Until the turn of the century, Brazil mainly manufactured products similar to ice cream, using cheap raw materials such as vegetable fats and artificial flavorings. Over the past 10 years, with the gradual increase in wealth and greater consumer demand for higher-quality products, word has gradually spread about the delights of Italian hand-made gelato. This growing demand for top-quality products has forced most sorvete manufacturers to select their raw materials more carefully, initially replacing artificial flavors with Italian-made flavored pastes, then introducing cream and whole milk in the place of vegetable fats and water, and implementing recipes with stabilizers and emulsifiers.
In the last three years, gelato has literally burst onto the Brazilian market. All of the new openings are for Italian gelato and not Brazilian sorvete and those who still insist on using low-quality raw materials are slowly losing customers. In addition, the continuing European economic crisis is pushing many Italians across the water to Brazil, which provides more opportunities and great potential for a quality gelato shop.
The number of gelato parlors in Brazil, when compared to the number of inhabitants (201 million) and to the ratio we find in Italy (about 37,000 gelato parlors for 60 million inhabitants) is still very low, so the market has huge growth potential.
The state with the highest number of gelato shops is São Paulo (with about 50 parlors already active in the city alone), followed by Rio de Janeiro (about 20 scattered along its waterfront and main shopping malls), followed by Paraná and Goiás states.
The main cities in Brazil, where it is worth opening a gelato parlor, are (in order of population): São Paulo, Rio de Janeiro, Brasília (the capital), Belo Horizonte, Salvador, Fortaleza, Recife, Curitiba, Porto Alegre, Manaus, Belém, Goiânia, and Natal.
The main reason why these cities are best is that you can get the raw materials needed to make gelato (such as sugar, milk, cream, glucose, etc. ..), whereas in some inland areas or in the far north, these raw materials are very difficult to find or very expensive, which significantly raises production costs.
If you are thinking of opening a gelato parlor in a big city, there are two options: either in a shopping mall, or a classic high-street shop (“loja na rua”). Theoretically, either one will work equally well, provided all the variables are taken into account with care and precision.
The first approach means large volumes, a more balanced consumption cycle and above all, eliminates the dangers of the street; by contrast, however, fixed costs are much higher, which also pushes down margins.
Opening a street-side gelato shop is undoubtedly a cheaper strategy, but at the same time more difficult. Make sure to choose a wealthy area with plenty of pedestrians, as Italian gelato in Brazil is regarded as a premium product, and it is statistically proven that gelato consumption is mainly based on impulse. In all this, great care needs to be taken over rents because, as an emerging nation, the whole world is trying to get a look in on the Brazilian market and the demand for shops is growing proportionately.
In Brazil, store design is very similar to the American model, because of the huge amount of space available. Indeed, a classic Italian take-away only gelateria with its display case on the sidewalk is hard to find, except in the malls, where there is always a praça de alimentação (food court), so they can make use of the communal tables at the center of the court. Brazilians are used to sitting down for long chats, so a parlor needs plenty of space for seating.
The average Brazilian gelato parlor varies in size from 80 to 150 sq.m. This includes rooms for the laboratory, warehouse and sales area.
Another great way of boosting gelato culture is to create an open-plan laboratory, where customers can come and browse, and admire the craftsmanship on show.
Average consumption at a Brazilian gelato shop is about 1,500-2,000 kg a month, with peaks of up to 2,500-3,000 kg during summer. Gelato shops in shopping malls can normally count on slightly higher amounts, as well as much less pronounced seasonal cycles, ensuring constant minimum sales all year round. Even though it might almost always seem hot in Brazil, gelato consumption is still closely linked to season.
The investment needed to start up a gelato shop varies according to the type of parlor and the area you want to open it in. If the store opens up in a shopping mall, the initial investment will be higher because of rent and the Luvas (deposit).
The average investment for a gelato parlor on a medium-sized street is around R$ 250,000-300,000. The workshop with all of its equipment makes up around R$ 160,000 of that.
The margins are also closely related to the type of sale, and the type of customers that the gelato-maker decides to aim at. As in all parlors, gelato can be sold by weight and/or by portion (scoop). On average, 70% of the gelato is sold by portions and 30% by weight. A kilo of gelato sells for R$ 60, of which the cost of raw materials is around R$ 9-10 (which includes operating costs). A 100 g serving, however, sells for around R$ 9, so a kilo sold by the portion brings in pre-tax income of R$ 90.
The minimum number of staff needed for the parlor (plus the gelato-maker) is six: 2 in production and 4 counter staff working in shifts. On average, Brazil parlors offer about 20 permanent flavors in the display case with another 4-6 flavors rotating.
The Brazilian bureaucratic structure is extremely complex and, at times, even backward. So in order to understand and handle all of the initial paperwork involved, it is a good idea to hire a good legal and accounting firm.
Brazil’s other weak point is labor, dictated primarily by the country’s recent exponential growth. In practical terms, the main problem is that the market has a huge demand for labor, as the economy is growing, while the supply side is relatively low and poorly educated. It may be useful, again, to turn for help to a recruitment company.
If you would like any further advice, have any questions or want us to put you in touch with the best Italian companies in the industry, with distributors or consultants in Brazil, please write to us at email@example.com