The aftermath of a fast-growing story
Cash and carry (C&C) has historically been the fastest-growing grocery format in Brazil, offering an attractive value proposition to consumers while attaining higher returns in the food retail sector. Consequently, food retailers have accelerated the expansion of such formats, raising concerns of potential market saturation. We mapped 390 C&C additions for 20 chains between 2019-22, which led to around 1,200 C&C units by YE2022. Nationwide, C&C is estimated to account for 29% of Brazil's total food retail sales of BRL696bn in 2022, which may indicate room for further penetration. However, some states, specifically São Paulo and Rio de Janeiro, which have been the focus of expansion for leading food retailers, may be closer to a saturation point. With that background, in this report, we leverage UBS Evidence Lab data to identify overlap and cannibalization risks within grocery stores and update our assumptions for the food retail sector.

How overlap among food retailers has evolved so far?
We used UBS Evidence Lab data to trace overlap and cannibalization throughout the sector as it became increasingly more crowded. Given scale advantages and access to capital, we think the leading C&C companies in Brazil are in a position to continue to offer more affordable prices and capture market share within the sector.

How client demographics expanded post conversions?
Cash & carry stores were often found in regions with more limited population density and/or lower income. More recently, the segment has reached more densely populated locations and has also tapped higher income consumers, which is likely adding exposure to more higher-margin final consumers.

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