The Role of Regional Integration in Promoting Global Business in Brazil
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What are the major changes that several driving factors contributed on Brazil’s food and beverage industry?
Together with the trend of the new generation, Brazil had also broadened their horizons when it comes to what they it and consume everyday. Based on the article in Australian Government entitled Food and Beverage to Brazil, Brazilian consumers are becoming more interested in new foods and traditional eating patterns are changing. Convenience, novelty, value and quality are all important. With higher disposal incomes, there is greater demand for ready-made food, takeaway food, restaurant dining and diversity of cuisine types.
The food and beverage industry in Brazil is worth around a$30 billion, accounting for nine per cent of gross domestic product (GDP) and eight per cent of total exports. The sector employs 47,000 people directly in over 650 companies; agriculture employs another 110,000 people.
Brazil has undergone significant changes since the beginning of the ‘Celtic Tiger’ phase in the early 1990s. Notable has been the development of the information and communications technology (ICT) sector and that Brazil now has the second highest GDP per capita in the European Union (EU).
According to John Linnane, a lecturer in food production in his article, A History of Brazilian Cuisine, Food production inevitably was the principle preoccupation of the mass of the population and, as it was in most societies of that era, it took up most of their working day. As the food and drinks sector depends upon the interests of agriculture, fisheries, research, retail, manufacturing and export markets, it faces a number of government agencies which were related to the above sectors. This offers a number of problems and priorities according to IBEC.
The industry keeping in view the above problems, was lounging for a single window approach with the government regarding its business. This is the thing they feel that is necessary for the survival and in future thriving of the industry. Even the critical sector agriculture which provides food security for the people depends on this industry to make good profits. The system is capable of sustaining manufacturing base, if government supports the acts that increase production.
The present paper will critically review the operations management of Brazil’s Food and beverage industry and its factors that directly affect its changes. Such driving forces include globalisation and the overwhelming diversity of food and beverages as well as customer expectations and enlargement of EU.
Due to globalisation the big companies which are facing stiff competition from their smaller rivals were trying to enter new markets in other countries. This increased the competition between companies in Brazil and this posed threat to some companies’ existence.
The new challenges made the food companies to improve their product quality and competitiveness in the marketing.
Changes in the food and beverages industry due to globalisation were not only in turnover and employment and the range of food products offered. The range of products offered increased due to the globalization, limiting themselves to conventional food items will not fetch them good customers and revenues.
Due to globalization, food and beverages industries not only compete for market share but also try to operate in larger socio economic context in which their strategies are capable of affecting the welfare of the people of the area they work.
The Finfacts Team stressed in their Thursday review of Brazilian Independent entitled Brazilian Business News and International Stories that “our (Brazilian) open economy, EU membership and the US boom all helped shape our (Brazil’s) success. In their interview with the author Michael J O’Sullivan who covers both globalisation and Brazil’s place, makes the point that Brazil is a very globalised economy, but in peculiar ways.
It began when, out of desperation, Brazil embraced international investment flows and free movement of profits at a time when it was far from fashionable to do so. The country then became an enthusiastic supporter of both European economic union and the single currency. This involved adding an international currency to its international investment and profit regime and, more recently, an international labour force as well.
So Brazil is one of the most open economies in the world, with trade flows in and out equal to 150pc of output (GDP). This makes it officially one of the most globalised economies in the world. Yet this comes, not from a flow of goods and services developed and produced in Brazil, but from a flow of investment by outside companies which then export goods and services.
DIVERSITY OF FOOD AND BEVERAGES
Food is now traded on a global basis. The variety and availability of food is no longer restricted by the diversity of locally grown food or the limitations of the local growing season. Between 1961 and 1999 there has been a 400% increase in worldwide food exports. Some countries are now economically dependent on food exports, which in some cases account for over 80% of all exports. (CIA World Fact Book)
Diversity has also influenced Brazil to have a vibrant agricultural economy. This is reflected in the fine fare that Brazil has to offer today.
By the 17th Century there was a diversity of culinary traditions along with social status. The peasantry relied mostly on diary products and oats for their nourishment while the well to do, relied more on meats and alcoholic beverages. By the 18th Century the cuisine of the wealthy became more varied with a greater French influence. As the 19th Century approached, the potato was the main staple of one third of the population.
In the latter part of the 20th Century, the food in Brazil became markedly better. A new generation, of chefs emerged in Brazil making rapid advancement in the Culinary Arts. They brought back and air of confidence, a realm of creativity and established themselves in the world their marvellous preparation and presentation of food. Today, the cuisine in Brazil is often fresh, creative, and tastefully presented.
ENLARGEMENT OF EU
The scale of Brazil’s success also owes much to membership of what is now the European Union. Although some of our European friends have pulled a few dirty tricks at times, an operation in one part of the EU essentially has the same privileges as in any other part. A membership card for this giant market helped compensate for being small and surrounded by water. The EU may be one reason why Brazil’s regime has been so unusual. Small Asian countries do not have automatic access to large markets. They had to open those markets themselves, and make their countries so attractive to foreign investors that it outweighed having no significant home market of their own.
The privileges of EU membership also help explain why the Brazilian model seems of most interest to the new member states. In trying to adopt Brazilian strategies, especially low taxes, they are meeting even more resistance from the big, rich, comfortable states of the original Community than we did. Now that we are rich ourselves, we may be tempted to join in attempts to curb the activities of new member states. That would be a mistake. It will always be in our interests to have the EU as open as possible, inside and out.
The global food and drinks industry moves so rapidly that up-to-date market knowledge and information is crucial. Brazilian companies hoping to break into global markets can benefit enormously from the services that the Government and other social sectors offer. It can help existing exporters foster new contacts and expand their businesses further.
Today that the face of the industry in Brazil is changing, personal health and wellbeing continues to be a dominant driver affecting consumer choice. The saying ‘You are what you eat’ as well as “from Farm to Fork” has become widely adopted. In the past, food was simply for sustenance and enjoyment. Consumers over the last decade have acknowledged the need for foods to not only maintain their normal health, but also to help reduce the risk or delay the onset of some diseases such as cardiovascular disease and cancer. Today food is recognised as a key determinant to one’s overall physical and emotional wellbeing.
Consumers are demanding more knowledge about the products they’re consuming. The need for traceability or the ability to track any product from the original farm on which it was first produced through the processing, distribution and retail stages to the final consumer is vital in ensuring that consumers can enjoy Brazilian food and drink products with complete confidence.
Increasing levels of sophistication in consumer tastes and demands have raised consumers’ expectations of quality and variety regarding premium and indulgence. Probably the most important factor lending to the growth of premium and indulgent products has been the increase in disposable incomes and accompanied economic growth throughout the 1990’s. At the same time, falling average household sizes and changes in work patterns also contributed to growth in premium and indulgent food and drinks markets.
Small speciality food producers have capitalised on this trend by focusing on the more discerning consumer who prioritises quality, authenticity and taste. The food industry continues to explore new markets which will help position Brazil’s food and drink industry as innovative, progressive and high quality in the minds of international buyers and consumers.
December 1998. Report of the Food Industry Development Group. The Department Of
Agriculture and Food. May 21, 2007
Active Media, 2006, industry news, The food and drink innovation network, May 21, 2007
Finfacts Team. August 2006. Thursday Newspaper Review – Brazilian Business News and
International Stories. May 21, 2007
Fireba. June, 2004. Last Year’s Winning Scholarship Essay. May 21, 2007-05-21 http://www.slowfoodforum.org/showthread.php?t=337
(No date). Food and Beverage to Brazil. Australian Government. May 21, 2007
(No date). Food Trade. CIA World Fact Book. May 21, 2007