According to Euromonitor, retail sales in the packaged food market in Brazil had been estimated to reach US$94.9 billion in 2019. That makes it the largest in Latin America and the 5th largest in the world. That also represents
a growth rate of 24.3% or US$18.5 billion since 2015. The forecast for growth in this market is also quite promising. By the year 2024, the retail sales in the packaged food market in Brazil is expected to reach US$131.1 billion, a growth
rate of 30.8%, or coincidentally US$30.8 billion. High growth rates in the forecast included:
- Sauces Dressings and Condiments
- Processed Fruit and Vegetables
- Baked Goods
- Ready Meals
- Confectionery
- Processed Meat and Seafood
- Dairy
- Rice, Noodles and Pasta
Post reports that for the food retail sector, 2019 was considered a positive year. The industry totaled R$378.3 billion (US$96 billion) in 2019, a 6.4% increase in nominal terms, compared to the previous year. Due to the COVID-19
pandemic, 2019 will likely become a new benchmark as the Brazilian economy starts to recover.
In 2019, France’s Carrefour maintained its leadership as Brazil’s largest retailer, with reported sales equivalent to R$62.2 billion (US$16 billion). Carrefour
expanded the number of stores in 2019 by 7% compared to the previous year and maintained its investments mainly on the cash-and-carry format, which accounted for R$42 billion (US$11 billion). Sales of Atacadão, Carrefour’s cash-and-carry
stores, increased 12% compared to 2018. The company opened 20 cash-and-carry store locations throughout the year and ended 2019 with 186 Atacadão stores.
Grupo Pao de Acucar (GPA), also controlled by a French group, Casino, ranked second on the list of major Brazilian retailers. In 2019, GPA registered sales of R$61.5 billion (US$15.6 billion), which represented an increase of 14.7% compared to the prior year. As the leading company, GPA concentrated investments on the cash-and-carry format, 19 stores were turned
into Assai, GPA’s cash-and-carry brand. Assai amounted sales of R$30.4 billion (US$8 billion) in 2019. ABRAS did not include Grupo Big, former Walmart, in the 2019 ranking, as the new company did not provide its sales results to the association.
Nevertheless, Grupo Big is listed as the third largest Brazilian retailer. Grupo Big operates 550 stores in 18 Brazilian states, plus the Federal District. The company maintains seven hypermarkets brands in addition to its cash-and-carry
format, Maxxi and Sam’s Club.
In 2019, the retail industry represented 5.2% of the country’s GDP. Food retail executives considered the year of 2019 as an important shift of trends and, before the COVID-19
outbreak, an upward trend was expected for 2020. Despite the unprecedented demand for food items in the beginning of the social isolation period, the forecast for 2020 is uncertain. However, as an essential segment, the food retail sector
will likely perform better this year compared to other sectors of the Brazilian economy.
In Brazil, the 500 leading retail companies represented 78% of the industry’s overall revenues of R$378.3 (US$96 billion) in 2019. With
R$296.8 billion (US$75.1 billion) in gross sales, this group registered an increase in revenues of 11.2% compared to 2018. Although these leading retailers have always registered better results compared to the sector as a whole, in 2019 the 500 largest
companies achieved higher efficiency levels vis-à-vis the past years. In 2019, the group operated 8,042 stores, in which supermarkets represented 45% and convenience stores summed 42%. Other operations include cash-and-carry, neighborhood
stores, and hypermarkets, which accounted for 6%, 5%, and 2% of the total number of stores.
Brazil is a country of continental size and regionalism plays a crucial role. The country’s 26 states and the
Federal District are divided into five regions: Southeast, South, North, Northeast and Center-West. According to the Brazilian Supermarket Association (ABRAS) research, in 2019 the Southeast region, which includes the states of Sao Paulo and
Rio de Janeiro, accounted for 53.6% of retail revenues and 51.7% of total stores. The Southeast region registered expansion and was responsible for more than half of the retail business. Alone, the state of Sao Paulo represented 27.8%
of total industry sales. The South region, the second largest in retail sales, represented 29% of the overall revenues. The South also accounted for 27.7% of all stores. The Northeast region, one of the least wealthy regions in Brazil,
accounted for 9.9% share of sales and 11.5% of stores. The Center-West and North regions remained relatively minor players in the retail sector. The Center-West accounted for 4.6% of sales and 6.2% of total stores, while the North had
registered 2.7% of overall revenues and 2.9% of total number of stores.
Although imported products are not part of the basket of goods typically purchased by Brazilian middle-income households, rising income plays a key role in generating changes in consumption of these items. The
improvement of economic indicators affects consumption as it expands the base of consumers and consequently the number of individuals willing to trade up. The Brazilian Institute of Geography and Statistics (IBGE) considers that 69 million households
exist in Brazil. According to a research publicized in October 2018, Brazilian families had lost income in the past nine years, while wealthy families became even wealthier, showing the inequality gap continues to widen. Upper-income households have
an average monthly income of R$23,850 (US$6,037) and 69% of this amount is earned from work. The wealthiest comprise 1.8 million families with an average of 3.07 individuals per family. This group concentrates 20% of overall income.
Post advised U.S. suppliers and other stakeholders that when launching new-to-market products, Brazilian buyers are hesitant to purchase full containers of single products while, on the other hand, U.S. suppliers are often unwilling to deal with small volumes. Oftentimes
exporters are cautious to do business with a single supermarket chain as their perception of reaching consumers through a single source does not seem attractive. Post advises this perception does not always correspond to the reality. It
is a matter of strategy, as retailers may achieve significant market penetration.
Best Product Prospects
Post reports that Brazilian importers are generally looking for well-known brands and high-end products. They usually prefer products with one year shelf-life or more. In addition to the product itself, packaging, status and level of innovation
are important attributes. Products that combine these characteristics are more likely to successfully enter the market. The food categories that are most frequently exported to Brazil from the United States are: dairy products, fresh fruit,
processed fruit, processed vegetables, fruit and vegetable juices, tree nuts, chocolate and cocoa products, snack foods, breakfast cereals, condiments and sauces, prepared food, wine, beer, distilled spirits, non-alcoholic beverages (ex. juices) and
fish products. Other food categories that are getting more supermarket shelf space are products for special diets, such as lactose and gluten free products.