The conundrum
of choice
Welcome to the 2023 ranking
of Latam’s most successful brands
In the 11 years since we launched the Brand Footprint ranking, consumers across Latin America have experienced periods of significant disruption and crisis. These have been both global in impact, such as the COVID-19 pandemic and the war in Europe, and local in scale – for example elections in Colombia and Brazil, and the drafting of a new constitution in Chile, as well as civil unrest in Ecuador, Panama and Peru.
Throughout Brand Footprint’s first decade of life, one factor remained consistent: the Top 25 most chosen Latam brands grew their Consumer Reach Points (CRPs) year after year. In 2022 however, for the first time, the total number of CRPs has declined, by 2.4% – a result of inflation and changes in shopper behaviour.
Overall, 45% of brands in the ranking have achieved growth – and there are some big winners among them.
In this Brand Footprint Latam 2023 report, we’ll take a look at the regional context around the performance of the Top 25, reveal the brands with the highest growth, and tell the stories behind their success. We’ll also explore what it takes to win in Latam today, and explain how shoppers’ purchase behaviour is evolving.
Brand Footprint uses Consumer Reach Points (CRPs) to measure a brand’s strength in terms of the number of times it is chosen by shoppers. There’s a moment when a shopper's hand hovers between two brands, and they make their decision. The Brand Footprint ranking reveals which brands are winning at that moment of truth.
Price rises hit hard
Inflation is a global phenomenon, but the impact in Latam has been especially harsh. The trend has been part of our daily lives for decades now, contributing to unstable and short economic cycles. As a result shoppers have become experts in navigating these difficult conditions and pressures – and they began to reduce the volume and frequency of their FMCG purchases as early as the end of 2021.
Shoppers in Latin America have lost 25% of their purchasing power in the last two years. At the end of 2022, US$100 bought 30 fewer units of product than it did two years ago. Inevitably, this has driven people to become more restrained in their spending, and start rationalising their purchases to a greater extent.
Fewer brand choices
While shoppers are making around the same number of choices globally, in Latam in 2022 consumers made 51 billion choices – 1.3 billion fewer than the year before. Even though consumers are visiting the point of sale more times, with the aim of rationalising their purchases, brands are having to fight for attention. The region contributes 13% of all brand choices made worldwide, meaning that what happens here has a significant impact at a global level.
Paying more for less
The choices Latam shoppers are making cost more. Annual spend on FMCG has risen 11.1% in 2022, with the average spend per trip going up 13.9%. This is much higher than the global increases of 4.8% and 3.4% respectively. Overall, this has driven up value sales for 58% of brands. Of course, that does not represent growth in real terms, as the increase in spend has largely been due to rising prices.
Shrinking baskets
Inflation has negatively impacted FMCG volume, which has remained steady in the region as a whole while value has risen. Shopping frequency has also dropped.
In Brazil and Mexico, where inflation had a less damaging effect on prices, volume purchases of groceries grew by 2.7% and 1.9% respectively as consumers found themselves able to raise their spending to a level above the price increases. In the other markets, however, volume contracted by 3% or more compared to 2021.
All markets in Latam are feeling the effects of inflation – but there is a lot of variability between countries. Dividing the markets covered by the Brand Footprint study into three distinct clusters helps us to understand these differences.
More choice – less loyalty
There are more potential brand and channel choices available to consumers in Latam than ever before. This increase in options is empowering for them, and experimenting with a greater number of brands enables them to understand which products are of interest when weighing up value and benefits. However, this scenario has created an incredibly challenging and competitive environment for brands and manufacturers.
Consumers are shopping around to find the best value for money, visiting 18% more channels in 2022 than they did the previous year. They’re also widening their brand repertoire, purchasing an average of 93.4 brands a year, almost five more than in 2021. Globally, this figure is 61.3; the gap is partly due to the fact that retailer private label brands are not yet widely disseminated in Latam.
As a result, the brand landscape is extremely fragmented, and brands are finding it difficult to hold on to consumers’ brand loyalty. 71% of the brands in Latam are considered small or medium, and have 30% penetration or less.
When it comes to categories, shoppers in Latam are prioritising the most essential purchases – food – while pushing dairy and dairy substitutes to the bottom of their list.
These trends and behaviours have created a challenging scenario for FMCG brands of all sizes, both global and local. They are having to fight harder to be chosen among a rising number of options. They have had to behave differently here compared to other regions of the world, using all the tools at their disposal to be seen, and to be selected. And in the fiercely competitive world of FMCG in Latam, some brands are getting it (very) right.
