2013-10-22 11:38:52 - Fast Market Research recommends "Brazil Agribusiness Report Q4 2013" from Business Monitor International, now available
BMI projects Brazil consumer electronics spending will grow by about 11.7% in US dollar terms in 2013 to US$37.8bn. In 2013, sales of some consumer electronics devices have been hit by currency weakness and high household indebtedness, and this is expected to continue in H213. However, growth areas will include 4G smartphones, tablets, WI-Fi-enabled cameras and HD TV sets. The extension of the government's Lei Do Bem programme, to encourage local production of various products, should boost the availability of affordable smartphones and Huawei has already moved to take advantage of this. Brazil's hosting of the 2014 FIFA World Cup and 2016 Olympics Games will provide a boost to spending on devices ranging from handsets to TV sets and cameras.
However, in 2013 we expect the Brazilian consumer to feel the effects of high levels of household debt and there are signs banks are becoming wary about increasing lending.
Headline Expenditure Projections
Computer hardware sales: US$10.6bn in 2012 to US$11.1bn in 2013; +3% in US dollar terms. Our forecast downgraded, following slowdown in GDP growth and exchange rate decline hitting consumer spending. .
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AV sales: US$10.8bn in 2012 to US$11.6bn in 2013, +68% in US dollar terms. Forecast in US dollar term unchanged, with large flat-panel TV sets expected to receive a boost from the 2014 FIFA World Cup.
Mobile handset sales: US$12.5bn in 2012 to US$15.1bn in 2013, +21% in US dollar terms. Long-term forecast in US dollar terms upgraded, following the passing of tax incentives encouraging local production to lower prices for smartphones in 2013-2014.
Brazil's score is 61.2 out of 100.0, which makes it second place in our latest Americas Consumer Electronics Risk/Reward Ratings (RRRs) table. The country's huge potential market means its relatively high industry rewards score should be maintained over coming quarters. BMI expects Brazil to be one of the region's most dynamic markets over our forecast period, with digital upgrades ahead of the 2014 football World Cup and the 2016 Olympic Games providing further momentum.
Key Trends and Developments
* The Brazil 2014 FIFA World Cup and 2016 Olympics Games are both expected to provide a huge boost to demand for digital TV sets and cameras, in what is already the world's fourth largest digital cameras market. Vendors are positioning themselves to take advantage. However, the government has had to modify the 2016 deadline for analogue signal switch-off in several parts of the country due to concerns that digital converters are too expensive for many consumers. The government mandated that all HD TV set models must come installed with converters by 2012 and said it would work with industry stakeholders to improve access to the devices.
* PC shipments are projected to continue to increase, with the government and retail sectors at the forefront. PC market penetration is approaching about half of all households. Greater affordability combined with more credit options, lower interest rates and tax concessions will drive retail PC sales. However, tablets are accounting for an increasing share of volume sales, with lower-priced models dominating in 2012.
* In April 2013, President Dilma Rousseff signed a decree that would remove the PIS/Cofins welfare tax on smartphones made in Brazil, in an attempt to improve technological innovation and boost consumption and production. The tax waiver excludes higher end models such as the latest Apple iPhones and Samsung Galaxy, but applies to those that retail at less than BRL1,500 (US$750). The government expects the price of smartphones produced locally will fall as much as 30%, compared to those which are imported.
Smartphones accounted for around 25% of mobile handset sales in 2012 and sales will continue to grow rapidly as the range and prices of smartphones become more accessible to consumers. Use of mobile internet has grown steadily and will reach about 31% of mobile phones in Brazil at-end 2013. H113 saw the launch of a range of 4G-compatible smartphones on the Brazil market, with Claro and other telecom operators rolling out initial commercial 4G/LTE services in a number of cities which will host the FIFA Confederations Cup tournament in 2013. By implementing tax incentives, the Brazilian government also hopes to curb the black market for smuggled electronic devices, which emerged due to the high prices of imported smartphones. Huawei has been quick to take advantage of these incentives, by establishing a local manufacturing base in August 2013, which should boost sales and lower the average price of handsets.
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