For a first-hand account of Brazilians’ increased spending power, visit Ana Paula Galvani at the Sherry-Lehmann wine shop on New York’s Park Avenue.
Tourists from Brazil, Latin America’s largest economy, stop by daily and don’t flinch at buying $1,000 bottles, she said.
“I sold 30 cases of 2009 Bordeaux futures in the last two weeks,” Galvani, a native of Mirandopolis, in Sao Paulo state, said in an interview at the store. “I sell a lot to Brazil.” A 12-bottle case of 2009 Chateau Margaux Grand Cru Classe Premiere costs $15,540 for delivery in 2012.
The fastest economic growth in 15 years, a currency that has doubled against the U.S. dollar since 2003 and higher disposable income are encouraging Brazilians to purchase luxury goods in New York. At the Prada store in SoHo, the Italian retailer has at least three Portuguese-speaking sales representatives to cater to Brazilian visitors. David Wasserman, co-owner of Stereo Exchange in Manhattan, said demand from Brazilians is rising, including the sale of a $100,000 home theater system this month to a customer from Sao Paulo.
“Brazil has really hit my radar screen,” Wasserman said.
In the country of more than 193 million people, the number of billionaires has doubled since 2000 to 18 and Brazil now has more than any nation in Latin America, according to Forbes magazine. The number of millionaires in Brazil jumped 19 percent to 126,882 from 2008 to 2009, according to Boston Consulting Group data. That ranks Brazil as 17th among markets with the highest number of households having a net worth of $1 million.
The real rallied 100 percent against the dollar since President Luiz Inacio Lula da Silva took office in January 2003 and jumped 33 percent in 2009, the best-performing currency in the world, helped by revenue from exports of commodities such as coffee and soybeans and demand for the nation’s stocks and bonds. The currency is down 1.7 percent this year after the government started a tax on foreigners’ purchases of stocks and bonds in a bid to curb its gains.
First quarter economic growth of 9 percent, the fastest since 1995, was driven by consumer spending, as retail sales climbed 15.7 percent in March from a year earlier, the most since at least 2001. Gross domestic product will expand 7.2 percent in 2010, the quickest pace in more than two decades, according to a central bank survey of about 100 economists published July 19. U.S. GDP is forecast to increase 3.1 percent this year after declining 2.4 percent last year, according to data compiled by Bloomberg.
Fashion stylist Patricia de Azevedo Camargo Araujo of Santos, Brazil, traveled to New York at least five times in the past three years to scout for Chanel, Prada and Louis Vuitton products. The city’s stores offer a better variety of models and colors than are available in Brazil, she said.
“We focus on luxury goods with our trips,” said Araujo, 39, who was shopping with her husband and two daughters, ages 14 and 18, at the Prada store on Broadway. “We have better access outside Brazil.”
A fax and two telephone messages left at Prada Holding SpA’s main office in New York weren’t returned.
Gross disposable income in Brazil advanced 54.3 percent from the time Lula, 64, took office through the first half of 2010, the national statistics agency said in an e-mailed statement July 16.
More than 5.22 million jobs have been created in Brazil since December 2006, pushing the unemployment rate down to 7.5 percent in May from 8.4 percent. Average monthly wages have risen 29 percent, excluding inflation, to 821 reais ($463) under Lula, according to the Labor ministry.
While many are benefitting from the country’s economic expansion, almost a quarter of Brazilians live below the national poverty line, according to data from The World Bank in Washington. Brazil ranks 75th on the United Nations human development list, which measures poverty and literacy.
Brazil trails Albania, Cuba, Venezuela, Argentina, Singapore and 69 other countries in human development, according to data from the United Nations. Brazil’s per capita income is $8,205, about 17 percent of the U.S. figure of $46,350, data compiled by The World Bank and the Commerce Department show.
Brazil is benefitting from a boom in commodities in the decade ending last year and inflation that’s remained under 6 percent since 2005. The country is the largest exporter of coffee and second-biggest provider of soybeans and is home to the world’s largest iron-ore producer, Vale SA. Overall, commodity prices rose 34 percent from 1999 through 2009, and are down 7.7 percent this year, according to the Reuters/Jefferies Commodity Price Index.
More Purchasing Power
“Brazil is growing more than developed countries, increasing the inflow of dollars and boosting purchasing power,” Luciano Rostagno, chief strategist at Madrid-based brokerage CM Capital Markets, said in an telephone interview from Sao Paulo.
The number of Brazilian tourists who traveled to New York increased 41 percent to 359,000 last year from 2007, making visitors from Brazil the eighth-largest group arriving in the city.
Demand is so strong for travel to New York that American Airlines is adding 11 flights a week between the U.S. and Brazil beginning Nov. 18, the Fort Worth, Texas-based air carrier said in a June 24 statement.
Wasserman of Stereo Exchange and Sherry-Lehmann Chief Executive Officer Chris Adams said Brazilians are helping support sales as Americans cut discretionary spending.
“There has been a marked increase” from Brazilian buyers, said Adams. “Traditional buyers -- New York buyers, American buyers -- are still the foundation of our business. But to see in a down economy a three- to four-fold increase from a market is just fantastic.”
Wasserman said he began to see more demand from Brazilians about a year ago and many were interested in high-end brands such as Bowers & Wilkins and McIntosh. A B&W system starts at $2,000 and the most expensive can cost several hundred thousand, he said.
The Brazilian audiophile that spent $100,000 on the home theater project bought a pair of $15,000 802D2 B&W speakers, a $15,000 Runco Q750I projector, $8,000 McIntosh MVP881BR Blu Ray television and $7,500 in Kimber cables and power cords, he said.
“We designed the system for him strictly through e-mail exchanges,” said Wasserman. “He wired $50,000 to us and he came to visit us several weeks later and went through a complete demonstration in the store.”
For Sherry-Lehmann’s Galvani, 36, Brazil has provided a growing customer base. Her Brazilian clients have at least doubled since she began at the store in 2007 to about 3,500, Galvani said.
“It is fashionable to drink wine in Brazil now, and the real is strong,” she said. “They want certain labels in their cellars, certain wines to offer to friends.”