Midsize companies adapt to export under Mercosur-EU pact

Trade between Brazil and Europe reached $100 billion for the first time in 2025. With an eye on that record and the trade agreement between Mercosur and the European Union, in force since May 1 after more than 25 years of negotiations, Brazilian midsize companies are preparing to export to or increase sales in Europe. The path for brands seeking to establish themselves in the demanding European market, however, requires a long-term international vision and a commitment to quality across the production chain to meet regulatory requirements.

The agreement eliminates tariffs on 92% of Mercosur exports. However, for companies to take advantage of its benefits, they must comply with EU sanitary and phytosanitary standards, which were not relaxed. The requirements also include compliance with the EU Deforestation Regulation (EUDR).

Santa Catarina-based Peach Up, a cosmetics brand whose flagship product is a cream that reduces sagging and cellulite, has just obtained a license to sell the product in the EU’s 27 countries, but the process took nine months. “The EU is very demanding, more than the United States,” says company founder Lu Soares.

Peach Up’s route to international expansion, after posting revenue of R$20 million in 2025, began with the U.S. Food and Drug Administration (FDA). “European agencies look at the FDA; if it has not been approved there, they do not approve it either. It was a fundamental step to ensure credibility and the technical approval needed to enter the EU,” she says.

The company had to alter the product’s original formula, removing an orange dye at the request of the U.S. agency. It also had to prove that the cream’s packaging, imported from China, does not contain any toxic ingredients. Another requirement is the presence of a technical officer on European soil. With the EU certification newly issued, Peach Up is seeking sales representatives on the continent. The first shipments are expected within 90 days. With the Mercosur-EU agreement, Soares projects a reduction in tax costs of around 30%.

Ceará-based Labotrat, also in the cosmetics segment, has already completed all stages required to operate in Europe. André Rios, the company’s commercial director, says the most significant impact of the agreement is the simplification of processes, which take from three months to a year for regulatory approval.

Consumers in Europe should see savings of around 10% on the final price of Labotrat products, Rios estimates. In the production chain, he believes the reduction could be even greater when considering the full manufacturing package. This includes eliminating tariffs on machinery, equipment, and advanced chemical inputs from Europe, such as fragrances and high-tech molecules, which are currently heavily taxed.

With revenue of R$230 million last year, Labotrat shipped its first container to Europe about a month ago and began operations in Portugal at Wells, a beauty products chain with more than 100 stores in the country.

“The Mercosur-EU agreement will expand, accelerate, and reduce bureaucracy and taxation,” Rios says. In his assessment, the impact should be felt next year because of the gradual implementation of the bilateral pact. The company already has expansion plans for Spain.

In Bahia, Amma Chocolate, a midsize company in the organic cocoa segment, is reactivating its operations in the European market. Exports, interrupted during the COVID-19 pandemic, are resuming to France, Spain, and Denmark. The company already holds an official organic seal in Europe, which certifies compliance with requirements such as supply-chain development and cocoa cultivation in agroforestry systems. “We project an improvement in taxation of between 5% and 15%,” says Fernanda Schwarzstein, Amma’s general manager. In addition to exports, the company sees benefits in importing technology. Although Amma uses entirely domestic ingredients, part of its industrial machinery is still imported.

Virginia Vaamonde, CEO of GS1 Brasil, the local arm of the global organization that standardizes product barcodes, sees more requirements for the production chain. “There are regulations that provide for deforestation-free products, as well as concerns about origin, safety, the circular economy, and sustainability,” she says.

In GS1 Brasil’s assessment, the agreement highlights the role of traceability in exports. “When a product is created, it needs an identification so it can be understood in the global supply chain. That is what we do. Midsize companies need our support more than large ones, which have legal structures,” she says.

Of GS1’s 61,000 members, 25% are midsize companies. To support the market, the organization plans to launch technical guidance materials explaining European requirements to entrepreneurs. GS1 Brasil’s priority is to ensure that each link in the production chain is aligned with the standards.

For Camila Nicolau, a lawyer at Tardioli Lima, which serves midsize agribusiness companies—a sector that accounts for 49.5% of Brazilian exports—compliance with environmental and traceability standards will no longer be a competitive advantage but a condition for survival. “Compliance with ESG [environmental, social, and governance] rules is no longer a matter of marketing; it is a matter of barriers,” she says.

Over the past year, Nicolau has seen requests for court-supervised reorganization among its small- and midsize-agribusiness clients increase by 30% to 40%. A potential inability to adapt to the new technical and climate requirements could aggravate that trend, she says. To mitigate risks, companies need specialized advisory services on multiple fronts: sanitary standards, labeling, legal adequacy of international contracts, and, above all, trademark registration in the 27 countries of the European bloc to avoid unfair competition.

Prática, a Brazilian equipment company for the food sector, opened an office in Cologne, Germany, last year and plans to go public on the Madrid Stock Exchange by the end of 2026. André Rezende, the company’s co-founder, says compliance with local standards is an indispensable investment. The company had to conduct electromagnetic compatibility tests, a requirement that does not apply in the Brazilian market but is essential in the Old Continent. To adapt just one of its lines—speed ovens—the investment in certifications and special supplier development was around €150,000.

With revenue of R$460 million last year, the company is optimistic about the elimination of import tariffs in its segment. Rezende notes that the international arm already accounts for 25% to 30% of revenue—sales to the European market alone rose 73% last year.

Source: Valor International

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