As a result of the overall levels of economic uncertainty that particularly characterised Costa Rica during the second half of 2018, a broader base of mid- and low-income consumers continued to adopt very cautious expending habits, becoming increasingly proactive in relation to discounts and promotional sales. Therefore, most segments of the population gained a further preference for value for money soft drinks, which continued to incentivise bulk product offerings (larger family-sized packaging) as well as multipacks, which continued to focus on attracting children with school lunch box content.
Ranging from sugar-free concentrates, to all-natural functional ingredients claims across most soft drinks categories (such as energy drinks, juice and RTD tea), healthier value proposals continued to gain sales momentum in Costa Rica during 2018. An expanding base of upper- and mid-income millennial consumers continued to demand affordable but yet higher quality options, capable of meeting their evolving health and wellness-orientated lifestyles and budget capabilities.
Despite the growing offer of new imported value proposals (including Wal-Mart’s private label), traditional global (Coca-Cola FEMSA) and domestic players (Florida Bebidas and Dos Pinos) remained ahead in both volume and value sales during 2018, taking advantage of consolidated top-of-mind brand awareness that benefits from strong economies of scale in terms of manufacturing, marketing and distribution. Point-of-sale availability remained associated with the capacity of these players to control the refrigeration space where most products tend to be offered.
The most relevant new product development trends in 2018 continued to be associated with healthier but still affordable soft drinks, capable of addressing the lifestyle expectations and budget capabilities of a broader base of mid-income consumers. Good examples of this trend included the further development of Wal-Mart’s private label proposal Great Value, which gained additional penetration across more dynamic soft drinks such as nectars and bottled water, based on aggressive pricing relations (which include family packs and multipacks) in addition to relevant point-of-sale presence that leverages on gondola heads and promotional/discounts activation campaigns.
Even though it is difficult to anticipate the economic performance that will finally take place in Costa Rica over the forecast period given the delicate fiscal situation being discussed at Congress, (which could post additional pressure on public investment and unemployment as well as inflation and exchange rates), most average local consumers will remain highly cautious in relation to maximising their budget capabilities, gaining additional interest in affordable value proposals, while becoming increasingly proactive in terms of discounts and searching for promotions. In this context, additional levels of innovation and new specific proposals are expected to focus on smaller groups of niche local consumers.
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