Post-election Brazil: 'With uncertainty certainly comes opportunity', says expert
At the end of October, far-right politician Jair Bolsonaro was voted in as Brazil's new president with 55.2% of the vote. Set to assume office on January 1, 2019, Bolsonaro has vowed to bring competition back to Brazil through privatization and tax reforms, among other things, and details of his new administration include plans to merge the ministries of agriculture and the environment.
As the country awaits the transition of power from Michel Temer, there remains great uncertainty on what changes Bolsonaro and his administration may implement and the impact this might have on business. But what effect might change have on food and beverage manufacturers? And how best should they anticipate impending change?
Speaking to FoodNavigator-LATAM, Ana Heeren, managing director at FTI Consulting Strategic Communications, said it was firstly important to acknowledge there was indeed great uncertainty after such a highly polarized and controversial election but that didn't have to be viewed entirely negatively.
“Look, with uncertainty certainly comes opportunity. But you need to be prepared,” Heeren said. “You have to both monitor and continue to monitor the situation so you know the opportunities. I don't think we all have the answers but I think every move of this administration is going to give us additional clues to where the opportunities are.”
Highs and lows on the horizon
If Bolsonaro was able to form a governing coalition, bringing together centralist and smaller parties, Heeren said he would be able to implement certain economic reforms that could create “quite a favorable situation” for food and beverage companies.
The cost of doing business in Brazil remained “extensively high”, she said, mostly due to complex administrative processes, so any cost reduction would benefit food and beverage companies. Similarly, Bolsonaro's promise to seek investment from abroad could be favorable for the sector, she said.
Heeren said the administration's intention to relax environmental regulations might also present opportunity for food, beverage and agribusinesses in the country, with land permits and farming licenses simpler to obtain, wider crop production plans and a focus on more rural development.
However, she warned there could also be some serious conflict around such change, particularly as environmentalist groups and the indigenous communities resisted. This would be especially tense around Bolsonaro's comments to allocate parts of the Amazon for industry.
Be ready to 'act quickly'
Irrespective of what policies were introduced, Heeren said it was important to understand that from January next year change would likely occur at speed, so industry would have to be ready.
“[Bolsonaro] loses the electorate if he doesn't show some progress right away. You have to keep in mind Brazil has had 13 years of the PT [Workers' Party] and the reason why he won is the desire that Brazilian population has for change. And so, I think he would be smart to hit the ground running with some quick changes – not leaving too much time for a honeymoon period – because I think one thing that is lacking [in Brazil] is patience, quite honestly,” she said.
What this meant for food and beverage companies, just like another other sector, she said, was the need to factor in government and public affairs to 2019 strategies and planning.
Industry must be ready to “act quickly” to any changes implemented at government level, Heeren said.
“And being prepared to act quickly will come with the ability to know and have the facts at your fingertips. So, really being able to watch closely what's happening so you can act quickly and take advantage of the opportunities that present themselves is going to be key here.”
“...I think it's important to do some scenario-planning – just to say 'if the government goes this way, here's what best for us to do'. It's about having your moves, in a chess board point of view, having your moves ready,” she said.
