Executive Summary
This report is an analysis of Brita, Inc.’s position within the marketplace and the
potential growth opportunities if the company were to introduce products into the Brazilian
market. Contaminated drinking water can cause several bacterial diseases for those living
in Brazil. This has become a serious health problem that people of Brazil face. Due to an
increase in population and internal migration, many water sources have become
overexploited, making Brazil a great market for water purification and filtration products.
Brita is one of the leading companies in household water filtration products and has yet to
reach the market in Brazil.
In an attempt to gain market share from competitors, Brita intends to launch the sale
of products in the Brazilian market. Over the years Brita has been able to offer great
tasting water without the cost or waste of bottled water. The company offers a wide
range of products using disposable filters as their primary filtering mechanism. Brita’s
most popular products including their pitchers and dispensers, filtering bottles, and
faucet filtration products. This product line offers convenience to consumers whether
filtering the water in your own kitchen or water on-the-go. Not only will these products
benefit the consumer but aid in reducing the community's carbon footprint as well. “One
Brita pitcher or bottle filter can save 300 standard 16.9 oz. plastic bottles from reaching
landfills” (Brita, 2014).
Brita’s products will help Brazil become a part of their growing community making
better choices for the environment and consumer health by reducing water bottle waste
and giving citizens a greater chance of escaping various harmful diseases. In an
attempt to test the effectiveness of the product our team decided to introduce Brita Pitchers
and Brita Filtration bottles to the new market.
Brazil - General Facts
Geographical setting
Brazil is located on the eastern coast of South America. It borders ten other
countries – French Guiana, Suriname, Guyana, Venezuela, Colombia, Peru, Bolivia,
Paraguay, Argentina, and Uruguay – as well as the Atlantic Ocean. It is the largest country
in South America and fifth largest country in the world in both land area and population
(Central Intelligence Agency, 2014).
The northern part of Brazil is made up of the Amazon River and its basin. Ridges
and mountain ranges span the southeastern region, making it much more rugged. There
are hills, plains, and highlands in the rest of the country, as well as a narrow coastal belt.
The climate is mostly tropical, except in the south where it is temperate (Central Intelligence
Agency, 2014).
History
Brazil gained independence from Portugal in 1822, after nearly 3 centuries of being under
their rule. A monarchical government was maintained for 66 years, after which the military
was in control. In 1985, civilian rulers peacefully gained control of the country. There has
been immense industrial and agricultural growth in recent decades (Central Intelligence
Agency, 2014).
Language
Portuguese is the most widely spoken and official language of Brazil. Spanish is spoken in
border areas as well as in some schools. English, German, Italian, and Japanese are
spoken in certain areas, and there are many Amerindian languages still spoken as well
(Central Intelligence Agency, 2014).
Economic Analysis
The Federative Republic of Brazil’s current total population is roughly 201 million
ranking it as the fifth most populated country in the world just behind Indonesia. The
population density of Brazil is about 23 people per square kilometer or 61 people per square
mile. The population distribution in Brazil is very uneven with the vast majority of citizens
living along the coast and the Amazon Basin to the west is sparsely populated. Sao Paulo
and Rio de Janeiro are by far the largest cities in Brazil with Sao Paulo being home to 11
million and Rio de Janeiro with 6 million.
In recent years, the Gross Domestic Product per capita has risen to $12,528 from
just over $11,000 in 2010 and the economy is expected to grow in years to come due to
increased industrialization and the implementation of more jobs and also due to the
upcoming hosting of the FIFA World Cup which will be held in June 2014.
Employment rates in Brazil are fairly stable with about 51 percent of people aged 1524 are employed. The vast majority of people aged 25-54 are employed with a rate of 76
percent in 2011. The unemployment rate, however, is slightly lower than that of the United
States at about 5 percent in 2012. The inflation rate was at 5 percent in 2012.
Brazil has numerous mineral reserves harboring iron ore, tin, quartz, granite,
manganese, gold and bauxite, most of which are found in Minas Gerais and Para. There is
a large amount of the mineral kaolin found in the Amazon Basin as well. Off the southeast
coast, Brazil has many petroleum reserved and natural gas making it a big competitor in the
oil industry.
Coffee is a major industry in Brazil, it is the world’s primary source of coffee,
oranges, and cassava and also produces large quantities of sugar, soy, and beef. Brazil has
traditionally been an agrarian culture but the importance of it has declined in recent years
due to increased industrialization and exploitation of mineral, industrial, and hydroelectric
power.
Brazil has one of the most expansive highway systems in the world but is infamously
inadequate with only 1.5 percent of the country’s GDP allocated to maintaining the
infrastructure. To accommodate for the upcoming FIFA World Cup and 2016 Olympic
Games the roadways will undergo an extreme overhaul.
Market Audit and Competitive Market Analysis
Analysis of relevant trends
Cultural
A cultural trend can be defined as an action or belief that is widespread throughout a
culture as a tendency to follow along with others in one’s own culture. Something that can
be considered a cultural trend in Brazil is that in cities such as Rio de Janeiro and Sao
Paulo, there are many universities resulting in a more educated population overall. A more
educated population in turn can cause a variety of other cultural trends.
One trend that is relevant to the all industries, is that this influence of education has
caused many Brazilians to strive for higher living standards. OCED Better Life (2014)
explains that “Brazil has made tremendous progress over the last decade in terms of
improving the quality of life of its citizens. In recent years, the country has seen a track
record of inclusive growth and poverty reduction.” This ultimately opens Brazil’s market and
invites different brands and products in because with this rise in quality of life, many citizens
have a more disposable income to buy products that would continue to improve their quality
of life.
Another cultural trend is that the education of its citizens has lead middle class
Brazilians to be more aware of different diseases caused by water contamination. Ribeiro
(2011) states “the consumption of filtered and/or bottled mineral water is widespread in
Brazil.” This means that many Brazilians are either purchasing water bottles or using inhome water filtration systems in order to access clean water. This leaves the market and
cultural demands of Brazil open to a product like ours.
Demographic
Brazil is currently the sixth most populated country in the world with a population of
201, 009, 622 people. The growth rate has been slowing due to a decline in the fertility rate
since the 1960s. Currently the majority of people are of working age, but the labor force will
shrink with the aging population (Central Intelligence Agency, 2014).
Eighty seven percent of Brazil’s population is urban. The two most populated cities
are Sao Paulo with 19.96 million people and Rio de Janeiro with 11.836 million people.
Ninety nine and a half percent of this urban population has access to a slightly improved
drinking water source such as piped water or public tap (Central Intelligence Agency, 2014).
Of the rural population, eighty five percent of them have access to improved water sources,
which is an increase of 2% since 2009 (The World Bank, 2013).
Economic
The economic trends in Brazil reflect a concern for inflation rates, debt, and investor
confidence, but still expect gross domestic product to rise and no cuts to the country’s
budget. This could create a few concerns in entering this country for business, but the
prospects for the market still look good for our product.
As Latin America’s largest economy, Brazil shows no room for budget cuts and cuts
to governmental spending (Trevisani, 2014). As a result, The Wall street Journal has found
that a “rigid budget structure means the government has little room to cut costs, so it needs
lots of taxes to be able to pay its bills” (Trevisani, 2014). This can be reflected in possible
increases to the taxes placed on the citizens of Brazil. This could be a possible influence on
entering the market of Brazil because if citizens are paying higher taxes they will be less
likely to spend money on products like ours or they will have a smaller disposable income.
Also, with rises in taxes to its citizens, the Brazilian government “struggles to rebuild
confidence amid slow growth, high inflation and concerns about the fast pace of
government spending” (Trevisani, 2014). This is seen through the lack of confidence that
foreign investors have in the Brazilian market.
Despite the challenges that Brazil faces, the economy has remained “stable” since
2011 (Trevisani, 2014) and the government has been working hard to re-instill the
confidence of Brazilian citizens in the economic decisions of that the government has made.
Since Brazil is also fraught with rising inflation, the Finance Minister, Guido Mantega,
released economic data to show that in “2013 [the government] had saved around 75 billion
Brazilian reais ($31.57 billion) of its tax revenues to pay debt” (Trevisani, 2014). This
information was released to show that despite these difficulties, Brazil is using its tax
revenue to repay its debt while it’s economy is still growing.
In a report by Trading Economics (Taborda, 2014), as the second largest economy
in the world, Brazil’s GDP expanded by .70 percent in the fourth quarter of 2013 alone. This
growth despite the nation’s rising inflation and debt is because of “trade is driven by its
extensive natural resources and diverse agricultural and manufacturing production”
(Taborda, 2014). The growth of Brazil’s economy despite it’s economic struggles shows a
good outlook in most sectors including the category in which our product would fall.
Electricity, water, and gas supply rose by 1.4 percent during the year (Taborda, 2014). This
proves that the industry our product is entering has been growing in an economy that is
facing rising inflation and high taxes to come back from national debt.
However, despite these challenges and economic trends that Brazil is facing, we are
confident that Brita will do well in Brazil. This is because Brazil’s quality of life is rising
causing a larger educated and middle class population that has a disposable income to
spend on various products. Our product is congruent with many needs and beliefs of
Brazilians and is set to flourish in their market for foreign products.
Psychographic
As previously mentioned, the education level of many Brazilians, especially in the
middle class in urban areas, is rising. This has lead to an improved quality of life that many
Brazilians strive for. That ultimate goal has left Brazilians with a few underlying goals and
lifestyles.
The first psychographic that is important to our product’s success is that consumers
are more environmentally and personal health conscious. This means that our consumers
have often times are beginning to make purchasing decisions based on these factors. They
are looking for products that either help to promote their own well-being or the well-being of
the planet. An example of this is the popularity of bottled water to avoid contaminated water
sources for the health of the consumer and this trend’s move into the popularity of in-home
water filters in order to provide the same health benefits with a reduced risk of harming the
environment.
Technological
While Brazil has a rapidly fast growing economy and industrialization rate, it is still
considered to be a developing country. This often times means that a country is growing
and expanding, but the markets and technology available is still trying to meet the needs of
consumers. Technology Trends in Latin America (2014) explains “With the restrictive laws
on importation of hardware in Brazil, the prices of computers are about twice the price in the
U.S. Surprisingly however, there is a technology boom going on in Sao Paulo.” As one of
our target markets, our product will be reaching a part of Brazil that is more technologically
advanced.
Despite the inflated cost of computers, Technology Trends in Latin America (2014)
also states that Brazil has the 5 largest number of mobile phone and Internet users in the
th
world. Not only does this go to show that Brazil is advancing as far as the technology they
have available and their ability to use it, but the Brazilian government is also putting a heavy
influence on the availability to technology centers and various equipment (Technology
Trends in Latin America, 2014). The technological trends in Brazil are also accompanied by
trends such as social media usage. According to Global Intelligence Alliance (2010), “ecommerce in Brazil has been growing at a little over 30 percent per year since 2000” and
that “Brazilians spend more time web surfing than their peers in the US.” Most of this web
surfing is attributed to social media websites, both ones that are popular in the US, such as
Facebook, and ones that are more popular internationally, like Orkut.
Consumer
As previously mentioned with other aspects of relevant trends, consumers are
increasingly becoming more educated and striving for a better quality of life. This often
times leaves consumers with a more disposable income as there is growth in Brazil’s middle
class. This disposable income leaves the consumer with the ability to pick and choose the
products they want. The consumers in Brazil and choosing to spend their money on
products that ultimately will improve the quality of their life and the quality of their family’s
lives (GIA, 2010). Products such as water filtration devices fit this category and are exactly
what consumers in Brazil are looking for.
Another beneficial trend that affects consumers includes the recent movement on
being eco- friendly. The use of Brita filters could greatly decrease the amount of plastic
bottles wasted in Brazil every year. According to the GIA, most Brazilian Supermarkets
“have started selling eco-friendly products, diminishing the use of plastic bags and providing
recycling collection centers (GIA, 2010). This “green” movement could be extremely
beneficial when it comes to marketing our new eco- friendly product.
Social
The social trends in Brazil focus heavily around what is next for Brazil and its people.
Future global sporting events such as the 2014 World Cup and 2016 Summer Olympic
Games make Brazil an extremely viable future market. These events are predicted to boost
the Brazilian economy greatly and generate millions of new jobs. According to the Global
Intelligence Alliance it is expected to generate 2 to 3 million jobs over the next six years and
boost the infrastructure, telecommunications, retail, and services sectors in the Brazilian
economy (GIA, 2010). This ultimately has caused and is set to continue to cause a rise in
the quality of living and social classes of Brazil.
Another recent trend that is worth recognizing is new social media expansion. ECommerce in Brazil has grown 30 percent every year since 2000 and the number of
Internet users in Brazil exceeds 35 percent of the world’s population (GIA,2010). Today
Brazil is the number 2 Facebook and Twitter users in the world and the market is continually
expanding. This social trend will enable our company to reach a huge portion of the
Brazilian population at a rather inexpensive marketing investment.
SWOT Analysis
STRENGTHS

Established, successful brand in other countries

Need for clean water in Brazil

Cheap cost of producing water filter
WEAKNESSES

No established brand recognition
in Brazil
OPPORTUNITIES

Growing interest in saving the environment – recycling
THREATS

and producing less waste

Size of the target market – 34.6 million people
Slowed economic growth in recent
years

Online distributors are available for
consumers

Growth of the bottled water
industry
Target Market: Characteristics and estimated size
The target market - those ages 25-40 - is about 40 million people out of the total
population of Brazil. This is the age where people start building families and having children
and start to become their own independent unit. This age group is more educated than any
other age group and is more likely to be interested in healthy alternatives to things that they
now know are not good for them. They are also more tech savvy than any other age group
making it very easy to reach them for promotion. With increased industrialization and a
growing job market, the middle class has expanded allowing for families to have a higher
income and make basic health services available to them. With more access to healthcare,
people are now living longer and the life expectancy in Brazil has risen to 77 for women and
70 for men.
Industrialization has also made an impact on the birth rate. Now that there are more
people, particularly women, in the workforce, they are waiting longer to have children and or
may be having fewer children. The birth rate in 1970 was 4 births per woman, and in 2012
the birth rate was 1.81 births per woman. Industries will continue to grow and the population
will grow along with it. With fewer children being born the population will not increase at the
steady rate that it has before but it will continue to increase.
The Product
Consumer needs it addresses
Contaminated drinking water is a serious health problem that causes several
bacterial diseases for Brazilians. The water in Brazil and many areas in South America
coming from lakes, streams, rivers, and shallow wells contain harmful chemicals. The World
Bank states that, “Despite having almost 20 percent of the world’s freshwater, Brazil suffers
from very unequal access and increasing natural disasters linked to extreme weather, either
flooding or drought, with growing social and economic impacts” (2011). Other challenges
include the lack of access to clean water due to rural areas that do not have piped water
and the high number of poor Brazilians living in slums. Another challenge faced is water
scarcity in the northern parts of Brazil. Due to the increase in population and internal
migration, many water sources have become overexploited making Brazil a great market for
water purification and filtration products.
Features and benefits
The way Brita filters work differs among the pitcher filters and faucet filters. Brita
pitcher filters use activated carbon and ion exchange resin to filter out several impurities
leaving the user with healthier drinking water. “The Carbon reduces Chlorine, and the Ion
Exchange Resin reduces metals: Copper, Cadmium, Mercury (health contaminants) & Zinc
(metallic taste)” (Brita, 2014). Brita faucet filters, on the other hand, use a two-step process.
“ When you turn on your tap, water first passes through a non-woven screen around the
filter to trap sediment. The water then flows through a compressed block of carbon and
zeolite, reducing chlorine (for taste and odor) and lead” (Brita, 2014).
The products that we will be providing include Brita water pitchers and Brita water
bottles. Brita has a large line of products that could be offered, but during the introduction to
the Brazilian market, we have chosen to these two top selling products. This then provides
consumers the benefit of having clean drinking water. Since many Brazilians, rural or urban,
do not freely have access to uncontaminated drinking water, our product is a cost efficient
way of improving upon this situation. With a Brita pitcher or water bottle, consumers are
able to fill it up with water from the tap and allow it to be filtered into clean drinking water for
consumption.
Competition
More and more companies are manufacturing water filters and competing with Brita.
Some popular competitors include Pur, Whirlpool, and Aquasana. The prices of whirlpool
products are a bit higher ($30-$130) due to their refrigerator filtering systems. Aquasana
has prices similar to Whirlpool; however they don’t have a very large product line. Aquasana
has a couple of water drinking filters, but they focus more of their efforts on their wholehouse water filters which cost as much as $1399.99 (Aquasana, 2014). Pur water filters
have somewhat lower prices, much like these of Brita; however Brita’s got the competition
beat with some filters costing as little as $20 (Brita, 2014).
The Price
The cost of manufacturing Brita products is low compared to the possible selling
cost. Brita products are made using 2 main components, which allow the manufacturing
process to remain inexpensive. Brita’s pitchers, filtration bottles and the outsides of each
filter are made of polypropylene plastic (Sheryl, 2009). Polypropylene is the most common
plastic used to manufacture products and it costs an average of 5 cents a pound to produce
(Plastic News, 2014). The second component is the carbon/ charcoal used in the products’
filter. Carbon is priced at $2.40 per 100 grams making it extremely inexpensive. According
to Brita.com, each filter used in a pitcher contains 25 grams of Charcoal. The cost of
materials is then combined with the cost of the mold and the cost of labor. Total cost to
produce one Brita filter comes to about $5.
In the United States, the selling price for a basic Brita pitcher ranges from $25 to $36
dollars and the average price of a personal filtration bottle is $14. The replaceable filters for
these products cost $7.99 for pitchers and $3.99 for filtration bottles. Based on the current
selling price and the inexpensive manufacturing cost, selling Brita filters in Brazil is likely to
remain extremely profitable.
We will be selling Brita filter in Brazil for the following prices:

Water filter pitchers - $21.99

Personal water filter bottles - $9.99
Distribution
Brazil has many locations that are industrial and can host a factory where our
product can be produced. Minas Gerais has the nation’s second largest industrial plant with
expansion on the horizon (Brazilian Regions for Foreign Investors, 2014). This would be a
good place to produce our product because it is not too far from both Sao Paulo and Rio de
Janeiro. According to The Real Cost of Trucking (2013), a semi-truck that is used to
transport goods costs about $0.54 per mile to operate. With Minas Gerais being 475 miles
from Sao Paulo and 393 miles from Rio de Janeiro, this makes the cost per truckload to
transport the products to this location $256.50 and $213.84, respectively (this does not
factor trucker salary).
We will be selling our product in Walmart stores in Sao Paulo and Rio de Janeiro.
Walmart is the third largest retailer in Brazil, with a total of 556 total retail units in the
country (Walmart, 2014).
Promotion and its cost
Due to the technological trends in Brazil, we will take advantage of social media as a
way of promoting our product. It is cheap to advertise on sites such as Facebook, Twitter,
Google+ and Orkut. If we hire a consulting company to manage our sites, it would cost
anywhere from $500-$2000 per month (Collier, 2012). This cost would be reduced by
having an in-house social media manager.
Projections
Sales volume.
The target demographic of 25-40 year olds accounts for 40 million people in Brazil
(Brazil Auto Reports, 2011). However, the focus of our marketing plan will be on Sao Paulo
and Rio de Janeiro, which according to Brazil Auto Reports (2011) make up 86.6% of
Brazil’s population. Since 86.6% of the Brazilian population is located in Sao Paulo and Rio
de Janiero, our target market is roughly comprised of 34.6 million people. It was reported
that from 2007 to 2010, the presence of water filters in Brazilian homes rose from 51.1% to
51.6% (Ribereiro, 2011). The increased consumption of bottled water and other products
used for clean drinking water was expected to rise 15% in 2011(Ribereiro). Ribereiro (2011)
also remarks that 5.694% of this increase is directly attributed to the sale of bottled water.
That being said, if the consumption rate of products related to ours raises 15% and 5.694%
of that is directly attributed to rival products (bottled water), sales in our product category
should see a .38% raise each year. In the year 2011 from a basis of water filtration products
being present in 51.6% of homes (Ribereiro, 2011), the rate in which consumption rises
should be 67.36% by the year 2014.
Revenue
Our filter pitchers will be introduced to the market at a price of $21.99, and our filter
water bottles will be introduced at a price of $9.99. These prices are a bit cheaper than what
they are being sold for in the United States because we are introducing our products into a
new market, geared towards the 25-40 year olds in the urban areas around Rio de Janeiro
and Sao Paulo. These individuals will be able to afford our products and identify them as a
necessity due to the poor water conditions in the area. The penetration rate for filtration
products in Brazil is fairly low, but anticipates a steady increase each year. Therefore we
arrived at a penetration rate, or the amount of sales and adoption of our product, of about
7% of our target market by the year 2014 due to current market trends. Our target market is
around 34.6 million people, so we can multiply this population first by the penetration rate,
and again by the price of our product to calculate our expected revenue. Our expected
revenue for the year 2014 will therefore be around $53,259,780 from the pitchers and
$24,195,780 from the water bottles.
Rev= (Penetration rate)(Target market)($)
Pitchers:
(7%)(34.6million)($21.99)=$53,259,780
Water Bottles:
(7%)(34.6million)($9.99)=$24,195,780
Profit
The estimated cost to produce a Brita filter in Brazil is around $5, based on the cost
of the polypropylene plastic for the bottle, the carbon/ charcoal component used in the filter,
and the cost of labor per pitcher. For a target market of 34.6 million people and a
penetration rate of 7%, the estimated cost to produce filters for the year is $12,110,000.
Finally to figure out our ending profit for the year 2014, we subtract the estimated cost of
production from our expected revenue. Therefore, we will end with a profit of $41,149,780
from our pitchers, and $12,085,780 from our water bottles.
Estimated cost of production = (Target market)(Penetration rate)(Cost of production)
(34.6million)(7%)($5)= $12,110,000
Profit = Revenue - Cost of Production
Water Bottles:
(24,195,780) - ($12,110,000) = $12,085,780
Pitchers:
($53,259,780) - ($12,110,000) = $41,149,780
Conclusion
After conducting an extensive marketing analysis, it seems that the introduction of Brita
products into the Brazilian market is a profitable venture to pursue. High product demand
and high profit projects all work in the favor of this conclusion. Using social media
advertising and the need for environmentally friendly products Brita will be able to penetrate
and succeed in this market. Low levels of competition will allow Brita to remain at the top of
its perspective industry and remain profitable for years to come. Being an already
established and well known global company, Brita will once again gain a sustainable
advantage over its competition in the new Brazilian market.
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