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Foodservice in Latin America: Long-term Opportunities in a Major Growth Region

October 2014

Latin America continues to be among the most attractive long-term growth regions, due to the presence of both large and fast-growing Brazil as well as many smaller, rapidly developing markets that have high potential for future chained development. Despite economic instability in a few key markets, foodservice in the region continues to grow at a healthy pace, evidence of the high priority local consumers place on foodservice, as well as a rapidly growing middle class.

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Economic conditions matter, but foodservice is resilient

The economic climates in key markets are affecting consumer spending, especially in Brazil, Argentina and Venezuela, however foodservice appears to be weathering the storm better than other industries.

Value growth is still strong, even where transactions growth has slowed or halted, suggesting Latin Americans place a high priority on dining out. As demonstrated by Mexico’s “hybrid consumer” movement, they are still willing to spend on high-value dining experiences, even as they cut back in other areas.

Brazil is the Latin American foodservice growth story

Brazil continues to dominate the Latin America growth story, both literally in terms of size and figuratively in terms of focus. The market currently makes up nearly half of all foodservice value in the region, and over 2013-2018 Brazil will contribute more absolute value growth than all other major markets combined.

Diversified expansion, however, is needed

Share in Brazil is growing more and more difficult to earn, and the country’s economic difficulties mean growth has started to lag other markets in the region. To maximise future prospects, operators looking to expand must now invest in other growth markets in addition to Brazil, in order to establish a presence in markets that will pay very high dividends over the long term.

Growth is broad, though moving towards fast food

Latin America will offer average annual growth of at least 3% in all categories over 2013-2018; however fast food will be the highest at 6%. Burger, bakery products, convenience stores, and chicken fast food will be the four highest growth areas in percentage terms.

New flavours, new channels, new experiences

Latin American foodservice consumers are demonstrating growing demand for new foodservice experiences, new flavours and new service channels such as delivery and drive-through. This has led to growth in new cuisines and for new format types, a trend that will only gain momentum over the long term as these markets develop.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Introduction

Scope
Key findings in Latin America foodservice
A note on Venezuela

Regional Performance

First, a look at inflation and value distribution
Value growth is strong, but transactions falter
Global attention is on Latin America
Consistent returns make the region even more attractive
Another strong year, with some local struggles
Chains surge ahead of independents
Fast food outpaces full-service
A large - and growing - middle class in key markets
Size is in Brazil, Mexico, but smaller markets offer stronger growth
Latin American consumers are open-minded about format
Beverages make up a large portion of local value
Soft drinks trends point to diversifying demand in beverages
Non-dine-in channels are growing as markets mature
Per capita spending remains low relative to other regions
Latin America is a culinary melting pot with diverse preferences
Key takeaways

Competitive Landscape

Latin America brand leaders: A blend of local and multinational
Share growth shows international players gaining ground
Overall, independents still dwarf the chained segment
Chained opportunities are concentrated within Brazil
Plenty of local chains are growing fast, gaining share
Retail and travel locations lead growth
Key takeaways

Category Analysis

Category growth shows strength in modern, premium segments
Fastest growing categories region-wide in 2013
Full-service restaurants and cafés/bars have the majority
Full-service restaurants are slow and steady
Fast food is growing quickly and diversifying
Demand is high for Asian flavours and concepts
Cafés/bars show modern and traditional can co-exist
Cafés/bars remains fragmented, but chains are expanding fast
Latin Americans love pizza, but the market is already dense
Key takeaways

Future Prospects

Long-term prospects are bright
Parallel opportunities in massive Brazil and smaller, faster markets
Growth is in fast food, especially for chains
Chained segments have plenty of room to grow
Key strategic takeaways for long-term growth in Latin America
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