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Brazil packaged food market: Optimistic outlook despite slowdown in economy
Packaged Food in Brazil - a new market research report on 2014-03-05 08:35:01
The Brazil packaged food market was set to record double-digit growth in value terms in Brazil in 2012. The strong growth was driven in part by rising prices of commodities such as sugar, wheat flour, soybeans and cocoa. The increasing sales of specific products in bakery, dairy and confectionery also played an important role in the performance of packaged food as consumers, in particular from lower-income brackets, are increasingly interested in trying new and different products.Threat of Restrictions for Advertising Towards ChildrenThe growing number of overweight and obese children attracted the attention of the government. In big urban centres, the possibility of restricting advertising of packaged food with content of sugar, saturated fat and salt towards children has been discussed, in a bid to reduce the levels of obese children in the country. This was negatively received by packaged food manufactures as they claim that this hurt the freedom of communicating to consumers.Important Acquisitions Continue To Take PlacePackaged food continued its activity in mergers and acquisitions. Over 2011-2012, three important acquisitions took place as part of the strategy to amplify the presence in Brazilian packaged food and target key segments. In late 2011, PepsiCo acquired Cipa Industrial (Mabel), a large manufacturer of biscuits, and Bunge Alimentos SA acquired Etti, Etti Salsaretti and Puropurê from Hypermarcas as part of the strategy to expand its portfolio with specific products such as ready meals. In May 2012, General Mills made one of the biggest acquisitions in the country by taking over Yoki Alimentos SA for R$1.3 billion.Consumers for Neighbourhood RetailersSupermarkets and hypermarkets continued to account for the bulk of sales. In big urban centres, a growing importance in outlets established in neighbourhood areas was evident as these are more convenient for consumers to go shopping in since it is closer to their homes. As a result, Cia Brasileira de Distribuição (Pão de Açúcar) reformulated its convenience store concept to change from Extra Fácil to Mini Mercado Extra offering a different assortment of products that satisfies the demand of neighbourhood consumers.Optimistic Outlook for Packaged FoodDespite a slowdown in growth in Brazils economy in 2012, the prospect for packaged food is still very optimistic due to low unemployment rates and growing disposable income in lowerincome brackets. Manufacturers are expected to continue investing in specific products and categories that offer convenience such as frozen processed food, ready meals and soup. Bunge Alimentos, Gomes da Costa Alimentos and Leardini Indústria e Comércio de Pescado are examples of manufacturers that have invested in premium products and the fastest growing categories.

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