Latin America: Latin America consumers more mindful of their spending on alcohol

Inflation has been a pressing concern in Latin America since 2021 and while rates have declined in some countries, economic growth remains sluggish. The gap between inflation and income growth indicates that consumers are struggling to improve their purchasing power, Euromonitor International reported on December 20.

As a result, consumers are more mindful of their spending, opting for unique experiences that justify expenses—especially when discounted. According to the Euromonitor Voice of the Consumer: Lifestyles Survey, fielded January to February 2024, only 21% of Latin Americans plan to increase spending on restaurants, while 50% intend to maintain it. Conversely, 78% are looking to increase or maintain their spending at discount stores, and 58% aim to boost their savings.

Mexico and Brazil lead beer consumption with 78.5 and 69.1 litres per person, significantly above the regional average of 57.4 litres per capita.

As consumers increasingly prioritise healthier lifestyles, and some aim to decrease or eliminate alcohol intake, the competition among both international and local brands in this segment emphasises the need for high-quality flavours and unique features to attract consumers. As an example, in Brazil, brands are incorporating vitamins like D and B into their offerings, hence adopting a healthier position, thus marking a difference against other world regions that don’t tend to have these claims.

Premium beers have been gaining traction with higher growth than other segments, as consumers acquire a taste for more sophisticated types of beers, imported or local, which is why larger breweries have increased their efforts in this segment, acquiring craft brands through the years to preserve their heritage and quality, while expanding their distribution capabilities.

Craft brands that remain independent are struggling to keep up against the strong backing of bigger distributors, as well as the incursion of mainstream brands into craft territory, upgrading established brands with premium options, like 100% malt, and various craft-like varieties, but at the same time making these varieties affordable. By doing this, and emphasising craftsmanship and authenticity, they differentiate themselves through innovative brewing processes, exotic ingredients, or niche products like gluten-free beer. Beer bars and tasting rooms have emerged from several of these brands, enhancing brand visibility and allowing them to experiment with innovative flavours.

Sustainability in beer production is increasingly important, focusing on water reuse, energy efficiency, and packaging recycling. Major breweries are making strides to meet carbon emission targets, often before 2040, and several of them are in the Latin American region.

In Panama, Cervecería Nacional (AB InBev) has been implementing solar power in its distribution centres, and, in Ecuador, its award-winning plant has increased efficiency in water use, as well as providing technological and financial assistance to local farmers to increase their productivity.

Consumers are demanding transparency and measurable impacts regarding sustainability efforts; therefore, making these actions tangible and verifiable is necessary, so that the drinkers identify with them and know that the products they buy generate less negative impact on the planet.

Generation Z and baby boomers are particularly critical of sustainability claims, according to the annual Euromonitor Voice of the Consumer: Sustainability Survey, highlighting the need for genuine practices.

Also, compared to other regions, many Latin American consumers still feel sustainable products are not readily available in stores, necessitating clear communication of these values to enhance perception and drive sales.

As consumer preferences evolve, understanding these trends is crucial for brands seeking to thrive in the Latin American market. By prioritising health, giving a premium feel to affordable products, and leveraging sustainability, companies can align with consumers’ values and navigate the challenges posed by inflation and competition from other categories.

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