Dennis Tenney

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.

Background
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.


Dennis Tenney

Opportunity

  1. Youthful population and rapidly growing middle class: With significant upward mobility, rising consumer demand, and a growing middle class in excess of 100 million, the demographics bode well for companies that have quality products, professional management, attractive compensation plans, and strong leadership.
  2. Dynamic, diversified economy and increasing demand for quality consumer goods and nutritional supplements: Brazilians are health conscious and tech savvy. Having some of the most beautiful beaches in the world, Brazilians naturally emphasize personal appearance, quality nutrition, and a healthy lifestyle. Companies whose products satisfy these needs enjoy nearly limitless opportunities.
  3. Entrepreneurial spirit and social networking culture: Brazilians are friendly, hard-working, and they have strong aspirations for achieving financial success. In addition, Brazilians love to enjoy life and socialize face to face. Each of these characteristics fits the profile of the ideal independent sales representative for any reputable direct sales company.
  4. Sophisticated banking/legal services; reliable postal and courier services: The Brazilian banking and financial services sector is very sophisticated and reliable. The Brazilian postal system and courier services are efficient, facilitating the delivery of consumer goods in a timely, safe manner throughout the country.

Clovis Lemes

Challenges
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

  1. Find the best consultants in the areas of accounting/tax compliance, corporate management, obtaining permits with the various local, state and Federal tax entities, product fulfillment, dispatch, and so on. This will save years of “on the job” training and hundreds of thousands of dollars. Actively utilize the services of ABEVD in this respect.
  2. Never, ever succumb to paying bribes, selling products without proper permits, or cutting corners. Credibility is everything! Patience, tenacity, and complete compliance are essential. The Brazilian government approved a new anti-bribery law in August 2013. Companies can be heavily penalized under this new legislation.
  3. Manufacturing, mixing, and/or packaging some or all of your products in Brazil will significantly reduce import duties. In addition, appealing to Brazilian pride and cultural sensitivities as a result of rebranding some of your products with a Brazilian “flavor” will give you a competitive advantage.
  4. Proactively implement a meaningful Corporate Social Responsibility cause or program. Brazil is leading the way worldwide in terms of the number of businesses involved in this effort. Neglecting to do so is a serious mistake. To do so with a meaningful, sustainable cause or partnership from the very beginning is a smart move!
  5. Identify, train, and motivate the most respected and capable corporate management and field leaders. Since Brazil has such a lengthy track record of extremely successful direct sales companies, the human leadership component cannot be stressed enough.

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.