The effects of inflation on purchasing power are still relevant to understanding FMCG consumption in Latin America. At the end of 2022, US$100 bought 30 fewer units of product than it did two years ago.
However, when it comes to how Latins buy FMCG, it is necessary to understand that there is a lot of variability between countries. Through segmenting people into groups based on their personal economic circumstances, we can reveal their unique consumption characteristics.
In 2021, consumers in Ecuador, Bolivia, Mexico and Chile were in the strongest position financially, while those in Colombia, Brazil and Argentina were experiencing difficult situations. A year later, there has been a lot of change: thanks to the resumption of government aid payments, Brazil managed to improve its indicators and closed the year as the best positioned country.
Mexico has maintained a favourable environment for consumers, and remittances from relatives in the US have been reaching record levels. Peru, which in 2021 had not yet experienced the effects of the current social unrest within the country, has also hovered between a positive and challenging economic climate.
On the other hand, Chile, Ecuador, Bolivia and Central America – which presented a positive consumption index in 2021 – have been most affected by the economic crisis. This was especially the case in Chile, which suffered the largest FMCG volume sales reduction in Latam during 2022. In Argentina and Colombia, the two countries with the highest FMCG inflation in Latam, the environment continues to be challenging.
But even in countries where the pressure is highest there is a limit to how far the FMCG market will contract. This means it is likely that the most basic categories will begin to recover between now and 2024.
Our new video – based on the findings of our latest Consumer Insights Q4'22 report – puts a spotlight on Colombia, where the outlook for the FMCG market is positive. Following rapidly changing consumer trends is key to knowing where and how to invest, and this is our specialty; contact us to find out more!
Watch the video in English:
You can also watch it in