Brazil is the third largest direct selling market in the world after the U.S. and Japan. It’s also one of the most mature direct selling markets, with its top two companies selling several hundred million dollars of their products each year. Nonetheless, for direct selling companies willing to invest in this market, abide by the rules and regulations, exercise patience and creativity, and commit to corporate social responsibility, the opportunities are virtually limitless.
Brazil is presently the world’s eighth largest economy. It has a relatively youthful population: of its 201 million people, 40 percent are under the age of 24 and only 7 percent are over the age of 65.
Most Brazilians live within two hundred miles of the coastline, with the greatest concentration of wealth being in the south and southeastern part of the country. Significant income disparities exist between the impoverished north and northwestern parts of the country. The three most populated cities are Sao Paulo (20 million), Rio de Janeiro (12 million) and the capital Brasilia (4 million).
Direct selling formally began in Brazil more than forty years ago and the Brazilian Direct Selling Association (ABEVD) was formally organized in 1980. ABEVD currently has twenty-three member companies, a strict Code of Ethics, and a professional staff eager to help corporate and field leaders “learn the landscape” to enable them to become successful as soon as possible.
Direct sales for the year 2011 reached approximately $12.24 billion US dollars, which was 5.4 percent higher than the year before. This rate of growth was more than double the GNP (PIB) growth rate of 2.7 percent. Today Brazil has an estimated 2.8 million direct selling professionals.
Unfortunately Brazil suffers from a bureaucratic regulatory environment and an complicated tax regime for corporations and individuals. In addition, Brazil along with Argentina are two of the most protectionist countries in Latin America. Importation of finished consumer goods can often be assessed an import tariff duty of 40 to 70 percent of the products’ wholesale price.
Another challenge is the high cost of doing business: Rio de Janeiro presently has some of the most expensive office real estate in the world. Additionally, qualified, experienced Brazilian direct sales managing directors and corporate management command high salaries and government required social benefits. Expect to budget at least double of what you might spend to open other markets. In return, the increased market size/opportunity will often result in significant net gains in the long term.
Keys to Success
Brazil is an amazing country that provides an incredible opportunity to be successful if you’re willing to play by the rules, have sufficiently deep pockets, and pay the price. Best of luck!
An established direct selling consultant, DENNIS TENNEY assists network marketing companies with corporate management, field recruitment, and market development in Brazil.
CLOVIS LEMES is the president of Candex do Brasil and consults with direct selling companies entering the Brazilian marketplace. He is a former U.S. Department of Commerce Officer in Brazil.