Brazil Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Brazil Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Brazil luxury goods market is forecasted to witness a CAGR of 4.32 % during the forecast period (2022 - 2027).

Despite recent economic difficulties and the impact of the Covid-19 outbreak, Brazil's luxury goods sector has survived the storm and recovered faster than other countries. The jewelry and apparel segment has shown nominal growth during the pandemic. However, high-net-worth individuals (HNWIs) continued to purchase luxury goods despite the health crisis and local restrictions, prompting companies to accelerate their digital strategies to reach them in the new digital channels and regional locations of their choice. For instance, Dolce & Gabbana, a luxury fashion retailer expanded its e-commerce operations in the financial year 2020-2021 and created a program called “Stay beautiful at home” for in-person and virtual appointments with its regular and prospective customers during the pandemic.

Over the long term, the Brazil market offers significant opportunities for luxury goods companies across e-retailing, as the health crisis has influenced Brazilians to online purchase their preferred luxury goods. For instance, the survey conducted by UNCTAD (United Nations Conference on Trade and Development) in association with the NIC.br (Brazilian Network Information Center) in October 2020 revealed that onine purchase had increased by 6-10% across different products categories including personal care, cosmetics, and fashion accessories.

Moreover, brands are transforming their entire value chain to be more environmentally and morally conscious. Addressing consumer concerns about sustainability has become standard practice in the luxury goods industry. Organic cotton, and recycled plastic mesh, are among the popular sustainable materials used by luxury brands. With the motive of an innovative approach, the brands are making several changes, including sourcing more materials locally, reducing their carbon footprint, and supporting animal welfare. For instance, in June 2022, Brazilian brand "Malwee" launched sweatwears designed from recycled clothes. Malwee transforms used clothes into a new textile via circular fashion and upcycling.

Key Market TrendsExpansion of Online Retailing

During the lockdowns, there was a spike in online shopping, with even the most affluent customers willing to buy luxury products online. Millennial and young shoppers spend half of their spare time on digital platforms looking for inspiration or trying to influence others. As a result, luxury firms are increasingly partnering with online marketplaces to promote and market their labels. Moreover, e-commerce platforms also allow modern affluent consumers to shop in multi-brand environments by showcasing a diverse collection from both global and regional luxury brands. Further, leading luxury goods brands are heavily investing in e-commerce retailing alongside the strong network of brick & mortar stores to retain their market position in Brazil. For instance, In April 2021, Balenciaga, a luxury fashion brand of Kering Group entered the South America market by launching its products through the Iguatemi 365, an online platform of Brazilian mall conglomerate, Iguatemi Group.

Demand for Sustainable Products

Millennial consumers are looking for eco-friendly "quality labels" that go beyond modern design and new runway trends. In response to evolving consumer perception, some Brazilian manufacturers have begun to invest in collections that are less detrimental to the environment in the last few years. And what draws customers and sellers of eco-friendly goods together is the fact that "conscious" fashion has increasingly evolved beyond an artisanal, rustic appearance to become appealing pieces that inspire desire without harming the environment. For instance, In April 2022, Costa Brazil, a chief brand of Amyris adopted ethical ingredient sourcing for sustainable beauty. The company also partnered with Conservation International, an environmental conservation nonprofit organization, demonstrating a dedication to the inspiration and initiative required to safeguard the environment.

Competitive Landscape

The Brazil luxury goods market is considered to be a fragmented one, as many international companies like Prada holdings, Hermes S.A, Chanel, and LVMH among others are competing for the market share along with several regional and domestic luxury brands. The key players aim to increase their customer base by investing in an extensive distribution network. In a move to increase revenue, major players are expanding their trade opportunities through strategic acquisitions and partnerships with e-commerce giants. For instance, LVMH has acquired a 70% stake in Sack’s, a major online retailer of fragrances, cosmetics, and toiletries, and a beauty distributor in Brazil.

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• The market estimate (ME) sheet in Excel format
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