Breakfast cereals in Latin America is largely dependent on two markets – Mexico and Brazil. Brazil is slowly recovering from an economic crisis, while the category is developing further in other regional markets, thus stronger growth is predicted over 2019-2024. While lifestyle trends such as convenience and healthiness are evident and play an important role in future prospects, the most important drivers for growth will be increasing GDP and growing populations.
Mexico and Brazil together accounted for 50% of regional value sales of breakfast cereals in 2019, and are expected to continue to lead sales over the forecast period. RTE cereals is the most important category, with over 80% of the total market. Family and children’s breakfast cereals have equal sales importance within RTE. Ease of preparation and taste are key attributes for the category.
The market is relatively concentrated, and three companies – Kellogg Co, Cereal Partners Worldwide SA and PepsiCo – have a strong presence in several countries.
Competition on price is benefiting local companies and private label, causing the leaders to lose market share. Bigger and/or cheaper plastic packaging and promotions are successful strategies. Premium products have to clearly demonstrate their benefits to persuade consumers to purchase them.
Rising awareness of the negative effects of excessive sugar consumption impacted sales in Colombia and Chile, especially due to new labelling regulations. Some reformulations were unsuccessful, as products failed to deliver either healthiness or taste, forcing manufacturers to go back to the original recipes or maintain both regular and sugar-free versions in their portfolios.
Rises in GDP and populations are key drivers of growth, with higher disposable incomes and the entrance of new consumers being the central pillars for sales.
While companies cannot rely on volatile Latin economies, responding to soft drivers must be part of their strategies. Product availability, consumer awareness, lifestyle trends and increasing product variety are common denominators in Brazil and Argentina, where sales have benefited most from such factors.
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