While Brazil seems to be slowly recovering from the economic recession, with low inflation and interest rates, and a positive GDP at the end of 2017, consumer behaviour continued to be impacted by habits adopted during the crisis. Consumers traded down in several categories including meat, switching from fresh meat to processed meat for example, which has a cheaper price point.
Despite the fact that consumers traded down to processed meat, growth for this category could be much higher. In March 2017, several scandals regarding some players resulted in decline for the category compared to its potential.
Brazil faces a complex political scenario, carrying the burden of a recession, an impeached president (Dilma Rouseff) and her interim vice-president (Michel Temer) who, together with the Central Bank, have implemented austerity measures to attempt to rebalance government accounts and re-stabilise the job market and the economy. One of these measures is deregulating fuel prices across the country, according to demand faced by state-owned Petrobras, the largest oil conglomerate in Brazil.
The largest player in processed meat and seafood as well as one of the largest in packaged food in Brazil, Brf Brasil Foods gained value share in 2018, due to its Perdigão brand’s performance in frozen processed meat and poultry. Additionally, the player has invested in two product lines that focus on niche consumers: the first one, announced in early 2018, is called Kidelli and uses meat remainder from the manufacturing processes of the major brands Sadia and Perdigão to make an affordable, competitive line with 13 SKUs that sell through warehouse retailers (atacarejos) and distributors.
Despite JBS SA’s loss of share in frozen processed red meat, it was still able to gain value share within overall processed meat and seafood. The company is developing its Seara brand across several categories and achieving some success.
Processed meat and seafood in Brazil is highly concentrated among the leading five players, with the remaining value share coming from other smaller companies. Products are perceived to have little differentiation between them and Brazilians who remain avid consumers of processed meat and seafood are more interested in price than quality, as higher-end consumers switch to fresh meat instead of processed.
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This industry report originates from Passport.