Ferretti, the Italian luxury yacht builder, is turning to the new super rich of Brazil as sales have slumped to its traditional 'old economy' customers in the marinas of the Mediterranean.
The company plans to boost its Brazilian workforce from 600 to 1,000 and increase sales by up to 15 per cent annually during the next three to four years, chief executive Giancarlo Galeone told the Financial Times.
Brazil is fast becoming one of the top new investment destinations for the yachting industry thanks to surging salaries, the country's 7,400 km of coastline and year-round warm weather.
However, as international yacht makers look beyond stagnant markets in Europe and the US, the Latin American country could soon be overwhelmed by a glut of supply, analysts have warned.
"Brazil is a very attractive market. The difference between Brazil and China, for example, is that there is already a culture of yachting here," Mr. Galeone said.
"There are people who like boating; there are harbours and yachting clubs."
More Brazilians are also able to afford Ferretti's yachts, which range in price from €300,000 ($429,000 U.S.) to €80m. Chief executives and directors in São Paulo earned more last year than their counterparts in New York and London, according to the headhunting firm Dasein Executive.
"Many of the customers don't even know how to operate the boats. They just hire a crew and use them as what we call 'cocktail boats'," said Marcio Christiansen, head of Ferretti's group in Brazil. "They certainly wouldn't go out fishing on them."
Revenue from Ferretti's Brazil group has tripled over the past three years and is expected to reach $100-million in the year to end-August.
Sales from the main Ferretti group are expected to grow about 10 per cent to €550-million in the year to August 2011 and reach about €700-million in 2013, Mr. Galeone said.
Revenue from the Mediterranean region is only a third of what it was before the global financial crisis hit.
In Greece, sales have dropped from €30-million-€40-million a year to close to zero this year after the group managed to sell only one small boat, Mr. Galeone said.
However, yacht makers such as Ferretti should be braced for tough competition in Brazil, said Eduardo Colunna, president of the Brazilian Boat Building Association (Acobar). "Foreign companies are flocking here because of the situation abroad, but our market is slowing," he said. "Some are also imagining the market to be bigger than it is." Strained capacity at Brazil's harbours and growing environmental concerns also threaten to limit demand, Mr. Colunna said.
Brazil is expected to produce about 5,200 sport and leisure boats in 2011 compared to 4,700 last year, according to Acobar.