Brazil is one of the top 20 consumers of soft drinks in the world. This article will show the main trends of this market, its peculiarities and its evolution.
Soft drinks first appeared in Brazil in 1904, almost 20 years after the foundation of Coca-Cola in the United States. Today, the country has nearly 200 soda companies, although the biggest share of this market is owned by large corporations.
According to a study released by the consulting company Euromonitor in 2012, Brazilians purchase an average of 85 liters of soft drinks per person, ahead of countries like Spain, France, Japan and South Africa.
The results of the consumption of soda have been varying in Brazil. When it comes to nominal values, most recent data by Euromonitor pointed out that in 2012, off-trade sales reached BRL 45.2 billion, which was considered acceptable, yet not thrilling, by most corporations.
Numbers were a bit worse in 2013, according to entities like Abras, the Brazilian Association of Supermarkets. A study in conjunction with the consulting company Nielsen, showed that the volume of sales made in supermarkets and stores decreased approximately 4.3% in that year.
Companies and Brands
Soft drinks companies in Brazil can be divided in two categories: the big companies, and the small regional ones.
According to Afrebras — the Brazilian Association of Manufacturers of Soft Drinks — large corporations own a little less than 90% of soda market share in volume, and almost 95% in value sales.
There are three main soda companies in the country. Data below is provided by Afrebras.
- Coca-Cola Company, which has a market share of 55% in volume and 62% in value
- AmBev, with a market share of 19% in volume and 21% in value
- Brasil Kirin, with a market share of 5% in volume and 4% in value
Coca-Cola products are known worldwide. The main soft drinks of this company sold in Brazil are Coke, Fanta, Sprite and Kuat, made from the Brazilian fruit Guaraná.
This same fruit is the main ingredient for Guaraná Antarctica, owned by AmBev. The beverage is responsible for around 10% of all the soda sales in Brazil, and was originally founded in 1921. Other famous soft drinks made and/or distributed by AmBev in Brazil are Pepsi, H2OH! and Soda Limonada.
Brasil Kirin is a branch of the Japanese corporation Kirin. In Brazil it is responsible for soft drinks like the traditional Itubaína, which has a tutti-frutti flavor, and Schin, with Cola, Lemon, Guaraná and Orange flavors.
Smaller and Regional Companies
There are around 180 tiny players in Brazil. Most of them have less access to resources, investments and technology. This results in smaller production, and consequently, smaller sales. Many specialized in selling cheaper items, trying to embrace the consumption by the poorer population from Class C, D and E.
Some of the smaller Brazilian brands are:
Beverages made from Guaraná can be found in other countries, but some beverages are exclusively made — and perhaps sold — in Brazil.
“Tutti-frutti flavored” soft drinks known as Tubaína, were more popular before the dominance of this market by big companies. As previously stated, Brasil Kirin produces a version of this beverage, but other brands still resist and are made by small companies.
However, the famous Guaraná Jesus, popularly known for its bright pink color, could not stand up to market pressure and was bought in 2001 by the Coca-Cola Company. Until 2013 this beverage could only be sold in the state of Maranhão, where it was developed by a local pharmacist in 1927.
The Brazilian government sets a minimum amount of certain ingredients to be in soft drinks produced in the country. By definition, a soda, or refrigerante, is a “carbonated beverage, obtained by dissolving, in drinking water, juice or vegetable extracts of its origin, with the addition of sugar”.
The requirements are:
- Soft drinks must be saturated with carbon dioxide.
- Orange, tangerine, and grape sodas must contain at least 10% of juice in its natural concentration.
- Lemon, or lime sodas must contain at least 2.5% of lemon juice.
- Guaraná sodas must contain at least 0.02 grams of guaraná seed in each 100 milliliters of the beverage.
- Cola sodas must contain cola nut, or cola seed, in its composition.
- Apple soda must contain at least 5% of juice.
Since large corporations usually have factories installed in the countries in which their products are sold, the export of Brazilian soft drinks is on a reduced scale. The sale of additions and ingredients made in Brazil to other countries happens more frequently.
The main exception is Guaraná Antarctica, which can be bought in Europe, North America, and Asia. This beverage is also manufactured in Portugal and Japan.
Cotuba and Refrix are examples of smaller players that decided to sell their products in foreign nations as an expansion strategy.
The Brazilian soft drink market expects a recovery in the next few years, not necessarily classifying stable results as negative.
One of the key factors are major sporting events, such as the World Cup and the Olympics. A study made by Nielsen and ABRAS showed that soft drinks are the most consumed item by Brazilians while they watch sports.
Longer periods of warm weather also boost the sales of soda being responsible for a growth of 1.7% at the end of 2013 and the beginning of 2014, according to Nielsen.