Latin America Euromonitor publishes comprehensive data and analysis with five-year forecasts on products, industries, demographics and consumer lifestyles in Latin America.

Key Drivers for Private Label Growth in Latin America

3/5/2024
Andres Chehtman Profile Picture
Andres Chehtman Bio
Paula Goni Profile Picture
Paula Goni Bio
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Value share of private label has been slowly increasing in Latin America, reaching between 10% and 15% of total sales through modern grocery retailers in 2023. This growth is also observed in online channels. According to Euromonitor International’s E-Commerce system, private label accounted for 9.8% of Carrefour Brazil’s total e-commerce sales in the first quarter of 2022 and 13.7% of total sales in the third quarter of 2023. While this growth is impressive, the share of private label sales in Latin America remains far below that of developed regions such as Western Europe and North America, indicating there is further opportunity for growth. Euromonitor International has examined the main reasons for the growth of private label in Latin America, identifying the following drivers:

1. Inflation and cost-of-living crisis

While many regions have faced abnormally high inflation, Latin America has endured consistently elevated levels, which have increased in recent years, with some countries such as Argentina dangerously close to hyperinflation.Chart showing Inflation in Latin America 2020-2024

Latin American consumers are looking for more affordable options amid a cost-of-living crisis. Private label products are an appealing option in this context. According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey 2023, consumers of all generations in Latin America regularly seek private label and low-cost products. Younger generations are more inclined to increase their purchase of private label in the next 12 months due to their openness to try new products and their limited loyalty to legacy brands. This bodes well for the future of private label in the region, if it can capture the loyalty of younger shoppers.Chart showing Shopping Preferences and Future Spending Habits in Latin America

2. A transformed retail channel landscape

Small local grocers have been losing ground, dropping from 38% share of total grocery sales in the region in 2013 to 30% in 2023, displaced by modern grocery channels, including discounters, a channel characterised by low prices and strong private label offers. The growth of discounters has been particularly strong in Colombia, expanding from 1% to 17% of total sales in the last 10 years. The leading Colombian discounter brands D1 and Ara both quadrupled their current value sales in local currency between 2019 and 2023.

Convenience stores are also contributing to the growth of private label in Latin America. The Mexican brand OXXO has been the main driving force behind this growth. With a portfolio of over 25 private label lines, it has grown from 10,000 outlets in the region in 2013 to almost 20,000 in 2023. It has expanded from Mexico to Brazil, Chile, Colombia, and Peru, reaching 66% of total Latin American convenience store sales.

E-commerce value sales have grown explosively, with a CAGR of 26% from 2018-2023 (in US dollars at current prices), reaching 12% of total Latin American retail sales in 2023. Retailers such as Cencosud and Walmart are leveraging this growth to promote their private label lines online.

3. Retailers benefit from private label

Retailers launching private label options are seizing an opportunity to improve margins, grow consumer loyalty, and have better control over their supply chains. While many retailers in Latin America participate in hundreds of product categories with their private label lines, performance varies considerably across categories. In some markets, private label’s share of products such as milk, edible oils, or shelf stable fruit, accounts for more than 50% of sales. In other categories, retailers have yet to launch private label options. However, due to their knowledge of product and category performance, retailers are well-positioned to evaluate the categories that are worth adding to their private label portfolios.

4. The increasing quality and variety of private label

The quality of private label products in Latin America is increasingly similar to that of leading brands. Frequently, the same manufacturers produce both traditional brands and private label. On the other hand, some retailers partner with small local producers to launch a private label line. Either way, retailers look for high-quality suppliers since their reputation is at stake.

Traditionally, private label competed in the low-price segment of each category. However, private label is increasingly targeting premium segments, with high-quality packaging and designs. One of the latest examples in Chile is Frubom from the private label Cuisine&Co (Cencosud), which is a line of berries covered with chocolate and resembles the premium brands Franuí from Argentina and TrüFrü from the US.

Looking ahead: Opportunity for continued growth of private label in Latin America

Private label in Latin America is expected to continue gaining value share in 2024 and beyond. Sustained high inflation will prompt consumers to continue exploring private label as lower price alternatives. Further expansion of private label into premium categories beyond staples will attract additional customers seeking quality products at competitive prices, resulting in further growth for private label. Retailers and manufacturers can find opportunities in launching additional private label SKUs, building loyalty through the quality of their offer, and establishing their private label lines as mainstream household brands.

Read our report, Retailer Corporate Strategies in Private Label, for in-depth analysis of global trends and strategies of leading retailers in private label.

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