Brazilian consumers have shown greater interest in frozen food over the last year and demand for healthier options has grown, write Mauro Fernandes and Luisa Belchior.
It takes minutes for any Brazilian on Instagram to be bombarded with ads from companies selling items from tofu tikka masala stew to cauliflower risotto. But the posts are not from restaurants heavily impacted by the Covid-19 pandemic and using social media to survive.
Rather, they are from manufacturers in Brazil’s frozen-food market, a sector that has grown during the Covid-19 pandemic and one expected to continue to do so when the worst of the virus is behind the country.
As Covid-19 has hit Latin America’s biggest economy, interest in healthier frozen foods has increased. In general, frozen-food sales have risen, with consumers seeking convenient products helping them to reduce store visits but the appetite for products perceived to be healthier is also on the rise.
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By GlobalDataA consumer survey carried out in the first quarter of 2021 by UK-based data and analytics organisation GlobalData shows almost a third (29%) of Brazilians say the greatest benefit to frozen foods is good quality, while a further quarter (25%) cited good value for money, indicating past concerns about low-quality frozen products is easing.
Market researcher Kantar says the proportion of Brazilians considering frozen food as healthy has risen. In a Kantar poll of consumers in the second semester of 2020, 4.4% of Brazilians bought frozen food because they thought it was healthy for them. In the first semester of the same year, that figure was 2.3%.
In the city of São Paulo, the most populous and wealthiest in Brazil, and one regarded as leading market trends in the country, 7.2% of polled consumers in the second semester of 2020 said they were buying frozen food because it was healthy, against 3.9% in the first semester.
Brazil's frozen-food market contains some of the country's major names in packaged food, including BRF and JBS, but the sector is also being served by up-and-coming businesses, including those operating in the nascent direct-to-consumer market.
Three companies based in São Paulo – Liv Up, Beleaf and Free Soul Food – are web-only businesses selling directly to shoppers online. Most of their products cost between US$1 and $5, but a full meal could be as expensive as $15, more than a meal from many Brazilian fast-food restaurants.
However, despite Brazil's struggling economy (the country's GDP fell 4.1% year-on-year in 2020, according to government data), Covid-19 lockdowns have meant middle-class consumers who have maintained their jobs have more disposable income – having not spent much on trips and restaurants – and are looking for quick options to eat good food without having to cook.
Liv Up is one company looking to capitalise on the purchasing power of those Brazilian consumers. It was founded in 2016 with only eight staffers and initially expanded slowly.
However, investment in areas from delivery infrastructure and staff (Liv Up hired more than 450 workers last year), through to improved packaging, helped the company take advantage of growing consumer interest in frozen food and in shopping online last year. In the wake of the pandemic hitting Brazil, Liv Up has seen demand more than double, a company spokesperson says, although the firm would not disclose its sales.
Liv Up sells via an app and its website, offering individual frozen portions of products including salmon and falafel to appeal to conservative clients buying ingredients that are popular nationwide. The company uses a flash-freezing process, which it says helps the food retain its nutrition, while it packs products in plastic bags that can be heated in a microwave or in boiling water.
Higher demand has not been without its challenges. Livia Malouf, the company's director for strategy and innovation, says as demand grew, Liv Up focused on manufacturing its best-selling items to maintain product quality and not over-stretch capacity. The company is once again broadening its offerings with new items. One of them is frozen pizza, not an obvious healthy frozen-food item, but one Liv Up says uses natural ingredients.
The pandemic has had other benefits. Malouf says Liv Up's farmer suppliers "had an excess in their production because schools and restaurants cancelled their requests due to the pandemic", so the company found its ingredient supplies were available in good volumes and at competitive prices. "From 2019 to 2020, the company doubled in size. This year, we must follow that pace again," Malouf adds.
Like in many markets, Covid-19 has also provided a boost to one particular product segment in the healthy frozen-food area – plant-based meat. In December, local polling organisation IBOPE (Instituto Brasileiro de Opinião Pública e Estatística), in a survey commissioned by The Good Food Institute, said half of the 2,000 Brazilians it polled had reduced their consumption of meat during the pandemic. The Good Food Institute, a US-based non-profit that promotes the alternative-protein sector, said its survey shows "Brazilians are seeking to incorporate healthier options into their daily lives".
Ricardo Laurino, the president of the Brazilian Vegetarian Society (Sociedade Vegetariana Brasileira), says one key growth area in 2020 was increased sales of higher-end plant-based frozen hamburgers from companies such as US business Beyond Meat. "Some people discovered that the amount of beef that we eat could have a link to the next pandemic, and that also stimulated this market," Laurino says.
One Brazil-based supplier of plant-based meat products that has seen increased demand over the last 12 months is The New, a business set up in 2019 but one already selling products in retailers including the country's two largest retail chains, Pao de Acucar and Carrefour.
Bruno Fonesca, one of the company's co-founders, says demand has been driven by increased consumer interest in health and the impact some believe meat production can have on the environment.
"Definitely, the pandemic was an important catalyst for a switch in consumption behaviour," he argues. "We [saw] an increase in the search for healthier foods. Because of the pandemic, people also have a wider perception of what an irresponsible meat market can cause, animals crammed and be subject to disease, and how that can spread quickly."
The pandemic has not been without its trials for businesses in the sector. Some frozen-food companies were forced to react after losing foodservice business. Free Soul Food had had a solid 2019, extending its services to catering events, scoring around 12 contracts a month that year. It expected a busy 2020, focusing on that side of the market but, from February 2020, the company was forced to change its plans. Free Soul Food closed for four months while it re-calibrated.
"Our good performance in 2019 allowed us to keep our staff and the expense of our office," CEO Maíra da Costa says. Sales plummeted 70% but, without shifting focus, it would have been worse. "We started to offer online courses for clients and companies that wanted to give their employees a useful gift," da Costa said, using that channel to create new products for delivery, including a basket of pre-baked frozen items, such as braised rice, chopped vegetable mix and jackfruit-based veggie beef.
The company expects sales to recover some ground, rising 20% in 2021. "In 2020, we learned how the market is now operating under a new logic," da Costa says. "Our clients were good partners in understanding. Now we are much more ready."
