What Brazilian macroeconomics mean for brands
By Aurora Yasuda
Business Development Director, Millward Brown Brazil
Any plans for strategic development of local or global brands within Brazil must recognize the major demographic, social, economic, cultural and political trends that affect consumption patterns, and the changes that are occurring within them. Here we consider some of the key factors that are shaping the Brazilian consumer profile today.
The altered age pyramid
Improved quality of life has increased the average life expectancy of the Brazilian population. This, combined with the fact that the large contingent born between 1950 and 1960 — ‘the baby boomer generation’ — has now reached maturity and has now begun to change the age structure of the population.
The over 65s population represents the highest growth, and may well exceed 4% year-on-year between 2025 and 2030. Meanwhile, the growth rate of the 0 to 14-year-old population has been declining in absolute value from 1990 to 2000. This is due to families having fewer children, even among lower classes (and despite the fact that the infant mortality rate has also shown a downward trend).
In 2008, 0 to 14-year-olds represented 26% of the total population and the over 65s accounted for 6%. The projection for 2050 shows a reversal: children will represent 13% while the over-65s are expected to exceed 22% of the population. The value of ‘pester power’ will perhaps be sidelined for brands by the growing importance of the more considered approach of the older consumer.
Changes in the ma ke-up of the family unit
In a more open society with greater tolerance and acceptance of separation and divorce, new family compositions and household profiles arise and significantly affect consumption patterns:
- Single-parent families (households with one adult, usually mothers living with their children).
- Large families where the children return to their parents’ home with their own children and receive help from grandparents to raise them.
- Blended families — couples in their second or third marriage where their children from previous marriages all live together with them.
A collision between consumerism and indebtedness
With economic stability and a steadier employment rate, Brazil experienced a phase of increased consumption, giving many of the population access to consumer goods that they once believed to be beyond their reach. However, the perils of easy credit and high interest rates led to an indebted population that was unable to make ends meet, generating a very high default rate. The indebtedness rate has more than doubled in eight years according to Central Bank— from 18% in 2005 to about 43% now.
This indebtedness is already affecting the decision making process for the purchasing of staples; it may well result in a trade-off where the strongest brands earn the loyalty of consumers by offering the best value combined with an emotional reward.
The formalization of domestic work increases household costs
For a long time, the employment circumstances of many domestic workers were characterized by high informality with limited access to social rights. However, starting this year, this segment formalized its working relationship with access to labor rights from other categories. Thus, the cost for maintaining maids, nannies, elderly caregivers, drivers, caretakers and so on has substantially increased, forcing families into new agreements and arrangements. The impact of this on disposable income — for both employee and employer — may yet to be fully felt.
Adoption of global consumption patterns, driven by technology
As elsewhere across the globe, Brazil has seen the growth of e-commerce and online shopping; the penetration rates of tablets, smartphones and social networking are also rapidly increasing. This window on the world has strengthened the presence of global brands, but it is the brands that fulfill the mantra of ‘glocalization’ that are at an advantage. Consumers engage easily with brands that reflect or are part of the local culture.
In the face of these major and ongoing changes, brands have greater challenges and responsibilities. Brazil remains a market of great opportunities but to capitalize upon them, brands must consistently deliver something beyond the product or service itself. That ‘something’ must be differentiated enough to attract the consumer’s interest, and meaningful enough to merit their engagement and loyalty.