Dairy market opportunity offered by Brazil

Posted by AFN Staff Writers on 21st March 2013

Research from global market research house Mintel shows that the ice cream market in Brazil has grown by 33 per cent in the last five years, reaching a volume of nearly 398 million litres and a value of approximately US$2 billion.

However, while some 77 per cent of Brazilian consumers say that they eat ice cream, the frequency of consumption in Brazil is still very low, with only 25 per cent of consumers saying they eat ice cream at least once a week, almost the same percentage of people who never eat ice cream.

The average consumption of ice cream per person in Brazil is approximately 2.3kg per year, compared to an average of 17kg per person in America, and 5.5kg for British consumers. Meanwhile, in Australia the average consumption of ice cream per person is 10kg per year. In New Zealand this figure stands at 12kg per head.

“Due to the economic rise of lower socio-economic groups in Brazil, it is expected that more people will begin to consume nonessential products, such as ice cream. There is a great opportunity for the industry to provide products that meet this new customer demand—for example, offering indulgent flavors, smaller sizes that fit customers’ budgets and greater product accessibility in terms of distribution channels,” said Naira Sato, senior Brazil food analyst at Mintel.

“Ice cream companies need to be aware of the differences between regions in Brazil, and how consumer behavior within them may be rapidly changing,” said Naira Sato, senior Brazil food analyst at Mintel.

“The Northeast region has been growing economically along with the rest of the country, and it is already growing in terms of luxury goods retailing in the region, but is still underexplored,” he said.

Premium brands tend to invest more in the South-east region, Ms Sato said, but the research shows that consumer affluence and a propensity towards premium brands is growing in the North-east.

Furthermore, there could be future opportunities in this region for manufacturers of premium ice cream, with 70 per cent of consumers in the North-east saying they would be prepared to pay a premium for quality ice cream, compared to 64 per cent in the South-east, 61 per cent in the South and 55 per cent in the Central-west.

“Premium brands can tap into this market, which still consumes little ice cream, by working with established leading and supermarket own brands. This will allow them to encourage current users of a certain brand to trade up, while the premium options can also attract new consumers to the category. In addition to inspiring trust, the introduction of smaller sizes, such as the 100ml mini pots used more frequently in other countries could also encourage consumers to trade up to premium products, while also making it more affordable,” Ms Sato added.

Presenting a further opportunity for ice cream manufacturers, 66 per cent of consumers in Brazil showed an interest in ‘natural ice cream’ products. There are currently very few new products launched annually in the country with ‘natural’, ‘minus’, ‘plus’ or ‘functional’ claims. According to Mintel, only 5 per cent of all ice cream launches in Brazil between 2009 and 2012 had a ‘natural’ claim.