Until June, sales of fine wines fall 3.9%

The good news for Brazilian wineries is that after the agreement signed at the end of 2012 with importers, distributors and supermarkets in Exchange for the withdrawal of the licence application of safeguards against imports, the national fine wine returned to win, albeit modestly, in the internal market. The bad is that just when industry and retail managed to finally reach an understanding to end a fight in several years, the economic slowdown made the fall and put water consumption in industry numbers.
As the Brazilian Wine Institute (Ibravin), the total sales of fine wines in the country declined by 3.9% from January to June compared with the same period last year, to 38.383 million liters.
Imports fell 4.1 percent to 29.620 million liters, while the nationals had fall bit smoother, 3.1%, to 8.763 million liters, and managed to enlarge slightly their market share of 22.6% to 22.8%, reversing the behavior observed in the first half of 2012.
The problem is that the performance of the first six months is far short of what would be necessary for the fulfilment of the goal provided for in the agreement last year to sell 27 million litres of domestic national product in of 2013. "We must stay in 23 million gallons", says the Chief Executive Officer of Ibravin, Carlos Paviani.
Still, the performance there will be nothing to sneeze at. If the new estimated Paviani is confirmed, it will mean an increase in annual sales of 22.6%, after 4% reduction in 2012 compared with the previous year. For those imported, it projects a drop of 5% to 6% in total volume to be sold in 2013 in the country, to about 70 million liters.
As the Director of Ibravin, the hope is that the numbers of national wines will improve in the second half thanks to cold in July and August, the increase in consumption at the end of the year and likely high prices for imported with the devaluation of the real. The Executive also has the gradual implementation of the agreement which secured the withdrawal of the licence application of safeguards that had been made by wineries to the Ministry of development, industry and foreign trade (MDIC) in 2012.
The negotiations included the offer of national wines increase in supermarket chains of events, bringing industry, importers and retail (the first took place in Bento Gonçalves in February) and promotional campaigns at points of sale.
The agreement has been closed, as well as of Ibravin, Brazilian Wine Union (Uvibra) and by the Brazilian supermarket Association (Abras), drinks (Abrabe) and importers of drinks (ABBA).
The Vice President of Abras, Márcio Milan, reports that the agreement is already being implemented by associations of supermarkets in Rio Grande do Sul, São Paulo, Rio de Janeiro, Santa Catarina, Paraná, Minas Gerais and Pará and will be gradually extended to other States.
According to him, the self-service retail, formed by 83 thousand points of sale in the country, accounts for about 50% of the sales of domestic and imported fine wines in the internal market.
In the squares where the program for stimulating domestic wine is already more advanced, the plan is to do some promotions more "aggressive" pricing throughout the second half, with discounts between 15% and 20%, says the Executive. According to him, "four or five" among the ten largest supermarket chains in the country must reach, until the end of the first quarter of 2014, the participation of 25% of the national total wine sales, as provided for in the agreement.
On the side of imported, the Vice President of Abras says that prices must be adjustments between September and October to compensate at least in part the Exchange variation of the last months. So far the devaluation of the Brazilian real had no impact on sales because supermarkets still working with products received until may, but starting in August will have networks that start the inventory replacement under a new rate reality.
The President of the deliberative Council of ABBA, Adilson Carvalhal junior, confirms that the Exchange has not yet been passed on to the price of imported. Still, he acknowledges that the market is more retracted due to the economic situation "delicate" and understands that the fall of imports in the first half was also influenced by anticipations of purchases at the end of 2012, when it was still discussing the possibility of imposing safeguards.
Nevertheless, Oakwood Junior claims to be "optimistic" about the future of the agreement with the national wineries. In addition to designing a high in the sale of fine wines from Brazil to 40 million gallons in 2016, the industry's plan is to increase the per capita consumption of the drink (considering national and imported wines, and fine) of 1.9 litre currently to 2.5 litres per year in the same period. "The problem at the moment is the little favourable scenario," he says.
But worse than the situation is the high tax burden, adds the Executive. According to him, up to 53% of the price of domestic and imported wines in sales points correspond to State and federal taxes and contributions, not to mention the difficulties created by the differences in tax rates and tax regimes adopted in every State. "This agenda is walking very slowly because it depends on the situation and Governments [of public accounts] is not favourable", adds Milan, the Brazilian supermarket Association (Abras).