Refresh yourself

Are Latin American beverage companies in tune with their consumers?

Latin America’s huge potential in terms of consumption of food and beverages is well known, thanks to booming economies and a positive upward social mobility trend across the region. However, the assumption of a European/US style of consumer development in these economies could be setting some companies off track.

In terms of beverage consumption, what really explains the huge potential for the industry is simple arithmetic: a human being drinks – give or take – 2.2 liters of liquid per day; this includes hot drinks such as tea and coffee, milk, alcoholic drinks such as beer, home-made juices, soft drinks and of course tap water.

The case is that in Latin America, during 2011, around 240 billion liters of commercial and branded beverages were consumed by a population of almost 600 million. 

This means that only half of this liquid intake comes from these branded beverages. The rest of the daily consumption, around one liter per day, is still driven by unbranded commercial beverages, such as freshly squeezed juice sold on the streets, homemade drinks and tap water. 

Billions of sips will inexorably be replaced by some form of brand-named products, concurrent with the economic progress that implies more time out of home and less time to prepare homemade drinks.

The same calculation for a typical European country tells us that only 30 per cent of the total intake comes from non-branded drinks and that number is even lower for the US. 

Industry forecasts are projecting that the total commercial beverage volumes in Latin America will increase by around 3 per cent yearly until 2016. What categories will drive this volume growth? Well, I believe that the answer is also simple, but somehow could be controversial.

If you conduct a survey across many marketing teams, you will probably hear, erroneously, that most Latin America consumers are willing to pay extra for functional products. Some will refer to the much overused "wellness trend". 

Not many companies have actually understood what Latin Americans are willing to drink and this might be one of the reasons why an industry concentration has become more evident in the region. In order to explain this, allow me to use a basic interpretation of the need states analysis model. 

In the mid-Seventies, marketing gurus came up with the need states theory. This model provided a new approach for analyzing consumers, moving from time specific consumption occasion (breakfast, party, etc.) to segmentation by needs; in the case of beverages, needs could go from plain refreshment to relaxation, hydration, energy boost, need for fun, weight management, heart health, and so on.

A basic application of this model would start allocating all existing commercial beverages categories in four different quadrants limited by two axes with the horizontal axis going from Wellness to Indulgence and the vertical axis going from Functional to Refreshing. Something like this:

Ten years ago typical Latin America consumption was driven by indulgence/refreshing drinks (mainly carbonated soft drinks) with more than 40 per cent of total consumption. Many were betting that in future years the opposed segment, the wellness/functional, would start growing as it did in Europe or the US.

Contrary to that, in 2011 indulgence/refreshing drinks represented more than 45 per cent of total consumption, while wellness/functional have lost share of throat accounting for only one quarter of total consumption.

Does this mean that Latin Americans are turning their back on more functional and “healthy” drinks? No. It means that drinks that fulfill the indulgence and refreshing needs are still outperforming the much-hyped new functional drinks, which in many cases will remain limited to something just larger than a niche.

A couple of months ago, while discussing this with an executive of a global company, I received a clear explanation: “Simple," she said. "For a house-wife in El Salvador, wellness means being able to put on top of the family table at lunch time a cold two liter bottle of cola flavor soft drink”.

Drinker: Getty Images

Pedro Ibañez is Latin America director for consumer market group, Canadean

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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