By Ricardo Alvarez Posted August 28, 2019 In Consumer and Retail
Economically, 2019 has been rough for the top three economies in Latin America: only .9% growth forecasted for Mexico, fears of recession in Brazil after two quarters of contraction and a 5.8% drop in GDP for Argentina in Q1 2019. On a positive note, Colombia’s GDP grew by 3% in Q2 2019, Peru’s GDP went up by 2.6% and Chile’s by 1.9%.
Despite this decidedly challenging landscape, LatAm’s consumer market is still posting growth, often in unexpected areas. Below we run down products with strong demand (and investment potential) across Latin America.
Between 2019 and 2024, the passenger car market in Latin America will grow with a CAGR of 4.38%, according to Mordor Intelligence. The arrival of more Chinese brands lowers the price of entry to new car buyers, helping to expand the car owner base.
Earphones and Headphones
According to ResearchandMarkets, the earphones and headphones market in Latin America will expand to $3 billion by 2024, growing with 10% CAGR between now and 2024. Now that 70% of urban adults own a smartphone, they are ready to be up-sold accessories.
Between 2019 and 2024, the Latin American jewelry market will grow with a CAGR of 2.79%, as per projections from Mordor Intelligence. Studies show that millennial and generation Z affluent eschew the use of expensive jewelry, threatening future growth levels.
Wearable Medical Devices
These products help users track glucose levels, blood pressure, activity, sleep, heart rate and more. Market Data Forecast estimates that the wearable medical devices market in Latin America will grow with a CAGR of 16.95% between 2018 and 2023 to increase in value from $664 million in 2018 to $1.4 billion by 2023. Latin America is the world’s fastest- aging region in the world and suffers some of the highest obesity levels. The combination is helping propel very high growth rates of chronic disease.
According to Newzoo, between 2018 and 2022 the videogame market in Latin America will grow by 11.1% year-over-year to reach $5.6 billion, with growth coming mostly from mobile gaming. Currently LatAm makes up 4% of the global gaming market, compared to 47% for Asia-Pacific and 26% for North America. Cloud based videogames cannot be replicated by pirated copies, which hurt sales in the past.
The cosmetics market has been growing in the region for several years now, despite economic turmoil, and that’s expected to continue. Goldstein Research projects 4.49% CAGR for cosmetics in Latin America between 2017 and 2025. Fast growing segments include cosmetics for the aged and male cosmetics.
According to a report from ResearchAndMarkets, in Latin America the energy drinks market will register a CAGR of more than 15% between 2019 and 2023. Wide public awareness over the health risks of soft drinks has migrated many to energy drinks and flavored waters.
2019 SALES GROWTH IN SPECIFIC LATAM MARKETS
While the overall projections for certain product categories are encouraging, the numbers are less compelling as we drill down into specific markets. We’ve looked at hot-selling products for LatAm in both 2018 and 2017, and this time out, it was much harder to find high growth indicators.
Case in point: Argentina. In 2017 and 2018 we were able to find data pointing to growth in different areas, ranging from cars to tech products. But for 2019 growth turned flat to negative in all of the following categories: beer, cars, footwear, housing and, strangely enough, condoms.
Chile was similar to Argentina in terms of the difficulty in finding growth categories. While the country did have modest GDP growth of 1.75% for the first half of 2019, the retail sector has its worst semester in 10 years.
That said, there are definitely grounds for optimism in LatAm, as you’ll see below.
2019 has seen sluggish growth in retail sales, with a 0.3% in Q1 followed by a corresponding drop of 0.3% in Q2. Notwithstanding, the Brazilian consumer market offers some bright spots, and these are some of the top-selling products in Brazil in 2019.
Cars: New car sales rose by 11% during the first half of 2019 in Brazil, according to trade association Fenabrave. Overall 1,065,888 new passenger vehicles were sold in Brazil in the first semester of 2019. Thus far, the top-selling car makes/models in Brazil for 2019 include the Cheverolet Onix, the Ford Ka and the Hyundai HB20.
Wearables: More than 88 million smart watches and bracelets were sold in Brazil during Q1 2019. Overall, IDC projects that over 461,000 wearable devices will be sold in Brazil during 2019: a 91% increase compared to the 241,000 sold in 2018.
Cosmetics and Personal Care Products: Sales went up by more than 10% during Q1 2019, according to Associação Brasileira de Redes de Farmácias e Drogarias, with R$4.7 billion in sales, beating the 4.5% increase posted in Q1 2018. Overall, Brazil accounts for 6.2% of the world’s consumption of health, beauty and wellness products but only 2.75% of the world’s population and 2.5% of global GDP.
Gaming: According to PwC’s Global Entertainment and Media Outlook, the gaming market in Brazil should grow by 5.3% by 2022. Mobile games are the area with the biggest projected growth: revenues are expected to grow from $878 million in 2017 to $1.7 billion by 2022.
Smartphones: Among the top 5 markets in overall smartphone sales in the world, Brazil grew the most in Q2 2019, posting a 1.3% increase, according to Gartner. China posted modest growth of .5% and the other 3 markets (Indonesia, the U.S. and India) all dropped in sales.
Consumption growth in Mexico has not declined at the worrying rates seen in Brazil and Argentina. These are some of the top-selling products in Mexico in 2019:
Smartphones: According to the Competitive Intelligence Unit (CIU), the smartphone market in Mexico grew by 1.9% in Q2 2019. While not a huge amount of growth, this is significant considering the drops in mobile phone and smartphone sales in other LatAm countries in recent months. Overall, CIU estimates that 106.8 million smartphones were operating in Mexico at the end of Q2 2019, a 3.8% increase versus the same period in 2018. Samsung leads the Mexico smartphone market with 35.4% market share, followed by Motorola with 14.2% and Huawei with 12.1%.
Videogames: While no figures for 2019 appear to be available yet, CIU reports that the videogame industry in Mexico grew by 9.1% in 2018. While in Brazil the growth trend seems to be occurring with mobile gaming, in Mexico, of the 27 billion Pesos in revenues generated by the videogame industry in 2018, nearly 86% came from video console sales: around 23 billion pesos. Of this mount, 12.4 billion Pesos came from videogame sales and 10.8 billion from hardware sales.
Premium Spirits: A recent report from Diageo indicates that premium spirits sales have gone up by 8% in Mexico over the past year: the report corresponds to the company’s fiscal year, stretching from July 1, 2018 to June 30, 2019. Scotch was the spirit that grew the most, spurred by a sales growth of 7% with Johnnie Walker Black and a 4% uptick with Black and White.
Hybrid Cars: Despite the sales drops in regular cars in 2018 and 2019 in Mexico, hybrid and electric cars are doing well. According to the Asociación Mexicana de la Industria Automotriz (AMIA), hybrid and electric car sales in Mexico leapt by 68% in 2018. For Q1 2019, AMIA reports that hybrid and electric sales in Mexico grew by 64% compared to Q1 2018. Of course, overall volumes are still quite small: only 2,160 units.
Beverages: According to the Industria Refresquera Mexicana (ANPRAC), sales volume for the beverage industry in Mexico grew by 2% in Q1 2019, compared to Q1 2018. Flavored beverages (like sodas) grew the most, with a 3% uptick in sales volume during Q1 2019.
Consumer growth in Peru continues to impress with 5.3% recorded in the first half of 2019. As a smaller market, few categories are tracked by published sources. These are the top-selling products in Peru in 2019:
Cosmetics: The cosmetics market in Peru grew by 3.3% in 2018 and is projected to grow by another 4% in 2019, according to the Cámara de Comercio de Lima (CCL). Sales of body treatment products in Peru grew the most in 2018 (5.4%), followed by facial treatment products at 4.4%. This growth is expected to continue: the CCL projects that the cosmetics market in Peru will grow by 3% in 2020 and by 4% in 2021.
Clothing and Footwear: Over the past five years, clothing purchases rose by 36% in Peru, while sales of footwear in Peru increased by 18%, as indicated by a report from the Ministerio de la Producción en Perú
Cars: New car sales dropped by 7% in Peru between January and May 2019, according to the Asociacion Automotriz de Peru. However, due to changes to the Impuesto al Consumo tax, Scotiabank projects that overall, new car sales in Peru should increase by 2% during 2019. It’s not clear if this sales will benefit motorcycle sales in Peru: these increased by 3.5% in 2018 but then dropped by more than 6% in the first half of 2019.
Colombia has kicked off 2019 with two solid quarters in a row. According to the Departamento Administrativo Nacional de Estadística (DANE), GDP grew by 3.1% in Q1 2019 and then by another 3% in Q2. Beyond GDP, there are more direct indicators of economic growth in the country, such as an increase in retail sales of 5.7% in the first half of 2019 in Colombia, as recently reported by DANE. The most recent numbers available were for June 2019, in which retail sales in Colombia went up by 7.2% compared to June 2018.
In June 2019 among the products with robust sales increases in Colombia were footwear and leather goods (17.8%), home cleaning products (14.4%), appliances and furniture (13.8%) and food (11%). In looking at 2019 thus far and a bit forward, here are some of the top selling products in Colombia in 2019:
Cars: According to trade group Asociación Nacional de Movilidad Sostenible (ANDEMOS), Colombia’s car market is performing strongly this year. New car sales in Colombia went up by 4.7% between January and July 2019 to total 139,114 units. Used car sales in Colombia also went up significantly in 2019, with an 8.8% increase. The strong 2019 new car sales in Colombia come after a 7.2% increase in new car sales in 2018 that was reported by the Federación Nacional de Comerciantes (FENALCO) and the Asociación de Empresarios de Colombia (ANDI).
Motorcycles: According to ANDEMOS, new motorcycle sales in Colombia increased by 12.6% between January and July 2019 to reach a total of 346,804. Used motorcycle sales grew by even more: 14.2% in the same period.
Home Appliances: Between 2018 and 2023 sales of home appliances in Colombia (such as washers, dryers, dishwashers) will grow by 8.8% to reach more than 15 million units sold.
Cosmetics: After posting revenues of US$3.4 billion in 2018, Raddar and Inemxoda project that the cosmetics and beauty sector in Colombia will reach revenues of US$4.1 billion by the end of 2020, a 20.5% increase.
Sportswear: According to figures from the Colombian government, sportswear sales have gone up by 11% so far in 2019. A Euromonitor study from last year projects that sportswear sales in Colombia will increase by 28.5% between 2018 and 2020.