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Offsetting previous years’ gains, truck drivers’ crisis in May affects cheese production
Whilst the consumption of cheese products grew strongly in both volume and value terms in 2017 for several reasons, the gains were clearly restrained by the truck drivers’ crisis in the Brazilian dairy landscape that started in May 2018. In the previous year, Brazilian cheese manufacturers had seen a surplus of milk availability as a raw material, especially due to a good corn crop season for feeding cows as well as good climatic conditions.
Preference for traditional Brazilian cheeses intensifies sales of spreadable processed cheese and soft cheese
Spreadable processed cheese includes the traditional requeijão, a product that is widely consumed in Brazilian households and even during the economic crisis recorded volume and value growth due to its perceived essential nature as an everyday complement in breakfast and snacks. Consumers have been showing a preference for more traditionally Brazilian flavours across several food categories; for example, in savoury snacks vegetable chips with traditional local roots like cassava (mandioca) posted record growth.
Polenghi Indústrias Alimentícias maintains leadership in cheese
The Brazilian cheese landscape remains highly fragmented, with local and artisanal cheese production still being responsible for most cheese value sales. The category leader remains Polenghi Indústrias Alimentícias, which performed worse than expected in 2017, but increased its value share slightly in 2018.
Grupo Lala enters the Brazilian market through Vigor acquisition
Mexican giant Grupo Lala, present throughout Latin American markets and even the US, has entered the Brazilian cheese category by acquiring Dan Vigor Indústria e Comércio de Laticínios from JBS, which has sold several business units as it is involved in political corruption scandals throughout the country. Although not as strong in cheese as it is in other dairy categories like yoghurt, Vigor brand products offer the multinational a safe entry point in the country, as the company has strong penetration amongst major retail outlet chains as well as bakeries, which is an important distribution channel for cheese in Brazil.
Groupe Lactalis attempts to develop its presence through acquisition, still unapproved
Whilst Grupo Lala’s purchase of Dan Vigor Indústria e Comércio de Laticínios was approved by the Brazilian Administrative Council of Economic Defense (CADE – Conselho Administrativo de Defesa Econômica), similar to the US Federal Trade Commission, as well as other competition bodies, the company is still caught in a legal battle with Groupe Lactalis over the purchase of former Vigor subsidiary Itambé. Itambé’s shares were evenly split between Vigor and the cooperative Cooperativa Central dos Produtores Rurais de Minas Gerais (CCPR-MG), but as soon as Grupo Lala announced its purchase of Vigor, CCPR-MG exercised its rights of purchase over the unowned shares of Itambé.
Milk is a traditional Brazilian staple food that shows good penetration across households of most income levels and in most regions of the country. It is seen as a healthy source of protein and Brazilians generally favour its consumption daily.
Milk value sales rise due to inflationary effects of truck drivers’ crisis, whilst volume suffers
The week-long strike led by truck drivers protesting about the exorbitant prices of diesel fuel virtually shattered expectations of 2018 being a better year in consumption terms due to production losses and price increases resulting from the strike. Several major companies and news outlets reported major losses in raw material production, with milk harvesters having to dispose of thousands of litres of milk.
Other milk alternatives receive large-scale investments – ahead of their time?
The most dynamic category in drinking milk products in 2018 was other milk alternatives, partially due to its small consumption base but also because of several other key drivers on both demand and supply front. The aversion to soy-based products seen in recent years remained in place and is attributed to the general perception that soy is harmful to the environment as it is a monoculture and the negatives outweigh the positives because most soy in the country is genetically modified.
Coca-Cola saves Ades line through launching new almond and coconut milks
On the supply side, three conglomerates announced in 2018 that they were entering the non-soy drinks alternatives category. Firstly, Coca-Cola Co revamped its Ades line, which is successful within other milk alternatives in Latin American countries, through new product developments, including two flavours of almond milk (natural and vanilla) and one of natural coconut milk.
Anheuser-Busch InBev and Groupe Danone enter other milk alternatives
Other beverage and food conglomerates entered the other milk alternatives category in Brazil in 2018, showing the industry response to growing consumer demand for these products. Anheuser-Busch InBev launched coconut milk in four different flavours (although only two were available to date in regular markets) through its national brand Do Bem, acquired in 2016.
Dairy Partners Americas Brasil maintains leadership whilst Groupe Lactalis tries to consolidate its presence
Whilst drinking milk products is a significantly fragmented category, Dairy Partners Americas Brasil holds the leading value share largely due to its strong position in the large powder milk category with brands like Leite Ninho. The joint venture between Nestlé and Fonterra also has successful flavoured milk brands like Nescau and Nesquik.
Effects of the economic recession are still being felt
Yoghurt (as sour milk products are negligible in Brazil) is one of the categories that has suffered most due to the economic crisis that has affected Brazil since 2014. High unemployment rates, lower disposable incomes and a political crisis all contributed to limited consumer spending.
A few yoghurt categories gain modest traction due to promotions and innovation
Whilst the crisis years reduced consumption of yoghurt across all categories, the modest signs of economic recovery were seen in the second half of 2017 as well as intensifying health and wellness trends allowed yoghurt categories to post slight growth rates in 2018. Very frequent promotions, such as buy-1-get-1-free and price discounts, were strategies that worked for the category.
Strategy of changing consumption moments proves to be successful yet challenging
Yoghurt players in Brazil currently face the challenge that yoghurt is almost exclusively consumed as a snack, usually in the afternoon. This exclusive consumption occasion limits purchase frequency as well as places yoghurt in direct competition with other prominent snacks like fresh fruits and juices, Polenguinho cheese squares, and even fruit and nut bars.
Competitors follow Coca-Cola Co’s Verde Campo Natural Whey in protein frenzy
Innovations in yoghurt are expected to drive category growth higher over the forecast period, particularly because manufacturers are capitalising on another increasingly popular yoghurt consumption occasion – by fitness enthusiasts as a nutritious, on-the-go post-workout snacking option for this specific consumer segment. The pioneer product is Verde Campo (owned by Coca-Cola Co) Natural Whey; it is a drinking yoghurt with at least 14g of protein per pack (from whey protein) in either portable plastic bottles or single-serve cartons, made with lactose-free milk and sweetened with stevia.
Groupe Danone continues to lead
For years, Danone brands have been the most widely consumed across several income levels. Brands like Paulista and Activia are staple household names, and the leader maintains a comfortable position across categories.
Smaller players enter skyr yoghurt and increase share of “others”
In 2017 yoghurt brand Moo launched the first skyr-type yoghurt in the country. The tiny, independent start-up-like manufacturer was able to enter major retail chains like Pão de Açúcar in the same year, proving that a very premium product with high added value can find its way to niche consumers, even during uncertain economic times.
Concerns with health and wellness reduce sales of chilled dairy desserts
Chilled dairy desserts represents a significant part of other dairy products, and the category’s negative performance in both volume and value sales has negatively impacted other dairy products. As consumers become increasingly concerned with health and wellness trends, categories with high sugar and fat content suffer in comparison to other healthier alternatives that offer similar experiences, as is the case between chilled dairy desserts and yoghurt products.
Condensed milk and cream maintain positive performance
Brigadeiro is an all-time favourite Brazilian dessert, and its main ingredient is condensed milk. Whilst in 2017 retail volume sales of condensed milk decreased slightly and value sales increased due to higher prices in the first half of the year, especially for leader Nestlé’s brand Leite Moça, 2018 saw more intense growth in volume and value.
Fromage frais sees decline in volume, but growth in value sales due to packaging
Danone disrupted the fromage frais category in late 2017 by launching an exclusive to-go packaging technology for its main product Danoninho (Danonino). This new insulated stand-up pouch has an easy-open cap perfect for children and allows the product to remain outside of the fridge for up to five hours, breaking one of the lunchbox barriers it faced as a perishable snack.
Nestlé Brasil leads other dairy products due to magnitude of condensed milk
Condensed milk is a large category in Brazil, being used frequently for at-home cooking due to several traditional dishes that use it as an ingredient. Given the magnitude of the category, Nestlé Brazil remains the clear leader as its products are widespread throughout the country.
Fromage frais dispute between Groupe Danone and Nestlé intensifies
Danone’s revolutionary move in the packaging of its fromage frais brand Danoninho in late 2017 helped increase its already dominant value share, inverting the trend seen in previous years, when the premium brand saw decreases in share due to competition from more affordable options. The number two in fromage frais and quark, Nestlé’s Chamyto, followed suit with the packaging innovation and was able to maintain a steady share of the category’s value sales, in contrast to previous years when it had also been slowly losing relevance.
Grupo Lala enters other dairy products through purchase of Vigor
Mexican dairy conglomerate Grupo Lala has made its first foray into the Brazilian other dairy arena through the acquisition of Dan Vigor Indústria e Comércio de Laticínios from JBS. This purchase places the multinational in both the chilled dairy desserts and fromage frais and quark categories, albeit it has a significantly lower value share than that of the category leaders.
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The Dairy in Brazil market research report includes:
Analysis of key supply-side and demand trends
Detailed segmentation of international and local products
Historic volumes and values, company and brand market shares
Five year forecasts of market trends and market growth
Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
What is the market size of Dairy in Brazil?
What are the major brands in Brazil?
How has the economic downturn impacted sales performance given its staple food status?
Given mounting obesity concerns, are consumers moving from full-fat to reduced fat/fat-free offerings?
How are volatile farmgate prices for milk impacting retail prices and sales performance?
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Inform your marketing, brand, strategy and market development, sales and supply functions
2018 truck driver crisis turns off the light at the end of the tunnel seen in late 2017
Incumbents lose share and mitigate with acquisitions, while regional players grow
High-end consumers seek convenience, while others continue to seek bargains
Post-election 2018 supports a positive outlook, while regulations create uncertainty
Sales to foodservice
Retail volume sales to foodservice operators increase as manufacturers innovate with internet retailing Several sauces, dressings and condiments categories continue to see growth Snacks sales to bakery products fast food outlets, or padarias, suffer as convenience stores gain relevance
Slightly optimistic expectations for 2018 remain unmet, while future prospects call for modest growth Consumers begin to prefer experiences over things and digital channels have increasing influence Healthy living and experience trends begin to shape mindful eating, including sustainability and veganism
Table 1 Foodservice Sales of Packaged Food by Category: Volume 2013-2018 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2018-2023 Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2018-2023
Table 5 Sales of Packaged Food by Category: Volume 2013-2018 Table 6 Sales of Packaged Food by Category: Value 2013-2018 Table 7 Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 8 Sales of Packaged Food by Category: % Value Growth 2013-2018 Table 9 GBO Company Shares of Packaged Food: % Value 2014-2018 Table 10 NBO Company Shares of Packaged Food: % Value 2014-2018 Table 11 LBN Brand Shares of Packaged Food: % Value 2015-2018 Table 12 Penetration of Private Label by Category: % Value 2013-2018 Table 13 Distribution of Packaged Food by Format: % Value 2013-2018 Table 14 Distribution of Packaged Food by Format and Category: % Value 2018 Table 15 Forecast Sales of Packaged Food by Category: Volume 2018-2023 Table 16 Forecast Sales of Packaged Food by Category: Value 2018-2023 Table 17 Forecast Sales of Packaged Food by Category: % Volume Growth 2018-2023 Table 18 Forecast Sales of Packaged Food by Category: % Value Growth 2018-2023
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Why buy this report?
Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.