Wednesday, June 1, 2011

Brazil Rising: 3 observations from the street view

Karen Hughes and Karl Rove were both senior advisers to the George W Bush administration. They used to argue about how to take the pulse of the country. Rove would look at detailed surveys street by street and data-mine the hell out of them. Karen Hughes, in contrast, would “talk to moms” to get a feel for the mood of the voting electorate. Both approaches are legitimate. The difference is that the Rove approach provides the “hard evidence” that most decision makers want. The Hughes approach tells stories to help viscerally understand what is going on.(Note: I am not endorsing their political policies.)

As I write this, I’m waiting for my AC 91 flight at GRU, and have a few minutes to share my Hughes-esque anecdotal observations on the rise of Brazil. I’m going to by-pass the numbers and econometrics that papers widely report. You can check out those facts and figures in the Economist magazine “Brazil takes off”, American Chamber of Commerce Sao Paulo, or government publications. You’ll get numbers on the growing employment rate, the rise of the middle class, the surge in commodity exports, increases in tax revenues, government surpluses, and falling crime rates. Here, however, I will share 3 observations that weave a telling story.

Brazil is perhaps the hottest country brand in the world. We all know that it won the bids to host the world’s largest sporting events: FIFA World Cup (2012) and Summer Olympics (2014). It has also been widely reported that this is the first time that a South American country will be hosting the Olympics. That’s a big deal. Brazil is getting a world stage with an intense spotlight. Even before this happened, however, Brazil’s image in the media had been changing. Somewhere around 2009, Hollywood got enamored with Brazil. For example, 3 blockbuster movies in the last year have emphasized Brazil in their story-lines and have done so in a much more glamorized way (Rio, Fast and the Furious V, and the soon-to-be-released Harry Potter sequel). Of course, the motion pictures only are the starting point of the positive exposure for the country. The video games like THQ’s hit videogame Rio and Angry Birds Rio- and mega-media coverage from the Entertainment-Tonight’s of the world further cultivate the desirable brand image of the country.

But, there is still more “love” coming from the entertainment world for Brazil. What do you get when Shakira, Rihanna, Coldplay, Jay-Z, Elton John, Kay Perry, Lenny Kravitz, Metallica, Red Hot Chili Peppers and about a dozen other headliner bands get together to play a 6 day concert extravaganza? A festival called Rock in Rio. More massive exposure to country which is already red hot.

Let’s go back just a couple of years to 2009. (eg. Obama had just taken oath of office) If I was in 2009 and posting a blog about films set in Brazil, I would be writing about the Hulk (2008) which highlighted a Brazilian slum, Tourista (2006), which depicted brutal violence against tourists, City of God (2002), which told a gritty account of poverty, corruption and crime, and the Simpsons, which had Homer kidnapped by violent Brazilians and featured corrupt police (see 5:30 minutes). These are not exactly the messages coming out of the media these days. What a difference 3 years makes. Don't get me wrong, Brazil still has a tremendous drug, crime, and violence problem - but its international image has changed a lot faster than the change Obama followers dreamed about having for the USA post Bush.

Every been to Times Square on New Years eve- or Mardi Gras on Bourbon Street? Packed streets, right? Well, put those crowds carrying shopping bags and you will get a sense for how crowded some of the Brazilian malls have become. These consumers are not just buying clothes and food. They are purchasing consumer durables like microwave ovens, refrigerators and couches. As tens of millions of impoverished “D-class” Brazilians begin their climb into a “C middle class”, there is pent up demand for consumer durables. One stat about Sao Paulo (a city with approximately 20 million people), says that 1,000 new cars hit the street every week. The upwardly mobile society is spawning production, new jobs, and a lot of wealth creation. A prominent Brazilian business magazine ran some analysis and announced in their cover story that there is a new millionaire created every hour in Brazil. This is likely a very conservative statistic.

Headlines like this have a psychological effect on society: “If I play by the rules, I can win”. In other words, some of the entrepreneurs working in the “grey market” are shifting to honest lines of work. I had an interesting conversation with a former drug dealer and arms runner from a favella. He had gone back to school and had started up his own business. He said, “Dealing was always a sure way make money but now I have opportunity to do it honestly. I feel better about myself.” Leo told me that he not the only one who stopped. For folks like Leo, it seems that the fear of bullets is not nearly as good a motivator as the promise of opportunity from legitimate work.

Every year I check out a soccer game in Brazil. This year I noticed something different. All advertisements around the field were sold out. I remember going to the games in 2004 and there would be one lone, shabby beer advertisement surrounded by empty advertising spaces. Some keen observers of advertising in Brazil would say, “That could be Bob, but all outdoor advertising was banned in Sao Paulo so advertisers needed a new place to advertise…soccer stadiums are the natural place to go to find crowds.” This is true, but other Brazilian cities did not ban the outdoor advertisements and their soccer stadiums are loaded with crisp, thoughtful, brand-building advertisements. A lot of these ads are regional brands as well- suggesting that advertisers are not just national who are looking to spend their budgets. (I only saw 1 multinational brand ad at the soccer game: Pepsi)

At the macro level, what is going on is this: more, better advertising means stronger Brazilian brands. Stronger brands generally mean more stable sales. Stable sales means more, less-risky investment. This translates into jobs, growth and more societal stability. This is exactly the state where Brazil is at now.


  1. There was one thing in your blog that made me thoughtful: in your article it sounds a little bit like Brazil becoming the middle class paradise. The possibility to consume. Welfare is possible for all classes. People becoming honest. And - you have evidence for all your observations.

    Now look at it from this side: the rents and prizes for real estate have risen at the percentage of 380% in the last 1,5 years in Zona Sul of Rio de Janeiro. Prizes of vegetables and fruits are 3 x higher than the national average. (see Veja, Globo) Salaries? Have not even increased the percentage of the inflation (which is right now already estimated to be at least 7% next year). How many people go abroad (e.g. trips to Miami, etc.) to buy electronics and luxury goods? A lot.

    You are talking about strong brands. Could be - but when checking the quality it becomes absurd. Especially for someone who has always the news and a clear picture of what is going on outside it is unbelievable on how much low quality those brands are build. For us it is just a matter of time those images crash.

    Brazil is showing off tremendously: great brands, great events, consumer welfare - but have a closer look. It is still the same old gang which can afford to participate. And it is the poorer (upcoming) classes that can't. (and besides a huge part of the middle class which can't as well.) The social differences are becoming insanely huge!

    Taking the drug dealer who wants to become honest - cute picture. but he is not the one to rule. The ones who rule are the old families, the old establishment and they continue to do what they have done for ages: corruption, fiscal fraud, fraud in general, stealing from the communities, etc.etc.. And it is not getting better - infelizmente.

    The Brazilian society is becoming worse and worse: the wish and the belief that it is one's right to enrich oneself on the cost of everybody else is widely spread and accepted.
    For many people (especially foreigners but also well educated Brazilian) it is a burdensome question how long they will/ can stay in this society and when it is time to leave. This is a pity for the Brazil.

    If you would like to discuss some of the ideas I mentioned - I am open to do so. ;-)

    Have a good time and see you next time you are in Rio.

  2. Hi Ilona,
    Thanks for taking the time to write such a thoughtful rebuttal to my post. It is especially special when there is a local perspective.

    There are a couple things that I will respond to:

    1. If a brand is making a shoddy product, the brand will suffer. Any investment made in the brand (in the form of advertising, distribution etc) will be lost. Any company that brands a shoddy product does so at its own peril.

    2. The Karen Hughes approach to looking at Brazil would suggest that there is a lot of social mobility. It is reasonable to assume that a lot of these millionaires are coming from the middle (and maybe even poorer) classes. If money = power, then the power structure in Brazil is changing as well. (Lula and Dilma were from the poor classes and became some of the most powerful people in Brazil, as evidence to my point)

  3. I certainly enjoyed reading this post! As an expat, I certainly prefer to believe that indeed Brazil is a rising star!

    Brazil has the opportunity and the resources, and more than ever, a chance to shine. Of course it will take a lot more than just publicity, but morals of many corrupted individuals that still roam the Brazilian soil :-(

    I do have "high hopes", or better yet, I truly believe in the possibility of success for Brazil's economy and social stability one day, though such reform takes time, a lot of time unfortunately. Meanwhile, "Go Brazil"!!

  4. Hi Robert - I enjoy your posts. I'd like to quote some of the findings from Brand Mojo in my new book "Brand Like a Rock Star". Can you please contact me at Thanks!