According to figures published by Statista, a specialist in market and consumer data, Latin America’s top performing brands (by revenue) last year included Brazilian clothing chain Renner, Mexican tequila giant Don Julio and wireless telecommunications conglomerate Telcel. All took a significant hit during Covid as shops closed and customers stayed at home. But strong online sales, and resilient business models could see a better weathering of the pandemic storm than predicted.
A retail expert and former CEO of a major clothing company in Chile explained, “Despite the pandemic in Chile, brands have remained remarkably resilient for several reasons. First, rental prices have reduced which eased pressure on balance sheets and made new shop acquisitions a more attractive option. The pandemic also spurred a much greater focus on e-commerce and many businesses benefited from fairly generous government subsidies.”
“Despite the pandemic in Chile, brands have remained remarkably resilient for several reasons. First, rental prices have reduced…The pandemic also spurred a much greater focus on e-commerce and many businesses benefited from fairly generous government subsidies.”
Former CEO, major clothing company, Chile
Across the region, consumer confidence is lower than usual but not alarmingly so and consumers are continuing to spend. Brands increasingly talk about sustainability and in Latin America this matters and allows companies to distinguish or reinvent themselves – companies are now burnishing their credentials when it comes to lower water consumption, CO2 emissions reduction and supporting local communities.
A former director of one of Latin America’s largest crowdlending companies explained, “Latin American brands need to keep leveraging their deep understanding of the region, Latin America is not one size fits all. They need to understand that with great opportunities comes the responsibility to really cater for the needs of the people and that these needs are not the same as in developed markets.”
“Latin American brands need to keep leveraging their deep understanding of the region, Latin America is not one size fits all.”
Latin America is one of the fastest growing regions in all aspects, for example venture capital funds have invested 2 times more in Latin American companies than in any other region, this has boosted the region’s economic growth and consumption power. A few companies have managed to leverage their market knowledge and location successfully to take advantage of the opportunities that Covid opened, like nearshoring, and establishing new supply chain options for international businesses.
Indeed, Latin American consumers have relatively high trust in local companies but this also depends on those companies being able to produce high quality products matched with the kind of innovation that keeps them relevant. They are also adapting to a changing consumer profile, more socially conscious, more politically savvy, and ethically minded.
Local entities have a long way to go to catch up with leading brands, however. According to data recently released by pollster Ipsos, Google leads the ranking of the most influential brands in Brazil followed by Samsung, YouTube and Netflix. Brazil’s own Natura and Mercado Livre came in 8th and 9th place respectively. Itau is the only Brazilian representative among the 500 most valuable brands.
In good news, Latin America’s largest economy is still attracting major brands including Versace, Pininfarina, Lamborghini & Co. Brazil has provided a good example to the rest of the region where domestic brands have innovated to remain resilient in the face of dominant foreign competition.