Wine marketing to Brazil: Market environment analysis(Name)(Institution)(Course name)(Course code)(Module)(Instructor’s Name)Date of submission1.0 Introduction Fordwich Estate is small scale family owned winemaker formerly part of the Hunter Valley vineyard until the split in 1997. In the 2010 Australian Small Winemakers Show, the vintage won five medals in total (Fordwich 2011). The firm produces red, white and sparkling wines which are fairly priced. The brands are Rose 2010, Shiraz 2006, Shiraz 2010, Verdelho 2008, Chardonnay 2007, Unwooded Chardonnay 2009 Blanc de Blanc. This report uses PESTL and SWOT tools to assess the business climate in Brazil in light of Fordwich Vineyard Estate venturing in exporting its products into the country (Fordwich 2011).
The report also makes recommendations to the firm over the impeding decision of entering the Brazilian market2.0 Political Environment 2.1 Government stability Brazil follows federalism Federal government constitutes three main branches, legislative, executive and the judiciary. Executive is headed by president. The current president is President Dilma Rousseff. The country has enjoyed political stability for a long and holds democratic elections after every four years (DFAT 2011). 2.2 Government and contribution Formulates monetary and fiscal toolsMarkets Brazil to foreign investors Government raised taxes on some foreign investments.
Brazilian embassies around the world provide helpful information to interested business investors (DFAT 2011). Analysis A stable political climate allows undisturbed business activities such as distribution. Again, a stable political climate boosts consumer and investor confidence especially under a regime that shows good governance (Kalansky, Soares & Vella 2008). Positive GDP growth rate implies that consumer purchasing power is growing and that the consumers are optimistic about the future. 3.0 Legal Environment 3.1 Regulatory framework A new regulation requires that all wine exported to Brazil must have a certificate of origin and a certificate of analysis carried out by a NATA accredited laboratory.
These forms have to be produced at the entry of the product within the Brazilian borders (Deloite 2010; DFAT 2011). 3.2 Business laws All foreign business entities must be registered with the National Institute of Industrial Property. Registered firms will only be allowed to remit 1-5% of their gross sales revenue to their parent companiesMergers and acquisition are prohibited where the resultant firm would create monopolistic conditions.
Members of the Southern Cone Common Market-Mercosur (Brazil, Argentina, Paraguay and Uruguay) may exchange goods tariff free is 60% of the content is local. Firms that seek to establish a branch in Brazil must obtain authorisation by a presidential decree (Deloite 2010). 3.3 Labour laws Employers must contribute 8% of each workers salary to the Length of Service Guarantee Fund (FGTS) 44-hour work week and overtime pay of 50% base pay. The federal government sets the minimum wage though state can set theirs beyond and not under that of the federal government.
Employees are entitled to 30 calendar days paid vacation after a full year of full service with no more than six absences. Unjustified dismissals entitle employees to compensation. Foreign employees must obtain a work visa (Deloite 2010). 3.4 Taxation lawsAll private business entities in Brazil are subject to taxation on three levels federal, state and municipal governments. Foreign companies are subject to taxation if they engage in certain sales activities through agents or representatives based in Brazil. Import duty (0-35%) is charged on all imports Federal VAT (0- 335%) is levied on imports but is recoverable in IPI output debits.
State VAT applies to all business and stands at 17% in all states except for Sao Paulo and Gerais which is 18% (Deloite 2010).