October 26, 2021
Alternative In times of price hikes, cheap brands are losing retail space

Alternative In times of price hikes, cheap brands are losing retail space

When shopping for staples, such as rice, beans, milk and juice, Brazilians are now finding fewer options for cheap brands than it was six years ago, when inflation also hit double digits.

Budget brands or “Talibans” – a reference to guerrilla tactics in Afghanistan -, priced at least 20% below the market average, are becoming increasingly scarce in supermarkets.

This is another difficulty for families to take home everything they need, especially at a time when the budget is under pressure due to high prices. inflation And through lower income.

A survey commissioned by Estadão by market research startup Varejo 360 shows that half of a list of ten core products have fewer budget brands today than in 2015, when inflation was 10.67%.

The survey reveals that the number of Taliban brands has been reduced to rice, beans, whole milk, powdered juice and detergent. In 2015, there were 14 economical varieties of rice, 38 of beans, and two of milk. Today there are only 6 rice, 7 beans and no milk.

In the case of soy oil and sugar, there was no presentation of economic brands in both periods. “The two categories are still very focused, with five brands,” says Fernando Farrow, Consulting Partner and responsible for the survey.

The survey indicates that the total of the economic brands of this ten-item list, which numbered 161 in 2015, decreased to 116 this year, and the share of sales in this period decreased by about 40%.

menu

The smaller offering of budget brands has made micro-entrepreneur Aline De Marque, who prepares and sells homemade food online, to change her business logic. “Today, I go shopping first, see what’s at an affordable price, and then make a menu.”

Recently, I stopped preparing the traditional filet parmigiana. In addition to the high price of meat, Allen could not buy the tomato pulp brand, the price of which was 30% lower than the leading one and that met taste expectations.

The irregularity of product delivery, exacerbated by the difficulty of obtaining raw materials due to the epidemic, is one of the factors that have led to a decrease in the supply of affordable brands in supermarket chains.

“All a retail chain can’t have is disruption (product shortage) and the big concern today is supply,” says consultant Luis Alberto Paiva, partner at Corporate Consulting, who specializes in company restructuring.

The chaos, which has been in the industry since the end of 2020, has mainly affected small businesses and made large retailers reduce the number of suppliers. As a result, purchases were focused on the strongest, says Paiva.

Today, Fernando Djibouti, Chairman of the Board of Directors of GS Ciência do Consumo, says that more than 60% of the 12,000 items sold in medium-sized supermarkets are concentrated in 25 global companies, comprising between 250 and 300 brands.

The difficult financial situation of small businesses in the shadow of the pandemic has led to an increased focus. Small businesses have been bought up by big companies, and there have been extreme cases of small businesses going out of business.

In addition, the increased “expensive” space on store shelves – with the requirement to share merchandising boxes, for example – large industries launched a second brand at a slightly lower price, and the advance of private brands ended by driving the Taliban out of large networks.

Camp juice powder, made by General Brands, which has a consumer price of 40% less than that of multinational companies, is out of supermarkets. They want upfront financing, and the contract price is high. So, let’s go to cash and carry stores and independent chains,” says Ezel Pinto, president of the company, which has been subject to judicial reorganization since 2014.

Cerealist Barcelona Alimentos, owner of the Rio de Janeiro bean brands Leivinha and Pina, is more difficult to sell at large chains. The mid-sized company has marketed commercial Pina beans to major retailers in the past. But today, with so many demands, he has given up on this channel. The grain company chose to focus on convenience stores and businesses specializing in basic food baskets.

In the environment of fierce competition, the retailer’s brand has been to exit large and small supermarket chains to retain customers and fill the void left by the reduction in the supply of affordable brands. Private brands are more affordable than leading brands. However, it is not as cheap as the “Taliban”.

The progress of brands of staples in supermarkets, hypermarkets, cash and carry is due to the growth of sales and the introduction of new products. A survey by GS Ciência do Consumero Consultancy showed that in the January-September period, private-brand sales grew 72.5% in industrial bread, 68% in rice, 64% in coffee, 39% in soup and broth, and 24% In frozen vegetables, 14% in sweet biscuits and 13% in pasta, compared to the same period in 2020.

“In the past three years, private brands have gained a lot of power, and what was a franchise of the big chains is starting to happen in small businesses, in regional businesses with 10 to 15 stores,” says Fernando Djibouti, Chairman of the Advisory Board. .

With the growth of private brands, he shows, space within supermarkets is becoming more financially contested by industries. This is another reason why it has been difficult for brands on a budget to reach large retailers.

Seven years ago, he established 13 supermarkets, with sales exceeding 15 million Brazilian reais and together they have 262 stores, Associação Unigrupo Brasil to do the import directly. Since February this year, these retailers have created an exclusive and popular brand, called “Casa de Mãe”.

“We started with 11 items, and we’re going to 40 this month,” says Sandra Caires Saboia, the association’s brand manager. The goal is to have a full line of products, including food, personal hygiene and cleaning, to reach 2,000 items within three years.

The idea of ​​a single brand for all retailers is to reduce the costs of negotiating with the industry, due to the greater volume. Sandra notes that depending on the category, the price difference between the private label and the flagship brand is at least 20%. ‘Our brand does not want to be the first price.’

The exponential growth in the demand of retailers to own their own brand has been driven by the need to make the customer loyal to the store due to competition, especially from the markets. Another reason is rising inflation. “There are so many movements happening at the same time,” says Antonio Sa, partner at Amicci, a private label consultancy.

Last year, for example, the company fattened its customer list with 30 new retailers, mostly from the supermarket segment. Before inflation started, the consulting firm was servicing about 60 retailers.

Sa says the products most in demand for developing new businesses in this time of high inflation are the basics: rice, beans, coffee, toilet paper, toiletries and diapers.

Information from O Estado de S. Paulo newspaper.