Brazilian adheres to ‘hourglass consumption’ to circumvent inflation

The inflation that consolidates in the house of two digits in Brazil has generated a different style of consumption in the country: the “hourglass”. In this sense, the sale of products at the extremes grows: the cheapest, to face the widespread price increase in most categories, and the premium ones, which come in as compensation for the savings made away from home. Intermediate brands lose ground, according to consultancy Nielsen|IQ.

In the first quarter of this year, for example, compared to the same period last year, the consumption of ready-to-eat dishes grew (up 116% in value and 68% in volume), according to consultancy Nielsen|IQ. On the other hand, rice sales fell in value (-13%), but grew 6% in volume – a clear sign that people are replacing traditional brands with cheaper ones.

“Brazil was much more impacted by inflation than other world economies”, says Roberto Butragueño, retail director at NielsenIQ.

In a survey carried out by the consultancy to measure the weight of inflation on consumers in 100 countries, Brazil was the one that presented the greatest variation in 2021 over the previous year: a 24.6% increase in the average price per unit of consumer products (food, drinks and hygiene and cleaning items).

“Brazilians want and need to save. But they have tried to combine this reduction in expenses with some rewards. Instead of going out to a bar, for example, they buy their favorite beer and drink it at home, hence the increase in the consumption of premium beers and handcrafted”, says Butragueño. “It’s an hourglass consumption, in which the most expensive and the cheapest grow, to the detriment of mid-range brands.”

In this scenario, medium, traditional brands lose ground and those that cost 20% more and those that cost 20% less grow.

In order not to stop consuming the preferred brand, consumers often change sizes in search of a reduced version. Or it increases consumption of family-size packages, which have a lower cost per unit. “Part of this behavior is the search for purchase in wholesale stores, which offer an average price lower than that of traditional supermarkets”, says the Executive.

According to Butragueño, it’s not necessarily about always consuming the cheapest, but looking for the best cost-benefit ratio. “To deal with the reduction of purchasing power, the consumer is doing more account, evaluating what to spend”, he says.

Post-pandemic economics grew more in Brazil than in the world

During the pandemic, the number of consumers in the world who became “new restricted” (they went through a degradation of the financial situation and began to control spending) reached 46%. In Brazil, this rate was much higher, 62%.

On the other hand, those “cautious protégés” (who suffered little or no impact on their financial situation, but even so began to observe more spending) added up to 27% in the world and 25% in Brazil.

The country distances itself from the world average in the extremes: those “previously restricted” (who already managed their spending closely before the pandemic and maintained their behavior) add up to 17% in the world and 9% in Brazil; while the “unrestricted protected” (whose financial situation was stable or even improved during the pandemic, and do not need to control their spending) are 9% in the world and 3% in Brazil.

Among the “new restricted” in the world, 68% realized that the cost of groceries had increased in the last six months. In Brazil, 87% had this perception. As a result, virtually everyone has changed the way they shop to manage expenses: 97% worldwide and 98% in Brazil, according to Nielsen|IQ.

In the search for the best “value for money”, says Butragueño, consumers do more online research on prices and often decide to buy online. “It also reduces trips to the point of sale, returning to making the purchase of the month, so common in the 80s, a time of high inflation”, he says.

In managing expenses, is the reduction of consumption outside the home and superfluous services, according to the Executive. “For companies, it is important to evolve the product portfolio, seeking to be relevant across the entire price spectrum,” he says. “You also need to focus on communicating the main benefits of the product, for which the consumer is willing to pay.”

But, at the same time, says Butragueño, companies cannot help but think about innovation. “Five years ago, no one would have thought that food delivery apps would reach this representation in the market, even in a pandemic scenario under control”, he says.

“In the same way, the concern with healthiness is a trend with no return. Consumers will not want to stop consuming delicious things, but they want them to be increasingly healthy.”