Country Report

Brazilian Furniture

Production records high, but overall numbers are modest.

The 2018 numbers of furniture production in Brazil prove something that the market has felt in recent years. A scenario of stagnation, with progress in some areas and declines in others. That is, there is no significant change that demonstrates a future perspective that Brazil will have greater representation in world furniture production and international trade. The only change that guarantees a positive expectation in the opinion of the Brazil’s furniture entrepreneurs is in the new political command.

Of the total US$ 434.5 billion that world furniture production reached in 2018, Brazil had a share of US$ 15.9 billion. In reais, this amount is R$ 67.4 billion (equivalent to 2.7% of the total value of net revenues of the Brazilian manufacturing industry), a considerable increase of 8.3% compared to 2017.

Between 2014 and 2018, the value of furniture and mattress production in Brazil increased by 23.3%, even considering the period of severe crisis of the Brazilian economy (between 2014 and 2017). However, it is below inflation which was 25.6%. Separately, the furniture sector grew 15.2% while the mattress industry grew 29.1% since 2014.

The data are from the Brazilian Furniture Industry Sector Report, called Brasil Móveis 2019 and produced by Iemi – Inteligência de Mercado with support from the Brazilian Furniture Industry Association (called by Abimóvel or Associação Brasileira das Indústrias de Mobiliário).

Within the world furniture market scenario, Brazil has a production of 3.7%, of which practically all this amount is destined for domestic consumption. Thus, the percentage of imports (0.4%) and exports (0.4%) is not significant, with a total of US$ 590 million in furniture imported while US$ 688 million were exported.

Made in brazil

The furniture sector is of great importance in the Brazilian economy. Considering furniture and mattresses, the number of employed persons is one of the most significant in the manufacturing industry, with 268,300 employees directly or indirectly. It is equivalent to 3.3% of total workers allocated to industrial production as a whole. This demonstrates the social impact of the furniture industry going beyond economic relevance.

The furniture and mattress industry produced 435.9 million pieces in 2018, up 0.9% compared to 2017. However, in the period between 2014 and 2018, there was a decrease of 14.1%, and 14.7% refers to furniture, while mattresses fell 7.2%.

The Brazilian is a staunch consumer of bedroom furniture. Thus, the production follow this desire. Among the types of furniture, the most produced are:

  • bedroom furniture: 33.3%
  • office furniture: 17%
  • kitchen furniture: 12.7%
  • upholstered furniture: 11%
  • dining room furniture: 10.6%
  • living room furniture: 5.7%
  • other furniture: 9.7%

Other furniture includes institutional furniture for swimming pools, terraces, gardens, etc., while kitchen furniture includes pantry, bathroom and laundry furniture. The production of living room furniture was the fastest growing from 2017 to 2018 – 2.9%, while between 2014 and 2018 production of office furniture fell by 18.1%.

The total production of the Brazilian furniture industry was manufactured by 19 thousand companies. This amount fell by 3.1% from 2017 to 2018. Between 2014 and 2018, the decrease was 4%, as in 2014 there were 19,800 furniture companies. Among the 19,000 furniture manufacturing companies, just over 16,000 produce wood furniture. Other furniture, including metal furniture, represents more than 2,200 companies, while there are 443 mattress factories in Brazil.

Brazil is the fifth largest country in the world. Divided into five regions – North, Northeast, Midwest, Southeast and South – it has predominantly furniture industries in the South and Southeast of the country. In total, there are 14,800 companies in the seven states of both regions. In the Northeast of Brazil, region with vast coastline and ports for production flow, were 2,267 companies consolidated in January 2018.

Consumption and investments

Apparent consumption of furniture and mattresses (production minus exports and imports added) decreased 13.8% in volume of pieces in 2018 data compared to 2014. However, compared to 2017, there was an increase of 1.2%. In reais, consumption increased by 7.9% in 2018 compared to 2017up 7.8% in furniture and 8.5% in mattresses. Between 2014 and 2018, there was a 15.5% increase in total consumption, mainly driven by mattresses, 28.7%, while furniture grew only 13.7% – this proves the growing concern of the Brazilian to acquire the best product for a good night’s sleep.

Investments reached R$ 1.2 billion in the furniture and mattress sector in 2018, 2.7% higher than 2017. On the other hand, in the period between 2014 and 2018, there was a decrease of 10.2%, a decrease that followed the reduction in the number of machines available in the sector (down 3.4%). This indicates investment growth in other items that are not necessarily productive.

However, with regard to the importation of machinery and equipment, Brazilian companies have modernized production. There was strong growth, from 35.7% in 2018 compared to 2017, jumping from US$ 56.4 million in 2017 to US$ 76.6 million in 2018. The sectioning machines segment had a significant growth of 246%. In addition, most imports came from China, with 29% of the values. Next are Germany (28.6%) and Italy (21.9%) – together with the Chinese account for about 80% of the origin of machine imports.

Imports and Exports

There was an increase of 2.3% in volume of tons in furniture imports, while imports of mattresses had a huge fall of 85.3% in volume of tons. Together, they fell by 0.4%. When measured in dollars, there was a 21.3% drop in finished furniture and 51.1% in mattresses.

The average price of imported furniture and mattresses was 57.6% higher than the average price of exported furniture and mattresses, when measured in dollars per kilogram.

Among the main countries of origin of Brazilian imports is China, with 70% of imports. The top ten furniture suppliers to Brazil accounted for 92.6% of 2018 figures, with Hong Kong rising sharply from 154.3% from 2016 to 2018, and Italy and the United States occupying the top positions.

In the foreign market, Brazil has increased its performance, although very small within the world scenario. Exports of furniture (without mattresses) totaled US$ 618.5 million in 2018, up 14.9% between 2014 and 2018 and growth of 15.1% over 2017. Meanwhile, exports of mattresses totaled US$ 15.7 million in 2018, a significant increase of 71.9% compared to 2014, although it registered a decrease of 0.2% compared to 2017.

Among the main destinations for furniture exported by Brazil are the United States (with a 31.3% share) and the United Kingdom (10.9%), remaining in the first two positions with a total of 42.2%. Then, Brazil mainly exports to South American countries such as Uruguay, Peru, Chile, Paraguay, Argentina and Bolivia. Latin America, which also includes CentralAmerica, the Caribbean and Mexico, accounts for 39.3% of Brazilian exports. Canada and France complete the top 10 representing 77% of Brazil’s total furniture exports.

Importing and exporting states

The state of São Paulo is the largest importer of furniture and mattresses, accounting for 52.1% of them. Together with the three southern states (Paraná, Santa Catarina and Rio Grande do Sul) that imported 30.3% in furniture and mattresses, these four states represent 82.1% of the total purchase of parts in the international market. Rio de Janeiro is another state that buys a lot, with 6.4% of the total imports from Brazil.

The three states in the Southern region correspond to 85.4% of the value exported in 2018. Along with São Paulo, Brazil’s total exports are 95.9%, which demonstrates the furniture strength of this Brazilian territory. In this case, Santa Catarina has 41.6% of furniture exports, while Rio Grande do Sul concentrates 30.1% and Paraná 13.7%. São Paulo has 10.4% of the total values of furniture exported by Brazil in 2018.

Forecast

Carlos Bessa, Diretor Superintendente, Mobile Lojista, Brazil

Furniture sales are strongly affected by the economy. Furniture, as a durable consumer good, ends up being delayed in the desire of consumer shopping in times of weak economy. In turn, it is also highly influenced by the performance of construction.

In this sense, the analysis of the economic activity performance of the Institute of Applied Economic Research (Ipea) shows that conditions in the real estate market started to evolve positively in the second quarter of 2019 – in June, 16,298 new properties were launched, the second largest result of the Historical series started in January 2014.

Positive construction numbers are largely driven by the residential sector. The area of infrastructure is expected to improve by 2020, due to advances in sector regulatory frameworks that favor concessions and public-private partnerships.

In Gross Domestic Product (GDP), Ipea’s economic projections point to growth of 0.8% of Gross Domestic Product (GDP) in 2019. For 2020, the previously mentioned 2.5% expansion expectation was revised to 2.1%. %. It means that the Brazilian economy is in a slow recovery, which may intensify.

Thus, the best way to accelerate the resumption of the Brazilian economy is the continuation of the reforms that make possible the recovery of investments in infrastructure and the consolidation of fiscal adjustment. Also, once again Brazil is waiting for changes in the economy that the country’s policy offers and fosters an increase in consumption, in addition to the removal of brakes that brake the development of industry and, also, greater internationalization of the Brazilian furniture.

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