As Brazilian consumers develop a more sophisticated sweet tooth, new research from Mintel reveals that the sugar and gum market in Brazil has, for the first time, broken the R$10 billion barrier.
New research from Mintel valued the Brazilian confectionery market at R$ 10,2 billion in 2011, up from R$ 8,2 bi in 2007 and estimates it to have grown even further to R$ 10,8 billion to the end of 2012. And it’s a sweet outlook for the future of the sector too, as Mintel forecasts market revenue to grow at a rate of 5 percent a year, annual growth peaking at 6 percent in 2014 and 2016, when the World Cup and Olympic Games will take place. Furthermore, by 2017 the market is set to reach a mouthwatering R$14 billion. While value sales continued to grow, volume levels have remained stable, at an average of 260 thousand tonnes a year from 2007 to 2011.
Jean Manuel Gonçalves da Silva, senior Mintel food analyst said: “Over the past five years, the confectionery market has shown fast revenue growth against stable growth for sales volume. Apart from raw material price increases, in sugar in particular, the market was also boosted by a better product offering. Higher quality and more expensive sugar confectionery and gum products have been developed—which, coupled with increased income from Brazilian consumers and a desire for innovation—have really boosted the market over this period.”
The demand for more sophisticated products has been catered for by both imported and products made in Brazil alike. The volume of importation grew 40 percent between 2007 and 2011, while in value, importation has nearly tripled over the same period of time, highlighting the shift towards more expensive products in Brazil. Around R$10 million confectionery products were imported to Brazil in 2007—this figure jumped to R$30 million by 2011.
The average price of confectionery also grew 23 percent over the past five years, from R$33 a kilo in 2007 to R$41 in 2011. Mintel data reveals that chocolates followed this trend with 20 percent average price increase over this period (from R$22 a kilo in 2007 to R$26), as did biscuits, with a 28 percent average price increase in the category, growing from R$7 a kilo in 2007 to R$9 a kilo in 2011.
The report also reveals that Brazilians are open to new flavors and products, especially consumers aged between 16 and 24 years old. Indeed, 76 percent of Brazilian consumers in this age group claim that they like to try new kinds of gum and sugar confectionery.
“The growth on raw materials has triggered innovation and reformulation in the sugar and gum category in Brazil. As a result of this, items with more flavor appeal have been developed in order to justify price increases - and there seems to be big demand among Brazilian consumers to purchase this new product development,” says Jean Manuel Gonçalves da Silva.
The research also highlights how, on the whole, confectionery is more frequently consumed than gum. Some 40 percent of Brazilians tend to consume sugar confectionery at least once a week, while 30 percent consume gum with the same frequency. In addition, both sectors are consumed more frequently by younger consumers than older consumers, but this difference is much more pronounced in the gum segment than in the sugar confectionery sector. Here, some 55 percent of those aged 16 to 24 years old consume gum at least once a week, compared to 9 percent of those aged over 55. Indeed, chewing gum in particular struggles to maintain usage among older consumers. Mintel’s research finds that only 14 percent of those aged between 45 and 54 years old chew gum at least once a week, compared to 23 percent of the same group who enjoy sugar confectionery on a weekly basis. But it is not just the young who are particularly keen on gum, it seems that those consumers on higher income tend to have a particular penchant for chewing gum. Today, 43 percent of better off ABC1 consumers say that they consume gum or chewing gum at least once a week, compared to 36 percent of lower income consumers of the C2DE classes.
According to Mintel´s Global New Product Database (GNPD), new sugar confectionery and gum product launches in Brazil have grown nearly 40 percent from 2007 to 2011, while in the USA, launches have dropped by nearly 50 percent in the same period of time.
“The popularity of new lines of sugar confectionery and chewing gum, either with new products or new varieties, means Brazil is an ideal market for confectionery NPD. There’s a constant move towards innovation in Brazil, indicating that success is related to ongoing development, where products are always focused on quality and responding to consumer demand,” says Jean Manuel Gonçalves da Silva.
In the gum category, sugar free gum represents an important segment of the market, accounting for around 44 percent of all Brazil gum volume sales in 2011. Consumer attitudes in Brazil support this, with over half (52 percent) of consumers saying they would buy more gum if it had no sugar. The majority of consumer demand for this comes from those aged between 35 and 44 years old, with some 46 percent of this age group saying that they bought sugar free chewing gum in the last 12 months, presenting growing business opportunities within this demographic.
And it seems health and wellness are high on the consumer agenda as, simultaneously, 64 percent of consumers say they prefer confectionery made with natural juices, highlighting another area ripe for more innovation. However, natural products currently represent just a small proportion of category launches, highlighting potential for more NPD in this area—as just 2 percent of new sugar confectionery launches in Brazil carried an ‘all natural product’ claim in 2011.