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Business Ideas South America

Top 7 Most Profitable Industries to Start a Business in Brazil

With more people able to spend greater amounts on products, Brazil is a great market to start a business

Brazil is known for its great footballers, fantastic tourist destinations, music and samba. It’s also the fifth-largest market in the world with 209 million people, 15% of which are rising from poverty into the wealthier middle-class. This number is only growing. With more people able to spend greater amounts on products, Brazil is a great market to start a business.

Successful entrepreneurs and investors take advantage of the best industries, trends and markets to make as much money as possible. Take this opportunity to look through the best industries to start a business in Brazil, so that you can make a profit by investing in one of the below industries. 

1. Agribusiness

Brazil is one of the biggest food producers worldwide, especially of coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus and beef. It’s the leading producer of coffee, grows a third of the world’s oranges, and has 200 million more livestock beef than the US. This is because around 28% of its land is used for agriculture.

The country exports almost 75% of their agricultural produce to other countries, which grew from US$84.9 billion in 2016 to US$101.1 billion by 2018. Brazil’s government offers several incentives for agribusiness companies, especially those offering modern equipment to help improve the low rate of mechanised farming. Anyone looking to start a business in this industry should take advantage of these initiatives.

2. Oil, Petroleum, and Gas

According to ITA, Brazil is the largest oil producer in Latin America, the ninth-largest oil producer and seventh-largest oil consumer in the world, and has the largest recoverable ultra-deep oil reserves globally. The country’s oil sector is booming. More and more international oil companies are investing in different parts along the supply chain like exploration, production, transportation, storage, legalities, intermediaries and local partners. 

A word warning, entrepreneurs and investors may have trouble getting into this market as its dominated by Petrobras, which accounts for 92% of Brazil’s oil and gas production. There are also 47 local and 50 foreign companies that hold rights over oil exploration in different Brazilian regions. Brazil’s stature as an oil-producing nation is expected to keep growing by leaps and bounds. So if you make a quick decision to launch your company in this field, you are likely to get good returns on your investments.

3. Automotive

In 2018, the automotive industry contributed to 22% of GDP with Brazil becoming the seventh-largest market for cars worldwide. Companies in this sector can make huge profits with such a large market. Yields will be even higher for companies with electric vehicles or carrying out research and development (R&D) into more environmentally cars because of Route 2030. The government launched this scheme to decrease vehicle pollution and increase energy-efficient car sales. It grants up to R$1.5 billion per year in tax credits to companies that invest at least R$5 billion in eco-friendly R&D, and it reduces the tax rate of 25% on industrialised products by 7% to 20% for electric and hybrid cars.

4. Renewable Energy

Though a developing economy like Brazil needs to have uninterrupted energy supplies, the government has to guard against environmental pollution. This is leading to a rise in renewable energy projects and incentives for companies operating in this industry. The government aims to increase its 2019 33.1GW renewable energy capacity to 60GW by 2030 by expanding its current renewable sources.

2019 Breakdown of 82.9% of Brazil’s Renewable Energy Sources, source Britannica

According to Mordor Intelligence, Brazil’s renewable energy market is largely fragmented with only a few major players, namely Engie Brasil Energia SA, Furnas Centrais Eletricas SA, Companhia Hidro Eletrica do Sao Francisco, CPFL Energias Renovaveis SA, and Omega Geracao SA. This makes it easier for new businesses to enter the market and startup. 

5. Tourism

Brazil has some of the world’s best tourist destinations from Rio to the Amazon, Iguacu Falls, and amazing coastal beaches. Before the pandemic, over 10 million tourists visited Brazil annually for years. This increased internal tourist spending from US$93.5 billion in 2010 to an all-time high US$102.5 billion in 2015. It went down to US$97 billion by 2019 due to the pandemic. 

The growth in middle-class and wealth in Brazil led to more Brazilians travelling inside and outside the country, especially to the USA, Uraguay, and Argentina. Tourism is expected to boom again once the pandemic is over. Now could be the perfect time for startups to establish themselves in the market providing tourist holidays, information, experiences, goods and other services.

6. Infrastructure and Transport

Developing good infrastructure and transport is crucial for such a large country like Brazil, which is covered by the Amazon rainforest. The government auctioned 44 projects in 2020 for traditional industry sectors like residential (50%+ of industry revenues), energy and utilities (16.8%), commercial (9.1%), industrial (7.4%) and new growth sectors like social, transportation, extraction, and manufacturing. More projects will be auctioned following the pandemic to attract investment and generate revenue to help the economy recover.

Growth in trade, agribusiness, eCommerce, and tourism drives Brazil’s infrastructure and transport industry development. eCommerce grew steadily to US$14.5 billion by the 2016 Olympics, with 70% of online goods being bought by the middle-class. Both the Olympics and 2014 Worldcup showed how far Brazil’s infrastructure and transport had come to be able to handle the massive influx of international tourists. Competition in the market is fragmented, making it easier for entrepreneurs and investors to enter and establish themselves. The industry is expected to keep growing mostly due to private and venture capital investment.

7. Healthcare

The healthcare industry in Brazil is one of the largest in the world and the largest in South America. The country spends 9.1% of its GDP on healthcare, and primarily combats its ageing population and obesity. In 2018, Brazil was one of the top six markets in size for drugs and pharmaceuticals, with US$28.4 billion sales. Growth in pharmaceuticals is not likely to slack any time soon as the pandemic has increased demand for corona-vaccine production. 

Companies in this industry should focus on providing equipment and IT healthcare to make the most profit. The Ministry of Health announced investments of more than US$450 million in healthcare IT to digitalise Brazil’s Unified Health System (SUS) public care units and work towards offering socially distanced or virtual healthcare, especially during the pandemic.

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