The confectionery market in Brazil has seen significant growth over the years, with a wide range of preferences among Brazilians. The market has attracted both local and foreign confectionary producers, each with its strategies and techniques. In this market review, we will examine the current state of the confectionery market in Brazil.
Market Volume:
The confectionery market in Brazil has been steadily growing, reaching a market volume of $10.5 billion in 2020. This figure is set to continue rising, with analysts predicting a compound annual growth rate of 3.9% by 2025.
Preferences of Brazilians:
Brazilians have a diverse range of taste preferences when it comes to confectionery. However, some products, such as chocolate, biscuits, and candy, are more popular than others. The Brazilian market has a high demand for innovative and healthy confectionery products, such as sugar-free and organic confectionery.
Local and Foreign Leaders:
The local confectionery market in Brazil is led by companies such as Garoto, and Lacta, which are well-established brands with a strong presence in the country.
- Garoto
Garoto, established in 1929, is a Brazilian chocolate manufacturer that offers a wide range of chocolates and candies. According to a report in 2021, Garoto has a market share of 37.4% in Brazil’s chocolate market, making it the market leader. The company has an efficient business model that focuses on innovation and quality. Its strengths lie in the fact that it has a well-established and recognizable brand, and it is known for introducing new and unique products regularly.
On the downside, the company struggles with distribution, as it only has a limited presence outside Brazil. Garoto’s marketing and sales strategies are target-specific, and focus on creating brand awareness among its target audience. Its product line includes high-end premium chocolates for gifting or indulgence, and affordable chocolates for mass consumption. The company does not have many strategic partnerships but has collaborated with other major players in Brazil’s food and beverage industry.
- Lacta
Lacta, on the other hand, was established in 1912 and is a subsidiary of Mondelez International. In 2021, it had a 33% market share in the Brazilian chocolate market, making it the second-largest player. Lacta’s business model is based on consistency in quality and variety in its offerings. It is known for being the first to introduce new and innovative flavors that cater to a diverse audience.
Lacta’s strengths rest in its established and knowledgeable workforce and its well-performing parent company. However, it struggles with product pricing and the need to incorporate environmentally sustainable practices. The company’s marketing strategy is more diverse than Garoto, with a greater focus on digital marketing. Its products range from affordable mass-produced snacks to high-quality chocolate bars.
As far as strategic partnerships are concerned, Lacta collaborates with other major food and beverage companies to extend its reach. In conclusion, Garoto and Lacta are both behemoths in Brazil’s confectionary industry with their distinctive business models and strategies. Their strengths and weaknesses differ, but their common goals include providing high-quality chocolates to their diverse customer base.
- Foreign companies
Foreign companies have been able to enter the Brazilian market, but they must be willing to navigate the import duties. Notably, Mondelez International and Ferrero Rocher are some examples of foreign companies that have a significant presence in the Brazilian confectionery market.
Import Duties for Foreign Companies:
Brazil imposes high import duties on foreign companies that want to enter the country’s confectionery market. The Brazilian government views this as one way of safeguarding local producers. Thus, foreign confectionery producers must factor these duties into their overall costs to operate in Brazil.
Sales Channels:
Confectionery in Brazil is commonly sold through supermarkets, hypermarkets, and convenience stores. Small kiosks and shops in central areas also sell confectionery. Brazilians are more likely to purchase from stores located in central areas rather than supermarkets or hypermarkets.
Success Story and Lessons Learned:
The success story of Nestlé in Brazil is a testament to foreign confectionery producers’ potential to do well in the Brazilian market. In the 90s, Nestlé entered the Brazilian market by acquiring Garoto (becoming Garoto’s parent company), a local company. Since then, Nestlé has become the largest confectionery manufacturer in Brazil and has a significant market share in the country.
Many foreign confectionery manufacturers that failed to enter the Brazilian market did so because they did not understand the local market, tastes, and preferences of Brazilians. Some foreign companies tried to replicate their home-country strategy in Brazil, which was not effective in the Brazilian market. It is essential for foreign confectionery manufacturers to have insights into the local market and adapt their strategies to align with the Brazilian market’s preferences.
The Brazilian confectionery market offers foreign confectionery manufacturers an opportunity to grow their business. While the Brazilian market is lucrative, foreign companies must be flexible and willing to understand the market’s local tastes, preferences, and culture. By doing so, foreign companies can create effective strategies to succeed in the Brazilian confectionery market.