How brands are Growing
Why penetration and frequency are key across LatAm
Latin America is not the rest of the world. Consumers here make their decisions based on a unique brand palette and a distinct economic environment.
In 2023, that environment was more positive than the overall global picture, with spend up 14.3% compared to a global rise of 8%.
Each household spends an average of $928 a year, a rise of 12.8%. This is above average inflation and, while the total spend number is below the average global household spend of $1,051, spend per trip is up 12.4% in 2023, nearly double the global growth rate of 6.7%.
We don’t expect to see so much growth in 2024, reflected in the fact that consumers have stabilised the number of channels they visit, which is down by just 1% regionally, when we compare Q423 with Q422. As mentioned in Omnichannel Latam Report 2024, consumers are looking to omnichannel to keep spend down while enabling them to continue to purchase. With channel numbers stable at just above six per household, it’s clear that consumers have adapted to increased choice.
More than half the brands (53%) in our Top 250 grew their total shopper numbers. By contrast, in 2022 only 45% of brands were growing. And when we compare the winners and losers for 2023, we see that the growing brands are up 12% on average in terms of their CRP, while the declining ones are down by 10%.
Size of brand was not a factor in determining success in 2023, with all sizes from Super to Small up by more than 50% and small brands (those with a penetration of less than 10%) growing strongest at 57%.
More choices, more brands
Across the year, 53bn brand choices were made, an additional 10.3m brand choices (+1.7%), with consumers making at least one brand choice every day.
Breaking down that performance by category we see that Food makes up more than a third (35.7%) of all brand choices, followed by Beverages (22.1%) and Home Care (15.0%).
Breakdown consumption by generation and, again, there are different patterns to observe. The brands that over-index for under 34s are connected to babies, self-care and snacking: Pampers, Nido, Tang, Sunsilk and Cheetos.
By contrast the top five brands that over-index among the over 65s are connected to at-home and household routines, with Cif, Raid, Maisena, Knor and Nescafé all performing well.
These strong figures, driven at least partly by an encouraging economy, and while the growth for 2024 is not expected to be as strong, this year’s Brand Footprint highlights regional resilience. However, while regional numbers may be stable, each country will be at its own stage in the economic cycle and brands have to understand this and pick local moments accordingly.
We see a slight increase in the brand repertoire at nearly 90 brands per household across the year, significantly higher than the global average of 62.3.
What’s also noticeable is that local brands (62%) remain strong and at least half of the annual brand basket consists of brands that we define as Small or Medium (those with penetration of less than 30%).
Market leaders
But while Latam overall is different to the world, so our regional numbers also hide huge variations. Consumers in Chile spend the most on average ($1,705), while those in Argentina spend the least ($265).
Consumers in Peru buy the most brands at 98.8 on average, while those in Honduras buy the least at 70, although they remain above the global average.
The Impact of scale
Sources of growth differ across the brand size scale and while penetration remains an important factor in this market — even if it’s not as important as it was last year when it played a part in more than 90% of growth cases — it’s not the only issue that marketers have to monitor.
Penetration — getting more households to buy a brand — is, of course, fundamental to growth. It is straightforward yet powerful: the more households a brand reaches, the larger its potential market base becomes.
Such expansion typically sets the stage for more sustainable growth. Brands have not only captured new consumers via penetration but have also successfully navigated the natural churn that all brands face — losing customers to competition or changing preferences.
This year penetration played a part in nearly 90% (88%) of the growth seen in CRPs. Contributing 29% on its own and 59% in conjunction with frequency. By contrast the combined figure was 86% globally.
Average penetration is just 33.7% in Latam but for many of the larger brands, it’s already higher. So while 1% penetration growth is worth millions to some, it’s less important than frequency once that penetration hits a certain level.
Breaking down the penetration growth by brand size, we not only see that total growth has declined from 3.1% in 2022 to 1.9% this year, but that Large brands – those with 30-70% penetration – grow most at 2.8%, with Super Brands – 70% plus penetration – improved least at 1.2%.
While penetration builds the foundation, frequency — how often consumers purchase a brand — amplifies the impact. Increasing frequency ensures that once a consumer is brought into the fold, they are engaged and retained. For smaller brands, a third of the growth will primarily come from new buyers; for Super Brands, getting more customers to buy one more product one more time brings in the big numbers.
What matters to Super Brands around the world is that their consumers are activated as many times as possible. This is reflected in their unique growth profile for 2023, where penetration alone accounted for just 10% of their growth in Latam but frequency played a role in nine out of 10 CRP rises.
That compares with Medium brands – those with a 10-30% penetration – which found 36% of their growth came via penetration. The simple truth is that the bigger you are, the more frequency is critical, while down the scale, penetration is a more powerful weapon.
Blueprint for Brand Growth
In all the winners in our brand rankings, we see that once they identified and created their brand’s meaningful difference for more people, Kantar’s three growth accelerators come into focus:
It is not just about your brand being preferred; you need to be pertinent. Brands need to resonate deeply with consumer needs and desires, to turn casual browsers into defined customers. The best performers also found scale with global multi-channel campaign platforms with consistent messaging as their foundation and stack the odds in their favour.
Being seen is as crucial as being relevant. You need to be easy to find and easy to buy, whenever and wherever shoppers and consumers encounter you. Our case studies in this report demonstrate time and again that exploring everything from foodservice to e-commerce and neighborhood sundry stores in rural communities are presence-led pathways to growth. Presence is a common denominator.
The journey doesn't stop at visibility or relevance; it extends into uncharted territories. Your brand size fundamentally affects the likelihood of success of the way you can identify and exploit new market segments, or how once you know what your customers unmet needs are, how you can serve new consumption occasions and introduce fresh and incremental growth vectors, much like Nescafé entering the ice cream market.
These three growth accelerators don’t happen in isolation. FMCG brands must ask and answer pivotal questions: Which consumer needs can we meet more effectively? Who are our most accessible and lucrative target shoppers? How and where do they shop? The answers will define strategies and create pathways to growth.
