The end of Q1 2018 gives us a first glimpse of 2017 sales results in Latin America’s leading markets. Across the region, consumption grew thanks to strengthening currencies, falling interest rates and rebuilding consumer confidence. With the region’s big three (Brazil, Mexico and Argentina) enjoying modest to very strong consumption growth, 2018 promises to be an even better year than 2017.
To that end, below we break down some of the best-selling products and fastest-growing markets in Latin America.
LATIN AMERICA REGIONAL TRENDS
According to Inkwood Research, the Latin American beauty and personal care products market totaled US$59.6 billion in 2017 and is projected to reach a value of US$83.6 billion by 2026, or 4% CAGR. Latin American women spend more than twice the global per capita average on these products.
The market for energy drinks in Latin America will grow with a CAGR of nearly 12% between 2017 and 2021, according to a projection from Technavio. As increasingly health-conscious Latin American consumers wean themselves off of high volumes of soft drinks, many migrate to energy drinks.
In a recent report with projections for the next 10 years (2018-2028), Reportlinker forecast a CAGR of 9.3% for the Latin American pharmaceutical market for the first half of that span. Latin America is the fastest-aging and most obese region in the world. As a result, chronic disease levels are rising quickly and with them, the demand for pharma products. Pharma retail is quickly consolidating, providing distribution efficiencies that make pharmaceuticals more affordable.
Although projections are that 20% of malls in the United States will close over the next five years, mall construction keeps booming in Latin America. According to Lizan Retail Advisors, malls in Latin America are growing by 5% a year. Mexico is leading the region in mall construction: Lizan projects that the country, which currently has 650 malls, will have 760 by 2025. Consumer demographic trends in LatAm (fewer children, more working adults) continue to support retail overall. While e-commerce is growing swiftly (15% per annum), it still represents only 3% of total retail, versus 12% in the U.S.
In Q3 2017 some 4.9 million PCs were sold in Latin America, representing a bump of 15.2% compared to Q3 2016. Overall, IDC forecasted 2.5% growth for the PC market in Latin America in 2017, with overall sales of 17 million units. Recovering resource prices and investment inflows are buoying most LatAm currencies; domestic interest rates are falling again after 2-3 years of austerity; online sales of computers offer price savings — all of which underpin growth.
According to research firm Counterpoint, smartphone sales in Latin America grew by 5% in 2017 to reach more than 146 million. The increase happened despite a significant drop in sales of premium smartphones in LatAm during 2017: a 9.4% decrease in phones costing $500 or more and a 26.6% decrease in phones costing between US$400 and US$499. Samsung’s sales grew by 14% in 2017 and it still leads the market with a 38% share, followed by Motorola (11.6% market share), LG (9.1%), Huawei (7.6%) and Apple (4.2%). The arrival of economical white-label smartphones from Asia make the ultimate aspirational product accessible to over 80% of Latin American adults.
INDIVIDUAL MARKETS IN LATIN AMERICA
While Latin America is growing soundly after a challenging three-year period, the rate of consumer growth varies by individual market. Here’s a look at what consumers in Latin America are buying in specific countries.
Likely to be Latin America’s fastest growing consumer market in 2018, Argentines are catching up on spending after a decade of stymied consumer credit and an undervalued peso. Enjoying strongest growth are non-essentials, higher-ticket priced products that require the flow of consumer credit to fuel their growth. The figures in this report are stated in USD. A strengthening Argentine peso therefore exaggerates already impressive volume growth.
- Notebook computers: Sales of notebooks in Argentina went up by 55% in 2017 after import tariffs were removed, with a total of 557,000 notebooks sold last year.
- Cars: More than 900,000 new cars were sold in Argentina in 2017—a 26.9% increase compared to 2016.
- Pharmaceuticals: Sales for the Argentina pharmaceutical sector grew by 26.9% during 2017, while exports of Argentine pharmaceutical products went up by 17%.
- Groceries: Final numbers have not been released for all of 2017, but during the first 11 months of 2017, grocery sales in Argentina supermarket went up by 20.6% compared to the same period in 2016; the biggest jumpers were with drinks (25%), baked goods (23%) and meat (22.7%).
LEARN MORE ABOUT LATAM
Brazilian households took a beating in 2014-2016 when falling resource prices and a political crisis sabotaged the currency. Overextended with retailer-provided credit, Brazilians have worked hard to pay down their debts. Credit is growing once again and Brazilian consumer confidence is rebounding.
- Furniture, appliances and clothes: A report from the Brazilian Institute of Geography and Statistics or IBGE noted that retail sales went up by 2% in Brazil during 2017, with biggest increases happening in discretionary items, including furniture and appliances (9.5%).
- Cars: New car sales went up by 9% in the Brazilian market during 2017.
- Mobile phones: Sales of mobile phones in Brazil grew by 8% in 2017, with 51.1 million units sold.
- Toys: Toy sales went up by 6.2% in Brazil during 2017, with overall sales of 6.3 billion reais (US$1.9 billion).
- Books: Overall book industry revenues in Brazil went up by 6.1% in 2017, while unit sales were up by 4.5%.
- Groceries: Sales in Brazilian supermarkets increased by 1.5% during 2017.
Recovering copper prices (responsible for more than 50% of Chilean exports), and pre-election public spending helped deliver 2.4% consumption growth in Chile in 2017. The newly installed Piñera administration promises pro-business reforms which should expand investment and fuel more spending in 2018.
- Personal devices (including PCs, smartphones and tablets): Sales of these products went up by 116% in Chile over the last seven years (4 times the global growth rate), reaching $800 million in sales in Chile in 2017. Chileans bought 9.1 million smartphones in 2017. As possibly the most mature cellphone market in Latin America, future smart phone sales (in units) will grow very little and may decline slightly as smartphone penetration reaches its natural zenith.
- Cars: New car sales went up by 18% in Chile during 2017 to reach a total of 348,000 cars sold—and the Cámara Nacional de Comercio Automotriz de Chile (National Board of Auto Commerce) projects that 400,000 new cars will be sold in Chile during 2018.
- Cosmetics: Figures for the first 11 months of 2017 show a 3.1% increase in the sales of beauty products in Chile compared to 2016, which is historically low grow: Chile’s Chamber for the Cosmetics Industry expects 6-8% growth for cosmetics sales in 2018.
Despite all the political risk hanging over Mexico (U.S. bilateral tensions, NAFTA negotiations and a contentious domestic election), consumers continue to spend. High U.S. factory utilization rates and a weakened Mexican peso combine to drive Mexican export manufacturing sales, an important pillar of Mexican growth. Given that 2018 is an election year and a promising year for el Tri (national soccer team) in the World Cup, there should be a double boost to public spending and consumption. Growth will prove especially strong in the more modest social strata.
TVs: Between 2008 and 2017 (spanning both boom and recession years), sales of television sets in Mexico grew from US$1.3 billion to US$2.9 billion, a 126% increase, while units sold went up by 155% (2.2 million TVs sold in Mexico in 2008 versus 5.8 million TVs sold in Mexico in 2017).
Clothes and shoes: The sales value of stores specialized in clothes and shoes in Mexico went up by 36% between 2012 and 2017, with brands such as Forever 21, American Eagle Outfitters and Banana Republic all growing by double digits during 2017.
Electric cars: While sales of these are still quite modest, sales of electric cars in Mexico grew from 6,277 in 2016 to 8,268 in 2017, an increase of 32%.
Beauty products: The beauty sector in Mexico is growing at 11% a year, with an estimated value of US$8.2 billion.
Movie tickets: Ticket sales in Mexico went up by 6.4% in 2017, with 348 million sold, while overall box office (including concessions) went up by 10.9%.
Toys: The Mexican toy industry set a record in 2017 with sales of US$800 million, a 6% increase over 2016.
Peru is in the midst of a political crisis with the resignation of President Kuczynski. Yet Peruvian consumption growth is flourishing thanks to strong exports of metals, agrifood and fish products. Billions are poised to invest in Peruvian infrastructure and mining, money that will flow once some political stability is formed.
- Hardware: Retail sales of hardware products went up by 8.5% during the first nine months of 2017, totaling 3.8 billion soles.
- Beauty products: In 2017 Peru’s beauty industry grew by 8.1% during 2017 to reach nearly US$2.3 billion in sales, with perfumes being one of the biggest growth subsectors within the beauty industry.
- Cars: New car sales went up by 6.3% in Peru during 2017, totaling 163,668 for light vehicles (cars, pickups, station wagons, SUVs).
- Groceries: Supermarket sales in Peru grew by 5.3% in 2017, while overall 2017 retail sales in Peru grew by 3.9% to reach 35.4 billion soles, with 2018 retail sales growth for Peru projected to be 6%.
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