Carnival Spirit

29 January, 2016

Brazil may be suffering economically, but its second sporting event in as many years is being hailed a great opportunity for its national spirit. Holly Motion reports

Brazil will have to put its current financial woes aside and host the second major sporting event in as many years. It is hoped Rio 2016 will present opportunities for the country’s fragile finances as well as the national spirit: cachaça.

“The great thing is that the Rio Olympics is happening so quickly after the World Cup,” says Phoenix Kelly-Rappa, managing partner of Cuca Fresca Spirits. “It keeps the momentum and the focus on the category going. And it is an opportunity to take the marketing that has proven effective during the World Cup and do it on a larger scale.”

For many, cachaça fell short when it came to capitalising on the World Cup. “In Germany, cachaça volumes decreased by double digits in the first eight months of 2015, with sales totalling 770,000 litres in this period,” says Fabrizio Sassoli de Bianchi, Mangaroca International export & marketing manager. “This is the effect after the 2014 World Cup in Brazil.”

As big consumers of the World Cup this might seem curious, but a closer look at the second-largest cachaça market in terms of volume shows that figures were down 9% prior to the World Cup and are forecast to fall a further 9% in the next five years, according to Euromonitor International.

There is a cause for optimism in other European markets though.

In France, says De Bianchi, cachaça volumes increased by 17% due to the World Cup – gaining market share at the expense of tequila. “As a consequence, many new cachaça brands were imported in France and even private labels were created. Despite this, once the ‘World Cup effect’ ended, in 2015 there was a physiological decrease.”

In general, the 2014 World Cup effect took place as a larger-than-usual  number of both off and on-trade promotions were carried out. “Once the promotions were over, consumption decreased back to the usual volumes, although cachaça gained in popularity,” De Bianchi adds.

AT HOME

In its domestic market – where 99% of the spirit is consumed – the main cachaça trend is premiumisation. The super-premium alambique segment is growing at 36% in Brazil, while the industrial cachaça segment is in steady decline (IWSR).

“Even in Brazil, the cachaça category is getting reinvigorated with younger consumers being drawn to higher quality, artisanal brands,” says Cuca Fresca Spirits’ Kelly-Rappa.

In Brazil, there are hundreds of formal producers and thousands of informal producers.

“Informal producers are usually for personal use, and quantities are very low,” says Leblon founder and CEO Steve Luttmann. “I have seen some estimates of about 4,000 brands in Brazil. However, per IWSR, there are approximately 65 active brands that sell at least 1,000 9-litre cases in Brazil.”

For export, Luttmann approximates there are 20 brands, of which seven or eight are actively pursuing the international opportunity with marketing and sales investments. Most set their sights on the US and Europe.





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