Carbonated Soft Drinks in Latin America
After a long run of steady growth, the carbonated soft drink market in Latin America is facing headwinds. What are the prospects for global bottlers in the Latin American market?
In 2012, Latin America became the world’s largest consumer of carbonated soft drinks (CSD) after having served as a key contributor to global growth in the sector over the past decade. However, consumption has slowed down in recent years as key markets such as Brazil, Mexico and Venezuela have stagnated or contracted for various reasons.
Sugar taxes in Mexico
Mexico instated a sugar tax in 2014 as a response to rising consumption of CSDs. Other markets are planning to follow suit, most notably Chile and possibly Colombia. Taxes on CSDs have a direct impact on the final price of soft drinks at points of sale and could potentially hurt sales volumes. Mexico’s tax will shed some light on whether sugar taxes actually achieve the government’s targets of curbing consumption.
Brazil's mature market
Brazil, as the largest market in the region, occupies an important place as an engine for growth for global players. However, sharp price increases and weaker economics contributed to declining volumes in 2013. A rebound is underway in 2014, due to seasonal factors, but there are signs that the market is maturing and could face weaker growth going forward.
Challenges in Venezula
Venezuela is a regional market facing particular difficulties. An economic crisis, hyperinflation and shortages of raw materials are all working against the soft drinks industry. Nevertheless, currency controls are likely to be the biggest issue that foreign operators face in Venezuela.
Speedy growth for Colombia
Colombia is growing faster than the regional average and is poised to continue doing so in the coming years. Strong economic growth, favourable demographics and wide acceptance for CSDs have helped propel consumption of non-alcoholic beverages. Nevertheless, a sugar tax similar to Mexico’s could be underway and could impact future growth.
Prospects for global bottlers
Consumption rates in Latin America suggest that further per capita growth is limited in some markets, especially given changing consumer preferences for healthier beverages. Weaker economic growth in key markets combined with sugar taxes could influence potential growth in coming years.
Find out more about how the region remains strategic for global bottlers and other bright prospects in the market.
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Andrés PadillaSenior Analyst - Beverages, Dairy, F&A Supply Chains Read more