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cachaca from Brazil

Page history last edited by Brian D Butler 1 year, 5 months ago

 

cachaca from Brazil

 

Cachaca [pronounced Ca-SHA-sa] is more than 400 years old and is the Brazilian national tipple - just as rum is in the Caribbean or vodka in Russia. Yet while both rum and vodka are sold in large quantities in foreign markets, only an estimated 1% of cachaca is exported. De Moraes believes that no one had tried in earnest to launch an international cachaca brand before him because Brazil is "off the beaten path and inward looking". And also because the Brazilian internal market is so huge.

 

 see also:  market entryMarketingstrategy , Exports , Import Export business modelsexport subsidy

 

 

Table of Contents:


 

 

 

 

 Why “Cachaca”?

 

 

after vodka and whisky, cachaca is the world's biggest-selling spirit.. Cachaca is a white Brazilian spirit and is the third-most drunk spirit in the whole world. Vodka, unsurprisingly is number one and gin is number five.  Currently, 99 per cent of all cachaca is consumed in Brazil but this is expected to change rapidly.

 

 

Native to Brazil, it is essentially a type of rum, but instead of being made from molasses, it's made from fermented sugar cane juice, giving it a slightly more grassy character than your usual white rum. Sometimes it is also aged in wooden barrels for a bit more depth of flavour. The vast majority of it is drunk by Brazilians, either muddled with limes and sugar and served over crushed ice as a caipirinha, or neat with a little honey. But another good cachaca cocktail is the batida: a kind of caipirinha with fruit and sometimes a little sweetened, condensed milk.

 

 

"In spirits, there's a trend for super premiums. We're experiencing a vodka fatigue; people are moving over to cachaca and rum. It's a cultural phenomenon that has a strong Latin undercurrent."

 

 

 

How to describe a “caipirinha”?

 

 

 

Based on the advertising, you might expect the caipirinha to be an urban, blandly sophisticated drink, but it has an assertive undertaste that my tasting panel described as "slightly straw-like". This is only fitting since, contrary to its hip image, the caipirinha was originally a rural refreshment (caipira means "countryman"). These Brazilian countryfolk knew how to kill a thirst stone-dead. With cubes of lime floating in crushed ice, the caipirinha looks pretty and tastes wonderfully refreshing.

 

 

 

About “Sagatiba”

 

The Sagatiba brand is owned by the South American company B4

 

 

he company was created by businessman Marcos de Moraes, a former dot.com investor that in 2000 sold for US$365mil the Zip Net company to Portugal Telecom.

 

Having sold his internet company for $365m (pounds 230m) in 2000 he wanted to invest in a new project. Once he decided it was cachaca, he chose the name Sagatiba - an invented word using the suffix "tiba" from the indigenous language Tupi-Guarani, meaning infinite.

 

 

Plans are to create a global corporation, with Sagatiba exporting 35% of its output of 1.1mil bottles, a percent to expand to 45% - 50% in 2007. It will introduce the new cachaca brand Preciosa, selling for R$480 per bottle. Marketing & advertising are to cost US$12mil in 2007, which is by far the largest budget among cachaca manufacturers in Brazil that in 2006 exported an overall 12.5mil litres.

 

 

In 2006, the company intends to triple sales globally, to 1,2mil bottles, and expects a leap in exports, which currently account for 30% of revenues. Moraes estimates exports accounting for 50% of the total commercialized. In 2005, 433,000 bottles of Sagatiba cachaca were sold over the globe.

 

 

 

 

 

 

Production:

 

 

2004 - Three traditional families of agribusiness, Moraes, Biagi and Rodas, are united in chacaça. On October 3, industrial scale production begins of Sagatiba, a cachaça idealized by Marcos de Moraes, son of Olacyr de Moraes, former "soybean king" and today a big sugar and alcohol producer. The "pinga" will be produced in a modern multidistillation unit, with capacity for 12 million liters/year. The new installation is an annex of the industrial distillery of Cia. Energetica Vale do Sapucai (Cevasa), the company headed by Maurilio Biagi. Moraes entered the beverage sector by buying 85% of South American Beverages, a company created by Roberto Biagi, son of Maurilio, and Lucas Rodas, whose family is owner of Montecitrus juice producer, which in 2002 launched Caipirinha Ice ready-to-drink beverages.

 

 

Roberto and Lucas, both 28, now have 15% of Sagatiba Brasil S.A., a company controlled by Moraes, ten years older. The aim is to compete with vodca, tequila and rum and whisky in Europe and here. Brazil produces 1.3 billion liters of cachaça a year, but it exports little, only 15 million liters a year

 

 

 

 
 

Channels:

 

 

Currently, exports of Sagatiba account for 30% of the company's total production… exports in the UK, where it distributes via 2,000 “selling points”….

 

 

9/28/06 - World Duty Free, the controller of the shops in London's main airports, announced this week that Brazilian cachaça Sagatiba was the most sold distilled spirit in the past 30 days. The drink sold more than tequila, rum and vodca, and this is the first time that a cachaça becomes leader in distilled spirit sales at an international airport.

 

 

10 May 2006 -  (what is the “off-trade”market?)…. “Sagatiba has secured a listing in the UK off-trade.The cachaça producer announced yesterday (9 May) that the brand would now be available in Oddbins. The brand will be extended to all stores nationwide throughout the year, the company added. “This is a fantastic step forward for Sagatiba, and for bringing cachaça to the attention of the broader public,” said Nick Gillett, UK commercial manager for Sagatiba. “Oddbins delivers world-class brands to high streets across the country and we are proud to be working with them.”  Claudia Brown, PR manager of Oddbins added: “Oddbins takes pride in stocking the very best products from all over the globe. We are delighted to be able to offer our customers this world class premium product.”

 

 

1.  Brazilian Churrascaria's in Spain are a primary target.  These Brazilian steak houses are where clients EXPECT to drink a caipirinha.  

 

 

 

 

 

 

 

 

 

 
 

 Selling to the Channel partners:

 

 

Key is to get distributors / stores, and restaurtants to WANT to carry our line.  To do so… we tell them that  "Cachaca will eventually be bigger than tequila. It has the potential to be very, very big," he adds. "It has got great mixability, it is a very flexible drink.".

 

 

Note, this is a different sales pitch than what we say to the individuals.  The pitch is different because the people are different.  We need to understand our partners, and have a sales pitch ready for them that is different than to the final consumer.

 

 

 

For example:  “Sales of Sagatiba in Britain, its most important foreign market, have grown from 80,000 bottles in 2005 to 200,000 in 2006 and de Moraes expects that number to double every year for the next few years.”

 

 

in the UK has helped Sagatiba grab an estimated 90% of the market.  Dustin Menke, manager of Bardo, a Knightsbridge bar, says: "Three years ago the caipirinha was a very obscure drink. People could hardly pronounce it. Now people still can't pronounce it but it's one of our biggest sellers."  Mal Evans, owner of Mojo bar in Leeds, adds: "What the Sea Breeze was in the mid-nineties, the caipirinha is now. It is something people expect to be able to order when they go into a bar."

 

 

9/21/06 - Global sales of Brazilian Cachaça Sagatiba rose 450% in the first half, reaching 451,000 bottles. According to the company, local sales in the period reached 291,000 bottles, up 385% compared to the 60,000 units sold in the first half of 2005. In Europe, where the distilled beverage is sold in England, Italy, the Netherlands, Swiss, Norway, and Germany, sales jumped 627% to 160,000 bottles, up from 22,000 in the first half last year. The United States are the company's international target for next year.

 

 

 

 

Marketing concept - positioning

 

 

Sagatiba's passion for bringing premium cachaça to the world has reinvigorated the popularity of the entire category in the UK and driven significant growth in our market… bring the pure spirit of Brazil to everyone in the UK that appreciates great drinks

 

 

 

 

 

Unique advertising campaigns - films

 

 

Sagatiba, a newcomer in the market and a heavy advertiser, is launching the first part of a documentary film at Cannes (France), a project that leads its new marketing strategy for the drink, which is now focusing in high income classes. Until the end of 2008, Sagatiba will invest US$40mil in marketing and sales, says Marcos de Moraes, president.  The documentary film project, produced by O2 Filmes, required US$1,5mil investments

 

 

Using his personal contacts, he managed to get Pele to appear in a Sagatiba-sponsored promotional film about Brazil - something of a coup since the footballing legend is careful not to associate himself with drinks or cigarette companies.  

 

 

The stunning documentary promoting Sagatiba, launched at the Cannes Film Festival.  Then, The 50-minute documentary investigated the pure spirit of Brazil and saw it aired across Europe on Christmas Day and Boxing Day was very rewarding professionally.  

 

 

"Our approach is to engage actively with consumers by producing content that takes on the value of a brand," says Wilkie. "Brands become the entertainment rather than surrounding it." 

 

 

 

 

Money spent on advertising, brand building

 

 

Brazilian Sagatiba, a producer of the traditional Brazilian sugarcane liquor cachaca, plans to invest over $28 mln (21.94 mln euro) in marketing activities by the end of 2007 with the aim to promote the alcoholic beverage on the international market, local media reported on May 26, 2006.  In addition, the company has invested a total $12 mln (9.4 mln euro) to promote cachaca worldwide since 2004.

 

 

With a budget of $40m, almost 85% of which he spent on marketing, he hiredSaatchi & Saatchi to launch the brand - which featured in a BBC2 documentary about the advertising company broadcast in 2005.

 

 

 

 

 Unique ad campaigns (doing something memorable)

 

 

Judging by the advertising campaign, which features a bearded Brazilian dude posing as Rio"s statue of Christ the Redeemer in unlikely circumstances (crowd-surfing in a nightclub etc),

 

 

 

 

Getting into supermarkets

 

 

The growth of Sagatiba in Britain - where it is the first cachaca brand to be available in supermarkets

 

 

 

 

 

Appoint a national marketing manager with experience (and a rolodex of contacts)

 

 

Traditional Brazilian spirit producer Sagatiba UK has appointed Paul McDonnell as UK marketing manager. McDonnell joins Sagatiba from drinks group Allied Domecq where he delivered campaigns for Maker's Mark bourbon and tequila Sauza. He also has experience in on and off-trade brand activity, brand sponsorship and live event production.  "Paul's strong corporate background made him the ideal candidate for the job. Paul's experience and knowledge of the drinks market will be an invaluable addition to the growing Sagatiba UK team."

 

 

 

 

Benefits from others success (in Branding Brazil)

 

 

has benefited from an increased interest in Brazilian culture, which is also reflected in the heavy promotion of the Brazilian beer Brahma.  Brahma sales in Britain are up by 25% in the last year and the beer is, a company spokeswoman claims, "the fastest-growing lager in the world".  Brahma is a traditional Brazilian beer, now owned by InBev, the drinks giant created by the fusion of InterBrew and the Brazilian brewer AmBev in 2004. InBev is pushing Brahma to become a global lager brand.

 

 

 

 

 

National assistance in exporting cachaca from Brazil

 

 

According to the coordinator of the Brazilian Programme for Development of Cachaca (PBDAC), Maria Jose Miranda, the country's investments in the promotion of cachaca abroad stand at 16 mln Brazilian reais ($7.16 mln/5.61 mln euro) since 2000. Half of them were provided by Brazilian export promotion agency APEX and by private investors. The funds were allocated for the development of high quality cachaca production and for the participation of cachaca producers in international food and beverage fairs.

 

Brazil exports a modest 1.0 pct of its total cachaca production of 1.3 billion litres

 

 

The largest cachaca producers are Ypioca, Pitu, 51 and Velho Barreiro, among others.

 

 

 

 

Hiring a Distributor

 

 

Sagatiba has hired Inspirit Brands for its UK distribution.  the drinks marketing and brand development agency will be its exclusive distributor for the UK market

 

 

 

 

 

Building the Brand: 

 

 

Luxury specialist Bacchus PR has been handed a consumer brief to promote Brazilian spirit Sagatiba to the UK market. It will position the cachaca brand as a 'sexy and exotic' drink for summer

 

 

Sagatiba has appointed a public relations agency to push the drink in Ireland.  The PR firm handling the account is Eulogy! run by Irish man Adrian Brady.  In addition to the PR firm, Sagatiba is being distributed by Irish company, Brinkman Beverages

 

 

"Prestige", "luxury" and "super-premium" are the new buzz words in the spirits world (Ultimat, a vodka that sells for about Pounds 200 a bottle in bars, has trumped the competition with the tag "ultra-premium").

 

 

The drinks companies are directing giddy levels of marketing at germinating the brand-calling habit. Stolichnaya vodka recently flew a Russian choir to London to entertain a party of upper-end social revellers, and its new venture at Harvey Nichols's Fifth Floor Bar in London will mix a bottle of custom-flavoured vodka for your exclusive use. Last year, Sagatiba, a brand of the Brazilian spirit cachaca, used in the popular caipirinha cocktail, took 150 "tastemakers" on a private jet from London for a party at Pierre Cardin's villa in the mountains above Cannes during the film festival. Even Beefeater gin, a label you might once have expected to find tucked away in granny's drinks cabinet, has reportedly stumped up a six-figure sponsorship for Jade Jagger's Jezebel group to try to tap into her exclusive Ibiza set.

 

 

As for the cost of all this to the drinks companies, status acquisition doesn't come cheap. I ask Bowers how much the Aids Foundation bar auction will cost Grey Goose. "I'm not prepared to say. Sorry.

 

 

How a competitor (“Leblon’) describes themselves: LEBLON is an ultra-premium cachaca (pronounced ka-SHAH-sa) produced in Minas Gerais, Brazil. The rum-like spirit, the most award-winning cachaca on the market, is made from fresh pressed Brazilian sugar cane that is then rested in cognac casks and blended to create superior complexity and taste.”

 

 

 

 

 

Magazine Advertising

 

 

Wallpaper* magazine and find a double page ad for Sagatiba within

 

 

 

 

Word of mouth advertising

 

 

Part of the campaign has / had to do with Word-Of-Mouth (WOM) marketing: top bartenders (or bartenders from top clubs) were invited for an evangelisation session where they are made familiar with the product, the values, and how to endorse it to customers.

 

 

project blog: What about having all those endorsing top bartenders blogging about Sagatiba? What about a Sagatiba blog including all things Brazilian? Costs only a fraction of the entire budget, allows your customers to get an insight into your thinking, allows intelligent emotionalisation and, what's better, you can still get to fly to Rio with your entourage.  Blogs are a great complementary mechanism for most other marketing efforts.

 

 

 

 

 

Field marketing (creating consumer demand)

 

 

Its not enough for a consumer simply to buy a brand; they have to be immersed in an 'experience'

 

 

We need to partner with a “field marketing partner” in Spain… “experiential agencies are prospering from the creation of ever-more sophisticated branded events often centred on product demonstrations and sampling”… for example, :  Last autumn, Brazilian rum brand Sagatiba hired experiential specialist Sledge to run a sampling campaign. The agency targeted London bars, with teams of Brazilian brand ambassadors trained to make free caipirinha cocktails at tables. Drinkers were given recipe cards, as well as items such as branded cocktail guides and a 'muddler', the wooden tool used to crush the drinks' ingredients. 'By using experiential to educate consumers, we were able to establish a stronger link with the brand,' says Nick Gillett, commercial manager at Sagatiba UK.

 

 

Teams will give away Sagatiba-based cocktails at 'Pure spirit of Brazil' nights

 

 

Getting the right blend of promotional staff is crucial to the success of experiential activity, writes Suzy Bashford.  Suitability is the obvious watchword when it comes to the promotional staff employed for field marketing campaigns. If the right people are picked to represent a brand on the frontline, they can prove invaluable ambassadors; by the same token, sending out ill-chosen recruits for the job can damage a brand's image, regardless of how thoroughly they have been briefed.  It is imperative that clients examine how an agency selects staff to work on campaigns. Some will do so purely on availability, when they should be aiming to match skills and experiences to the requirements of the campaign. Sledge recently ran an experiential drive for Brazilian drinks brand Sagatiba, for which the matching of staff was deemed so critical that the agency held a casting open only to Brazilian promoters who were able to make the country's famous Caipirinha cocktail.  Sense, for example, has developed a two-day course to train field-based event managers.

 

 

 

 

 

 

 

 

Subsidiary in Europe?

 

 

15 June 2005  - “Sagatiba Europe” is launching an experiential marketing campaign for its eponymous Brazilian spirit brand, developed by Carbon

 

 

 

 

European – wide advertising campaign

 

 

16 April 2004  -  Saatchi & Saatchi has won the pan-European launch of a new Brazilian alcoholic drink Sagatiba without a pitch.  It is understood that the launch will include TV ads, as part of an integrated campaign across Europe.   A media agency has yet to be appointed.   'We are looking for Saatchis to deliver a powerful creative idea in a complex and cluttered market and to create a world-class Brazilian brand. We are confident that it will provide advertising with genuine cut-through.' 

 

 

 

 

Retail Prices in the UK

 

 

Brand: “Brasilla” sells for £13.49.,  brand “Germana Single Barrel” sells for £27.89:   brand “Leblon” sells for £28.50, and :  brand Sagatiba “Velha” sells for £22.89

 

 

 

 

 

 

IHow its sold in the USA

  1. Leblon brand markets to restaurants directly in Miami 
    They go into restaurant & help train
    they offer incentives for bartenders that sell the most
    they get their liquor featured on "drink of the week" on the menu.
    bartender has many cachacas to choose from, but selects, and illustrates brand of just this one....why?  must be incentives
    notes on preparation:  glasses were pre-made, and waiting in cupboard under bar, with limes pre-cut and waiting in the glasses already
    instead of dry sugar, the bar tender has a pre-made bottle of "syrup" which is basically sugar and water, which he pours over the limes, adds ice, and shakes.
    instead of taking the normal method of grinidng the sugar into the fruit, and mashing,...he saves time by just mixing the drinks
    VERY Expensive = $12 + tip per glass.... so, how many glasses can he get from a bottle ?  how much does the bottle cost the restaurant?   how profitable are these drinks? 

 

 

 

 

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General thoughts about marketing cachaca from Brazil to overseas markets

 

 

Paola E's comments:  " I think we should market our product as a high end product for a young working sophisticated crowd. What do you guys think?"

 

 

 

Tangible vs Intangible marketing

 

For example, when selling cachaca from Brazil, you would want to sell fun, happiness, lifestyle, and not the mere product in a bottle.  Because the product is tangible, you want to market the intangibles, such as "brazilian lifestyle", or the beach,  or beautiful and happy people.  You sell escape to the tropics...all wrapped up in a bottle.  So, the person doesnt buy a glass of cahcaca mixed with lime, no,...instead they pay extra for all of the intangibles...love, life, happines...etc.. 

 

 

 So, the packaging should be bright colored, and the bottle should look fun.  The drink cachaca is bright green, with fruit.  Everything should look bold, fun.  For example: 
 
       
 
 
 
 
 
 
 

The manufacturer we selected for this project

 

 

Sagatiba, which means The Infinite Saga in Brazilian, is available in a 70cl bottle (rsp: £13.49 in London).

 

 

 

 

Why are we selecting them? 

 

These guys are independently owned, and they are a new brand that was built for export (not an old, classical brand, but instead is one built to be hip, urban, and appealing to global markets.).

 

Ive heard that they are making a big push in NYC right now....(Dani was just there, and she said she saw their promotions...they work to train bartenders how to make the drinks properly, etc)..

 

Global strategy (as far as I can tell) works like this:

 

1.  They find 1 distributor in each country

2.  they support the market with local advertising

3.  training at local bars, etc...

 

what do you guys think?  I see that they are not in Spain, although they are in Portugal and France....

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Sagatiba Advertising Campaigns

 
 
Short film from Cannes
 
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Party at Cannes

 

 

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TV advertising

 

 

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About Caipirinha's

 

There is an old adage in Brazil: quanto pior a cachaça, melhor a caipirinha––the worse the cachaça, the better the caipirinha. Consequently, most 'experts' believe it's best to use clear colored (white), non aged cachaça, essentially, the cheapest available. We agree! Therefore, the popular (and usually more readily available) Pitú, 51 or Ypioca brands are perfect for making a world class caipirinha.

 

A caipirinha must be made with fresh lime to achieve an 'authentic' taste. In Brazil, the very best caipirinhas are made with limões galegos––what in the U.S. is often referred to as a key lime. That's what we believe is best too. The limão galego has a lighter lime odor and tastes a little more acidic. The larger, more readily available, thick-skinned, Tahitian limes sold in the U.S., Brazil and elsewhere can certainly be used but are not as good as key limes (limões galegos).

 

the classic Brazilian caipirinha

 

 

Half a lime cut into quarters, skin still on

1tsp brown sugar powdered in a mortar

50ml cachaça

Put lime quarters in medium beaker (highball glass) with powdered brown sugar. Muddle fruit (lightly crush) with rolling pin or handle of wooden spoon to release the oils and juice. Add the cachaça and crushed ice, then stir thoroughly. Serve with straws.

 
 
 

 Varieties

 
"Two and a half years ago, nobody knew what cachaca was," says Manuel Nieves, the sommelier/bar chef at Table 8 South Beach in Miami, where the signature cocktail is an amarena black cherry caipirinha (muddled amarena cherries, fresh-squeezed lime juice, simple syrup and soda) he created three months ago
 
 
 

Reasons for growth

 
widely popular Brazilian steakhouses churrascaria  This helps give people expossure to the drink, and gives the cachaca distributors a key customer in export markets.
 
tourism to Brazil:   as tourists come home, the seek the caipirinha as a reminder of travel.
 

 

 

 

 

 

Spain  -  marketing cachaca in Spain

 

 

see our discussion on:

 

1.  "Spain consumer market info"

2.   Spain  (general economic info)

3.   Spain market entry for cachaca

 

 

 

 

 

 

 

 

How Cachaca is made: 

 
 
 
 
 
 
 

Cachaca from Brazil

 

the cultural significance of cachaça, a distilled liquor, ranks among soccer, carnival, and samba. Although non-Brazilian’s compare cachaça to rum, their only similarity is that they both originate from sugarcane. Cachaça first gained popularity among slaves and peasants during Brazil’s colonial period but the spirit has recently become a favorite domestically and internationally regardless of the drinker’s class. Also, Brazilian cachaça exports to Europe and the United States have been aided by the trendy drink caipirinha.

 

According to PBDAC, cachaça is the third most distilled liquor on the planet, falling behind to vodka and soju. Other drinks that followed were, in order, shochu (A Japanese liquor that can be distilled from sweet potatoes, rice, and even barley), gin, rum, Scotch whisky, Thai whisky, and brandy. Remarkably, production of cachaça was twice that of rum – geographic indication could really help this rising star.

Most Distilled Liqours Worldwide
1) Vodka 6) Rum
2) Soju 7) Scotch Whiskey
3) Cachaca 8) Thai Whiskey
4) Shochu 9) Brandy
5) Gin  

 

 

Cachaca Exports

 

 

Top ten cachaça importers (as a percentage of all Brazilian exports):

1) Paraguay (28.19%)

2) Germany (23.31%) 3) Italy (6.09%) 4) Uruguay (5.94%)

5) Portugal (5.68%)

6) Bolivia (4.28%) 7) USA (4.13%) 8) Chile (3.69%) 9) Spain (3.60%) 10) Netherlands (2.39%)
 
 

Brazil is by far the largest and most important producer and exporter of cachaça. This is not surprising since the distilled liquor originated in the country and since the Brazilian government has declared the drink a national trademark and begun to press for its international protection. Over the last five years, Brazilian exports of cachaça have skyrocketed as a result of successful international marketing and export campaigns. According to the Brazilian Cachaça Development Program (PBDAC), 500,000 liters of cachaça were sent abroad in 1995, while 2003 estimates project exports at 20 million liters in over 60 countries around the world (see Figure 1). In 2001, the 11.1 million liters sold outside Brazil yielded $9 million in revenue. As its short-term goal, PBDAC hopes to increase cachaça exports to 38 million liters by 2010. However, Brazilian cachaça exporters must first overcome distribution problems. Unlike José Cuervo, Johnnie Walker, and Smirnoff, distributed by the well-established UDV, cachaça companies have trouble finding expert distribution companies.

 

The export explosion can be partly attributed to the success of the caipirinha, a cachaça-based cocktail with sugar and limes. Caipirinha enthusiasts enjoy the drink because of its exotic and tropical flavor as well as its association with Brazilian culture. But while caipirinhas and cachaça become more popular abroad, their real success lies at home. In 2002, of the 1.3 billion liters of cachaça were distilled in Brazil, exports represent only 1% of that figure. The industry generates about $5 billion and employs roughly 450, 000 Brazilians directly or indirectly. PBDAC claims that there are 30,000 cachaça manufacturers producing 5,000 different brands of the spirit. Of those producers, Industrias Muller de Bebidas ranks number one. Their most popular cachaça, Pirassununga 51, makes up 33% of the market share alone.

 

Germany imports 23.31%. All this cachaça is needed for caipirinhas at German bars; the cocktail is the second most consumed beverage in Germany after beer. As Mercosur countries negotiates with the European Union in a trade agreement to lower tariffs (how high are they now?)  on spirits and wines, the amount of cachaça entering Europe will undoubtedly continue to increase.

 

However, Brazilian cachaça has run into several obstacles in the international market. One of these complications concerns cachaça’s classification as a distilled spirit. In the US, EU, and other countries, cachaça officially enters as rum. The US tariff schedules does not have a separate category for cachaça as it does for tequila, pisco, mezcal, Scotch whisky, and others, and lists the Brazilian spirit under the heading “Rum and Tafia.” Yet, cachaça exporters are not complaining about the tariffs themselves because under the Generalized System of Preferences of Title V of the Trade Act of 1974, Brazil qualifies for special status as a developing country. According to this provision, all Brazilian cachaça enters the US tariff-free. Therefore, the effort to create cachaça’s own classification seeks to increase its international recognition and earnings by highlighting cachaça’s uniqueness.

 

Does Spain have the same "tariff free" policy?

 

Another similar hurdle Brazilian cachaça must face is competition against rum in Europe. During the Lomé Conventions between the EU and the Africa-Caribbean-Pacific (ACP) nations, which are among the poorest countries in the world, the EU established a rum protocol that placed a quota on the importation of rum from Caribbean ACP trade partners. Brazil, which is not an ACP country, could bypass the protocol and export unlimited quantities of cachaça to Europe even though the liquor is classified as rum. However, in the Cotonou Agreement between the EU and ACP nations in 2000, the rum protocol was terminated. Caribbean nations have since been able to export rum to Europe with fewer obstructions. To further complicate the situation, in August 2002, the EU initiated a program to develop and modernize the Caribbean rum industry so that it will be able to remain survive amidst global liberalization. The 4-year program will provide $70 million to 15 Caribbean ACP rum producers, including the Dominican Republic, Haiti, and the Bahamas

 

To add to these headaches, certain alcohol taxes are still placed on Brazilian cachaça. According to the Alcohol and Tobacco Tax and Trade Bureau of the US Treasury, a $13.50 excise tax per proof gallon, the equivalent of $2.14 for 750mL bottle, is levied on all distilled spirits in the US. Considering that a bottle of cachaça can be bought in Brazil for about a dollar, and even as little as $.10 a shot, this places considerable strain on exports. In addition, while Puerto Rican rum faces the same taxation, most of the revenues received from the excise tax in the US are given back to the Puerto Rican government. Hence, Puerto Rican rum manufacturers, such as the producers of Bacardi, potentially gain from money their government can use to support the Puerto Rican economy and export industries

 

 

 

 

Innovations:

 

Date: November 6, 2007

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Brazil: Natural Drinks launches ready made caipirinha

Natural Drinks, from impresario Ricardo Erminio de Moraes, is launching One, a ready made caipirinha drink, a produce which he sees as having potential in Europe. Investments in the product launching in Brazil amount to R$2mil, with a campaign designed by Power4 agency, while a plant was erected at Colina (Sao Paulo) that uses cachaca (distilled from sugarcane) or Polish vodca. Exports are to start as of March 2008 beginning with Germany and then the UK, Spain, Portugal and France. The unit is to manufacture 8mil units per year and can be easily doubled. Half of the output is to sell in the domestic market targeting consumers between 18 - 30 years old.
 
 
 
 

Links

 
 Brazilian Program for Cachaça Development (PBDAC). http://www.pbdac.com.br

4) Brazilian Ministry of Development, Industry, and Foreign Trade. http://www.desenvolvimento.gov.br/sitio/secex/negInternacionais/tec/apresentacao.php

5) Brazzil Magazine Online. “Brazil, Land of Cachaça. It’s the Law.” October 2003. http://www.brazzil.com/2003/html/articles/oct03/p111oct03.htm

6) Cachaça Export. Ltda. http://www.cachacaexport.com.br

7) The Courier ACP-EU. “Adding punch to the Caribbean Rum Industry.” No 198, May-June 2003. http://europa.eu.int/comm/development/body/publications/courier/index_198_en.htm

8) European Commission, “EU-Mercosur: Trade Ministerial agrees roadmap for final phase of free trade negotiations.” http://europa.eu.int/comm/external_relations/mercosur/intro/ip03_1544.htm

9) Ikisan. http://www.ikisan.com

10) Luxner, Larry. “Brazil Bottles a Good Idea.” Americas. Washington: January/February 1997. Vol. 49, Issue 1, p4

11) National Public Radio. “Profile: Distillers in Brazil Trying to Change the Cheap Rotgut Image of the Liquor Cachaça, Which is Used in the Popular Drink Caipirinha.” Morning Edition. Washington, DC: July 26, 2002.

12) Osava, Mario. “Trade-Brazil: Cachaça Ready to Challenge Tequila and Rum.” Global Information Network. New York: April 1, 2002

13)Osava, Mario. “Trade-Brazil: Fuel Alcohol Could Sustain the Sugarcane,” Global Information Network. New York: January 10, 2002

14) Osava, Mario. “Dual Fuel Cars Seen as Boon for the Environment.Global Information Network. New York: August 27, 2003

15) Puerto Rico Herald. “Excise tax on Rum Could Be Trimmed,” December 11, 2003. http://www.puertorico-herald.org/issues/2003/vol7n50/CBExciseTax-en.shtml

16) Regan, Gary. “The Tale of Cachaça’s Transformation to Caipirinha is One of Sweet Success.” Nation’s Restaurant News. New York: July 31, 2002. Vol. 34, Issue 31, p29

17) Revista On-line Mercosur. http://www.mercosul.gov.br/default.asp

18) São Paulo Sugarcane Agro Industry Union (UNICA). http://www.unica.com.br

19) Sugar Knowledge International. http://www.sucrose.com

20) Bolling, Christine, and Nydia R. Suarez. “The Brazilian Sugarcane Industry: Recent Developments.” US Department of Agriculture, September 2001. http://www.ers.usda.gov/Briefing/Brazil/braziliansugar.pdf

21) US International Trade Commission. http://www.usitc.gov/taffairs.htm

22) World Trade Organization, “Standards concerning the availability, scope and use of Intellectual Property Rights.” http://www.wto.org/english/docs_e/legal_e/27-trips_04b_e.htm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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