5 INSIGHTS

YOU NEED TO KNOW

ABOUT LATIN AMERICA
 5 INSIGHTS
YOU NEED TO KNOW
ABOUT LATIN AMERICA

1 NEED OF FASTER OPTIONS

NO TIME TO WAIT!!!

E-COMMERCE 2
A REALITY IN LATAM

LATINOS PREFER
3 LOCAL BRANDS

HEALTHY PRODUCTS NON

HEALTHY LIFESTYLE 4

5 CONSUMERS ARE
AGEING ACROSS LATAM

Copyright 2016 The Nielsen Company 2

 The Latin American growth challenge continues, in 2015 our
economy slowed down due to oil prices, the reductions of
exportations to China, high levels of corruption and devaluation
rates in most of countries, reducing consumer confidence
throughout the region.

CONSUMER CONFIDENCE INDEX

Q4 2015

86
83 83
81
78

Q1 15 Q2 15 Q3 15 Q4 15 Q1 16

87% 78% 54%

Think they are in Think that job Only have enough
recession prospects will be money for food,
lower or worse shelter and basics

Source: Nielsen Global Survey of Consumer Confidence & Spending Intentions, Q1'2016

Copyright 2016 The Nielsen Company 3

 In 2015, FMCG manufacturers and retailers alike continued
to struggle to find significant levels of growth within the Latin
American region. Annual average volume growth was 2.5%
and value sales growth was 6.7% ending DJF 2016 - excluding
Venezuela -.

GROWTH REMAINS HARD TO FIND IN LATIN AMERICA

KPI SUMARY - FEBRUARY 2016
NIELSEN T. BASKET
Vol. % Chg Val. % Chg Price % Chg
LATAM 39% 11% 50% Vs. RY Vs. RY Vs. RY
YAGO YAGO YAGO

ARGENTINA 38% 17% 45% Argentina 3,3 34,7 30,4

Peru 6,0 5,3 -0,7

PERU 46% 10% 43%
Mexico 3,2 5,9 2,8
MEXICO 48% 11% 41%
Brazil -2,3 4,7 7,1
BRAZIL 37% 11% 51% Chile 3,3 9,8 6,2

CHILE 41% 11% 48% Colombia 2,9 7,0 4,6

Costa Rica -1,0 -0,1 1,5

COLOMBIA 33% 18% 48%
El Salvador -1,1 -2,8 -1,0
COSTA RICA 36% 12% 51%
Guatemala 4,4 5,0 1,0
EL SALVADOR 35% 12% 53% Honduras 2,1 0,1 -1,6

GUATEMALA 48% 12% 40% Nicaragua 5,7 3,2 -1,8

Panama 4,0 6,0 2,2

HONDURAS 37% 13% 50%
Venezuela -12,4 157,7 194,1
NICARAGUA 51% 10% 39%
Puerto Rico -3,5 -3,2 0,9

PANAMA 45% 13% 41% Dominican R. 9,2 13,4 4,6

VENEZUELA 30% 3% 68% Uruguay 1,4 11,6 10,1

Growing Stable Decreasing

Source: Nielsen Retail Index Basket Monitor Latin America RY ending February 2016 | % Of manufactures that are growing, stable or decreasing in Volume
(-3 % < and > +3%)

Copyright 2016 The Nielsen Company 4

 1. NEED OF FASTER OPTIONS
NO TIME TO WAIT!
As the urban population is growing across the region, major
demographic and lifestyle changes are taking place. Currently
77% of the population lives in urban areas and this is expected
to exceed 85% in 2050.

According to the ECLAC, there has been a gradual decline in

average household size in almost all markets from 4.3 people per
household to 3.1, with more single households and small families.
In addition, the time that Latinos are investing in working is more
than ever - we work 42 hours per week compared with 37 in
European countries - and the increase in female participation
in the labor force, are producing major cin the family and its
consumption. As a result, households are eating fewer meals at
home, and are instead increasingly looking for convenient meal
solutions that fit into their daily routines. 75% of Latin Americans
are having lunch at restaurants and only 21% have dinner. In
Mexico for example, nearly 50% usually eat at restaurants,
creating immense opportunities for retailers to develop affordable,
quality prepared meal options and in-store lunch experiences.

Whether it is more females in the labor force, shrinking

households or changing family roles and behaviors due to labor
time, one thing is certain when Latinos are facing a recession,
42% try to save money by cutting down on take away meals,
thats why retailers and manufacturers should consider offering
innovative products to make their lives easier 53% are willing to
pay extra for products with superior functions or performances
and seek ways to facilitate their shopping experience.

Copyright 2016 The Nielsen Company 5

 HIGHLY INFLUENTIAL ATTRIBUTES THAT LATIN AMERICANS CONSIDER
WHEN SELECTING A STORE

41% 41% 32% 28%

the store has the store makes it easy the store has an the store has
short checkout for me to get in and organized layout that a variety of freshly
lines/fast checkout get out quickly makes it easy to shop prepared foods

93%
of Latinos say that

PROXIMITY
influences their choice of store to store.

Source: Nielsen Global Survey Growth Strategies Q12016

As lifestyle and consumption habits change, a structural shift is

beginning to emerge in how consumers shop and spend their money.
Across the region, we see an accelerated growth of small formats such
as discounters, cash & carry and convenience. In Brazil for example,
small supermarkets and superettes grew 6% in 2015 while in Mexico
proximity channel reached a double digit growth (+19%)

Copyright 2016 The Nielsen Company 6

 2. E-COMMERCE, A REALITY
IN LATIN AMERICA
The growth of Latin American population with internet access
(57%) in the last few years, smartphone ownership and an
increasing array of Apps targeting online shoppers (Amazon,
Linio, Mercado Libre, etc.) have supported the development of
e-commerce, according to International Telecommunication
Union (ITU) in 2019 the Total Retail sales online will be 2.2
USD Trillions, +29% vs. 2014.

The most common categories that Latinos are buying online are
fashion (44%), travel (43%), event tickets (41%), electronics
(37%) and books/music (35%), however retailers e-commerce
strategies are supporting the development of e-commerce for
grocery and personal care products, today 12% of internet users
are buying something online but the potential is still enormous.

ORDER ONLINE FOR USE A VIRTUAL ORDER ONLINE AND PICK

HOME DELIVERY SUPERMARKET IT UP INSIDE THE STORE

13% 72% 7% 71% 9% 69%

15% 65%
9% 66% 7% 67%

9% 65%
7% 64% 8% 58%
15% 62%
9% 64% 8% 57%
14% 71%

11% 70% 13% 72%

11% 68%

11% 59% 7% 68% 8% 66%

Already Willing
using to use

Source: Nielsen Global Survey: The Future of Grocery Q12015

Copyright 2016 The Nielsen Company 7

 On line shopping for FMCG is still in its primary stage in
Latin America, however, we can expect to see further growth
as current bricks and mortar players develop and refine their
offer. Ecommerce has changed the playing field and new
competitors who purely play online are launching their offers
to Latin American shoppers (Mercadoni, Rappi, Cornershop,
etc). E commerce for FMCG is a necessity for Latin American
retailers.

FLEXIBLE RETAILING IS ABOUT ADDING VALUE AND DIFFERENTIATION

CONSIDER CHANNEL
DIFFERENCES

ADD VALUE MAKE IT

EASY

AISLE 1
KNOW B2B
YOUR SHOPPERS B2C
B2C C2C
RETAIL RETAIL DIGITAL DIGITAL
(BRICK AND MORTAR)

Source: Global Survey Shopper Trends & Behaviors Q3'2015

In this competitive retail environment, retailers and

manufacturers must add value and differentiate by providing
digital tools to help consumers take control of their shopping
experience while also increasing sales potential.

The most successful retailers and manufacturers will be at a

cross junction of the physical and virtual world to deliver a
seamless customer experience.

Copyright 2016 The Nielsen Company 8

 3. LATINOS PREFER
LOCAL BRANDS
Regional and local players in Latin America are outpacing
multinationals, Latinos are loyal to local products, these are
more relevant for FMCG purchases (Food and Beverages)
because consumers think that local brand are culturally closer
to their heritage, local brands also have a better understanding
of their preferences and create a sense of national pride,
however when Latinos are thinking of durable goods
(electronics, cars, health and wellness) multinationals have a
higher preference because of the perception of better quality
and the latest innovation.

Value Importance and Variation % IN LATAM:

63% prefer to buy local
brands, because they support
local businesses
GLOBAL
(vs. 59% Global)
76% +7% 75%
54% say that local brands
are more in tune with their
REGIONAL personal needs / tastes
(vs. 53% Global)
+12%
3% 4%
71% say that global brands
LOCAL 21% +11% 21% are generally more expensive
than local brands
Y1 Y2 (vs. 63% Global)

Source: Nielsen Retail Index (FY 2015) Manufacturers that represent 60% of LatAm Basket | Nielsen Local vs. Global Brands study (Q3.2015)

Copyright 2016 The Nielsen Company 9

 Price is one of the most relevant attributes for Latin American
people, and in general terms, local brands are perceived as
cheaper than multinationals, and in fact, they are cheaper,
specially in terms of the current inflation rate and the high USD
which affect the final prices of multinational products.

WHAT IS MOST IMPORTANT TO YOU WHEN CHOOSING A LOCAL OVER A GLOBAL BRAND?

47%

34%
31%
27%
21%

Better Value for On Sale / Positive Previous Flavor is better National pride
Money Promotion experience

Venezuela Argentina Chile Mexico Colombia

53% 39% 36% 36% 35%
Chile Venezuela Peru Peru
38% 35% 32% 34%

Source: Nielsen Local vs. Global Brands study (Q3.2015)

Manufacturers and retailers need to understand shoppers

preference at the smallest possible level to be successful in
our countries because Latin Americans usually have different
preferences in each city within the same country. In Mexico
for example, beer consumption is more relevant than other
alcoholic beverages in the north of the country while vodka is
over developed in terms of consumption in the south.

Copyright 2016 The Nielsen Company 10

 4. HEALTHY PRODUCTS.
NON HEALTHY LIFESTYLE
Current non healthy lifestyle is producing chronic diseases such
as obesity or diabetes in Latin Americans, today we are aware of
these statistics and consumers focus on health and well being
has increased 56% are trying to lose weight which means it
is a huge opportunity for those manufacturers and retailers who
are committed to help the consumer reach their goals - 75% are
changing their diet -.

VARIATION OF HEALTHY BASKET VS. INDULGENCE

20%
16% 15% Healthy Indulgence
11%
7% 7%
5% 5%
1% 2%

-2% -2%
Africa and Latam Asia North Europe Global
Eastern America

ANNUAL PERCENTAJE OF SHOPPING SPEND ON HEALTH PRODUCTS IN LATAM

23% 22% 21%

14%
11%
6%

Colombia Brazil Chile Puerto Rico Venezuela Mexico

Source: Nielsen Retail Index 2015

Copyright 2016 The Nielsen Company 11

 In spite of the economic recession, Latinos are worried about
their health so they are willing to spend extra money on
premium foods that contain healthy attributes (all natural,
natural flavor, low salt, etc), in Peru for example, 80% of
respondents are willing to pay extra for products with low
colesterol, in fact, Latin Americans declared that they would like
to have more healthy options available, it is a huge opportunity
to think in innovative products.

% OF CONSUMERS WHO WISH FOR MORE HEALTHY/NATURAL INGREDIENT

PRODUCTS TO BE AVAILABLE IN THE MARKET

PRODUCTS SUITING A HEALTHY LIFESTYLE

40%
31% 30%
26%
19%

PRODUCTS MADE OF NATURAL INGREDIENTS

41%

28% 31%
26%
20%

Asia Europe Africa/Middle East Latin America North America

Source: Nielsen Global New Product Innovation Survey (Q1'2015)

Copyright 2016 The Nielsen Company 12

 5. CONSUMERS ARE AGING
ACROSS LATIN AMERICA
In spite of its young population, Latin America has not escaped
the global trend of an increasingly aging population. Latin
Americas silver head population (65 years or above) currently
account for 40 million (7%) of the total population and will grow
to about 83 million in 2020. This will be accompanied by an
increase of medical illnesses which are more likely to manifest
above the age of 65 - Diabetes, Obesity, Cancer, Cardiovascular
diseases, etc. .

Future silver heads are worried about aging, however, with the
current economic situation it is not easy to be prepared, while
Latinos are using their extra cash to pay debts (35%), they
are putting less into their savings (Q116 32% vs. Q115 48%),
investing in shares of stock/mutual funds (Q116 8% vs. Q115
22%) and retirement funds (Q116 4% vs. Q115 11%).

LATINOS BIGGEST CONCERNS ABOUT AGING:

Global Latam

62% 63% 62% 61% 60%

56% 55% 53% 50% 48%

Losing ability to care Losing mental agility Being a burden Losing physical agility Having enough
for basic needs on family members money to live
(feed self, bathe or friends comfortably
self, dress self)

Chile Argentina Colombia Brazil Mexico

69% 65% 65% 60% 53%
Mexico Brazil Peru
65% 64% 65%
Source: Nielsen Global Aging study (Q3 2013)

Copyright 2016 The Nielsen Company 13

 Medical, financial and entertainment services focused on silver
heads will have a tremendous opportunity in this segment while
retailers must make their facilities more accessible and offer
more service options in one location.

RETAILERS ARE TRYING TO HELP

THIS SEGMENT OF THE POPULATION BUT STILL HAVE WORK TO DO:

Silver Heads perception of what retailers Silver Heads perception of what retailers
are DOING to meet their needs still NEED to do to meet their needs

Ample lighting 83% Benches to sit down 49%

Large print advertising
signage 66% Electric shopping carts 49%
Aisles dedicated to aging-
Handicap ramps/doors 65% needs products 45%

Trained and courteous Road-side assistance to help

customer service 63% with grocery bags to the car 44%

Online shopping/delivery Handicap check-out aisles 43%

options 62%

Source: Nielsen Global Aging study (Q3 2013)

Copyright 2016 The Nielsen Company 14

 Manufacturers have opportunities to create specialized food
which could be enriched fiber, low sodium fat and sugar,
specialized products for diabetics, etc. and be aware of health
care priorities (Hydration for mature skin, specialized products
for some diseases diabetes - treatments for weak hair, etc.).

Thinking about the product and service needs of the aging consumer, please indicate how
easy or difficult it is to find: % that consider it is difficult to find

59% 57% 54% 54% 51% 48%

Easy-to-read Advertising that Clearly labeled Smaller portion- Easy-to open Foods that meet
product labels reflects older nutritional sized food product packages special nutritional
consumers information packaging diet needs

Retailers must take advantage of the lack of service demanded by aging consumers

56% 55% 52% 49% 46% 44% 44%

Transportation
43%
Medical insurance

Financial /investment
services/assistance

Easy-to-read

services/assistance
restaurant menus

disability access
Meal delivery
service assistance

services/assistance

Prescription drug

Restaurants with
Housing options
services/assistance

services/assistance

Source: Nielsen Global Aging study (Q3'2013)

Copyright 2016 The Nielsen Company 15

 BE FASTER!
1 PRACTICAL PRODUCT INNOVATION
RETAILER PROXIMITY & FORMATS

BE DIGITAL
OVERCOME E-COMMERCE BARRIERS
ONE STEP AHEAD
2

BE LIKE A LOCAL
3 UNDERSTANDING CONSUMER
PREFERENCES AT MINIMAL LEVEL

BE HEALTHY
INVEST IN INNOVATION OF HEALTHY
PRODUCTS 4
LATINOS WILL PAY EXTRA

BE PREPARED
5 ANTICIPATE THE SILVER HEAD NEEDS

Copyright 2016 The Nielsen Company 16

 HOW CAN NIELSEN HELP?

1 Understanding 2 Identify and reach

shoppers preferences niche consumers and
and behaviors via their stores via
Shopper Solutions Spectra

Designing the best way to communicate with them via Marketing Effectiveness

3 4
Guaranteeing
Best Shelf Layout
Successful
and Assortment via
Innovations -
Merchandising
Practical & Healthy
Services
Products

5
Web Page Diagnostic,
and Optimization via
E-Commerce
Solutions

Author
FABIOLA DE LA PORTILLA

NIELSEN CONTACTS:
fabiola.delaportilla@nielsen.com
paula.valadao@nielsen.com
montserrat.calderonnunez@nielsen.com

Copyright 2016 The Nielsen Company 17