Panettone shrinks in size and rises in price this Christmas

The panettone batches for Christmas 2022 begin to leave this month towards supermarkets across the country. The more attentive consumer will notice that, instead of the traditional versions with fruits or 500g chocolate chips, the shelves are filled with 400g Panettone.

There are also versions of the product in 300g and even panettone in pieces. On the other hand, according to retailers and manufacturers interviewed by Sheetprices are, on average, 20% higher than last year.

According to the manufacturers, the increase in the cost of packaging and inputs, especially wheat flour, butter, chocolate and raisins, account for the high price well above inflation, which was 8.7% in the last 12 years. months until August, according to the IPCA.

The movement to shrink the traditional version of Panettone seeks precisely to make the product fit into the tight budget of the consumer. It’s a format that started being offered about five years ago, but has now become mainstream in retail.

“Data from the Kantar consultancy show that, in 2021, we had a significant increase of 21% in sales in volume, with more manufacturers reducing the size of the versions, from 500g to 400g”, says Cláudio Zanão, president of Abimapi (Brazilian Association of Biscuits, Pasta and Industrialized Bread & Cakes).

The offer of smaller and more affordable options should be repeated this year, according to Zanão. “The Brazilian’s pocket is not elastic. He loves panettone, but often cannot afford it and needs to find cheaper versions”, says the Executive. On account of the economic context, however, Abimapi predicts an increase of only 3% in volume at Christmas this year.

The Casa Switzerland brand, bought two years ago by the biscuit maker Marilan, launched this year a 100g package with pieces of panettone (R$ 12.99) and a kit of 135g of honey bread (R$ 9.99).

“These are more economical gift options for Christmas”, says Sérgio Tavares, president of Casa Switzerland, who expects to sell 25% more this year.

Regional brands pulled the ‘mignon’ panettone movement

According to food industry consultant Reinaldo Bertagnon, smaller, regional brands –such as Romanato, from the interior of São Paulo, Roma and Siena (from Paraná)– were the first to offer panettone in smaller versions, weighing 400g.

“The big manufacturers realized that they were losing market for these brands that sold the cheapest panettone and sought to adjust”, says he, who has 30 years of experience in the bakery industry. “It was the same movement observed in the chocolate industry, which began to offer smaller sizes.”

In the North and Northeast of the country, for example, where the average ticket is smaller, the Bauducco brand has 400g packages. In other regions of the country, the manufacturer works its other brands —Visconti and Tommy, with more competitive prices — with 400g products. With Bauducco, Visconti and Tommy, Pandurata Alimentos owns about two-thirds of the national Panettone market.

“Now we already see some regional manufacturers leave for the 300g panettone, such as De Panes, which is starting to arrive in São Paulo”, says Bertagnon, referring to the manufacturer based in Santa Bárbara d’ Oeste (SP). In São Paulo, the product is sold, for example, in the Chama Supermercados chain, at R$6.

“We try to assemble a varied mix of traditional fruit panettone, ranging from R$ 6 to R$ 20, considering sizes from 300g to 500g”, says Fábio Iwamoto, director of Supermercados Chama. The chain, with 15 stores in Greater São Paulo, expects to sell 20% more at Christmas this year —despite the price increase of some brands, which reached 30%, says the Executive.

Imported from Argentina, raisins soared in price

At Panco, the decrease from 500g to 400g was made about five years ago. “We were one of the first manufacturers to make this change”, says Paula Marques, Panco’s marketing manager. “It’s a way to reduce costs and offer more competitive prices”, says the Executive. Panettone with this weight have a suggested price between R$ 16 and R$ 19.

Wickbold landed on the Panettone market last year, with an outsourced production. But at the end of 2021 it bought a cake maker in Guarapuava (PR), Delimyll, and made the adjustments to start its own production, with national distribution.

“We have already started with 400g products, in line with what is practiced in the market”, said Pedro Wickbold, general director of the company, which also owns the Seven Boys brand. Wickbold’s products should reach the market with a suggested price between R$23 and R$29 (including the zero sugar line) and those from Seven Boys, at R$20. The company also offers the mini panettone, licensed by Turma da Monica, at R$9.

The price increase compared to last year is around 20%, according to Wickbold. “It is a necessary adjustment, to maintain the quality of the product in view of the increase in the cost of inputs”, says the businessman.

“We had a rise of almost 40% in the price of wheat flour.”

João Diogo, director of the Village, reiterates the pressure on the price of inputs and packaging. “Only raisins have increased by more than 50%, in dollar terms”, says Diogo, who imports the product from Argentina. “The price of paperboard grew 25%, that of corrugated paper, more than 30%, chocolate increased 25%, and fat and butter 40%”, says the Executive.

Even so, the Village decided to keep the price adjustment at 12% this year.

“We are going to adopt a more aggressive pricing policy, to avoid a high rate of product returns, as was the case last year,” he says. According to him, 12% of what he sold on consignment to retailers was returned. An acceptable rate would be 3%. “Nobody was buying anything, it was an end of the year with everybody broke.”

Giftable version costs (and weighs) more

In value, the Panettone market should grow only 5% this year, according to Abimapi, to R$ 846.3 million this year. Last year, sales in value grew only 4%. In nominal values, growth is below IPCA inflation.

Eight major manufacturers heard by the Sheet (Bauducco, Arcor, Wickbold, Village, Cacau Show, Panco, Nestlé and Casa Switzerland) are betting, however, on a much higher growth, between 10% and 30%, both in volume and in value.

For this, in addition to the leaner versions, below 500 grams, they launch presentations that are a little more expensive (and heavier) to give away.

According to Kantar, in 2021, a third of households (32.9%) gave Panettone as a gift at Christmas, against 19.7% the previous year.

“Our product mix for Christmas ranges from R$6.90 to R$149.90”, says Alexandre Tadeu da Costa, president of Cacau Show. The chain maintains the tradition of leaving products below R$ 10. Last year, the cheapest, the Santa Claus Card (14g) cost R$ 5.90, and this year it went to R$ 6.90.

The highest value product is a 1.5kg panettone, the Special laCreme.

Argentinian Arcor, owner of four factories in Brazil and which also works with the Triunfo brand, reinforced its bet on more expensive versions, 530g and 650g. “Tasting a panettone is a moment of indulgence, the consumer likes a product with more filling”, says the marketing director of Arcor, Anderson Freire.

The biggest novelty this year is a 650g panettone filled with chocolate, of the character Tortuguita, sold at R$ 35. “It is a product for family consumption”, he says.

Nestlé, which since 2017 has adopted the weight of 400g for its Panettone, says that this year it decided to change it to 450g.

“The change seeks to keep up with market trends, adjust to new consumer needs, ensure compliance with technological innovations and maintain competitiveness,” Nestlé said in a note. According to the company, which owns brands such as Prestígio, Alpino and Talento, prices are negotiated directly with each retailer, “which defines the best strategy for your establishment”.

Paula Marques, from Panco, says that the retailers themselves asked the manufacturer to launch products with gift packaging. “We launched two versions of panettone to give away, in celebration of the company’s 70th anniversary”, she says. They are Apple Strudel and Tiramissu, to accompany the Banoffee version, launched two years ago. Prices are around R$30, in the 550g version.