While LatAm consumer/retail market growth in 2018 was not as robust as we would have liked, we certainly saw the groundwork laid for stronger 2019, such as:
- The election of business-friendly leaders in Brazil, Chile and Colombia, among other markets
- Economic recovery translating into higher levels of consumer confidence
- Continual growth in e-commerce and development of the on-demand economy (as shown by the growth of companies such as Rappi and Uber, among others)
Here’s a look and what we expect to see in LatAm’s consumer market in 2019, including positives, negatives and potentially disastrous.
Revised forecasts suggests a more robust growth in GDP for Latin America in 2019 and we’re anticipating good growth potential for consumer and retail sectors in the region for two key reasons: As Latin America’s economies continue to recover; consumer confidence grows and changes his behavior from savings to spending mode. Successful companies will need to maintain the consumer and the shopper at the center of their strategies in 2019 and beyond, designing products and facilitating access to them through digital solutions. Both CPG companies and retailers, must continue understanding and capitalizing on disruptive trends such as the rapidly growing omni shopping, as well as consumer’s increased expectations for convenience, simplicity and authenticity from brands as well as a clear shift towards healthier products and lifestyles. E-commerce while still small in the region (less than 3% of total retailer sales) is projected to continue grow at solid double-digit rates over the next five years
A quick look at consumer confidence levels in different markets shows projected high levels of consumer confidence in major LatAm markets for 2019:
It is expected that the positive political and economic outlook for the region will continue to drive positive confidence level as well as grow in Consumer products, as reflected in the sales projections for different product categories in LatAm, including:
- Beauty products sector in Latin America: projected CAGR of 3.6% through 2021
- Consumer electronics sector (South America): CAGR of 4.6% through 2023
- Food and beverages market (South America): CAGR of 9% through 2023
- Footwear sector in Latin America: Estimated 3% annual growth through 2022
- Non-alcoholic beverages sector in Latin America: 3.5% CAGR through 2021
- Nutrition and dietary supplements in Latin America: 8.8% annual growth through 2023
- Packing industry in Latin America: 3.5% projected growth through 2021
Looking forward at 2019, the possible negative outcomes seem to be more likely to present themselves in specific markets driven by local items rather than a macro trend that could impact the entire region:
Mexico outlook for 2019 : Investors nervousness surrounding President López Obrador’s leftist orientation could spark capital flight, economic challenges and a downturn for consumer/retail sales. The new USMCA deal should be ratified this year—but ongoing tensions between Democrats and Republicans in the U.S. may complicate things as well as the current government anti-immigration policies.
Argentina outlook for 2019: The country was hit with 52% currency depreciation and Moody’s predicts the country will remain in recession until mid-2019. High interest rates could also hit the country hard, curtailing domestic investment. There’s also political uncertainty as President Macri battles for reelection, which in turn can cause economic uncertainty and mean either a sluggish or a bad year for consumer/retail.
Chile outlook for 2019: If the U.S.-China trade dispute continues, a drop in the price of copper could be part of the fallout and thus slow down the Chilean economy. This would affect consumer/retail negatively.
Under current political regimes, Venezuela and potentially Nicaragua will face very difficult economic conditions during 2019 and therefore all sectors will continue to be affected.
Contact us to explore how we can help drive your success in Latin America’s consumer/retail market. We’ve done more than 600 studies in consumer/retail, delivering competitive intelligence to help companies outmaneuver rivals, as well as identifying opportunities via market sizing, brand awareness research, opportunity benchmarking, market readiness research and more.