The Brazilian States: Rio de Janeiro

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Hello and welcome again to Denmark Brazil.com. If this is is your very first visit Id like to welcome you as well. This post is part of the series, ” The Brazilian States” that I have started out 5 weeks ago. If you are interested in reading about the other states you are very welcome. I have already covered the southern region of Brazil. The Southern region of Brazil is comprised by the states of Rio Grande do Sul, Santa Catarina and Paraná.

Last week, I have published the first post on the Southeastern region of Brazil

The Southeastern region is comprised by the states of São Paulo, Rio de Janeiro and Minas Gerais. These  states account for nearly for 53,1% of the total Brazilian GDP. An impressive figure, for a country so large and extensive as Brazil. Thus, in these regions there are probably several opportunities to your business. The competiton however, is much higher, but this is where the majority of the consumer market in Brazil is. Let’s get started…


Rio de Janeiro

Over the last years Rio de Janeiro has been the destination of several large scale investments. There are are still some very good perspectives for the state. The perspectives for Rio de Janeiro are positive due to the ammount of natural resources avaiable there.

Rio de Janeiro accounts for 83% of the total production of oil in Brazil. In the state there are also huge reserves of natural gas. Aside of the traditional Oil and Gas industry and correlated activities like the oil refineries and the petrochemical industries, Rio de Janeiro also has some very important firms acting in the logistics and transportantion sector, building and construction sector, glass, cement, textile, metal structures,metal stretching, lamination,pharma industries, pulp & paper, etc.

The tourism represents an important economic activity for the state. In fact, in Rio de Janeiro there are some wonderful destinations not only in the capital, but also in other coastal cities such as Paraty, or Angra dos Reis and Buzios, which are widely known by foreigners.

Rio de Janeiro makes boarders in with Minas Gerais,Espirito Santo and São Paulo. Rio de Janeiro capital city has the name as the state. According to IBGE, Rio de Janeiro occupies an area of 43.780.172 km2 what means that the state of Rio de janeiro is slightly bigger than Denmark. Despite being the 3rd smallest Brazilian state,

Rio de Janeiro accounts for 8,4% of the total Brazilian population, thus being the state with the highest demographic density of Brazil.In Rio de Janeiro, there is a total of 92 municipalities. I’m enclosing below a spreasheet with Rio de Janeiro’s population per region (local) and microregion. The GDP per locality isn’t avaiable, but it is already a good kickstart to your market research and it gives you a good clue of the consumer market per region. Rio de Janeiro population According to the latest census released by IBGE, there are almost 16 million inhabitants in the state of Rio de Janeiro. The income per capita in the state of Rio de Janeiro is  on average 921 BRL, furthermore the income per capita is the 4th highest of Brazil, staying behind Distrito Federal, Santa Catarina and São Paulo respectively.


 

Consumer Market 

After São Paulo, Rio de Janeiro is state with the largest number of malls. In Brazil there are 496 malls in total, and out of this 496, 62 malls are located in the state of Rio de Janeiro, according to ABRASCE, the Brazilian Malls Association.

Untill 2014 it is estimated to be operation 65 malls in Rio de Janeiro. Just to give you an idea of how malls are a relevant market place in Brazil, in São Paulo there are 164 malls in operation and it is forecasted that by the end of 2014 there will be 176 malls operating.

There are a few mental models that should be re-shaped. Instinctively when we think of a favela, we believe in places only for people living under harsh conditions, with little or no money to consume the so called superfluous goods right?

Well, this is partly correct but not entirely.

In the favelas there is a very large percentage of the population that are part of the “New Middle Class”. It is first important to understand what favela is.

A Favela is a community, with all characteristics of a neighborhood, but what prevails is the clear aspect of social issues. In a favela( and I’m not talking exclusively about Rio de Janeiro) there are very different people, whom during the course of their lives, were able pursue to live a normal life.

As a matter of fact a Favela isn’t synonim of low educational level and low qualification. Several people who had sucess during their lives, and are now in a well off “position” decided to still live in the favelas where they were born. This is not a rule, but there are cases as such.  An example, is the famous samba singer and composer Zeca Pagodinho.

“Overview” a  Brazilian research and survey institute has recently done a survey at the entrance of the main favelas in Rio de Janeiro.

The sample isn’t large. It encompasses 1510 people. But there is something very interesting about this survey that I think it’s worth sharing here. Theses guys discovered that in the favelas of Rio De Janeiro, 51,3% of the people interviewed are part of the “New Middle Class”, or the “Class C”. They have discovered that the ammount of the poopulation belonging to the New Midlle Class living in the favelas outweight the number of people that are positioned in the Classes D and E.

This is a major insight, as it shows that there is a huge consumer market potential in the favelas as well. Below I’m enclosing a graph that shows the percentual of people living in low income communities in the state of Rio de Janeiro,per social class.
 


 

In Brazil the social classification is associated to the ownership of certain goods. There is a lot of debate on whether or not it is resonable to evaluate social classes by utilizing these itens, but this is another story…

 I also think it is debatable, but several of the evaluations I have seen so far makes sense. The criteria used to evaluate social classes in Brazil is called “Critério Brasil”.

In the favelas the basic itens composing “Critério Brasil” are: Color TV; Automobile; Washing Clothes Machine; Video Cassete; Fridge. I’m enclosing a info graphic where you will see ( based on the survey) the percentage of the population that has ownership of this so called basic goods. Conversely, there are also itens that are not considered “basic”.

This data is very relevant as it can bring you better understanding on the consumer market in some of the low income communities in Brazil.


Industries & Economy

Rio De Janeiro is the second state most representative for the Brazilian economy. It’s GDP accounts for 11,2% of the total Brazilian GDP.. According to FIRJAN, the Industries Federation of the state of Rio De Janeiro, the sectorial structure of the economy is divided as it follows in the info graphic.

International Trade & Commerce

 

 Year/Month

Export

Var

Import

Var

Result

2013………………………………..

21.273.039

-26,04

21.574.165

5,46

-301.127

     January……………………………

861.043

2.110.396

-1.249.352

     February…………………………

1.546.281

79,58

1.686.929

-20,07

-140.649

     March………………………………

2.734.034

76,81

1.895.418

12,36

838.616

     April…………………………………

1.277.801

-53,26

1.649.215

-12,99

-371.414

     May………………………………..

1.863.251

45,82

2.242.531

35,98

-379.280

Jun……………………………..

1.236.917

-33,62

1.729.921

-22,86

-493.004

     July……………………………….

1.311.069

5,99

2.218.098

28,22

-907.029

Ago…………………………….

1.738.884

32,63

1.519.069

-31,51

219.815

     September…………………………

2.013.113

15,77

1.430.554

-5,83

582.559

     October……………………………

1.690.521

-16,02

1.498.353

4,74

192.169

     November………………………..

2.569.025

51,97

2.110.730

40,87

458.295

     December……………………….

2.431.099

-5,37

1.482.951

-29,74

948.148

Source: SECEX

 

 

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Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.

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