Brazil Furniture Market TRENDSPOTTING OFFICIAL PROGRAM

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Edmund Allison
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1 Brazil Furniture Market TRENDSPOTTING OFFICIAL PROGRAM

2 TRENDSPOTTING BRAZIL Compiled by: Swiss Business Hub Brazil DISCLAIMER The information in this report were gathered and researched from sources believed to be reliable and are written in good faith. Switzerland Global Enterprise and its network partners cannot be held liable for data, which might not be complete, accurate or up-to-date; nor for data which are from internet pages/sources on which Switzerland Global Enterprise or its network partners do not have any influence. The information in this report does not have a legal or juridical character, unless specifically noted

3 1. Trend description 1 Growing demand for furniture is due to the ongoing housing market boom in Brazil. This was in turn underpinned by rising real average incomes, which over increased by 9%, and a dramatic rise in the availability of mortgage credit, with banks especially pushing mortgage sales to low- and midincome first-time homebuyers. Furthermore, in March 2009 the federal government launched housing programme My House, My Life, with this aiming to build a million houses over for low-income families. The second stage of this programme was launched in June 2011 and aims to construct two million houses by the end of 2014, with one million of these houses having been built by August With the ability to obtain subsidised mortgage loans, Brazilians are proving keen to move to new homes and thus driving growth for the furniture market. The majority of consumers (41.3%) usually acquires new furniture every year, but most of the time the purchase is motivated by a need related to specific stages of life, such as moving to a larger property (30.2%), children entering adolescence (15.1%) and recent marriage (13.3%)*; The average expense of consumers with furniture in 2012 was BRL (CHF 456 as of ); The online trading has attained a strong market position in Brazil. The offer is wide and many manufacturers participate in the online business. New marketing strategies, such as the mobile commerce, will further increase the competitive pressure on retail. No manufacturer will be able to avoid having a consistent approach to the delivery of online channels. The growth in online trading, due to the young, experienced online customers, will be faster than in Europe. Most part of the supply is of box furniture for dormitory and living rooms. 2. The Sector in Numbers Furniture and homeware stores recorded current value growth of 8% in 2012 to reach R$28 billion, pushed by middle class spending on home decoration. 1 Source: DCI Diário Comércio Indústrias e Serviços *Data from IEMI research held in 2012 TRENDSPOTTING 3

4 Furniture and homeware stores are expected to increase by a CAGR of 3% in constant value terms between 2012 and 2017 As the chart shows, the trend is for the imports to keep growing. From 2007 to 2013 the import value growth was of 179%.

Imports (U$ Millions) 900.00 800.00 700.00 738.92 837.23 600.00 621.91 500.00 400.00 300.00 299.41 430.11 336.34 502.80 200.00 100.00 0.

5 Imports (U$ Millions) In the meantime, exports continue to fall and thus harm Brazil s trade balance FROM JANUARY TO OCTOBER (US$ MM) 3 Brazilian furniture exports reached US$ 432 million from January to October 2012, which represents a decrease of 2,7% comparing to the same period of The South and Southeast of the country, represented by Bento Gonçalves, Arapongas and São Paulo respectively, are the greatest producers of furniture in Brazil. Main Furniture Production Hubs 2 MOVERGS /CGI Moveleiro/SECEX/SDP - (NCM code / ) 3 AliceWeb/MDIC. Elaborated by Brazilian Furniture / APEX ABIMOVEL (This study does not consider furniture parts, car seats)

6 3. Import Regime The Brazilian classification system is the NCM (Mercosur Common Nomenclature). It contains 8 digits (6 from the HS and 2 additional ones) and is the basis for the application of customs taxes. Most import taxes are calculated over the CIF price, except for the ICMS, calculated in a cascade effect, as shown below 4 : Taxes (II) Import tax (IPI)Tax on Manufactured Products (PIS/Pasep) Social Contributions (Cofins) Social Contributions (ICMS) Value Added Tax (AFRMM) Freight Surcharge for Renovation of Merchant Marine - only for maritime transportation Calculation Base CIF CIF + II CIF CIF CIF+ II + IPI + taxes + PIS + Cofins + customs expenses* Freight value 4 The Swiss Business Hub Brazil offers to its potential clients a free analysis on import taxes. If you are interested please contact us and inform your NCM code.

7 4. Main Industry Associations Movergs Rio Grande do Sul Furniture Industry Association Telephone: +55 (54) ABIMAD Brazilian Association of High-End Decoration Furniture Telephone: +55 (11) Main Upcoming Fairs FIMMA (International Fair of Machinery, Raw Material and Accessories for the Furniture Industry) March 2015 Bento Gonçalves - RS Formóbile (International Fair of Suppliers for the Wood and Furniture Industry) 29 th july 1 st August 2014 Anhembi Parque São Paulo Abimad 29 th july 1 st August 2014 Expo Center Norte São Paulo MovelSul To be defined 2015 Bento Gonçalves RS

8 6. Bibliography Euromonitor: Industrial capsule: Furniture in Brazil - January 2014 Euromonitor: Sector capsule: Furniture and homewares stores in Brazil - April

9 ExportHelp T Switzerland Global Enterprise Bleicherweg 10 CH-8006 Zürich T Switzerland Global Enterprise Corso Elvezia 16 CP 5399 CH-6901 Lugano T Switzerland Global Enterprise Avenue d Ouchy 47 CP 315 CH-1001 Lausanne T

Foreign Trade Vademecum. 2012 Edition. osec.ch

Foreign Trade Vademecum. 2012 Edition. osec.ch Table of contents. Swiss economic key figures 3 Global view 4 Worldwide export development by region 4 Worldwide largest exporters 4 Worldwide import development