The home care industry in Latin America is currently navigating a complex landscape characterised by inflationary pressures, which have adversely affected sales across various categories, both in terms of volume and value. While the pandemic led to an increase in the demand for cleaning and disinfection products during 2020 and 2021, its global economic aftermath, combined with internal factors, has exerted a substantial impact on the regional economy and consumer finances from 2022 onwards. This, in turn, has prompted a re-evaluation of preferences and priorities when it comes to the purchase of home care products. Given this situation, what strategies should be employed to navigate this landscape, and what key insights can be gleaned from this context?
Inflation's costly twist and its impact on home care
The slowing of economic growth and elevated inflation rates that Latin America is currently experiencing, alongside global uncertainty, indicates that a considerable number of individuals within the region can anticipate a decrease in their living standards, particularly households with lower income levels. This condition prompts consumers to seek practical and affordable solutions that align with their needs and financial constraints. Unfortunately, home care products are not exempt from this prioritisation reshaping.
In practical terms, inflation and the resulting increase in consumer prices affect industry categories both in terms of volume and value.
The value transcends mere competitive pricing
The current cost-of-living crisis has brought about a change in purchasing priorities, forcing increasing numbers of consumers to prioritise quality and value over attributes such as sustainability. As a result, consumers are now more inclined to choose products that offer the best value for money, regardless of whether they are private label or branded goods, as long as they fulfil their cleaning and/or disinfection promise. According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey, approximately 36% of Latin American consumers are inclined to invest a higher amount in high-quality cleaning products, whereas 28% would be willing to spend more on products that offer a favourable price-to-quality ratio. Therefore, efficacy at a reasonable cost stands as the most valued attribute when it comes to home care among consumers in the region.
Unpacking the power of sustainability
Is sustainability a critical consideration for consumers when it comes to cleaning products? The evidence suggests that it indeed plays a significant role, particularly concerning packaging and its potential for recyclability. According to the same survey, a notable 16% of Latin American consumers express a willingness to pay more for cleaning products featuring recyclable packaging. However, it is essential to note that the success of environmentally-friendly value propositions will only gain widespread acceptance in the mass market if they are accompanied by convenience and affordability. Neglecting this crucial aspect could lead to further segmentation within an already limited audience.
In this context, and with a focus on making affordability a practical reality, the concept of the circular economy assumes paramount importance. The strategic pursuit of efficiency improvements throughout the design and production phases of cleaning products yields tangible benefits, which reverberate not only for manufacturers but also resonate with end consumers. A clear example of this principle is the sustainable management of product packaging. In a product like laundry detergent, the packaging component alone can constitute a substantial portion, ranging from 30% to 40% of the final retail price. When manufacturers embrace the adoption of reusable packaging solutions, they can effectively curtail these expenses, offering a relevant, sustainable, and convenient value proposition.
If this model appears to be the solution for combining sustainability and affordability, why is not being widely implemented? What are the barriers to its popularisation in the region? The answer encompasses various dimensions. First, it requires companies to embrace new methods of production and marketing for their products, which is not always easy to achieve, especially when substantial initial investments are involved. Secondly, there are implementation costs and infrastructure requirements for creating product reuse and/or refill models. It is important to consider whether the model will involve refilling at recharge points or in the consumer's home.
Exploring collaborative partnerships with entrepreneurs, well-established brands, and retailers emerges as a promising strategy to cultivate synergies that engage consumers effectively
Source: Euromonitor International
Lastly, the extent to which fragmented sales of cleaning products are permitted under a country's legislation plays a pivotal role. Presently, in Latin America, this model can only be deployed for cleaning products in Chile and Mexico. Furthermore, for disinfection products, it is exclusively available in the Mexican market. Fostering robust commitments and forging strategic alliances among diverse stakeholders, encompassing both public and private sectors, becomes imperative for the genuine sustainability of a packaging management model with a sustainable core.
Case study: Ecocarga is a Chilean company specialising in eco-friendly cleaning products packaging in reusable containers available at refill stations across the country. As of 2023, Ecocarga has expanded its operations to Mexico City.
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