Navigating the Latin American network requires a thorough knowledge of the economic, geographic and even political landscape.
“In general, Latin America is still slowly recovering from the recession, specifically the collapse in global commodity prices,” explained Maria Carolina Gollo, marketing manager, Grupo Bimbo, Mexico City, in Baking & Snack’s June issue. “Despite having shown an economic improvement since last year, the industry still has to be aware of the price sensitivity of Latin consumers before innovations can begin.”
Logistics is another issue, especially in highly congested cities and less populated areas where mom-and-pop shops prevail and supermarkets are few and far between. Basic infrastructure, too, often poses a challenge where wholesale bakers have been forced to respond.
“We see companies launching low-expenditure products and longer shelf-life goods to overcome the complexity of the region’s distribution network and, at the same time, investing in strong brands,” Ms. Gollo observed.
Such brand-building initiatives could pay off in the long run.
“As the disposable income of Latin consumers is lower when compared to other regions in the world, these people are usually loyal to the brands that always deliver what they are looking for,” Ms. Gollo observed. “Despite the price sensitivity, these consumers are willing to trade up if they see value in a product. This is the same reason why private label does not work in Latin America. With a limited budget, consumers cannot afford to go wrong trying different products, so they rely on known brands as the guiding element for their purchase choice.”
Opportunity knocks but understanding the complexities of this market help when you open the door.