Brazilian consumers demonstrate cautious behaviour in 2014

After a strong development in the recent years, the Brazilian economy is currently showing a moderate growth and it seems this new economic climate is reflected in the habits of the Brazilian consumer. Indeed, new research from Mintel – the first flagship report on all sectors of the Brazilian consumer market – reveals that this has been a year of ‘cautious consumerism’ in which the consumer is spending on basics such as in-home and house items, rather than big ticket items. Last year, nearly half (48%) of Brazilians claimed to be spending more on in-home food compared to the year before and 43% on household care products, such as cleaning, laundry and dishwashing products.

Furthermore, when asked about how they are planning to spend their extra money this year – over half (50%) of Brazilian consumers claimed leisure, 30% on putting money into a savings account and 28% on eating out. Conversely, 34% of Brazilian consumers claim they were spending, in 2013, less on technology and communications and 35% less on home improvement, such as furniture. Brazilian consumers are also cutting down holidays, with 32% of consumers claiming they were spending less in 2013.

Highlighting consumer priorities in Brazil, “sorting out my finances” (73%) ranks third in the most cited aims for the coming year – with males (76% versus 70% for females) and those aged between 25 and 34 years old (86%) as the main consumer groups that aim to organize their personal financial situation. However, demonstrating a move towards not only money oriented activities, the top of the list is: “take better care of my appearance” (75%), followed “spend more time with my family” (74%).

Sheila Sanalia, Consumer lifestyle analyst at Mintel, said:

“After a period of high spending, Brazilians are becoming more aware that they need to learn more about financial planning, how to save, invest and manage their income. While Brazilian consumers still want luxury items, they have learnt how to be more prudent. Consumers are spending more on day-to-day products and learning a new purchase behaviour of being more cautious. As they are being ‘forced’ to sort out their finances and think about their budget when shopping, they are more likely to want to learn the benefits of a product or service before buying, as comparing prices, quality, delivery and service. Customization and one-to-one marketing will be key factors in the country in the short and medium term, and not just directed at high-income socioeconomic groups.”

Mintel’s research also reveals the markets in which future growth lies. Indeed, over the next five years, alcoholic drinks (on-premise consumption) is predicted to achieve the highest growth rate in Brazil, nearly doubling its market, with 96% projected growth to 2018 (from R$ 46 bi in 2013 to R$ 90 bi in 2018). Communications and technology is the category with the next largest projected growth at 84% (from R$ 119 bi in 2013 to R$ 220 bi in 2018) , followed by house items (60%), pharmacy (53%) and house maintenance (47%).

New launches of beer in Brazil and increased consumption of imported beers should boost volume and value sales. Both craft beers and premium beer brands are increasingly coming into the market with high status attached – and as consumer incomes increase, they are able to buy more expensive drinks and go out more, drinking more outside the home. Important events such as the World Cup and the Olympics will boost this consumerism. In addition, demands by Brazilian consumers will become more complex, for sophisticated products, such as international cocktails, wines and sparkling wines, which should boost value sales of alcoholic drinks and lead to such strong growth towards 2018.

In line with the fact that ‘looking after appearance’ is the number one goal for Brazilian consumers this year, the Beauty and Personal care category is expected to benefit as a result, with Mintel forecasting growth of 45% up to 2018 to reach R$ 83 bi.

Sheila Salina, Consumer lifestyle analyst at Mintel, says:

“Appearance is high on the agenda of Brazilian consumers and the beauty and personal care market in Brazil can expect to see the benefit”. Categories, such as deodorants and shampoos and conditioners will continue to excel in the coming years. In the shampoos and conditioners category, there’s still a high growth potential, especially through more sophisticated products of specialized treatment (eg hydration, repair, anti-frizz properties) targeted to female consumers.