From Samba Surge to Aztec Tiger

August 2013

With evidence of a cooling in luxury goods demand in Asia, together with softer spending by tourists in Europe and North America, there has never been a more promising time for the luxury goods industry to ramp up investment in Latin America. The region’s emerging middle class is highly aspirational and hungry for prestige brands, while the super rich are doing more of their shopping at home. Wealth is filtering from the capitals to small and mid-sized cities, bringing retail modernisation in it

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Retail revolution

The value of Latin America’s retail market has sky-rocketed over the past five years, spurred by a mushrooming middle class, wider access to consumer credit and a surge in retail modernisation.

Shopping mall boom

Upscale shopping malls are springing up all over the region, creating opportunities for luxury retailers to develop new and broader footprints in capitals and second tier cities alike.

Spread of wealth

In the key markets of Brazil and Mexico, middle class wealth is spreading beyond traditional consumption hubs and bringing in its wake an appetite for prestige international brands.

Social media

There has been dramatic growth in social media, opening up new opportunities for luxury brands to engage with consumers. Brazilians and Mexicans are now among the biggest users of Facebook in the world.

The MBA axis

Mexico, Brazil and Argentina fuel over 60% of retail spending in Latin America and are at the crux of the luxury goods opportunity. Mexico’s economy is growing fastest, and luxury goods expenditure could overtake Brazil by 2014.

Off the beaten path

Peru’s economy is one of the fastest growing in Latin America, and its luxury goods market is ripe for new investment. Chile, Colombia and Uruguay also present attractive niche opportunities.

Contraband effect

Vibrant contraband activity impacts the development of luxury brands, though not always in a negative way. The biggest hub is the Paraguayan free zone of Ciudad Del Este, which feeds the Brazilian and Argentinean markets.

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


Key findings

The New Latin America

US$1 trillion retail market attracts new luxury goods investment
Power shift from traditional to modern retail will spur luxury demand
The emerging middle class is a sweet spot for luxury goods
Social media is an opportunity in the making for luxury brands
Latin America’s spending power catching up on developed markets
Burgeoning credit card culture will diversify luxury penetration
The challenge of an ageing demographic

The Middle Class Revolution

Latin America’s luxury opportunity pivots around the MBA axis
The region’s HNWIs are now shopping at home rather than abroad
An emerging middle class hungry for prestige brands
Pockets of luxury opportunity in Latin America’s smaller economies
Social media is a chance for brands to get closer to consumers

The MBA Axis of Growth

The MBA triumvirate fuels a US$9 billion luxury goods market
Luxury goods growth in MBA is outperforming developed markets
Luxury spending in Mexico is set for strong growth
International designer labels drive Mexico’s luxury goods demand
Aspiration is at the heart of the brand battleground in Mexico
Brazil’s import tariffs are a bigger barrier than a weaker economy
Niche segments present attractive Brazilian growth prospects
Brazil’s new shopping malls are beacons of luxury opportunity
Brazil’s key regional battlegrounds
International luxury goods retailers shut up shop in Argentina
Designer clothes and fine wine shore up luxury spending
Buenos Aires loses its swagger but not its luxury heritage

Off the Beaten Path

Venezuela presents risk for new luxury goods investment
Strong iPad demand is a positive sign for luxury goods in Colombia
Chilean consumers are the most discerning in Latin America
Peru’s AB class is growing faster than any other income group
Luxury goods opportunity in Ecuador will remain weak
Per capita income in Uruguay is the highest in Latin America
International tourism drives niche luxury demand in Costa Rica

Opportunities Going Forward

Modern retail is fuelling a revolution in regional consumer culture
Brazilian shopping malls will push into small and mid-sized cities
Mexico will be a new regional darling of luxury goods opportunity
The digital revolution will inspire innovation in luxury branding
Contraband will continue to impact luxury goods development
The aspiration factor is critical to brand strategy in Latin America
Summary 1 the main strategic opportunities in Latin America
Summary 2 key recommendations for luxury brand development


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