Tight economic conditions in Latin America are affecting consumers and manufacturers alike. Inflation is causing consumers to be more strategic with their spending, while manufacturers are searching for ways to grow their profits. Despite the economic terrain however, consumers are still seeking out the best products for their money, which highlights opportunity in the premium and health and wellness categories.
Three key factors are driving pockets of opportunity in Latin America: The middle class is growing, which means more people have disposable incomes; younger generations are growing and gaining their financial footholds; and consumers are looking to be more health conscious. But consumers aren’t just buying whatever’s in their reach. As is typically the case, consumers are looking for the best products, even if it means spending more money for them. In fact, Nielsen’s recent Pockets of Growth – Latin America report notes that 79% of consumers are open to buying newer products if they meet their key concerns and demands.
This openness is good news for the premium product sector, which is seeing higher sales growth than the overall market. But while the opportunities are there, manufacturers need to have a better understanding of potential premium consumers in order to successfully develop and market to them.
So who is willing to spend a little more for premium products? Like many categories, preferences and consumption trends across consumer groups are far from homogeneous. So in that respect, traditional marketing efforts aimed at the overall Latin America population as a whole will fall short.
Today, each generation has a very specific profile, and should therefore be segmented in order to better understand their reasons behind a premium product purchase and the attributes that make them pay more.
More than 30% of Millennials and Generation X are more worried about what people say and purchase premium products to feel good and successful. Five out of 10 are more open to innovations (products that offer or do something that no other product on the market provides or one that provides superior function or performance), while 50% of Baby Boomers and Silent Generation are more inclined to pay a little bit more for products that can help them to be healthier (organic or all natural products); however, this varies from country to country.
For additional information, including specific sections specific to opportunities in Brazil, Chile, Colombia and Mexico, download our Pockets of Growth – Latin America report.