In Brazil, South America’s most populous country, the population consumes some 11kg of seafood per inhabitant annually. This is higher than the average in South America (10kg), but is lower than the WHO’s recommended consumption. It is also significantly lower than the average in Europe.
The economy is improving, yet not fully recovered
Brazil went into recession in 2014 as a result of falling commodity prices, and high unemployment. However, the last half of 2018, showed some positive signals in the economy with growth in GDP, falling unemployment and higher optimism in the economy in the future i.e. Consumer Confidence Index (CCI ). On the other hand, Household Consumption – a decisive factor and measurement parameter for GDP – saw a marginal increase of only 0,1% in the first quarter of 2018.
Given the size of the country, you’d think there would be plenty of opportunity for seafood in Brazil. However, it is difficult to compete with meat. Brazilians are used to eating a lot of cheap meat – they eat about nine times more meat than seafood per person. For instance, while the price of fillet mignon costs about NOK 80, Norwegian dried and salted Atlantic cod costs approximately NOK 120.
The competition comprises imports from other nations
Brazil’s own fish production consists of conventional catch estimated at 800,000 tonnes, besides farmed fish production of 600,000 tonnes a year. Despite the low production, the local fishing industry is facing criticism from several angles. For example, the EU introduced an import ban on Brazilian seafood in June 2018 due to inadequate fisheries management regimes. The competitive landscape for Norwegian seafood in Brazil is, therefore, dominated by imported seafood – primarily from China, Chile, Canada, USA, Argentina and, to some extent, Portugal.
Historically, Norway has had a substantial market share in the bacalhau category (dried and salted whole cod), which stood at over 80% until 2008. Nowadays, the term bacalhau is used to designate dried and salted whitefish, including coalfish, ling, cusk and Alaska pollock. Norway has been losing market share in this category, mainly to competition from China.
Lunch is one of the most important meals in Brazil. Supper is usually eaten late at night and is when the family gets together. For Brazilians, lunch is an important meal in terms of seafood as well. When asked what meal they usually eat fish and seafood at, more Brazilians say that they eat it at lunch rather than supper, which applies to both weekdays and weekends.
Considering that traditional bacalhau needs to be soaked in water for a couple of days before being eaten, it is rarely eaten as an everyday lunch option. Instead, we see a preference for shredded dried and salted cod.
As well as eating bacalhau as an everyday meal, Brazilians also eat a lot of bacalhau as a traditional festive meal at Christmas and Easter. Figures indicate that traditional bacalhau remains a festive meal consumed once or twice a year, whereas soaked and ready-to-eat bacalhau is consumed all year round.
In contrast to bacalhau, which is eaten mostly at home, salmon is mainly consumed in restaurants in Brazil. When people buy salmon for home, they prefer fillet. As previously mentioned, meat is popular in Brazil as a result of availability and price. Natural, frozen salmon from Chile costs up to NOK 180 per kilo at the store. This shows that salmon is a luxury product, as well as indicating that there is potential for Norwegian salmon in the Brazilian market.
Countless small chains and stores
The Brazilian groceries market is fragmented, with the five largest chains holding a market share of only 14%. By comparison, the five largest chains in the USA have approximately 42% of the market and those in Portugal around 60%.
What is more, four of the five largest players are foreign-owned. French Casino is the largest one through its ownership of Pao de Agucar. Another French chain, Carrefour, comes second. The main reason why it comes second largest is perhaps because they are the only one that is nationwide. The third largest chain is the American Walmart. Walmart has gained market share by early implementation of its EDLP (Everyday Low Price) strategy. Nonetheless, Low-cost chains have not managed to gain such a strong foothold as they have in Europe, but they are expected to capture market share in the future.
The reason why the five top chains do not have a higher market share is, among other things, because approximately two-thirds of groceries turnover is traded through smaller supermarkets and corner shops. This is particularly the case outside the big cities. Moreover, a great deal of the chains are regional which makes it difficult to run countrywide campaigns.
Most consumers in the large cities state that they buy most of their salmon and bacalhau in hypermarkets and supermarkets. On the other hand, the largest increase in sales has been in the cash & carry sector. In terms of numbers, while sales volumes rose by 10,6% in the first half of 2018 compared to the same period in 2017, earnings rose by 11,4%.
Health over pleasure
When we ask Brazilians why they choose seafood, health comes at the top, and is significantly more important than in other markets. What is more, Brazilians are famous for being more preoccupied with appearance than others. This perhaps explains why a high proportion of the consumers say that the most important reason for them to eat seafood is that it is a lean option.
Bacalhau differs from other seafood in terms of why Brazilians buy the product. Most people state that they buy bacalhau because the entire family likes it and not necessarily because it is healthy.
Here we are probably talking about Bacalhau from Norwegian Atlantic cod and the strong position of dried and salted cod as a meal shared by the entire family. Norwegian Atlantic cod is primarily a food for social occasions and pleasure, with health being an additional bonus.
What differentiates Brazil from the rest of the world is that there has been little change regarding the drivers for buying seafood. In most other countries, we see that trends like convenient meals, the environment and sustainability have become prominent in recent years. But most factors in Brazil have been stable for several years. This is probably because a country in a recession, which simultaneously has low consumption of seafood, would not prioritise buying it. Another possibility is that the trends that we have observed in the rest of the world are just coming into force in Brazil and will exert an effect in the coming years.