CONSUMER

INSIGHTS
LATAM
2018: A YEAR OF
RECORD LOWS
AND ALL-TIME
HIGHS
L ATA M | M AY 201 9
2018: A YEAR OF
RECORD LOWS AND
ALL-TIME HIGHS
Latin America’s FMCG industry ended 2018 at a low
point. Q4 was the third consecutive quarter to re-
cord a drop in consumption across the region, with
shoppers buying 0.9% less than they did in Q4 2017.
The continuing downward trend in volume sales is
playing out against a backdrop of continued high
unemployment – 8.5% in Latam, compared with
5% globally – and GDP growth that reached 2.7%,
slower than the global figure of 3.9%. This growth
was driven by Brazil, Chile, Colombia and Peru.

As a result of the end of year decline, when we look

at 2018 as a whole FMCG consumption was flat.
Volume sales failed to increase for the first time in
10 years, despite the increase in population. None-
theless, households spent 3.9% more than they did
in 2017, due to price increases – a ‘curse word’ for
anyone who manages their household’s income.
The rise in value sales was slower than it has been in
previous quarters, however, due to shoppers chan-
ging the brands and channels they chose in a quest
to save money.

Zooming in to look at the trends on a country level,

grocery consumption declined in Argentina, Mexi-
co, Peru and Central America. The picture was a
little more positive in Chile, Bolivia, Colombia and
Ecuador – though growth rates were still low, with
Ecuador highest at 4%. Brazil ended the year on
a negative trend, dropping -0.4% in volume, with
out-of-home consumption of foods and beverages
particularly hard hit with a drop of 4%.

Virginia Garavaglia
Marketing Director Latam
Worldpanel Division
virginia.garavaglia@kantarworldpanel.com

2
2018 ended flat; it was not even offset by the organic growth in households
In Q4, FMCG consumption dropped -0.9% in Latam

2009 2010 2016 2017 2018 Q4 2018

8% 5.4% 2.6% 1.7% 0.1% -0.9%

LATAM

Source: % Volume Growth | FMCG | Full-year 2018 vs. YA | Total Latam

Consumption has declined in Argentina, Mexico and Peru

Chile, Bolivia and Colombia are the countries with the most favorable setting, al-
though growth rates are low. The year ended negative in Brazil.
% Volume Change YoY

2016 2017 2018 Q4 2018

8.0
5.0

4.5
4.0
3.6

3.3

3.0

2.6
3.1

3.1
2.7

2.4

2.3

0.9
1.7

1.7
0.8
1.0

1.0

0.4
0.3
1.1

1.1
0.1

0.1

0.1
-0.8

-0.8
-0.9

-0.9
-1.0
-1.0
-1.1

-1.5

-2.5
-3.2

-3.6
-4.0
-4.4

-6.0

CHI BOL COL ECU BRA Latam CAM ARG MEX PER

CAM

Source: FMCG | Full Year 2018 vs. YA | Total Latam

3
 TODAY’S LATAM SHOPPER:
YOUNG, LOW INCOME AND
HIGH FREQUENCY
Number of Latin Americans are high frequency shoppers,
shopping trips per typically making a trip to the store every two or
household in 2018 three days in all markets except Brazil, Argentina
and Chile. However, the increasing trend across the
PER 281 region is for shoppers to make fewer visits to points
of purchase, leaving longer between each trip. This
BOL 269 presents a challenge for brands and retailers, who
have fewer physical touchpoints with shoppers and
MEX 231 therefore fewer opportunities to reach and engage
them.

ECU 222 In the Latam region, 56% of all households are low
income. The average family of four spends around
CAM 189 1,400 US dollars per year on groceries – meaning
they run their households on less than a dollar per
COL 179 day per person.

CHI 119 Overall, shoppers are young, and in a third of all

households in the region the chief home-maker is
a millennial, aged 34 or younger. In Argentina and
ARG 103
Chile, on the other hand, it is ‘senior’ shoppers –
those of retirement age – who make up the most
BRA 81 prominent segment, and are therefore most rele-
vant for brands and retailers to target.

Your shoppers are young, and a third of all households have Millennial housewives
In Argentina and Chile, “retired” shoppers stand out
% Households
FY 2018 CAM

Homemaker's
age LATAM ARG BOL BRA CAM CHI COL ECU MEX PER

34 or
29% 22% 40% 29% 36% 20% 30% 27% 30% 30%
younger

35 – 49 37% 29% 39% 39% 33% 36% 38% 35% 38% 36%

50 – 64 21% 27% 16% 20% 22% 27% 20% 26% 21% 21%

65 or
13% 22% 5% 13% 10% 18% 12% 12% 11% 13%
older

Source: Worldpanel Latam | 2018 | % Households

4
A SHIFT IN HABITS: CATEGORIES: THE
GETTING THE SAME YEAR OF ‘DOING
AMOUNT FOR LESS WITHOUT’
Shoppers purchased the same
quantity of FMCG goods in 2018
as they did the previous year,
but they bought in very different
ways, seeking out cheaper op-
tions for the products and chan-
nels they use. As a result, eco-
nomy brands continued to grow.
The popularity of private labels –
mostly sold by discounters – has
climbed steadily since 2015 in
Colombia and Central America,
while mainstream brands have
gained a 10% share of the mar-
ket in Argentina in the last three
years. In the same time period
premium brands lost 2% of their
volume share in food and dairy
products across the Latam region
as a whole, but they still lead the
way in home care and personal
care.
In terms of emerging retail for-
mats, wholesalers have come into
their own over the last year, and
now hold their highest share ever
of the FMCG market. ‘Neighbor-
hood’ formats such as discoun-
ters and minimarts also recorded
their highest growth in history in
2018.
Shoppers in Latam cut out some
‘non-essential’ categories in 2018
– those that are purchased by less
than a third of all households on
a regular basis – which enabled
them to make savings. These ca-
tegories include fragrances, which
lost 2.1 million shoppers, olive oil
(-2 million), sun protection (-2
million) and honey (-500,000).
Top 10 non-essential cate-
gories that households cut
out the most in 2018 (in
Millions of households)
1. Fragrances: -2.1M
2. Olive oil: -2M
3. Sun protection: -2M
4. Facial tissue: -1M
5. Floor wax: -960k
6. Hair treatments: -800k
7. Hair colorant: -650k
8. Honey: -500k
9. Shaving cream & after
shave: -500k
10. Insecticides: -418k
Beverages and dairy were the
product areas that suffered most
badly in 2018. Soft drinks – a ca-
tegory that has traditionally been
extremely strong in the region
– lost penetration in almost all
countries. The product that lost
most shoppers over the year was
bakery bread – bought by a stag-
gering 7 million fewer households
than in 2017.
In a case of something good co-
ming from something bad, 2018
was an excellent year for beer,
which expanded into nearly three
million Latam households as
people went out less often. Also
doing well in terms of winning
new shoppers were manufactured
bread (+3.8 million households),
laundry additives (+3 million) and
hand and body wash (+2 million).
With more than half of shoppers
in Latin America living in low
income households, and so many
young of them young people,
the key to growth for brands is
to become more inclusive. They
must make their products ac-
cessible and affordable for those
segments. They also need to have
their finger on the pulse of the
channels these shoppers want to
use to buy groceries. For example,
in 2018 they eagerly purchased
cleaning products ‘in bulk’…via
WhatsApp!
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COUNTRY SPOTLIGHT
Chile
The economic climate in Chile
continued to improve in 2018.
After four years of FMCG grow-
th that was lower than 2%, 2018
saw growth of 4%. The rate of
inflation, which has been under
3% since 2016, dropped further to
2.6%. Inflation continues to drive
household expenditure in the
country.
Despite the improving situation,
unemployment rose in Chile
through 2018, and the resulting
pessimism about future emplo-
yment prospects triggered low
consumer confidence.
FMCG baskets are recovering in
this challenging environment,
however, with spend increasing
by 5.8% and volumes by 2.7% in
Q4 of 2018. The food and home-
care categories saw the biggest
growth in consumption. The
recovery was driven by shoppers
across all socioeconomic levels,
particularly lower income consu-
mers.
Regional supermarkets and Cash
& Carry achieved their highest
ever growth in 2018. Among
the traditional channels, streets
markets maintain their strong
position with shoppers, while dis-
counters gained in importance in
modern trade.
Premium brands managed to
6
grow the volume of products sold
via traditional channels, thanks to
successful endeavors by manu-
facturers to target street mar-
kets and Cash & Carry. Levels of
promotions continued to increase
in Chile during the year, which led
to bigger shopping carts.
Argentina
2018 was another year of
declining FMCG consumption in
Argentina, with the biggest drop
of all in Q4. Shoppers bought
the same amount of groceries
as they did in 2000, despite the
population increase. Inflation
and currency devaluation had
a major impact on households’
wallets; as a result, in December
consumption dropped by 3%
while prices rose by a huge 47%.
Economy brands have been the
only winners, recording growth
across six consecutive quarters,
while premium brands lost 12%
of their market share in the
same period. Some brands have
successfully managed to grow by
targeting niche segments.
Two thirds of all FMCG categories
lost volume in Argentina in 2018,
with refrigerated and frozen
foods the hardest-hit product
areas.
For 2019, we expect to see a
further 1.5% volume decline in
the total FMCG basket.
Brazil
While unemployment fell in Brazil
during 2018, it remains high at
11.6%, representing 12 million
unemployed workers. Consumer
confidence recovered over the
year, rising back to pre-crisis
levels.
Overall FMCG consumption
remained stable in-home, with
volumes of perishable foods and
sweets expanding, although
beverages and commodities
shrank 5% and 2.7% respectively.
Out-of-home (OOH)
consumption dropped 4% for
food and beverages as Brazilians
went out to eat less frequently.
The popularity of the Cash &
Carry format continued to grow:
half of all Brazilian households
already shop via this channel,
visiting on average 11 times per
year.
We expect to see a slow recovery
in Brazil during 2019, with GDP
rising by around 2.5% compared
with 1.2% in 2018. FMCG
consumption growth is predicted
to be higher, around 3%.
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