We entered 2020 with similar expectations for the FMCG industry as recent years—that it would continue to grow at a sluggish pace in most regions, but we were wrong.
Latam experiences its highest FMCG volume growth since 2010 The arrival of COVID-19 changed purchase behaviours significantly in Latin America, driving the highest volume growth seen for 10 years during Q1 of 2020. Shoppers everywhere were buying more FMCG, stocking up on certain types of goods as they prepared for lockdown and possible supply shortages. This resulted in total volume growth across the region of 4.8% In Brazil and Mexico the pandemic strengthened an existing volume growth trend, while in Argentina and Chile it reversed declines.
This rise in FMCG value can be attributed to four key trends:
1. Stockpiling before lockdown At the beginning of lockdown, it was inevitable that shoppers would add extra items to their baskets when faced with restrictions to circulate and possible isolation for becoming unwell. This led to people making additional shopping trips and buying slightly higher volumes than normal. In Latin America, after the stockpiling, the frequency declined and the purchases are bigger, increasing the importance of stock-up missions
2. Out-of-home transfers to in-home With restaurants and cafés closed in many countries, the opportunity for out-of-home consumption disappeared overnight. Bars, fast-food chains and restaurants were the most impacted channels, directly reflecting on the performance of ready-to-eat food and beer categories. In Brazil, the biggest retraction occurred in the last week of March. Lunch and afternoon snacks have been the main moments of consumption to contribute negatively, which reflected in an increase of +27% new in-home consumption occasions for foods and beverages. (CI Brazil Q1 2020).
3. New occasions outside of core moments The dynamics behind meals eaten in-home has been significantly disrupted by the lockdown. With the majority of people working from home and children off school for the foreseeable future, we’ve seen an increase in eating occasions. In Mexico, 8.1% more eating occasions were generated, mainly due to people snacking between main meals as they craved pleasure and ‘pick-me-up’ moments throughout the day – these occasions grew by 3%. There was also a renewed focus on some occasions. For example, without the morning rush, families have been spending more time preparing and eating breakfast together. In Mexico, people have been spending 5.5% longer in the kitchen preparing breakfast, 1.4% longer making lunch, and 2.2% longer cooking dinner. In Colombia, 90% say they are eating healthier and 61% are testing new recipes at home.
Latam vision:
New values and concerns influence consumption habits
Brick-and-mortar stores are driven by new attributes
The demand for delivery grows and online channels accelerate
4. Heightened focus on health and hygiene The constant stream of advice laid down by health authorities during the pandemic has led to a surge in sales of hygiene and health-related products.
Economy brands winning in Latin America during lockdown New values and concerns are changing shopping habits. In Latin America, 79% (vs. 60% global) are concerned about the economic future. Unlike the global trend, due to the economic concern and situation in Latin America, the demand for economy and private label brands has increased since the beginning of the COVID-19 pandemic.
Spotlight on private label In Colombia, the success of discounters – whose value share increased by 39% – boosted the performance of manufacturers’ own brands, which increased in value share by almost a third (32%). This was despite the 214% growth of online channels, where major brands have a greater presence.
