Bloomberg - As reported, Brazil\'s internal consumption could grow up to 7% this year to 19.5
million 60-kilo bags, according to estimates from the Brazilian Association of Coffee Industries. And according to ABIC, a large chunk of soaring consumption over the last few years has come courtesy of changing habits and rising income for the middle class in South America\'s largest economy, which is expected to see gross domestic product expand over 7% this year.
Over the last five years, economical stability and higher wages in Brazil favored the ascension of more than 20 million people from the lower social classes to the middle class. The \"new middle class\", as it is being referred to, already accounts for 49% of the total population, or 95 million Brazilians.
According to the renowned Sao Paulo-based Getúlio Vargas Foundation, an average middle class family has a monthly income between US$ 650 and US$ 2,700, points Carlos Brando, founder of P&A Marketing in Brazil.
With more available money and more access to credit, this new middle class represents a group with specific social-cultural characteristics that have already begun to influence consumption patterns, he said in a recent newsletter.
The middle class share in the total coffee consumption rose from 37% in 2003 to 42% in 2009, a growth of almost 14%.
Out-of-home consumption grew at an incredible fast pace - 170% increase over the same period pushed largely by the new middle class, as the 2010 ABIC Consumption Trends survey indicates.
Out-of-home consumers are looking for different types of coffee beverages, namely espressos, cappuccinos and other milk-based preparations, different from the traditional filtered coffee they usually drink at home.
From 2003 to 2008, out-of-home consumption of espresso grew 30% and cappuccino, a whopping 127% The 2010 ABIC survey indicates that the concept of coffee quality in this
segment revolves around purity, aroma and flavor. The coffee brands they are used to buy as well as its quality are strong determinants of purchase for these customers. They are also more inclined to pay more for higher quality coffees as compared to previous years.
A higher demand for instant coffee is also noticed amidst this new middle class as they look for more practical products. According to a recent survey done by Nielsen, the middle class contributed to the increase in sales of products linked to health & well being in the country in 2009. Apart from soluble coffee, instant soups, easy to prepare pastas, yogurts and disposable diapers also registered above average sales.
Companies and industries of different segments are maximizing efforts to adapt and launch new products that best serve the needs of this emerging class. On supermarket shelves one can witness more and more pouch products, as well as smaller-sized packages, that make consumer goods more attractive and accessible to this type of client, adds Mr. Brando, a highly respected researcher on coffee consumption trends.
The variety of options in the Brazilian retail include instant coffee offered in small portions of 50g and R&G coffee, traditionally sold in 500g pouch packages, now also available in packages of 200g, noted P&A.
Coffee is the second most consumed beverage in Brazil, after water, and is consumed by 97% of the population over 15 years of age. The rise of the new middle class is creating new opportunities for the coffee industry, but challenges are there too nonetheless. Over the last five years, coffee-substitute products have also registered growth in sales, mainly ready-to-drink juices, powder refreshments and soft drinks. Children seem especially attracted by ready-to-drink chocolate beverages. Coffe e companies now have to fight for more space in an expanding sector.
ABIC\'s executive director, Nathan Herszkowicz, coffee consumption in Brazil will grow 5% per year over the next years, in a rather conservative perspective. If the country keeps this pace, aided by the expansion of consumption in the middle class, the domestic market will demand around 21 million bags of coffee by 2012 which will possibly position Brazil as the largest coffee consuming country in the world.
Last year, the Brazilian per capita coffee consumption reached 5.81kg/year. Sales of the Brazilian coffee sector in 2010 are estimated at more than R$ 7 billion (US$3.9 billion).
MAY RETAIL COFFEE SALES UP
According to ABIC, Brazil\'s May retail coffee sales rose 8.84% from April, but increased just 1.88% from May 2009. The growth in May was the highest monthly gain in the last 11 months, according to a monthly survey commissioned by ABIC.