By Jay Forte, Contributing Reporter
RIO DE JANEIRO, BRAZIL – While the so-called “sin” industries like alcohol, cigarettes and candy are traditionally considered recession resistant, beer sales in Brazil are drying up more than expected, especially at the bars and restaurants. In an effort to spend less, many Brazilians are choosing to drink and entertain at home, and the industry is looking to fill the gap.
Nielsen data confirms that Brazilians are preferring to drink beer at home in an effort to reduce spending on entertainment, according to a report by O Globo. The study in late 2015 showed that 61 percent of respondents preferred ‘to bring the bar into the house’.
“This explains the reason for the decrease of 1.2 percent in the Nielsen basket of alcoholic beverages. While there is an increase in sales of these products in the self-service channel (supermarkets, convenience stores), there was a drop at the retail counter, the bar,” Tatiane Vale, an analyst at Nielsen told O Globo, adding that this is the biggest decline for the segment since 1992.
The total amount of beer consumption across Brazil has dropped according to the CervBrasil, an association that brings together the industry’s manufacturers, beer production fell 6.7 percent in the first quarter, compared to the same period last year.
Paulo Petroni, CEO of CervBrasil told the national news outlet, “There is a significant drop off (in consumption). There was a change in behavior. With low confidence and falling purchasing power, consumed volumes were shrinking and there was migration to lower-priced products. The consumption habits also changed, due to the economic crisis scenario.”
To prevent sales from falling further, traditional breweries are stimulating consumption via promotions and offers of returnable bottles, in the 300 ml, 600 ml or one liter versions. These options have always existed, but were intended for bars and restaurants. In times of recession, however, Petroni says this alternative comes out cheaper to the consumer and to the manufacturer, it means a greater margin.
Jason Galeria, an American expatriate living in Rio and co-owner of the Blue Agave restaurant bars (in Ipanema and Copacabana), confirms that they are seeing a drop in beer sales. “Traditionally, as we move towards winter, and lower temperatures, there is always a dip in beer sales. This year is no different.” But adds, “sales are down slightly more than the average low season trend.”
While the local economy is suffering and Brazilian’s are spending less, most foreign travelers and expatriates in Brazil have seen their purchasing power double with the fall of the Brazilian real currency in the last year. Although the influx of tourism has certainly been slowed by issues like the Zika virus scare and general political turmoil in the country.
Galeria shares, “It’s tough to determine if [the lower beer sales] is a result of internal problems aka the recession; or external issues i.e. less tourists coming in.” Yet he adds thankfully, “Overall we continue to see a healthy mix of international students and travelers, long-term expats, as well as local Brazilians of all ages at the bars.”