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NCA Global Compass & Insights

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NCA - Argentina Map v.2.png


Source: Euromonitor International


Dashboard Explanation

A: Total market size by country (dark blue indicates the largest market size, light blue shows the smallest market sizes)

B: Country specific data highlighting total market size, per capita consumption and the forecast growth CAGR, as well as that country’s global rank for each data point

C: Global market size for total confectionery in US$ millions

D: Market size comparison for total confectionery across each region

 
  • Forecast Market Growth Rate: 3.3%, which is slower than the growth rate during the historic period.
  • Per Capita Confectionery Spending: US$56.5, which is the second highest in the Latin America region.
  • Opportunity: Confectionery products that provides health and wellness benefits, such as sugar-free gum and dark chocolate, are expected to perform strongly.
  • Challenge: High inflation and weak economic growth will dampen consumer spending on confectionery products in the forecast period.

 

NCA - Argentina Datagraphic.png

Source: Euromonitor International


  • Forecast Growth Rank:a ranking of 15 out of the 36 studied countries demonstrates how the volatile economic market is negatively impacting growth.
  • Per Capita Spending on Sub-categories: consumers purchase the most chocolate confectionery at US$23.1, followed by sugar confectionery at US$21.3.
  • Key Sub-category: Argentina’s gum market is the 6th largest out of the 36 countries studied, highlighting gum’s popularity within the country.

Quick Facts

    • The Argentine confectionery market totaled US$2.3 billion in 2014 and is forecasted to grow 3.3% annually through 2019.
    • Chocolate confectionery leads all the subcategories with a 40.9% share of the total confectionery, with sugar confectionery in second place (37.6% value share), and gum confectionery in third place (21.5% value share).
    • Value sales of gum confectionery will grow faster than those of chocolate and sugar confectionery. Teenagers in particular are driving this market by increasingly consuming sugar-free gum and seeking out innovative flavors.
    • Arcor SAIC is the leader in the total Argentine confectionery market with a value share of 47.7%.
    • The overall confectionery market is expected to grow slower in the forecast period than it did in the historic period because inflation is eroding consumer spending. Children, a core consumer group of confectionery products, are not receiving as much money from their parents and thus have reduced the number of purchases of confectionery products.




Market Trends

One of the main threats to sugar confectionery consumption in Argentina is the impact of inflation, which is weakening children’s purchasing power, as their parents do not give them extra money to cover inflationary costs. The consumption of sugar confectionery is also affected by the growing trend towards opening kiosks selling healthy food in educational facilities in several provinces and cities, with the aim of encouraging healthy eating habits in children and young people in general. Although the sale of traditional sweets is not restricted, kiosks are required to offer juice, seasoned or dried fruits, nuts, seeds, etc. At this time, toffees, caramels, and nougats are set to be one of the best performing categories.

 

Competitive Landscape

Arcor leads sugar confectionery with a 55.0% retail value share, followed by Cadbury Stani Adams with 14.0% and Ferrero Argentina with 5.0%. Arcor’s leadership can be attributed to a strong distribution network, which reaches every kiosk (confectionery specialist). The company leads every category with the exception of licorice, which is led by Cadbury Stani Adams, and mints, which is led by Ferrero Argentina. Private label products have no presence in sugar confectionery in Argentina as the leading outlets, kiosks, do not have the ability to produce their own products.

 

Future Outlook

Sugar confectionery is forecast to see slower value growth than expected for gum or chocolate confectionery due to category maturity and the dominance of low- and mid-priced products. The main threat to its expected growth is ongoing inflation putting many small- and medium-sized operators at risk. Functional and sugar-free products are expected to gain ground over the long term as consumers look for healthier products. Energy-boosting products are likely to evolve as consumers seek products that can enhance their performance at work. Finally, new flavor variants are expected to perform reasonably well but will not boost sales significantly as they are merely marginal improvements on existing products.

 

Source: Euromonitor International


Chocolate Confectionery

Market Trends

The latest chocolate trend in Argentina is that consumers are more likely to eat chocolate as part of their daily routine, instead of saving it for a special occasion. As Argentines devote less time to proper meals and more time to snacking, gourmet chocolate makers have sought to introduce bigger chocolate tablets to satisfy customer needs. Argentines are becoming more health conscious and aware of the benefits of dark chocolate due to its higher cocoa content. Recently, countlines have been the best performing category within Argentina, followed by tablets.

 

Competitive Landscape

Domestic brands continue to lead chocolate confectionery, driven by Arcor SAIC’s portfolio of brands. International manufacturers—led by Kraft Foods Argentina SA and followed by Ferrero Argentina SA, Nestlé Argentina SA, and R & HL SA (Lindt)—gained ground in 2014, collectively accounting for a 25% value share of chocolate confectionery sales. Standard and economy brands continue to gain ground in the context of economic inflation, but premium domestic brands are growing faster, albeit with a niche profile.

 

Future Outlook

Chocolate confectionery is predicted to see a volume CAGR of 3.0% and a value CAGR of 4.0% at constant 2014 prices over the forecast period. While this category offers products at all price points, it is dominated by standard brands. Thus, unless an economic crisis should unfold, such as that seen in 2001/2002, growth rates should not deviate from those forecasted. Prices are thus expected to rise in line with inflation over the forecast period; however, no relevant unit price movement in constant terms is expected for chocolate confectionery

Source: Euromonitor International



Gum

Market Trends

Sugar-free gum accounts for the majority of chewing gum sales as consumers are very concerned about their weight. The latest trend observed in gum in Argentina has been the entry of teenagers into the sugar-free gum category, a move encouraged by parents and other adults. New and exotic flavors are introduced every year, but mint, fruit, strawberry, and banana remain the most popular. Bubble gum aimed at children tends to offer more traditional flavors such as strawberry, tutti-frutti, and mint.

 

Competitive Landscape

Cadbury Stani Adams SAIC continues to lead gum in Argentina, followed by Arcor SAIC. Cadbury’s leadership is based on acquisitions that allowed Cadbury to assemble a broad portfolio of products and brands. The two leading companies, Cadbury Stani Adams SAIC and Arcor SAIC, focus on innovation in terms of flavor and packaging under their Beldent and Top Line brands, respectively, although Cadbury is also increasingly supporting Bazooka and Bubbaloo, its flagship bubble gum brands. Both companies support their new products with strong advertising campaigns on television, the internet, outdoors. and in print media. Arcor, the biggest domestic manufacturer, is making progress and aims to reach parity with Cadbury through extending its product range and expanding its distribution network.

 

Future Outlook

Although gum confectionery is forecast to see higher value growth than the estimates for sugar and chocolate confectionery, growth will still be slow due to category maturity and ongoing import restrictions resulting from rising inflation and capital flight. Sugar-free gum is expected to see the best performance over the forecast period, related to the appearance of combined flavors. Other innovative products, such as functional gum with relaxing or energy-boosting properties, are currently not present in Argentina but could emerge over the forecast period.

 

Source: Euromonitor International

Retailing

Quick Facts

    • Current value growth of grocery retailing is 35.0% in 2014, with retail value sales amounting to US$60.5 billion.
    • Convenience stores are expected to perform strongly in the future as Argentines increasingly value convenience as they lead busier lifestyles. Discounters are also becoming more popular as consumers are becoming more cost conscious during this inflationary period.
    • Grocery retailers’ outlets dropped slightly in 2014 to 353,319, down from 353,442 in 2013.
    • Carrefour Argentina is the leading company in grocery retailing, with a 5.6% share. Cencosud SA holds the largest share of the total store-based retailing market with a value share of 3.9%.
    • In the forecast period, grocery retailers are expected to see a growth rate of 2.0% a year at constant 2014 prices.

 

Market Trends

Argentina saw GDP decline in the first half of 2014, along with an annual inflation rate of 35–40% (amongst the highest in the world), reducing both consumer purchasing power and spending on non-essential goods. The effects of this decline can be observed in the volume sales of core products. Due to these factors, Argentines favored cash and carry outlets for their low prices and discounts on volume purchases. The government launched the National Plan “precios cuidados” to battle inflation. This plan offers a basket of specific goods, consisting mainly of food, drink, and some cleaning products. With the agreement of suppliers and major chains such as Carrefour, Coto, Wal-Mart, and Jumbo, these products are identified on the shelves of these chains. This plan had a strong positive impact on those chains that entered into agreement with the government, resulting in increased customer traffic to the participating companies.

 

Competitive Landscape

During 2014 purchases in proximity stores increased. This trend grew strongly from 2012, with a high number of openings. Rising unemployment and inflation of over 40.0% annually made consumers more rational when making purchases. Unlike other years—in which consumers carried out a monthly shopping trip—with the fall in purchasing power, weekly shopping in convenience stores, discounters, and independent small grocers prevailed at the expense of hypermarkets and supermarkets. In the face of the current economic situation in Argentina, major brands such as Diarco, Vital, and Makro made significant changes, such as extending opening hours, adding more checkout lines, opening new outlets in residential areas, and carrying out strong advertising in the mass media.

 

Future Outlook

The economic crisis of 2014 will have a significant impact on grocery retailers in the short and medium term. Consumers have become very rational when making purchases, acquiring only necessities. This trend favored convenience stores, since weekly shopping is now accentuated, to the detriment of large monthly purchases from hypermarkets. Discounters—with their low prices—will also be a favored channel in the forecast period. Internet retailing is expected to continue to grow, and will become an important sales channel for large chains. Increased access to the internet and the development of mobile applications will drive online sales in the coming years. Exclusive online discounts will help develop this channel.

 

Source: Euromonitor International


Income & Expenditure

Per capita annual gross income in Argentina was ARS66,693 (US$12,180) in 2013, following a real upsurge of 66.9% over the 2008–2013 period. Real GDP expanded dynamically, as the country emerged strongly from its 2001–2003 debt crisis and entered a decade-long boom.

Argentineans in their late 30s and early 40s—many of whom hold senior positions following an extended period of professional progression accelerated by the economic momentum—were the dominant demographics in the uppermost annual gross income bracket of US$150,000+. These consumers tend to financially prioritize their young families and careers, and typical spending areas include connectivity technology, such as laptops, tablets, and smartphones.

In 2013, 36.3% of the Argentine population over age 15 belonged to social class E; social class D accounted for 31.7% of the population. The deep-seated income inequality that is characteristic of many Latin American countries is less pronounced in Argentina; nonetheless, this trend continues to inflate the top and bottom social classes by diving the population into the “haves” and “have-nots.”

Income inequality in Argentina is currently decreasing, due to a decade-long economic boom and welfare provisions for low-income groups. Between 2008 and 2013, the most affluent 10.0% of households saw their share of total annual disposable income drop from 30.8% to 27.9%, with the bottom 10.0% of households strengthening their share from 1.5% to 1.9%.

Middle-class households totaled 3.7 million in 2013, which equated to 28.3% of total households nationwide. This figure represented continued robust growth over 2008–2013 in both absolute and proportional terms, with middle-class households having numbered 3.0 million households, or 25.7% of total households, in 2008.

 

Per Capita Annual Disposable Income, Spending and Savings Ratio: 2006-2013

NCA_Income and Expenditure - Argentina.png


Argentina posted total consumer expenditure of ARS2.2 trillion (US$408 billion) in 2013, a real surge of 72.4% over the 2008–2013 period. These gains were focused on the Gran Buenos Aires metropolitan area, with overall consumer expenditure at US$220 billion. In 2013, non-discretionary spending accounted for 38.9% of total consumer expenditure, leaving the remaining 61.1% for discretionary items.

 

Household Expenditure by Region: 2014

NCA_Region - Argentina.png


 

Source: Euromonitor International 




Demographics

Australia’s population is steadily rising, reaching 23.5 million in 2014, up from 14.7 million in 1980. The median age in 2014 was 37.4 years—8.0 years older than in 1980.

 

The fertility rate has been relatively stable over time, and is somewhat higher than that of most industrialized countries. It is currently 1.9 births per female (slightly less than the replacement level) and is expected to remain at that level for the remainder of this decade. Immigration is an important contributor to population growth. More than one fifth of all Australians were born overseas, and over a quarter of those born in Australia have at least one parent who was born overseas. Most of today’s immigrants come from Asia.

 

The distribution of population is unusual owing to the fact that portions of the country can support little more than scattered, tiny communities. In most states—including New South Wales, Victoria, South Australia, and Western Australia—the vast majority of residents are concentrated in major cities.

Source: Euromonitor International





Economy & Trade

Argentina’s economy will see a second consecutive year of decline in 2015 when real GDP contracts by 0.7% after a drop of 0.9% in 2014. Capital flight has intensified, pushing the peso currency to record lows and fuelling inflation, which was 21.5% in 2014 and will jump to 26.4% in 2015. The government controls the prices of many products, and broadened its reach in 2014 by imposing price controls on hundreds of food items.

Unemployment stood at 7.3% in 2014 and will jump to 7.9% in 2015. Real wages have fallen by more than 10% since the beginning of 2014, owing to runaway inflation.

The real value of private final consumption rose by 2.4% in 2014, and growth of 0.8% is expected in 2015. Many ordinary consumer items cannot be found on store shelves because producers cannot cover their costs.

Argentina continues to adopt more protectionist policies. The government cannot freely raise tariffs because it belongs to Mercosur, a multinational customs union with other South American countries. Instead, it relies on ad hoc restrictions, which are harshest for industries where imports are considered non-essential or where the government wants to promote domestic production (mostly for agricultural products, machinery, and auto parts).

Source: Euromonitor International



Confectionery Exports from Argentina to the US (2013)
Volume (Tons) 8,119.0
Value

$13,765,456.0

Confectionery Exports from Argentina to the World (2013)
Volume (Tons) 54,299.0
Value  $209,843,232.0
Confectionery Imports to Argentina from the US (2013)
Volume (Tons) 722.6
Value  $2,686,998.0
Confectionery Imports to Argentina from the World (2013)
Volume (Tons) 17,611.7
Value

$78,919,411.0

Source: Euromonitor International


US Exports to Argentina (Value in US$ Thousands)

January February March April May June July August September October November December
2012 753.0 8.0 215.0 664.0 589.0 258.0 72.0 409.0 347.0 119.0 763.0 454.0
2013 201.0 280.0 504.0 573.0 166.0 240.0 584.0 485.0 491.0 25.0 653.0 697.0
2014
355.0
180.0
131.0
464.0
482.0
478.0
933.0





 Source: Euromonitor International

US Export to Argentina (Volume in Metric Tons)

January February March April May June July August September October November December
2012 165.4 1.4  68.4 134.0 123.8 28.6 26.7 57.7 88.1 22.9 92.5 30.3
2013 38.0 75.0 143.7 109.3 95.2  43.0 109.3 92.3  95.7  7.2 120.8   131.2
2014 81.5 55.7 32.8 111.4 120.6 106.1 196.0




Source: Euromonitor International


Definitions

Retailers

Retailers selling predominantly food/beverages/tobacco and other everyday groceries. This is the aggregation of supermarkets, hypermarkets, discounters, convenience stores, independent food stores, chained forecourt retailers, independent forecourt retailers, food/drink/tobacco specialists and other grocery retailers.

 

Convenience Stores

Chained grocery retail outlets selling a wide range of groceries and fitting several of the following characteristics: extended opening hours, a retail area of less than 400 square meters, located in residential neighborhoods, handling two or more of the following product categories: audio-visual goods (for sale or rent), take-away food (readymade sandwiches, rolls or hot food), newspapers or magazines, cut flowers or potted plants, greetings cards, etc. Example brands include 7-Eleven and Spar. Note: The number of branches required to be termed chained varies from country to country, but is usually ten or more. If a multinational is operating in the country, then this is included, even if the brand operates less than ten outlets.

Discounters

Discounters typically have a retail space of between 400 and 2,500 square meters. Retailers' primary focus is on selling private label products, within a limited range of food/beverages/tobacco and other groceries at budget prices. Discounters may also sell a selection of non-groceries, frequently as short-term special offers. Discounters can be further differentiated as hard discounters and soft discounters. Hard discounters were first introduced by Aldi in Germany, and are also known as limited-line discounters. These retail outlets are typically 300-900 square meters, and stock fewer than 1,000 product lines, largely in packaged groceries. Goods are mainly private label or budget brands. Soft discounters are usually slightly larger than hard discounters, and are also known as extended-range discounters. Retail outlets of this type typically stock 1,000-4,000 product lines. In addition to private label and budget brands, soft discounters commonly carry leading brands at discounted prices. The discounter retail format excludes mass merchandisers and warehouse clubs. Example brands include Aldi, Lidl, Plus, Penny, Netto, etc.

Forecourt Retailers

Forecourt retailers are retail grocery outlets selling a wide range of groceries from a gas station forecourt, and meet several of the following characteristics: extended opening hours, retail area of less than 400 square meters, offering two or more of the following product categories: audio-visual goods (for sale or rent), take-away food (readymade sandwiches, rolls or hot food), newspapers or magazines, cut flowers or potted plants, greeting cards, or automotive accessories. Sales data excludes gasoline sales. Example brands include BP Connect, and Shell Select. Forecourt retailers are an aggregation of chained forecourt retailers and independent forecourt retailers

Hypermarkets

Hypermarkets typically have a retail space of more than 2,500 square meters, with a primary focus on selling food/beverages/tobacco and other groceries. Hypermarkets also offer a range of non-grocery merchandise. Hypermarkets are frequently located in out-of-town sites, or serve as the anchor store in a shopping center. Example brands include Carrefour, Tesco Extra, Géant, E Leclerc, Intermarché, and Auchan. This retail format excludes cash and carry, warehouse clubs and mass merchandisers. For the hypermarket channel, Euromonitor International also provides a breakdown of value sales between grocery and non-grocery products.

Supermarkets

Supermarkets focus primarily on groceries, and have a retail space ranging from 400 to 2,500 square meters. This retail format excludes discounters, convenience stores and independent grocery stores. Example brands include Champion, Tesco, and Casino. Exception: In some markets, primarily the US, Australia and Hong Kong, there are grocery retailer brands that operate outlets with a selling space of over 2,500 square meters, but offer only a very limited range of non-grocery merchandise or none at all. These brands are included in the supermarket category. Examples include Coles, Woolworths, and Park ‘n Shop. For the supermarket channel, Euromonitor International also provides a breakdown of value sales between grocery and non-grocery products.

Traditional Grocery Retailers

Traditional grocery retailing is the aggregation of those channels that are invariably non-chained and are therefore owned by families or individuals. Traditional grocery retailing is the aggregation of three channels: independent small grocers, food/drink/tobacco specialists and other grocery retailers. While there can be modern (chained) food/drink/tobacco specialists or other grocery retailers operating in this sales channel, these stores are still considered as traditional according to Euromonitor International’s criteria.

Other Grocery Retailers

Other retailers selling predominantly food, beverages and tobacco or a combination of these. This category includes kiosks, markets selling predominantly groceries, food and drink souvenir stores, regional specialty stores, and CTNs (CTN = Confectionery, Tobacco and News retailers). Direct home delivery of milk and meat from dairies and farms is excluded. Sari-Sari stores in the Philippines and Warung (Waroon) in Indonesia, that can either be markets or kiosks, are included in other grocery retailers unless they occupy a separate permanent outlet building, in which case they are included in independent small grocers. Outlets located within wet markets, particularly in Southeast Asia (often located in government-owned multi-story buildings) should be counted as separate outlets.

Confectionery

This retail format is the aggregation of chocolate confectionery, sugar confectionery and gum. Note: Retail sales measurements are confined to packaged sales. However, exceptions are made for seasonal chocolate, where unpackaged/artisanal sales are included. Pick ‘n’ mix sales are also included. Finally sales from chocolatiers, typically displayed loose and later packaged (usually in boxes), are also included.

Chocolate Confectionery

This is the aggregation of tablets, countlines, bagged selflines/softlines, boxed assortments, seasonal chocolate, chocolate with toys, alfajores and other chocolate confectionery. Note: Chocolate overtly positioned for baking/cooking purposes is excluded from Euromonitor International's confectionery coverage.

Sugar Confectionery

This is the aggregation of mints, boiled sweets, pastilles, gums, jellies and chews, toffees, caramels, nougat, medicated confectionery, lollipops, liquorice and other sugar confectionery.

Gum

This is the aggregation of chewing and bubble gum. Bubble gum is similar to chewing gum but is specifically marketed at children/adolescents, with blowing bubbles as the principal marketing theme. Both regular and sugar-free gum is included in bubble gum and chewing gum.

 

Source: Euromonitor International

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