Luxury goods in Latin America is driven by high penetration, growing demand, the relaxation of import regulations and continuous investment in innovation. The region is slowly recovering from the import regulations imposed in Argentina during 2010-2015 and the economic crisis in Brazil, and is set to record positive performance in the coming years.
Latin America is one of the smaller regional markets for luxury goods, owing to economic crisis in Brazil and low supply of international luxury brands in Argentina, as a result of import restrictions. Mexico is the largest market in the region, aided by the presence of premium brands that have strong domestic demand.
Super-premium beauty and personal care witnessed positive growth across markets despite unfavourable economic conditions in a few. There were several different reasons for this growth in the various markets. In Mexico, growth was driven by demand from millennials. In Argentina, it was driven by greater availability, owing to the elimination of barriers to imports, while in Brazil growth was supported by continuous investment by brands in innovation.
Consumer attitudes regarding luxury goods in Latin America largely favour the leading international brands. Across markets, consumers associate the top brands with high quality and unique designs, which they believe offer better value for the money spent. As a result, the market has witnessed a high degree of concentration.
The leading brands in Mexico and Brazil have increased consumer reach as a way of increasing market share. Some of the popular strategies employed by players include targeting different income levels through different product ranges, the expansion of distribution networks by targeting mid-sized cities, and increasing presence through third-party vendors and internet retailing.
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