Global Trendsetters Latin America/South America

In South America’s Capital of Luxury, Rich Brazilians Relish Upscale Goods and the Fine Packages They Come In

by Wilson Palhares

On March 17 and 18, São Paulo, Brazil, was the site of an event that to those unfamiliar with Brazil might have seemed quite impossible—the Luxe Pack São Paulo Luxury Goods Packaging Show.

Out of a population of 170 million people, Brazil is home to over 10 million people living in abject poverty, according to UN figures, and 7.7 million unemployed. Total economic growth was negative in 2003, and in addition to falling average wages, the country faces serious challenges in health care, education, and housing. Given such a situation, foreigners might wonder if a luxury products event has any place in Brazil.

In fact, for the 10 percent of Brazilians who are among the wealthy, economic crises simply don’t exist, and in total financial terms, this portion of the population represents a total market larger than that of many of the so-called economically developed countries. These 17 million high-income consumers give Brazil the largest share of executive jets, private helicopters, and Ferraris anywhere in the world outside the United States, and this vast number of the economically well-off explains the presence of almost every top designer label, including the likes of Armani, Cartier, Kenzo, Mont Blanc, and Ermenegildo Zegna.

Tiffany times two

The crème de la crème of global brands are concentrated primarily in São Paulo, which maintains the distinction of being the only city on the planet with two Tiffany’s stores. It was in the heart of this chaotic metropolis of 10 million people, in the glamorous new Hotel Espaço Unique, that the third edition of Luxe Pack São Paulo was held.

During the two days of the event, nearly 1,500 designers, suppliers, specifiers, and end users were able to see some of the most advanced packaging materials used by global manufacturers of cosmetics, spirits, clothing, jewelry, and food. The event was a reproduction of Luxe Pack Monaco and Luxe Pack New York, although on a smaller scale, and included 21 exhibitors, principally multinational companies with operations in Brazil or their competitors from the United States and Europe.

Merck, the German specialty chemical manufacturer, exhibited a line of pigments whose color perception changes depending on the angles from which they receive light and from which they are viewed. Commercialized under the trade names Xirillac and Colorstream, these raw materials can be applied to cosmetic packaging, bottles for wine and spirits, toys, and other products.

Eastman Chemical Company launched The Glass Polymer (co-polyester Eastar AN001), a highly transparent resin that gives a very glass-like appearance for cosmetic packaging, which as already been used by Victoria’s Secret, Matis, Luxiva, and Gucci. DuPont also exhibited a glass-substitute resin, Surlyn, which can be either injection-molded or blow-molded. The resin is currently being used by Brazil’s Incom to produce cosmetic caps and closures, and DuPont credits the material with offering the packaging industry’s best sealing properties.

MeadWestvaco announced that its AGI Media and AGI Klearfold businesses would aggressively extend their reach to Brazil and the rest of Latin America. With an established operational base at its Rigesa subsidiary, this new marketing arrangement will bring technology formerly available only at AGI facilities in Europe and the United States directly to consumer packaged goods manufacturers in Brazil.

Several notable successes have already been achieved, primarily in the home video market through the local launch of the global Digipak platform, and important new products are ready for release in the coming months. The introduction of the AGI product line to Brazil will broaden Rigesa’s traditional role as a leader in high-impact corrugated packaging.

Matches her boots

Verrieres Pochet, the French glass bottle manufacturer, brought a number of innovations to Brazil, including bottles and jars with a snakeskin finish. According to the company’s Brazilian representative, Rodrigo Busine, this effect is obtained through a process which, in addition to using modern equipment, also utilizes specialized hand labor to create highly detailed designs. Visitors to the show also saw pieces from Saint-Gobain Desjonquères, another French bottle company, with accounts including Yves Rocher, Dior, Christian Lacroix, and Guerlain.

As a measure of the degree to which the country not only consumes but also produces luxury products, the 70-year old Brazilian rigid box manufacturer, Embalagens Greco Prete, exhibited a line of set boxes that goes back over 50 years and which is currently used by top local brands like Natura and O Boticário as well as exported to various consuming countries.

In the final analysis, attendance at the show was up 35 percent over 2003, and the show’s organizer, Salvatore Privitera, estimates that exhibitors at the show will do $5,000,000 in business as a result of contacts made this year. According to Privitera, the success of the show was not just a result of the “worldwide powerhouses of our industry who attended, but of the quality of the technical presentations given during our conference sessions.”

He foresees growth for Luxe Pack 2005 of at least 20 percent, and credits that growth primarily to the recovering Brazilian economy, which is expected to expand by 3.5 percent by year end. While it is expected that income distribution in Brazil will continue to be highly concentrated, this concentration will continue to drive demand for prestige products.

Wilson Palhares is Executive Editor of EmbalagemMarca (www.embalagemmarca.com.br), a monthly magazine serving packaging professionals in Brazil with news about developments and trends in all parts of the package supply chain. Contact him at palhares@embalagemmarca.com.br

A Marketing Expert’s “Homecoming” Indicates the Strong Growth Potential of Latin American Packaging Market

by Ron Sasine

My visit to Luxe Pack São Paulo was a homecoming of sorts. It had been 14 years since I first traveled to Brazil on packaging business, and almost two years had passed since my last assignment there came to a close, but the world of packaging in Latin America is changing, and changing rapidly.

The first thing that struck me was the growth of the Latin American market for luxury goods. Many casual observers in the U.S. and Europe underestimate the booming demand for luxury products in cities like São Paulo, Buenos Aires, Santiago and Mexico City. With cosmopolitan populations and improved access to international markets through foreign travel and global media, the countries of Latin America are home to groups of consumers with an increasing taste for international products.

A look through the upscale malls in any of these countries shows clearly that Latin American consumers of luxury products are increasing their spending power and broadening their scope of purchases to include an ever-increasing list of product categories. And as currency fluctuations make European imports that much more expensive, local consumers are turning to high-quality local products, which in turn drives demand for high-quality local packaging.

Impressive local talent

I was also very impressed by the caliber of Latin America’s growing corps of packaging professionals. Whether packaging designers, manufacturers, or specifiers, it was clear to me that there is a new sense of professionalism fueling the growth of the industry. Brazil is Latin America’s largest producer of packaging, and the local packaging industry association (ABRE) has spent the past five years working with local universities to develop excellent graduate and undergraduate programs in packaging engineering and design, similar to the best programs we find in the U.S. and Europe. With graduates of these programs now entering the work force, the next few years could bring a step change in the quality and creativity of packaging in this part of the world. The information presented in the Luxe Pack conference sessions by a diverse group of local experts was as topical and insightful as anything I’ve seen over the years in New York or Monaco.

Finally, I was impressed by the number of international packaging suppliers expanding their presence in the region. Saint-Gobain, DuPont, and MeadWestvaco were just a sampling of the companies exhibiting at Luxe Pack that have shown heightened interest in the Latin American market for packaging materials.

In the case of MeadWestvaco, at Luxe Pack São Paulo we announced the formation of a new marketing organization to manage our growing regional sales of distinctive packaging for fragrances, cosmetics, personal care products, and recorded media. This group will coordinate its efforts with our AGI Klearfold and AGI Media businesses worldwide and draws on the assets of our local manufacturing facilities and sales force which have grown over our 50 year presence in Brazil.

I came away from Luxe Pack convinced that distinctive and sophisticated packaging is poised for future growth in Latin America. With its partners in Monaco and New York, Luxe Pack São Paulo can become the focus of an evolving Latin American market for luxury packaging.

Ron Sasine is Vice President for Global Cross-Selling of MeadWestvaco’s Consumer Packaging Group. Prior to returning to the U.S. in 2002, he spent seven years with MeadWestvaco’s Brazilian subsidiary, Rigesa Ltda., and served as a director of the Brazilian Packaging Association (ABRE).