Beverage Industry

South America: A Brazilian Powerhouse

March 1, 2008
South America: A Brazilian Powerhouse

By Elizabeth Fuhrman

Beverage categories boom south of the equator
The South American countries of Brazil, Venezuela, Argentina, Peru, Chile and Colombia consist of important world beverage markets. Brazil’s population consumed more than 19.5 billion liters of carbonated and non-carbonated beverages and 12.2 billion liters of alcohol drinks in 2007, according to Euromonitor International, Chicago. Brazil’s carbonated and non-carbonated drinks volume is expected to reach more than 24.4 billion by 2012 and its wine, spirits and beer volume to reach more than 14.9 billion.
In 2006, Brazil ranked as the fourth-largest beverage market, after the United States, China and India, with 5 percent of the global market share, according to United Kingdom-based Zenith International. This positioned Brazil ahead of Japan, Russia, Germany, Mexico, the United Kingdom and Turkey in beverage volume.
Brazil also is the leading South American country in new product introductions. In 2007, the country launched more than 1,000 new beverages, according to Chicago-based Mintel’s Global New Products Database. The beverage mix category unveiled the most new products with 178 releases, followed by tea, nectars, coffee, carbonated soft drinks, and fruit and flavored still drinks as the frontrunners in new product introductions.
Argentina’s beverage volume placed it second among countries on the continent, with more than 10 billion liters of carbonated and non-carbonated beverages and 3 billion liters of alcohol drinks sold in 2007. Colombia placed third in carbonated and non-carbonated drinks volume, with more than 4.1 billion liters sold, but Venezuela followed next in alcohol drinks volume with more than 2.7 billion liters sold.
Rounding out the ranking of carbonated and non-carbonated drinks volume is Venezuela in fourth (3.2 billion liters), Chile in fifth (2.4 billion liters) and Peru (2 billion liters). Alcohol drinks contributed 2.1 billion liters to Colombia’s market, followed by Chile and Peru, which both have volumes less than 1 billion liters.
South American beverage sales
(volume in millions of liters)
  2002 2007 % CHANGE Forecast 2012
CARBONATES AND NON-CARBONATES
Argentina6,058.110,053.365.91,3614.2
Brazil16,141.619,575.721.32,4487.4
Chile1,834.22440.033.03,031.4
Colombia3,569.24,171.516.94,946.1
Peru1,377.51,966.742.82596.0
Venezuela2,301.03,160.537.44,194.5
ALCOHOLIC DRINKS
Argentina2,648.33,068.415.93,467.5
Brazil1,055212,211.115.714,935.8
Chile7,05.6916.429.91,032.9
Colombia1,471.22,142.545.62,492.1
Peru610.6906.048.41,302.4
Venezuela1,797.12,762.853.72,967.8
Source: Euromonitor International

Continental trends
Similar to other parts of the globe, “better-for-you” beverages are leading sales. Brazil ranked eighth globally in bottled water sales in 2006, and Argentina placed third in functional water sales, with 270 million liters sold and 10 percent market share, according to Zenith International.
The flavored and functional bottled water market increased dramatically from 2002 to 2006 in Argentina, which grew from 16 million liters in 2002 to 400 million liters in 2006, Zenith International reports. Argentina developed an autonomous approach to its flavored and functional bottled water segment, the analyst says. Flavored and functional waters in Argentina are similar to light carbonated soft drinks in concept, but are considered healthier, it says.
Of the 400 million liters sold in 2006, 270 million liters were flavored waters that contained functional benefits. Zenith International attributes the key factors of flavored and functional bottled waters success in Argentina to the category answering consumers’ wellbeing concerns; the segment’s visual differentiation from bottled water in packaging and content; the ample availability of citrus flavors in the category that appeal to the Argentine palate; and strong leading brands, such as Ser from Danone, that are driving the market forward.
Argentineans are forecasted increasingly to opt for bottled water. The segment that is predicted to experience the most gains is flavored water, with total volume sales estimated to increase 108 percent and total value sales growth of 122 percent between 2006 and 2011, Euromonitor says. Still water sales in Argentina are expected to increase 13 percent in volume and 22 percent in value.
Carbonated soft drinks
Brazil and Argentina also have posted positive results for carbonated beverages. Brazil’s carbonated market ranked fourth globally, and Argentina came in eighth, according to Zenith International. Brazil also placed in the top three countries with the most anticipated volume growth from 2000 to 2010. During the decade, gains of 11 percent are expected in Brazil. In line with this trend, PepsiCo International reported double-digit growth in volume for all beverages in Brazil and Argentina in 2007.
The Coca-Cola Co., Atlanta, as well, reported strong growth in Brazil and Argentina. In Brazil, unit case volume grew 16 percent in the fourth quarter of 2007, the company says. Double-digit unit case volume growth for regular Coca-Cola drove the results and led to sparkling beverage share gains for the quarter and the whole year. In Argentina, The Coca-Cola Co. reported strong carbonated beverage growth across core brands contributed to an increase of 9 percent in unit case volume in the quarter and for the year, driving share gains.  
Brazilian spirits
Spirits manufacturers continue to invest heavily in marketing in Brazil to increase their consumer base, particularly among consumers between the ages of 18 and 35, Euromonitor reports. During the past few years, supermarkets in Brazil also have been expanding their shelf space to accommodate more alcohol beverages. Additionally, several supermarket chains have moved the alcohol aisles from the back corners to a more visible area within their stores.
Vodka saw the highest growth in volume and constant value terms in 2006, 11 percent and 10 percent, respectively. More good news for spirits in Brazil is that Brazilian consumers are just beginning to be exposed to super-premium spirits, and Euromonitor expects this segment to grow. Vodka and white rum are predicted to be the leading spirits in growth, with the mixed drink trend continuing to make gains.