Outlook for 2024
A breakdown of FMCG consumption growth trends
Heading towards sustained growth
As we face the new year, the only possible path is growth. Latin America has stood out as the champion of FMCG volume increase in recent years, despite the countless economic challenges it has faced.
However, compared to other global regions with greater capacity in terms of the number of categories purchased and the level of spending, consumption in the region is still at an early stage. The average spending in Latam remains 30% lower than in Britain, signalling considerable room for growth.
The Pressure Index, which evaluates economic factors such as unemployment, price pressure, and the Gross Domestic Product (GDP) evolution, confirms a favourable moment in all countries comprising Latin America. Brazil and Mexico continue to be the stars in the spotlight; but they are no longer the only markets with positive performance, as Central America, Peru, and Ecuador approach the positive average; followed by Colombia, Bolivia, and Chile – the latter slowing down the previous negative trend. Argentina is the only country in the opposite trend, as it is going through a deterioration in its economic situation.
Factors driving growth
Recovery of the Purchasing Power. In recent years, purchase frequency (between 5-6%) had sustained the FMCG basket, but in 2023 we saw the beginning of a recovery in volume per occasion. For 2024, we anticipate a change in this trend, with volume taking on a key role as frequency stabilises. An increase in larger shopping missions is expected, precisely those that had been impacting negatively the total units purchased.
Well-established omnichannel. In 2022, we witnessed a remarkable raise in the penetration of shopping channels, embraced more strongly by the low socioeconomic level (SEL), increasing the number of visited channels from 7.9 to 9. The phenomenon was accompanied by a loss in consumer loyalty, impacting the frequency of visits to each channel. As consumers change the pace of searching for new formats, frequency becomes the central axis. There is an inflection point here: although the traditional channel remains the most important in the region, the gap in daily shopping occasions compared to other channels has decreased drastically. Preferences lean towards formats that favour larger purchases, such as hypermarkets, wholesalers, and discounters, but proximity formats such as pharmacies and convenience stores also stand out.
Access to banking products, a key facilitator. With more payment methods to access channels, households can anticipate their purchases, progressively reducing the disparity in spending on consumer goods between the high and low SELs. This change marks a milestone in the evolution of omnichannel, where convenience and accessibility drive a new era in purchasing decisions.
Values driving conscious consumption
Increasingly informed consumers seek transparency and responsibility from the industry and retailers in every choice. Sustainability, in particular, has gained importance, with more than 50% of the Latin American population committed to the environment in 2023 – a figure expected to reach 70% in 2025. Concern for health and nutrition is also evident, with 66% of all shoppers seeking products with natural ingredients.
In another sphere, social transformations, such as the choice of not having larger families, also weigh in on the reconfiguration of consumption. Smaller households already account for 33% of the total Latam population, and their spending is 26% lower than larger households’.
In this new year, brands will be increasingly affected by consumer beliefs. It is important to ask yourself if your brand is prepared to connect with these emerging trends in the FMCG landscape.
Revealing Latam's growth momentum: pace consistent with increased positivity in more countries
