Caroline Roux
As a Consultant Analyst, Caroline provides consumer insights and recommendations to dairy companies and tracks global innovation and consumer trends.

Margarine has long been the go-to yellow fat option for Brazilians. The product is a household staple, and has traditionally been preferred to butter thanks to its affordability. In 2016, margarine was responsible for 85% of all yellow fat volume sales in Brazil. However, few Brazilians have a positive image of margarine and many are now moving to butter instead.

The economic turbulence of recent years has stalled the growth of the butter market, where volume sales remained static in 2016. But the segment has a positive outlook as the Brazilian economy shows signs of revival, with GDP up by 1% in 2017, the first rise recorded since 2014.

Better in the eyes of the consumer

Changing perceptions around the health impact of butter have been an important factor behind its rising profile in Brazil. As is the case in many global markets, Brazilian consumers are increasingly reassessing the previous consensus that fat needs to be avoided, as studies highlight the health benefits of consuming unprocessed fats from natural sources, such as butter. These “good fats” are increasingly being touted as important components of a healthy diet. More than a third of Brazilians agree that butter is healthier than margarine, and as fat continues to shed its stigma, butter brands can promote their fat content as a positive.

Popularity of whole milk weakens domestic supply

Butter market growth has been hampered in recent years by local conditions. Outside of the economic climate, domestic butter shortages have been a significant constraint. As most milk is consumed whole in Brazil – 63% of Brazilians drink whole milk, compared to 23% who drink skimmed milk – reducing the supply of milk fat for other uses. This has created space for manufacturers to import butter, but has also elevated the product to a premium tier. Two-thirds of Brazilians say they would buy more butter if it was cheaper, highlighting opportunities for local dairy producers.

The opportunities

Brazil may have some way to go before it has the butter production capacity of other markets, but positive changes are being made. In 2017, 58% more butter products were launched in Brazil than in 2016, according to Mintel Global New Products Database (GNPD). Nevertheless, most recent launches have been plain, unsalted butters. Few products have looked to stand out by taking a more experimental approach to flavour, functionality or packaging, and this represents a potential growth area going forward as butter consumption becomes more ingrained in Brazil.

One potential method of achieving diversification is through flavour innovation, which can not only help brands break down butter’s commodity image, but can also position the dairy product as a cooking aid. Showing consumers that butter can help them in the kitchen will draw attention as consumers value convenient shortcuts when cooking at home.

What we think

The Brazilian butter market offers significant opportunities for manufacturers as the country recovers from a historic recession, with more consumers likely to shift away from margarine as price becomes less of an issue. Butter is still, however, overwhelmingly seen as a spread, which highlights opportunities for manufacturers to be more experimental around flavour, which can help consumers be more creative in the kitchen.