Brazil: Its Strong Growth Potential is Becoming Strategic for Luxury

As the fifth-largest country in the world, spanning 8.5 million square kilometers and sixth by population, with 208 million inhabitants, Brazil stands as Latin America's foremost economy. The election of President Lula seems to have injected fresh vigor into democratic institutions, which had been undermined in recent years by the autocratic tendencies of former president Jair Bolsonaro. With this new political context, Brazil emerges as a market of strategic importance for advancing the economic interests of major foreign luxury brands.

The first four centuries of Brazil's history were characterized by a rural tropical landscape. However, it has now transformed into a considerable urban power, boasting 17 cities with populations exceeding one million. While significant social issues persist, particularly prevalent among the impoverished populations, especially in the Northeast, its economy is rapidly advancing. In this context, the luxury market is experiencing robust growth.

The shift began in the 1990s and 2000s when the incomes of the wealthiest 10% in São Paulo witnessed a 10.6% growth, nearly reaching 50% of the city's total income, according to data from the Brazilian Institute of Geography and Statistics (São Paulo state alone represents 75% of luxury goods consumption in the country). During this "golden" decade, the luxury sector exhibited an average growth rate of over 35%.

São Paulo stands as a metropolis of chic boutiques juxtaposed with tens of thousands of homeless individuals, emblematic of the chronic inequalities in the country. It ranks third globally in terms of private helicopter ownership. While the ultra-wealthy soar above the skyline and frequent luxurious malls, a multitude of inhabitants struggle in favelas, lacking essential goods. These inequalities trace their roots to the historical peculiarities of the country; Brazil remained a slave society until the late 19th century, fostering a culture of tolerance toward inequality despite the emergence of a middle class in recent decades.