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
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
"We're a cybersecurity firm that specializes in engineering security solutions both at the software and hardware level. Security cannot be an after-the-fact afterthought, which is what it's become," stated Richard Blech, Chief Executive Officer at Secure Channels, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"IoT is going to be a huge industry with a lot of value for end users, for industries, for consumers, for manufacturers. How can we use cloud to effectively manage IoT applications," stated Ian Khan, Innovation & Marketing Manager at Solgeniakhela, in this SYS-CON.tv interview at @ThingsExpo, held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Information technology is an industry that has always experienced change, and the dramatic change sweeping across the industry today could not be truthfully described as the first time we've seen such widespread change impacting customer investments. However, the rate of the change, and the potential outcomes from today's digital transformation has the distinct potential to separate the industry into two camps: Organizations that see the change coming, embrace it, and successful leverage it; and...
Join Impiger for their featured webinar: ‘Cloud Computing: A Roadmap to Modern Software Delivery’ on November 10, 2016, at 12:00 pm CST. Very few companies have not experienced some impact to their IT delivery due to the evolution of cloud computing. This webinar is not about deciding whether you should entertain moving some or all of your IT to the cloud, but rather, a detailed look under the hood to help IT professionals understand how cloud adoption has evolved and what trends will impact th...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
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 does...
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, discussed why and how ReadyTalk diverted from healthy revenue and mor...
"Qosmos has launched L7Viewer, a network traffic analysis tool, so it analyzes all the traffic between the virtual machine and the data center and the virtual machine and the external world," stated Sebastien Synold, Product Line Manager at Qosmos, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"We are a modern development application platform and we have a suite of products that allow you to application release automation, we do version control, and we do application life cycle management," explained Flint Brenton, CEO of CollabNet, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...