Brazilian market has suffered from the last economic crisis, considered to be the strongest one in history. The shy recovery shown in the first quarter of 2017 has been considered enough motivation to bring new investments and business to the Brazilian market. It is now possible to identify a considerable number of investments activities taking place to bring new products and companies to the Brazilian market.
As a side effect of the crisis, the consumer demand fell strongly on the premium segment, being redirected to basic products and in some extreme cases some products have been completely cut off the Brazilian supermarket lists. As a result supermarkets have taken action to adapt their product portfolio to the new consumers’s shopping list, including strong reduction on SKU’s available on the shelves and a new mix of products positioned on the value segment. The introduction of new products is currently conditioned to meet these conditions: substitute of a current product and price reduction.
Ranking as the world’s eighth-largest economy and the fifth-largest country, Brazil’s population of 210 million people is predominately urban (86 percent), with a stable middle class. The country’s expanding middle class increased from 12.5 million households to more than 21 million from 2000 to 2016 and is expected to grow to 22.3 million households by 2021.
During the peak of the recession in 2015, Brazilian consumers modified their consumption habits to accommodate higher food prices. “Bonus packs” and “price discounts” drove sales in 2016, but recent consumer trends have shifted towards focusing on the “value of money”. This trend means that consumers are not only interested in better deals, but that the quality of the product plays a more important role when considering a purchase. Trends show that Brazilians are purchasing less in quantity and focusing more on the quality of products. For this reason, long-term projections for retail food and beverage sales, which had dipped from a high in 2014, now indicate growth recovery.
By 2021, IHS Global Insight forecasts that Brazil’s rural population is expected to decrease by 2 percent while the urban population is expected to grow by 5 percent. Along with an aging population and growth in the labor force, consumers will continue to focus on the quality of food versus the quantity. Exposure of urban societies to larger scale retail markets will drive promotion potential and increase exposure of healthier food alternatives along with increased demand for high-end retail choices and imported products.
Searching for a healthier lifestyle Brazilians have spent over US $ 27.5 billion in 2015 on by organic, lactose-free, gluten-free, fat-free and more natural foods.
The growth rate of the segment is impressive: 20% yearly since 2012 compared to 8% in the rest of the world.The innovations range from a company created to reformulate the school cafeterias to investment funds that bet on the import of fruit puree packaged in sachets. They have all found space on the growing Brazilian market of heathy food, the fifth largest market for healthy food and beverages in the world.
Recovering from 2 % decrease on the market in 2016, top players the sector expect sales to grow around 5% in the second semester of 2017, compared to the same period last year.
With an annual volume of 138.6 million hectoliters (2015), Brazil plays an important role in the global brewing market, it is the third largest producer beer in the world. While the mainstream beer market has fallen in recent years the craft beer market comes in the opposite direction, growing at annual rates of 30% to 40% until 2016.
Although still not very expressive, especially when compared to the United States, this market now has 0.7% of the total volume of beers in the country, representing a volume of approximately 91 million liters annually of craft beers.