With inflation reaching more than 11% in 2022, consumers in Latin America have experienced a distinct loss of purchasing power. FMCG prices in the region have risen by 30% compared with two years ago, while incomes have reduced due to the increase in people working in jobs within the informal economy, which pay on average 25% less than roles in the formal employment market.
In this environment, only one third of all brands in the region have managed to grow.
Latam consumers have responded to the financial pressures they’re under by developing new habits to balance their FMCG spending. They have started to visit more channels in search of better value-for-money, with each household adding on average one channel to their repertoire.
This prudence is enabling shoppers to keep on buying the products and categories they like, and as a result 84% of all FMCG categories have managed to sustain or expand their buyer base. It’s a different story if we look at consumption, however. While shopping frequency has increased by 1%, consumers are buying 5% less on each trip, pushing down total FMCG volume.
Despite their difficulties, Latam shoppers have increased the number of brands they buy, and they continue to choose premium brands, especially in essential categories such as food and beverages. This shows that there is still room in the market for high quality options.
In our new video, María and Juan illustrate the journey of the average Latam consumer.