Brazil’s Aging Consumer

The Brazilian population is aging more rapidly than anticipated, with birth rates down significantly in recent years, even before the impact of the pandemic. An older consumer base will have consequences for future food sales, as consumer needs change with age. At the same time, today’s younger consumers will make up the biggest consumer segment of the future population, with peak economic activity in 2030. This means that some consumer habits seen in the younger generations today, will reflect on future sales in the older consumer segment. Dairy sales look more vulnerable from a volume standpoint in an aging population, while animal protein consumption should grow, and coffee sales will rely on higher value-added formats.

Aging Consumers

Demographic Trends Mirroring Some Developed Markets

The average Brazilian consumer is getting older, and while the average age today is still relatively low at 35 years compared to 43 years in the EU, population growth is decelerating rapidly in Brazil, and will continue to do so according to projections by the Brazilian Institute of Statistics (IBGE). Population growth has declined from just under 1% in 2010, to 0.7% today, and is headed towards 0 by 2046. That means the average Brazilian will be much closer in age to the average European by 2050. In the EU, the average age today is 43 and will rise to 47 by 2050, meaning that the gap between Brazil’s and Europe’s average age will shrink by half in the next three decades. This is relevant because some food consumption trends in Brazil will no longer reflect that of today’s young population and will start to mirror those of older populations, such as that of the EU. This can mean many things for each sub-category, but food companies need to be aware that there will be a strong demographic slowdown in the coming decades. Brazil’s total population is currently estimated at 215m, and it will peak at 233m by 2046, according to estimates by the IBGE.

Why Age Matters: Dairy and Breakfast

Declining birth rates mean fewer children per household and, potentially, smaller households, which are factors for the consumption of certain food categories. Also, an older population structure can mean higher taxes for younger consumers to provide support for the elderly, higher savings rates as consumers age, with a reduction in spending, and higher medical care costs. This can have an even bigger impact on consumer expenditure on food in a country with a low savings rate, like Brazil. The intake of products like fluid milk, orange juice, breakfast cereals, some snacks, among others, starts to face headwinds in a country with fewer children per household and fewer people per family. That will become an issue in the coming years, as seen in the way the demographic structure of the country is evolving (see Figure 2).

Coffee and Young Consumers

According to the Brazilian Coffee Industry Association (ABIC), domestic demand grew at a CAGR of 1.8% since 2017, reaching 21.5m 60kg bags in 2021, and the consumption of specialty coffee represents 5% to 10% of total volume. This is low compared to other large coffee markets, and, interestingly, a survey conducted by Euromonitor indicated that 60% of specialty coffee drinkers are aged 18 to 40. This shows that a younger population structure favors the development of specialty coffee consumers. Consumer interest in functional and healthy products is growing in Brazil, and new brands have emerged following this trend, such as SuperCoffee, Power Coffee, and Desincoffee.

Looking at Brazil’s aging population, we believe coffee demand should continue to grow, especially for the premium segment. We have seen a strengthening of the third-wave culture (see our article on third-wave coffee in Brazil, The Brazilian Coffee Market) among the younger population, supporting category growth in the future. However, this is also dependent on income growth, so if the Brazilian economy fails to recover and grow on a sustainable path in coming years, it will be difficult to see consumption growth.

In addition to specialty coffee, new generations are likely to adopt new formats such as functional beverages, ready-to-drink, liquid coffee, steeped coffee bag, cold brew etc. On a positive note, as today’s younger consumers age and achieve peak income, they will continue drinking specialty coffee and other formats, driving value sales higher for the domestic coffee market. However, these new formats can negatively impact overall per capita consumption in volume terms, as often, less coffee is used per unit compared to traditional preparations.

Animal Protein and Alternatives

Analyzing and comparing Brazil's demographic data in 2030 and 2050 to that from 2010, we can see an increase in the potential for per capita consumption of meat in general. A greater participation of the economically active adult population creates the potential for increased demand in coming decades. This will reach its peak in 2046. In 2030, the Brazilian population is expected to rise by around 30m people compared to 2010. As a result, the increase in domestic demand for beef should be approximately 785,000 metric tons, for pork around 530,000 metric tons, and for chicken 1.5m metric tons. By 2050, the population increase compared to 2010 should be around 38m people, which would raise the demand for beef by around 996,000 metric tons, pork meat by 670,000 metric tons, and chicken by another increase of 2m metric tons at current per capita consumption levels.

It’s worth mentioning that, in the same period, the consumption of alternative proteins, such as plant-based products, should also register an improvement, mainly by the younger generations and flexitarians, even if at incipient levels in relation to animal proteins. A NielsenIQ survey concluded that sales of plant-based frozen meats jumped 52% in Brazil in 2021, reaching a volume of 1.9 metric tons. Some of the younger consumers that are more actively purchasing these products will reach economic maturity in the coming years, leading to growth of these alternatives relative to where they are today.