Eduardo Tomiya discusses how, when it comes to Latin America, companies can profit from rising consumer confidence.
Consumer confidence is rising across Latin America, but no business can afford to sit back and wait to reap the benefits of higher spending power and consumption. Without a strong brand that meets consumers’ changing needs in a meaningful way, the rewards simply won’t come. Food and beer brands in the region have understood this particularly well, and as a result were among only three sectors to grow their brand value in the last year (by 21% and 13% respectively).
The overall value of the BrandZ Top 50 Most Valuable Latin American Brands declined 4.5% from 2013 to 2014. Those sectors that struggled to meet the needs of the middle classes profitably, including telecoms, saw their value drop. So did financial institutions, which were forced to restrict brand building activities to cut costs. What used to be sufficient for a company’s success – an excellent product and superior delivery – are no longer enough.
Food and beer brands bucked the trend by successfully engaging with and representing the motivations of LatAm consumers, and global food and beverage brands looking to gain a foothold in Latin America can learn a lot from their performance.
Beer brands certainly profited from the increasing consumption of beer in the region; according to Euromonitor, this increased 76% between 2008 and 2013. Yet, it was their ability to develop a distinct brand experience that really boosted their value, differentiating themselves to attract new customers while remaining deeply relevant to existing ones.
Differentiation – or the distinctive, unique and original added value a brand can offer – makes it more appealing than the competition and gives it the ability to command a price premium.
Mexican beer brand Modelo grew 51% in brand value in the last year by building on its differentiation as a young, yet sophisticated brand, and creating a sense of status and craftsmanship. Corona – Latin America’s most valuable brand – creates a compelling consumer experience with cues that link it to relaxation, music and a Mexican heritage that’s popular worldwide.
Heritage, and the feeling of continuity and confidence it brings, is important to Latinos, but we also like it when a brand is unique and trend-setting in a positive way, staying ahead of the curve for the consumer’s benefit. Sadia (No 26 in the Top 50) is one brand that has hit the right balance between tradition and innovation.
Founded in 1944, this leading producer of processed and frozen foods such as hamburger patties, pizza and dairy products exports to more than 65 countries. The perceptions of its customers are built on its family run ‘Brazilian-ness’. However, it also spearheads innovation in the market, launching products with higher added value, including its new Frango Fácil (Easy Chicken) and Hot Pocket (fast prepared sandwich snack) that combine convenience and quality.
Mexico’s Tía Rosa is one of Grupo Bimbo’s key brands. A specialist in sweet bread and popular local products such as tortillinas, it has a clear promise built around a homemade taste. However, it also reinterprets traditional baked treats such as Banderillas, Doraditas and Orejas ‘with a twist’, giving them their own particular stamp.
Food and beer brands in Latin America have successfully evolved their value propositions to meet the needs of people who are increasingly prosperous. Brahma (No 8), for instance, created Brahma Fresh to compete against low-price beers in the affluent northeast region of Brazil, while Skol (No 2) launched Skol 360 to grab a share of the emerging middle class beer drinker.
Traditional Peruvian beer Pilsen Callao (No 42) updated and refreshed its image in 2012 to create a more premium positioning based on an emotional connection with consumers, using the slogan ‘the flavour of true friendship’. It entered the Top 50 for the first time this year.
As people become wealthier and more sophisticated, their priorities change. Colombia’s 15th most valuable brand, Pietrán, has built its proposition around the increasing interest in healthier eating. A specialist in premium lean meats, it develops innovative low fat, low salt products, such as its turkey sausage, and reinforces its positioning by sponsoring the Bogota Half Marathon.
As people’s basic consumption needs are satisfied, they shop more mindfully, hunting for real value and fulfilment from the choices they make. Strong brands add meaning to consumers’ lives, creating strong connections with their customer base and making themselves highly relevant on a rational and emotional front. This generates greater appeal, and ‘love’.
Brands that amplify this meaning and relevance through their marketing are remarkably salient, coming spontaneously to shoppers’ minds when they think about what they need from a product. This doesn’t require a huge investment in mass media, but rather finding content and messages that really connect with consumers in a distinctive and personal way, across all touch points.
Skol is one of the world’s most widely consumed beers. Its communication emphasises enjoyment of life, and appeals especially to young people, efficiently combining the functional and emotional aspects that are vital to cement brand loyalty in this category. It sponsors music festivals to keep close to its youthful target audience, including Lollapalooza. Brahma, meanwhile, is well known for its innovative and witty advertising that relies heavily on sex appeal.
Dating back to 1943, bakery brand Bimbo (No 23) has built its marketing around its long heritage to find a place in the daily diets of Mexican families. Its iconic image of the Bimbo bear, together with the slogan ‘with love as always’, are widely known and appreciated by consumers in Mexico as well as 19 countries abroad.
Being different, meaningful and relevant elevates a brand well beyond a transactional relationship. It empowers people by making a difference in consumers’ lives, and creates powerful appeal and loyalty. Latin America’s food and beverage brands do this exceptionally well. True local icons, they have managed to stay true to their roots while adapting their offer to a changing market and an increasingly sophisticated consumer base. However, this doesn’t mean that the door is closed to global players.
Local brands may know how to beat foreign competitors on their home turf, but they’re currently struggling to transcend their local success and build propositions that connect with the wider Latin America region, even when they have expanded and prospered further afield.
Developing a pan-LatAm offering may be a less challenging prospect for global brands than it seems. While international companies need to be aware of cultural differences that exist between countries, these are less distinct than in other regions. There are only two languages, most countries have a common culture that’s emotional, social and creative, and people everywhere share a love for music, food, family and entertainment.
If they take steps to understand the Latin consumer’s motivations and needs – and they look for ‘gaps’ their products can fill, rather than competing head-to-head with the local incumbents – global food and drink brands have a chance to claim their space in the region.
Eduardo Tomiya is managing director of Millward Brown Vermeer. This is a personal blog and views expressed are his own.
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