Welcome!

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
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
We are always online. We access our data, our finances, work, and various services on the Internet. But we live in a congested world of information in which the roads were built two decades ago. The quest for better, faster Internet routing has been around for a decade, but nobody solved this problem. We’ve seen band aid approaches like CDNs that attack a niche's slice of static content part of the Internet, but that’s it. It does not address the dynamic services-based Internet of today. It doe...
SYS-CON Events announced today that 910Telecom 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. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
SYS-CON Events announced today that Numerex Corp, a leading provider of managed enterprise solutions enabling the Internet of Things (IoT), will exhibit at the 19th International Cloud Expo | @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Numerex Corp. (NASDAQ:NMRX) is a leading provider of managed enterprise solutions enabling the Internet of Things (IoT). The Company's solutions produce new revenue streams or create operating...
Qosmos has announced new milestones in the detection of encrypted traffic and in protocol signature coverage. Qosmos latest software can accurately classify traffic encrypted with SSL/TLS (e.g., Google, Facebook, WhatsApp), P2P traffic (e.g., BitTorrent, MuTorrent, Vuze), and Skype, while preserving the privacy of communication content. These new classification techniques mean that traffic optimization, policy enforcement, and user experience are largely unaffected by encryption. In respect wit...
While DevOps promises a better and tighter integration among an organization’s development and operation teams and transforms an application life cycle into a continual deployment, Chef and Azure together provides a speedy, cost-effective and highly scalable vehicle for realizing the business values of this transformation. In his session at @DevOpsSummit at 19th Cloud Expo, Yung Chou, a Technology Evangelist at Microsoft, will present a unique opportunity to witness how Chef and Azure work tog...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
Between the mockups and specs produced by analysts, and resulting applications built by developers, there exists a gulf where projects fail, costs spiral, and applications disappoint. Methodologies like Agile attempt to address this with intensified communication, with partial success but many limitations. In his session at @DevOpsSummit at 19th Cloud Expo, Charles Kendrick, CTO at Isomorphic Software, will present a revolutionary model enabled by new technologies. Learn how business and deve...
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
Although it has gained significant traction in the consumer space, IoT is still in the early stages of adoption in enterprises environments. However, many companies are working on initiatives like Industry 4.0 that includes IoT as one of the key disruptive technologies expected to reshape businesses of tomorrow. The key challenges will be availability, robustness and reliability of networks that connect devices in a business environment. Software Defined Wide Area Network (SD-WAN) is expected to...
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of (at least) three separate application components: the software embedded in the device, the back-end service, and the mobile application for the end user’s controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target –...
SYS-CON Events announced today that Hitrons 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. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....