Brazil is a major consumer of alcoholic drinks. It stands third in global beer consumption. However, in 2016, a continued fall has been noticed in the total volume sales of alcoholic drinks in Brazil in off-trade and on-trade distribution channels. The fall in disposable income of people in Brazil has resulted in the consumers trying to prioritize their spending. The budget of the consumers and necessity of the products are becoming increasingly important when the consumers are taking decisions. The consumers are therefore shifting to cheaper brands. This has led to a decline in many industries including alcoholic drinks.
The alcoholic drinks market in Brazil is highly unregulated as the retailers do not require any special license to sell alcoholic drinks. The cheap prices of alcoholic drinks have been the key driver of the industry and have helped in increasing availability of drinks widely across the country. Atacarejos is the traditional type of cash and carry in Brazil which is one of the primary distribution channel for alcoholic drinks. It provides the consumer to get the best price for drinks and helps in increasing and maintaining the consumption of their choice of alcoholic drinks.
According to the report, “Alcoholic Drinks in Brazil”, A-B InBev has been the market leader in the alcoholic drinks market in Brazil. It has managed to capture more than half of the market share. Brasil Kirin is also a well-known brand in Brazil but it had been suffering losses in the recent years. The company has been bought by Heineken with an aim to expand in Brazil and capture a significant market share. Heineken will also enjoy a better distribution network in the country after this acquisition.
The alcohol drinks market is segmented majorly by beer, RTDs or high- strength premixes, cider or perry, wine and spirits among others. All these segments have experienced a decrease in sales volume. Beer still remains the most consumed drink in Brazil. The majority market sales are comprised of beer. Beer brands have changed the way they were promoting their brands and have started to target young adults. However, RTDs/high-strength premixes were able to grow in 2016. This growth has overall attributed to the increase in sales of catuaba-based high-strength premixes and Skol Beats which become very popular during the carnival season.
The companies are tackling the slowdown in market by widening their product portfolios as the consumers are shifting their preferences to cheaper brands. Economy to premium brands is available in a wide range of prices and many companies are now expanding into different categories as a safe strategy. This new way has also increased the number of product choices available to the consumers. This has created an experience such as offered by hypermarkets and supermarkets. The companies are also selling their products at reduced unit prices. Many of the retailers have increased the variety of brands and categories of alcoholic drinks.
The economy in Brazil is suffering from various problems and unless the economy recovers from the tough time, the alcoholic drinks market is not expected to grow. The consumer confidence is still weak and they will continue to rationally allocate their incomes and prioritize their spending. Special offers and discounts on the drinks will attract the consumers in the future. On a whole, one can say that the market can prosper only if the economic situations are favorable.
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