Number of producers of cachaça and brandy fell 22% in 2019 in Brazil

The number of cachaça and brandy producing establishments registered with the Ministry of Agriculture reached 1,086 in 2019, a drop of 22.26% compared to 2018, when there were 1,397 units.
The data are from the 2020 Cachaça Yearbook published by the federal government.
The decrease in the number of establishments was pulled by the brandy sector, which suffered a 41.57% drop in the number of producers in 2019. In 2018, there were 611 units that made the drink, a number that dropped to 357.
The yearbook also showed that Minas Gerais (81) and São Paulo (75) are the states with the largest number of brandy producers, placing the Southeast as the leading region in the production of the beverage, with 134 producers, followed by the South (55), Northeast (46), Midwest (8) and North (5).
The reduction in the number of cachaça producers was only 6%, from 951 in 2018 to 89 in 2019.
Minas Gerais remains the largest cachaça producing state, and the number of registered establishments (375) is almost three times the number of second place, which is São Paulo (126).
For another year, the Southeast region led the production of the beverage, with 622 establishments registered with the Ministry of Agriculture. Minas Gerais, São Paulo, Espírito Santo and Rio de Janeiro concentrate approximately 70% of cachaça producers.
The Northeast region has 129 producers of cachaça, followed by the South with (101), Midwest (33) and North (9).
The decrease in the producers of cachaça and brandy is seen as a reflection of the high taxation on top of companies in the sector, according to the Brazilian Institute of Cachaça (Ibrac), a representative entity of the segment.
According to the director of Ibrac, the increase in the Tax on Industrialized Products (IPI) in 2015 brought "serious impacts" to the production chain.
"Even with the possibility of producers opting for the framework in Simples Nacional from January 2018, this reduction in the number of cachaça producers shows that the sector still faces several obstacles to recover. Adherence to the simplified tax regime seems to have come late for the Cachaça sector. We are realizing that the measure was not enough," he says.
According to Lima, the reduction in the number of registered establishments may also indicate an increase in the informality of the sector. A 2019 study by the entity shows that cachaça is the category most impacted by the illegal production of beverages in Brazil.
"Therefore, the need to reassess high taxes, especially at this time of discussion of tax reform," the entity said in a statement.