Top 10 Growth Markets in Latin America

In pursuing new business in Latin America, it can be helpful for agencies to discover the sectors in the region that are notching more sales and expanding. Here's a review made with a combination of data, including industry reports and projections, to identify the top growth markets in Latam.

Auto Indutry

In January 2014 Nielsen reported that Latin American consumers have one of the highest purchase intents in the world for cars: 75% plan to buy a new or used car this year, 10% above the global average. This strong purchase intent reflects sales growth in different Latam markets:

• Argentina set a record in 2013 for the registry of new cars, posting an increase of 13.5% compared to 2012
• New car sales in Chile increased by 12% in 2013
• Mexico’s car market grew by 7.7% in 2013
• Car sales in Panama grew by 16% in 2013
• Peru’s car market posted a 8% increase in new car sales in 2013 with a 12% increase projected for 2014

Cosmetics

While there haven’t been numbers reported for all of Latin America, a number of individual markets in the region have posted notable growth in the cosmetics sector:

• According to Associação Brasileira dos Distribuidores de Laboratórios Nacionais, sales of beauty, hygiene and cosmetics products in Brazil will increase by 11% to 20% in 2014
• Cosmetics sales in Chile in the first quarter of 2014 grew by 3% compared to Q1 of 2013 and overall the cosmetics market in Chile is projected to grow by about 5% in 2014
• The cosmetics market grew 31% in Colombia between 2011 and 2013
• The cosmetics market is Mexico is forecast to grow by 10-15% in 2014
• Ecuador’s beauty market is growing at 10% per year
• Sales of cosmetics products in Uruguay went up by nearly 10% in 2013

Diamonds

According to Erez Akerman, president of the Bolsa de Diamantes de Panama (Panama Diamond Exchange), the diamond market in Latin America is posting more than US$8 billion in annual sales and is projected to have 25% growth this year.

Energy Drinks

Growth in this sector dates back to 2007. Food and drink consultant firm Zenith International reported that the average annual growth in the energy drink market in Latin America was 25% between 2007 and 2012. The value of the energy drink market in Latin America went up by an average of 22% per year between 2007 and 2012. The top-consuming energy drink markets include Brazil (with 56% of the overall market), Argentina (nearly 18%), Mexico (15%), Colombia (4.5%) and Chile (4%). The firm Research and Markets recently release a report in which it indicated that the energy drink market in Latin America will grow at a current adjusted growth rate (CAGR) of 21% in revenue between now and 2018.

Hotels

A recent study from Jones Lang LaSalle projects that the Latin American hotel industry will increase its room supply by 65% over the next 10 years. In March 2014 Brazil had nearly 13,000 hotel rooms under construction, while in the same month Mexico had 162 hotels in the planning/construction phase. According to the STR Construction report, other Latam countries have significant amounts of hotel rooms under construction, including Colombia (2,805), Panama (1,919), Argentina (1,719), Chile (985) and Costa Rica (899).

Luxury

According to Euromonitor, in 2013 Latin America led the world in luxury market growth. The firm noted that in 2013 Latin America posted 24% growth in the amount of luxury outlets and 22% growth in luxury outlets sales growth. The #2 region in luxury growth was the Middle East, with nearly 14% growth in the number of luxury outlets and 22% growth in sales at luxury outlets. Among the top luxury growth markets in Latin America:

• According to Euromonitor, the luxury goods market in Argentina increased in value by 15% in 2013
• The luxury market in Brazil grew by 10-12% in 2013 and is expected to grow by 16-18% in 2014
• Luxury goods sales in Chile went up by 14% in 2013
• The sales of luxury boats in Colombia went up by 27% between 2009 and 2013
• In Mexico the luxury goods market grew by nearly 29% between 2008 and 2013 and is projected to grow another 34% by 2018

Over-the-Counter Pharmaceuticals

According to TechNavio, the over-the-counter (OTC) pharmaceuticals market in Latin America will have a CAGR of more than 14% between 2013 and 2018.

Pets

Although no recent pet market data for all of Latam is available for 2013, Euromonitor noted a 44% increase in spending on pet products in Latin America between 2006 and 2011. In addition, it was recently reported that pet supermarkets Petco and Gigante will invest US$50 million in the opening of 50 new stores in Mexico and Latin America. Individual Latam markets are also showing good growth in the pet product sector:

• The pet food industry has grown by 170% over the past 10 years in Argentina
• The pets market in Chile has grown by 37% over the past 4 years
• In Colombia, the pets market has posted an average annual growth of 13%
• The Peruvian pet food market is expected to grow by 25% in 2014
• The pet services sector in Mexico is projected to post 20-25% growth in 2014

TV sets

With the World Cup, it’s projected that TV sales will increase in a variety of Latin American markets:

• According to GfK, TV sales in Argentina could go up by 20-25% in 2014
• The Brazilian Association of Electronic Products predicts that Brazil will produce 30% more TVs than in 2014 and in the first quarter of 2014 sales of TVs in Brazil went up by 50% compared to Q1 of 2013
• In Chile, retail stores are projected to see a 10% increase in TV sales in 2014
• LG Colombia has projected that TV sales in Colombia will go up by 30% in 2014
• Sony Mexico projects that sales of TVs with screens from 50 to 59 inches will increase by 8% in 2014 while Samsung Mexico expects overall
• TV sales in Mexico to go up by as much as 30% in 2014 TV sales in Peru went up by 13% in 2013 and it’s expected that TV sales will go up another 13-15% in 2014

Toys

The year 2012 marked the first time that sales of traditional toys and games in Latin America surpassed US$10 billion, according to Euromonitor. The firm forecasts a 7% CAGR for the Brazilian toy market between 2012 and 2017, with spending per child increasing from US$81 in 2012 to US$125 in 2017. Euromonitor also projects that the Mexican toy market will be worth more than US$300 million by 2017. Other relevant numbers to take into account include:

• Argentina’s toy sales grew by 15% in 2013
• Brazil’s toy market grew by 12% in 2013 and is expected to grow by 10% in 2014
• Mexico’s toy sales grew by nearly 7% in 2013

Source: Latinlink