superstitions and religious rituals, either brought to the land by the Portuguese, the Africans or already present in its native cultures. All of these manifestations are quite peculiar to each culture and different in each region of Brazil. One the most popular one is the Saci. He is a one-legged black or mulatto youngster with holes in the palms of his hands, who smokes a pipe and wears a magical red cap that enables him to disappear and reappear wherever he wishes. He will grant wishes to anyone who manages to trap him or steal his magic cap.
Living Conditions: Diet and Nutrition Food consumption in Brazil is shifting toward vegetables, fruits, oils, meats and milk. Consumption of meat and milk is expanding the fastest. By 2008, total red meat and poultry meat consumption had risen to 89 kilograms per person, 31 kg above the 1993 level (USDA, 2009). Per capita consumption of milk has risen to 112 kg in 2008, up 20 kg from 1993. Rising incomes have led to increased consumption of some grain products with consumption of 131 kg per person in 2008, up 6% from 1993. Rice and wheat are the most popular cereals, with 41 kg and 52 kg per person, respectively, in 2008. Consumption of staples (beans and starchy roots) has reached 97 kg per person, and vegetable and fruit consumption have also been on the rise, with a 12% gain in vegetable and fruits consumption since 1993. Sugar consumption, currently double the world average, reflects abundant domestic supply and low price (FAOSTAT). Typical Meals are essential in the Brazilian diet. Popular foods are eaten throughout the country of Brazil and include pine nuts, yams, acai, cassava, hog plum, okra, peanuts, cheese bread, tapioca, and chourico, which is essentially a spicy sausage.Brazil's staple food items consist of feijao, or black beans, farinha, which is similar to what we know in the U.S. as flour, and arroz, or white rice. These three ingredients are typically cooked or served with protein such as fish, red meat, or poultry. The national dish of Brazil is called feijoada. It's a hearty meat stew made from pork and black beans. Traditional side dishes served with feijoada are kale, ground manioc, orange salad, and arroz. As a result of Brazil economic growth and improved social programs, their malnutrion rate is only 5%, a 75% reduction from 1990 Brazil is also a major consumer of food. With a population of 191 million, Brazil is one of the worlds leading consumers of cereals, pulses, oil crops and meats. Domestic demand is likely to grow as Brazils population gains 23 million people by 2018. Income growth, a more balanced income distribution, and increased urbanization are expected to lead to higher demand for all foods, and a shift from staple foods to a diversified diet with higher animal protein consumption. Housing Housing in Brazil is as varied as the culture. Buildings are of different proportion and design depending on the area you are in. In the city you may witness tall buildings or smaller buildings resembling a hut made of scrap resources. These small structures are known as shanties. In villages you may see small huts made of leaves and logs. Some have an open concept without windows, whereas others may be closed up all around. A recent survey ranked So Paulo as the tenth most expensive city in the world, and Rio de Janeiro as the twelfth. New York, North Americas most expensive city is at number 32, making Brazil the most expensive country in the Americas. The figures concerning the housing situation in Brazil are staggering. Brazil has between 6 and 8 million fewer houses than it needs, and the poor are the most impacted by this deficit. People earning a monthly salary of US$1,000 or less account for about 90 percent of the housing deficit, which is expected to remain stable for the next decade. The greatest needs are in the northeast and southeast areas of the country. In the
cities, there is urban overcrowding and housing deterioration. It is estimated that more than 50 million Brazilians currently live in inadequate housing conditions. Most of these families have an income below the minimum wage of roughly US$350/month. According to data from several sources, 26 million people living in urban areas lack access to potable water, 14 million are not served by a trash collection service and 83 million are not connected to sewage systems. The government and private sector are responding to the housing demand. Private housing developers have shifted from luxury and mid-high -end projects, to the economic segment, to low-end buyers. The government pro-market reforms have greatly helped expand Brazils mortgage market. The first big break was the governments approval of fiduciary alienation, whereby the buyer becomes the owner of the property only after it has been fully paid. The bank or lending institution holds ownership of property, while the loan is being repaid. Home ownership is at 75%, with only about 14% of the 42 million housing stock rented. But around 85% of all homeowners live in low quality, self-built, single-room housing units. The average household size is Brazil is 2.39, and the average family size is 3.1, indicating that most people live in single family households. Clothing People wear the same types of clothes in many places of the world. Jeans and T-shirts are worn in most countries, replacing traditional garments. But for special occasions or celebrations, some people choose to wear traditional clothing such as Bombachas, Biana dresses, etc. While they don't wear it every day, Brazilians care about their traditional clothing and wear it for different occasions, such as carnivals or national. Western business attire is worn at work. Recreational, sports and other leisure activities All of the following activities can be practiced with adequate infrastructure at numerous places in Brazil: canoeing, canyoning, horseback riding, caving, rock climbing, scuba diving, mountain biking, rafting, rappel, trekking, hang-gliding, paragliding, photography safaris, surfing, whale watching, bird watching, wildlife spotting, cross-country bicycling, rowing, golf, swimming and fishing. Capoeira, an acrobatic, dance-like martial art invented by Brazilian slaves, can be learned or witnessed all over the country. Brazils only popular spectator sport is soccer. Brazilian consumers spent about 12% of their income in sports and leisure activities. Social security The Ministry of Social Security carries out the conventional mandate of ensuring old-age assistance. Recently, health benefits and social security have become nearly universal, no longer depending on formal employment and contributions. Retirement and disability benefits are pegged to the official minimum wage. They weigh so heavily on government spending that they are one of the reasons the government resists raising the minimum wage for the active work force. At the same time, the middle class considers these benefits insufficient and, therefore, seeks private social security plans or makes investments in real estate, given the instability of financial markets in Brazil. The social security system will face even greater challenges as the age structure of the population changes, with a greater number of pensioners in relation to the number of contributing workers.
Healthcare The constitution grants all Brazilian citizens the right to procure free medical assistance from public as well as private providers reimbursed by the government. While the public domain oversees basic and preventive health care, the private nonprofit and for-profit health care sector delivers the bulk of medical services, including government-subsidized inpatient care. The public health system also subsidizes expensive, high-technology medical procedures that consume 30 to 40 percent of health resources and often end up being used to attend affluent segments of the population. Language All Brazilians speak Portuguese, English is the foreign language most used by the business community. A small population speaks derivatives of Native languages
Economic Analysis
Executive Summary
Brazil is now the rising start in South American and it is now view as an established country both politically and economically. It is also one the most attractive emerging markets for foreign investment. The Brazilian economic has demonstrated its resilience during the most recent international crisis and has developed into a strong more attractive global player. Brazil s political and currency stability along with a discipline fiscal plan and regulated financial systems were essential in maintaining a stable economic during the crisis. Brazil s ability to growth and shield itself from the international economic crisis makes it an excellent and promising market in the world. Natural resources are abundant in Brazil, giving the country competitive advantages in the energy production industry. Furthermore, infrastructure in the country is modern and still growing allowing businesses to expand throughout the country. Overall, Brazil is an excellent destination for international business, though there are still some challenges to overcome.
Introduction
Brazils economy is very complex, and there are several different things that have changed in the last few years in Brazil. Their population is climbing. They also have a fairly high rate of growth in their GDP. It will continue to expand into the world markets. Brazils economy outweighs all of the other South American countries.
Population
As of July 2001, the Brazilian population is estimated to 203,429,773, and it is growing at a 1.134% rate. Brazil is the fifth largest country by population and geographical size. There are 21.17 deaths/1,000 live births and17.79 births/1,000 population.
It is a young populations, the median age is 29.3 years, 28.5 for males and 30.1 for females. There are 0.98 men per every woman. 87% of the populations live in urban areas, with a net migration rate of 0.09 per 1,000.
The Brazilian ethnic groups make-up is composed by white (includes Portuguese, German, Italian, Spanish, Polish) 55%, mixed white and black 38%, black 6%, other (includes Japanese, Arab, Amerindian) 1%.
Economic statistics and activity Brazil has the largest economic in Latin America and the seventh largest in the world. The following facts and figures indicate Brazils growth (2010): y y y y y GDP (Gross Domestic Product) was approximately $2.172 trillion Rate growth of 7.5%. GDP per capital is approximately US$10,000. Personal Income per capita: $5,663 Average family income: $3460
Gross national product (GNP and GDP), personal income per capital and distribution of welth
Wealth and income concentration is a major concern to the Brazilian government. As of GDP Brazil ranks 9th in the world, but when it comes to per capital GDP, it ranks 109th. Despite major economical advances, about 25% of the population lives below the poverty line (13th in the world). It is estimated that the middle class in Brazil constitute about 66% of the population, leaving the top 10% with most of the wealth and power of the country.
Mineral and resources Brazil has immense resources in energy, mineral and raw materials. It is self-sufficient in oil and is a world leader in the development and production of low emission fuels and biofuels. In addition, Brazil has a great deal of natural resources, some include: bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, hydropower and timber amount others.
Surfaces transportation
Surfaces transportations in Brazil are another asset and incentive to do business in the country. The Government has given funding priority to roads and highways, which transport about 85 percent of Brazil's population and goods. Brazilian highways are of modern design. Paved roads link practically all the state capitals. So Paulo, Rio de Janeiro, and other major cities have modern metropolitan expressways. The overall total of roads and highways in Brazil is approximately 1.1 million miles (1.5 million km), reflecting an increase of more than 300 percent in the last two decades. The railway network is, in proportion to highways, relatively small. However, some special projects have been implemented, such as the Steel Railway (Ferrovia do Ao) to connect the inland iron ore mining areas to steel mills and port facilities on the south-eastern coast. Brazil's long coastline and vast waterways in most of the hinterland offer a good potential for economic use of waterborne transport. (Brazil transports more than 350 million tons annually by water.) However, this mode of transport has not been fully exploited due to the initial investments required and especially because of its low speed. Although the merchant marine has increased in the last three decades, its long-range capabilities are still not in proportion to the volume and growth rate of Brazil's overseas trade. In 1989, approximately two percent of waterborne goods were transported in containers. There are 16 fully equipped harbors in Brazil. Among the busiest ports are Santos, Rio de Janeiro, and Porto Alegre. Two waterways are
improving river transport inside Brazil and with its south and southwest neighboring countries: The "Paran-Paraguay" and the "Tiet-Paran" waterways, the later also called the "Mercosur Waterway". Brazil's physical size and the need for fast economic growth led (starting in the 1930's) to the establishment of a vast network of air services. These routes and many more new ones are operated by a number of commercial airlines, both at the commuter (or feeder level) and at the medium to long range level, increasingly using Brazilian-designed and built planes.
There are now ten international airports, fully operational and offering high standards of comfort and efficiency. Besides direct air connections to all other South American countries, several in Central America, and many destinations in the three countries of North America, Brazil is linked by air routes to every continent. All airlines registered in Brazil are private enterprises, some of them allowing foreign equity participation.
Communication Systems Modern communication Systems (3H HSDPA, VDSL2+, Digital TV) in Brazil are easily found in the central and south east regions. Yet other regions in the country do not even have basic analogue land line phones.
Working Conditions Employer and employee relations are dealt with principally in the labor laws (CLT). These laws and subsequent legislation are applicable to all employees in regular registered employment, except for those in the public sector. All types of workers, regardless of profession and/ or skills are referred to as employees under these laws. Unions are heavily involved in the employeremployee relations and they represent all major industries. In Brazil, employees enjoy generous vacations, after a 12-month period they are entitled to 30-calendar day paid vacation. Monthly salaries, overtime, night shift, sick time, are some of the typical pay-roll expenses in the country. The usual maximum working hours for a week are 4044 hours depending on whether the employee works five or six days. You are eligible for full time employment at age 14, but there are some protective legislation covering this until they are 18.
Principal Industries
The service is the major GDP contributor (67.4%), followed by industry (26.8%) and lastly, agriculture (5.8%).
Foreign Investment
As part the BRICs group, Brazil is offers tremendous opportunities and room for growth. Currently, Brazil is experiencing a rapid economic growth, high growth rate of GDP per capital, increasing market size across all sectors, an expanding middle class, large and growing urban population and increasing energy consumption. International Trade Statistics Brazils exports are as diverse as its population, but commodity based items have been playing an essential role in Brazils foreign sales. Major exports includes: transport equipment, iron ore, soybeans, footwear, coffee, autos. At a dollar value of $201.9 billio n in 2010. On the other hand, Brazil imports in 2010 reached an amount of $181.9 billion, mainly from machinery, electrical and transport equipment, chemical products, oil, automotive parts, and electronics. A surplus of 2.9% of GDP exit s. Brazils currency is the Real, its current rate of exchange: 1.77per US dollar. Trade Restrictions Various used items such as foreign blood products and automobiles are restricted; Pleasure boats valued above 3,000 US dollars; Beef derived from cattle-administered growth stimulants; Fresh poultry meat and poultry products from the US; Color prints for the theatrical and television market ; Dangerous Goods as defined by the International Air Transport Association . Import taxes in Brazil vary on the product that is being imported. The following are so me o f the taxes and fees: y y y y Brokerage Fee --1% of C.I.F. value Warehouse Tax --1% of the import duty Fee for Handling Charges--varies according to value of product (from 20 USD to 100 USD) Administration Commission--currently fixed at 50 USD
y y y y
Additional Port Tax--two fees totaling 3 % of C.I.F. value Tariffs: For products covered by the Common External Tariff, the maximum Brazilian tariff is now 22.5 percent; the most commonly applied tariff is 17 percent. Licensing: With licensing, the import of most products into the country needs a preliminary license from the Secretariat of Foreign Trade Customs Dut ies: Fees involved with customs can be very pricey, and often times, it is common to use a Brazilian broker. This broker ensures that the rules are known. Brazil applies the Harmonised Customs System. The customs duties are calculated Ad valorem on the CIF value.
Labor Force 1. Size: 102.2 million 2. Distribut ion of labor force: Agriculture: 20%; industry:14%; and services: 66% 3. Unemployment rates: 6.7% 4. Inflat ion rates: 5%
Current technology available (computers, machinery, tools, etc.) Brazil is a leader in science and technology in South America. Brazil is a global leader in biofuels, agricultural research, deep-sea oil production, and remote sensing. In an effort to promote economic growth, the Brazilian Government seeks to develop an environment that is more supportive of innovation and takes scientific advances from the laboratory to the marketplace. Brazil has one of the largest IT markets within the emerging economies. IT end-user spending in Brazil is expected to grow to $134 billion in 2014. The largest share of spending will be on telecom equipment, representing 72% of the market, followed by IT services at 13.3%, and computing hardware at 11.9%. The U.S. Government, private sector, and academic researchers have extensive ties with Brazilian counterparts. Areas in which there is close cooperation include biofuels, medical research, remote sensing, and agriculture. The extent of bilateral scientific and technological cooperation is expanding and prospective areas in which to expand include advanced materials, telecommunications, energy transmission, and energy efficiency. There are limitations to cooperation, however, which stem from substantial restrictions on foreign researchers collecting or studying biological materials. This is mostly due to concerns over possible unauthorized taking and commercialization of genetic resources or traditional knowledge of indigenous communities. state.gov
Retailers
Brazil is home to one of the worlds largest retail markets. According to this latest research report Brazil Retail Industry, the Brazilian retail industry has been witnessing strong growth in sales for the last few years and is expected to strongly grow in the coming years. The country's retail industry is expected to grow at a CAGR of around 11% during 2011-2014. Further growth in the Brazilian retail industry will be fueled by an increase in purchasing power and the strengthening middle class.
Over the last few years, supermarkets and hypermarkets have become the most important distribution channels for food and beverage products. In Brazil, supermarkets capture about 80% of the market estimated at around 72,000 stores. The average size of these supermarkets is comparable to those in the US at approximately 46,000 square feet.
Payment terms are extremely important in Brazil because of the countrys high interest rates. In fact, it is not unusual for a local company to select a U.S. supplier with higher prices but better finance terms.
In Brazil, all import-related costs are generally high because of import duties and taxes thus some U.S. companies implement efficient logistics systems and lower profit margins. In some cases costs are so high that a simple calculation may indicate that your margins will not allow you to compete with a local product.
Historically, Brazilians have been more inclined to pay with cash, which is typically drawn from automated teller machines (ATMs) only once or twice a month. Credit in Brazil accounts for less than 40 percent of GDP, far behind the 70 percent average of other emerging countries. Over 50 percent of the population does not have a credit card.
However, banks and retail chains are addressing this gap. Bradesco, in partnership with Banco do Brasil, will be launching a credit card in August 2010 that targets lower SES level consumers. Most retail stores offer private label cards, especially to those people who have little or no access to bank credit.
All convenience stores accept credit cards and many have yet to develop any co-branded cards. ATM machines remain one of the main elements that attract customers to convenience stores.
Modern retailers are responding with a segmented strategy. Po de Acar acquired a line of heavily discounted supermarkets in Northeastern Brazil called CompreBem to target lower income consumers and another of the same ilk in Southeast Brazil named Barateiro, whose name was changed to CompreBem to form a national chain. Wal-Mart adopted a similar strategy with their Todo Dia stores. Carrefour not only began a discount supermarket, Dia, but allowed independent retailers to join the chain.
Wholesale middlemen
All the customary import channels exist in Brazil: agents, distributors, import houses, trading companies, subsidiaries and branches of foreign firms, among others. Although some companies import directly from foreign manufacturers without local representation, in most cases the presence of a local agent or distributor can be very helpful.
Availability of media With its well-established and diversified industrial sector, Brazil has a variety of specialized publications that can provide excellent advertising outlets. TV advertising can also be an important marketing channel for Brazils growing consumer base.
Coverage of various Media
Television y y y y y y 138 television stations 209.2 TVs per 1,000 ppl 13.7 cable subscribers per 1,000 ppl 6.8 satellite subscribers per 1,000 ppl Over 2/3 of media budget is spent on TV and this is not declining Brazil is already the fifth largest TV market globally, but should be the fourth largest by 2016. y Nearly 50% of all advertising investment is spent on Rede Globo de Televiso, the dominant media force in Brazil, which started as a newspaper and now owns the vast majority of TV channels in Brazil. millward brown y The ad formats used in Brazil are usually :30, :45 and :60, and the :30 ad format is the most common. They also have "patrocinios" which are fivesecond insertions that can appear during programs such as football games; these often appear in the top left-hand corner of the screen with a voiceover. y Brazilians don't usually like comparative ads or ads that denigrate the competitor. Generally the ads in Brazil are of a very high quality, which could also explain the low AI. As such, an ad must be very good to be shown in Brazil in order to compete with others.
Radio
y 1822 radio stations y 407 radio receivers per 1,000 ppl Print o 465 daily newspapers o 2,020 nondaily newspapers o The next most common medium is Newspaper with 18% of spend millward brown
o The largest daily circulation newspaper is Folha de So Paulo, published by the Folha Group, with a circulation of 400,000 on Sundays and a daily circulation of 317,000 from Monday through Saturday (www.uol.com.br/fsp). Magazines o Brazils magazine market should continue to be the regions largest, growing by 9.7% each year through 2016, by which point we expect $1.2 billion in total advertising from the medium. o The most popular magazine in Brazil, with a circulation of over one million copies, is the weekly Veja, published by the Abril Publishing Company (http://www.uol.com.br/veja). Internet o 407 computers per 1,000 ppl o 28.7 internet access per 1,000 ppl E-commerce in Brazil has grown more than 30 percent per year since 2000, reaching close to US$5 billion in 2009 even if broadband, at just slightly less than 6 percent, is not yet a reality for most people. Brazil also has one of the most well-developed online banking systems in the world. In addition, the country occupies leading positions in terms of number of Internet users (63 million, or 35 percent of the population), and there is ample space for further growth. The time they spend surfing the Web and on social media Web sites such as Orkut, MSN and the recently discovered Facebook is phenomenal. At more than 48 hours per month, Brazilians spend more time Web surfing than their peers in the U.S. (a little more than 42 hours) and the U.K. (36.5 hours), based on July 2009 estimates. Such high Internet usage and participation in social media impacts the way companies sell to and communicate with the market, as consumers compare products, share experiences with peers, and more importantly, participate in the creation of products and even management of companies. Innovative companies are keeping blogs and Twitter accounts to listen to their customers voice their opinions on store layouts, product development and even competing products.
Market Audit and Competitive Market Analysis
Executive Summary
The H. J. Heinz Company is considering entrance into the Brazilian baby food market under the name Brazinino. The market for baby food in Brazil increased at a compound annual growth rate of 11.3% between 2003 and 2008, and moderate growth is expected through 2016. Careful research has revealed that organic, locally grown ingredients will set Braznino apart from the market leader namely Nestle. The product will be compatible with Brazilian tastes, and provide easy usability with its extra-wide opening. The product can be tested and promoted through free trial promotions and adapted as the testing sees fit. The primary concern of entering the Brazilian baby food market lies in the Nestle boycotts that have received publicity as of late. In order to properly avoid these threats, Brazinino must be sure to abide by all labeling regulations. The market in Brazil appears to be receptive to the introduction of a new baby food product. In operating under a local brand, Brazinino should attract Brazilian shoppers who tend to prefer national products. Brazinino should focus its initial strategy on the Southeastern region which is home to the three richest states in Brazil. Cities such as Sao Paulo and Rio de Janeiro are home to a growing middle class from which Brazinino will attempt to capture a loyal customer base. Brazil has sophisticated transportation and communication channels. Television is the cheapest source of advertising and also has the highest reach and coverage relative to other media sources. Internet use has grown rapidly in Brazil and may provide a useful means to gain brand recognition and loyalty. Supermarkets are the primary source of retail outlets, but convenience stores are an important consideration in the middle class sector. Heinzs primary competitor will be Nestle, as they currently have a near monopoly over the baby food market.
Introduction After conducting a thorough analysis of the cultural and economic setting in Brazil, we aim to complete an in-depth analysis of our target market. Our product, Brazinino Baby Food, will be targeted at the growing middle class in Brazil. Of course, those targeted will either be the parent or primary care-giver of a child between the ages of 6 months and 3 years of age. We hope that through this analysis we will have the information necessary to compile a specific and effective marketing plan that will meet the needs of this growing market. II. The Product The H.J. Heinz Company will be expanding in to the Brazilian baby food market. We will operate in this market under a local name, Brazinino. All Brazinino baby food will be organic and made with locally-grown ingredients. This will be a clear differentiator and give us an advantage over our competitors. Although we are a Heinz brand, we will operate under a local brand as Brazilians tend to prefer local products whenever possible. We think that entering the market as a new brand and following Brazils strict labeling regulations (in terms of the importance of breastfeeding), will give us an advantage over existing brands like Nestle who have faced very public backlash. Brazinino has great compatibility with the target market; all of our products are made from homegrown vegetables and fruit. As with many emerging economies, the Brazilian population is facing more problems with obesity, and as a result have become more health conscious. We plan to make flavors that they already enjoy and emphasize the benefits of enjoying local, organic products. Brazinino will be packaged in small glass jars that contain an easy to open top and a wide opening. This will make it easier for the user to feed the infant. Our website will be on every jar of baby food. This website will again feature appropriate government warnings, but also detailed instructions on the appropriate way to use the product. The website will be offered in Portuguese and English and will also be broken down into appropriate age categories that will provide nutritional information for each age group. Brazinino will have a high trialability. We plan to test Branzino in popular retail outlets, such as Walmart and Carrefour. We also hope to give away free samples of Brazinino at popular events in Brazil to increase brand awareness. The benefits of Brazinino will mainly be observed through its labeling and education. Unfortunately, it will be difficult to observe the benefits of all organic locally grown baby food through the product itself. However, through our approach we plan to educate Brazilians on the nutritional benefits of our product. Despite the exhibited relative advantage, compatibility, and trialability of our product, Brazinino is bound to encounter challenges along the way. While our product will stand apart from market leaders in being locally grown and organic, the baby food market as a whole has
faced resistance in the Brazilian market. The recent Nestle boycotts emphasize the importance of abiding by Brazils strict labeling regulations. These regulations are designed to ensure that manufacturers of baby food educate their customers on the benefits of breast feeding. This is especially important to users with children under 6 months.
III. The market
Geographical Region Our babyfood will be sold in the Federal Republic of Brazil. Initial entry will be in the southeastern states, which are home to the 3 richest states of Brazil (Sao Paulo, Rio de Janeiro, and Minas Gerais.) Sao Paulo, alone, is responsible for 1/3 the GDP of Brazil. Specifically, we will target metropolitan areas like the cities of and Rio de Janeiro. The city of Sao Paulo is an ultramodern metropolis with skyscrapers, palatial homes, and spacious parks and recreational facilities. Its population is 11.836 million and has a tropical climate moderated by the city's altitude (2,700 ft/6,823 m). The city of Rio de Janeiro is located on the Atlantic coast, and The Centre, the heart of the city, lies on the plains of the western shore of Guanabara Bay. The remainder if the city is shaped by mountains, hills, plains, and beaches. Rio has a population of 11.836 million. While Rio lost its status as Brazils capital in 1960, it is still considered the countrys cultural capital. Transportation Southeast Brazil is covered in paved roads and highways are generally in good to very good conditions. Railways are available as well, although they are mostly used for freight transport. Southeast Brazil is home to 3 international airports. So Paulo-Guarulhos International Airport connects Brazil to 28 countries and is visited every day by nearly 100 thousand people. The airport has two terminals (with a third on the way), and has the capacity to handle 15 million travelers. The airport's cargo terminal is South America's largest and stands behind only Mexico City's in all of Latin America. In 2003, over 75 thousand metric tons of freight passed through the terminal. Galeo Airport, of Rio de Janeiro, is the most popular airport for tourists. Galeo Airport has connections to 18 other countries and can handle a capacity of 15 million users in its two terminals. Located only 20 kilometers from downtown Rio, the international airport is served by several quick access routes, such as the Linha Vermelha and Linha Amarela freeways and Avenida Brasil, thus conveniently serving residents of the city's southern, northern and western zones. There are special shuttle buses linking Galeo to Santos-Dumont, and bus and taxi service to the rest of the city. Confins International Airport is Southeast Brazils third international airport located in Belo Horizonte (the capital of Minas Gerais). It was opened in January 1984 and planned to
expand in steps to meet growing demand. Confins International Airport is known for being very reliable and has one of the lowest shutdown rates for weather in the country. Communication Brazils mobile phone market is the fifth largest in the world. Though penetration has passed the 100% mark, the number of subscribers continues to grow, with many Brazilians having more than one SIM card. On the other hand, the widespread ownership of multiple SIM cards pushes up penetration figures and hides the fact that many Brazilians more than one out of four have no mobile phone at all. Fixed line telephones are relatively costly and less popular in Brazil. The number of fixed line telephone users has remained stagnant or even decreasing as more people switch to mobile phones. Brazil is the regional leader and one of the top countries in the world in terms of fixed broadband subscribers, ranking ninth globally. In terms of fixed broadband penetration, however, Brazil is only slightly above the Latin American average, trailing behind neighboring Chile, Argentina, and Uruguay. Brazil is already the fifth largest TV market globally, but should be the fourth largest by 2016. More than 99% of Brazils population now has access to television. Although broadcast TV dominates the landscape, pay TV services (principally cable and satellite) are enjoying significant growth, especially in the more prosperous Southern and Southeastern regions. The total number of active users of the internet reached 43.2 million in March 2011, which means an increase of 4.4% in comparison with the previous month, according to a survey of Brazilian Institute of Public Opinion and Statistics (Ibope) disclosed this week. Compared to 37.9 million active users in March 2010, there was an increase of 13.9%. Consumer buying habits While supermarkets are clearly the most popular retail outlets in Brazil, lower middle class Brazilians don't necessarily buy everything at the supermarket. They are still used to going into separate stores to buy products, to the meat store to buy meat and the bakery to buy bread. As far as durables or non-food products, then their preferences go back to the brand they know and can afford. Transportation is important to consider in the lower middle class. They won't make a huge amount of purchases in a supermarket because they might not be able to carry the products back home. They will visit stores more frequently, sometimes several times a week, to be able to carry the products home in a comfortable way without having to pay huge transportation costs. Brazilians place high value on appearance. "Looking good" is an integral and important aspect of Brazilian culture. Whenever possible, Brazilians prefer to purchase products made
within their own country. Brazilians prefer saving money for larger purchases, such as a house; they often look for a "deal" when purchasing other items. The largest growth in retail store formats is oriented towards the [lower middle] C and D classes, who patronize smaller stores that operate in their neighborhoods. In countries like Brazil, transportation is not like in the U.S. Public transportation is [the primary] means of getting from one place to another, which changes the dynamics of going to the market. Lower middle class Brazilians will go someplace in their neighborhood. It is expensive to have to pay for two or three buses or a taxi. You do see people in the C-to-D neighborhoods going to hypermarkets but it's a weekend leisure trip with their families. It's a big trip to make to a shopping center or big box retailer. But for the day-to-day, it's walking to the neighborhood store. Distribution In Brazil, supermarkets capture about 80% of the market estimated at around 72,000 stores. By definition, a supermarket is a large retail market that is usually operated on a selfserve basis. They usually carry food products in addition to household products. However, neighborhood and convenience stores have seen the highest growth rate in recent years as the middle class continues to expand. Brazilians tend to make more frequent trips to these smaller distributors as supermarkets can sometimes be difficult to reach on a routine basis. Advertising and promotion Television is the most popular type of media in Brazil as it is less expensive than other types of media, including magazines and newspapers. Television viewing is considered a leisure activity. Brazil is already the fifth largest TV market globally, but should be the fourth largest by 2016. More than 99% of Brazils population now has access to television. Although broadcast TV dominates the landscape, pay TV services (principally cable and satellite) are enjoying significant growth, especially in the more prosperous Southern and Southeastern regions. The greater wealth of pay TV viewers is a significant factor in their attractiveness to advertisers. The typical television ad in Brazil is either 30, 45, or 60 seconds, with 30 seconds being the most popular. Patrocinios, 5 second program inserts, as well as Telenovelas are also extremely popular. These Telenovelas lend themselves to product placement and other means of product promotion and are produced by almost all television networks in Brazil. Whereas the magazine market in developed economies such as the US has been shrinking, the Brazilian market is expected to grow by 9.7% each year through 2016. Currently, the most popular magazine in Brazil is the weekly Veja, which has a circulation of over one million copies.
Brazilians spend an increasing amount of time surfing the internet and on social media websites. Such high Internet usage and participation in social media impacts the way companies sell to and communicate with the market, as consumers compare products, share experiences with peers, and more importantly, participate in the creation of products and even management of companies. In addition, the government has been working on digital inclusion programs, such as funding Internet cafs, to help the lower income groups gain access to the Internet. Competitors Leading players in Brazilian baby food market include Nestle S.A., Unilever and Multdia Ind. Com. SA. Nestle has near-monopoly control (91.2 percent) in infant milk-based formula market in Brazil. The top-three baby food brands in Brazil (Mucilon, Nan, and Nestogeno, and Neston) are brands owned by Nestle, and it is Nestle local brand ownership that gives it strong presence in the Brazilian baby food market. The company has strong participation in all categories and monopolies sales of prepared baby food and other baby food products. Also, Nestls traditional brands in milk formula such as Nan, Nestogeno and Ninho have a high level of brand recognition amongst pediatricians and mothers. Between 2010 and 2011, leading manufacturers of baby food, particularly Nestl and Danone, introduced family packaging for their brands in all categories within milk formula, with which consumers can save around 15-20% per kilo compared to standard versions. In general, such family packaging contains between 800g and 900g per package whilst the regular packaging is 400g. This strategy has boosted sales of milk formula in both volume and value terms. Gerber, now owned by Nestle, is another producer of baby food in Brazil. Their product line includes Gerber vegetable, fruit, meat or fish purees, Gerber cereals, Gerber juices, and Gerber bottled water. Gerber is pushing product exposure through creative new ways such as contracting the Brazilian Outback restaurant chain to give free Gerber jars and juices to travelling babies while their parents enjoy a steak and a break.
Market size Baby food sales in Brazil increased from $474.1 million in 2003 to $578.6 million in 2004, an increase of 18.1%. The market for baby food in Brazil increased at a compound annual growth rate of 11.3% between 2003 and 2008. The baby cereals category led the baby food market in Brazil, accounting for a share of 88.4%. Due to the fierce competition amongst leading multinationals within baby food and significant resources invested by top companies, including Nestl Brasil and Danone, in introducing cheaper packaging like family packs in milk formula and smaller sizes in dried baby food, it is expected that unit prices of baby food will show only moderate growth during the 2011-2016 forecast period. Government Regulations
The Brazilian Trade and Investment Promotion Agency (APEX-Brazil) is a Brazilian government agency that promotes exports of Brazilian products and services, supports internationalization of Brazilian companies and attracts foreign investors into the country. Apex-Brasil promotes investment opportunities to attract foreign direct investors to Brazil. The Agency focuses on companies and projects that offer technological innovations and new business models, strengthen industrial supply chains, have a direct impact on national job creation and improve the volume and diversity of Brazilian exports. Perhaps the most important government regulation that, as a company, we must follow has to do with labeling. According to the Brazilian government, all breast feeding substitutions must promote the following message: Breastfeeding must be maintained after introducing new foods into the childs diet, until 2 years or beyond. This product must not be used for feeding infants during the first 6 months of life, except upon advice of a doctor or nutritionist. This is especially important in light of the recent Nestle boycotts. Similar groups could have similar complaints if we do not follow Brazils strict labeling regulations.
Preliminary Marketing Plan
Executive Summary
Brazinino will be a new baby food introduced into the Southeastern part of Brazil. The fruits and vegetables found in the baby food will be locally grown. Everything will be local except for the packaging components. These components will come from China. Brazinino is for the fast growing middle class in Brazil. Attempting to get ahead of the competition that already exists in the area, we will spend ample money on our marketing. The baby food will cater to the local tastes of the Brazilians.
Marketing Objectives Brazinino is meant to cater to the fast growing middle class. Our main target market is composed of parents and caregivers with infants of ages 3 months 3 years. The Geographics of our target market include the southeastern part of Brazil; this is our initial region with potential expansion to other regions. Most of our target market will be married, with a small exception for single parents of both genders. The age group will be between 23-45 year olds. When entering the Brazilian market, our main goal is to capture some of the market share from some of out top competitors (Nestle & Unilever). We will begin to market our product in some of the more developed areas in the southeast of Brazil. We will use some of the larger supermarkets including Wal-Mart, Carrefour and local Supermarkets to test our product. With the results of our first few months of testing, we will decide on what needs to change and if it is appropriate to expand to surrounding regions. Swot Analysis The SWOT analysis gives us some competitive advantages and some things that we need to be concerned about: 1. Strengths- Organic product, locally grown ingredients, produced locally, competitive pricing, strong marketing techniques, and no importation needed. 2. Weaknesses- New brand, lack of recognition, established competitors, not familiar with uncontrollables (Cultural & Political) 3. Opportunities- growing economy, growing middle class, population growth. 4. Threats- Corruption, strong competition, natural disasters Product Adaptation/Modification Brazinino will be packaged in a small glass jars, it will contain an easy to open top and a wide opening to make it easy for the user to feed the infant. The brand name is Brazinino we plan on registering the name as a trademark before we begin to sell the product. The packaging will include colors from the Brazilian flag; it will also describe the quality of the ingredients used. Our website will be on every jar of baby food, once they arrive at our website, they will have the option of choosing the language of every page. We will have detailed information on our products and recommendations of how to use it for different age groups. We will also stand behind our product and offer 100% satisfaction on every jar purchased. Promotion Mix The main objective in advertising is to reach as much of our target market as possible. We want to develop brand recognition and eventually form a loyal customer base. There has been a significant growth in televisions within Brazil in the last couple of years; we will use this to reach a large majority of our target market. A second media that we will use is print ads in popular magazines and possible billboards on popular streets. The main message that we will try
to deliver is that we offer the best value for the money. We have a premium product at a low price. We will also focus on the homegrown ingredients and the benefit of buying home grown vs. imported products. To reach a significant portion of our target market, we will have to start with a significant budget. We want to attack the market and deliver our message effectively. The main objective of our sales promotion is to supplement our advertising with special events; this will provide incentives for people to want to try our product. We will offer coupons in situations where we feel are appropriate. We will do some research on what our competitors are doing and make sure that we have better offers than they do. Premiums will not be used as part of our sales promotion. Costs for our sales promotion will be minimal compared to our advertising costs. We feel that it is more important to get our product name into the market. We might use direct mail to reach populated areas where our target market is located. We will not use individual sales as part of our strategy. Distribution/Mode Selection The port located in Shanghai China is the most popular for exporting in the country; the jars that we use will ship out of this location. All of our glass containers and labels are made and printed in China. All of our packaging and containers will arrive in Port el Salvador. It is the largest port in Brazil and only about 150 miles from our warehouse and facilities located south of the port. Railroads will not be used unless railroads are better developed throughout Brazil. Disadvantages include, slow and not reliable. Air Carriers will also not be used, they are not cost efficient. Ocean Carriers will not be used once the product is packaged, we will only use motor transportation. Motor Carriers will be our primary mode of transportation from the port to our facilities and from our facilities to the retailers. We will manage a complete freight team with the resources necessary to supply our retailers. Some of the advantages include; control of product and routes, fast delivery and cost efficient. Packing These are the Brazilian Marking and labeling regulations that we must follow: 1. Name of product, 2. Ingredients, country of origin, 3. Special storage instructions (when necessary) 4. Net weight (in metric units) 5. Date of production (must be identified on master carton), and 6. Expiration date (shelf life, established by the manufacturer)
Channels of Distribution We will mainly use large retail stores with some exceptions. Some of the larger stores include Wal-Mart, Carrefour, Cia Brasileria, and a few smaller supermarkets. We will start about 40 locations and then expand once we see progress. Retail markups for products will depend on the location and retail store. We will offer better prices in locations such as Wal-Mart because of their ability to sell cheaper products. The method of operation weather it is credit or debit
depends on the retailers ability to pay us back within a certain time period. We will make every attempt to offer each retailer what he or she wants. The scale of operation will have to do with the size of the retailer; we will obviously focus more on the larger retailer and make sure the operations are adequate to the size of the retailer. We will operate all the distribution of our product to the retailers, we will not use any wholesalers in our marketing plan. Most of our warehouses will be buildings that are no longer in use. We will be able to get these at a good price and will not have to spend to much to make them usable warehouses. We will have 3 warehouses located around the southeastern part of Brazil; our main warehouse will be located next to Port el Salvador. The rest of the warehouses will be used to keep overstock of our product closer to the retailers. Price Determination Our factory is going to be located in Southeast Brazil. We will incur costs to have our labeling and containers delivered to our factory. These will delivered via ocean carrier from China to Brazil. From there, the goods will be shipped on the ground via truck using the highways in Brazil. Some of the customs duties we may encounter may be difficult. Brazil uses the Harmonised Customs System. The customs duties are calculated ad valorem on the cost, insurance, and freight value. Brazil has tough import licensing regulations. Heinz will have to obtain a license from SECEX. There is not an extremely high price for this license, but it only works for 60 days before you have to obtain a new one. Usually this 60 days is not sufficient enough, and companies have to get the new one. We will have to supply a pro forma invoice to receive this license. The other fees associated with customs can be very high. We then would need to use a Brazilian broker to explain all of these rules and regulations to make sure we are adhering to these. There are some import taxes that may need to be paid. The Guia de Importacao is a $70 payable lump sum to obtain an import license. There is a Merchant Marine Renovation fee that is twenty-five percent of the total amount of the freight. Also, air mail dispatches valued at $51 to $30000 are subject to a tax of sixty percent on the FOB value of the goods. This will not apply to us with Brazinino. Heinz gross margin for April 2011 was 3,952,540. For April 2010, it was 3,794,306. The gross margin for April 2009 was 3,569,256. With all of these cost and associations, the retail price for Brazinino for one jar will be $1.25 Terms of Sale There are several different terms of sale such as EX works, FOB, FAS, C&F, and CIF. EX works requires that the seller deliver the goods at his or her own place of business. All of the other transportation costs and risks are the responsibility of the buyer. The FOB shipping method is Free on Board shipping. This requires the seller to deliver the goods on board a vessel designated by the buyer. The seller fulfills its obligation to deliver when the goods have passed over the ships rail. From this point, the buyer is responsible.
FAS shipping is free alongside ship. The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. It is typically used for heavy-lift or bulk cargo. C & F is cost and freight. It is a term of trading in which the buyer of the goods pays an amount which covers the cost of the goods plus the cost of transporting the goods from origin to the port of discharge or final destination. CIF shipping is cost, insurance, and freight. A term in trading in which the buyer of the goods pays for the cost of the goods, the cost of transporting the goods from origin to the port of discharge or final destination and the insurance premium for a maritime insurance policy for the value of the order. When receiving our materials, we will use FOB shipping. The seller in China will be responsible for the goods until they have been unloaded from the ocean carrier. We then take over the responsibility for the goods. Methods of Payment There are several different options for method of payment. Cash in advance is where the payment is made in advance for goods. Open accounts are similar to credit lines. Letters of credit are opened in favor of the seller by the buyer to handle most exports. Letters of credit shift the buyers credit risk to the bank issuing the letter of credit. These provide the greatest protection for the seller. We will be using a letter of credit with our retailers for the most part. When first beginning with a retailer, we may require cash in advance until a relationship is established. This is because it is the most secure way to make sure payment is made. Since letters of credit are the most secure, we will require that the retailers obtain one. This way the risk for the company is lower because the responsilbity will shift to the bank. Marketing Budget As part of the marketing budget, advertising and promotions will be budgeted at $3000 per month. The product cost will be $5000 a month.
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"Export Requirements for Brazil." USDA Food Safety and Inspection Service Home. Web. 01 Dec. 2011. <http://www.fsis.usda.gov/regulations/Brazil_Requirements/index.asp>. "Export Requirements for Brazil." USDA Food Safety and Inspection Service Home. Web. 01 Dec. 2011. <http://www.fsis.usda.gov/regulations/Brazil_Requirements/index.asp>. "Doing Business in Brazil." Export.gov. US Commercial Service. Web. 09 Nov. 2011. <http://export.gov/brazil/static/CC_BR_CCG_FullDocument_Latest_eg_br_034878.pdf>. "FY 2001 Country Commercial Guide: Brazi." Globalatlanticpartners.com. U.S. Department of State. Web. 09 Nov. 2011. <http://www.globalatlanticpartners.com/pdf/brazil_ccg2001.pdf>. "Gerber." Ibfan.com. International Baby Food Action Network. Web. 09 Nov. 2011. <http://www.ibfan.org/art/302-9.pdf>. "Invest in Brazil." ApexBrazil.com. Brazilian Trade and Investment Promotion Agency. Web. 09 Nov. 2011. <http://www.apexbrasil.com.br/portal/publicacao/engine.wsp?tmp.area=510>. King, Mike. "The Key Players in the Baby Food Market Are Nestl SA, H.J. Heinz, Bristol-Myers Squibb, DANONE and Hero." Pr-inside.com. Companiesandmarkets.com. Web. 09 Nov. 2011. "Number of Internet Users in Brazil Grows 13.9% in a Year." Brasil.gov.br. Portal Brasil. Web. 09 Nov. 2011. <http://www.brasil.gov.br/news/history/2011/05/06/number-of-internet-users-in-brazilgrows-13.9-in-a-year/newsitem_view?set_language=en>. "Packaged Food Sales in Brazil." Ats.agr.gc.ca. Agri-Food Trade Service | Service D'exportation Agroalimentaire. Web. 09 Nov. 2011. <http://www.ats.agr.gc.ca/lat/5326-eng.htm>. "Q&A: The Shopping Habits of Middle Class Brazilians." Gplus.com. Gerson Lehrmen Group, Inc. Web. 09 Nov. 2011. <Q&A: The Shopping Habits of Middle Class Brazilians>. Rodeguero, Natan. "Six Trends Shaping Brazils Retail and C-store Market - Departments Convenience Store News." Convenience Store News | C Store News | C-Store Chains | Convenience Store Chains. Convenience Store News. Web. 09 Nov. 2011. <http://www.csnews.com/article-six_trends_shaping_brazil_acute_s_retail_and_c_store_market1203.html>. "Sao Paulo." Encyclopedia.com. Web. 09 Nov. 2011. <http://www.encyclopedia.com/topic/Sao_Paulo.aspx>.
Appendix
Cultural Analysis I. Introduction The main purpose of this cultural analysis is to develop a marketing plan that can guide us into a successful launch of baby food in Brazil. Throughout this analysis we will be conducting secondary research about the cultural and economic ways of Brazil. After the completion of this analysis we should have the adequate information to successfully launch a new baby food brand in Brazil. Understanding the culture of Brazil will help us understand business customs and other important features of the country. The history of Brazil The first people to arrive to brazil where indigenous peoples, even though the exact date is not known, they arrived thousands of years ago by crossing the Bering land bridge into Alaska and then entering the rest of North and Central America. It is widely accepted that the European first to discover Brazil was Portuguese Pedro lvares Cabral on April 22, 1500. From the 16th to the 19th centuries, Brazil was a colony of Portugal. It was on September 7, 1822, that Brazil declared its independence from Portugal and became a constitutional monarchy, the Empire of Brazil. A military coup in 1889 established a republican government. The country has seen a dictatorship (19301934 and 19371945) and a period of military rule (1964 1985). III. Geographic Setting A. Brazil is located in Eastern South America, bordering the Atlantic Ocean B. The climate in Brazil is mostly tropical, but temperate in south C. The topography in Brazil is mostly flat to rolling lowlands in north; some plains, hills, mountains, and narrow coastal belt Social Institutions a. Family i. The Nuclear Family- While the typical household in Brazil may consist of parents and children; this is not the isolated nuclear family unit familiar to Americans. Brazilian culture puts a high premium on extended family ties and Brazilians, regardless of social class, do not like to live any distance from their kin. Grown sons and daughters almost always remain at home until they marry and ideally live near their parents after marriage. ii. The Extended Family- Brazilians normally interact weekly, if not daily, with members of the extended kin groupcousins, aunts and uncles, married children and their spouses, and in-laws. Among the urban middle class it is not uncommon for members of an extended family to live in separate apartments in the same building. iii. Dynamics of the Family1. Parental Roles- According to Romanelli (2000), the model of a Brazilian contemporary family includes a hierarchical structure, with husband/father exerting authority and power over the wife and children, a work division separating 'masculine' from 'feminine' tasks, and attribution and the bigger proximity between
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the mother and the children. This traditional way of life is slowly changing as women begin to enter the workforce. 2. Marriage & Courtship- Both civil and religious marriage exists in Brazil but the number of religious marriages is on the decline especially in urban areas. The poor continue to cohabit and are less likely to legalize their unions than those of higher social status. Owing to the strong opposition of the Catholic Church, divorce was made legal in Brazil only in 1977. 3. Female/Male roles-The female role in Brazil is quickly changing, with an increasing number of women participating in the workforce, it is becoming very common for mothers to provide their babies with milk formula since they cannot breastfeed them for long periods. As a result, sales of milk formula experienced robust growth in 2010. b. Education i. The role of education in society 1 and 2. Primary/Secondary Education- educational opportunities are tied to social class. Brazil has never invested heavily in public education and most middle-class and elite families send their children to private school. Education is also linked to race and geography. A white person in the Southeast has an average of 6.6 years of schooling, whereas a person of color living in the Northeast has spent an average of just 3.5 years in school. 3. Higher Education- Two-thirds of all public monies spent on education in Brazil goes to universities, the other third to public primary and secondary schools. While public universities in Brazilwidely considered superior to their private counterpartscharge no tuition, they have very competitive entrance exams which generally favor students who have attended costly private schools with high academic standards. 4. Literacy RateTotal population: 88.6% Male: 88.4% Female: 88.8% (2004 est.)
c. Political system 1. Political Structure- Federal republic, Multi-party system (Executive, legislative, & Judicial) 2. Political parties- Some of the main political parties in brazil are: Brazilian Democratic Movement Party or PMDB, Brazilian Labor Party, Brazilian Renewal Labor Party, Brazilian Republican Party, Brazilian Social Democracy Party, Brazilian Socialist Party, Christian Labor Party, Communist Party of Brazil, Democratic Labor Party. 3. Stability of Government- The government is Brazil is becoming a more stable government, even though corruption is still existent. 4. Special Taxes5. Role of Local GovernmentHeinz Brazinino: Baby Food in Brazil 42
d. Legal System 1. Organization of the judiciary system- Supreme Federal Tribunal or STF (11 ministers are appointed for life by the president and confirmed by the Senate); Higher Tribunal of Justice; Regional Federal Tribunals (judges are appointed for life); note - though appointed "for life," judges, like all federal employees, have a mandatory retirement age of 70 2. Cod, Common, socialist- Given the nation's stark economic inequalities, social control in Brazil has long been problematic, even more so at the end of the twentieth century than in the past. High rates of crime, particularly in large urban areas, are a frequent topic of conversation; kidnappings, assaults, and murder receive wide media coverage e. Social Organizations a. Clubs, other Organizations- Arguably the most visible nongovernmental organization (NGO) in Brazil today is the Movimento dos Trabalhadores Rurais Sem Terra (MST), or Movement of Landless Rural Workers. Now with some 500,000 members, it began organizing the occupation of large unproductive estates in the mid-1980s after the federal government was slow to follow through on its promised program of land reform. A convoy of vehicles invade an estate at night so that by dawn too many people will have occupied the land for the police to be able to evict them. b. Race, ethnicity & subcultures- white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% (2000 census) f. Business customs and Practices a. Brazilians need to know who they are doing business with before they can work effectively b. Brazilians prefer face-to-face meetings to written communication as it allows them to know the person with whom they are doing business. c. The individual they deal with is more important than the company. d. Since this is a group culture, it is important that you do not do anything to embarrass a Brazilian. e. Criticizing an individual causes that person to lose face with the others in the meeting. f. The person making the criticism also loses face, as they have disobeyed the unwritten rule. g. Communication is often informal and does not rely on strict rules of protocol. Anyone who feels they have something to say will generally add their opinion. h. It is considered acceptable to interrupt someone who is speaking. i. Face-to-face, oral communication is preferred over written communication. At the same time, when it comes to business agreements, Brazilians insist on drawing up detailed legal contracts.
V. Religion and Aesthetics A. Religion and other belief systems 1. Orthodox doctrines and structures- Roman Catholic 2. Relationship with the people- Most Brazilian considered themselves Roman Catholics but they dont regularly attend mass. 3. Which Religion are more prominent- Roman Catholic 4. Membership of each relation- Roman Catholic (nominal) 73.6%, Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census) 5. Any powerful or influential cults?-Spiritists or Kardescist, followers of Allan Karder, and followers of candomble and umbanda. B. Aesthetics 1. Visual Arts Brazilian Art is a unique combination of ingenious and contemporary creativities. The ingenious Art of Brazil speaks a lot about the nature and lifestyles of the so-called original inhabitants of the country. 2. Music- Classical music is present in the Brazilian culture and it has a Brazilian touch to it. The classical composer Heitor Villa-Lobos was a powerful force in breaking with tradition to create distinctively Brazilian compositions by merging folk themes and rhythms of Portuguese, Indian, and African origins into his music. In contemporary music, Joo Gilberto and Antnio Carlos Jobim introduced the world to bossa novarhythms by blending samba rhythms with cool jazz. Francisco Buarque de Hollanda composed a wide range of popular music including ballads and socially relevant light opera. The poetsongwriter Vinicius de Moraes caught the urban Brazilian spirit in his memorable lyrics, and the pop singer Roberto Carlos Braga built up a considerable following throughout Latin America in the latter part of the 20th century. Other popular musical styles include sertanejo, especially in the South and Central-West, ax, which is a blend of samba and reggae often heard in the Northeast, and pagde, an energetic samba style that developed in urban areas. Musical influences from Brazil, North America, and Europe have been blended to create the tropiclia style. The larger Brazilian cities periodically host contemporary musical shows, and free outdoor concerts of classical music that attract multitudes of listeners in Rio de Janeiro, So Paulo, Belo Horizonte, and elsewhere. Brazil also has a long tradition of folk music. 3. Drama, ballet and other performing artsTheatrical productions are widespread and well attended, from the bawdy regional comedies in neighborhoods theatres to lavish classical productions in Rio de Janeiros opera house. Brazilian theatre has reached international audiences through playwrights such as Alfredo Dias Gomes, author of RoqueSanteiro (Roque, the Saint Maker). Motion pictures are enormously popular in Brazil, with offerings for popular and sophisticated audiences. However, imported North American and European films are the most popular movie fare in Brazil.
4. Folklore and relevant symbols-Because of its great diversity, Brazil has numerous folklore symbols. It includes stories, legends, dances, superstitions and religious rituals, either brought to the land by the Portuguese, the Africans or already present in its native cultures. All of these manifestations are quite peculiar to each culture and different in each region of Brazil. One the most popular one is the Saci. He is a one-legged black or mulatto youngster with holes in the palms of his hands, who smokes a pipe and wears a magical red cap that enables him to disappear and reappear wherever he wishes. He will grant wishes to anyone who manages to trap him or steal his magic cap. V. Living Conditions A. Diet and Nutrition 1. Typical Meals- popular foods are eaten throughout the country of Brazil and include pine nuts, yams, acai, cassava, hog plum, okra, peanuts, cheese bread, tapioca, and chourico, which is essentially a spicy sausage.Brazil's staple food items consist of feijao, or black beans, farinha, which is similar to what we know in the U.S. as flour, and arroz, or white rice. These three ingredients are typically cooked or served with protein such as fish, red meat, or poultry. The national dish of Brazil is called feijoada. It's a hearty meat stew made from pork and black beans. Traditional side dishes served with feijoada are kale, ground manioc, orange salad, and arroz. 2. Malnutrion rates-In 2006 5%- a 75% reduction from 1990 3. Foods available- Brazil is also a major consumer of food. With a population of 191 million, Brazil is one of the worlds leading consumers of cereals, pulses, oil crops and meats. Domestic demand is likely to grow as Brazils population gains 23 million people by 2018. Income growth, a more balanced income distribution, and increased urbanization are expected to lead to higher demand for all foods, and a shift from staple foods to a diversified diet with higher animal protein consumption. B. Housing 1. Types of housing available-Because of the financial constraints of working with a low-income clientele, the federal Housing Finance System (SistemaFinanceiro de Habitao--SFH) has been used primarily to provide low-cost mortgages for houses and apartments for the middle class.Many poor people, without access to financing, find it necessary to build their own houses. The favelas on the hills of Rio de Janeirp are one well-known type. In other parts of Brazil, shantytowns on stilts are built over water (alagados ), or in marshy areas (baixadas ). A. Clothing a. National Dress- People wear the same types of clothes in many places of the world. Jeans and T-shirts are worn in most countries, replacing traditional garments. But for special occasions or celebrations, some people choose to wear traditional clothing such as Bombachas, Biana dresses, etc. While they don't wear it every day, Brazilians care about their traditional clothing and
wear it for different occasions, such as carnivals or national. Some of the traditional b. Type of Clothing worn at work- Western business attire. B. Recrational, sports and other leisure activities-All of the following activities can be practiced with adequate infrastructure at numerous places in Brazil: canoeing, canyoning, horseback riding, caving, rock climbing, scuba diving, mountain biking, rafting, rappel, trekking, hang-gliding, paragliding, photography safaris, surfing, whale watching, bird watching, wildlife spotting, cross-country bicycling, rowing, golf, swimming and fishing. Capoeira, an acrobatic, dance-like martial art invented by Brazilian slaves, can be learned or witnessed all over the country.Brazils only popular spectator sport is soccer. C. Social security- The Ministry of Social Security carries out the conventional mandate of ensuring old-age assistance. Recently, health benefits and social security have become nearly universal, no longer depending on formal employment and contributions. Retirement and disability benefits are pegged to the official minimum wage. They weigh so heavily on government spending that they are one of the reasons the government resists raising the minimum wage for the active work force. At the same time, the middle class considers these benefits insufficient and, therefore, seeks private social security plans or makes investments in real estate, given the instability of financial markets in Brazil. The social security system will face even greater challenges as the age structure of the population changes, with a greater number of pensioners in relation to the number of contributing workers. D. Healthcare-The constitution grants all Brazilian citizens the right to procure free medical assistance from public as well as private providers reimbursed by the government. While the public domain oversees basic and preventive health care, the private nonprofit and for-profit health care sector delivers the bulk of medical services, including government-subsidized inpatient care. The public health system also subsidizes expensive, high-technology medical procedures that consume 30 to 40 percent of health resources and often end up being used to attend affluent segments of the population. VII. Language A. Official language(s)- Portuguese (official and most widely spoken language) B. Dialects- A small population speaks derivatives of Native languages
Economic Analysis I. Brazils economy is very complex, and there are several different things that have changed in the last few years in Brazil. Their population is climbing. They also have a fairly high rate of growth in their GDP. It will continue to expand into the world markets. Brazils economy outweighs all of the other South American countries. Population A. Total Population: 203,429,773 1. Growth rates: 1.134% 2. Number of live births: 3,026 3. Birthrates: 17.79 births/1,000 populat ion B. Distribut ion of populat ion 1. Median Age: 29.3 years; male: 28.5 years; female 30.1 years 2. Sex: 0.98 male(s) per female 3. Geographic areas: 87% are part of urban areas 4. Net migration rate: 0.09 migrant(s)/1,000 populat ion 5. Ethnic groups: a. whit e 53.7% b. mulatto (mixed white and black) 38.5% c. black 6.2% d. other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% III. Economic statistics and activity A. Gross national product (GNP or GDP) 1. Total: $2.172 trillion 2. Rate of Growth: 7.5% B. Personal Income per capita: $5,663 C. Average family income: $3460 D. Distribut ion of wealt h: Brazil has one of the more unequal distributions of wealth. The wealthiest 10 percent do 48 percent worth of the nation's consumer shopping, and the lowest 0.7 percent (1998 figures). The wealthiest 10 % in the United States do 30.5 % worth of shopping and the lowest 1.8 %. These figures for Sweden are 20.1 % and 3.7%. E. Minerals and resources: transport equipment, iron ore, soybeans, footwear, coffee, autos, natural gas, oil, text iles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment F. Surfaces transportation: 1. Modes: airways, heliports, pipelines, railways, roadways, waterways, ports and terminals, merchant marine 2. Availability: Highways are very common, and there are several popular ports.
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3. Usage rates: These depend on what exactly they are being used for. The highways do not cost anything to use. The other modes of transportation depend on what you are going to be sending. 4. Ports: cargo ports: Ilha Grande, Paranagua, Rio Grande, Santos, Sao Sebast iao, Tubarao; container ports: Santos, Itajai; oil terminals: DTSE/Gegua oil terminal, Guaiba Island terminal, Guamare oil terminal Communication Systems 1. Types: telephones (main line and cellular), broadcast media, internet 2. Availability: There are 19.316 million internet hosts. There are more than 1,000 radio stat ions operat ing, and over 100 TV channels. 3. Usage rates: These depend on where you are located in the country. It may also depend on the company that is providing the service to you. Working Condit ions 1. Employee-employer relat ions: Unions represent all major segments of industry. 2. Employee part icipat ion: The usual maximum working hours for a week are 40-44 hours depending on whether the employee works five or six days. You are eligible for full t ime employment at age 14, but there are some protective legislat ions covering this unt il they are 18. 3. Salaries and benefits: The law provides 30 days of vacat ion that can be taken all at once or divided into two parts. Principal industries 1. What proportion of the GNP does each industry contribute? Agriculture: 5.8%; industry: 26.8%; services: 67.4% Foreign Investment 1. Opportunities: The food and beverage market have been closely looked at over the years for foreign investment. Although this sector has already grown in Brazil, there are still many opportunities to continue to grow this sector. Private equity funds have began to show their presence in the market. There are also opportunities in the transportation and communication sector because many Brazilians spend much of their money in this sector. There is also a growing sector for organic shopping goods that can be expanded. International Trade statistics 1. Major exports: transport equipment, iron ore, soybeans, footwear, coffee, autos a. Dollar value: $201.9 billion 2. Major Imports: machiner y, electrical and transport equipment, chemical products, oil, automot ive parts, electronics a. Dollar value: $181.7 billion 3. Balance of payments a. Surplus or deficit: 2.9% of GDP
4. Exchange rates: a. Current rate of exchange: 1.77per US dollar L. Trade Restrict ions : Various used items such as foreign blood products and automobiles are restricted; Pleasure boats valued above 3,000 US dollars; Beef derived from cattle-administered growth stimulants; Fresh poultry meat and poultry products from the US; Color prints for the theatrical and television market ; Dangerous Goods as defined by the International Air Transport Association 1. Import taxes: Import taxes in Brazil vary on the product that is being imported. Some other taxes are listed below: a. Brokerage Fee --1% of C.I.F. value Warehouse Tax --1% of the import duty Fee for Handling Charges--varies according to value of product (from 20 USD to 100 USD) Administration Commission--currently fixed at 50 USD Additional Port Tax--two fees totaling 3 % of C.I.F. value 2. Tariffs: For products covered by the Common External Tariff, the maximum Brazilian tariff is now 22.5 percent; the most commonly applied tariff is 17 percent. 3. Licensing: With licensing, the import of most products into the country needs a preliminary license from the Secretariat of Foreign Trade 4. Customs Dut ies: Fees involved with customs can be very pricey, and often times, it is common to use a Brazilian broker. This broker ensures that the rules are known. Brazil applies the Harmonised Customs System. The customs duties are calculated Ad valorem on the CIF value. M. Labor Force 5. Size: 102.2 million 6. Distribut ion of labor force: Agriculture: 20%; industry:14%; and services: 66% 7. Unemployment rates: 6.7% N. Inflat ion rates: 5% IV. Developments in science and technology A. Current technology available (computers, machinery, tools, etc.) Brazil is a leader in science and technology in South America. Brazil is a global leader in biofuels, agricultural research, deep-sea oil production, and remote sensing. In an effort to promote economic growth, the Brazilian Government seeks to develop an environment that is more supportive of innovation and takes scientific advances from the laboratory to the marketplace. Brazil has one of the largest IT markets within the emerging economies. IT enduser spending in Brazil is expected to grow to $134 billion in 2014. The largest share of spending will be on telecom equipment, representing 72% of the market, followed by IT services at 13.3%, and computing hardware at 11.9%.
The U.S. Government, private sector, and academic researchers have extensive ties with Brazilian counterparts. Areas in which there is close cooperation include biofuels, medical research, remote sensing, and agriculture. The extent of bilateral scientific and technological cooperation is expanding and prospective areas in which to expand include advanced materials, telecommunications, energy transmission, and energy efficiency. There are limitations to cooperation, however, which stem from substantial restrictions on foreign researchers collecting or studying biological materials. This is mostly due to concerns over possible unauthorized taking and commercialization of genetic resources or traditional knowledge of indigenous communities. state.gov B. Percentage of GNP invested in research and development: 1.1% of GDP (2007)
V. Channels of distribution A. Retailers 1. Number of retailers Brazil is home to one of the worlds largest retail markets. According to this latest research report Brazil Retail Industry Analysis, the Brazilian retail industry has been witnessing strong growth in sales for the last few years and is expected to strongly grow in the coming years. The country's retail industry is expected to grow at a CAGR of around 11% during 2011-2014. Further growth in the Brazilian retail industry will be fueled by an increase in purchasing power and the strengthening middle class. 2. Typical size of retail outlets Over the last few years, supermarkets and hypermarkets have become the most important distribution channels for food and beverage products. In Brazil, supermarkets capture about 80% of the market estimated at around 72,000 stores. The average size of these supermarkets is comparable to those in the US at approximately 46,000 square feet. 3. Customary markup for various classes of goods Payment terms are extremely important in Brazil because of the countrys high interest rates. In fact, it is not unusual for a local company to select a U.S. supplier with higher prices but better finance terms. In Brazil, all import-related costs are generally high because of import duties and taxes thus some U.S. companies implement efficient logistics systems and lower
profit margins. In some cases costs are so high that a simple calculation may indicate that your margins will not allow you to compete with a local product 4. Methods of operation (cash/credit) Historically, Brazilians have been more inclined to pay with cash, which is typically drawn from automated teller machines (ATMs) only once or twice a month. Credit in Brazil accounts for less than 40 percent of GDP, far behind the 70 percent average of other emerging countries. Over 50 percent of the population does not have a credit card. However, banks and retail chains are addressing this gap. Bradesco, in partnership with Banco do Brasil, will be launching a credit card in August 2010 that targets lower SES level consumers. Most retail stores offer private label cards, especially to those people who have little or no access to bank credit. All convenience stores accept credit cards and many have yet to develop any co-branded cards. ATM machines remain one of the main elements that attract customers to convenience stores. 5. Scale of operation (large/small) 6. Role of chain stores, department stores, and specialty shops
Modern retailers are responding with a segmented strategy. Po de Acar acquired a line of heavily discounted supermarkets in Northeastern Brazil called CompreBem to target lower income consumers and another of the same ilk in Southeast Brazil named Barateiro, whose name was changed to CompreBem to form a national chain. Wal-Mart adopted a similar strategy with their Todo Dia stores. Carrefour not only began a discount supermarket, Dia, but allowed independent retailers to join the chain. B. Wholesale middlemen 1. Number and size
2. Customary markup for various classes of goods 3. Method of operation (cash/credit) C. Import/export agents All the customary import channels exist in Brazil: agents, distributors, import houses, trading companies, subsidiaries and branches of foreign firms, among others. Although some companies import directly from foreign manufacturers without local
representation, in most cases the presence of a local agent or distributor can be very helpful. VI. Media A. Availability of media With its well-established and diversified industrial sector, Brazil has a variety of specialized publications that can provide excellent advertising outlets. TV advertising can also be an important marketing channel for Brazils growing consumer base. B. Costs 1. Television 2. 3. 4. Radio Print Internet
5. Other media (cinema, outdoor, etc.)
D. Coverage of various media 1. Television y y y y y y 138 television stations 209.2 TVs per 1,000 ppl 13.7 cable subscribers per 1,000 ppl 6.8 satellite subscribers per 1,000 ppl Over 2/3 of media budget is spent on TV and this is not declining Brazil is already the fifth largest TV market globally, but should be the fourth largest by 2016. y Nearly 50% of all advertising investment is spent on Rede Globo de Televiso, the dominant media force in Brazil, which started as a newspaper and now owns the vast majority of TV channels in Brazil. millward brown y The ad formats used in Brazil are usually :30, :45 and :60, and the :30 ad format is the most common. They also have "patrocinios" which are fivesecond insertions that can appear during programs such as football games; these often appear in the top left-hand corner of the screen with a voiceover. y Brazilians don't usually like comparative ads or ads that denigrate the competitor. Generally the ads in Brazil are of a very high quality, which could also explain the low AI. As such, an ad must be very good to be shown in Brazil in order to compete with others.
2. Radio y 1822 radio stations y 407 radio receivers per 1,000 ppl 3. Print y Newspapers o 465 daily newspapers o 2,020 nondaily newspapers o The next most common medium is Newspaper with 18% of spend millward brown o The largest daily circulation newspaper is Folha de So Paulo, published by the Folha Group, with a circulation of 400,000 on Sundays and a daily circulation of 317,000 from Monday through Saturday (www.uol.com.br/fsp). y Magazines o Brazils magazine market should continue to be the regions largest, growing by 9.7% each year through 2016, by which point we expect $1.2 billion in total advertising from the medium. o The most popular magazine in Brazil, with a circulation of over one million copies, is the weekly Veja, published by the Abril Publishing Company (http://www.uol.com.br/veja). 3. Internet y 407 computers per 1,000 ppl y 28.7 internet access per 1,000 ppl E-commerce in Brazil has grown more than 30 percent per year since 2000, reaching close to US$5 billion in 2009 even if broadband, at just slightly less than 6 percent, is not yet a reality for most people. Brazil also has one of the most well-developed online banking systems in the world. In addition, the country occupies leading positions in terms of number of Internet users (63 million, or 35 percent of the population), and there is ample space for further growth. The time they spend surfing the Web and on social media Web sites such as Orkut, MSN and the recently discovered Facebook is phenomenal. At more than 48 hours per month, Brazilians spend more time Web surfing than their peers in the U.S. (a little more than 42 hours) and the U.K. (36.5 hours), based on July 2009 estimates. Such high Internet usage and participation in social media impacts the way companies sell to and communicate with the market, as consumers compare products, share experiences with peers, and more importantly, participate in the creation of products and even management of companies. Innovative companies are keeping blogs and Twitter accounts to listen to their customers voice their opinions on store layouts, product development and even competing products.
Market Audit and Competitive Market Analysis I. Introduction This section aims to provide and in-depth analysis of our target market.
II. The product A. Evaluate the product as an innovation as it is perceived by the intended market 1. Relative advantage - All Brazinino baby food will be organic and made with locally-grown ingredients. This will be a clear differentiator and give us an advantage over our competitors. Although we are a Heinz brand, we will operate under a local brand as Brazilians tend to prefer local products whenever possible. We think that entering the market as a new brand and following Brazils strict labeling regulations (in terms of the importance of breastfeeding), will give us an advantage over existing brands like Nestle who have faced very public backlash. 2. Compatibility - Brazinino has great compatibility with the target market; all of our products are made from homegrown vegetables and fruit. As with many emerging economies, the Brazilian population is facing more problems with obesity, and as a result have become more health conscious. We plan to make flavors that they already enjoy and emphasize the benefits of enjoying local, organic products. 3. Complexity - Brazinino will be packaged in small glass jars that contain an easy to open top and a wide opening. This will make it easier for the user to feed the infant. Our website will be on every jar of baby food. This website will again feature appropriate government warnings, but also detailed instructions on the appropriate way to use the product. The website will be offered in Portuguese and English and will also be broken down into appropriate age categories that will provide nutritional information for each age group. 4. Trialability - Brazinino will have a high trialability. We plan to test Brazinino in popular retail outlets, such as Walmart and Carrefour. We also hope to give away free samples of Brazinino at popular events in Brazil to increase brand awareness. 5. Observability - The benefits of Brazinino will mainly be observed through its labeling and education. Unfortunately, it will be difficult to observe the benefits of all organic locally grown baby food through the product itself. However, through our approach we plan to educate Brazilians on the nutritional benefits of our product. B. Major problems and resistances to product acceptance based on the preceding evaluation - Despite the exhibited relative advantage, compatibility, and trialability of our product, Brazinino is bound to encounter challenges along the way. The recent Nestle boycotts emphasize the importance of abiding by Brazils strict labeling regulations. These regulations are designed to ensure that manufacturers of baby food educate their customers on the benefits of breast feeding. III. The market
A.
Describe the market(s) in which the product is to be sold
1. Geographical region(s) - Our baby food will be sold in the Federal Republic of Brazil. Initial entry will be in the southeastern states, which are home to the 3 richest states of Brazil (So Paulo, Rio de Janeiro, and Minas Gerais.) So Paulo, alone, is responsible for 1/3 the GDP of Brazil. Specifically, we will target metropolitan areas like the cities of So Paulo and Rio de Janeiro. 2. Forms of transportation and communication available in that (those) region(s).
a. Transportation Southeast Brazil is covered in paved roads and highways are generally in good to very good conditions. Railways are available as well, although they are mostly used for freight transport. Southeast Brazil is home to 3 international airports. b. Communication - Brazils mobile phone market is the fifth largest in the world. Though penetration has passed the 100% mark, the number of subscribers continues to grow, with many Brazilians having more than one SIM card. On the other hand, the widespread ownership of multiple SIM cards pushes up penetration figures and hides the fact that many Brazilians more than one out of four have no mobile phone at all. The total number of active users of the internet reached 43.2 million in March 2011, which means an increase of 4.4% in comparison with the previous month, according to a survey of Brazilian Institute of Public Opinion and Statistics (Ibope) disclosed this week. Compared to 37.9 million active users in March 2010, there was an increase of 13.9%. 3. Consumer buying habits a. Product feature preferences - Lower middle class Brazilians don't necessarily buy everything at the supermarket. Transportation is important, as they need to be able to easily carry their purchases home. While supermarkets are most popular, convenience stores are seeing high growth as they are easily accessible. Brazilians place high value on appearance. Whenever possible, Brazilians prefer to purchase products made within their own country, and Brazilians prefer saving money for larger purchases, such as a house; they often look for a "deal" when purchasing other items. b. Shopping habits The largest growth in retail store formats is oriented towards the lower and middle classes, who patronize smaller stores that operate in their neighborhoods. Lower middle class Brazilians will go someplace in their neighborhood. It is expensive to have to pay for two or three buses or a taxi. 4. Distribution of the product a. Typical retail outlets - In Brazil, supermarkets capture about 80% of the market estimated at around 72,000 stores. By definition, a supermarket is a large retail market that is usually operated on a self-serve basis. However, neighborhood and convenience stores have seen the highest growth rate in recent years as the middle class continues to expand.
5. Advertising and promotion a. Advertising media usually used to reach your target market(s) - Television is the most popular type of media in Brazil as it is less expensive than other types of media, including magazines and newspapers. Brazil is already the fifth largest TV market globally, but should be the fourth largest by 2016. More than 99% of Brazils population now has access to television. The typical television ad in Brazil is either 30, 45, or 60 seconds, with 30 seconds being the most popular. Patrocinios, 5 second program inserts, as well as Telenovelas are also extremely popular. Whereas the magazine market in developed economies such as the US has been shrinking, the Brazilian market is expected to grow by 9.7% each year through 2016. Brazilians spend an increasing amount of time surfing the internet and on social media websites. Such high Internet usage and participation in social media impacts the way companies sell to and communicate with the market. 6. Pricing strategy a. Compare and contrast your product and the competitions product(s) - Leading players in Brazilian baby food market include Nestle S.A., Unilever and Multdia Ind. Com. SA. Nestle has near-monopoly control (91.2 percent) in infant milk-based formula market in Brazil. The topthree baby food brands in Brazil (Mucilon, Nan, and Nestogeno, and Neston) are brands owned by Nestle, and it is Nestle local brand ownership that gives it strong presence in the Brazilian baby food market. The company has strong participation in all categories and monopolies sales of prepared baby food and other baby food products. Also, Nestls traditional brands in milk formula such as Nan, Nestogeno and Ninho have a high level of brand recognition amongst paediatricians and mothers. b. Competitors product(s) - Between 2010 and 2011, leading manufacturers of baby food, particularly Nestl and Danone, introduced family packaging for their brands in all categories within milk formula, with which consumers can save around 15-20% per kilo compared to standard versions. In general, such family packaging contains between 800g and 900g per package whilst the regular packaging is 400g. This strategy has boosted sales of milk formula in both volume and value terms. B. Market size 1. Estimated industry sales for the planning year - Baby food sales in Brazil increased from $474.1 million in 2003 to $578.6 million in 2004, an increase of 18.1%. The market for baby food in Brazil increased at a compound annual growth rate of 11.3% between 2003 and 2008. The baby cereals category led the baby food market in Brazil, accounting for a share of 88.4%. C. Government participation in the marketplace 1. Agencies that can help you - The Brazilian Trade and Investment Promotion Agency (APEX-Brazil) is a Brazilian government agency that promotes exports of Brazilian products and services, supports internationalization of Brazilian companies and attracts foreign investors into the country.
2. Regulations you must follow a. Strict labeling - Breastfeeding must be maintained after introducing new foods into the childs diet, until 2 years or beyond. This product must not be used for feeding infants during the first 6months of life, except upon advice of a doctor or nutritionist.
Preliminary Marketing Plan I. The Marketing Plan A. Marketing Objectives 1. Target Market- Brazinino is meant to cater to the fast growing middle class. Our main target market is composed of parents and caregivers with infants of ages 3 months 3 years. The Geographics of our target market include the southeastern part of Brazil; this is our initial region with potential expansion to other regions. Most of our target market will be married, with a small exception for single parents of both genders. The age group will be between 23-45 year olds. 2. Sales forecast- Year 1-5, 3. Profit forecast years 1-5 This is the Income Statement of Heinz Company for the past three years. With the expansion to Brazil, we expect these numbers to increase somewhere between 5-10 % annually until reaching a plateau.
3. Market penetration and coverage-When entering the Brazilian market, our main goal is to capture some of the market share from some of out top competitors (Nestle & Unilever). We will begin to market our product in some of the more developed areas in the southeast of Brazil. We will use some of the larger supermarkets including Wal-Mart, Carrefour and local Supermarkets to test our product. With the results of our first few months, we will decide on what needs to change and if it is appropriate to expand. B. SWOT Analysis
1. Strengths- Organic product, locally grown ingredients, produced locally, competitive pricing, strong marketing techniques, and no importation needed. 2. Weaknesses- New brand, lack of recognition, established competitors, not familiar with Uncontrollables (Cultural & Political) 3. Opportunities- growing economy, growing middle class, population growth. 4. Threats- Corruption, strong competition, natural disasters, C. Product adaptation or modification-Using the product component model as your guide, indicate how your product can be adapted for the market 1. Core component- Brazinino will be packaged in a small glass jar, it will contain an easy to open top and a wide opening to make it easy for the user to feed the infant. 2. Packaging components- The brand name is Brazinino we plan on registering the name as a trademark before we begin to sell the product. The packaging will include colors from the Brazilian flag, it will also describe the quality of the ingredients used. 3. Support services component- Our website will be on every jar of baby food, once they arrive at our website, they will have the option of choosing the language of every page. We will have detailed information on our products and recommendations of how to use it for different age groups. We will also stand behind our product and offer 100% satisfaction on every jar purchased. D. Promotion Mix 1. Advertising a. Objectives- The main objective in advertising is to reach as much of our target market as possible. We want to develop brand recognition and have repeat customers. b. Media Mix- There has been a significant growth in televisions within Brazil in the last couple of years; we will use this to reach a large majority of our target market. A second media that we will use is print ads in popular magazines and possible billboards on popular streets. c. Message- The main message that we will try to deliver is that we offer the best value for the money. We have a premium product at a low price. We will also focus on the homegrown ingredients and the benefit of buying home grown vs. imported. d. Costs- To reach a significant portion of our target market, we will have to start with a significant budget. We want to attack the market and deliver our message effectively. 2. Sales Promotions
a. Objectives- The main objective of our sales promotion is to supplement our advertising with special events; this will provide incentives for people to want to try our product. b. Coupons-We will offer coupons in situations where we feel are appropriate. We will do some research on what our competitors are doing and make sure that we have better offers than they do. c. Premiums- Premiums will not be used as part of our sales promotion. d. Costs- Costs for our sales promotion will be minimal compared to our advertising costs. We feel that it is more important to get our product name into the market. 3. Personal Selling a.We might use direct mail to reach populated areas where our target market is located. We will not individual sales as part of our strategy. E. Distribution: From origin to destination 1. Port selection a. Origin Port-The port located in Shanghai China is the most popular for exporting in the country. All of our glass containers and labels are made and printed in China. b. Destination port-All of our packaging and containers will arrive in Port el Salvador. It is the largest port in Brazil and only about 150 miles from our warehouse and facilities located south of the port. 2. Mode Selection: Advantages/Disadvantages of each mode a. Railroads- will not be used unless railroads are better developed throughout Brazil. Disadvantages include, slow and not reliable. b. Air Carriers- Will not be used, Not cost efficient c. Ocean Carriers- Will not be used once the product is packaged, we will only use motor transportation. d. Motor Carriers- This will be our primary mode of transportation from the port to our facilities and from our facilities to the retailers. We will manage a complete freight team with the resources necessary to supply our retailers. Some of the advantages include; control or product and routes, fast delivery, cost efficient. 3. Packing
a. Marking and labeling regulations- These are the requirements when labeling a product 7. name of product, 8. ingredients, country of origin, 9. special storage instructions (when necessary) 10. net weight (in metric units) 11. date of production (must be identified on master carton), and 12. expiration date (shelf life, established by the manufacturer) Label approval is the responsibility of the exporter through his agent. The importer usually prepares the required Portuguese translation and submits the labeling along with the Label approval can be accomplished through the importer in the Brazil or might be accomplished through consulting firms: b. Costs- The cost for labeling and containerization should not be very high per jar. We will use economies of scale to produce make the production cost the lowest possible. F. Channels of distribution. This section presents details about the specific types of distribution in your marketing plan. 1. Retailers a. Type and number of retail stores-We will mainly use large retail stores with some exceptions. Some of the larger stores include Wal-Mart, Carrefour, Cia Brasileria, and a few smaller supermarkets. We will start about 40 locations and then expand once we see progress. b. Retail markups for products in each type This will depend on the location and retail store. We will offer better prices in locations such as Wal-Mart because of their ability to sell cheaper products. c. Methods of operation for each type-The method of operation weather it is credit or debit depends on the retailers ability to pay us back within a certain time period. We will make every attempt to offer each retailers what they w ant. d. Scale of operation for each type- The scale of operation will have to do with the size of the retailer, we will obviously focus more on the larger retailer and make sure the operations are adequate to the size of the retailer. 2. Wholesaler middlemen We will operate all the distribution of our product to the retailers, we will not use any wholesalers in our marketing plan. 3. Warehousing a. Type- Most of our warehouses will be buildings that are no longer in use. we will be able to get these at a good price and will not have to spend to much to make them usable warehouses. b. Location-We will have 3 warehouses located around the southeastern part of Brazil, our main warehouse will be located next to Port el Salvador. The rest of the warehouses will be used to keep overstock of our product closer to the retailers.
G. Price Determination 1. Cost of shipment of goods a. Our factory is going to be in the Southeast region of Brazil. This will keep costs lower when it comes to the shipment of goods because we are shipping on the ground by truck. We will also incur some cost associated with having our containers and labeling shipped via ocean carrier from China. 2. Transportation of goods a. The goods will be transferred via truck on the ground since our factory will be located in Brazil. They will be transported on the highways in Brazil. The containers and labeling will be shipped via an ocean carrier from China. 3. Handling expenses 4. Insurance costs: Insurance premium $3000 a month. 5. Customs duties: Import licensing rules are tough. A company generally has to obtain a license from SECEX. There is not a high price for this license, but a pro forma invoice must be supplied. The license is generally good for 60 days, and this is usually not enough. You must then obtain a new license. The other fees involved with customs can be very pricey, and often times, it is common to use a Brazilian broker. This broker ensures that the rules are known. Brazil applies the Harmonised Customs System. The customs duties are calculated Ad valorem on the CIF value. 6. Import taxes and value added taxes: Guia de Importacao: $70 payable lump sum to obtain an import license. Merchant Marine Renovation Fee: 25 % of the total amount of the freight (except imports intended to the West Amazon, or from Manaus trade zone). Air mail dispatches valued at $51 to $3000 are subject to a tax of 60 % on the FOB value of the goods. There is a value added tax that varies between 10% and 15% on nearly all sales and transfers of products industrialized in or imported into Brazil. This is with the exception of exports. 7. Companys gross margins a. April 2011: 3,952,540 b. April 2010: 3,794,306 c. April 2009: 3,569,256 8. Retail price: We set the retail price at $1.25 H. Terms of sale 1. EX works a. This requires the seller to deliver goods at his or her own place of business. All of the other transportation costs and risks are the responsibility of a buyer. 2. FOB a. This Free on Board shipping and requires the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills its obligations to deliver when the goods have passed over the ship's rail. 3. FAS a. This is Free alongside ship. The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. It is typically used for heavy-lift or bulk cargo 4. C & F: Cost & Freight
a. It is a term of trading in which the buyer of the goods pays an amount which covers the cost of the goods plus the cost of transporting the goods from origin to the port of discharge or final destination. 5. CIF: Cost, insurance, and freight a. Cost, Insurance and Freight. A term of trading in which the buyer of the goods pay for the cost of the goods, the cost of transporting the goods from origin to the port of discharge or final destination and the insurance premium for a maritime insurance policy for the value of the order. 6. When receiving our packaging materials, we will use FOB shipping. The seller in China will be responsible for the goods until they have been unloaded from the ocean carrier. We then take over the responsibility for the goods. I. Methods of payment 1. Cash in advance: This is payment for goods in advance. 2. Open accounts: These are credit lines. 3. Consignment sales 4. Sight, time, or date drafts 5. Letters of Credit: opened in favor of the seller by the buy to handle most exports. Letters of credit shift the buyers credit risk to the bank issuing the letter of credit.These provide the greatest protection for the seller. 6. We will be using letters of credit with our retailers for the most part. When first beginning with a retailer, we may require cash in advance until a relationship is established because it is the most secure way to make sure payment is made. Since letters of credit are the next most secure, we will require that the retailers obtain one. This way the risk for the our company is lower because the responsibility will shift to the bank. II. Pro forma financial statements and budgets
A. Marketing Budget 1. Selling expense: 2. Advertising/promotion expense: $5000 3. Distribution expense: 4. Product cost: $5,000 per month B. Attached

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Heinz Brazinino

Baby Food in Brazil

Luis Domenge Amber Fawbush Karina Nolan Mary Urdaneta

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Coverage of various Media

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Market Audit and Competitive Market Analysis

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Preliminary Marketing Plan

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5. Other media (cinema, outdoor, etc.)

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Describe the market(s) in which the product is to be sold

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