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Brazilians already have access to a wide variety of foreign imports and are highly receptive to foreign brand names which can demand premium prices over competing domestic products (KPMG, 1998). AG Barr should benefit from this trend and in entering the market, should consider playing on the Scottish origin of its products.

Environmental

Given the key ingredients of soft drinks (purified water, high fructose corn syrup, sugar or a combination of the two, carbon dioxide, some sodium and a large number of flavourings), the fact that Brazil is the world's biggest producer of sugar cane (Economist Intelligence Unit Limited, 1998a) could be advantageous to AG Barr.

Brazil's water quality may cause concern given that the water of most medium and large cities is contaminated and mining activity in the Amazon is causing damage to river systems (The Economist Intelligence Unit, 1998b). The quality of water that is needed in the manufacture of soft drinks is of greater importance than is generally appreciated ("How the soft drink industry treats its water" http://www.softdrink.ca/wateren.htm). As soft drink manufacturers need to treat water to reduce its alkalinity and pass it through a series of filters to remove impurities, the degree of pollution could have an effect on costs at this stage of production. There may also be challenges in terms of consumer perceptions, however this treatment of the water should in effect make soft drinks safer to drink than water, and therefore provide a positive perception.

Social

Population Size, Growth and Structure

According to the IBGE, Brazil's official statistical body, by June 1998 the population had reached 161.7 million, the fifth largest in the world. The population is forecast to reach 200.3 million in 2020 when it is expected to level off (The Economist Intelligence Unit Limited, 1998 a and b). The overall size and growth dynamic of the population is encouraging for companies looking at the Brazilian market.

Although Brazil's population is growing older with the median age increasing from 23 years in 1990 to 27 years in 2010 (ILO, quoted in Euromonitor 1992) by international standards the population is relatively young (The Economist Intelligence Unit Limited, 1998b). This is potentially a key statistic for Barr's, given that in the UK although the 10-24 year old age range accounts for only 20% of the UK's demographic make-up it is responsible for over 40% of carbonates consumption (Beverage Industry Articles http://just-drinks.com/features_detail.asp?art=98). If this trend is replicated in Brazil this makes Brazil an extremely attractive market opportunity, since in spite of an ageing of the population, the overall size still makes this a significant market segment.

The main language of Brazil is Portuguese. This will have implications for AG Barr in terms of communications - with officials, potential staff and potential customers.

Consumer Power

The population is expanding more slowly than the GDP, so income per head is rising more quickly, if unevenly (The Economist Intelligence Unit, 1998). Total consumer expenditure has increased from US$261.2 billion in 1991 to US$466.4 billion in 1996 (Euromonitor, 1998).

Income per head is highly skewed. Most Brazilians remain in the lowest income brackets with 52.5% of all households belonging to the D and E socio-economic strata (The Economist Intelligence Unit Limited, 1998).

Health

Public spending on health is low at around 2.7% of GDP in