Bain & Company partner shares insight on South American consumer market

In order for brands to reach consumers in South America, they should attempt to expand their client base and embrace online sales technology, says Bain & Company Partner Robin Bartling.

In a new video titled “How Brands Can Thrive in South America”, Robin Bartling, a Bain & Company partner, gives advice on fundamental changes in the marketplace. Bartling, co-leader of Bain & Company’s South American branch and a member of the company’s Consumer Products Practice, has worked in several South American markets including Brazil, Argentina, Chile and Peru. In the video, Bartling explains that in developing markets “many consumer products' companies are struggling to keep up with the fast-changing rules of the game.” To adapt, companies will need to change their mindset to penetrate more households, focus on digital consumer behavior, and integrate both sales and marketing into a holistic commercial strategy. 

Latin America’s economy as a whole has had a rough few years, fueled by political feuds and multiple recessions. The election of Donald Trump in 2016 managed to shake 10% from the Mexican peso, while recent political turmoil in Brazil has left the national economy in a space of instability. Venezuela's economy is predicted to contract 15% in 2018, with inflation set to hit 13,000%, according to the IMF. Meanwhile, the election of Mauricio Macri in Argentina allowed the government to reel in the blue market currency exchange rate which in turn prompted economic progress, while Peru, Colombia and Chile have all experienced steady albeit mild regional growth.

The volatility in both the political and economic facets of South American society have been important factors in why the area has failed to attract continued regional investment. Nevertheless, strong global conditions and the rise of the middle class are creating a favorable domestic environment which benefits consumer brands. Robin Bartling suggests that there is significant opportunity for both local and international consumer product companies to “adapt quickly and win”.

With the recent expansion of the Latino middle class, it is important that companies diversify their target audience, rather than selling more to their existing client base. Almost two-thirds of Latin America’s consumption growth to 2030 will be a direct result of an increase in per capita spending, according to McKinsey. This growth will be concentrated in urban areas, as South Americans flock towards cities across the continent. The growth of metropolitan areas creates a new connected population with larger purchasing power than their rural counterparts. Higher disposable incomes are likely to open up consumer markets to new products which were previously unattainable. 

To reach this evolving market, consumer product companies must take advantage of tech-savvy consumers. However consumer confidence in online shopping is still lagging due to poor site navigation and third-party payment systems. According to Forbes, Latin Americans — especially Colombians, Mexicans, and Brazilians — are less likely to see targeted advertisements as an invasion of privacy in comparison to the rest of the world. This shows a desire for brand engagement and highlights the necessity for creating a better customer experience during online browsing and purchasing.

A shift towards higher consumer confidence in online shopping will create a significant step forward. “Consumers are increasingly more and more digitally connected, and they're willing to pay for convenience, so this drives on one side in the digital world, online sales,” says Bartling. By improving customer service, utilizing technology-driven customer engagement, and promoting secure online transactions, consumer product companies can break down the “silos between marketing and sales”. Brands that integrate a holistic commercial strategy can harness this significant shift in the marketplace and find themselves in a competitive position.

Watch the video with Bain & Company Partner Robin Bartling online on YouTube.