Olympics, World Cup
Spark Demand for Brazilian Paint
Preparations for
these events will
result in massive
urban renewal
throughout the
social capital of Rio
de Janeiro.
by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodpub.com
This year Brazilian paint and coatings offi- cials expect 1.5 billion liters in total sales and they predict 2.0 billion liters in sales
within a few years’ time, buoyed by the strong
economy and growing consumer spending.
Brazil’s Associacao das Fabricantes de Tintas
(Abrafati), the national paint manufacturers’ association, also expects that the 6. 7 percent growth
rate projected at the end of 2010 will be exceeded,
according to a recent statement by Abrafati President Dilson Ferreira, in Sao Paulo. Last year, the
industry expanded by a record 10 percent overall, with industrial segment sales even higher.
Among the host of positive architectural segment market conditions cited by Ferreira as supporting this year’s growth include ample
financing for residential real estate investment
and government-subsidized housing like the
Minha Casa program. Similarly, new car sales
and hard goods purchases have helped the automotive and industrial paint segments. “These
factors contributing to growth in the paint business are structural, not circumstantial,” he said.
Looking back, Abrafati calculates that the
paint industry grew by 60 percent during the past
decade, and the association predicts that growth
in the current decade will be even stronger.
A small but rapidly growing component of
this growth has been export sales, traditionally
a market used to compensate for slower domestic sales. In 2010, export sales rose 25 percent
to $135 million, led by exports to the rest of
Latin America, Africa and the Middle East. Since
exports only represent three percent of total
Brazilian paint sales, there is substantial room
for growth, according to Ferreira.
The Mercosul trade region—comprising Argentina, Chile, Paraguay and Uruguay—alone
accounted for 45 percent of total Brazilian export sales, or approximately $61 million,
Abrafati reports. These sales were not suppressed
by the rising value of the Brazilian currency, the
real, compared to the U.S. dollar last year.
Brazil will host the World Cup in soccer in
2014 and the Olympic games in 2016. Preparations for these events are expected to result in
massive urban renewal throughout the social
capital of Rio de Janeiro. The city budget for the
Olympic games preparations alone is $15 billion, and private investors are expected to plow
as much or more into redevelopment.
Among major infrastructure plans associated
with the preparations is an $18.7 billion high-speed rail line between Rio and the business capital, Sao Paulo. Several new freeways are
planned within Rio, and a new subway line
from the Ipanema hotel to the Barra da Tijuca
Olympic site is under development.
Similarly, some 300 new hotels are planned
for Rio to host the Olympic crowd, but that figure is still projected to be less than what will be
needed. To ease the anticipated 20,000-room
shortfall, plans are to spruce up the city port
area and use cruise ships to house some 8,000
visitors during the games.
By the time the games are over, Brazil is expected to be the world’s fifth-largest economy.
The paint and coatings industry will have to
play a major role in helping Brazil put on a fresh
face for these upcoming events. CW
