I’ve officially been demoted from Rooted Journeys co-author to guest contributor. Not because Suzanna said so (she never did), but because it turns out I’m just not very good at motivating myself to actually sit down and write something. But here I am, so vamos-lá.
Generally speaking, it seems that many Americans view Brazil as a chaotic tropical wonderland – think Carnaval, string bikinis, palm trees, samba dancing, bossa nova, favelas, drug lords…you know, all the fun stuff. In reality, one of the most defining features of Brazil as an expat in São Paulo is simply how ridiculously expensive it is. No matter how much you try to stop talking about it, and even more importantly, try to stop converting prices into dollars, it just won’t fade into the background as a simple fact of life. For those of us living it, it’s like a permanent fat lip – the moment you think it’s healing, you bite it again and want to take out your aggression on the old lady walking too slow on the street in front of you. That’s right, it makes you want to push an old lady. It’s that ridiculous. Although, just for the record, I would never actually push an old lady. And the prices here are worse than a fat lip. Maybe that wasn’t quite the right metaphor, but there’s no turning back now. Let’s keep moving.
A couple of recent articles have highlighted some of the effects of this charming Brazilian reality. The cover story a few weeks ago for Veja (a popular weekly magazine in Brazil) was titled Pague Um, Leve Dois, Tres, Quatro…. English translation: Pay for One, Get Two, Three, Four. The lead-off explains further (translated): “The favorable exchange rate alone does not explain the low prices that mesmerize Brazilians who shop in the United States.” To drive home the title, the article cites the happy fact that the cost of an iPhone in Brazil is the highest in the world, leaving shelves for $1,650 (USD equivalent) in Brazil. In the US, the same unlocked iPhone 4S (32GB) goes for $815. That puts it at just over double the price for us lucky brasileiros. But why stop there, it gets better! Asics sneakers that go for around $200 in the US? A cool $457 in the equivalent Brazilian play money. That’s 2.3 times the price. A PlayStation 3 goes for 2.8 times the price. Calvin Klein jeans are 3 times the price and a Guess handbag tops it off at 3.8 times the price. Go Brazil!
These are just random examples, but they do give an indication of general price levels. Not everything comes in at double the price, but it’s fair to say that São Paulo has justly earned its ranking as the 10th most expensive city in the world for expats and the most expensive in the Americas (Mercer Survey). So, you may ask “why”, which we ask ourselves constantly. Of course there is no simple explanation, though the Veja article presents a pretty reasonable set of factors. Here’s a summary:
- Exchange Rate – the Brazilian Real (currency) is about 25% stronger against the dollar than its long-term average making goods more expensive accordingly, especially imports.
- Demand – quite simply, growing demand is outstripping the country’s productive supply capacity. High demand + low supply = high prices.
- Tax Burden – the Brazilian tax burden is 36% on average versus around 25% in the US. The difference is even greater when considering additional taxes on goods Brazil classifies as “superfluous.” Plus, Brazilian import taxes are triple what they are in the US.
- Inflation – while the days of hyper-inflation have passed (hopefully for good), inflation is still significant and widens the price gap over time (6.5% inflation in Brazil last year versus 2% in the US)
- Competition – as a matter of policy, the US government prioritizes competition over protectionism and Brazil vice-versa. For example, whereas the US government made cheap credit available to US auto-makers to help them become more competitive with cheaper Asian imports, Brazil has chosen to simply elevate import taxes to artificially raise prices of the foreign competition.
- Economies of Scale – US companies generally focus on selling more at a lower margin whereas Brazilian companies tend to focus on a small market at a high margin
- Productivity – it’s just not rising fast enough relative to labor costs (due to low unemployment, a lack of qualified labor, insufficient investment, etc.)
The result? Prices that make your eyes pop and a growing class of Brazilian consumers that have become America’s big-spenders. It’s no wonder so many Brazilians take annual shopping trips to Miami and New York – they easily recoup the cost of the trip in savings on their purchases. Brazilians now spend more in the US than visitors from any other country – on average, $5,400 per person per trip in 2010 (article). Japanese tourists came in far behind at number two with $4,300 in spending per person. So next time you see people filling up suitcases with stuff in the mall, try a warm bem-vindo. Good chance they’re our neighbors.
So, please have some patience when you hear us (constantly) complaining about the prices here and be generous with your suitcase space when you come to visit – we’ll be filling it up.
PS – I had a coke and a nice sandwich for lunch today (filet, brie, arugula). No fries or chips or any extras. The tab was R$45. That’s about $26. For a sandwich.
For Carnaval this year, we did what many Brazilians do: take advantage of the time off of work to get out of town. Travel outside of Brazil these days tends to be less expensive than travel within the country; and even flights are equal, if not less, so we’re taking advantage. While it is a bummer to miss the festivities and traditions of Carnaval, we thoroughly enjoyed our wonderful vacation to Chile – full of sunshine, cool nights, tasty (and affordable) wine, lots of walks, and so much laughter thanks to our friends April and Jeff who joined our journey. Picture heavy post follows – enjoy!
Jeff and I started our time in Santiago with local Chilean beer and traditional dishes at Galindo in Bellavista, the neighborhood known as the bohemian part of town. This fun bar/restaurant was a perfect start to our trip and only a few minutes from our hotel.
Just outside of our hotel we were able to hop on the funicular for a ride to see the beautiful views from atop San Cristobal. You’ll notice very few clouds in the sky (though maybe a little smog held in by the not-so-far-off Andes), which is telling of how perfect the weather was for our trip (apparently quite typical for this time of year). Sunny, hot during the day, cool at night, nice and dry.
After our afternoon adventures we took a nap in our lovely hotel room at The Aubrey and then went to dinner at El Meson Nerudiano where we enjoyed a wonderful, intimate setting on the back patio, delicious seafood, THE BEST PISCO SOURS, and lovely live music.
Throughout our stay in Santiago, we truly enjoyed The Aubrey boutique hotel. The grounds are beautiful, the staff very sweet and accommodating and the breakfast just delicious.
On Saturday we caught up with our new favorite travel buddies and explored a few neighborhoods of Santiago, including Lastarria and Centro. We started and ended the day with ice cream at Emporio La Rosa, walked up the hill/park Cerro Santa Lucia, explored Plaza das Armas and ate a seafood lunch at the Mercado Central. We hit up a local, hole-in-the-wall bar La Piojera for “terremotos”, which I’ll let you read about on April’s entertaining blog (click here) and after that stumbled on to enjoy some Chilean contemporary art at Museo de Bellas Artes. Besides April’s bag getting snagged while we were too focused on the delicious ice cream and coffee (and Jeff being sad about how tiny his coffee was – see picture below), it was a flawless day that we ended in the hustle of Bellavista nightlife for dinner and drinks at Etniko.
Though all of our days in Chile were spectacular, the hands-down winner was our bike tour and wine tasting day with La Bicicleta Verde. It felt so good to be amongst the vineyards again, on a bike and breathing fresh air. Not to mention, the wine. Just spectacular. We ate some fresh almonds along the way (see picture below where they are drying out), drank wine straight from the barrels and learned a lot from our wonderful guide and winery hosts. We ended the tour with a tasty Chilean lunch (chicken stew, empanadas, pork ribs and of course more wine) at a little country house called K-feteria Tipica (no joke).
We enjoyed the evening back in Santiago sipping beers outside with beautiful cool evening weather.
Monday morning we savored our tasty breakfast at the hotel one last time and hopped in our rental car with April and Jeff to head to Valparaiso. We made a few stops in the Casablanca valley for more wine tasting at Vina Indomito and Metetic. We enjoyed the remote setting and tour at Metetic more than the more lounge-like setting of Indomito, but views from both were spectacular and the region, known for its white wine grapes, puts out some wonderful, refreshing wines. I also became minorly obsessed with the fact that there were llamas around – okay, alpacas, but still. Awesome.
Later in the evening we made it to Valparaiso, a funky port town spread over five or so very steep hills – each having it’s own name starting with cerro, meaning hill. We made our way to Cerro Alegre (aka Happy Hill) where we were staying. We spotted our hotel from way below and it only took us 3 to 4 attempts before we finally found a street that didn’t dead end into an 8-foot wall – many thanks to our brave driver Jeff Jones (the car was a manual!).
From the second upon arriving at Hotel Cerilo Armstrong, I knew I was going to love this town. Wonderful, colorful street art, rustic materials lining all buildings and spectacular views from every corner of the city. It is definitely not a place for everyone – ask most Brazilians and they’ll tell you to skip over the port city and head straight to Vina del Mar, the beach resort 20 km up the road – but, we loved it. Our hotel was perfect. A fun balance between rustic, contemporary and artsy with a great balcony and friendly staff.
We had one full day in which we took advantage of the sunshine and walked around a lot. We explored Pablo Neruda’s house La Sebastiana, wandered through different neighborhoods, hopped in to many cute shops (lots of fun jewelry and artsy accessories), ate tasty seafood, and of course, drank lots of wonderful Chilean wine.
We also rode up one of the many funiculars in Valparaiso, which transports pedestrians from the port up to the top of the hillside neighborhoods. While arguably much better than climbing hundreds of stairs, we all decided that once was enough due to the feeling that it might just fall apart, at any second.
We had lots of fun wandering and taking pictures. And as you might assume from pictures like this one, we had lots of laughs as well.
April and I memorialized our llama encounter with “So Sexy” alpaca wool “llamas” and we ended our day-of-wandering by spending an inordinate amount of time at a little shop called the Traveling Chili. We picked up everything from ceramic coffee mugs to special Chilean chili powder to beef jerky. We then went back and enjoyed our patio and the exceptional weather at the hotel suite with a few good games of Farkle, amazing cheese, bread and wine – all Chilean, obviously (besides Farkle, which is an American game April and Jeff have introduced us to. so fun.). Then we rolled ourselves out for one last Chilean dinner (tasty seafood) and more wine at a casual Chilean joint in the neighborhood.
The drive back to Santiago the next morning was easy and we even made it back in time to go to the Los Dominicos market, where I found a pretty copper ring and a nice alpaca shawl.
Let me tell you – good wine, excellent cheese, delicious seafood, beautiful jewelry and all at a reasonable price – I could have stayed for weeks/forever. Especially knowing how much more there is to see and do in Chile – skiing, patagonia, the desert, the lakes – we’ll be going back.