News Feed Item

Rising Interior Will Power Brazil's Next Consumer Frontier

Middle-Class and Affluent Families in Brazil's Interior Cities Will Represent a Market Worth More Than $600 Billion by 2020; But Few Companies Are Positioned to Capture the Opportunity, Says a New Report From The Boston Consulting Group

SAO PAULO, BRAZIL -- (Marketwired) -- 06/03/14 -- Middle-class and affluent households in Brazil's interior cities are poised to replace those in the country's state capitals and major metropolitan areas as the chief drivers of growth in many consumer-product categories. Yet while such consumers will represent a market of more than $600 billion by 2020, most companies are in a weak position to capture the opportunities, according to a new report released today by The Boston Consulting Group (BCG).

The report, titled Brazil's Next Consumer Frontier: Capturing Growth in the Rising Interior, says that middle-class and affluent consumers in Brazil's interior cities will account for around half of incremental household consumption, or around $130 billion in added spending, through the end of this decade. These consumers will be especially important sources of growth in sectors such as financial services, automobiles, and apparel.

Even though middle-class and affluent households in the interior have nearly 20 percent more disposable income than those in Brazil's major cities, they consume much less in certain categories. Interior households spend 19 percent less on postpaid mobile-telecommunications services and about half as much on air travel, for example. The findings are based on a survey of more than 3,600 middle-class and affluent households in capitals, metro areas, and interior cities of all regions of Brazil by BCG's Center for Consumer and Customer Insight.

"The interior market in Brazil offers some of the world's richest growth opportunities for consumer goods and services," said Olavo Cunha, a BCG partner and coauthor of the report. "Yet this market is vastly underserved by both foreign and domestic companies, whose management still tends not to think much beyond Brazil's major cities and its more developed southern coast."

A lack of access to retail outlets is one reason interior-city consumers spend considerably less on certain kinds of products. A physical retail presence is especially important in Brazil's interior because consumers there prefer to touch and feel products before making purchases. Yet some 1,400 interior cities -- each with more than 5,000 households -- have no supermarkets that belong to Brazil's top 20 chains. Nearly 5,500 cities lack bank branches solely dedicated to offering premium financial services to wealthier customers, even though the premium-banking target segment in these cities is growing much more rapidly than in bigger cities. And 60 of 98 interior cities with more than 5,000 affluent households have no luxury-car dealership.

Inadequate infrastructure and differences in consumer behavior also make it difficult for some companies to penetrate interior markets. Consumers in the interior travel less by air than their big-city counterparts, in large part because airports are too far away and flights to desired destinations are too few. Another reason, the research found, is that interior-city consumers enjoy spending leisure time at home -- and have much less desire to travel by air either domestically or abroad. And even though interior households use the Internet as heavily as big-city consumers, they are more hesitant about buying goods online because deliveries to the interior take so long and it's too hard to get refunds.

"To become leaders in the critical interior market, most companies must substantially increase both their physical and their online presence," said BCG partner Masao Ukon, a coauthor. "They also need to do a better job of getting in sync with interior consumers' needs and purchasing patterns."

In addition to expanding companies' retail reach in Brazil, the authors recommend that companies develop stronger on-the-ground marketing, better e-commerce capabilities, and innovative business models that can cost-effectively reach these growing concentrations of wealth. They should gain clearer insights into the particular consumer-spending patterns and attitudes of the interior. "Most companies require a deeper understanding of the underlying drivers of consumer behavior in interior cities. These drivers often differ from those in capitals," said André Xavier, a BCG senior partner who leads the firm's Financial Institutions practice in Brazil.

Taking a slow and incremental approach to expanding in Brazil's interior will be insufficient. "Millions of middle-class and affluent households already represent a crucial market, and they are forming brand loyalty ties that will likely endure for many years," said Cunha, who leads the firm's Consumer practice and Marketing & Sales practice in Brazil. "The time to establish a leading presence is now."

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter and LinkedIn.

About BCG's Center for Consumer and Customer Insight
The Boston Consulting Group's Center for Consumer and Customer Insight (CCCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG's various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCCI is sponsored by BCG's Marketing & Sales practice and Global Advantage practice. For more information, please visit here.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In past @ThingsExpo presentations, Joseph di Paolantonio has explored how various Internet of Things (IoT) and data management and analytics (DMA) solution spaces will come together as sensor analytics ecosystems. This year, in his session at @ThingsExpo, Joseph di Paolantonio from DataArchon, will be adding the numerous Transportation areas, from autonomous vehicles to “Uber for containers.” While IoT data in any one area of Transportation will have a huge impact in that area, combining senso...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The IoT has the potential to create a renaissance of manufacturing in the US and elsewhere. In his session at 18th Cloud Expo, Florent Solt, CTO and chief architect of Netvibes, discussed how the expected exponential increase in the amount of data that will be processed, transported, stored, and accessed means there will be a huge demand for smart technologies to deliver it. Florent Solt is the CTO and chief architect of Netvibes. Prior to joining Netvibes in 2007, he co-founded Rift Technologi...
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Kubernetes, Docker and containers are changing the world, and how companies are deploying their software and running their infrastructure. With the shift in how applications are built and deployed, new challenges must be solved. In his session at @DevOpsSummit at19th Cloud Expo, Sebastian Scheele, co-founder of Loodse, will discuss the implications of containerized applications/infrastructures and their impact on the enterprise. In a real world example based on Kubernetes, he will show how to ...
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Eric Robertson, General Manager at CollabNet, will discuss how customers are able to achieve a level of transparency that e...
@DevOpsSummit has been named the ‘Top DevOps Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @DevOpsSummit ranked as the number one ‘DevOps Influencer' followed by @CloudExpo at third, and @MicroservicesE at 24th.
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Established in 1998, Calsoft is a leading software product engineering Services Company specializing in Storage, Networking, Virtualization and Cloud business verticals. Calsoft provides End-to-End Product Development, Quality Assurance Sustenance, Solution Engineering and Professional Services expertise to assist customers in achieving their product development and business goals. The company's deep domain knowledge of Storage, Virtualization, Networking and Cloud verticals helps in delivering ...
In his session at @DevOpsSummit at 19th Cloud Expo, Robert Doyle, lead architect at eCube Systems, will examine the issues and need for an agile infrastructure and show the advantages of capturing developer knowledge in an exportable file for migration into production. He will introduce the use of NXTmonitor, a next-generation DevOps tool that captures application environments, dependencies and start/stop procedures in a portable configuration file with an easy-to-use GUI. In addition to captu...
Most of us already know that adopting new cloud applications can boost a business’s productivity by enabling organizations to be more agile and ready to change course in our fast-moving and connected digital world. But the rapid adoption of cloud apps and services also brings with it profound security threats, including visibility and control challenges that aren’t present in traditional on-premises environments. At the same time, the cloud – because of its interconnected, flexible and adaptable...
SYS-CON Events announced today that SoftNet Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. SoftNet Solutions specializes in Enterprise Solutions for Hadoop and Big Data. It offers customers the most open, robust, and value-conscious portfolio of solutions, services, and tools for the shortest route to success with Big Data. The unique differentiator is the ability to architect and...