Consumer Discretionary

<p style="text-align: justify;"><span data-preserver-spaces="true">When talking about devices for air conditioning or making home environments more comfortable, in Brazil the great demand comes from devices that alleviate heat. In addition to being a tropical country like the rest of the world, it has also been suffering from rising temperatures year after year. Not to mention natural phenomena such as &laquo; El Ni&ntilde;o or la Ni&ntilde;a &laquo;. This year we are experiencing one of these phenomena &laquo; El Ni&ntilde;o &raquo; which, with the warming of the waters of the Pacific Ocean, significantly alters rainfall in Brazil, leaving the climate much warmer for long periods. The spring that is ending here in Brazil has seen records of much higher temperatures than in recent years, several cities have broken records for high temperatures, exceeding 40&deg;. In many of them.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Air conditioning and fan industries and retailers celebrate the large sales achieved during this spring period(2023), in many cases higher than last year's summer(2022). On the other hand, there is enormous pressure for more products, as summer is not yet here. Inventories are well below expectations. Therefore, there is concern about whether it will be possible to meet the high demand and also about prices, as many of the inputs for these products are not manufactured here in Brazil and may have inflated prices.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Looking to the future I see a very strong tendency for sales of these products to increase in Brazil, currently the 6th. Worldwide market, with annual sales of approximately 18 million fans and 5.5 million air conditioners, for the following reasons:</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; In Brazil there are 60 million homes,</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; Brazilians invest 30% of their income in the comfort of their home,</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; There is a need to replace old machines,</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; There is a search for products with better energy efficiency and connectivity technology, to monitor from a distance,</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; Brazilian homes have a small percentage that have thermal insulation,</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">&bull; And especially air conditioning has become a dream for Brazilians, in addition to improving thermal comfort, it also increases the value of their property.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Given this scenario, I invite everyone in the industry to look at Brazil and its opportunities in this business.</span></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/jose-luis-s-487b904b/">Jose Luis S</a>&nbsp;</em></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><strong><span style="font-size: 18pt;">Frequently Asked Questions Answered by Jose Luis</span><br /><br /></strong></p><h2 style="text-align: justify;"><span style="font-size: 12pt;" data-preserver-spaces="true">1. How has consumer demand for energy-efficient cooling solutions influenced market dynamics?</span></h2><p style="text-align: justify;">Due to the need to leave devices on for long periods, to face the great heat wave, this has a financial impact on Brazilians' pockets due to the energy bill. Thus, devices that appeal to energy savings have gained a lot of market share, today it is estimated that 30% of devices have this feature.</p><h2 style="text-align: justify;"><span data-preserver-spaces="true"><br /><span style="font-size: 12pt;">2. How are manufacturers innovating in terms of cooling technologies to meet the specific climate conditions in different regions of Brazil?</span></span></h2><p style="text-align: justify;">Brazil is a continental country and you will find very different climates from one region to another. In the south, for example, the device with hot and cold functions is preferred by consumers, as in this region winter temperatures are much lower than others and it can be used as a heater.</p><h2 style="text-align: justify;"><span data-preserver-spaces="true"><br /><span style="font-size: 12pt;">3. Can you provide insights into the expected growth trajectory of the market in the coming years?</span></span></h2><p style="text-align: justify;">As the temperature has increased year after year and air conditioning devices are no longer just a comfort item, their democratization has increased a lot, with estimates that this market should grow by more than 2 digits every year.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;" data-preserver-spaces="true">4. How do companies tailor their marketing strategies to resonate with the diverse cultural and regional aspects of Brazil?</span></h2><p style="text-align: justify;">Today, Brazilians are among the people who stay connected the longest, but the main media continues to be open TV, so companies have adapted their strategies across various media and platforms, to reach the largest possible audience. Another way is to be close to professional installers, who have the support and learning of installation services, in many cases paid for by the manufacturer, which helps to promote brands.</p><p>&nbsp;</p>