Latin America report

Long-term opportunity on the Brazil border

As plans to open more duty free border shops in Brazil take shape, ASUTIL Secretary General José Luis Donagaray gives Liam Coleman his early reflections on this emerging channel in a vital market. While this interview was conducted before the COVID-19 crisis escalated, the potential of the land border duty free business remains (and perhaps increases).

In November 2019, 170 delegates gathered in Porto Alegre for Encuentro de Frontera, a new event dedicated to the embryonic Brazilian border store market.

Although the conference had been announced less than three months previously, the strong attendance underlined the high level of interest in this fledgling channel. That interest was initially sparked by the introduction of regulations in 2018 that permitted the opening of land border duty free at 32 border cities across Brazil.

There are now seven of these stores up and running in those border cities, with one operated by Dufry, one by Duty Free Americas, and the others by smaller, mainly family-owned companies. A further five stores are scheduled to open by the middle of the year.

Dufry Chief Executive Officer Central & South America René Riedi says the approval of Brazillian border stores was an “important milestone for the country and for the Brazilian economy”.

“This is a business that has a lot of potential but needs to be well developed,” adds José Luis Donagaray, Secretary General of Asociación Sudamericana de Tiendas Libres (ASUTIL), which co-organised the November conference with CEFSU, the Chamber of Uruguayan Free Shop Operators.

Representatives from the border shops open to date discuss the challenges of the channel at the November event

One of the main challenges faced by some of the family-owned stores is that the average spend is “a little bit low” Donagaray adds, with these retailers struggling to secure supply of products. One of the main reasons ASUTIL organised last November’s conference was to create networking opportunities for the smaller operators to be introduced to brand owners.

The Encuentro de Frontera conference was also a chance for operators and suppliers of all sizes to be fully educated on border stores and the potential of this new channel. “We need to make operators and suppliers aware that this is a different situation,” Donagaray says. “This is not an airport, where you have a walk-through store. You have to call the people to your store and it is more in competition with the domestic market than with other duty free.”

An important message from last year’s event was the need to maximise learnings from the Uruguayan border store market. There, duty free stores can account for more than 30% of the employment opportunities for the active population in some border towns.

In one conference session, representatives from five companies that have opened stores – Dufry do Brasil, Free Shop Caraballat, New York Free Shop, Central Free Shop and Duty Free Americas – discussed their individual stores and the challenges they faced.

Riedi comments: “Dufry is still on a learning curve and working to improve even further its border duty free operation. Having said that, the company is focusing on the product assortment in order to adapt the offer to the new customer profile, thus guaranteeing they have Dufry’s world-class retail experience.”

An increase in shopping allowances represents an opportunity for retailers once travel begins again post-COVID-1-9

All of the retailers said there had been bureaucratic difficulties that needed ironing out. Donagaray adds, four months on from the conference, that there had been difficulties with the coding of products for Brazilian customs, but that these bureaucratic issues are becoming less acute.

Reflecting on Encuentro de Frontera, Donagaray says it achieved its aims of informing stakeholders and encouraging collaboration. To maintain this momentum, ASUTIL has started organising webinars to educate border store operators, with the first one taking place in March. The association is also actively planning another conference for the autumn, which is likely to take place in the first week of November in Foz do Iguaçu, according to Donagaray.

In the meantime, the association is pushing for an increase in the duty free limit for Brazilians purchasing from border stores in Brazil. On 1 January, an increase in the duty free allowance from US$500 to US$1,000 for travellers arriving at Brazilian airports took effect, as did an increase from US$300 to US$500 for those entering Brazil via a land border.

Yet the limit for those leaving Brazil remains at US$300. Donagaray says ASUTIL is calling for this amount to also be increased to US$500. “We want to have everything harmonised,” he adds.

Brazil’s land borders are currently (as of 31 March) closed to all but Brazilian citizens and resident foreign nationals and border stores have been temporarily closed. Nonetheless, ASUTIL is working closely with authorities to support the retailers, with this new channel representing a sizeable opportunity once business returns.

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The Moodie Davitt eZine

Issue 278 | 7 April 2020

The Moodie Davitt eZine is published 12 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit and to subscribe, please e-mail

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