From a macroeconomic point of view, inflation is currently the main issue impacting consumption in Latin America, as it is elsewhere around the globe. FMCG prices have risen 30% on average in Q2-2022 compared with two years ago, while incomes in the region have fallen due to an increase in ‘informal’ jobs, which pay 25% less than roles in the formal employment market.
Shoppers are prioritizing their basic expenditure, and limiting out-of-home consumption. They are reluctant to compromise on FMCG consumption, so have started visiting more channels in search of better value-for-money. This has become a trend across the region, increasing the number of points of sale shoppers visit per year by 14%, with households adding on average one more channel to their purchasing choices.
This has led to a 1% increase in the overall frequency of shopping trips within Latam, but consumers are purchasing 5% less on each trip due to rising prices. This means that the increased frequency has not been enough to compensate for the smaller basket sizes.
Brands and categories sustain penetration
Despite these changes in behavior, 84% of FMCG categories have managed to maintain or increase their buyer base. To make sure they can continue to purchase all the categories they usually do, consumers are buying less of each. This is also enabling them to increase the number of categories they buy, with households purchasing on average two more FMCG categories for home consumption compared to last year.
One third of brands in Latin America have either maintained their level of consumption or managed to grow. As with categories, shoppers have been able to increase the number of brands they buy, purchasing five more than they did last year, although they’re taking home less in terms of quantity. Premium brands in particular are benefiting from this strategy, reinforcing the fact that even in times of crisis a good value proposition can be attractive.
The brands that win in Latam over the coming months will be those that consumers perceive to have a strong value proposition, and which make themselves available in the right channels.
Kantar Worldpanel’s quarterly Consumer Insights report is based on real behavioral data from more than 50,000 households monitored by us in Latin America. Contact one of our experts to learn more about how brands can grow in the current context.