The Mexican food and beverages market has grown 67 percent since 2004, and in Venezuela growth has been more than 50 percent in the same period.
While the impact of the global recession is expected to "significantly" curtail this growth, these are just two of the promising findings to appear in a new report published in May by Leatherhead Food International, Emerging Food Markets in Latin America.
"Recent growth has been stronger in Latin America than in many parts of the developed world, since many sectors of the food and drinks industry are considerably less well established," the report stated. "Latin America now accounts for an estimated 8 percent of the global food and drinks market, a figure which is believed to have experienced a slight rise in recent years."
With such rich opportunities waiting in Latin America, how can North American businesses tap into this market?
"Supplements manufacturers have been trying for years to penetrate the Hispanic market, and they have generally not been successful," said Cesar Diaz, a physician based in Utah, who works mainly in natural and holistic health with the Hispanic community.
"The problem every company faces is they don't understand the culture," he said. "People think that if people speak Spanish, they must be a Mexican, or that they have the same background and beliefs. But it's simply not true. Each country has a unique culture of its own dialect. You need to learn the country you are trying to target."
The countries of Argentina, Brazil and Chile are a great example. Although all located on the southern tip of Latin America, Brazilians speak Portuguese, not Spanish, and Argentineans and Chileans are age-old rivals.
"If you hire a Chilean to be a spokesperson for your project in Argentina, that is not the best way to approach it," Diaz said. "That's like sending a Yankee down South. The two cultures are totally different. In South America, the roots of culture are very deep, so you better do it the right way or you will not be successful."
Other key findings of Leatherhead's report include:
- The food and drinks sector typically accounts for 25 percent to 30 percent of all consumer expenditure in Latin America. Consumers are now spending more money on imported foodstuffs.
- Market potential is considered particularly high in Brazil and Mexico among growing affluent urban areas. Other promising countries include Argentina and Chile, which have more stable economies in the region.
- The only "unattractive" market in the region is Venezuela, due to friction between the government and many food producers.
- The soft drinks market continues to perform well, with highest growth in mineral water and fruit juices, as consumers become more health conscious.
- Dairy products (especially value-added varieties such as ice cream and yogurts) and convenience products (such as ready meals and pizza, beer and soft drinks) are likely to experience the highest levels of future growth in the region. Sales of bakery products are expected to remain, owing to their position as an essential staple.