During the recession that Brazil has faced since 2014, the emerging middle-class that boomed several years prior, experienced significantly restricted budgets, which forced them to leave non-essential products out of their baskets, such as leavened and unleavened packaged bread, packaged cakes and packaged pastries. As practicality became a luxury during the economic crisis, consumers who had started to try these packaged products migrated back to the unpackaged format, as they are deemed cheaper and have an equal perception of healthiness in terms of ingredients and are even considered fresher most of the time.
The economic crisis also spurred a newly-unemployed proportion of the population to seek alternative forms of income. Several artisanal cake and pastry shops were launched around residential neighbourhoods across metropolitan areas, as they require low investment, stocks are easily adjusted, and the products offer better price per kilogram than packaged counterparts.
Manufacturers are beginning to respond to this movement towards unpackaged baked goods by launching fresher-looking packaged breads and cakes. It is important to note the movement towards packaged bread with healthier ingredients, differentiated packaging, and clean labels.
Bread accounts for the majority of baked goods in Brazil, as it is a common household staple and consumers eat it for different occasions, most notably for breakfast with butter or jam and afternoon snacks such as grilled ham and cheese. Although unpackaged bread is dominant, the packaged format also has representative volume and value sales.
With Bimbo’s leadership, other players struggled to gain share, as competing in price and quality with either the leader or alternative unpackaged bread diminishes margins and does not allow for significant innovation. Third-ranked player WickBold & Nosso Pão Indústrias Alimentícias, the privately-held company, is still adjusting to changes in administration, because in 2016 the Wickbold family regained its leadership after several years of hiring outsider management (since 2013).
While packaged and unpackaged bread compete for share, the former is set to increasingly lose to the latter. Mid- and lower-income consumers continue to choose unpackaged bread, while affluent consumers are beginning to migrate from premium packaged bread to premium unpackaged.
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This industry report originates from Passport, our Packaged Food market research database.