While Cachaça is the true Brazilian spirit—being invented during the times of Portuguese colonization—Brazil is a beer-drinking country. This year, Brazilians will likely have consumed 10.4 billion liters of beer, around 49 liters per person. Unsurprisingly, two beer labels figure among the top 5 most valuable Brazilian brands.
But Brazilian beer drinkers are changing their habits, according to a recent survey. More and more, consumers are prioritizing quality over quantity—which has raised red flags for big brewers. Among high-income Brazilians, 68 percent of beer drinkers are now becoming pickier when choosing their liquor. But the trend is also observed among those with a smaller purchasing power (52 percent). “Brazilian consumers, especially the younger ones, are attracted by new, interesting flavors when trying new beer labels,” writes Ana Paulo Gilsogamo, food and beverage expert at consulting firm Mintel.
Consumers tend to associate craft breweries with higher quality. That explains why the number of registered beer producers in Brazil jumped from 266 in 2010 to 670 last year. The number of labels registered with the Ministry of Agriculture reached 8,900. Even during the country’s worst recession on record, the beer sector was one of the few that kept hiring, but only among companies with fewer than 100 employees
Giant producers take over
Eyeing that trend for craft beer, big producers have started to map and take over small breweries. One of the first notorious examples came in 2007, when sector giant Schincariol took over Eisenbahn, Baden Baden, and Devassa. In 2015, AB InBev bought Colorado, one of the country’s best-regarded microbreweries. While the move skyrocketed these labels’ spread and popularity, it also meant that more experimental labels were dropped in favor of more profitable ones.
That trend, however, does not seem to please consumers very much. Some 40 percent of consumers believe that when a giant producer takes over a small brewery, quality will invariably drop. A similar rate of consumers agrees that smaller producers have a better-quality product than larger ones.
“Brands try communicating that when they buy out a small brewery, quality will remain the same. That’s key, since the perception of quality by consumers is heavily associated with the ingredients that are used, rather than something about size or fermentation methods,” says Ms. Gilsogamo.
Why big beer producers have a bad image
A 2014 study by the University of São Paulo showed that 45 percent of Brazilian beer labels are made of corn, instead of barley. And Brazilian legislation allows that rate to get to 50 percent. “It’s because corn is cheaper,” said at the time the coordinator of the research, professor Luiz Antônio Martinelli. Some labels also use rice instead of barley.
Earlier this month, prosecutors from the state of Goiás reached a deal with big beer producers in Brazil, which forces them to explicitly mention on the label whether or not a product is made out of corn or rice. Now, Brazilian consumers will know exactly what they’re pouring into their glasses.