The Real Brazil (05/23)

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May 23 (Bloomberg) -- Bloomberg's Trish Regan takes you inside The Real Brazil. Brazil is at a crossroads, beset by low growth and high inflation as it prepares for the Olympics and the World Cup - arriving in the country almost simultaneously. Bloomberg Television investigates the companies, brands and innovators driving the country out of its rut, and into the future. (Source: Bloomberg)

It is a country at a crossroads.

The growth and high inflation as it prepares to host two of the world's biggest hosting events.

Below the surface, and the biggest driving brazil out of its rut and into the future.

The market in brazil is exploding three brazilian reality is different than american reality.

Get to know brazil's business on the ground up.

A tour of one of the world's most dynamic and challenged economies.

The real brazil begins now.

[captioning made possible by bloomberg television] captioned by the national captioning institute --www.ncicap.org-- is rio ready?

That's the question as brazil hosts the real -- the world cup in 2014 followed by the 2016 olympics, an event that will bring 500,000 athletes and tourists into town.

But rio's mayor knows the gains are not about two weeks of tourism but 10 years of infrastructure.

I used the olympics as a good excuse to get these kind of things done.

Rio is unlike other megacities that have hosted the games.

Rio's basic infrastructure has not kept his with brazil's recent growth spurt.

We are very excited about the things we are doing.

If you compare our urban infrastructure with a city like new york or london, we are way behind.

Rio is investing more than $30 billion over the next three years on projects aimed at improving life in the coastline to the favelas.

This construction site will host athletes during the game but afterwards will be turned into apartments.

The city is spending $2 billion to upgrade its transportation system.

The brt.

By the end of the day, the athletes won't use it.

It will be used by the average worsen.

By 2016, the city expects to move 20 times taht number --200 people -- 200 million people daily on 800 buses.

I look at what they will get from the city.

The coo of the rio 2016 olympics.

You wake up, the morning after in 2016, if the economy still going to reap the rewards of what you have done?

I used to say to my family, my dream would be to be born in rio in 2020. it's a new city.

The new generation that will come after the games will have a fantastic city.

Preparation for this new rio are rife with obstacles.

The context stadium -- the iconic stadium which will host the world cup and olympics all construction delayed by four months.

This is more of a developed economy at this point?

Perhaps the olympic games will show the world that?

The games and the world cup will help showcase the new brazil.

Rio is a city known for poverty and violence but the games may help change that image.

Welcome to one of rio's most infamous favelas, what used to be one of the most dangerous slums wehrehere few tourists would venture but todaymore more are venturing.

They chase after a young tour guide who is detailing life inside the favela -- stolen electricity, overcrowded houses.

Torres and is part of a booming industry.

-- tourism is part of a booming industry.

Made possible because favelas are becoming more secure.

It is a process called pacification.

A coordinated police effort to make real streets safer for both residents and tourists in advance of the olympics and world cup.

We are returning peace in the community, allowing them to work without fear from drug traffickers.

On this trip, tourists from around the world paid a company called exotic tors 75 real for this two hour walking tour.

In addition to local culture, tors are -- tourists are invited.

The slow slide out of poverty has become a sprint.

As this tourism has grown a popularity, have so has the means.

This-- the means to the slums.

Opened just last year, 155 cable cars carry visitors high above the novella.

When the visitors come, they have a place to have lunch, have coffee and local artist can sell their crafts.

It is also a view of the stark disparity for profit him poverty -- profit and poverty.

If you want to see the real brazil, even the police will tell you you have to venture past the sand.

It's a culture but in a culture.

If you do not come here, you do not know rio.

Inside the country's industrial strength from the american automakers selling in sa o paulo to the aerospace company building the biggest planes in brazil's history when we continue.

, and vehicles a day are you producing?

What he had to vehicles -- how many vehicles a day are you producing question mark?

300. these vehicles are rolling off a gm assembly line and brazil two hours outside of sa o paulo.

We have invested in the last five years over $3 billion in new products, improved productivity and in increasing our capacity.

Middle-classaspirations take root in brazil's poorest communities.

During america's golden age , the first car was a rite of passage.

Now an american company is trying to re-create that moment for millions of people living here in brazil.

It's a growing market.

40 million people climbed to the middle class between 2003 and 2011. a record 3.8 million vehicles were sold in 2012 and brazil.

Analysts expect that number to hit nearly 6 million by 2016. is everyone just realizing this is a market they want to be in question mark richt the market in brazil is exploding.

Coming back after just three years away, it is a completely different country.

The streets are different, the vehicles are different.

The vehicle that come off the assembly line are designed a few hours away in one of gm's flyer ive global design centers.

Every car here was designed in brazil for the design -- for the brazilian market?

Absolutely.

We launched 10 new vehicles at 18 months.

Gm knows if you want to sell in brazil, you better produced in brazil.

Autos from outside the country can be as high as 340%. the government recently extended a tax break on cars manufactured locally.

Even with these protectionist measures, last year brazilian automakers suffered their first production decline in over a decade.

You recently had to layoff 600 workers at this the plant.

Is that connected to the slowdown in auto sales?

We are seeing basically a shift in demand.

The carcass of the plant , we're seeing less demand for the product then we have been.

-- in the assembly plant, we're seeing less demand for the product product then we had been.

When is gm going to be number one in brazil question mark?

I would not get hung up with number one in vehicle sales and market shalesales.

We want a sustainable business.

As gm tries to woo consumers in brazil, a local aerospace company is going outside the country to sell the biggest lane it is ever made.

111 feet long, 38 feet high and big enough to carry a black hawk helicopter -- the kc390 is a 23 ton behemoth that could be a game changer for brazilian aerospace giants.

But it is very exciting.

This is the big airplane question mark ever built?

Yeah.

This is brazil's answer to boeing, albeit smaller.

It dominates --[inaudible] [indiscernible] why this move to defense?

We look at the scenario around us.

All of those markets are growing.

Their budget -- they are finally paying attention to that.

Relying on an emerging market with an improving track record in defense spending is a big risk thomas especially when sales for their bread-and-butter business fell 20% in the first quarter of.

213 but it is a gumbo -- first quarter of 2013. but it is a gamble they are willing to take.

More than 50 billion u.s. dollars.

The plan --offer it for a much lower price than its competitor, lockheed martin.

The 30 hercules to be between $90 million to $125 million.

How are you able to produce something that is in your opinion a better quality but more economical than what lockheed would do?

We are using new technology for the product introduction.

Can you actually [indiscernible] technology like an auto throttle system.

That helps avoid imminent disaster.

Embrear is banking on that to continue the growth of its defense division which exceeded $1 billion in revenue for the first time in 2012. that is to live far cry from lockheed martin whose sales topped $13 billion.

Our main concern is not to be one of the biggest guys.

But we can be like a top 50. coming up, americans love brazil and vice versa.

Why some of brazil 'ds most love products are breaking into the lucrative american market.

Samba, sandals and swim suits --all made famous by brazilians.

Lately, a one ingredient wonder is dominating in the export market -- coconut water.

The land but all the gushing drink is a favorite in rio.

-- the bland but refreshing drink is a favorite in rio.

Waddling up this favorite is big business.

The water from young, green coconuts packed with electrolytes and potassium, has become a favorite as a natural alternative to sugary sports drink.

We made about 300 million dollars in retail sales.

One of the fastest growing categories out there.

Which is by the fewest budget -- by the biggest u.s. beverage bransd has bought in.

Pepsico added the brand to their portfolio.

An independent new york race company leads the market for this beverage.

Vita coco.

They say sourcing coconuts for miley primarily from brazil is key.

There is tremendous benefit to capture the spirit of brazil.

It is truly born on the beaches of brazil.

That is in stark contrast to zeo and one who sows source their coconut water primarily from the philippines and indonesia.

Despite coconut water's rapid rise in popularity, there is a fickle beverage market.

There were claims the brand was falsely advertising the health benefits of the privilege.

The company-- benefits of the beverage.

58 new coconut products joint vita coco last year in the u.s. alone.

Took that water is here to stay.

-- coconut water is here to stay.

Brazil's appeal in america goes beyond soft drinks.

When local footwear land climbed the ladder from the favelas to the international fashion team.

They have become a brazilian staple.

You can't walk down the street or beach without spotting a pair of these.

Now brazil's most popular sandal.

Over 200 million pairs of the flip flops were sold last year.

One for every man, woman and child living in brazil.

The company got its start simply.

It offered a comfortable, basic and most importantly, affordable sandal.

It was launched in 1962. for 33 years, that's all that was.

One style, five colors.

But while one star style and color may have worked, the country company was searching to grow.

The brand was repositioned an d macde it -- ma emotionally appealingde it more ==-- made it emotionally more appealing.

Despite high fashion global branding, they try to stay close to its roots.

It leads in the design of its first friendship store.

-- at least in the design of its first trackflagship store.

The company asked if i could show the spirit of the sandals through the architecture.

They are at heart 100% brazil so he designed a store to look like a common brazilian outdoor marketplace.

Yet this market store is located in the middle sao paulo's most fashionable shopping district.

It is a brand of improbable combination.

Where luxury meets the street market.

Our tagline is everybody wears them and everybody does.

Coming up, the futuristic technology turning brazil's commodity into cash like never before.

100 billion barrels, the largest oil deposit uncovered in a generation.

In 2006, brazil tumbled upon the western hemisphere's biggest oil find in three decades.

150 miles off the coast of rio.

It darted and energy frenzy and new hopes for the future but like so many booms, the potential may be bigger than the payoff.

We are far from the coast and deep in the water.

It requires a lot of technology to extract the oil from where it is.

He is the ceo of ge latin america.

One of the firms helping petrobras get oil.

It could supply brazil enough oil for a century.

It is several thousand feet below the bottom of the sea.

With this oil and gas land , ge is producing -- can carry up four miles to ships watiing iting above.

It is so simple but very complex and precise technology.

The pressure for this project is not as coming from the bottom of the ocean.

It's also coming from investors who expect brazil to pump 5 million barrels a day.

Slowing the project down -- a government mandate to get parts and labor locally.

This is an opportunity.

He creates an industry, it creates demand.

In brazil, the petroleum promise has yet to be fulfilled.

Today it is just the world 11 biggest oil producer but aims to be in the the top five by 2020. despite the technological and bureaucratic hurdles, ge is staying the course.

Correctly -- we hope to hit 5 billion barrels a day -- $5 million 5 million barrels a day by 2020. groundbreaking technology is turning brazil's commodities into cash across the country's economy.

The latest innovation is combating a big testified problem with a tiny solution.

-- big pesticide problem with a tiny solution.

These are no ordinary caterpillars.

They are the bugs of the future bread to make farming more profitable.

Mozilla is the biggest exporter of coffee, sugar, beef, chicken, and orange juice.

And therefore the world's biggest consumer of chemical pesticides.

Decades of overuse led to millions of resistant bugs, leaving brazil looking for new solutions trade one firm on the cutting edge is fighting fire with fire.

It is called bugs and they are creating super bugs genetically engineered to work as in alternative.

Biological agents are much cheaper than using traditional pesticides.

It does not harm the environment.

It does not harm the crops.

These microscopic wasps made bug a pioneer and biological agents.

They are actually killer wasps.

The release and field, they stop harmful parasites from reproducing, protecting soybean and sugarcane fields, two of the zillow's -- of brazil's biggest cash crops.

The secret is in the sauce, literally.

The team engineered an artificial diet to grow these insects.

It is the key to their biological design and process which is why this is one they are not sharing.

Bugs was founded by three brazilian entrepreneurs and backed by a brazilian venture capital team.

Two things caught their eyes.

The entrepreneurs really had us park in their eyes - had a spark in their eyes to make a difference.

They wanted to change the way martin our culture is done -- the way moder agriculture n agriculture is done.

The company had just read percent of the biological agent market now but these entrepreneurs expect to be a dominant player soon as the buzz about bugs catches on.

The potential for brazil may be limitless but after a long history of economic booms and busts, it's clear the road to prosperity is filled with challenges.

One thing is certain, right now as brazil's opportunity.

Thank you for joining us on this journey through "the real brazil." i'm trish regan.

This text has been automatically generated. It may not be 100% accurate.

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