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Opportunities inBrazil 2015
Opening international marketsfor digital companies
Market Intelligence Business Development Sales Representation
www.latamconnection.com
Brasil Online 1995-1996 ZAZ 1996-1999 Terra 2000-2005 DM9DDB 2006 iG 2007-2013 Latam Connection 2013
About the authorCaique Severo
Agenda
1. General data about Brazil
2. Internet and technology
3. Digital media
4. Challenges of doing business in Brazil
General data about Brazil
2014 203 million people
Source: IBGE, december 2014 - http://www.ibge.gov.br/home/default.php
20147th largest country in GDP
US$ 3 trillion purchase power parity standard
Source: Finance Ministry - http://www.fazenda.gov.br/area-destaques/economia-brasileira-em-perspectiva-30.12.2014
2014Very small growth
+ 0.2%
Source: Finance Ministry - http://www.fazenda.gov.br/area-destaques/economia-brasileira-em-perspectiva-30.12.2014
2014Low unemployment
4.8%
Source: IBGE December 2014 - http://saladeimprensa.ibge.gov.br/noticias?view=noticia&id=1&busca=1&idnoticia=2801
Big shift in economic classes
Million of people in each economic class
Source: Finance Ministry, December 2014 - http://www.fazenda.gov.br/area-destaques/economia-brasileira-em-perspectiva-30.12.2014
Class AB
Class C
Class D/E
Growth in higher education% of people ages 25-34 with at least an undergraduate degree
Source: IBGE
2004 2013
15,2%
8,1%
Cars sales doubled in a decadeNumber of new cars on the streets
Source: Anfavea, November 2014 - http://www.anfavea.com.br/tabelas.html
Domestic airline travel grew 164% in 9 yearsNumber of passengers
Source: ANAC, November 2014 - http://www2.anac.gov.br/estatistica/demandaeoferta/DemandaeOferta.asp
November 2005 November 2014
7.952.936
3.011.295
Inequality is lower but still high% of income per capita by deciles of income
Source: IBGE - ftp://ftp.ibge.gov.br/Indicadores_Sociais/Sintese_de_Indicadores_Sociais_2014/SIS_2014.pdf
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
41,7%
15,3%
10,8%8,3%
6,6%5,8%4,5%
3,4%2,5%1,2%
45,8%
15,9%
10,4%
7,7%5,9%4,9%
3,7%2,8%1,9%1%
2004 2013
The 10% richer gets more than 41% of all income
Demographic bonus
Decrease in number of child per womanSource: World Bank, Google, others
Demographic bonus
2010 2020
More people in the economic active age
Men WomenMen Women
Internet and technology
Internet users in Brazil
Non-users70
Users95
Million of people over 12 years old
Source: F/Radar 2014 - http://www.fnazca.com.br/index.php/2014/12/16/fradar-14%C2%AA-edicao/
Internet users by social economic class
DE7
C48
AB38
Million of people over 12 years old
Source: F/Radar 2014 - http://www.fnazca.com.br/index.php/2014/12/16/fradar-14%C2%AA-edicao/
Internet users by age
73% are under 35 years old
60+346-59
8
36-4514
26-3524
18-2524
12-1720
Million of people over 12 years old
Source: F/Radar 2014 - http://www.fnazca.com.br/index.php/2014/12/16/fradar-14%C2%AA-edicao/
Mobile access: 62 million peopleMillions of internet users (celular and tablet)
Source: F/Radar
2013 2014
62,5
42
Access through celular grows% of internet users
Source: F/Radar
2013 2014
65%
48%
Access through tablets grows% of internet users
Source: F/Radar
2013 2014
14%
9%
Tablet OS
3T sales
iOS5%
Android95%
Source: IDC Brazil
Best seller tablets
78% of sales are under US$ 200 51% of sales are under US$ 120
Semp Toshiba
US$ 79Android 4.2.2
7” screen 8GB drive
CCE
US$ 128Android 4 9” screen 4GB drive
Multilaser
US$ 87Android 4.2 7” screen 8GB drive
Room for growth in mobile commerce% of purchases made on mobile devices
Source: Criteo
Brazil US UK Japan
49%
41%
27%
10%
Mobile phones are the most used device to access the internet at home
% of internet users
Source: F/Radar
Tablet Celular Portable PC Desktop PC
42%40%
52%
12%
Almost 75% of phones sold are smartphones
4,7
15,1
Smartphones Feature phones
Source: IDC, december 2014, http://br.idclatin.com/releases/news.aspx?id=1777
Sales by type in third quarter 2014
15.1million smartphones sold
July - September 2014
Source: IDC, december 2014, http://br.idclatin.com/releases/news.aspx?id=1777
More than half of internet users have a smartphone
2013 2014
53%
33%
% of internet users
Source: F/Radar
Broadband penetration will grow
Brazil Chile Argentina
53,9%49,6%
42,4%
% of households
Source: ITU, State of Broadband 2014 - http://www.broadbandcommission.org/Documents/reports/bb-annualreport2014.pdf
National broadband plan
• 1 Mbps for R$ 35 (US$ 13) monthly
• New frequency auctions: 2.5 GHz (3G) and 450 MHz (rural areas)
• Tax exemptions or reductions for
• Local production of smartphones, tablets, PCs and modems (zero tax - PIS/Cofins)
• Profits generated from investments in telecom infrastructure (tax down to 15%)
• Satellite launch in 2016 to improve bandwidth
• New submarine cables linking Brasil to US, Europe and Africa
• Free 2Mbps access in 65,000 public schools
Source: Communications Ministry, May 2014 - http://www.mc.gov.br/programa-nacional-de-banda-larga-pnbl
Fixed broadband reaches 23 million subscriptions
Source: Communications Ministry, May 2014 - http://www.mc.gov.br/programa-nacional-de-banda-larga-pnbl
Number of subscriptions
Mobile broadband reaches 3,400cities and 123 million subscriptions
Source: Communications Ministry, May 2014 - http://www.mc.gov.br/programa-nacional-de-banda-larga-pnbl
CitiesSubscriptions
4G
4.2 millionsubscriptions in October 2014
Source: Teleco, October 2014 - http://www.teleco.com.br/4g_brasil.asp
Digital media
Digital ad spending
Brazil is by far the largest market in Latam
Source: eMarketer
Social Media usage% of internet users
Source: F/Radar
Facebook Whatsapp Skype/MSN Twitter Instagram
171719
37
88
9
2227
7
85
Abr 2013 Abr 2014
Brazil is the second in time spent online
Source: Comscore, september 2014 - http://www.comscore.com/por/Insights/Presentations-and-Whitepapers/2014/2014-LATAM-Digital-Future-in-Focus
News sites reach 63% of users in Brazil
Source: Comscore, september 2014 - http://www.comscore.com/por/Insights/Presentations-and-Whitepapers/2014/2014-LATAM-Digital-Future-in-Focus
34 million people access government sites
Source: Comscore, september 2014 - http://www.comscore.com/por/Insights/Presentations-and-Whitepapers/2014/2014-LATAM-Digital-Future-in-Focus
64 million people access online videos
Source: Comscore, september 2014 - http://www.comscore.com/por/Insights/Presentations-and-Whitepapers/2014/2014-LATAM-Digital-Future-in-Focus
Ecommerce
US$ 6.15billion (+11%)
1S 2014
Source: eBit
E-commerceFashion/Clothing Cosmetics Electronics
CarsAuctions/Trade Comparison
General
Media
Portals Verticals Legacy print
Mobile News about internet
Payment
Retargeting, DSPs, Ad Networks and segmentation
Challenges of doingbusiness in Brazil
BureaucracyDays to open a business
OCDE
Latam & Caribbean
Brazil 102,5
30
9,2
Source: Doing Business 2015
BureaucracyHours spent managing taxes
OCDE
Latam & Caribbean
Brazil 2600
365
175
Source: Doing Business 2015
Tax costsTotal taxes (% of profits)
OCDE
Latam & Caribbean
Brazil 68,9
48,3
41,3
Source: Doing Business 2015
Office space rent(US$ / cubic meters)
Lima
Buenos Aires
Caracas
São Paulo 90,8
46
30
21,5
Big Mac Index (US$)
Mexico 2.86
Argentina 3.88
Colombia 4.48
Brazil 5.28
Traffic in São Paulo5/23/2014: 214 miles (344 km)
Conclusions
Opportunities Challenges
• Growing consumer base
• Big mobile adoption
• Demographic bonus
• Bureaucracy
• High taxes
• High operating costs
Thank youwww.latamconnection.com