Required Report - public distribution

**Date:** 10/21/2004

**GAIN Report Number:** BR4016

BR4015

**Brazil**

**Exporter Guide**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Ron Verdonk, Director

U.S.AGRICULTURAL TRADE OFFICER

**Prepared by:**

Fabiana Fonseca, Agricultural Marketing Specialist

**Report Highlights:**

This report provides information on procedures related to importing food
products in Brazil and also brings to light some characteristics of the
major importers and their purchasing criteria.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Sao Paulo \[BR3\]

\[BR\]

**I. Market Overview**

Brazil will meet its year-end primary budget surplus goal of 4.25
percent of gross domestic product, however, political pressure is
building to increase government spending. The high primary surplus,
which does not include interest payments on debt and is stipulated in
the country's loan agreement with the International Monetary Fund (IMF),
serves as a guarantee to investors that Brazil will continue to pay down
its public-sector debt.

The government maintains that the markets would punish any relaxation in
fiscal policy, which would be bad for the economy and even worse for the
government's approval ratings. According to the Brazilian Institute of
Geography and Statistics (IBGE), the Brazil's GDP of R\$1.514 trillion
in 2003 reflected an actual shrinkage of 0.2 percent. The economy has
not expanded to its potential and fiscal policies have probably had an
even greater dampening effect upon demand, slowing down productive
investments and jeopardizing income.

The economy is forecast to grow by 3.5% in 2004, yet economists question
whether Brazil will be able to sustain a meaningful expansion. Analysts
indicate that the economy is performing in 2004 similarly to 2000's
outcome when GDP appreciated 4.4 percent. Since Brazil is at or above
historical highs for industral capacity usage and investments are still
relatively limited, the crucial issue now is how the Brazilian
Government will overcome inflationary pressure.

That said, as the following table shows, inflation has remained in
check, the country continues to run a solid trade surplus and interest
rates, though still high by international standards, have declined
somewhat.

ECONOMIC INDICATORS

  -------------------------- ---------- ---------- ---------- ---------- ------------ ------------
                             **2000**   **2001**   **2002**   **2003**   **2004\***   **2005\***

  GDP Growth (%)             4.4        1.3        1.9        -0.2       3.7          3.9

  Inflation-IPCA (%)         6.0        7.7        12.5       9.3        5.9          5.1

  Interest Rate-Selic (%)    16.1       19.0       25.0       16.5       15.0         14.0

  Total Exports (US\$        55.0       58.2       60.4       73.1       80.0         85.6
  billion)                                                                            

  Total Imports              55.7       55.6       47.3       48.3       54.0         60.2
  (US\$billion)                                                                       

  Trade Balance              -0.7       2.6        13.1       24.8       26.0         25.4
  (US\$billion)                                                                       

  Current account            -24.2      -23.2      -7.6       4.0        5.0          5.0
  (US\$billion)                                                                       

  Average Exchange Rate      1.83       2.35       3.54       2.90       2.95         3.10
  (R\$-US\$)                                                                          
  -------------------------- ---------- ---------- ---------- ---------- ------------ ------------

Source: Brazilian Institute of Geography and Statistics (IBGE),
Brazilian Central Bank, Secretariat of Foreign Trade (SECEX), Getulio
Vargas Foundation (FGV), Research Institute for Applied Economics (IPEA)

\* forecast

Since abandoning a fixed exchange rate regime in 1999, the US Dollar has
appreciated approximately 40 percent vis-à-vis the Brazilian Real.
Various categories of imported agricultural products were affected
differently by these economic adjustments. As such, U.S. bulk,
intermediate, consumer--oriented, forest, and seafood product exports to
Brazil show divergent results.

Brazil's agricultural system is well developed. The country is the
leading exporter of coffee, sugar, orange juice, beef and also ranks
among the top producers and exporters of soybeans, corn, poultry, fresh
fruit, etc. In consequence, it comes as no surprise that major food
multinationals play an active role in the commodity merchandising and
food processing business given relatively inexpensive labor and other
production costs. At the same time, a domestic market of more than 180
million consumers provides the other main attraction for developing
business in Brazil.

On the other hand, Brazil has the most imbalanced income distribution in
South America. According to the Brazilian Institute of Geography and
Statistics (IBGE), the top ten percent wealthiest individuals own
three-fourths of the national wealth. This helps explain why imported
consumer-oriented products are more susceptible to exchange rate
oscillations. Given the weakening of the Real in the course of this
decade, imported products tend to be luxury items, only affordable for a
limited percentage of the population, probably at least five million
individuals.

For these high-end consumers, importers have to offer what is new,
trendy and also a wider variety of products and brands. These market
atmospherics make import operations a little more difficult for both
Brazilian importers and foreign exporters who prefer to deal in
container loads of a single product as opposed to multi-product
consolidated cargos.

Given this outlook, there are challenges and advantages to be
investigated prior to entering the market, as illustrated below:

+----------------------------------+-----------------------------------+
| # ADVANTAGES                     | # CHALLENGES                      |
+----------------------------------+-----------------------------------+
| More supermarkets are showing    | Brazil is self-sufficient in food |
| interest in selling imported     | supply. An imported product is a  |
| goods.                           | luxury item and not a necessity.  |
|                                  | Retailers offer foreign goods to  |
|                                  | differentiate themselves and      |
|                                  | develop new niche markets. US     |
|                                  | exporters may start selling small |
|                                  | volumes but in the long run there |
|                                  | are possibilities to establish a  |
|                                  | plant in Brazil.                  |
+----------------------------------+-----------------------------------+
| # Price is not                   | # High-end consumers are more de  |
| always the determinant purchase  | manding regarding other aspects o |
| criteria for high-end consumers. | f products such as innovation, pa |
|                                  | ckaging, status, new trends, etc. |
+----------------------------------+-----------------------------------+
| # The US food i                  | # Brazilian consumers/importers h |
| ndustry is able to respond to co | ave limited trade relations with  |
| nsumers' demand promptly, regard | the US. There is room to develop. |
| less of the segment of products. |                                   |
+----------------------------------+-----------------------------------+
| As a developing economy, Brazil  | Learn how to operate in an        |
| still is very sensitive to       | up-and-down environment where     |
| international turbulence in      | long-term planning is not easy to |
| addition to its own internal     | implement or predict.             |
| issues.                          |                                   |
+----------------------------------+-----------------------------------+

**II. Exporter Business Tips**

When exporting to Brazil, U.S. companies need to understand that the
import process is heavily influenced by the Government of Brazil (GoB)
through its decrees and procedures, which are implemented by different
branches of the federal government to regulate the various aspects of
trade between Brazil and other countries. The GoB has modified Brazil's
one aspect or another of foreign trade regulations within short periods
that can catch companies involved in import-export off-guard, so
Brazilian importers need to keep abreast of changes in standards and
decrees.

Not infrequently, new-to-market U.S. suppliers have found local
importers especially demanding and determined documentation requested
not truly necessary. Of course, when exporters provide the right
documentation to their Brazilian importers, the import transaction
concludes more quickly, facilitating the business relationship between
buyer and seller. To explain the import process, the system is described
below. The main Brazilian Government offices involved in import
administration, including tariff collection, are:

**Ministry of Finance (MF)**

Main divisions:

\> Secretariat of Federal Revenue (SRF)

\> Brazilian Terminology Committee (CBN)

\> National Monetary Council (CMN)

\> Brazilian Central Bank (BC)

**Ministry of Development, Industry and Foreign Trade (MDIC)**

Main division:

\> Secretariat of Foreign Trade (SECEX)

For imports of agricultural food products, the following Brazilian
Government offices can play a role in the clearance process depending on
the product:

**Ministry of Agriculture, Livestock and Food Supply (MAPA)**

In general, MAPA is the primary ministry overseeing and enforcing most
of the regulations regarding production, import, export, sanitary and
phytosanitary issues for bulk commodities, meats, dairy and fishery
products, beverages, feed/fodders, pet food, seeds, plants, fruits and
vegetables. U.S. products of animal origin (beef, pork, seafood, and
dairy and processed poultry) are allowed into the Brazilian market, if
the product comes from a U.S. federally inspected plant, which has the
approval of the Brazilian Animal Products Origin Inspection Service
(DIPOA). Unprocessed products of plant origin (fruits, seeds, and
grains) can be exported to Brazil after the Brazilian Plant Health and
Inspection Service (DDIV) completes a pest risk analysis of the product,
and if accompanied by USDA/APHIS/PPQ phytosanitary certificate.

**Ministry of Health (MS)**

Through ANVISA, an agency created in 1999, MS enforces regulations
regarding processed food products, tobacco and tobacco products. The
primary function of this agency is to safeguard public health;
therefore, all food products marketed in Brazil are under ANVISA's
purview.

For additional information on GoB regulations regarding imports of
agricultural commodities and food products from the United States, such
as labeling requirements, including products containing biotech
ingredients, please check the \"Food and Agricultural Import Regulations
and Standards\" (FAIRS) report, number BR4616, dated July 28, 2004 at
the USDA/FAS home page, "www.fas.usda.gov" or on the USDA Brazil home
page "www.usdabrazil.org.br".

Since January 1997, the Secretariat of Foreign Trade (SECEX), the
Secretariat of Federal Revenue (SRF) and the Brazilian Central Bank (BC)
have been responsible for import related activities such as licensing,
customs clearance and exchange monitoring though the Integrated Foreign
Trade System (SISCOMEX), an administrative software program with graphic
interface to complete the computer-based import document. Since this
system has been implemented, import and export procedures have become
more transparent, allowing the GoB to adopt quick measures to minimize
trade deficits and frauds. The system also enables the government to
better control tax payments.

Brazilian companies interested in importing must register with the
Importers and Exporters Registry Office of SECEX. Registrations
completed prior to 1997 have been entered into the SISCOMEX. New
registrants are automatically added to the system upon the first import
transaction. It is necessary to be registered at the SRF in order to
obtain a user password to access the SISCOMEX.

Brazilian importers may contact foreign manufacturers, trading
companies, concessionaires or any individual interested in exporting to
Brazil to determine products of interest for importation, as well as
cost, guarantees, type of payment, etc. Such contact may be done via
fax, e-mail, by telephone or personally. The importer must then request
from the foreign exporter the remittance of a document that formalizes
the transaction costs agreed upon (pro forma invoices, letters,
telegrams, fax, purchase orders or contracts). At any given time, SECEX
may request relevant information or documentation on the transaction
from the importer. In case of discrepancies, SRF may arbitrate the
product value in order to establish the applicable tariff rate.

Another important element is the means used to ship the product, as well
as whether payment of the freight is the importer or exporter's
responsibility. If the exporter pays the freight charges, the bill of
lading will highlight that freight is \"pre-paid\". If the importer is
paying for the freight charges, the bill of lading will include
information that the freight is \"collect\".

The Import License (LI) can be either automatic or non-automatic and is
executed through the SISCOMEX. In order to grant a license, the SISCOMEX
will require information regarding commercial, financial, tax and
exchange details of the transactions to define the legal status.

\> Automatic Licensing: products not subject to special control or
special conditions will be automatically licensed upon completion of the
Import Declaration of Customs Clearance in the SISCOMEX system.

\> Non-Automatic Licensing: products or transactions subject to special
importation approval or which are required to comply with special
conditions must obtain licensing prior to shipment or before registering
the Import Declaration. A list of products and/or transactions, as well
as the schedule for licensing, according to general conditions of trade,
may be found in the SISCOMEX Administrative Treatment chart.

Generally speaking, agricultural products fall into the latter of the
two licensing protocols, which means that they can only be exported to
Brazil after MAPA or MS approval. This special authorization is
requested and released by the system. Importers, however, may want to
contact the pertinent ministry to speed up the process in case more
documentation or analysis is needed. In general, the authorization is
granted within a week.

Once the commercial transaction is concluded, the importer may authorize
shipment of the merchandise to Brazil. Products and/or transactions
subject to prior import approval must have obtained the approval prior
to shipment. After shipping, the exporter must send, according to the
established method of payment, the documentation that will allow the
importer to gain release of goods from Brazilian Customs.

Documentation required:

\> Shipping information (B/L or AWB)

\> Commercial invoice

\> Certificate of origin (for International Agreement products)

\> Phytosanitary certificate (when required by Brazilian law)

Overseas payment may be done in advance, by collection or by letter of
credit (cash or installments). A Foreign Exchange Contract, according to
the standards and regulations established by the Brazilian Central Bank,
formalizes the buying and selling of foreign currency between the
importer and an authorized exchange establishment. For simplified
exchange transactions, transactions made through DSI, up to the value of
US\$10,000, or the equivalent in other currency, the formalization of
the exchange can be made with a signed docket. The exchange transactions
may be made for immediate or delayed payment. The time between signing
the contract and payment of the transactions must not exceed 360 days.
When the payment is made before Customs clearance the bond between the
Import Declaration and the Foreign Exchange Contract will be established
according to the form of payment agreed upon by the importer, or
according to the negotiating bank upon exchange settlement.

The clearance process starts when imported products arrive in Brazil.
The importer or a contracted customs broker, using relevant
documentation, **[LI]{.underline}** (if necessary), shipping
information, commercial invoice, and other documents required due to
special characteristics of the product and/or transaction, will prepare
the Import Declaration (DI) in the SISCOMEX and, upon payment of the
Import Tax, Excise Tax (IPI also known as Tax on Manufacture) and
SISCOMEX user fees, will register the DI. This starts the customs
clearance process.

Clearance from Customs consists of a series of acts carried out by a
Customs official who will authorize the release of the goods to the
importer after the verification of the merchandise, verification of
compliance with tax laws and of the importer's identity. The SRF will
release an Import Warrant (CI) via SISCOMEX that will confirm Customs
clearance. SISCOMEX will then automatically select the method of Customs
clearance:

\> Green: customs clearance authorization is automatically issued.

\> Yellow: mandatory inspection of documentation is required and, if no
evidence of irregularities is found, customs clearance authorization is
issued.

\> Red: mandatory inspection of documentation and of merchandise is
required before customs clearance authorization is issued.

\> Gray: mandatory inspection of documentation, merchandise, and the
taxable basis of Import Tax is required before customs clearance
authorization is issued. Customs clearance authorization can be arranged
before the conclusion of the inspection of customs value, by using a
guarantee issued by the importer.

Except for the green option, all documents, together with the receipt of
the Import Declaration printed by SISCOMEX and proof of payment or
waiver of the ICMS (Value-Added Tax also known as Interstate Movement
Tax on Sales and Services), should be presented by the importer to the
Federal Revenue Office where the goods are located for the conclusion of
the customs clearance. For goods assigned the gray option, a Declaration
of Customs Value (DVA) must be made and transmitted via SISCOMEX to
explain the commercial aspects of the transaction and to provide
additional information to justify the value. Any corrections to the
information presented in the DI, changes in the calculation and
additional tax or fines required by law, will be carried out in
accordance with SISCOMEX procedures.

###### III. Market Sector Structure and Trends

# 

Imported consumer-oriented products are distributed in the Brazilian
market mainly through retailers and specialized importers. Major
retailers are willing to import directly in order to obtain better
margins. However, when volumes do not reach an advantageous level in
financial terms, retailers buy from local importers/distributors. While
avoiding the middleman is a general goal, it only happens if retailers
are able to fill containers and keep overhead costs in check. The most
preferable for them option is mixed containers.

As a result of the lack of economic growth in 2003, consumers lost
purchasing power; hence Brazil's local retail industry also registered
negative results. The sector's gross sales were valued at R\$87.2
billion in 2003, which represented 9.3 percent growth in nominal terms
compared to the previous year, however, applying the IPCA deflator it
showed a depreciation of 4.7 percent, cutting revenues to R\$76.01
billion. According to the Brazilian Institute of Geography and
Statistics (IBGE), the sector accounted for 5.8 percent of GDP, the sum
total of which was R\$1.514 trillion (for detailed information on the
Brazilian retail industry, please refer to the Retail Food Sector
report, number BR4014, dated August 4, 2004 which can be found at the
USDA/FAS home page or at the USDA Brazil home page).

![](media/image2.wmf)

Source: ABRAS/ACNielsen

# 

# MAJOR 10 RETAIL COMPANIES IN 2003

+---------------+---------+-------+-----+--------+--------+---------+
| **RETAILER    | **OWNE  | **SA  | **S | **No.  | **LOCA | **PUR   |
| NAME**        | RSHIP** | LES** | HAR | of     | TION** | CHASING |
|               |         |       | E** | OUT    |        | AGENT   |
|               |         | *     |     | LETS** |        | TYPE**  |
|               |         | *(R\$ |     |        |        |         |
|               |         | M     |     |        |        |         |
|               |         | IL)** |     |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 1- Cia.       | Brazil  | 1     | 1   | 497    | South  | LFP,    |
| Brasileira    | /France | 2,788 | 4.6 |        |        | DI, LI  |
|               |         |       |     |        | Sou    |         |
| De            |         |       |     |        | theast |         |
| Distribuicao  |         |       |     |        |        |         |
|               |         |       |     |        | Cente  |         |
| (Pao de       |         |       |     |        | r-East |         |
| Acucar,       |         |       |     |        |        |         |
| Extra, Se,    |         |       |     |        | Nor    |         |
| Compre Bem)   |         |       |     |        | theast |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 2- Carrefour  | France  | 1     | 1   | 329    | South  | LFP,    |
|               |         | 1,028 | 2.6 |        |        | DI, LI  |
| (Carrefour,   |         |       |     |        | Sou    |         |
| Champion, Dia |         |       |     |        | theast |         |
| Brasil)       |         |       |     |        |        |         |
|               |         |       |     |        | Cente  |         |
|               |         |       |     |        | r-East |         |
|               |         |       |     |        |        |         |
|               |         |       |     |        | North  |         |
|               |         |       |     |        |        |         |
|               |         |       |     |        | Nor    |         |
|               |         |       |     |        | theast |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 3- Sonae      | P       | 3,732 | 4.2 | 148    | South  | LFP,    |
|               | ortugal |       |     |        |        | DI, LI  |
| (Big,         |         |       |     |        | Sou    |         |
| Mercadorama,  |         |       |     |        | theast |         |
| Nacional,     |         |       |     |        |        |         |
| Maxxi)        |         |       |     |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 4- Bompreco\* | #####   | 3,442 | 3.9 | 118    | Nor    | LFP,    |
|               | ## Neth |       |     |        | theast | DI, LI  |
| (Bompreco,    | erlands |       |     |        |        |         |
| Balaio)       |         |       |     |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 5- Sendas\*\* | Brazil  | 2,273 | 2.6 | 76     | Sou    | LFP,    |
|               |         |       |     |        | theast | DI, LI  |
+---------------+---------+-------+-----+--------+--------+---------+
| **TOTAL TOP   |         | **33, | **  | **1    |        |         |
| 5**           |         | 264** | 37. | ,168** |        |         |
|               |         |       | 9** |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 6- Wal-Mart   | US      | 1,940 | 2.2 | 25     | South  | LFP,    |
|               |         |       |     |        |        | DI, LI  |
| (Wal-Mart,    |         |       |     |        | Sou    |         |
| Todo Dia,     |         |       |     |        | theast |         |
| Sam's Club)   |         |       |     |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+
| 7- Cia.       | Brazil  | 1,182 | 1.4 | 26     | South  | LFP,    |
| Zaffari       |         |       |     |        |        | DI, LI  |
+---------------+---------+-------+-----+--------+--------+---------+
| 8- Coop       | Brazil  | 940   | 1.1 | 21     | Sou    | LFP,    |
|               |         |       |     |        | theast | DI, LI  |
+---------------+---------+-------+-----+--------+--------+---------+
| 9- G. Barbosa | Neth    | 923   | 1.1 | 32     | Nor    | LFP,    |
|               | erlands |       |     |        | theast | DI, LI  |
+---------------+---------+-------+-----+--------+--------+---------+
| 10- Irmaos    | Brazil  | 811   | 0.9 | 40     | Cente  | LFP,    |
| Bretas        |         |       |     |        | r-East | DI, LI  |
+---------------+---------+-------+-----+--------+--------+---------+
| **TOTAL TOP   |         | **39, | **  | **1    |        |         |
| 10**          |         | 062** | 44. | ,312** |        |         |
|               |         |       | 6** |        |        |         |
+---------------+---------+-------+-----+--------+--------+---------+

Note: LFP (local food processors), DI (direct imports), LI (local
importers). Note: \* Bompreco was acquired by Wal-Mart from Ahold in
March 2004 and \*\*Sendas became an associate chain of Cia. Brasileira
De Distribuicao

Source: ABRAS/ACNielsen

Overall sales of the Brazilian food processing industry totaled R\$157.9
billion in 2003, which represented 21 percent growth in nominal terms
compared to the previous year. The local food processing industry tends
to negotiate directly with foreign suppliers as their purchases are more
specific, however, few importers of ingredients are present in the
market (for detailed information on the Brazilian processing industry,
please refer to the Food Processing Ingredients Sector report, number
BR4003, dated April 6, 2004 at the USDA/FAS home page or at the USDA
Brazil home page).

**FOOD PROCESSING SECTOR TRADE BALANCE (R\$ billion)**

  --------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
                                    **1998**   **1999**   **2000**   **2001**   **2002**   **2003**

  Production                        85.8       92.3       136.5      112.1      130.5      157.9

  Exports                           10         15.6       14.1       23.7       31.2       40.7

  Imports                           2.5        2.9        2.7        2.6        3.5        3.2

  Domestic Consumption              78.3       79.6       125.1      91.0       102.8      120.4
  --------------------------------- ---------- ---------- ---------- ---------- ---------- ----------

Source: Brazilian Food Processors' Association (ABIA)

The majority of imported consumer-oriented products found in Brazil
today are sourced from Mercosul suppliers, as trade among countries of
this economic bloc is duty-free. Products shipped by member countries
are price competitive with local products or at least not
price-prohibitive. The European Union is the second largest player in
the market, aggressively promoting its premium products and targeting
high-end consumers. With the advantage that Brazilian upper-class eating
habits are strongly influenced by European tastes, EU products are
naturally viewed as being traditional and sophisticated. As a result,
EU-origin products are often viewed as being preferred within several
high-end product categories. The EU is a direct competitor for US
products. However, despite the EU's favorable position, U.S. companies
are able to offer the same standards of products that EU suppliers do
and can increase market share in the Brazilian market.

**BRAZIL'S IMPORTS OF CONSUMER-ORIENTED PRODUCTS (US\$ million)**

  ---------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------
             **2000**   **Share   **2001**   **Share   **2002**   **Share   **2003**   **Share
                        (%)**                (%)**                (%)**                (%)**

  Mercosul   1,003.9    63.5      635.5      55.6      649.7      58.5      602.9      60.6

  EU         303.7      19.2      263.9      23.1      232.7      21.0      205.0      20.6

  U.S.       104.3      6.6       92.1       8.0       82.6       7.4       72.4       7.3

  Others     168.4      10.7      151.7      13.3      145.3      13.1      114.6      11.5

  Total      1,580.3    100.0     1,143.2    100.0     1,110.3    100.0     994.9      100.0
  ---------- ---------- --------- ---------- --------- ---------- --------- ---------- ---------

Source: Brazilian Secretariat of Foreign Trade (SECEX)

In 1994 with the implementation of the Real Plan and through the rest of
the last decade, imported products became a true alternative to
domestically produced goods and for this reason the retail industry has
gained power vis-à-vis domestic food processors. Even though imported
products represent significantly less than five percent of retail sales
today, arguably local food processors do not possess control over
product supply and pricing commensurate with their market share when
negotiating with retailers. Retailers are well aware of their importance
in the food distribution system, exerting considerable purchasing power
and reaching the overwhelming majority of Brazilian households.
Approximately 80 percent of food distribution takes place through retail
stores.

**Food Distribution**

# 

# IV. Best High-Value Product Prospects

# A. Products present in the market which have good sales potential

According to ACNielsen, from 1994 to 2003 product categories indicating
the most significant growth in volume are the following: fruit juices
(1263 percent), cake mixes (582 percent), aseptic milk (552 percent),
dog food (410 percent), spirits/sport drinks (378 percent), cappuccino
(372 percent), meat cuts/cold (348 percent), flavored milk (340
percent), cakes (334 percent), ready to serve desserts (309 percent),
instant pasta (286 percent), breakfast cereals (272 percent) and cat
food (243 percent).

Focusing on imports, products representing good sales potential are
those that in their original market also target high-end consumers or
are well known brands. In addition, Brazilian importers/distributors
usually prefer products of six months shelf life or more. The segments
of the population that can buy imported products regularly are estimated
in 5-8 million individuals. For this audience, in addition to the
product itself, its packaging, status, level of innovation, etc are
important attributes. Products that combine these characteristics are
more likely to successfully enter the market.

According to ATO analysis, in the past five years, consumer-oriented
food product categories that have demonstrated the best performance in
the market are: snack foods, wine/beer, fruit/vegetable/nuts
(fresh/processed), dairy products, red meats (prepared/preserved), pet
foods (dog/cat food) and seafood products.

# B. Products not present in significant quantity but which have good sales potential

Health foods, especially natural and organic products, have a limited
presence in the Brazilian market. The Brazilian food industry has not
made significant investments to develop these segments, as the consumer
base is restricted to a slice of the Brazilian population, which is
therefore less attractive when considering return on investment. There
are limited suppliers in the market for these products and consequently
prices are high to prohibitive. Small and medium-sized companies are
responsible for 70 percent of local organic supply. According to the
Institute of Biodynamics (IBD), sales of organic items are expanding
rapidly, on average 40 percent/year. In the local market, prices of
health foods, organic and natural products compared to conventional
products are 40 to 300 percent higher. As the US industry for this
segment has already achieved gains in scale and prices for these
products are relatively closer in the U.S. market to those of
conventional equivalents, exporters can find opportunities in the
Brazilian market. This is because the price of the imported product
could still be lower compared to locally produced ones, regardless of
the current exchange rate.

# C. Products not present because of significant trade barriers

Brazilian legislation requires all food items to be approved by Ministry
of Health (MS) or Ministry of Agriculture, Livestock, and Food Supply
(MAPA) prior to shipment. In general, there are no barriers towards
importation of food products; nevertheless, there are procedures to be
followed. Currently, unprocessed poultry product imports are banned
(Brazil does not allow the entry of this item per reciprocity), and for
products containing ingredients derived from biotech commodities there
are also considerable restrictions.

**V. Key Contacts and Further Information**

Please do not hesitate to contact the USDA/FAS offices below for
questions or comments regarding this report or require assistance to
export processed food products into Brazil:

Office of Agricultural Affairs (OAA) Agricultural Trade Office (ATO)

American Embassy, Brasilia Rua Henri Dummont, 700

Av. das Nacoes, Quadra 801, lote 3 01418-200 Sao Paulo, SP

70403-900 Brasilia, DF Phone: (55-11) 5186-7400

Phone: (55-61) 312-7101 Fax: (55-11) 5186-7499

Fax: (55-61) 312-7659 E-mail: [Atobrazil@usdabrazil.org.br]{.underline}

[Agbrasilia@fas.usda.gov]{.underline}
[http://www.usdabrazil.org.br]{.underline}

Other information sources include:

A. Government Regulatory Agencies:

Office of Agricultural Protection (SDA) Brazilian Environment Institute
(IBAMA)

Ministry of Agriculture, Livestock, and Food SAIN - Av. L 4 Norte

Supply (MAPA) 70800-200 Brasilia, DF

Esplanada dos Ministerios, Bloco D Phone: (55-61) 226-8221

Anexo B, 4 Andar, Sala 406 Fax: 322-1058

Brasilia, DF 70043-900 Internet site:
[http://www.ibama.gov.br]{.underline}

Phone: (55-61)218-2314/15

FAX: (55-61) 224-3996 or 218-2316

Interne site: [http://www.agricultura.gov.br]{.underline}

Office of Rural Development and

Cooperativism (SARC) Ministry of Science & Tecnology (MCT)

Ministry of Agriculture, Livestock, and Esplanada dos Ministerios, Bloco
E

and Food Supply (MAPA) 70067-900 Brasilia, DF

Esplanada dos Ministerios, Bloco D, 3 Andar Phone: (55-61) 321-8886

Sala 304 Fax: (55-61) 225-7496

Brasilia, DF 70043-900 Internet site:
[http://www.mct.gov.br]{.underline}

Phone: (55-61) 321-3594

Fax: (55-61) 321-4524

Internet site: [http://www.agricultura.gov.br]{.underline}

Agency of Sanitary Surveillance (ANVISA) Ministry of Justice

Ministry of Health Esplanada dos Ministerios, Bloco T

Esplanada dos Ministerios, Bloco G 70064-900 Brasilia, DF

70058-900 Brasilia, DF Phone: (55-11) 224-0954

Phone: (55-61) 315-2343 Fax: (55-61) 322-6817

Fax: (55-61) 225-6056 Internet site: [http://www.mj.gov.br]{.underline}

Internet site: [http://www.saude.gov.br]{.underline}

Ministry of Development, Industry and Brazilian Customs (Receita
Federal)

Foreign Trade (MDIC) Ministry of Finance

Esplanada dos Ministerios, Bloco J Esplanada dos Ministerios, Bloco P

70056-900 Brasilia, DF 70048-900 Brasilia, DF

Phone: (55-61) 329-7000 Phone: (55-61) 412-3000

Fax: (55-61) 329-7230 Fax: (55-61) 412-1721

Internet site: [http://www.mdic.gov.br](http://www.mdic.gov.br/)
Internet site: [http://www.fazenda.gov.br]{.underline}

B. Trade Association:

Brazilian Association of Supermarkets (ABRAS) Brazilian Assoc. of Food
Industries (ABIA)

Av. Diogenes Ribeiro de Lima, 2872 Av. Brigadeiro Faria Lima, 2003, 11
Andar

05083-901 Sao Paulo, SP 01451-001 Sao Paulo, SP

Phone: (55-11) 838-4500 Phone: (55-11) 814-6688

Fax: (55-11) 837-9933 Fax: (55-11) 814-6688

Internet site: [http://www.abrasnet.com.br](http://www.abrasnet.com.br/)
Internet site: [http://www.abia.com.br]{.underline}

Brazilian Association of Exporter and Importer

of Food And Beverage (ABBA)

R. Machado Bittencourt, 190 - cj. 609

04044-000 Sao Paulo, SP

Phone: (55-11) 5087-9546

Fax: (55-11) 55 11 5087-9546

Internet site: [www.aabba.org.br](http://www.aabba.org.br/)

**APPENDIX I. STATISTICS**

**TABLE A. Key Trade & Demographic Information**

  --------------------------------------------------- -------------------
  Agricultural Imports From All Countries (\$Mil) /   3,664 / 10.0 % ^1^
  U.S. Market Share (%)                               

  Consumer Food Imports From All Countries (\$Mil) /  839 / 6.0 % ^1^
  U.S. Market Share (%)                               

  Edible Fishery Imports From All Countries (\$Mil) / 203 / 1.0 % ^1^
  U.S. Market Share (%)                               

  Total Population (Mil) / Annual Growth Rate (%) ^2^ 170 / 1.82 % ^3^

  Urban Population (Mil) / Annual Growth Rate (%) ^2^ 138 / 2.7 % ^3^

  Number of Major Metropolitan Areas ^2^              9 ^4^

  Size of the Middle Class (Mil) / Growth Rate (%)    20 / NA
  ^7^                                                 

  Per Capita Gross Domestic Product (U.S. Dollars)    2,953
  ^2^                                                 

  Unemployment Rate (%) ^2^                           9.7 % ^5^

  Per Capita Food Expenditures (U.S. Dollars) ^6^     291

  Percent of Female Population Employed ^2^           41.4 % ^5^

  Exchange Rate (US\$1=R\$ local currency)            2.90
  --------------------------------------------------- -------------------

^1^ Source: United Nations Statistical Office -- 2003

^2^ Source: Brazilian Geography and Statistics Institutes (IBGE)

^3^ IBGE Census 2000, total population is estimated in 176.9 Millions
for 2003

^4^ Metropolitan areas used for the 2003 Consumer Expenditure Survey -
(POF, IBGE)

^5^ 2003 National Household Sample Survey (PNAD, IBGE)

^6^ Value based on the annual average expenditures according to the 2003
Consumer Expenditure Survey - (POF, IBGE)

^7^ Middle class represents 13.8% of the total population with income
between R\$ 750 and R\$ 4,800 per month

![](media/image3.wmf){width="6.617361111111111in"
height="4.199305555555555in"}**Table B. Consumer Food & Edible Fishery
Products Imports**

Source: FAS\' Global Agricultural Trade System using data from the
United Nations Statistical Office

**TABLE C. Suppliers of Consumer Food & Edible Fishery Products**

![](media/image4.wmf){width="6.747222222222222in"
height="2.8847222222222224in"}

Source: FAS\' Global Agricultural Trade System using data from the
United Nations Statistical Office