Upper class bets on wholesale purchases to circumvent inflation

posted on 04/16/2022 06:00 / updated on 04/16/2022 06:44

(credit: Fort Atacadista)

Research carried out by NielsenIQ, released yesterday, shows that families of the upper classes are opting for the so-called wholesales — hypermarkets that sell products both wholesale and retail — as a way of protecting themselves against food inflation. According to the survey, two out of three Brazilian homes — that is, 66% — have been choosing to buy in larger quantities to avoid repeated price increases.

Even after currency stabilization, the formation of homemade stocks remains a habit among Brazilians. Economists attribute this to the memory of hyperinflation, when people bought more products than they really needed just so they wouldn’t pay more—sometimes the next day—for them. Until the Real Plan came into effect on July 1, 1994, inflation in Brazil only reached 1,782% in 1989.

The retail director of NielsenIQ, Roberto Butragueño, explained that the option for the wholesales has been growing for five years now. “Attaejo went from 47% to 67%, gained 20 percentage points in consumption penetration. This came from the middle and upper classes, in addition to other classes that were already customers. Since the crisis of 2015 and 2016, the consumer has been looking for save,” he noted.

According to Butragueño, the pandemic helped to boost the wholesales even more, as consumers wanted to make larger purchases to leave the house less. “But inflation has had a great impact. There are consumers who need to save, because their household has lost income. But there are households that, although they have not suffered a direct impact, adapt and incorporate the culture of the economy. Nielsen calculated that only food prices of the last three years are 30% more expensive”, he observed. According to the survey, the cash and carry segment moved BRL 200 billion in 2021.

For Marcelo Neri, director of FGV Social, at Fundação Getulio Vargas, at the beginning of the pandemic there was a loss of purchasing power. But now the problem is the general impoverishment of the population.

“Income from work has devalued by 10%. So, it is natural that middle class people seek discounts, a price reduction, cheaper distribution points”, he said. He adds that the greater demand for theAtacaejos is also due to the inflationary memory of more than 30 years ago.

“Consumers diversify, change the point of purchase to try to lower their inflation. Those who buy meat will not stop buying it. They can reduce the frequency or try to find cheaper places. At this point, it is important to try to understand the consumption habit, because it is normal to change the place of purchase rather than stop consuming”, he observes.

dear gift

For this year’s Easter, chocolate eggs have a price increase of around 40% more than in 2021. This is what a survey carried out by the Associação Paulista de Supermercados (Apas) shows. Because of this, smaller eggs, such as those weighing 250 grams, have been gaining more space on the shelves.

Confectioner from Brasilia Naiara Cordeiro, 24, realized this and has been trying to adapt to the situation to keep the customers she has and win new ones. Despite the smaller amount of production, she has been offering Easter eggs at more competitive prices than those found in supermarkets. But she recognizes that adaptations had to be made.

“I stopped making fillings because of the prices, because I would have to charge more and no one would be interested. Nutella is the only expensive product that everyone wants and that is worth keeping (in the products it manufactures)”, he said.