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By: Angélica Salado

The current Brazilian crisis has led to a slowdown and even a retraction in the volume growth of many food categories, mainly among those that are not considered priorities, like chocolate and sugar confectionery. Despite this negative situation, packaged food is projected to reach R$312 billion in 2017, with current value sales growth of 5% on the previous year. This growth in value during an agitated period was caused by many factors, such as rising prices and sales of premium products, but mainly by producers’ and retailers’ promotional activity and marketing efforts to stimulate consumption even during a period when the purchasing power of consumers has decreased.

We tend to say that a crisis forces people out of inertia. With a reduced budget, consumers were generally more skeptical and rational in their purchase decisions. They ask themselves more about whether a product is really essential and if it can be substituted by similar products or cheaper brands. As consumers try and like products that they previously considered of low value added, they are unlikely to go back to the consumption pattern they had pre-crisis. Additionally, as consumers become better informed about product composition and ingredients, they also demand more transparency of brands in this aspect, as well as carefully contesting ingredients information on packaging. Manufacturers, therefore, should be more prepared than ever to show transparency and relevance in their products to remain competitive in these hard financial times.

Healthfulness and convenience are the main innovation drivers of the industry. Over the last five years, the value sales of the Health and Wellness Packaged Food industry has grown at an average rate of 8,4% in current terms. Snacks, together with dairy products and ready meals, are presenting the major innovations. We highlight the root snacks, like cassava, beet and potato chips that bring a healthier positioning to the category. Some niche initiatives also gained the spotlight, with the introduction of the tapioca bar, a really trendy product at the moment, and ‘trail mixes’ as well, which are a mix of nuts and dry fruits that also have a positioning related to healthfulness and convenience. In 2017, there was a slowdown, but its appeal was not lost, so health and wellness presented a good performance in Brazil even during the crisis. This market is projected to move R$63 billion this year, with a future CAGR of 7% at constant 2017 prices to 2022. This will be crucial to making these kinds of products more accessible to the population as a whole. As demand grows, big companies will be able to produce on a larger scale, reducing the cost of products that, although trendy right now, are still niche due to higher costs.

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