With crisis, shopping cart has changed: more promotions and less favorite brands

The rise in inflation is forcing a change in habits on the part of the Brazilian consumer, points out the consulting and research company Kantar. “The pocket is tighter”, says Renato Mello, senior manager of new business at the company.

A survey by the company shows that 63% of people said they are more cautious and only buy what they were already programmed to buy. They are also taking advantage of more promotions (46%) and have switched from their favorite brands to cheaper options (24%).

Products are exchanged for similar products with more affordable prices and, despite the consumption of commodities having fallen 1.4% in the period, the impact on the amount spent in the Brazilian shopping cart increased from 12% last year to 14%.

The survey followed the routine of 11,300 homes from all regions and social classes in the country and represents a sample of 59 million homes in Brazil.

Brazilian cuts out-of-home spending and gives priority to consumption at home

Expenses with food and drink inside the home, hygiene and household cleaning already represent more than 50% of the household budget. In classes D and E, this percentage jumps to 60%.

And with an accumulated inflation of 21.15% in the last 24 months, according to the IBGE, the consumer is reducing spending outside the home and giving priority to consumption at home. In the comparison between the first quarters of 2020 and 2022, domestic spending increased by 3%, while out-of-home spending fell by 3.5%.

The exception is São Paulo, which keeps the growth of out-of-home consumption higher than two years ago. One of the factors that contributes to this is that the vaccination rate for the population over five years of age is 92% in the state, ten percentage points above the national average.

With this scenario of higher inflation, another strategy adopted by the consumer is to reduce the number of items purchased. The level is already the lowest since the beginning of the pandemic. The drop is 2% compared to the first quarter of 2020.

"The scenario requires important reflections on portfolio, packaging size and clarity regarding price positioning", informs the consultancy. She points out that outside the home, the main challenge is to increase the frequency of consumption.

Unemployment and informality also affect consumption

Another problem that affects consumption is the unemployment rate, which has decreased in recent months but remains high, and high informality – there are 39.1 million in this situation, the highest number in the historical series of the Pnad Contínua survey, which began in 2012.

Another problem is that, although the labor market has reacted in terms of job creation, wages – for both formal and informal workers – have not followed this movement. Real earnings, after discounting inflation, are lower than a year ago. Purchasing power therefore fell.

“Unlike Europe or the United States, the vast majority of consumers did not accumulate reservations during the period of isolation that could help them face the escalation of prices”, points out Cecília Alva, director of clients and new business for Latin America at Latin America. Kantar's World Panel division.

The second year of the pandemic boosted the growth of informal income, which went from 7% of the total, in 2020, to 14%, in 2021. And now, with the end of government aid, especially the C class should be negatively impacted.

Kantar detected a 2% drop in the purchase of ground coffee units and a 30% increase in soluble coffee units consumed in the comparison between the first quarters of 2021 and 2022, with emphasis on the North and Northeast, where there was a high of 58%. This change is also reflected in a drop in the consumption of filter paper.

Foto: Abiove

Another product that is losing space in the Brazilian market is soybean oil, whose price has risen 32.59% in the last 12 months. Consumption in units fell by 4.9%.

According to Kantar, the space has been occupied by special oils, such as sunflower, corn and canola, whose consumption increased by 27.8% between the first quarters of 2021 and 2022. In addition to price, another issue that is favoring is the fact that to be more related to healthy habits.

Who also lost space was the long life milk. There was a 2.3% drop in consumption between the periods. And the price increased 29.14% in the 12-month period ended in June.

Kantar highlights that the crisis in commodities is a point of attention in consumer behavior, but that, at the same time, it opens space for the growth of substitute categories that have experienced less variation in price.

Consumption of snacks and alcoholic beverages grows at home

Inside the home, the consumption of alcoholic beverages and the frequency of purchase of “snacks” grew.

The consultancy also emphasizes that this behavior is related to protection against rising prices and meeting the need to eat out. She points out that the consumption of complete meals away from home requires an outlay four times greater than resorting to snacks.

Mello also points out that the consumption of cheaper proteins, such as sausages and breaded products, and drinks such as mineral water and juices has grown. "Consumers are looking for more pleasure and practicality at home", quotes the consultancy.

Source: FGVSP - Excellence in Retail