South America: A Brazilian Powerhouse
March 1, 2008
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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 | ||||
| Argentina | 6,058.1 | 10,053.3 | 65.9 | 1,3614.2 |
| Brazil | 16,141.6 | 19,575.7 | 21.3 | 2,4487.4 |
| Chile | 1,834.2 | 2440.0 | 33.0 | 3,031.4 |
| Colombia | 3,569.2 | 4,171.5 | 16.9 | 4,946.1 |
| Peru | 1,377.5 | 1,966.7 | 42.8 | 2596.0 |
| Venezuela | 2,301.0 | 3,160.5 | 37.4 | 4,194.5 |
| ALCOHOLIC DRINKS | ||||
| Argentina | 2,648.3 | 3,068.4 | 15.9 | 3,467.5 |
| Brazil | 1,0552 | 12,211.1 | 15.7 | 14,935.8 |
| Chile | 7,05.6 | 916.4 | 29.9 | 1,032.9 |
| Colombia | 1,471.2 | 2,142.5 | 45.6 | 2,492.1 |
| Peru | 610.6 | 906.0 | 48.4 | 1,302.4 |
| Venezuela | 1,797.1 | 2,762.8 | 53.7 | 2,967.8 |
| 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.
