Winter may be approaching in the northern hemisphere , but the sun is shining in South America. Growth is projected at a robust 4.8 % in 2014, almost five times the anemic results projected across the eurozone. South America’s population totals around 400 million people, creating a consumer market larger than the eurozone ( 329 million people) or the USA ( 324 million). The middle class is expanding in commodity rich countries such as Brazil, Peru, and Chile. These new shoppers can now afford to upgrade their food and personal products purchases to include international brands. Walmart continues to invest heavily, including acquisitions in Brazil and Chile as they try to play “catch -up” to Carrefour, the traditional market leader. Recapped below are our comments on the “red hot” South American market.
Export Solutions is bullish on Brazil. Our two recent market visits included meetings with eight top distributors of international brands. All reported strong double digit growth, ranging from 10-30 percent per year since 2008. Brazil remains the toughest market in the region to navigate due to a vast geography, complex tax structure, and a fragmented retail environment. Our database now tracks 91 local distributors to help you gain access to one of the most promising markets on the planet .
Security issues starved development in South America’s second largest market for almost a generation. Recent stability has inspired unprecedented investment in Colombia by forward thinking multinationals. Many companies enjoy large market shares in Colombia as their risk adverse competition avoided the market. Colombia still faces challenges, but now is a good time to take a second look at this sizable market.
Argentina is blessed with natural resources, upscale consumer market, and Buenos Aires, one of the world’s treasured cities. These positive dynamics must be balanced with an uncertain political environment and cyclical “boom-bust” economy. Currently, Argentine distributors are dealing with a law that effectively bans certain food imports. Naturally, savvy distributors are finding loopholes to protect their livelihood. Government interference distracts from the primary challenge of brand building. Still, Argentina represents a core market in South America for every exporter.
Its a pleasure to do business in Chile. Opportunities are only limited by the country size which is comparable to the population of the Netherlands. Why Chile ? It’s a relatively easy market with only two major supermarket retailers (including Walmart), strong distributor alternatives , and a modest cost of entry.
Peru is booming, with an “India like” growth rate of 6% projected for 2014. Peru is blessed with an abundance of minerals, metals, and seafood. Demand for these commodities has created new revenue streams that have begun to “trickle down” into the economy. Invest in Peru now , while the market is “young”.
Small countries often represent attractive markets for exporters. Normally, there a fewer local manufacturers, leveling the playing field. Uruguay fits this description joining similar sized markets such as Puerto Rico, New Zealand, or Ireland. Plus, everyone should visit Punta del Este once in their life during February (Uruguayan summer)!
Ecuador is approaching an economic and political crossroads. Will it veer right and join the export friendly countries such as Chile & Peru ? Or will Ecuador join the internally focused,socialistic societies of Venezuela and Bolivia ? Take a measured approach to Ecuador with targeted exports to financially stable distributors or leading retailers.
Welcome to the “Wild West” of South America. Paraguay’s location nestled between Brazil, Argentina, and Bolivia created a gateway for international trade. For years, Paraguay’s frontier represented a “tax free” shortcut to Brazil. Paraguay is a not a top priority market, but the strong local distributors are usually receptive to international brands.
Bolivia remains one of the poorest countries in South America. La Paz’s high altitude terrain symbolizes the difficulties in penetrating the market: only for the “strong climbers” and rugged competitors.
In the 90 ‘s, Venezuela served as our “poster child” for top export markets in Latin America. Large population, oil resources, great acceptance of USA and European brands, and easy access through their north coast ports. Unfortunately, this all began to unravel when Hugo Chavez became president in 1998.
Today, Venezuela experiences inflation rates of more than 20 percent, a contracting economy, and a government that has nationalized companies that they deem vital to Venezuela’s interests. Companies currently doing business in Venezuela find it difficult to route payments back to the USA or Europe due to government regulations.
South America: The Road Ahead
USA and European (especially Italian,Spanish, & Portugese) brands enjoy good awareness and acceptance. Veteran exporters recognize that South America has been victimized by economic cycles. Periods of supersonic growth are interrupted by economic malaise. Exporters following their normal due diligence process will be rewarded with new businesses in important new markets. Brazil is too big to ignore ! Call Export Solutions for help in navigating Latin America and identifying the best distributors for your brands. Habla espanol !
Export Solutions Database Covers every Country in Latin America !
Export Solutions covers more than 1,025 food and consumer products distributors in every country in Latin America. Our reach extends from Chile in the south to Mexico in the north and all countries in between. We have been recognized for our excellent coverage in challenging countries such as Brazil and Mexico. For more information, visit www.exportsolutions.com