The Brazilian consumer market has experienced a significant shift since the late 1990s due to a series of economic advances and changes that have provided the poorest population segments with improved conditions of life, among them lower inflation, reduced unemployment, increased access to cheaper credit, and a variety of conditional cash transfer programs and mechanisms.
This has produced three basic advances:
- Average income per family has risen 12% over the past years;
- Income inequality has dropped, the lowest rate in 30 years;
- Consumption patterns have become highly diversified as individuals devote proportionally less of their income to cover basic expenses (food and housing) and proportionally more toward other goods and services.
Market Segmentation and Profile of Consumers
As recently as just a few years ago, the consumer market was centered almost exclusively on socioeconomic segments A and B (upper middle and high-income earners). This focus on the two segments, notwithstanding their significance in absolute terms, prevented the country from reaching its full potential. The recent growth of the economy has enabled a new and substantial contingent of Brazilians in socioeconomic segments C and D to join the broader consumer market. Indeed, these groups have increasingly become the focus of corporate advertising and marketing campaigns.
There are today nearly 20 million families, or about 60 million individuals, with an average monthly income of R$ 2,500.00 (nearly US$ 1,400.00 at 2010 exchange rates). In general, consumers in socioeconomic segments C and D are individuals whose needs have not yet been fully satisfied and who are, according to various qualitative studies, highly optimistic about their future income prospects and express a strong desire to increase their consumption levels, both in terms of quantity and product variety.
Therefore, foreign companies should no longer look upon Brazil as a sophisticated and restricted niche market, but as a broad, diversified consumer market offering potential suppliers a vast range of opportunities in distinct price and quality segments.