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House brands, cheaper items gain space in supermarket cart

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Vincent

Filling the supermarket cart is getting more expensive. According to the association of supermarkets Abras, the cost of the 35 items mostly bought by the Brazilian consumer jumped 25% in the 12 months to January. The basket includes food and cleaning products, among others.

This is expected to intensify a trend already happening before the Covid-19 pandemic. Consumers are migrating more and more to cheaper brands, smaller packages and store-brand products.

A research by consulting firm Bain & Company with 2,000 Brazilians showed in July that 25% of consumers were migrating to cheaper products and around 18% said they had bought smaller-size, cheaper items. "This is not a new movement nor exclusive to Brazil, but it accelerated with the pandemic, because Covid-19 squeezed wallets. In Latin America, 70% [of respondents] expected reduction of income," says Ricardo de Carli, analyst of the firm.

The responses, collected while the government was still paying an emergency aid of R$600, indicated that the consumer was starting to feel the need to save, as prices were going up - at the time, Abras's index, called Abrasmercado, was up 14% in 12 months.

Now, without policies to stimulate income and amid a rising unemployment and even higher inflation, consumption analysts point out that the first quarter of 2021 should see even higher migration rates.

"People must get back to a more basic consumption. The expectation is for a return to 2019 levels," says Tathiane Frezarin, director of accounts at market research company Kantar. The average expense of classes D and E, of which 72% received financial aid, grew 9% and 14%, respectively, in the first and second quarters, compared to 2019. But contracted to 8% and 6% in the third and fourth quarters, according to Katar, when the emergency aid was reduced to R$300.

"The aid allowed people to access categories with higher average price, but the increase was of value, not volume. House brands, on the other hand, ended up being a means to access some categories in times of...

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