Latin America’s retail market is fragmenting, with new formats and channels proliferating: Kantar WorldPanel

By Stephen Daniells

- Last updated on GMT

© Getty Images / Aleksandr_Vorobev
© Getty Images / Aleksandr_Vorobev
Consumers across Latin America are spending more on their basic baskets and are becoming skilled omni-channel shoppers, according to a new report from Kantar WorldPanel.

The fast-moving consumer goods (FMCG) market across the region is becoming more fragmented as retailers respond to consumer demand for convenience, and this is creating opportunities and challenges to brands, according to the “Follow the shopper: The changing retail landscape in Latam”​ report from Kantar.

“Shoppers in Latin America are more willing than ever to try new retail formats in their quest to get the most from their grocery budgets. As a result, the channel structure in the region is changing rapidly,”​ writes Sonia Bueno, Kantar President–Brazil, Kantar Worldpanel Latam CEO in the report.

“Understanding the emerging channels, and having a clear strategy for being where shoppers are, is a critical part of brand building.”

Bueno adds that FMCG volume grew by only 1.7% in Latin America in 2017. Consumers are buying less frequently, but they are spending 10% more on their basic basket.

“Huge opportunities for brands”

Unlike other regions, private label accounts for only 1% of FMCG goods in Latin America. Contrast that with 30% in Europe, she said. (According to Neilsen​, value​ share growth for private label increased by 32% in Europe in 2016, compared with 18% in North America. The value​ share growth for Latin America was 8%.)

“Shoppers regard “A brands” as aspirational, and improving their premium brands portfolio will be the key to long-term success for many retailers,”​ states the Kantar report. “This means there are huge opportunities for brands owned by manufacturers – but the channel structure in the region also creates a challenging environment.”

Growth channels

According to the report, discounters, cash and carries, wholesalers, and e-commerce are where a lot of growth is.

“Discounters reach over 60 million families across Latin America, and this will increase: in the last year alone discounters grew their footprint by 20%, and Kantar Worldpanel data indicates that the growth opportunity is worth $700m,” ​states the report.

The report then goes on to make recommendations for success in the Latin American retail environment, including:
1. Have a clear retail strategy;
2. Appeal to shoppers’ desire to spend less by offering alternative pack sizes, and other strategies;
3. E-commerce is an area of significant opportunity. For example, e-commerce will account for 10% of the Argentinian FMCG market by 2025;
4. Don’t lump Latin America together – every country is unique and strategies must be tailored for each; and
5. Consider out-of-home opportunities by thinking about on-the-go consumption and convenience.

For more information and to download the report, please click HERE​.

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