Consumption slows in Latin America during first quarter of 2021

FMCG has still recorded growth, 60% of which came from shopping at neighborhood stores, online and large store formats.
07 July 2021
Cecilia Alva

Client & New Business Director, Worldpanel Division, Latam

marcela botana

Regional Account Director, Worldpanel Division

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In-home consumption in Argentina, Brazil and Colombia decreased in the first quarter of 2021 compared to 2020, largely due to a drop in purchase frequency seen across the lower classes.

In 2020 there was a decline in shopping frequency due to fear of infection. This year there is an economic factor. Particularly in Brazil and Mexico and across all socioeconomic levels we are seeing that people go shopping less often but buy more when they do go.

Shopping at neighborhood stores, online and large formats accounts for 60% of FMCG growth. This is because these channels play to consumers’ behaviors caused by the pandemic such as shopping less and either nearby or without going out at all. Alternatively people want to go to a big shop with plenty of space where they can find a greater selection and get everything under one roof.

It is notable that it’s the convenience/proximity channel that has contributed the most to the growth, at over 20%, which is more than the wholesalers. This is due to a 5% increase in shoppers plus baskets are 13% larger on each occasion. Some 80% of all channel shoppers are regular, while more than half are ‘new’ and come from higher classes – this is related to a persistent trend of people staying at home more.

In terms of products and baskets it is clear that COVID-19 is still having an influence. Food and dairy products are the main beneficiaries. There have been important changes in personal care as products that are related to hygiene recorded a recovery of sorts. Homecare and beverages have been affected in the short term by two factors: 1) A move away from the reactionary behaviors from the start of the pandemic such as more cleaning and in-home beverages 2) the economic slowdown.

Overall 50% of all brands in Latin America have grown in the long run, 43% in the short term, and 37% have sustained their growth in both the short and long term. They have done this by increasing their presence in growth channels, such as traditional stores, ecommerce, hypermarkets and wholesalers. In 2021 the channel, both direct and indirect, will be key for a brand’s success.

To grow it is vital to think of opportunities in new areas. Some are more long-term, such as those related to sustainability, while others are more fleeting. An example of this is Kimberly Clark’s Escudo in Mexico, originally a toilet soap which increased its share in categories including moist wipes, hand gel, and disinfecting aerosols by reacting to consumers’ new needs during the pandemic.

In conclusion, there are three tools that may be activated to maximize brands the most: firstly, retain existing customers by ensuring the product experience is the best possible and aligned to consumers’ expectations. Secondly win new shoppers, communication is an important factor in this to build mental availability and brand consideration. Finally, that mental availability must be converted at the point of purchase. The brand must be available and aligned to the growth opportunities. This will ensure consumers will find it wherever they go, at the ideal price and format.

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