CABO SAN LUCAS, MEXICO — Relatively speaking, winning the World Cup might be an easier feat that winning in the Latin American baked goods market. That was the challenge issued by Maria Carolina Gollo, innovation/global marketing for Grupo Bimbo, who discussed growth and consumer trends for various Latin American regions during the BEMA annual convention, held June 19-23.
With a commodity export-based economy, Latin America can be considered a challenging, even unstable, region when it comes to food consumption trends, she noted.
“It’s vulnerable and very dependent on external environments and economies,” she said.
For example, in the early 2000s, China’s growth increased demand on Latin American commodities and pushed up volume and prices, which in turn led to growth in the region, then sent the region into a recession period when the external growth slowed after 2010.
This change, she noted, had an impact on consumption trends, with a migration from out-of-home to in-home consumption.
“It also generated even higher price sensitivity,” she said, “and Latin America is already more price sensitive than other areas.”
She pointed out that, during a recession, Latin American shopping behaviors typically fall under two categories: frequent trips with lower spends — indicative of those with weekly income who get by day-to-day — or infrequent, planned trips to larger retailers to stock up for longer periods.
“These two behaviors strengthen two types of channels,” Ms. Gollo said.
The first supports c-stores, which she described as “an evolution of the ‘mom and pops’” in Latin America.
“We are seeing (c-stores) almost doubling their number of stores,” she observed, noting that Mexico is seeing the biggest c-store boom.
The second behavior, she said, is supporting the “cash and carry” outlet, which is also seeing double-digit growth.
Many bakery manufacturers have launched products that strategically fit these specific outlets and needs, she noted. For example, more single-serve products are being developed for c-stores in Latin America, while larger volume is reserved for cash and carry outlets.
“Although these two strategies may seem contradictory, they are both related to the same concern of the consumers, which is taking care of their money,” Ms. Gollo said.
For Grupo Bimbo, this strategy kept the company from declining in sales during the Latin American recession, she noted.
“It is possible to grow in a recession period,” she said. “The point is that if you want to operate in an unstable region such as Latin America, you have to understand that it is possible to grow during hard times.”
Looking ahead, Latin America is leaving the recession, and the forecast for the baking industry is a positive one.
“Global Data is expecting 3.8% annual growth for the next three to five years, which is the second fastest in the world following Asia Pacific,” she observed.
With the exceptions of Argentina and Mexico, most Latin American countries are experiencing this growth. Brazil and Chile are projected to see above-average growth, she said.
Categories such as breakfast cereal and morning goods are expecting to see 5% to 6% annual growth, and mature markets such as bread and rolls are projected to see 3% to 4% growth, presenting plenty of room for opportunities.