In 2017, global snack food sales surged by US$3.4bn, rising US$458.11m* alone in Latin America for the second quarter of the year, according to Nielsen Retail Measurement Services data. *Moving Annual Total (MAT) for Q2 2017
For MAT Q3 2017, Argentina posted significant value growth in cereal and energy bars – up 25.8%, ahead of Mexico which posted just 12.6% growth in overall snacks.
Healthy and portable
According to Nielsen's 'What's next in emerging markets?' report, consumers around the world had become more “mindful snackers”, seeking out clean labels and high-quality products – a trend that was seen strongly across Latin America. In 2016, for example, healthy food and drink sales grew by 11.3% in Costa Rica and consumers in Colombia and Mexico bought healthy foods two to four times more often than indulgent ones, according to Nielsen data.
Facundo Aragon, industry leader at Nielsen Argentina, told FoodNavigator-LATAM the trend towards healthy snacking was also true for Argentina.
“Healthy foods, mainly healthy snacks, are a segment that has been showing important growth in recent years,” Aragon said.
The 25.8% surge in cereal and energy bars demonstrated this, he said, although the rise in this category had been driven by higher price points as well as consumer preference for this product type.
However, tough economic times in Argentina had caused most consumers to spend less on food and beverage products overall, according to Nielsen's Global Consumer Confidence Index – with 73% of Argentinians stating they had changed their spending to save on expenses, 60% switching to cheaper grocery store brands, and 50% avoiding out-of-home meals.
“This situation 'forces' consumers to change some customs,” Aragon said. “You are much more attentive to other types of brand proposals, or look for smaller purchases in local stores, or go for price searches in wholesale channels.”
Despite this, Nielsen said that demand for premium products had not wavered. Throughout 2016 – during the worst inflationary times – the volume of premium products grew by 12.6%, almost twice the regional average, while the rest of the FMCG category was declining.
In MAT Q3 2017, both low- and high-tiered FMCG categories had grown in value in Argentina, 27.9% and 26.8%, respectively.
Aragon said the biggest challenge for snack makers in the market was “to be able to develop high-value segments but at a competitive price, given the general situation”.
Rafael Gouiran, market leader for Nielsen Argentina, agreed: “With products in the low and premium price tiers showing greatest growth in FMCG, it is essential for manufacturers to offer 'value' in the eyes of the consumer. In the lower price tier, this value must be genuine without sacrificing quality.”
Local brands 'propelling' the market
Aragon said achieving this sweet spot had been easier for local brands as they were able to enter niches far easier than large, global brands.
Argentina's top local brands grew sales by 47.1% in value terms and 11.9% volume terms for the 52 weeks ending September 2017, according to Nielsen Retail Measurement Services - significantly higher than top global brands that posted 1.8% value growth and -6.3% sales volume decline for the same period.
“Affordable offerings from local manufacturers are the driving force behind the uptick in snacks... Their innovations resonate with local consumers and have clear value propositions,” according to Nielsen.
Global brands, it said, could compete by focusing on developing value, private label and premium products, better capturing local tastes and investing in important trends like health and wellness.