Tuesday, September 22, 2015

Wine consumption, Brazilian will migrate to cheaper label

The shot of the dollar and the new taxes that will focus on alcoholic beverages from 1st of December have taken a climate of uncertainty to importers of wine. But they seem to agree on how the consumer will react: there will be immediate migration to cheaper labels.
"The Government's rules are unclear and it is difficult to understand," says Hermann Adolar, owner of importer Decanter, which hired a tax expert to understand what will change. "We are waiting for the results of this study to see how we can adapt without harming the consumer."
As announced on 31 August, the new taxation model focuses on domestic wines, of MERCOSUR, and other countries, and creates an extra tax of 10% on the value of each label. In the case of whiskeys and other distillates, the tax raises in 30% which was paid so far. According to the IRS, the measure is expected to generate an extra collection of r $ 1 billion in 2016.
In the case of wine, the importers seem unanimous in recognizing that the immediate consequence will be a migration to cheaper labels. "We need to seek alternatives to the consumer loyalty, with larger offer of products in the segment we call ' price versus pleasure ', our version of the traditional ' cost versus benefit, '" says Hermann.
Although the Decanter produces wines and sparkling wines in Rio Grande do Sul and in the Serra Catarinense, 98% of revenues from the import. The largest sales volume is concentrated in the range between $ 30 and $ 70. By preliminary calculations, a bottle sold to r $ 80 will be $ 100, if coupled with the devaluation of the dollar and the new tax.
"In fact, the crisis for us is no surprise. She had been camouflaged and had an unrealistic dollar. Only now, the fall of grade country investment aggravates the situation further and the solution will not be quick ", says the Manager. For him, right now, it's time to reduce costs to stay competitive. "Our sales are being held with a huge sacrifice of margins and with tough negotiations with suppliers. But it is clear that consumption will change and the client level will choose cheaper wines ".
A very similar view is shared by Celso La Pastina, owner of World Wine importers and La Pastina. "We live in a dark time, that represents a huge blow on a small market, which had been saying in the last decade. The high-dollar to understand, and would have been absorbed with more peace of mind if there had been no interference from the Government to keep the u.s. currency at unrealistic levels, "he says.
The importer explains that previous taxes, between 0.73 and R $ $1,08 per litre, tipped cost. Already the new rate of 10% on the selling price of each bottle. With it, a prior assessment, he imagines that the sum of taxes will reach 70% of the final price. "Everyone in the wine category will be affected, regardless of the country. We need time to see how the consumer will absorb this impact and how the evolution of the Brazilian economic crisis. If there is income there will be no increase in consumption, "says La Pastina.
In World Wine, where the portfolio more than thousand labels, the most sold are in the range between $ 50 and $ 100. In La Pastina, which has 300 acquis labels, sales are concentrated between $ 30 and $ 40.
According to the importer, expensive wines above $ 1,000 no longer sold here, because the staff brings out. Now, the expensive, between $ 500 and $ 700, will be very expensive.
For the moment, the World Wine began to anticipate promotions. Each week about 30 labels come into promotion since sold in boxes containing six units. The discounts, which amount to 50% may, for example, buy Spanish Setze Gallets 2012 for $ 48.50 a bottle, and the Madurese, Spain 2009, for $ 121. The specials change weekly and include diverse nationalities.
For those who work only with expensive wines, the market should shrink even more, predicts the French Philippe de Nicolay Rothschild, who five years ago opened the PNR and baptized the importer with his initials. As part of its sales is expressive wines and champagnes for US $ 70, where the tax burden is higher, he estimated that with the new taxes the sum total of taxes can reach 150% of the final price.
The NRP is a boutique importer, which has 38 labels, among the family, from the Domaine Barons de Rothschild and others, chosen by businessman-Baron. The label out cheap for $ 75 and the most expensive for $ 2.4 mil. "For rare wines no promotions," says he, who claims to practice smaller margins and continues to sell bottles of old imports by the same value, without adjustment.
"For the next shipments will have to raise prices, but if the lower dollar also will pass this fall to the customer", explains. Another change on the high-dollar, according to him, is the reduction in stock. "Today our inventory is tight, just enough to take care of sales over the next three months".
Last year, the PNR has already registered a 30 percent drop in sales and Rothschild worked with the hypothesis that will fall even more. "The big test will be now, because the best sales period is the end of the year. But I know that for the consumer is much more complicated than spend $ 300 today than 24 months, "he says.
The PNR concentrates 70% of wholesale sales, where as the network client St. Marché, which includes the Empório Santa Maria. For individuals, sales are for specific events, in most marriages, the drink of choice is usually the champagne.
Optimistic, Rothschild believes that despite the crisis the client will continue to spend a similar amount with wines, which will lead to more affordable labels. "In times of crisis is over going on always the same in all countries. If it's hard enough living, becomes even more difficult if you take all the pleasures. So, in these hours, buy a bottle to share with friends makes life better ".
Valor Economico
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