Brazil's significant dates for toy sales 2012-08-21

Toy time has come in Brazil 

With the approach of Brazil's significant dates for toy sales - National Children's Day on 12 October and Christmas - overseas suppliers are gearing for better returns from one of the few better-performing world toy markets. There's little wonder: the Brazilian toy market grew almost five-fold in the five years to 2010 and still continues on an upward trajectory despite world economic uncertainties.

The Chinese mainland is by far the largest manufacturer of toys for the Brazilian market, albeit under brands from other countries. US giant Mattel leads the extra upmarket distribution segment by a large margin of 30%, followed by Hasbro and local toy makers Grow Jogos and Estrela.

Mattel has successfully localised toys such as Dora the Explorer, although its largest sellers are Barbie and Hot Wheels, its large world properties. Against this are local licenses such as Xuxa, named after a former children's TV presenter.

One of the biggest hurdles for Brazil's market increase has been the fragmented nature of the supply chain, inclunding distribution problems. Large chain retailers such as Toys'R'Us are lacking, although stores such as Ri Happy and its subsidiary PBKids have been trying to fill the gap.

One of the new and fast-developing channels is Internet retail, with pure online player toymania.com.br making inroads.

Attempt to shift direction

Given the burgeoning opportunities, Brazilian toy makers want to shift the domestic market further to their benefit.

The toys sector has become a central industrial policy target, with the government's intention to improve the sector's contribution to GDP increase. Domestic toy makers and the Ministry of Development, Industry and Foreign Trade are taking an aggressive approach, expecting to raise profits by at least 12% this time(compared to 11% last year), generate extra than 4,000 jobs and elevate local participation in the toy market from 55% to 70%.

According to Batista da Costa, President of the Brazilian Association for Toys Manufacturers (ABRINQ) one significant measure is to invest in technical capacity and design.There's as well a move to develop domestic brands and cut low-priced imports.

Da Costa hopes gains in productivity will allow production of cheaper toys, with extra than 1,600 new toys costing less than US$25 each available this year.Taxation is a potent instrument of change. Last year, taxes on 14 types of imported toys were raised from 20% to 35%.

There are consolidations in the market to meet these goals. Retailer Ri Happy (controlled by the US investment fund Carlyle Group) announced the purchase of PBKids, so bringing together Ri Happy's 110 stores with PBKids's 50.

This puts them on a healthy footing to compete with the three other large retailers, Preçolândia, Lojas Americanas and Carrefour.

Toys to watch

The Brazilian market is heavily focused on kids' toys, as opposed to collectors' products and specialty or high-tech items. The usual favourites are model vehicles, dolls and action figures - amount heavily promoted on TV.Sales of pre-school and construction toys are growing, as are sales of arts and crafts. With prices an significant issue, Japan's toymakers such as Bandai Namco and Takara Tomy are looking to benefit from the widening market.