Microwaves in Brazil Are Becoming a Billion Dollar Business. Are You in the Game?

Microwaves in Brazil have never been so popular. Already worth US$836 million, the market is set to expand by a further US$ 1billion by 2017. To put that into context, it’s on the way to becoming as big as China. How so? Partly because prices are higher, but perhaps more significantly around 20 million households own a microwaves in Brazil today, and by 2017 we expect this consumer base to double and exceed 40 million homes.

Microwave Household Possession, Selected Markets, 2012-2017

Microwave Household Possession, Selected Markets, 2012-2017

Source: Euromonitor International

A market with a consumer base set to double in size offers huge potential for newcomers capable of entering the fray. Extremely concentrated, the Brazilian market is traditionally one of the most difficult to penetrate, and microwaves was no exception with Whirlpool, Electrolux, and Panasonic jointly commanding 90% of the market in volume terms for many years. That could be about to change.

Take LG for example. In just two years it was able to make a significant impact, closing 2012 with 9% share of microwave retail sales in volume. A remarkable performance, especially when compared with that of Mabe, which in 2012 failed to reach 3% share, having experienced volume declines of 24% on 2008. A key reason for LG’s success was the decision to focus on smaller microwaves to target single Brazilians living alone, one of the most dynamic consumer segments in the country.

We are also seeing Chinese manufacturers like Midea starting to move more seriously into the Brazilian market, although it still commands a very small share at present.

What do Brazilians cook in their microwaves?

The overwhelming preference in Brazil for frozen over chilled food mirrors what we see in the US. On the one hand consumers in Brazil tend to buy food in bulk and preserve it in the freezer. On the other, the very perception of food freshness is also very much tied to the idea of cold chain distribution and preservation. Among ready meals for example, volume sales of frozen food are set to be the most dynamic, increasing by over 50% by 2017, largely due to the success of Italian frozen ready meals, such as pizza and lasagnas.

Brazilians do not just use the microwave to heat food. They actually use it to cook, grill and bake too. More than 27% of microwaves sold in 2012 combined all these functions, and it looks like the success of combination models is set to increase over time. So while volume sales of standard microwaves grew by 14% last year, sales of combination models were up 19%.

Increasing microwave penetration opens up a wealth of opportunities to satisfy evolving consumer needs and even shape their future preferences. This has clear implications for both packaged food players and packaging suppliers. In turn these changing preferences have an impact on microwave design, and for those who get it right, the returns will be significant.