Sector Report - Footwear Industry 2020

SECTORAL REPORT
FOOTWEAR INDUSTRY
BRAZIL
SECTORAL REPORT
FOOTWEAR INDUSTRY
BRAZIL
01. LOGO + DECODIFICADOR
PRESENTED BY:
SPONSORED BY:
SUPPORTED BY:
SECTORAL REPORT
FOOTWEAR INDUSTRY
BRAZIL
ADVISORY SERVICES
Marcos Tadeu Caputi Lélis
TECHNICAL COORDINATION
Priscila Linck (Corecon 8.527)
TECHNICAL IMPLEMENTATION
Alessandra Roehrig
Priscila Linck (Corecon 8.527)
PROOFREADING
Alice Rodrigues (Mtb 12.832)
Diego Rosinha (Mtb 13.096)
Luana Chinazzo (Mtb 18.264)
GRAPHIC DESIGN
Gabriel Dias
Sectoral Report: Brazilian Footwear Industry 2020

Brazilian Footwear Industries Association. Novo Hamburgo: Abicalçados, 2020.
01. LOGO + DECODIFICADOR
PRESIDENT OF THE GOVERNING BOARD

Caetano Bianco Neto
BOARD MEMBERS
Analdo Slovinski Moraes, Astor Reinaldo Ranft, Caio Borges Ferreira, Carlos Alberto Mestriner,
Claudio Chies, Darcio Cisso Klaus, Jorge Bischoff, Júnior César Silva, Marco Lourenço Müller,
Paulo Roberto Konrath, Renato Klein, Ricardo José Wirth, Rosnei Alfredo da Silva, Samir Nakad
e Sérgio Gracia.
EXECUTIVE PRESIDENT
Haroldo Ferreira
CONTACT US
Rua Júlio de Castilhos, 561 - Novo Hamburgo/RS - Cep: 93510-130
Phone number: +55 51 3594-7011
inteligencia@abicalcados.com.br
www.abicalcados.com.br
SUMÁRIO
1. EDITORIAL 05
2. WORLD 06
2.1 Global Economic Panorama 07

2.2 Global Footwear Panorama 07
2.2.1 Main Producing Countries 08
2.2.2 Main Consuming Countries 09
2.2.3 Main Exporting Countries 11
2.2.4 Main Importing Countries 13
3. BRAZIL 16
3.1 Footwear Production 17

3.1.1 Capacity Utilization Rate (CUR) 18
3.1.2 Production Segmentation 19
3.2 Apparent Consumption of Footwear 23
3.3 Foreign Trade 24
3.3.1 Exports 25
3.3.2 Imports 32
3.4 Employment and Establishments 35
3.5 Economic Indicators 37
3.5.1 Exchange rate 37
3.5.2 Trade Behavior 38
3.5.3 Manufacturing Industry 38
3.5.4 National Inflation 39
3.5.5 National Competitiveness 39
4. OPPORTUNITIES FOR THE INTERNATIONAL MARKET 40

4.1 Competitiveness Index of Footwear Exports 41
4.2 Attractiveness Index of Brazilian Footwear Exports 44
5. EXPERT ANALYSIS 48
6. METHODOLOGY 52
6.1 Methodology: Production Data 53

6.2 Methodology: Statistical Projections 54
6.3 Sources 54
6.4 Classification of the Harmonized Commodity Description and Coding System 55
6.5 Definition of the Footwear Clusters 55
EDITORIAL
STABILITY AND
HISTORIC DECREASE
Haroldo Ferreira
Abicalçados’ executive president
“IF THE YEAR 2019 Despite all the difficulties in the international and in the domestic market, the year
2019 was stable for the industry. The survey presented in this report indicates a grow-
DID NOT GO AS
th of 0.4%, accounting for 908.2 million pairs produced, placing Brazil as the fourth
EXPECTED, 2020 WILL largest footwear manufacturer in the world. The slight growth was mainly based on
BE EVEN HARDER exports. Exports to the United States, our main destination abroad, increased signifi-
cantly.
FOR BRAZILIAN
FOOTWEAR In the same year, shipments increased by 1.5% in volume compared to 2018. Specifi-
MANUFACTURERS” cally to the United States, exports increased by 11% during the period. The assessment
is that the trade war between the Americans and China played a fundamental role in
the result since American buyers ended up looking for suppliers outside the Chinese
market as a way to avoid the high import tariffs imposed by President Donald Trump.
On the other hand, domestic consumption did not significantly improve last year. It
ended up taking a long time to respond due to the delays in structural reforms that
were important for the recovery of the confidence of entrepreneurs and consumers.
Growth in domestic consumption was very close to zero: 0.4%,
If the year 2019 did not go as expected, 2020 will be even harder for Brazilian footwear
manufacturers. The new coronavirus pandemic has severely affected the global eco-
nomy, with inevitable impacts for the sector. The forecast, which appears in this Re-
port, points to a decrease of 20.8% to 28.9% in apparent consumption, since brick-and-
-mortar retail operations — responsible for most of the domestic sales — will be closed
in major Brazilian cities for a good part of the year. Taking into account the fact that
over 87% of our sales happen in the Brazilian market, a sharp decrease in production,
of close to 30%, is expected. The decrease will make us return to the same production
levels as sixteen years ago.
The impact of the domestic decrease will be combined with decreased footwear ex-
ports. With the global economy in a severe recession and countries closing their bor-
ders for much of the year, Brazilian shipments are expected to decrease by 22.4% to
30.6%. If this really happens, we will return to the same levels as 1983. An unfortunate
record.
Future
In this period of crisis, however, there are two alternatives for Brazilian footwear ma-
nufacturers, who are renowned worldwide as some of the best manufacturers in the
world: to survive as the important player they are or to close their doors. And it will be
necessary to change, it will be necessary to learn how to read this new world we are
entering in order to survive. If we were already going through a digitalization process,
with new business models and changes in consumption and production processes, it
has been exacerbated now. Traditional retail, with brick-and-mortar sales, for example,
is jeopardized. E-commerce was “discovered” by many Brazilians.
Knowing how to interpret this new world will be imperative in order to know which
changes to make, to adapt to these new times. Abicalçados holds its doors open and
promotes this and other materials that aim to improve and strengthen the Brazilian
leather-footwear chain to assist footwear manufacturers in this mission. Get to know
the organization.
5
SECTORAL REPORT: FOOTWEAR INDUSTRY | BRAZIL 2020
WORLD
2.
WOR
LD
6
WORLD
2.1 GLOBAL ECONOMIC PANORAMA

The year 2019 was the second year in a row in the world economy followed by a slowdown in relation to the previous period.
It also had the lowest rate of variation (2.9%) since the 2008-2009 global financial crisis. This result may be explained by
weakened industrial production and less dynamic international trade. It is worth mentioning that this slowdown encom-
passed the group of developed and developing economies. It was not different in Latin America and in the Caribbean, with
prominence to social conflicts in economies such as Chile, to financial problems in Argentina, and to the still slow rhythm
of the Brazilian economy.
Throughout the year, concerns over the trade conflict between the main world powers, namely the United States and China,
prevailed. Therefore, estimates for global exports totaled USD 18.9 trillion in 2019. For 2020, concerns about the increase in
geopolitical tensions between Iran and the United States at the beginning of the year gave way to the recessive impacts in
the world economy, in view of the spread of the new coronavirus pandemic. In addition, the trade war between the United
States and China may escalate this year.
TOTAL EXPORTS AND GROWTH OF THE GLOBAL GDP
19,3 18,8
17,5 entre
16,5
12,9 3,8 3,6

3,0 1,21 1,05
-3,0 0,2 -5,2
2017 2018 2019 2020* 2017 2018 2019 2020* 2017 2018 2019 2020*
TOTAL GLOBAL EXPORTS REAL GDP (%) – WORLD REAL GDP (%)
(TRILLION USD) LATIN AMERICA AND THE CARIBBEAN
SOURCE: WTO; IMF (APRIL/2020) (*) 2020: AS ESTIMATED BY ABICALÇADOS/IMF
2.2 GLOBAL ECONOMIC PANORAMA

When examining the already combined information (2017 and 2018) regarding production, exports, imports, and worldwi-
de consumption of footwear (pairs), an increase can be seen in all these categories. In 2018, 22.1 billion pairs of shoes were
manufactured around the world, 57.5% of which were intended for the foreign market. In the same year, domestic footwear
consumption across the world totaled 20.2 billion pairs, resulting in a global average of 2.7 pairs per capita. In 2019 these four
categories are estimated to increase slightly, about 100 million pairs, both in production and domestic consumption, as well
as in international trade.
For 2020, due to the new coronavirus pandemic, the report by World Footwear foresees that global consumption of footwear
will decrease by 22.5%, totaling 15.7 billion pairs.
EVOLUTION OF GLOBAL FOOTWEAR TRADE, CONSUMPTION, AND PRODUCTION

BILLION PAIRS
21,5 22,1 22,2

19,6 20,6 20,3
12,5 12,7 12,8

10,6 10,9 11,0
2017 2018 2019* 2017 2018 2019* 2017 2018 2019* 2017 2018 2019*
EXPORTS IMPORTS PRODUCTION CONSUMPTION
SOURCE: WSR | (*) AS ESTIMATED BY ABICALÇADOS.

Note: information on reported exports and imports by country of origin and destination, respectively. The divergence in the global balance of
exports and imports happens due to the value that is reported by the countries, as well as due to the absence of values.
7
WORLD
2.2.1 MAIN PRODUCING COUNTRIES

The year 2019 was the second year in a row in the world economy followed by a slowdown in relation to the previous period.
It also had the lowest rate of variation (2.9%) since the 2008-2009 global financial crisis. This result may be explained by
weakened industrial production and less dynamic international trade. It is worth mentioning that this slowdown encom-
passed the group of developed and developing economies. It was not different in Latin America and in the Caribbean, with
prominence to social conflicts in economies such as Chile, to financial problems in Argentina, and to the still slow rhythm
of the Brazilian economy.
MAIN FOOTWEAR PRODUCING COUNTRIES IN 2018

SHARE IN PAIRS
52,3%
13,3%
6,5%
CHINA
3,7%
INDIA
4,1% VIETNAM
INDONESIA
BRAZIL
MILLION PAIRS
COUNTRY 2016 2017 2018 VARIATION 2017-2018
CHINA 11.116 11.410 11.545 1,2%

INDIA 2.797 2.868 2.943 2,6%
VIETNAM 1.171 1.255 1.427 13,7%
BRAZIL 938 903 904 0,1%
INDONESIA 771 810 824 1,7%
NIGERIA 415 429 434 1,3%
MEXICO 253 264 266 0,8%
THAILAND 231 238 242 1,5%
ITALY 188 190 184 -3,0%
PAKISTAN 258 265 170 -36,0%
OTHERS 2.454 2.848 3.149 10,6%
TOTAL 20.592 21.480 22.088 2,8%
SOURCE: WSR
8
WORLD
2.2.2 MAIN CONSUMING COUNTRIES

China and India, the world’s two largest footwear manufacturers, are also the largest footwear consumers (measured in
pairs). However, in the case of China, domestic production is about 3.5 times higher, which indicates its production is geared
towards exports. In India, in turn, domestic production and consumption are almost equivalent. The United States appears
as the third largest global consumer, even though it does not hold a relevant place as a manufacturer of these goods. Brazil,
in turn, is the fourth largest consumer market for footwear in the world, with a growth of 2.2% in this consumption category
in the period between 2017 and 2018.
MAIN FOOTWEAR CONSUMING COUNTRIES IN 2018

SHARE IN PAIRS
12,1%
16,7% 3,7%
14,0%
UNITED STATES
CHINA JAPAN
INDIA
4,0%
BRAZIL
MILLION PAIRS
CHINA 3.201 3.291 3.367 2,3%

INDIA 2.688 2.758 2.840 3,0%
UNITED STATES 2.339 2.381 2.443 2,6%
BRAZIL 835 800 818 2,2%
JAPAN 744 755 748 -0,9%
INDONESIA 482 504 516 2,3%
GERMANY 438 454 440 -3,1%
NIGERIA 409 422 428 1,4%
VIETNAM 361 375 419 12,0%
FRANCE 402 409 417 2,0%
OTHERS 7.113 7.471 7.783 4,2%
TOTAL 19.012 19.620 20.219 3,1%
SOURCE: WSR
9
WORLD
When observing footwear consumption per inhabitant, countries with the highest per capita income are those that are in
the first places of the ranking. Norway had the world’s highest consumption per inhabitant in 2018 by growing by 6.4% in
relation to the previous year, taking the place that belonged to the United States. Hong Kong and the United States are in
the second and third places in the ranking, respectively. Brazil, in turn, did not grow in this relation. Its consumption remai-
ned at 3.9 pairs of shoes per inhabitant in 2018. It lost positions in the ranking, given that the global average grew by 1.9%.
COUNTRIES WITH THE LARGEST PER CAPITA CONSUMPTION OF FOOTWEAR IN 2018

PAIRS PER INHABITANT
7,7
7,0
7,2
7,5
NORWAY
SWITZERLAND
BELGIUM
UNITED STATES
7,5
HONG KONG
PAIRS PER INHABITANT
NORWAY 7,1 7,2 7,7 6,4%

HONG KONG 7,1 7,2 7,5 3,5%
UNITED STATES 7,2 7,3 7,5 2,0%
BELGIUM 4,8 6,8 7,2 5,3%
SWITZERLAND 5,9 6,8 7,0 1,7%
GREECE 5,0 5,4 6,8 27,5%
NETHERLANDS 6,6 6,2 6,7 8,4 %
IRELAND 6,5 7,0 6,6 -5,3%
FRANCE 6,2 6,3 6,4 1,8%
PORTUGAL 5,5 5,5 6,4 16,0%
BRAZIL (41º) 4,1 3,9 3,9 0,0%
TOTAL 2,6 2,6 2,7 1,9%
SOURCE: WSR
10
WORLD
2.2.3 MAIN EXPORTING COUNTRIES

Similarly to the ranking of the world’s largest footwear producing countries, in 2018 China remained the world’s largest ex-
porter of this product, both in value (USD) and in pairs. It is worth mentioning that China is in a privileged position in terms
of share in global footwear exports (65.3% in pairs and 33.5% in value). When comparing the place in the ranking in terms of
value and pairs, it is possible to arrive at conclusions regarding the positioning of the countries in the average price of expor-
ted shoes. Therefore, Italy’s position as the world’s 6th largest exporter in the world in pairs and the 3rd largest exporter in
terms of value stands out. It is thus confirmed that the shoes exported by Italy remain among those with the highest prices
in the international market. Indonesia, in turn, is in the 3rd place in terms of pairs and in the 6th place in relation to the value
of its footwear exports, indicating its average price is below the price set globally.
MAIN FOOTWEAR EXPORTING COUNTRIES IN 2018

SHARE IN PAIRS
2,4%
2,2%
65,3%
GERMANY
BELGIUM 8,3%
CHINA
3,2%
VIETNAM
INDONESIA
MILLION PAIRS
CHINA 8.049 8.258 8.324 0,8%

VIETNAM 854 926 1.056 14,0%
INDONESIA 387 407 411 1,1%
GERMANY 252 283 306 8,3%
BELGIUM 236 249 284 14,0%
ITALY 206 211 203 -3,7%
NETHERLANDS 146 181 195 8,1%
INDIA 181 185 182 -1,7%
SPAIN 160 164 158 -3,6%
FRANCE 106 111 117 5,4%
BRAZIL (11º) 126 127 114 -10,7%
OTHERS 1.182 1.401 1.397 -0,3%
TOTAL 11.886 12.502 12.747 2,0%
SOURCE: WSR
11
WORLD
Vietnam’s place does not change in terms of value and pairs, but its share considering value is larger than the share in pairs.
Brazil’s position with regard to the average price is in a standard that is well below the global average, that is, it ranks 11th
when pairs are measured and 19th when the unit is the value (USD), also due to the composition of the exporting pattern
– types of shoes. Finally, it is important to highlight that Germany, Belgium, and the Netherlands are countries with insigni-
ficant or nonexistent footwear production, standing out as exporters of the product due to distribution in the international
footwear trade.
MAIN FOOTWEAR EXPORTING COUNTRIES IN 2018

SHARE IN USD
6,2%
5,3%
8,6%
33,5%
GERMANY
BELGIUM 12,1%
ITALY
CHINA
VIETNAM
MILLION USD
CHINA 44.886 45.682 44.673 -2,2%

VIETNAM 12.996 14.660 16.165 10,3%
ITALY 9.848 10.402 11.405 9,6%
GERMANY 5.643 7.236 8.266 14,2%
BELGIUM 5.902 6.595 7.033 6,6%
INDONESIA 4.526 4.784 4.987 4,2%
FRANCE 3.308 3.607 4.171 15,6%
NETHERLANDS 3.225 3.461 3.814 10,2%
SPAIN 2.916 3.008 3.133 4,1%
INDIA 2.445 2.435 2.495 2,4%
BRAZIL (18°) 998 1.090 976 -10,5%
OTHERS 23.956 24.877 26.271 5,6%
TOTAL 120.648 127.838 133.388 4,3%
SOURCE: WSR
12
WORLD
2.2.4 MAIN IMPORTING COUNTRIES

The position of the U.S. market stands out when the world’s largest footwear importers (in pairs) are identified. With 22.5%
of purchases of imported shoes in the world in 2018, there is a 16 percentage point difference between the United States
and Germany (ranked second). The following places in the ranking belong to Japan and to countries in Europe. The growth
of footwear imports (in pairs) of Poland (17.6%) and Belgium (12.0%) stand out. When analyzing the destinations of the world
imports measured in value (USD), it is possible to note practically the same share of the United States, establishing that the
average price of global footwear imports is defined by the U.S. market.
MAIN FOOTWEAR IMPORTING COUNTRIES IN 2018

SHARE IN PAIRS
4,7%
3,6% 6,5%
22,5%
6,2%
FRANCE
UNITED STATES UNITED KINGDOM GERMANY
JAPAN
MILLION PAIRS
UNITED STATES 2.338 2.379 2.446 2,8%

GERMANY 654 689 705 2,4%
JAPAN 665 677 670 -1,0%
FRANCE 486 498 512 2,8%
UNITED KINGDOM 652 600 391 -34,8%
BELGIUM 290 326 366 12,0%
ITALY 336 341 336 -1,4%
SPAIN 294 300 313 4,3%
NETHERLANDS 259 286 310 8,5%
POLAND 152 181 213 17,6%
BRAZIL (59º) 23 24 27 11,8%
OTHERS 4.158 4.341 4.590 5,7%
TOTAL 10.306 10.642 10.878 2,2%
SOURCE: WSR
13
WORLD
The presence of China among the ten main markets that import shoes in value (USD) also draws attention. However, the
country is not among the top ten footwear import markets when pairs are measured, indicating that the average price of
shoes imported from that region is significantly higher. This market also had the highest growth in the value imported in
2018, of 28.0%.
In relation to Brazil, the country ranks 59th in the ranking of footwear importers in terms of the number of pairs and 47th
among footwear importers when it comes to value, with growths of 11.8% and 2.2%, respectively, in 2018, demonstrating
there was a reduction in the average price of shoes imported by the country.
MAIN FOOTWEAR IMPORTING COUNTRIES IN 2018

SHARE IN USD
9,2%
5,2% 6,3%
20,7%
4,7%
REINO
UNIDO GERMANY
FRANCE
UNITED STATES
ITALY
MILLION USD
UNITED STATES 26.151 26.241 27.194 3,6%

GERMANY 10.361 11.471 12.056 5,1%
FRANCE 7.218 7.778 8.330 7,1%
UNITED KINGDOM 6.587 6.697 6.793 1,4%
ITALY 5.206 5.366 6.123 14,1%
JAPAN 5.161 5.060 5.246 3,7%
BELGIUM 4.012 4.680 4.916 5,0%
NETHERLANDS 3.945 4.384 4.581 4,5%
CHINA 2.739 3.238 4.145 28,0%
SPAIN 3.191 3.400 3.553 4,5%
BRAZIL (47º) 344 340 348 2,2%
OTHERS 41.598 45.017 48.038 6,7%
TOTAL 116.512 123.673 131.322 6,2%
SOURCE: UNCOMTRADE
14
WORLD
15
BRAZIL
3.
BRA
ZIL
16
BRAZIL
3.1 FOOTWEAR PRODUCTION

In 2019, the Brazilian footwear industry grew modestly, with 908.2 million pairs manufactured compared to 904.4 million
pairs manufactured in 2018, that is, a rate of 0.4%, demonstrating stability since 2018, when there was a variation of 0.1%. With
regards to 2020, the new coronavirus pandemic significantly changed the growth scenario that was expected for the year in
January. Thus, the optimistic forecast now indicates a decrease of 21% in production in pairs, while the pessimistic scenario
points to a reduction of 29.2%. In terms of value, the expected contraction stands between 18.2% and 27.4%.
It is worth noting that there will likely be an increase in the cost of footwear production due to the much-devalued exchange
rate and to a loss in the magnitude of production. Therefore, the value of production is expected not to decrease as much
as the volume in pairs. However, this does not mean a lower reduction in revenues. The prospect is actually for it and for
the profit margin to flatten due to the pressure on costs generated by the exchange rate, which will likely only be partially
passed on to end consumers.
NATIONAL FOOTWEAR PRODUCTION
908,2 23,3 23,9

903,3 904,4 22,8
717,5 19,5
643,4 17,3
-21%,0 | OPTIMISTIC
-18,2% | OPTIMISTIC
-27,4% | PESSIMISTIC
2017 2018 2019 2020* 2017 2018 2019 2020*
MILLION PAIRS BILLION R$
ANNUAL VARIATION OF THE FOOTWEAR PRODUCTION
5,8%
5,0%
0,1% 0,4%
-2,3%
-3,7%
-18,2%
-21,0%
-27,4%
-29,2%
2017 2018 2019 2020* 2017 2018 2019 2020*
PAIRS R$
SOURCE: IBGE/ABICALÇADOS
(*) As estimated by Abicalçados in April/2020
Note: (1) Includes manufacturing services - outsourcing (workshops). (2) Statistical review of footwear production since the year 2015, IBGE
PIA-Produto 2017).
17
BRAZIL
SERVICES RELATED TO PRODUCTION:

PRODUCTION VALUE IN WORKSHOPS
In the context of the footwear industry, a workshop is a company that provides manufacturing services –cutting,
sewing, prefabrication, embroidery, and others – for a footwear manufacturer. It is not the owner of the finished
product.
Of the production value of footwear manufacture – R$ 24.0 billion in 2019 – 3.2% is linked to manufacturing
services, workshop. Among the services used, cutting and embroidery expanded, reaching 11.1% and 16.7%, res-
pectively, of the total value of manufacturing services in the footwear industry.
SHARE IN THE TOTAL VALUE OF MANUFACTURING SERVICES

IN R$
2017 2018 2019
3,2% 3,4% 3,2%

SHARE OF THE TYPES OF SERVICES IN THE TOTAL VALUE OF MANUFACTURING SERVICES
IN R$ | 2019
Prefabrication Embroidery
Sewing 24,8% 16,7%

45,7%
Cutting Others
11,1% 1,8%
SOURCE: IBGE/ABICALÇADOS.
3.1.1 CAPACITY UTILIZATION RATE (CUR)

The capacity utilization rate becomes an important indicator insofar as it partly reflects the profitability of the capital stock of
companies in the industry. There is a recovery of this indicator in 2019 (76.9%) when compared to the previous years of 2018
(76.0%) and 2017 (75.0%). However, when comparing with the capacity utilization in 2014 (78.5%), the manufacturing plants of
the footwear industry are poorly used. That means a quick capacity response of footwear manufacture in the face of a more
consistent boost in demand, with no need for large investments in the sector. However, it is noteworthy that a significant in-
crease in idleness in the sector is expected for 2020 due to the impacts of the coronavirus crisis.
2017 2018 2019
75,0% 76,0% 76,9%

SOURCE: ABICALÇADOS.
18
BRAZIL
3.1.2 PRODUCTION SEGMENTATION

When establishing a regional segmentation of the Brazilian footwear production, the Northeast has a significant share. Howe-
ver, as of 2017, this share decreases; in this last year alone, the region’s production reduced by 6.6% in volume. Consequently, the
South and the Southeast become more important in the Brazilian footwear production, with prominence to the Southeast,
which has been growing more rapidly than the South. The Midwest had greater variation in production, with an increase of
26.8%. However, its representativeness is still small, with 0.8% of the total Brazilian footwear production. As for the states, Ceará,
Rio Grande do Sul, and Minas Gerais are among the three largest footwear manufacturers in the number of pairs, with market
shares of 26.5%, 22.1%, and 17.5%, respectively, in 2019. It is worth mentioning that in that year Minas Gerais became the third-
-largest footwear manufacturer, to the detriment of Paraíba, whose production reduced by 26.4% compared to 2018. In 2019,
the states that performed better in relation to the national industry were Pernambuco, with an increase of 21.8%, and Minas
Gerais, with 14.0%.
SEGMENTATION OF THE BRAZILIAN FOOTWEAR PRODUCTION BY MAJOR REGIONS

SHARE IN PAIRS
0,2%
49,5%
NORTH
0,8% NORTHEAST
24,0%
MIDWEST
REGIÃO 2017 2018 VARIATION 2018-2019
SOUTHEAST CENTRO OESTE 0,6% 0,6% 26,8%

25,5%
NORTHEAST 53,5% 53,2% -6,6%
NORTH 0,2% 0,2% 1,1%
SOUTHEAST 21,9% 22,1% 8,9%
SOUTH 23,7% 23,8% 7,5%
SOUTH
BRAZIL 100,0% 100,0% 0,4%
SEGMENTATION OF THE BRAZILIAN FOOTWEAR PRODUCTION BY STATE IN 2019

MILLION PAIRS
SHARE IN PAIRS
240,7 102,7 UNIDADE FEDERATIVA 2017 2018 2019
CEARÁ 26,0% 27,3% 26,5%

CE PB RIO GRANDE DO SUL 20,5% 20,6% 22,1%
9,0 45,0
MINAS GERAIS 14,5% 15,4% 17,5%
PE PARAÍBA 17,0% 15,4% 11,3%
159,0 SE
SÃO PAULO 7,0% 6,2% 6,0%
52,4
BAHIA 5,3% 5,4% 5,8%
MG
PERNAMBUCO 4,2% 4,1% 5,0%
13,7 54,5 BA
SANTA CATARINA 1,8% 1,8% 2,0%
PARANÁ 1,4% 1,4% 1,5%
PR 17,7 SP SERGIPE 1,0% 1,1% 1,0%
OTHERS 1,3% 1,3% 1,4%
200,4 SC
BRAZIL 100% 100% 100%
OTHERS 13,0
RS
BRAZIL 908,2
19
BRAZIL
CONCENTRATION OF THE MAIN FOOTWEAR CLUSTERS IN THE FOOTWEAR

PRODUCTION OF BRAZILIAN STATES IN 2019
SHARE IN PAIRS
STATE 2017 2018 2019
CEARÁ
SOBRAL 64,6% 61,3% 62,8%
JUAZEIRO DO NORTE 13,8% 13,1% 13,4%
HORIZONTE 6,4% 6,3% 6,5%
FORTALEZA 3,9% 3,7% 3,3%
OTHERS 11,3% 15,6% 13,9%
PARAÍBA
CAMPINA GRANDE 94,8% 95,0% 94,7% CE
JOÃO PESSOA 5,2% 5,0% 5,3%
OTHERS 0,0% 0,0% 0,0% PB
MINAS GERAIS
NOVA SERRANA 50,6% 48,6% 48,6%
OTHERS 49,4% 51,4% 51,4%
SÃO PAULO
BIRIGUI 46,6% 47,6% 45,2% MG
FRANCA 30,8% 29,4% 31,7%
JAÚ 11,0% 10,6% 10,5%
OTHERS 11,6% 12,4% 12,6% SP
SANTA CATARINA SC
SÃO JOÃO BATISTA 79,2% 79,2% 80,8%
OTHERS 20,8% 20,8% 19,2%
RS
RIO GRANDE DO SUL
VALE DO RIO DOS SINOS 43,1% 44,6% 45,1%
VALE DO PARANHANA/ 21,6% 21,3% 21,0%
ENCOSTA DA SERRA
OTHERS 35,2% 34,1% 33,9%
(*) Bahia and Pernambuco are states with geographically decentralized production. They do not consist of the formation of footwear clusters.
Footwear clusters are the regions where there is a great concentration of manufacturing companies in nearby cities. Footwear
production is significant in states such as Bahia and Pernambuco; however, this production is much dispersed geographically.
Therefore, we do not identify clusters but the production of the state as a whole. Three criteria were considered to select the
clusters that are the object of interest: (1) contribution of the region to the country’s production; (2) contribution of the state to the
region’s production; and (3) dispersion of production within the state. The estimated footwear production of each cluster was de-
veloped based on microdata on production by city, provided by IBGE [Brazilian Institute of Geography and Statistics], combined
in clusters. We sought to determine a relation between production and job creation in order to extrapolate the production data
relating to 2017, provided by IBGE, through employment in the footwear industry in 2018 and 2019. Therefore, it was necessary
to observe the variation of production in relation to employment between the states and between the footwear clusters within
each state.
Thus, when detailing the concentration of the production in the states in terms of production clusters, it is noteworthy that Ceará
has four clusters that together accounted for 86.1% of the state’s production in 2019. Among these clusters, Sobral was responsible
for over 60% of the state’s production (about 151 million pairs). Besides, this cluster is also the largest Brazilian manufacturer of
pairs of shoes. The second-largest manufacturer in Brazil is still the cluster of Campina Grande, located in the state of Paraíba, with
an estimated production of over 97 million pairs. In Southern Brazil, the states of Santa Catarina and especially Rio Grande do Sul
are important footwear manufacturers. The cluster of Vale do Rio dos Sinos stands out in the latter (45.1% of the state’s production,
about 90.4 million pairs).
20
BRAZIL
With regard to the predominant material used by the Brazilian footwear industry, plastic and rubber stand out. However,
the share of this type of material in the total pairs produced has been decreasing, going from 49.0% in 2017 to 42.1% in 2019.
On the other hand, leather, whose representativeness in the pairs of shoes produced between 2017 and 2018 had decreased,
grew again in 2019, reaching a share of 21.1%, also motivated by exports.
FOOTWEAR PRODUCTION IN BRAZIL BY PREDOMINANT MATERIAL IN 2019

SHARE IN PAIRS
Synthetic laminate
31,9%
Plastic/Rubber
42,1%
Fabric
Leather
4,0%
21,1%
Others 0,9%
PREDOMINANT MATERIAL 2017 2018
LEATHER 19,1% 18,6%

PLASTIC/RUBBER 49,0% 45,7%
SYNTHETIC LAMINATE 28,4% 31,8%
FABRIC 2,9% 3,3%
OTHERS 0,6% 0,6%
Note: the classification of the materials is not directly related to the classification by NCM [Mercosur Common Nomenclature]. The starting point of
the segmentation base is the Prodlist of PIA-produto/IBGE.
When considering the Brazilian production, measured in pairs, classified by gender, it is important to define two groups: (1) Identi-
fied and (2) Unidentified. The latter group consists basically of unisex, orthopedic, and safety shoes, among other types specified as
“unidentified” gender. Thus, in 2019, this type of shoe was characterized by a share of 37.4% of the total pairs produced. Among the
pairs with identified gender, the share of women’s footwear stands out, of 65.6%, registering an increase of 0.5 percentage points
compared to the previous year.
FOOTWEAR PRODUCTION IDENTIFIED BY GENDER IN 2019

SHARE IN PAIRS
Identified production 62,6% Unidentified production 37,4%
Men's
Women's 22,4%
65,6%
Children's
12,0%
GENDER 2017 2018
WOMEN'S 65,4% 65,1%

MEN'S 22,3% 22,5%
CHILDREN'S 12,3% 12,4%
Note: segmentation by gender in 2019 refers to 62.6% of the pairs, for which the gender is specified. Out of the total, 37.4% of the pairs are not
identified, such as unisex, orthopedic, and safety shoes. The coefficient of unidentified shoes in 2017 and 2018 was 38.1% and 37.3%, respectively.
21
BRAZIL
The base data for this classification of production by type of use is provided by IBGE [Brazilian Institute of Geography and Sta-
tistics] (prodlist classification), which presents a sample with more than a thousand companies in the industry. On average,
these companies represent more than 92% of the domestic production, yet with a two-year gap of information. With the values
of production in pairs of IBGE’s base, Abicalçados applies a simplified, specific production survey. Applied to the statistical
methodology with the cross-referencing of information from IBGE’s base and Abicalçados’ production research, the segmen-
tation of footwear production by type of use is estimated.
In the year 2019, the domestic production mainly consisted of flip-flops, with 44.8% of the total pairs produced. However, this
share has been decreasing in recent years. It amounted to 45.8% in 2017. The increased share of athletic shoes between the
identified years stands out (changing from 8.8% to 9.2%). The increase may be associated with, among other factors, women’s
fashion, in which shoes with a more athletic design stood out.
The growth in the representativeness of safety shoes is also noteworthy. It went from 4.0% in 2017 to 5.3% of the Brazilian
production in 2019. The manufacture of safety shoes has been performing well in recent years, associated with the growth of
personal protective equipment (PPE) in general. In addition, another reason for this dynamism may relate to a series of cer-
tifications (Technical Standards) that are required for products in the safety segment in the Brazilian market, so that only 2%
of domestic consumption comes from imports, according to the Brazilian National Association of the Industry of Safety and
Work Protective Materials (Animaseg).
SEGMENTATION OF THE BRAZILIAN FOOTWEAR PRODUCTION BY TYPE OF USE IN PAIRS IN 2019

SHARE IN PAIRS
Athletic
9,2%
Flip-flop Casual + dress
44,8% 40,0%
Safety
5,3%
Orthopedic 0,7%
TIPO DE USO 2017 2018
FLIP-FLOP 45,8% 45,6%

CASUAL + DRESS 40,9% 40,3%
ATHLETIC 8,8% 9,3%
SAFETY 4,0% 4,3%
ORTHOPEDIC 0,5% 0,5%
TOTAL 100,0% 100,0%
SHARE OF PRIVATE LABEL IN THE BRAZILIAN FOOTWEAR PRODUCTION

SHARE IN PAIRS
2017 2018 2019
9,2%
8,9% 9,7%
22
BRAZIL
The Brazilian footwear production in the private label format – a type of outsourcing, in which a company sells the product
for another company to resell it with its own brand – corresponds to approximately 10% of the national production of shoes in
pairs. It is worth noting that this footwear production with the private label format can be both geared towards the domestic
market and exports. When analyzing the recent dynamics, it is possible to note that the proportion grew by 0.8 percentage
points in 2019 in relation to 2018, largely motivated by increased exports to the United States. It is worth highlighting that foo-
twear exports in this format are more sensitive to exchange rate variations, inasmuch as they seek markets whose exchange
rate is favorable and stable to set prices during the period.
LEAD TIME IN THE BRAZILIAN FOOTWEAR

PRODUCTION
DOMESTIC MARKET FOREIGN MARKET
32 DIAS
43 DIAS
In the domestic market, there is variability in the average – 32 days – from off-the-shelf (0 days) to 90
days. In exports, in turn, the margin varies between 7 and 100 days.
3.2 FOOTWEAR CONSUMPTION

Apparent consumption is defined as the total of a country’s production, adding imports and discounting exports. In other
words, it is a measurement that reflects the importance of the domestic demand for the product.
In Brazil, after decreasing by 4.2% in 2017, the apparent consumption of footwear increased by 2.2% in 2018 and by 0.4% in
2019, reaching 821.1 million pairs. For the year 2020, the apparent consumption of footwear is forecast to decrease by betwe-
en 20.8% in the optimistic scenario and 28.9% in the pessimistic scenario, given the forecast decrease both in production
and in the foreign trade of shoes.
APPARENT CONSUMPTION OF FOOTWEAR IN BRAZIL

MILLION PAIRS
2017 800,0
2018 817,5
2019 821,1
-20,8% | OPTIMISTIC
650,4
2020*
-28,9% | PESSIMISTIC 583,4
SOURCE: IBGE, SECEX, ABICALÇADOS.

(*) Estimativa Abicalçados em março/2020.
23
BRAZIL
3.3 FOREIGN TRADE

The surplus of the Brazilian trade balance of footwear has been decreasing. It went from USD 750.5 million to USD 598.1 million
between 2017 and 2019. This development is explained both by a successive decrease in exports and by an increase in imports
when they are measured in value (USD). In 2019, Brazilian footwear exports measured in value (USD) decreased by 0.44%, while
imports increased by 7.6% in relation to the previous year.
TRADE BALANCE OF FOOTWEAR IN BRAZIL

MILLION USD
1090,5
976,3
972,0
750,5
628,7
598,1
347,6 373,9
340,0
EXPORTS
IMPORTS
BALANCE
2017 2018 2019

SOURCE: SECEX
The coefficient of exports establishes the percentage of domestic footwear production that is traded in the international market.
On the other hand, the coefficient of imports establishes the percentage of the local supply of footwear (national production, dis-
counting pairs sent abroad, plus imports) from other countries. Between 2017 and 2019 there was a decrease in the coefficient of
Brazilian footwear exports, which went from 14.1% to 12.7%. Regarding the coefficient of imports during the defined period, there
was a slight increase of 0.4 percentage points, reaching 3.4% last year. When dissociating these two coefficients by predominant
material, shoes made of fabric stand out. This type of shoe has the highest coefficients of exports in the three years under consi-
deration, despite a reduction of approximately 15 percentage points in this share between 2017 and 2019.
COEFFICIENT OF FOOTWEAR EXPORTS IN BRAZIL

SHARE IN PAIRS
43,5%
35,0%
28,5%
14,1%
12,5% 12,7% 14,0%
12,3% 12,9%
10,1%
9,6% 9,2%
7,3% 7,4%
6,5%
2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019
PRODUCTION SYNTHETIC
LEATHER PLASTIC FABRIC OTHERS
COEFFICIENT OF RUBBER
EXPORTS
SOURCE: ABICALÇADOS
24
BRAZIL
COEFFICIENT OF FOOTWEAR IMPORTS IN BRAZIL

SHARE IN PAIRS
46,3%
42,5%
39,3%
34,2% 34,6%
32,0%
3,3% 3,4% 2,2% 2,1%

2,0%
3,0% 1,2%
0,8% 1,0%
2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019
SYNTHETIC
CONSUMPTION LEATHER PLASTIC FABRIC OTHERS
RUBBER
COEFFICIENT OF
IMPORTS
3.3.1 EXPORTS
In 2019, the value of Brazilian footwear exports decreased once again, by 0.4% in relation to the previous year, totaling USD
972 million. In exports measured in pairs, however, there was a growth of 1.5% in exported shoes, totaling 115.2 million pairs in
the same year. The difficult resumption of the growth of the industry’s exports is mainly due to the protectionist, unstable
international scenario observed throughout 2019, reflecting the trade tensions between the United States and China, which
created instability in the international sphere. In addition to this scenario, the year 2019 was marked by socioeconomic crises
in Latin American countries, resulting in several popular demonstrations against the governments of countries in the region.
As for 2020, the prospects are for retractions between 24.0% in an optimistic scenario and 35.4% in the pessimistic context
in terms of dollars. In terms of pairs, exports are expected to decrease between 22.4% (optimistic) and 30.6% (pessimistic). It
is worth mentioning that these forecasts are structured based on the uncertainty and crisis in the international economy,
triggered by the new coronavirus pandemic.
In addition, even though the forecast indicates a more pronounced decrease in terms of values in exports, it is noteworthy
that this does not mean that the value in reais obtained by exporting a given number of pairs is lower. Due to the slowdown
in the economic activity of the partners and since the Brazilian currency will likely remain devalued against the dollar, the
trend is for greater discounts in selling prices in dollars. However, it is possible to expect that the discount in dollars will not
exceed the variation of the devaluation of the domestic currency. Consequently, the value in reais received by companies
may not decrease as much as the value of exports in dollars.
25
BRAZIL
BRAZILIAN FOOTWEAR EXPORTS
1090,5
976,3 972,0
739,2
627,3
127,1 113,5 115,2
89,4 80,0
-24,0% | OPTIMISTIC
-22,4% | OPTIMISTIC
2017 2018 2019 2020* 2017 2018 2019 2020*
MILLION USD MILLION PAIRS
ANNUAL VARIATION OF FOOTWEAR EXPORTS

9,3%
1,2% 1,5%
-0,4%
-10,5%
-10,7%
-22,4%
-24,0%
-35,5% -30,6%
2017 2018 2019 2020* 2017 2018 2019 2020*
US$ PAIRS
SOURCE: SECEX
(*) As estimated by Abicalçados in March/2020
Regarding footwear exports by destination, it is worth noting that the United States has historically positioned itself as the
main destination for Brazilian shoes in terms of value. In 2019, it accounted for over 20% of Brazilian shipments in the indus-
try, after a growth of 19.3% in the exported value.
Among the main destinations, the decline in the values exported to Argentina and Paraguay last year, of -24.9% and -23.8%,
respectively, is noteworthy.
Nevertheless, it is important to note that, especially in Argentina, the decreases in terms of value were higher than the de-
creases in terms of volume, indicating that the exchange rate devaluation in the countries, just like in Brazil, enabled the
negotiation of discounts in dollars, maintaining the profitability in reais in Brazil and, thus, making imports to the markets
possible.
26
BRAZIL
MAIN DESTINATIONS OF FOOTWEAR EXPORTS IN 2019

SHARE IN USD
20,5% 6,2%
UNITED STATES FRANCE
4,7%
4,2%
BOLIVIA
PARAGUAY
10,8%
ARGENTINA
MILLION USD
UNITED STATES 189,9 166,8 199,0 19,3%

ARGENTINA 147,0 139,7 104,9 -24,9%
FRANCE 58,5 56,9 60,5 6,3%
BOLIVIA 64,4 43,4 45,5 4,9%
PARAGUAY 74,6 53,7 41,0 -23,8%
COLOMBIA 38,4 36,9 37,9 2,5%
CHILE 36,5 36,7 37,6 2,4%
PERU 39,5 38,9 36,0 -7,5%
ECUADOR 26,0 34,0 35,7 5,0%
UNITED KINGDOM 24,5 23,7 24,5 3,5%
OTHERS 391,1 345,5 349,5 1,1%
TOTAL 1.090,5 976,3 972,0 -0,4%
SOURCE: SECEX
In terms of pairs of shoes, there was a major change in the ranking of destinations in 2019, with the United States ranking
1st (in 2018 it ranked 3rd), Paraguay falling from the 1st to the 2nd place, and thus Argentina remaining in the 3rd place. Al-
though the U.S. market appears as the main destination for Brazilian footwear exports in terms of volume, its share, of 10.4%,
is practically half of that of its value (USD). Therefore it is possible to note that higher-income markets, such as the United
States, tend to be more significant in value than in volume since they import shoes with a higher average price.
27
BRAZIL
MAIN DESTINATIONS OF FOOTWEAR EXPORTS IN 2019

SHARE IN PAIRS
10,4% 6,9%
UNITED STATES FRANCE
7,1%
9,1%
COLOMBIA
PARAGUAY
8,8%
ARGENTINA
MILLION PAIRS
UNITED STATES 11,3 10,8 12,0 11,0%

PARAGUAY 14,3 13,6 10,5 -23,1%
ARGENTINA 11,6 11,8 10,1 -14,4%
COLOMBIA 7,4 7,5 8,1 8,3%
FRANCE 6,9 7,3 7,9 7,9%
BOLIVIA 9,2 5,6 5,8 1,9%
PERU 5,0 4,9 4,7 -4,5%
BELGIUM 3,0 2,5 3,3 30,6%
AUSTRÁLIA 4,4 2,6 3,2 22,9%
ECUADOR 2,1 2,9 3,1 8,9%
OTHERS 51,8 43,9 46,5 6,1%
TOTAL 127,1 113,5 115,2 1,5%
SOURCE: SECEX
The largest footwear exporting states in value (USD) are: (1) Rio Grande do Sul, (2) Ceará, (3) São Paulo, (4) Paraíba, and (5)
Bahia. However, in pairs, the following distribution is found: (1) Ceará, (2) Rio Grande do Sul, (3) Paraíba, (4) Minas Gerais, and
(5) São Paulo. Based on this, it is possible to deduce that the average price of the shoes exported by Rio Grande do Sul and by
São Paulo is higher than the national average. When analyzing the period from 2017 to 2018, all states registered a decrease
in their external sales of shoes, both in value and in the number of pairs, except for the state of Minas Gerais, which registered
a positive variation in exports of footwear pairs (10.5%).
28
BRAZIL
IMPACT OF SOUTH AMERICA IN

The economic performance of the countries in Latin America and the Caribbean was not very significant in the
year 2019, resulting in a GDP growth rate of 0.13%. At the same time, the global economy grew by 2.9% in the same
year. Despite the relatively poor result of the global activity, the performance of Latin America and the Caribbean
was characterized at a lower level. The street demonstrations that mainly took place in Chile, Ecuador, and Bolivia
are among a set of determinants of the poor economic performance in Latin America. Thus, it is important to mea-
sure the size of the “loss” of Brazilian footwear exports in pairs in South America. It is possible to define “loss” as the
difference between how exports would be if the crisis in South America did not arise and the performance obser-
ved in these countries. Therefore, exports of pairs of Brazilian shoes are estimated based on the observation of the
first structural change in this variable. In July 2018, there was a significant decline in Brazilian footwear exports to
South America as a result of the economic crisis experienced by Argentina. This structural change deepens in 2019
due to the previously mentioned reasons. Thus, the difference between the estimated and accomplished curves
of footwear exports in pairs, shown in the figure below, establishes the “losses” of the industry in South America. In
2018, the estimated “loss” in South America reached 11.8%, while in 2019 this rate deepens to 20.4%. When observing
the “losses” for the total shoes exported in 2018 and 2019, we reach 4.8% and 9.2%, respectively. The reflection of
these contractions on Brazil’s footwear production reached 0.7% in 2018 and 1.2% in 2019.
INDEX NUMBER (2010=100) OF BRAZILIAN FOOTWEAR

EXPORTS TO SOUTH AMERICAN COUNTRIES - IN PAIRS
350
300
350
250
300
200
250
150
200
100
150 ACCOMPLISHED ESTIMATED
50
100
0
ACCOMPLISHED ESTIMATED
2018/012018/01
2018/022018/02
2018/032018/03
2018/04
2018/052018/05
2018/062018/06
2018/072018/07
2018/082018/08
2018/092018/09
2018/102018/10
2018/11 2018/11
2018/122018/12
2019/012019/01
2019/022019/02
2019/032019/03
2019/042019/04
2019/052019/05
2019/062019/06
2019/072019/07
2019/082019/08
2019/092019/09
2019/102019/10
2019/11 2019/11
2019/122019/12
50
0
2018/04
SOURCE: SECEX; ABICALÇADOS, COM BASE EM STAMP 8.3.
SOURCE: SECEX; ABICALÇADOS, COM BASE EM STAMP 8.3.

ANNUAL
YEAR VARIATION OF BRAZILIAN FOOTWEARPOTENTIAL
ACCOMPLISHED EXPORTS - IN PAIRS - TOESTIMATED
SOUTH AMERICA:
LOSS
ACCOMPLISHED ANNUAL GROWTH X POTENTIAL GROWTH WITHOUT THE IMPACTS OF THE CRISIS IN THE REGION
2018 -5,9% 5,3% 11,2%
2019
YEAR -7,4%
ACCOMPLISHED 13,0%
POTENTIAL 20,4%LOSS
ESTIMATED
2018 -5,9% 5,3% 11,2%

2019 -7,4% 13,0% 20,4%
YEAR ANNUAL VARIATION OF BRAZILIAN FOOTWEAR

ACCOMPLISHED EXPORTS - IN PAIRS
POTENTIAL - TOTAL:LOSS
ESTIMATED
ACCOMPLISHED ANNUAL GROWTH X POTENTIAL GROWTH WITHOUT THE IMPACTS OF SOUTH AMERICA
2018 -10,7% -5,9% 4,8%
2019
YEAR 1,5%
ACCOMPLISHED 10,7%
POTENTIAL 9,2% LOSS
ESTIMATED
2018 -10,7% -5,9% 4,8%

2019 1,5% 10,7% 9,2%
YEAR ANNUAL VARIATION OF THE BRAZILIAN FOOTWEAR

ACCOMPLISHED POTENTIAL PRODUCTION - IN PAIRS:LOSS
ESTIMATED
ACCOMPLISHED ANNUAL GROWTH X POTENTIAL GROWTH WITHOUT THE IMPACTS OF SOUTH AMERICA
2018 0,1% 0,8% 0,7%
2019
YEAR 0,4%
ACCOMPLISHED 1,6%
POTENTIAL 1,2% LOSS
ESTIMATED
SOURCE: SECEX
2018 0,1% 0,8% 0,7%
2019 0,4% 1,6% 1,2%
SOURCE: SECEX
29
BRAZIL
The largest footwear exporting states in value (USD) are: (1) Rio Grande do Sul, (2) Ceará, (3) São Paulo, (4) Paraíba, and (5) Minas
Gerais. However, in pairs, the following distribution is found: (1) Ceará, (2) Rio Grande do Sul, (3) Paraíba, (4) Minas Gerais, and (5)
São Paulo. Based on this, it is possible to deduce that the average price of the shoes exported by Rio Grande do Sul and by São
Paulo is higher than the national average.
When analyzing the period between 2018 and 2019, growth is registered in foreign footwear sales from Rio Grande do Sul and
from Paraíba, both in value and in the number of pairs. In Rio Grande do Sul, there was a more significant increase in the number
of pairs (13.8%) than in terms of value (4.7%), contrary to what happened with footwear exports from Paraíba, which grew by 14.5%
in monetary values and by 11.9% in volume.
Exports from Ceará decreased once again, both in terms of value and in volume, by 6.8% and 5.9%, respectively. Footwear exports
from the state of São Paulo decreased slightly last year in terms of value (-0.6%). However, the volume of pairs increased (6.6%),
indicating a reduction in the average price of the shoes exported by companies in the state.
FOOTWEAR EXPORTS BY STATE IN 2019

SHARE IN USD
MILLION USD
STATE 2017 2018 2019 VARIATION

2018-2019
RIO GRANDE DO SUL 451,7 428,3 448,4 4,7%
23,9% 7,1% CEARÁ 288,9 249,2 232,3 -6,8%
CE PB
0,6% SÃO PAULO 113,5 103,8 103,1 -0,6%
PE
0,8% PARAÍBA 74,6 59,9 68,6 14,5%
SE MINAS GERAIS 41,4 39,0 37,7 -3,1%
BAHIA 45,6 39,6 36,4 -8,1%
3,7%
BA SANTA CATARINA 18,6 19,9 19,7 -1,2%
3,9%
MG PARANÁ 6,7 9,8 7,9 -19,4%
10,6% SERGIPE 27,0 10,8 7,4 -31,7%
0,8% SP PERNAMBUCO 8,8 7,9 5,9 -25,1%
PR OTHERS 13,6 8,2 4,6 -43,7%
2,0%
SC TOTAL 1.090,5 976,3 972,0 -0,4%
46,1% SOURCE: SECEX
RS
FOOTWEAR EXPORTS BY STATE IN 2019

SHARE IN PAIRS
MILLION PAIRS
STATE 2017 2018 2019 VARIATION

2018-2019
33,5% CEARÁ 50,0 41,0 38,5 -5,9%

PB 17,6%
CE RIO GRANDE DO SUL 28,1 27,2 30,9 13,8%
PE 2,2%
PARAÍBA 21,9 18,2 20,3 11,9%
0,6% MINAS GERAIS 7,9 8,7 8,0 -7,8%
SE
SÃO PAULO 7,4 7,1 7,6 7,5%
2,8% BAHIA 3,6 3,2 3,3 2,3%
BA
7,0% PERNAMBUCO 4,0 3,5 2,5 -28,2%
MG
SANTA CATARINA 1,7 1,7 1,8 5,1%
6,6% PARANÁ 0,6 1,3 0,9 -29,8%
0,8% SP
PR SERGIPE 1,0 0,9 0,7 -23,9%
1,6% OTHERS 1,0 0,7 0,6 -23,1%
SC
26,9%
TOTAL GERAL 127,1 113,5 115,2 1,5%
RS SOURCE: SECEX
30
BRAZIL
In Brazilian footwear exports by predominant material (measured in USD) in 2019, “Synthetics” are the most representative
(45.4%), while in dynamic terms “Injected,” “Leather,” and “Other Materials” were the only ones to register a positive variation,
of 24.0%, 3.0%, and 34.8%, respectively, in the period between 2018 and 2019. When measured in pairs, most materials grew
last year, except for “Fabric,” in which there was a small retraction of 0.1%. In terms of market share, “Synthetics” are the most
important in terms of the number of pairs (75.0%), with a higher share than they have in terms of value. This happens because
this is a relatively cheap type of shoe in relation to other materials.
FOOTWEAR EXPORTS BY PREDOMINANT MATERIAL

MATERIAL 2017 2018 2019
MILLION USD VARIATION 2018-2019 SHARE IN 2019
INJECTED
MATERIAL
1,6
2017 1,7
2018 2,1
2019 24,0%
VARIATION 2018-2019
0,2%
SHARE IN 2019
SYNTHETIC 503,3 449,2 441,0 -1,8% 45,4%
INJECTED 1,6 1,7 2,1 24,0% 0,2%
FLIP-FLOPS 198,2 162,6 170,5 4,9% 17,5%
SYNTHETIC 503,3 449,2 441,0 -1,8% 45,4%
OTHERS 305,2 286,7 270,5 -5,7% 27,8%
FLIP-FLOPS 198,2 162,6 170,5 4,9% 17,5%
LEATHER 445,2 394,4 406,4 3,0% 41,8%
OTHERS 305,2
2017 286,7
2018 270,5
2019 -5,7%
VARIATION 27,8%
SHARE IN 2019
MATERIAL
FABRIC 134,6 123,1 111,9 -9,1%2018-2019 11,5%
LEATHER 445,2 394,4 406,4 3,0% 41,8%
INJECTED
OTHERS MATERIALS 1,6
5,8 1,7
7,9 2,1
10,6 24,0%
34,8% 0,2%
1,1%
FABRIC 134,6 123,1 111,9 -9,1% 11,5%
TOTAL
SYNTHETIC 1.090,5
503,3 976,3
449,2 972,0
441,0 -0,4%
-1,8% 100,0%
45,4%
OTHERS MATERIALS 5,8 7,9 10,6 34,8% 1,1%
FLIP-FLOPS
SOURCE: SECEX 198,2 162,6 170,5 4,9% 17,5%
TOTAL 1.090,5 976,3 972,0 -0,4% 100,0%
OTHERS 305,2 286,7 270,5 -5,7% 27,8%
SOURCE: SECEX
LEATHER 445,2 394,4 406,4 3,0% 41,8%
FABRIC 134,6
FOOTWEAR 123,1 111,9
EXPORTS BY PREDOMINANT -9,1%
MATERIAL 11,5%
OTHERS MATERIALS 5,8 7,9 MILLION PAIRS
10,6 34,8% 1,1%
TOTAL
MATERIAL 1.090,5
2017 976,3
2018 972,0
2019 -0,4%2018-2019
VARIATION 100,0%
SHARE IN 2019
SOURCE: SECEX
INJECTED
MATERIAL 0,3
2017 0,3
2018 0,3
2019 27,1%
VARIATION 2018-2019
0,3%
SHARE IN 2019
SYNTHETIC 97,6 86,3 86,4 0,1% 75,0%
INJECTED 0,3 0,3 0,3 27,1% 0,3%
FLIP-FLOPS 66,8 57,2 56,9 -0,5% 49,4%
SYNTHETIC 97,6 86,3 86,4 0,1% 75,0%
OTHERS 30,8 29,1 29,5 1,3% 25,6%
FLIP-FLOPS 66,8 57,2 56,9 -0,5% 49,4%
LEATHER 17,4 16,2 17,6 8,7% 15,2%
OTHERS
MATERIAL 30,8
2017 29,1
2018 29,5
2019 VARIATION 1,3% SHARE25,6%
IN 2019
FABRIC 11,5 10,4 10,4 -0,1%2018-2019 9,0%
LEATHER 17,4 16,2 17,6 8,7% 15,2%
INJECTED
OTHERS MATERIALS 0,3 0,3
0,4 0,3
0,6 27,1%
47,6% 0,3%
0,5%
FABRIC 11,5 10,4 10,4 -0,1% 9,0%
TOTAL
SYNTHETIC 127,1
97,6 113,5
86,3 115,2
86,4 1,5%
0,1% 100,0%
75,0%
OTHERS MATERIALS 0,3 0,4 0,6 47,6% 0,5%
FLIP-FLOPS
SOURCE: SECEX 66,8 57,2 56,9 -0,5% 49,4%
TOTAL 127,1 113,5 115,2 1,5% 100,0%
OTHERS 30,8 29,1 29,5 1,3% 25,6%
SOURCE: SECEX
LEATHER 17,4 16,2 17,6 8,7%
The most important segment in foreign sales of Brazilian footwear in value (USD) is the “Other Shoes” group, 15,2%
which includes
FABRIC
casual and dress shoes, with a market 11,5 share of 78.9%
10,4 in 2019, while
10,4 “Flip-flops” participate
-0,1% 9,0% Shoes” with
with 17.5% and “Athletic
3.6%. In termsMATERIALS
OTHERS 0,3
of pairs of shoes, “Flip-flops” are the0,4 0,6
most representative, 47,6%
with a share of 49.4%, followed by “Other0,5% Shoes” (48.2%)
andATHLETIC 2017 2018 2019 VARIATION 2018-2019
“Athletic Shoes” (2.4%). The dynamic
TOTAL 127,1 of the greater
113,5 share of115,2
plastic/rubber 1,5% in terms of pairsSHARE
flip-flops than inINvalue
100,0% 2019 corrobo-
rates the principle
VALUESECEX of a
(MILLION USD)low average price.
43,5Regarding43,1the performance
35,0 during the period
-18,9% from 2018 to 2019, the
3,6% positive varia-
ATHLETIC
SOURCE: 2017 2018 2019 VARIATION 2018-2019 SHARE INan
2019
tions of “Flip-Flops” in terms of value, with a growth of 4.9%, and of “Other Shoes” in terms of volume (pairs), with increase of
PAIRS (THOUSAND UNITS) 2.753,1 2.787,6 2.790,1 0,1% 2,4%
3.8%, stand(MILLION
VALUE out. On the other hand, “Athletic
USD) 43,5 Shoes” decreased35,0
43,1 dramatically in terms
-18,9% of value last year, by 18.9%.
3,6%
FLIP-FLOPS 2017 FOOTWEAR2018 EXPORTS 2019 BY SEGMENT
VARIATION 2018-2019 SHARE IN 2019
VALUE (MILLION USD)

ATHLETIC
FLIP-FLOPS
198,2
2017
2017 162,6
2018
2018 170,5
2019
2019 4,9%2018-2019
VARIATION
VARIATION 2018-2019
17,5%
SHARE IN 2019
PAIRS (THOUSAND UNITS) 66.798,0 57.194,3 56.886,5 -0,5% 49,4%
VALUE
VALUE (MILLION
(MILLION USD)
USD) 43,5
198,2 43,1
162,6 35,0
170,5 -18,9%
4,9% 3,6%
17,5%
PAIRS (THOUSAND UNITS)
PAIRS (THOUSAND UNITS) 2.753,1
66.798,0 2.787,6
57.194,3 2.790,1
56.886,5 0,1%
-0,5% 2,4%
49,4%
OTHER SHOES 2017 2018 2019 VARIATION 2018-2019 SHARE IN 2019
VALUE SHOES
(MILLION USD)
FLIP-FLOPS
OTHER 848,8
2017 770,6
2018 766,5
2019 -0,5%2018-2019
VARIATION 78,9%
SHARE IN 2019
VALUE (MILLION USD) 198,2
848,8 162,6
770,6 170,5
766,5 4,9%
-0,5% 17,5%
78,9%
SOURCE: SECEX
PAIRS (THOUSAND UNITS) 66.798,0
57.587,3 57.194,3
53.516,3 56.886,5
55.536,9 -0,5%
3,8% 49,4%
48,2%
SOURCE: SECEX
VALUE (MILLION USD) 848,8 770,6 766,5 -0,5% 78,9%

SOURCE: SECEX
31
BRAZIL
3.3.2 IMPORTS
In 2019, Brazilian footwear imports increased both in terms of value (USD) and in pairs, reaching rates of 7.6% and 5.9%,
respectively. When measured in pairs, three countries stand out as the origins of Brazilian imports: Vietnam, China, and
Indonesia. These three countries account for 83.7% of Brazilian footwear imports in value (USD) and for about 90% in volume
(pairs). China has the lowest average price among the three countries. This result is influenced by the type of shoe imported
by Brazil from the three highlighted regions. In the Brazilian import roster from Vietnam and Indonesia, there is a relatively
high share of athletic shoes, which raises the average price of the shoes originating from these two countries in comparison
with China.
ORIGIN OF BRAZILIAN FOOTWEAR IMPORTS IN 2019

SHARE IN USD
7,5%
12,9%
2,1% 50,2%
ITALY
CHINA
20,6%
CAMBOJA VIETNAM
INDONESIA
MILLION USD
VIETNAM 187,4 192,5 187,5 -2,6%

INDONESIA 65,7 65,4 76,9 17,6%
CHINA 31,2 36,1 48,1 33,3%
ITALY 19,4 23,4 28,2 20,5%
CAMBOJA 6,8 6,4 7,9 23,1%
THAILAND 3,5 3,1 5,2 67,5%
INDIA 8,6 6,6 4,7 -28,5%
PARAGUAY 3,1 3,0 2,9 -3,4%
SPAIN 1,1 1,3 1,8 42,3%
MYANMAR 1,1 0,9 1,8 104,5%
OTHERS 11,9 9,0 8,9 -0,9%
TOTAL 340,0 347,6 373,9 7,6%
SOURCE: SECEX
32
BRAZIL
ORIGIN OF BRAZILIAN FOOTWEAR IMPORTS IN 2019

SHARE IN PAIRS
29,6%
2,1% 42,8%
CHINA
16,9%
CAMBOJA VIETNAM
2,0%
INDONESIA
PARAGUAY
MILLION PAIRS
VIETNAM 10,87 12,16 12,05 -0,9%

CHINA 5,60 7,41 8,34 12,5%
INDONESIA 4,03 4,15 4,77 15,0%
CAMBOJA 0,46 0,51 0,60 18,6%
PARAGUAY 0,59 0,52 0,57 9,3%
INDIA 0,63 0,46 0,34 -25,6%
THAILAND 0,20 0,15 0,25 69,0%
ITALY 0,14 0,20 0,24 18,8%
BANGLADESH 0,25 0,38 0,17 -54,9%
MYANMAR 0,08 0,07 0,17 126,7%
OTHERS 0,9 0,6 0,7 14,5%
TOTAL 23,8 26,6 28,2 5,9%
SOURCE: SECEX
33
BRAZIL
In Brazilian footwear imports by predominant material (measured in USD) in 2019, the material “Fabric” is the most repre-
sentative (60.0%), while, in dynamic terms, “Synthetics” registered the greatest positive variation (24.3%) in the period betwe-
en 2018 and 2019. When measured in pairs, the biggest growth was observed in “Leather” shoes (24.0%). In terms of market
share, “Fabrics” are the most important (47.9%) also in the number of pairs. It should be noted that shoes made of fabric
include the athletic segment, which explains the large share of these shoes in Brazilian imports.
FOOTWEAR IMPORTS BY PREDOMINANT MATERIAL

MILLION USD
MATERIAL 2017 2018 2019 VARIATION 2018-2019 SHARE IN 2019
INJECTED 1,2 1,0 1,0 -0,5% 0,3%

SYNTHETIC 56,6 55,0 68,4 24,3% 18,3%
FLIP-FLOPS 1,6 1,9 1,6 -12,7% 0,4%
OTHERS 55,0 53,1 66,7 25,6% 17,8%
LEATHER 67,9 60,5 74,6 23,4% 20,0%
INJECTED
FABRIC 1,2
210,8 1,0
226,5 1,0
224,4 -0,5%
-0,9% 0,3%%
60,0
SYNTHETIC
3,4 55,0
4,7 68,4
5,6 24,3%
20,0% 18,3%
1,5%
FLIP-FLOPS
TOTAL 1,6
340,0 1,9
347,6 1,6
373,9 -12,7%
7,6% 0,4%
100,0%
OTHERS 55,0 53,1 66,7 25,6% 17,8%
SOURCE: SECEX
LEATHER 67,9 60,5 74,6 23,4% 20,0%
FABRIC 210,8 226,5 224,4 -0,9% 60,0 %
FOOTWEAR IMPORTS BY PREDOMINANT MATERIAL
OTHERS MATERIALS 3,4 4,7 5,6
MILLION PAIRS 20,0% 1,5%
TOTAL 340,0 347,6 373,9 7,6% 100,0%
SOURCE: SECEX
INJECTED 0,29 0,18 0,19 3,1% 0,7%
SYNTHETIC 4,85 5,84 6,84 17,2% 24,3%
FLIP-FLOPS 0,67 1,26 1,26 0,3% 4,5%
OTHERS 4,18 4,58 5,57 21,8% 19,8%
LEATHER 3,56 3,07 3,81 24,0% 13,5%
INJECTED
FABRIC 0,29
12,90 0,18
14,24 0,19
13,49 3,1%
-5,3% 0,7%
47,9%
SYNTHETIC
2,19 5,84
3,27 6,84
3,85 17,2%
17,8% 24,3%
13,7%
FLIP-FLOPS
TOTAL 0,67
23,79 1,26
26,60 1,26
28,18 0,3%
5,9% 4,5%
100,0%
OTHERS 4,18 4,58 5,57 21,8% 19,8%
SOURCE: SECEX
LEATHER 3,56 3,07 3,81 24,0% 13,5%
FABRIC 12,90 14,24 13,49 -5,3% 47,9%
As for the segments,
OTHERS MATERIALSimports from the “Other Footwear”
2,19 3,27 category
3,85 are the most17,8%
representative, both in value (USD), with a
13,7%
share of 50.4%, and in the number
TOTAL of pairs (62.9%),
23,79 26,60according28,18
to data referring 5,9%
to 2019. In terms of dynamism,
100,0% the positive
performance of athletic shoes stands out. They increased by 17.8% in terms of value and by 12.6% in the number of pairs. It is
SOURCE: SECEX
noteworthy, however, that a large part 2017
of athletic shoes
2018
– when they are not considered performance shoes – are classified
2019
ATHLETIC VARIATION 2018-2019 SHARE IN 2019
as other shoes.
VALUE (MILLION USD) 101,9 156,2 183,9 17,8% 49,2%
FOOTWEAR IMPORTS BY SEGMENT
FLIP-FLOPS 2017 2018 2019 VARIATION 2018-2019 SHARE IN 2019

ATHLETIC 2017 2018 2019 VARIATION 2018-2019 SHARE IN 2019
VALUE (MILLION USD) 101,9 156,2 183,9 17,8% 49,2%
PAIRS (THOUSAND UNITS) 667,5 1.261,3 1.264,5 0,3% 4,5%

FLIP-FLOPS 2017 2018 2019 VARIATION 2018-2019 SHARE IN 2019
PAIRS (THOUSAND UNITS) 667,5 1.261,3 1.264,5 0,3% 4,5%
SOURCE: SECEX

SOURCE: SECEX
34
BRAZIL
3.4 EMPLOYMENT AND ESTABLISHMENTS

In 2019, the footwear industry totaled 269.4 thousand permanent jobs and, in 2018, according to the latest data from Relação
Anual de Informações Sociais (RAIS) [Annual Report of Social Information], 6.1 thousand footwear manufacturing companies
in Brazil. The footwear industry continued following the downward trend in the number of formal jobs in 2019, registering
the loss of 3.7 thousand jobs in that year. This dynamic raises concerns relating to the fragility of the Brazilian labor market
as a whole and, also, in the footwear sector. The concerns become more serious in the context of a possible fragile recovery
of the economy, arising from the obstacles that will be faced considering the crisis due to the Covid-19 pandemic. When
comparing the indicators of employment and number of establishments, even if they are not defined in the same years
(they are structural indicators, which change more slowly), it is possible to note that Rio Grande do Sul has a greater share
in the volume of employment (32.3%) and in the number of companies (33.5%). The second place in terms of employment is
the state of Ceará (20.8%), while São Paulo ranks second in the number of companies, with 31.8%.
269,4 thousand 6,1 thousand

jobs (2019) ompanies (2018)
STATE
32,3% Rio Grande do Sul 33,5%
20,8% Ceará 4,1%
12,0% São Paulo 31,8%
11,3% Minas Gerais 16,0%
10,8% Bahia 1,8%
5,5% Paraíba 1,4%
2,4% Santa Catarina 3,6%
1,4% Sergipe 0,2%
1,1% Paraná 1,9%
0,6% Mato Grosso Do Sul 0,3%
1,8% Others 5,3%
SOURCE: RAIS/CAGED/MTE
Data on the concentration of companies and jobs in the footwear industry indicate that, with regard to the range of jobs,
most companies (50.6%) have up to four employees. Meanwhile, in terms of employment, 34.2% of positions are found in
companies with over one thousand employees.
RANGE OF
JOBS
3,7% Up to 4 50,6%
2,6% From 5 to 9 13,9%
4,9% From 10 to 19 12,6%
10,3% From 20 to 49 12,2%
9,7% From 50 to 99 5,0%
14,6% From 100 to 249 3,3%
10,5% From 250 to 499 1,2%
9,6% From 500 to 999 0,5%
34,2% 1,000 or more 0,6%
SOURCE: RAIS/CAGED/MTE
35
BRAZIL
Regarding the development of employment (employees hired - dismissed) by state in 2019, Bahia was the state with the
greatest increase in the number of jobs, with 1.1 thousand more openings, representing a growth of 4.2 %. With referen-
ce to negative variations, São Paulo, Ceará, and Rio Grande do Sul reported the greatest decreases: 7.3%, 1.9%, and 1.8%,
respectively. In the state of São Paulo alone, a reduction of 2.5 thousand permanent job openings was registered. In Rio
Grande do Sul, that number was 1.6 thousand and, in Ceará, 0.9 thousand.
The expectation for the year 2020 lies in an interval of decreases of permanent jobs in the Brazilian footwear industry
between 14.0% in the optimistic scenario and 21.0% in the pessimistic scenario. In other words, between 37.7 thousand
and 56.5 thousand permanent jobs are forecast to be lost in the footwear industry in 2020 due to the coronavirus crisis.
All states saw a reduction in the number of establishments that manufacture footwear in 2018 when compared to 2017.
Pernambuco performed the worst in terms of the rate of variation, with a reduction of 16.3% in establishments that ma-
nufacture shoes in the state. In Brazil, 476 footwear companies closed in 2018. In the states of Rio Grande do Sul and São
Paulo, more than 300 footwear companies were dissolved, that is, these two states accounted for more than 60% of the
reduction in the number of establishments in Brazil.
EMPLOYMENT IN THE FOOTWEAR INDUSTRY BY STATE
STATE 2017 2018 2019 VARIATION 2018-2019
RIO GRANDE DO SUL 92,0 88,5 86,9 -1,8% 231,7

CEARÁ 52,2 57,2 56,1 -1,9%
212,9
SÃO PAULO 38,3 34,8 32,3 -7,3%
MINAS GERAIS 30,7 30,3 30,5 0,8%
BAHIA 27,9 27,9 29,0 4,2%
PARAÍBA 14,2 14,8 14,9 0,7%
SANTA CATARINA 6,7 6,6 6,6 0,2%
-14,0% | OPTIMISTIC
SERGIPE 3,9 3,8 3,7 -4,9%
PARANÁ 3,1 3,0 3,0 1,8%
MATO GROSSO DO SUL 1,7 1,7 1,7 1,3%
OTHERS 5,9 4,7 4,7 1,7%
BRAZIL 276,6 273,1 269,4 -1,3%
SOURCE: SECEX 2020*
(*) As projected by Abicalçados in April/2020
FOOTWEAR MANUFACTURING ESTABLISHMENTS BY STATE
STATE 2016 2017 2018 VARIATION 2017-2018

6.013
RIO GRANDE DO SUL 2.461 2.234 2.043 -8,5%
SÃO PAULO 2.225 2.064 1.940 -6,0%
MINAS GERAIS 1.131 1.062 978 -7,9%
CEARÁ 295 262 249 -5,0%
SANTA CATARINA 240 243 221 -9,1%
GOIÁS 178 157 157 0,0%
PARANÁ 126 124 113 -8,9%
BAHIA 121 114 107 -6,1%
PARAÍBA 96 89 85 -4,5%
PERNAMBUCO 56 49 41 -16,3%
OTHERS 186 173 161 -6,9%
BRAZIL 7.115 6.571 6.095 -7,2%
SOURCE: RAIS/MTE 2019*
(*) As projected by Abicalçados in April/2020
36
BRAZIL
3.5 ECONOMIC INDICATORS

Brazil’s Gross Domestic Product (GDP) at current prices (not discounting price variations) reached a level of R$ 7.26 trillion in
2019, representing an increase of 1.1% in real terms (discounting changes in prices through inflation). Thus, 2019 represented
the third year of economic growth, but still at a slow, insufficient pace to reverse losses during the 2015-2016 crisis, during
which the Brazilian GDP retracted. The crisis resulting from the new coronavirus pandemic really hit the Brazilian economy,
which was still recovering at a very slow rate, and forecasts regarding growth are changing every week, with instability also
in the international stage. The forecast for the Brazilian economy in 2020, based on the average of the forecasts of several
international organizations, is for the GDP to decrease between -5.8% and -8.2%.
BRAZILIAN ECONOMY 2017 2018 2019 2020*
NOMINAL GDP IN DOLLARS

(TRILLION USD) (CURRENT PRICES) 2,05 1,87 1,85 -
NOMINAL GDP IN REAIS
(TRILLION R$) (CURRENT PRICES) 6,58 6,89 7,26 -
REAL GDP IN REAIS
(TRILLION R$) (CONSTANT PRICES) 1,17 1,18 1,19 -
GDP (%)
(GROWTH IN NATIONAL CURRENCY) 1,3 1,3 1,1 -5,8 A -8,2
IBGE/IMF.
Notes (*) As forecast by Abicalçados based on: World Bank, ECLAC, FGV, IMF, WTO, and The Economist (April/2020).
3.5.1 EXCHANGE RATE

The exchange rate (R$/USD) in 2019 continued to follow an upward trend (devaluation), reaching the rate of R$/USD 4.12 in
the last quarter of the year. For 2020 and 2021, the Focus Report by the Brazilian Central Bank estimates that at the end of
the year the exchange rate will be R$/USD 5.00 and R$/USD 4.83, respectively. Despite the estimates of the Focus Report, it
is believed that the exchange rate, in 2020, lies at a minimum level of R$/USD 5.20.
EXCHANGE RATE 5,0

R$/US$ 4,83
3,96 3,97 4,12

3,81 3,77 3,92
3,61
3,14 3,21 3,16 3,25 3,24
2017T1 2017T2 2017T3 2017T4 2018T1 2018T2 2018T3 2018T4 2019T1 2019T2 2019T3 2019T4 2020* 2021*
VARIATION OF THE EXCHANGE RATE

QUARTER/PREVIOUS QUARTER
11,2%
9,8%
3,9% 3,6%
2,8%
2,2%
1,4%
-0,2% -1,0%
-1,6%
-3,7%
-4,6%
2017T1 2017T2 2017T3 2017T4 2018T1 2018T2 2018T3 2018T4 2019T1 2019T2 2019T3 2019T4
SOURCE: BCB | NOTE: QUARTERLY AVERAGE EXCHANGE RATE, COMMERCIAL, PURCHASE.

(*) As forecast by BCB/Focus (May 11, 2020)
37
BRAZIL
3.5.2 TRADE BEHAVIOR

Retail sales in the textiles, clothing, and footwear industry followed the negative trend of the volume of overall sales in Brazil
in 2017. In 2018, in turn, there was a detachment of sales in the sector, which declined by 1.0%, while overall retail in volume
increased by 2.3%. In the year 2019, both indicators varied positively. However, the indicator referring to the sector was prac-
tically stagnant, with an increase of only 0.1%, while total retail grew by 1.8%.
In terms of nominal revenues, there were increases of 1.096% in the sector of textiles, clothing, and footwear and of 5.0% in
the total Brazilian retail. It is worth mentioning that, in the same period, the indicators of trade and consumer confidence
also improved.
VOLUME OF SALES IN RETAIL 2017 2018 2019
VOLUME OF SALES – SECTOR

TEXTILES, CLOTHING, AND FOOTWEAR (SEASONALLY ADJUSTED) (CUMULATIVE % OF THE YEAR) 7,6 -1,0 0,1
VOLUME OF SALES – OVERALL
(SEASONALLY ADJUSTED) (CUMULATIVE % OF THE YEAR) 2,1 2,3 1,8
SOURCE: IBGE
VOLUME OF SALES IN RETAIL 2017 2018 2019

SALES REVENUES IN RETAIL 2017 2018 2019
VOLUME OF SALES – SECTOR
NOMINAL
TEXTILES, REVENUES
CLOTHING, – SECTOR
AND FOOTWEAR (SEASONALLY ADJUSTED) (CUMULATIVE % OF THE YEAR) 7,6 -1,0 0,1
TEXTILES, CLOTHING, AND FOOTWEAR (SEASONALLY ADJUSTED) (CUMULATIVE % OF THE YEAR) 10,3 0,5 1,0
VOLUME OF SALES – OVERALL
NOMINAL REVENUES
(SEASONALLY – OVERALL
ADJUSTED) (CUMULATIVE % OF THE YEAR) 2,1 2,3 1,8
SOURCE: IBGE
SOURCE: IBGE
SALES REVENUES IN RETAIL 2017 2018 2019

CONFIDENCE INDEXES – SECTOR 2017 2018 2019
NOMINAL REVENUES
TEXTILES, CLOTHING, AND FOOTWEAR (SEASONALLY ADJUSTED) (CUMULATIVE % OF THE YEAR) 10,3 0,5 1,0
TRADE CONFIDENCE 88,3 94,7 97,6
NOMINAL
INDEX REVENUES
NUMBER – OVERALL
- EXTENDED RETAIL TRADE (SEASONALLY ADJUSTED) (POINTS)
CONSUMER CONFIDENCE 84,1 88,1 90,9
INDEX
SOURCE: UMBER
IBGE (SEASONALLY ADJUSTED) (POINTS)
SOURCE: IBRE/FGV
CONFIDENCE INDEXES 2017 2018 2019
TRADE CONFIDENCE 88,3 94,7 97,6

INDEX NUMBER - EXTENDED RETAIL TRADE (SEASONALLY ADJUSTED) (POINTS)
CONSUMER CONFIDENCE 84,1 88,1 90,9

3.5.3 MANUFACTURING INDUSTRY
INDEX UMBER (SEASONALLY ADJUSTED) (POINTS)
SOURCE: IBRE/FGV
MANUFACTURING INDUSTRY 2017 2018 2019
There was a decrease in the capacity utilization rate of the manufacturing industry in Brazil in 2019, reaching 75.1%. Con-
CUR in the industry followed this trend. Regarding the performance of the tangible production
fidence
CAPACITY UTILIZATION RATE (SEASONALLY ADJUSTED) (AVERAGE) (%) 74,4 in75,9
the manufacturing
75,1
industry, there was a positive variation in recent years, with 2.2% in 2017, 1.1% in 2018, and 0.2% in 2019.
INDUSTRY CONFIDENCE
INDEX NUMBER (SEASONALLY ADJUSTED) (AVERAGE) (POINTS) 92,5 98,6 96,8
TANGIBLE PRODUCTION
MANUFACTURING INDUSTRY (CUMULATIVE PERCENTAGE OF THE YEAR IN RELATION TO THE PREVIOUS YEAR) (%) 2,2 1,1 0,2
SOURCE: IBRE/FGV E IBGE
CUR
CAPACITY UTILIZATION RATE (SEASONALLY ADJUSTED) (AVERAGE) (%) 74,4 75,9 75,1
INDUSTRY CONFIDENCE
INDEX NUMBER (SEASONALLY ADJUSTED) (AVERAGE) (POINTS) 92,5 98,6 96,8
TANGIBLE
VOLUME OF PRODUCTION
SALES IN RETAIL 2017 2018 2019 2020*
MANUFACTURING INDUSTRY (CUMULATIVE PERCENTAGE OF THE YEAR IN RELATION TO THE PREVIOUS YEAR) (%) 2,2 1,1 0,2
INFLATION FOR CONSUMERS - OVERALL
SOURCE: IBRE/FGV E IBGE
IPCA (SEASONALLY ADJUSTED) 3,0 3,8 4,3 1,7
(CUMULATIVE RATE OF THE YEAR IN RELATION TO THE PREVIOUS YEAR)
INFLATION FOR CONSUMERS - SECTOR
IPCA (FOOTWEAR AND ACCESSORIES - HANDBAGS) (SEASONALLY ADJUSTED) 4,0 -0,9 -0,2 -
VOLUME OF SALES
INFLATION IN RETAIL
FOR MANUFACTURERS - OVERALL 2017 2018 2019 2020*
IPP (MANUFACTURING INDUSTRY) (SEASONALLY ADJUSTED) 3,9 9,0 4,8 -
INFLATION
(CUMULATIVE RATEFOROFCONSUMERS - OVERALL
THE YEAR IN RELATION TO THE PREVIOUS YEAR)
INFLATION
(CUMULATIVE RATEFOROF MANUFACTURERS
THE YEAR IN RELATION TO - SECTOR
THE PREVIOUS YEAR)
IPP (LEATHER PREPARATION AND MANUFACTURE OF LEATHER AND TRAVEL 0,1 2,7 -5,3 -
INFLATION FOR CONSUMERS
GOODS AND FOOTWEAR) (SEASONALLY -ADJUSTED)
SECTOR
IPCA (FOOTWEAR
(CUMULATIVE AND
RATE OF ACCESSORIES - HANDBAGS)
THE YEAR IN RELATION (SEASONALLY
TO THE ADJUSTED)
PREVIOUS YEAR) 4,0 -0,9 -0,2 -
SOURCE: IBGE
INFLATION
(*) As FOR MANUFACTURERS
forecast by BCB/Focus (May 11, 2020) - OVERALL
38
INFLATION FOR MANUFACTURERS - SECTOR
IPP (LEATHER PREPARATION AND MANUFACTURE
SECTORALOF LEATHER
REPORT: AND TRAVEL
FOOTWEAR 0,1
INDUSTRY | BRAZIL 2020 2,7 -5,3 -
GOODS AND FOOTWEAR) (SEASONALLY ADJUSTED)
BRAZIL
3.5.4
CUR
NATIONAL
CAPACITY INFLATION
UTILIZATION RATE (SEASONALLY ADJUSTED) (AVERAGE) (%) 74,4 75,9 75,1
INDUSTRY CONFIDENCE
TheINDEX
consumer
NUMBERinflation
(SEASONALLYrateADJUSTED)
in Brazil (AVERAGE)
was 4.3%(POINTS)
in 2019. It is forecast to decrease in 2020, with 92,5 98,6
a rate 96,8
of 1.7% at the end
of the year. The
TANGIBLE specif ic inflation for footwear and accessories registered a new deflation in 2019 (-0.2%). The price
PRODUCTION
(%) travel2,2
index for producers
MANUFACTURING in the
INDUSTRY sector ofPERCENTAGE
(CUMULATIVE leather preparation,
OF THE YEAR IN manufacture of leather
RELATION TO THE PREVIOUS and
YEAR) 1,1 0,2
goods and footwear also
deflated by 5.3% EinIBGE
SOURCE: IBRE/FGV 2019, in the opposite direction of the inflation for general producers in the manufacturing industry,
which increased by 4.8%.
VOLUME OF SALES IN RETAIL 2017 2018 2019 2020*
INFLATION FOR CONSUMERS - OVERALL

INFLATION FOR CONSUMERS - SECTOR
IPCA (FOOTWEAR AND ACCESSORIES - HANDBAGS) (SEASONALLY ADJUSTED) 4,0 -0,9 -0,2 -
INFLATION FOR MANUFACTURERS - OVERALL
INFLATION FOR MANUFACTURERS - SECTOR
IPP (LEATHER PREPARATION AND MANUFACTURE OF LEATHER AND TRAVEL 0,1 2,7 -5,3 -
GOODS AND FOOTWEAR) (SEASONALLY ADJUSTED)
SOURCE: IBGE
(*) As forecast by BCB/Focus (May 11, 2020)
3.5.5 NATIONAL COMPETITIVENESS

Some indicators are important determinants of a country’s competitiveness, such as: number of days to establish a business,
hours spent to pay taxes, and time and cost to export. When analyzing these indicators for Brazil in comparison with the
average of Latin American countries for the year 2019, it is possible to observe that Brazil performs better in the number of
days to open a business and in the time to export. For 2020, there is a prospect of improvement in the first criterion (number
of days to open a business) and in relation to the second criterion (hours spent to pay taxes). Regarding the time spent to
pay taxes, even with the projected improvement, Brazil will still be very distant from the average of Latin American countries,
with a time about five times longer.
LATIN AMERICA AND THE CARIBBEAN

BRAZIL (AVERAGE OF THE COUNTRIES)
INDICATORS
2019 2020 2019 2020
NUMBER OF DAYS TO ESTABLISH A COMPANY 20,0 17,0 20,4 18,5
HOURS SPENT TO PAY TAXES 1.958,0 1.501,0 329,4 317,2
TIME TO EXPORT:
BORDER COMPLIANCE (HOURS) 49,0 49,0 62,5 55,3
COST TO EXPORT: 862,0 862,0 534,2 516,4
BORDER COMPLIANCE (USD)
SOURCE: WORLD BANK
39
4.
OPPO
RTUNI
TIES
FOR THE INTERNATIONAL MARKET
OPPORTUNITIES
4.1 COMPETITIVENESS INDEX OF FOOTWEAR EXPORTS

It defines a ranking of countries based on competitiveness in international trade. The applied measurement ranges from
0 to 100. Data periodicity is annual. The result considers the analysis of 188 countries. The subindexes for assessment are:
market size, trade balance, dynamism, market deconcentration, market share, and specialization – Revealed Comparative
Advantage Index (RCAI), average price, and number of markets. This data ends up defining a single aggregated index for
each country. Therefore, it is possible to observe the competitive performance of each country in terms of position.
Subindexes:
Market Size: represents the country’s global footwear exports in value (USD);
Trade Balance: represents the trade balance of footwear in the country, that is, the difference between total footwear ex-
ports and imports in value (USD);
Dynamism: represents the average between the indicators of the growth rate of footwear exports and the variation of foo-
twear exports in the country (USD);
Market Deconcentration: consists of the concentration of the country’s footwear exports of the three main destinations in
relation to the total it exports;
Market Share and Specialization (RCAI): represents the average between the index number of the share of footwear in
the country’s exporting pattern (market share) and the RCAI, which is the ratio between the sector’s share in the country’s
exports compared to the world’s exports;
Average Price: represents the average between the indicators of the average price (USD/Kg) of the country’s footwear ex-
ports and its growth rate;
Number of Markets: represents the number of markets to which the country exported.
The five most competitive countries in the footwear industry, according to the 2018 ranking, are: Vietnam (1st place), Italy
(2nd place), China (3rd place), Cambodia (4th place), and Germany (5th place). Vietnam has already been taking the first pla-
ce in the ranking since 2016, while Italy, which already ranked first (2014 and 2015), fell to the 4th place in 2016. Its positioning
has been improving since then: it reached the 2nd place in 2018. The trajectory of Cambodia is noteworthy. It appears among
the five most competitive countries in terms of footwear exports for the first time since 2014, reaching the 4th place in 2018.
Germany, in turn, lost one position, falling to the 5th place. Brazil, which ranked 11th in 2014, fell to the 13th place in 2015 and
2016, recovered one position in 2017 (12th place) and, in 2018, fell to the 15th place, the lowest place in the ranking so far.
POSITION OF THE COUNTRIES IN THE RANKING OF THE

COMPETITIVENESS INDEX OF FOOTWEAR EXPORTS
1º 1º VIETNAM
2º 2º ITALY
3º 3º CHINA
4º 4º CAMBOJA
5º 5º GERMANY
6º
7º
8º
9º
10º
11º
12º
13º
14º
15º 15º BRAZIL
51º
2014 2015 2016 2017 2018

41
OPPORTUNITIES
VIETNAM
When analyzing the items that make up the competitiveness of each country alone, Vietnam improved its place in all the analy-
zed criteria, except in “Markets,” in which it lost nine places, and in “Market Share and Specialization,” in which the country already
ranked first. The most notable advance of the country was in “Deconcentration,” criterion in which the country moved from the
55th to the 15th place between 2014 and 2018. Thus, Vietnam left the 3rd place to take the 1st place in the overall competitiveness
ranking of the footwear sector during the period under analysis.
POSITION OF THE COMPETITIVENESS SUBINDEXES OF

FOOTWEAR EXPORTS IN THE GLOBAL RANKING
1º 1º 1º 1º
2º 2º 2º
3º 3º
4º
15º 17º
55º 26º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
TRADE MARKET SHARE

SIZE DYNAMISM DECONCENTRATION MARKETS FINAL
BALANCE SPECIALIZATION
ITALY
Italy, which ranked 1st in the overall competitiveness ranking in 2014, moved to the 2nd place in 2018, given the country’s
retreat in some of the criteria analyzed, with emphasis on “Deconcentration,” in which it went from the 3rd to the 11th place,
and also “Market Share & Specialization” in which it lost two positions, going from the 3rd to the 5th place. In “Dynamism,”
there was an improvement, going from the 16th to the 4th place, which allowed Italy to lose only one position in the overall
ranking during the period.

1º
2º 2º 2º 2º
3º 3º 3º 3º 3º 3º
4º
11º
16º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
TRADE MARKET SHARE

42
OPPORTUNITIES
CHINA
China remained in the 1st position in the criteria “Size” and “Markets,” continued occupying the 2nd place in “Market Share
and Specialization,” and advanced in the criterion “Deconcentration” (six positions). However, it dropped many positions in
“Dynamism” and ended up taking the 140th place in 2018. The combination of the performances in the different criteria
resulted in its going to the 3rd place in the overall competitiveness ranking.

1º 1º 1º 1º 1º
2º 2º 2º 2º
3º
4º
6º 10º
140º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
TRADE MARKET SHARE

BRAZIL
Brazil, in turn, lost four places in the period between 2014 and 2018 and ranked 15th. Despite climbing up many positions in
the criterion “Dynamism” (from the 122nd to the 26th place), that was not enough to improve its performance in the criterion
“Market Share & Specialization,” that is, the world performed better on average. That is why Brazil lost share. The country
also improved in the “Deconcentration” criterion (from the 14th to the 9th place). However, losses in all other criteria were
responsible for the lowering of Brazil’s position in the overall competitiveness ranking. The country lost eight places in terms
of “Market Share & Specialization,” five places in “Size,” four in “Markets,” and one in “Trade Balance.”

14º 8º 9º 14º 9º 10º 14º 11º 15º

19º
26º 30º 38º
122º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
TRADE MARKET SHARE

43
OPPORTUNITIES
4.2 ATTRACTIVENESS INDEX OF

It defines a ranking of countries with the best business opportunities for the Brazilian footwear market. The applied measu-
rement ranges from 0 to 100 points. Its periodicity is annual. The result encompasses 188 evaluated countries. The analyzed
subindexes are: Brazil Size, Brazil Dynamism, Relevance to Brazil and to the World, World Size, World Dynamism, and Ave-
rage Price. These subindexes end up defining a single aggregated index for each country, named Attractiveness Index of
Brazilian Footwear Exports.
Subindexes:
Brazil Size: represents the value (USD) of imports of Brazilian shoes in the pattern of imports of another country;
Brazil Dynamism: represents the average between the index numbers of the variation in value (USD) and the percentage
of footwear imports from Brazil;
Relevance to Brazil and to the World: evaluates the representativeness in value (USD) of footwear imports from a country
based on the average of the index numbers of the total imported value compared to that of Brazilian origin;
World Size: refers to the total footwear imports of the country in value (USD);
Dynamism: represents the average between the index numbers of the variation in value (USD) and the percentage of total
footwear imports of the country;
Average price: represents the average between the indicators of the average price (USD/Kg) of the country’s footwear im-
ports, from Brazil and from the world.
The most attractive countries for Brazilian footwear exports are France, Argentina, the United States, China, and Chile, in that
order. During the period from 2014 to 2018, there were changes in the ranking, with prominence to the advance of Argentina
(from the 21st to the 2nd place) and Chile (from the 8th to the 5th place). It is noteworthy that the changes in Argentina’s
attractiveness are based on the year 2018, that is, they still did not capture all the effects of the economic crisis that hit the
country. Thus, Argentina is expected to drop in the attractiveness ranking of Brazilian footwear in 2019.
POSITION OF THE COUNTRIES IN THE RANKING OF THE

ATTRACTIVENESS INDEX OF BRAZILIAN FOOTWEAR
1º 1º FRANCE
2º 2º ARGENTINA
3º 3º UNITED STATES
4º 4º CHINA
5º 5º CHILE
6º
7º
8º
9º
10º
11º
12º
13º
14º
15º
16º
17º
18º
19º
20º
21º
2014 2015 2016 2017 2018
44
OPPORTUNITIES
FRANCE
Despite changes in France’s position between 2014 and 2018, when considering only the first and the last year of the analy-
sis, the country takes the 1st place in the ranking. A significant improvement was perceived in the criterion “Average Price
Brazil and World,” in which it went from the 43rd to the 24th place, in addition to climbing up two positions in relation to
“Brazil Dynamism.” On the other hand, the country lost five places in relation to “World Dynamism” and one in “Relevance
to Brazil.” In addition, it kept the 3rd place in terms of “World Size” and “Brazil Size.”
POSITION OF THE ATTRACTIVENESS SUBINDEXES OF

BRAZILIAN FOOTWEAR IN THE GLOBAL RANKING
1º 1º
2º
3º 3º 3º 3º 3º
7º 12º
43º 24º 44º 42º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
AVERAGE RELEVANCE
WORLD WORLD BRAZIL BRAZIL FINAL
PRICE BRAZIL TO
DYNAMISM SIZE DYNAMISM SIZE RANKING
AND WORLD BRAZIL
ARGENTINA
Argentina, in turn, went up 19 positions in the overall ranking of attractiveness for Brazilian exports in the period from
2014 to 2018. The main determinants for this development were the country’s progress in “Brazil Dynamism,” in which
Argentina moved from the 134th to the 14th place, and “World Dynamism,” in which it advanced 104 positions during
the observed period.
POSITION OF THE ATTRACTIVENESS SUBINDEXES OF

BRAZILIAN FOOTWEAR IN THE GLOBAL RANKING
2º 2º 2º 2º
8º 14º
25º 21º
37º 36º 53º 38º
129º 134º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
AVERAGE RELEVANCE
PRICE BRAZIL TO
AND WORLD BRAZIL
45
OPPORTUNITIES
THE UNITED STATES

The United States advanced in some of the criteria that make up the attractiveness index, mainly in “Brazil Dynamism” (45
positions) and in “Brazil and World Average Price” (five positions) between 2014 and 2018. In addition, the country remained
in the 1st place in “World Size,” “Relevance to Brazil,” and “Brazil Size.” Despite the good results in the aforementioned criteria,
the loss of 106 positions in “World Dynamism” was significant for the loss of one place in the ranking, going from the 3rd to
the 2nd place among the most attractive countries for Brazilian footwear exports.
POSITION OF THE ATTRACTIVENESS SUBINDEXES OF BRAZILIAN FOOTWEAR IN THE GLOBAL RANKING

1º 1º 1º 1º 1º 1º
2º
3º
6º
16º 11º
112º 85º
130º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
AVERAGE RELEVANCE
PRICE BRAZIL TO
AND WORLD BRAZIL
CHINA
China lost one place in the attractiveness ranking between 2014 and 2018, despite the improvement registered in the indi-
cator “Brazil Dynamism,” in which it advanced 73 positions. However, the deterioration registered in “World Dynamism” and
in “Relevance to Brazil” was responsible for the country ranking 4th.

3º 3º
4º
5º 5º 10º
10º
13º 12º 14º
34º 35º 24º
97º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
AVERAGE RELEVANCE
PRICE BRAZIL TO
AND WORLD BRAZIL
CHILE
Finally, the fifth most attractive country for Brazilian footwear exports is Chile, according to the 2018 ranking. The country
has lost three positions in the overall ranking since 2014, which may be explained by its performance in “Brazil Dynamism,”
in which it moved from the 101st to the 44th place; “Relevance to Brazil,” in which it climbed up ten positions; and “Brazil and
World Average Price,” in which it improved by five positions.

5º
8º 8º 8º
18º 8º
19º 20º
28º 23º 39º 49º 101º 44º
2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018 2014 2018
AVERAGE RELEVANCE
PRICE BRAZIL TO
AND WORLD BRAZIL
46
OPPORTUNITIES
INFORMATION ON THE
MONITORING MARKET
Our team follows the structure and developments of All collected information is analyzed by professionals,
the economic and sectoral scenario, tracking any and who select the relevant aspects and organize the
all important information for its members. information according to the different demands of
the industry, meeting the particular needs of the
companies.
SCENARIO ANALYSIS PANORAMA OF

A semiannual event in which an economist discusses
the short-term prospects of the macroeconomic, BRAZILIAN FOOTWEAR
political, and sectoral scenarios. The content is made
available at the Market Intelligence Portal. EXPORTS
The content aims to analyze the detailing of Brazilian
footwear exports objectively, with greater segmentation.
CUSTOM STUDIES FOR

COMPANIES MARKET INTELLIGENCE
The unit assists in the selection of potential markets PORTAL
for the profile of the company's exports. For the It is an exclusive channel for Abicalçados' members
domestic market and marketing, in turn, the big where they can access information on the market. It
social data tool helps companies understand the makes it possible for them to check updated macroeco-
brand's consumer profile and to analyze the nomic and sectoral perspectives, in addition to market
competition, among other aspects. analyses.
47
inteligencia@abicalcados.com.br | www.abicalcados.com.br/inteligenciademercado
EXPERT
5.
EX
PERT
48
EXPERT
6.1 THE TWO L’S OF

THE BRAZILIAN ECONOMY
Marcos Tadeu Lélis
PhD in Economics
“THE SAME PATTERN In the past 12 years, the Brazilian economy has hit three considerably significant
bumps – 2009: global financial crisis (subprime); 2015/2016: political/economic crisis;
OF RECOVERY OF THE
and 2020: Covid-19 crisis. However, the economic activity quickly recovered after the
ECONOMY global financial crisis, in the shape of a V. This statement is evidenced by observing
IN BRAZIL DID NOT the growth rates of the Gross Domestic Product (GDP) in 2009 and 2010, respecti-
HAPPEN WITH THE vely, a decrease of 0.2% and a growth of 7.5%. It is interesting to note that the average
GDP growth for these two years was close to the yearly average registered in the ye-
POLITICAL/ECONOMIC ars 2000 (2001-2010), of around 3.7%. Consequently, the subprime crisis did not chan-
CRISIS ge the expansion of economic activity in the 2000s. However, the same pattern of
OF 2015/2016, IN THE recovery of the economy in Brazil did not happen with the political/economic crisis
of 2015/2016, in the shape of an L. It also seems that the recovery of Brazil’s economic
SHAPE OF AN L. IT
activity in the Covid-19 crisis will not follow the shape of a V. It will be more similar to a
ALSO SEEMS THAT second L. Therefore, it is possible to see the two L’s of the Brazilian economy.
THE
The Brazilian economy in 2014 already showed signs of a certain fragility, aiming at a
RECOVERY OF
GDP growth of 0.5% in that year. The Gross Fixed Capital Formation, which indicates
BRAZIL’S ECONOMIC investments by companies, families, and the government, established a contraction
ACTIVITY IN THE of 7.0%. At the same time, the Apparent Consumption of Machinery and Equipment
COVID-19 CRISIS by Companies, the main indicator of investments by the private sector and part of
the Gross Fixed Capital Formation, decreased by 9.5%. The importance of observing
WILL NOT FOLLOW the trajectory of investments by companies is justified by its association with the
THE SHAPE OF A V. future perspectives of the manufacturing industry for the pace of economic activi-
IT WILL BE MORE ty. In other words, there were already indications that the Brazilian economy would
no longer follow the same dynamics of the 2000s a year before the 2015/2016 crisis
SIMILAR TO A
arose. With the arising of the political crisis, when the economic crisis had already
SECOND started, the environment for the process of a deep decrease in economic activity is
L. THEREFORE, IT established. Therefore, in two years, a retraction of 6.7% is registered. Since the year
1900, there has been no accumulated decline of this magnitude in two years. In or-
IS POSSIBLE TO
der to get an idea of the size of the retraction, the effect of the 1930s crisis amounted
SEE THE TWO L’S to an accumulated GDP decrease of 5.5% in 1930 and 1931. The strategy for economic
OF THE BRAZILIAN recovery adopted during and after 2015/2016 was designed based on the concept of
ECONOMY.” “expansionary contraction.” It was thought that a consistent shock of cuts in gover-
nment spending could lead to gains in credibility and reactivate private investment.
That is, economic policy would signal responsible management and, thus, raise the
confidence of domestic and international investors. Thus, public investment was the
main adjustment variable, resulting in a real decrease of 47.2% between 2014 and
2019¹.
¹The three public spheres were taken into account. In addition, to construct the public
investment series, we used the methodology published in “Estimativas Mensais para
Formação Bruta de Capital Fixo Pública no Brasil (2002-2010)” [Monthly Estimates for
Gross Public Fixed Capital Formation in Brazil (2002-2010)]. Santos et al. Economia
Aplicada, v. 16, n. 3, 2012, pp. 445-473.
49
EXPERT
INDEX NUMBER APPARENT CONSUMPTION OF MACHINERY AND

EQUIPMENT AND PUBLIC INVESTMENT
(2010 PRICES) – (2016 1ST QUARTER = 100) – 1996 1ST QUARTER UNTIL 2019 4TH QUARTER:
350
2014-2019
300
250
200
150
100
50
0 INVESTMENT MACH EQUIP PUBLIC INVESTMENT

1T96
4T96
3T97
2T98
1T99
4T99
3T00
2T01
1T02
4T02
4T03
2T04
1T05
4T05
3T06
2T07
T08
4T08
3T09
2T10
1T11
4T11
3T12
2T13
1T14
3T15
2T16
1T17
3T18
2T19
SOURCE: IPEA E SECRETARIA DO TESOURO NACIONAL.
Not unlike the development of public investment, the Apparent Consumption of Ma- “THUS, THE L
chinery and Equipment decreased by 19.4% in the same years. Thus, it was not possible
OF THE CRISIS IS
to achieve the expected resumption of private investment in Brazil, but, on the contrary,
a decrease in public investment and in companies’ spending on machinery and equi- SHAPED – LOW
pment. This joint development of the two types of investments is visible in the figure GROWTH – IN THE
above. PERIOD BETWEEN
The figure shows an expressive association between the developments of public invest- THE YEARS 2015
ment and of consumption of machinery and equipment. In the 1990s, both series were AND 2019. THERE
somewhat stable, such that from 2004 onwards there was an upward trend in both types IS NO DOUBT THAT
of investment. The highlighted years show the strong contraction in these expenses with
THIS FIRST L LEFT
investment, resulting in the decrease already mentioned in the previous paragraph. In
fact, the concept of “expansionary contraction,” the adjustment based on public invest- DEEP MARKS IN
ment, seems unlikely to expand private investment. Thus, the difficulty in boosting public THE BRAZILIAN
and private investments individualizes an average annual GDP growth of close to 1.2%
ECONOMY, LEADING
between 2017 and 2019. Therefore, even with a deeply depressed base, the Brazilian eco-
nomy does not reach its most current average growth pattern (between 1990 and 2014) of TO A FRANKLY
2.6% per year. Thus, the L of the crisis is shaped – low growth – in the period between the LACERATED
years 2015 and 2019. There is no doubt that this first L left deep marks in the Brazilian eco- ECONOMIC SYSTEM,
nomy, leading to a frankly lacerated economic system, with a limited capacity to react.
WITH A LIMITED
This statement is supported by a set of economic indicators: unemployment + unde- CAPACITY TO
remployment rate: 18.4% (average Jan./Feb./Mar. 2020); household indebtedness: 66.6% REACT.”
(April 2020); informality in the labor market: 53.2% of jobs in the private sector (average
50
EXPERT
Imagem: Freepik.com by kjpargeter / natanaelginting

Jan./Feb./Mar. 2020); capacity utilization of the industry: 57% (April 2020); decrease in the
“FISCAL POLICY
number of establishments with more than ten employees between 2014 and 2018: ma-
nufacturing industry - retraction of 13.2%, civil construction – a decrease of 28.5%; share of WILL BE
the manufacturing industry in the GDP: 10.5% (forecast for 2019); not to mention the low PARAMOUNT
level of private and public investment, detailed previously. It is in this environment that
FOR THE RETURN
the second L of the Brazilian economy can be shaped.
OF SIGNIFICANT,
For the year 2020, Brazil’s GDP is estimated to decrease by around 7% by a group of insti- CONSTANT
tutions (IMF, ECLAC, FGV, The Economist, and the World Bank). By confirming this result, ECONOMIC
the historic mark of the greatest decrease in economic activity in a single year is reached.
In turn, there was previously a retraction of 4.3% in 1981 (debt crisis) and a decrease of 4.4%
GROWTH
in 1990 (Collor Plan). Furthermore, the average annual growth of the Brazilian economy in IN BRAZIL.
the decade of 2010 (2011-2020) will possibly reach a rate of 0.1%, representing stagnation. CONSIDERING THE
It is not reasonable to expect that the recovery in Brazilian economic activity comes from
OPPORTUNITY
families, given the expectation of rising unemployment rates and their indebtedness. On
the other hand, companies will be operating with a historically very low level of capacity COST OF
utilization and with little prospects for growth of demand. Therefore, economic policies IMPLEMENTING
will become essential for the second L of the Brazilian economy not to be established.
FISCAL POLICY IS
Fiscal policy will be paramount for the return of significant, constant economic growth
in Brazil. Considering the opportunity cost of implementing fiscal policy is important, in IMPORTANT, IN
turn. Two vectors will be paramount in these policies: (1) minimizing income inequality; TURN.”
and (2) raising the productivity of the Brazilian economy. With regards to the first item, it
would be fundamental to maintain the minimum income program of R$ 600.00 already
implemented by the Federal Government. In relation to the second item, in turn, it is
essential to have a consistent program to increase public investment, in a clear trend of
contraction since 2014. With these measures, it is possible to expect that the resumption
of Brazilian economic activity will be more consistent and happen at a speed that will
rapidly diminish the socio-economic effects of the major contraction in 2020.
51
METHODOLO GY
6.
METHO
DOLO
GY
52
METHODOLO GY
The Sectoral Report of the Footwear Industry in Brazil is published annually. The data it presents was collected from official sources
or estimated based on them, together with the information collected through the “Production Survey - Abicalçados.” Thus, data
may change between the reported years, according to updates and revisions by the sources. The Annual Industrial Survey - Product,
published by IBGE, revised data referring to footwear production for the years 2015, 2016, and 2017.
The “Production Survey - Abicalçados” is a structured questionnaire with voluntary responses, applied to a sample. The sample of
the companies that answer is estimated to represent about 70% of the domestic production output in pairs. The information is
confidential and will not be disclosed individually. Only consolidated data will be reported.
6.1 PRODUCTION DATA

DEFINITIONS - FOOTWEAR PRODUCTION
The Pesquisa Industrial Anual – Produto (PIA – Produto) [Annual Industrial Survey – Product] is a publication that measures produc-
tion and sales, in terms of quantity and value, of the industrial products and services generated in the country. The survey covers the
population of local production units with 30 or more employees, which earned gross revenues higher than the cut-off in relation to
the previous year. Given its scope, PIA-Produto is published with a two-year lag. The last publication refers to 2017.
The Produção Industrial Mensal – Produção Física (PIM-PF) [Monthly Industrial Production – Tangible Production] publicizes the
short-term behavior of the volume of domestic production through an index number. The panel of monitored products and infor-
mants for the index is based on PIA-Empresa and PIA-Produto (2010) and represents 85% of the value of manufacturing, based on
a fixed weighting of the indicators. Otherwise, the indexes are weighted averages of relative quantities, with weights defined by the
value of each product, estimated based on the current quantities in the previous month and on the prices of the base period (base
2012 = 100).
The Production Survey - Abicalçados was collected through the distribution of a structured questionnaire, covering information
referring to the years 2017, 2018, and 2019, and the expected developments for the year 2020. In terms of production volume, it was
possible to verify that the sample of the questionnaire represented about 76% of the production estimated by Abicalçados based on
the production identified by IBGE in 2017.
APPLICATION - FOOTWEAR PRODUCTION

The production data released by Abicalçados for the years 2018 and 2019 is based on the official IBGE base for the year 2017 (PIA-
-produto) and represents a total of 1,362 informant companies in the segment. Thus, footwear production in the years 2018 and 2019
was constructed considering the average weighted annual growth, observed in (1) the sample collected by Abicalçados’ Production
Survey and by IBGE’s PIA-produto in 2017; and (2) the annual average growth of PIM-PF, published by IBGE monthly.
The production estimate for the year 2020 is based on the same methodological conception. It uses an average growth forecast
through Abicalçados’ (weighted) sample, defined by the sample companies themselves and through the statistical projection of
the PIM-PF index for the months of 2020. This establishes the estimate of the average annual growth of IBGE’s tangible production
index for 2020, based on a confidence interval (maximum and minimum point). This confidence interval is intended to minimize
the error caused by the change in the estimated trend for 2020, arriving at interval, non-point estimates.
DEFINITIONS - PRODUCTION REGIONALIZATION

The Relação Anual de Informações Sociais (RAIS) [Annual Report of Social Information] is an annual report with socioeconomic in-
formation requested by the Brazilian Ministry of Labor and Employment to legal entities and other employers. This annual report is
the source of statistics on the number of companies and permanent jobs, by state and industry.
The Pesquisa Industrial Anual – Empresa (PIA – Empresa) [Annual Industrial Survey - Company] is an annual report that aims to
identify the basic structural characteristics of the business segment of the manufacturing activity. Its results subsidize the Sistema
de Contas Nacionais [System of National Accounts] with estimates of production value, intermediate consumption, added value, ca-
pital formation, and employed personnel. The survey addresses data on the number of companies, employed personnel (as decla-
red by the companies – formal and informal), costs and expenses, personnel expenses, revenues, value of the production, and value
of manufacturing, based on the Classificação Nacional de Atividades Econômicas [National Classification of Economic Activities]
(CNAE 2.0). The PIA-Empresa covers the local production units with thirty or more employed people, which earned gross revenues
higher than the cut-off in the year before the survey.
53
METHODOLO GY
APPLICATION - PRODUCTION REGIONALIZATION

The main challenge to estimate footwear production, considering a regional design, more specifically a definition by states of the
federation, lies in the segmentation of the production between the production units and in the capacity of the footwear industry
to move geographically agilely and constantly (light industry). Thus, the regionalized production of footwear in the years 2018 and
2019 is estimated based on the production by state of PIA-Produto in 2017 and on a set of indicators from RAIS and PIA-Empresa.
The production estimates by state for the years 2018 and 2019, published by Abicalçados, take into account a set of regionalized
information, such as: number of companies, employed personnel (PIA-Empresa and RAIS), and value of the production (PIA-Em-
presa). Therefore, the regionalized footwear production was estimated based on 2017’s PIA-Produto and on a weighted average of
the developments of employment, company, and value of the production by state.
6.2 STATISTICAL PROJECTIONS

DEFINITIONS - STATISTICAL PROJECTIONS
Structural Models in State Space and Kalman Filter: the structural models are defined with the objective of extracting the so-called
unobserved components of a series analyzed over time: Trend, Seasonality, Cycles, and Irregularities. The statistical treatment of a
structural model can be based on the form of State Space. Thus, two different stochastic equations are characterized: (1) equation of
measurement or of the observations; and (2) equation of transition or of state. The definition of the statistical model in State Space
allows the estimated parameters to be updated all the time, defining non-linear models. The Kalman Filter is an algorithm that pro-
vides the final update of each estimated parameter. The main advantage of structural statistical models in State Space and the Kal-
man filter lies in the ability to change the behavior of the unobserved components over time, absorbing any structural alterations
that occurred in the estimated parameters. This statistical structure enables estimates of trends of the time series more accurately.
APPLICATION - STATISTICAL PROJECTIONS

The available data for 2020 is collected based on the series observed monthly, up to the finalization of Abicalçados’ Report. The data
referring to the remaining months in the year 2020 was estimated through the structural model in State Space and the Kalman
filter, based on the trend for the observed series. At the same time, a weighting of this statistical trend was established according
to future expectations for the Brazilian economy. It is important to point out that we chose interval estimates vis-à-vis the estimates
per point, since, when defining the confidence interval for the projection, we have a procedure to minimize errors and to establish
optimistic and pessimistic scenarios.
6.3 SOURCES
BCB | Banco Central do Brasil [Brazilian Central Bank] | bcb.gov.br Euromonitor International | euromonitor.com
IBGE | Instituto Brasileiro de Geografia e Estatística [Brazilian Institute of Geography and Statistics] | ibge.gov.br
IBRE/FGV | Instituto Brasileiro de Economia - Fundação Getúlio Vargas [Brazilian Institute of Economy - Getúlio Vargas Foundation]
| portalibre.fgv.br IMF | International Monetary Fund | imf.org
ME | Ministério da Economia, Industria, Comércio Exterior e Serviços [Ministry of Economy, Industry, Foreign Trade, and Services] |
mdic.gov.br
MTE - RAIS/CAGED | Ministério do Trabalho e Emprego - Relação Anual de Informações Sociais e Cadastro Geral de Empregados e
Desempregados [Ministry of Labor and Employment - Annual Relation of Social Information and General Registry of Employed and
Unemployed People] | trabalho.gov.br
UNComtrade | United Nations Comtrade | comtrade.un.org World Shoe Review | worldshoereview.co.uk
WTO | World Trade Organization | wto.org
54
METHODOLO GY
6.4 CLASSIFICATION OF THE HARMONIZED COMMODITY

DESCRIPTION AND CODING SYSTEM
The codes referring to the Harmonized Commodity Description and Coding System (SH6) referring to the footwear industry are co-
vered by chapter 64 “Footwear, gaiters and the like; parts of such articles,” segmented by headings 6401, for injected footwear; 6402,
for footwear made of synthetic material; 6403, for leather shoes; 6404, for footwear of textile materials; and 6405, for other materials.
The data reported by segments meets the following classification: (1) flip-flops are included in SH6 6402.20; (2) athletic shoes are
represented by SH6 6402.12, 6402.19, 6403.12, 6403.19, and 6404.11; (3) the other headings of SH6 codes are represented in the group
“other footwear.”
6.5 DEFINITION OF THE FOOTWEAR CLUSTERS

The cities that make up each listed footwear cluster were identified based on previously published materials and verified with the
local unions. The list of cities in each cluster is below:
RIO GRANDE DO SUL

Cluster of Vale do Rio dos Sinos - Araricá, Campo Bom, Canoas, Dois Irmãos, Estância Velha, Esteio, Ivoti, Nova Hartz, Nova Santa Rita,
Novo Hamburgo, Portão, São Leopoldo, Sapiranga, and Sapucaia do Sul
Cluster of Vale do Paranhana/Encosta da Serra - Igrejinha, Lindolfo Collor, Morro Reuter, Parobé, Picada Café, Presidente Lucena,
Riozinho, Rolante, Santa Maria do Herval, Taquara, and Três Coroas
SÃO PAULO
Cluster of Franca - Franca
Cluster of Jaú - Jaú
Cluster of Birigui - Birigui, Alto Alegre, Andradina, Araçatuba, Auriflama, Avanhandava, Barbosa, Bento de Abreu, Bilac, Braúna, Brejo
Alegre, Buritama, Castilho, Clementina, Coroados, Gabriel Monteiro, Gastão Vidigal, General Salgado, Glicério, Guaracai, Guarara-
pes, Guzolândia, Lavínia, Lourdes, Luiziânia, Mirandópolis, Murutinga do Sul, Penápolis, Piacatu, Rubiacea, Santopolis do Aguapeí,
Turiuba, Valparaiso, Lins, Macaubal, Monções, Nova Castilho, Nova Luzitânia, Planalto, Santo Antônio do Aracanguá, Zacarias, and
União Paulista
MINAS GERAIS
Cluster of Nova Serrana - Araújos, Bom Despacho, Conceição do Pará, Divinópolis, Igaratinga, Leandro Ferreira, Nova Serrana, Onça
de Pitangui, Pará de Minas, Perdigão, Pitangui, and São Gonçalo do Pará
PARAÍBA
Cluster of Campina Grande - Campina Grande, Mogeiro, Araruna, Guarabira, Serra Redonda, Ingá, Alagoa Nova Cluster of João Pes-
soa - João Pessoa, Santa Rita, and Bayeux
SANTA CATARINA
Cluster of São João Batista - Tijucas, Canelinha, Nova Trento, Major Gercino, and São João Batista
CEARÁ
Cluster of Fortaleza - Fortaleza
Cluster of Sobral - Sobral
Cluster of Horizonte - Horizonte
Juazeiro do Norte - Crato, Juazeiro do Norte, Barbalha, Jardim, Missão Velha, Nova Olinda, Porteiras, and Santana do Cariri
55
SECTORAL REPORT
FOOTWEAR INDUSTRY
BRAZIL

Sector Report - Footwear Industry 2020

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SECTORAL REPORT

01. LOGO + DECODIFICADOR

Sectoral Report: Brazilian Footwear Industry 2020

01. LOGO + DECODIFICADOR

PRESIDENT OF THE GOVERNING BOARD

2.1 Global Economic Panorama 07

3.1 Footwear Production 17

4. OPPORTUNITIES FOR THE INTERNATIONAL MARKET 40

6.1 Methodology: Production Data 53

2.1 GLOBAL ECONOMIC PANORAMA

TOTAL EXPORTS AND GROWTH OF THE GLOBAL GDP

12,9 3,8 3,6

SOURCE: WTO; IMF (APRIL/2020) (*) 2020: AS ESTIMATED BY ABICALÇADOS/IMF

2.2 GLOBAL ECONOMIC PANORAMA

EVOLUTION OF GLOBAL FOOTWEAR TRADE, CONSUMPTION, AND PRODUCTION

21,5 22,1 22,2

12,5 12,7 12,8

SOURCE: WSR | (*) AS ESTIMATED BY ABICALÇADOS.

2.2.1 MAIN PRODUCING COUNTRIES

MAIN FOOTWEAR PRODUCING COUNTRIES IN 2018

COUNTRY 2016 2017 2018 VARIATION 2017-2018

CHINA 11.116 11.410 11.545 1,2%

2.2.2 MAIN CONSUMING COUNTRIES

MAIN FOOTWEAR CONSUMING COUNTRIES IN 2018

COUNTRY 2016 2017 2018 VARIATION 2017-2018

CHINA 3.201 3.291 3.367 2,3%

COUNTRIES WITH THE LARGEST PER CAPITA CONSUMPTION OF FOOTWEAR IN 2018

PAIRS PER INHABITANT

COUNTRY 2016 2017 2018 VARIATION 2017-2018

NORWAY 7,1 7,2 7,7 6,4%

2.2.3 MAIN EXPORTING COUNTRIES

MAIN FOOTWEAR EXPORTING COUNTRIES IN 2018

COUNTRY 2016 2017 2018 VARIATION 2017-2018

CHINA 8.049 8.258 8.324 0,8%

MAIN FOOTWEAR EXPORTING COUNTRIES IN 2018

COUNTRY 2016 2017 2018 VARIATION 2017-2018

CHINA 44.886 45.682 44.673 -2,2%

2.2.4 MAIN IMPORTING COUNTRIES

MAIN FOOTWEAR IMPORTING COUNTRIES IN 2018

UNITED STATES UNITED KINGDOM GERMANY

COUNTRY 2016 2017 2018 VARIATION 2017-2018

UNITED STATES 2.338 2.379 2.446 2,8%

MAIN FOOTWEAR IMPORTING COUNTRIES IN 2018

COUNTRY 2016 2017 2018 VARIATION 2017-2018

UNITED STATES 26.151 26.241 27.194 3,6%

3.1 FOOTWEAR PRODUCTION

NATIONAL FOOTWEAR PRODUCTION

908,2 23,3 23,9

2017 2018 2019 2020* 2017 2018 2019 2020*

MILLION PAIRS BILLION R$

ANNUAL VARIATION OF THE FOOTWEAR PRODUCTION

2017 2018 2019 2020* 2017 2018 2019 2020*

SERVICES RELATED TO PRODUCTION:

SHARE IN THE TOTAL VALUE OF MANUFACTURING SERVICES

2017 2018 2019

3,2% 3,4% 3,2%

Sewing 24,8% 16,7%

3.1.1 CAPACITY UTILIZATION RATE (CUR)

2017 2018 2019

75,0% 76,0% 76,9%

3.1.2 PRODUCTION SEGMENTATION

SEGMENTATION OF THE BRAZILIAN FOOTWEAR PRODUCTION BY MAJOR REGIONS

SOUTHEAST CENTRO OESTE 0,6% 0,6% 26,8%