Tuesday, September 22, 2015

Tightness in Pocket hits the market of food

The shrinkage of the disposable income and the high inflation already reach the consumption of food. Consumers have been less often to supermarkets and come home with bags more empty. In addition to the reduction in the volume of purchases, there was also replacement of products by other cheaper brands or similar.
According to research from Kantar Worldpanel: consumer, the foodstuffs that more lost sales volume in the first half in the country were soy-based drink, pasteurized milk, fermented milk and snacks ready. The survey indicates a fall of 7.5% in volume of total food sales in the first half of this year, compared to the same range of 2014, while the amount spent had increase of 0.5% in the period. Another study, conducted by Nielsen, indicates that the categories of drinks were the most penalized in the first half. Non-alcoholic (including soft drinks, juices and soy based) were 2.6% retracement in real sales revenue until June and alcohol, 0.3% drop. The survey cash inflation of the period, from 8.09 percent, according to the consumer price index (IPCA), measured by the IBGE.
The total basket evaluated by Nielsen, which encompasses 132 products, showed stability in sales revenue in the first half. "Last year, there has been a rationalization of consumption. Now, what is the fall in the volume of purchases of food, "says Christine Parker, Director of Kantar Worldpanel: consumer.
Consumers are leaving to buy sweets and desserts, snacks and frozen food (burgers, frozen dishes, lasagne) to save, according to a study of dunnhumby consulting with 700 respondents. Snacks and sweets are the first to be crossed off the list for 30% of respondents.
Mauricio Prado, Managing Director of consultancy Plan CDE, suggests another way to cut costs with the replacement of items for similar products, such as the exchange of yogurt drink olive oil packing for other vegetable oils.
The food was the second essential item that more overloaded the budget of class C in the last six months, after the increase in the electricity bill, according to the CDE. Purchases of home consume almost a third of the income of these families and to maintain the achievements of consumption amid the economic downturn, 94% of 238 respondents claim to have changed their strategies to supply layoffs. Consumers have stepped up the search for promotions, reduced the amount of purchases, cut categories and adopted new brands. "There is a part of the class C that is cutting consumption and back, but it's not all of it. Families are giving up some food for other achievements achievements how courses, health insurance, cell phone, cable TV, "said Prado.
Jeferson Cheriegate, Director of trade marketing company iTrade Smollan, says the retail strategy should be prioritizing items less sophisticated and better prepare the mix to the less frequent trips to the shops. "The chance of power supply as well, with promotions of larger packages, joining business with pleasure."
"Given the economic conditions, with increased inflation, higher unemployment and fall in disposable income, consumers seek to balance the costs with the money you have in your pocket," said Fabiana Furquim, Nielsen's industry leader. That balance, she said, is done with a few lines of products and maintenance of items considered essential for the consumer or that offer a good relationship between cost and benefit-even being of high added value.
In Fabiana, review price increase of a few lines above average inflation contributed to the drop in sales in the first half. At the other end, categories of products they had fall in prices, or inflation below the period adjustments, recorded increased sales, as pasteurized milk, rice, beans, oil, tomato sauce and cookies.
Consumers still resist to let consuming higher value-added items, like Greek yogurt, butter and salad dressing, which continue to gain space in shopping baskets.
Greek yogurt sales grew 21.7% in the first half in volume, and sales of butter increased 7.5%, according to Nielsen. In category food, 18% of products sold in the first half fell in the premium segment, compared with 14 percent a year earlier. Products considered to be of average prices had 2 percentage points drop, to 61% of total sales. Low cost items accounted for 23% of the total (1 percentage point drop). For the Director of Kantar Worldpanel: consumer, consumers still are willing to pay more for some foods with higher added value and compensate this higher spending by reducing the consumption of other items.
Survey by business consultancy Sonne, in partnership with the Vertude, applied research technology company, at the request of Value, also indicates that the Brazilians have some resistance to change food brands to save on purchases.
The consultancy interviewed 1.8 thousand people across the country. Of this total, 58% are not willing to change the brand of yogurt, for example; 61% don't want to replace the brand of cookies and 74% want to keep the brand of meat. "When consumers have a preference for a brand, hardly replace. Less than 30% of people tend to switch brands, even in a time of crisis. With the tighter pocket, the consumer does not want to risk on choice, "says Maximilian Bovaresco, Managing Director of the Sonne. In the category of yogurt, for example, the quality justifies the brand loyalty for more than 80% of buyers of Danone and Nestlé.
The fall of consumption has its reflection in the production. According to the Brazilian Association of Food industries (Abia) in 12 months accumulated until July, the production of 6 of the 11 categories of processed foods in the country retreat. There was a fall in wheat chain (1.37%), chocolate, cocoa and bullets (4.18%), dairy (3.20%), dehydrated and supergelados (0.99%), beverages (5.33%) and miscellaneous (5.07%). Food production as a whole presents fall of 0.99% accumulated.
Real accumulated sales in 12 months until July, in turn, indicate a drop of 1.04%. Presented fall in sales categories of chocolate, cocoa and bullets (1.72%), canned vegetables and juices (1.19%), vegetable oils and fats (2.91%) and miscellaneous (4.96%). "The result came in below the expected. We still had an expectation of growth of the sector of food this year, "says Amilcar Lacerda de Almeida, Deputy Director of the Department of Economics at Abia.
The industries have already made adjustments to control the increase of production costs, and try to hold price adjustments. In the 12 months until July accumulated, the food industries have reduced in 1.01% total jobs. Investment in the first half were reduced by 42%, to R $ 5,57 billion. Part of the fall is due to the high comparison base. "Last year, many industries anticipated investments to meet higher demand during the Fifa World Cup. In the year, the difference should not be so big, "I say.
The Director of the Abia also noted that industries are currently using around 66% of its installed capacity, compared with 71 percent a year ago. According to Almeida, this index is still considered "normal" for the food segment.
For the year 2015, the estimate of Abia is that the power sector report growth in production volume of 0.5% to 1.1% and sales increase 1.2% Royal 1.5%. In 2014, recorded sales revenue of $ 224,9 billion ($ 529,6 billion). The industry employs 1.6 million people, 1.5 million in food industries and 140 thousand in beverage industries.
Valor Economico News Item translated automatically
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