Newly wealthy Brazilians put out to sea
Foreign Boat makers move to take advantage of boom in yacht demand
Marcio Christiansen reeled off tales of the growing ranks of rich Brazilians who visit his showroom for Ferretti luxury yachts, where clients sip espressos on an oversized sable sofa and electronic music bubbles in the air.
One man paid $2 million for a vessel, Mr. Christiansen said, after succumbing within 30 minutes to his children’s pleas of “Buy it, Daddy, buy it!” Another toured the sparkling 16-meter, or 53-foot, yacht on the showroom floor, then asked to discuss it over lunch.
“The waiter comes over to take our order and the client asks to borrow a piece of paper from his pad,” said Mr. Christiansen, chief executive of the Brazilian unit of Ferretti, an Italian company. “He starts working out a contract on it, and we´ve agreed to it before I´ve asked for a sandwich.”
Brazil has always had its select group of superrich with extravagant tastes. But booming commodity prices fueled by Chinese demand, along with some of the world´s biggest offshore oil discoveries, have created an expanding new class of wealthy Brazilians. They, in turn, are lifting the international yacht market, even as it plummets in the United States and Europe.
The number of millionaire households in Brazil, the biggest nation in South America, is forecast to more than triple by 2020. Their spending, along with that of a newly swollen middle class, has protected Brazil more than any other nation in the region from economic shocks since 2008.
Exporting goods like sugar, gold, coffee and rubber, Brazil has been a boom-and-bust place since the 16th century. Past golden ages created a thin stratum of the wealthy and extreme inequality. Since the mid-1990s, however, economic changes following a return to democracy have slowly spread the wealth, and government social programs since 2003 have lifted 20 million people out of poverty.
A May report on the geography of wealth from the consulting firm Deloitte, based in the united States, forecast that U.S and European nations would remain the global centers for wealthy households during the next decade. Nonetheless, emerging market economies “are likely to prove to be more dynamic in terms of growth rates, creating significant opportunities for wealth managers seeking to gain a share of these potentially lucrative markets.”
The boom in Brazil´s yacht market attests to that growth.
Boat sales in Brazil have grown as much as 30 percent annually since 2008, depending on the specific segment of the market, industry leaders said. Meanwhile, in the more traditional boating markets in the United States and Europe, sales of high-end boats have dropped 70 percent, analysts said.
For Ferretti, one of the world´s leading yacht manufacturers, sales in Brazil represented less than 5 percent if global revenue in 2007, according to Mr. Christiansen.
This year, sales from Ferretti´s Brazil group are expected to reach nearly $290 million, or about 40 percent of the company´s global revenue, said Mr. Christiansen, who has more than three decades of experience selling upper-end boats in Brazil.
According to a report released late last year by the Association of Executive Search Consultants, executives in Sao Paulo now earn more than their counterparts in New York, London, Hong Kong or Singapore, and their disposable income is flooding the Brazilian consumer market.
In response, luxury goods sales in Brazil last year hit $8.9 billion, an increase of 28 percent from 2009, according to a study by Gfk Custom Research Brazil and the luxury goods consulting firm MCF Consultoria. Brands like Chanel, Hermés, Jimmy Choo, Lamborgini and others have opened shops in Brazil in the past two years
The number of millionaire households in Brazil, a nation of 190 million, will have increased 230 percent, to more than 1 million, by 2020, according to the Deloitte report.
