Something Remarkable is Happening in Latin America
That’s a quote from a special report in the September 11, 2010 issue of The Economist which cites two main reasons for Latin America’s “renaissance.” The first is the growing appetite of China and India for the raw materials which are found throughout much of the region. And, second, the improvement in economic management that have tamed inflation and opened up credit. As a result, there’s what The Economist calls a “virtuous circle” where a fast-growing domestic market helps to balance soaring exports.
Most forecasts are predicting economic growth of more than 5% this year for the region overall. That means increasing numbers of Latin Americans rising above the poverty line and creating unparalleled opportunities for marketers as the middle class grows.
That’s important since, as a recent McKinsey Study reports, these new consumers are the ones that will give early winners in the consumer product sector a chance to gain lasting advantages. They went back and looked at what happened in Europe and the United States at similar points in their development: in 17 product categories, McKinsey found that the 1925 US market leader remained the number-one or number-two player for the rest of the century. These companies include Kraft Foods (Nabisco), in biscuits; Del Monte, in canned fruit; and Wrigley, in chewing gum.
The Economist says that if the region can maintain the growth of the past several years, it will double its per capita income by 2025, to an average of $22,000 per year. By then, Brazil should be locked in as the world’s fifth largest economy—behind #1 China and the United States, India and Japan. Fifteen years down the road, the article predicts that six countries in Latin America will have achieved “developed-nation” status—putting them on par with the income levels of Spain today.
So now is the time for multinational companies to stake their claim in Latin America and invest in building visibility and awareness for their brands, products and services.