NCA Global Compass & Insights

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Argentina Map 2016

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: The total confectionary market in Argentina is expected to experience a forecast growth of 2.5% from 2015 – 2020
  • Regional growth comparison: The confectionary market in Argentina is expected to witness slightly faster than average growth compared to the rest of the Latin America region, because of improving economic conditions, including the market reopening to foreign brands
  • Total Per Capita Spending on Confectionary: Argentina’s consumers purchase US$65.2 of confectionary per year

Argentina Datagraphic 2016

  • 2015 Confectionary Market: US$2.752 billion, which is ranked 15th in the world
  • Per Capita Confectionary Spending: US$65.20, which is ranked 29th in the world, and also ranked 3rd in the Latin America region
  • Largest category: Chocolate is the largest confectionary category with a market size of US$1.154 billion and a value share of 41.9% in 2015
  • Fastest growing category: Chocolate is the fastest growing confectionary category with a forecast CAGR of 3.0%

Quick Facts

  • The Argentinean confectionary market totaled US$2.752 billion in 2015 and is forecasted to grow 2.5% annually through 2020
  • Chocolate confectionary leads all the subcategories with a 41.9% share of total confectionary, with sugar confectionary in second place (37.1% value share), and gum in third place (21.0% value share)
  • Demand for premium chocolate will lead to growth in the forecast period, due to improving economic conditions increasing the amount consumers are willing to spend on discretionary products


Sugar Confectionery

Market Trends

The worse economic situation and the erosion of purchasing power restricted impulse purchase in kiosks, directly affecting the consumption of sugar confectionary. This adversely impacted sugar confectionary, since kiosks are the main sales channel for these products in Argentina. Also, sugar confectionary was affected by the tendency of kiosks in educational institutions to offer healthier products to combat children’s poor nutrition. Mantecol, a kind of traditional soft nougat made with peanut butter saw the best performance, with only a slight decline in retail volume. Even though sugar confectionary does not see strong competition from other categories, such as sweet and savory snacks and snack bars, in the review period the competition increased, given the greater choice of healthy products in kiosks.

Competitive Landscape

Arcor leads sugar confectionary with a retail value share of 55% in 2015. International manufacturers represented a 23% retail value share in sugar confectionary. This share increased by two percentage points over the previous year, with the acquisition of the DRF and Billiken brands by Cadbury Stani Adams (Mondelez international) of the national company Molinos Rio de la Plata. Overall sugar confectionary focuses on standard brands, because the main sales channel is kiosks. Premium brands include only some imported brands, which, with the barriers to imports, virtually disappeared from the market. Private label sugar confectionary products are not available in Argentina, since the main sales channel, kiosks, does not have the ability to produce its own brands.

Future Outlook

Sugar confectionary is expected to grow in retail volume terms in the forecast period. The recovery of purchasing power is critical for consumers to return to kiosks, which mainly sell impulse products, thus favoring the consumption of sugar confectionary. The implementation of healthy kiosks in schools will undoubtedly have a negative impact on sugar confectionary in the coming years. Sugar-free medicated confectionary is expected to record the best performance in retail value terms over the forecast period. Healthy options will see a better performance than standard products, given the growing tendency of consumers to eat healthy products. In a context of high inflation, the strategy of companies in the forecast period will have price as a key point.

Source: Euromonitor International


Chocolate Confectionery

Market Trends

The devaluation of the exchange rate, together with price controls on chocolate confectionary by the government, impacted chocolate confectionary. The demand for dark chocolate is increasing in Argentina, since consumers are aware of its benefits over milk chocolate. Studies show that dark chocolate is a potent antioxidant and lowers blood pressure, resulting in dark chocolate slowly replacing milk chocolate amongst adult consumers. Tablets are the most popular type of chocolate confectionary in Argentina. In the year, plain milk tablets continued to lead in value share, followed by filled chocolate. The leading position of plain milk tablets is mainly a matter of tradition, and the low price of tablets geared towards children. Bagged selflines/softlines saw the best performance in the previous year.

Competitive Landscape

Arcor is the undisputed leader in chocolate confectionary in Argentina with a value share of 51%. Domestic companies dominate chocolate confectionary in Argentina. Besides Arcor, there is La Delicia Felipe Fort, Georgalos Hermanos and small enterprises engaged in the production of premium chocolate, which are located mainly in the south. In terms of multinational companies, Kraft Foods Argentina, Ferrero Argentina, Cadbury Stani Adams Argentina and Nestlé Argentina are present in the country, but in the review period they lost share as a consequence of the barriers to imports. Standard and economy brands continued to gain share as result of high inflation and the loss of purchasing power amongst consumers. However, domestic premium brands, mainly chocolate manufacturers in the south with a long tradition, saw interesting growth by opening new stores in several provinces.

Future Outlook

In the forecast period it is expected that the demand for premium chocolate will lead to growth above the average seen in the review period in retail volume terms. The improved economic conditions, the opening of new stores by companies such as Abuela Goye and Mamuschka and the anticipated normalization of imports will promote increased consumption of high-quality chocolate. In the forecast period it is expected that chocolate confectionary will register a retail volume CAGR of 3%, far superior to the negative CAGR of 1% seen in the review period. Nestlé Argentina is one of the fastest growing companies, driven by the launch of its traditional brand Kit Kat in March 2015. In this regard, fierce competition is expected, and a reordering of the retail value share in countlines.

Source: Euromonitor International


Gum

Market Trends

The retail volume consumption of gum dropped for the fourth consecutive year. The economic recession and reduced consumer spending on non-essential products adversely affected the demand for gum. The most important trend in gum was sugar-free gum for teenagers. This is because more and more doctors are advising consumers not to chew gum containing sugars. The most important flavors of gum, in order of importance, were mint, fruit, strawberry and banana. Less traditional flavors, particularly in chewing gum, have seen an increase in share, such as watermelon, apple and mandarin. Bubble gum targets children, and is very traditional in terms of flavors, such as tutti-frutti, mint and strawberry. The degree of innovation in terms of development and new product launches is much lower in relation to chewing gum. In the latter category, companies made many innovations in the review period, aimed at young people and adults.

Competitive Landscape

In Argentina gum was monopolized by the multinational Cadbury Stani Adams in 2015, with a 54% share of value sales, and the national company Arcor, with a 41% share. In the review period the national company was favored, because the barriers to imports imposed by the government. Both Cadbury and Arcor focus on innovation in terms of new flavors and packaging for their brands Beldent and Top Line respectively. In addition, Arcor made a new commitment in bubble gum. In Argentina there are no economy gum brands. In addition there are no private label products, since the primary sales channel for gum is kiosks, which do not have the independent ability to develop private label brands.

Future Outlook

Gum is expected to register a slow to negative CAGR in retail volume terms in the forecast period. The slow recovery of consumers’ purchasing power and changes in children’s consumption habits will limit the growth of gum in the coming years. The barriers to imports will continue to limit the expansion of international brands of gum; with the normalization of the economy and the likely liberalization of imports, these brands will slowly regain the sales they lost in the review period. Sugar-free gum is expected to record the best performance in the forecast period. There are many niches which have significant potential for exploitation in the forecast period. The most important is sugar-free gum combined with liquid and solid flavors. Another niche which has potential is energy-boosting/caffeine gum; products, which if the barriers to imports are eliminated, have a high chance of being marketed in Argentina.

Source: Euromonitor International


Retailing

Quick Facts

  • In 2015, grocery retailers recorded 27% current value growth to reach ARS614.2 billion
  • Retailers are investing in local stores, boosted by changes in consumption habits
  • Carrefour Argentina leads grocery retailers in 2015 with a value share of 6%, driven by new stores
  • Over the forecast period, grocery retailers is expected to grow at a CAGR of 3% at constant 2015 prices, reaching ARS826.6 billion in 2020

Market Trends

Grocery retailers invested exclusively in chains, which performed better as a result of the economic crisis and the changing consumption habits of consumers. Furthermore, the deepening of the economic crisis continued to benefit cash and carry chains. This channel offers significant discounts for volume purchases, unlike supermarkets or hypermarkets. The economic crisis resulted in a fall in consumers’ purchasing powers. Given this context, Argentineans became very rational consumers, preferring local stores as a better way of managing their expenditure. With such outlets, they focused on small purchases and on replacement, while not being tempted by non-essential products that were available in large retail outlets. Internet retailing by grocery chains was very underdeveloped towards the end of the review period, and was growing at a very slow pace. Slow development was due to several reasons: firstly because online prices were usually more expensive than those in-store, secondly because retailers charged for delivery, an expense that consumers prefer to avoid during periods of weak purchasing powers, and thirdly because retailers did not have yet offer significant coverage online, with even the leading chain Carrefour not providing an online sales platform.

Competitive Landscape

Carrefour Argentina led grocery retailers with a 6% value share in 2015. The company is investing very strongly in the convenience store chain Carrefour Express; the change in the purchasing habits of Argentineans is driving Carrefour Argentina to invest exclusively in convenience stores. Distribuidora Internacional de Alimentación (Dia) recorded the strongest value sales growth of 9% in 2015, reaching a value share of 3% within grocery retailers. The chain Dia was also the one of strongest in terms of expansion, opening 65 new stores in 2015. The franchise system allows Dia to grow much faster than its competitors. The chains Jumbo and Disco are focused on high- and middle-income consumers, and therefore they are the chains with the widest range of imported products. No chain is present throughout the entire country.

Future Outlook

The economic crisis will continue to impact the investment decisions of the principal chains of grocery retailers in Argentina in the short and medium term. These retailers will focus on the opening up and development of local stores. Convenience stores are set to be the most dynamic channel over the forecast period. This expected strong performance is because many chains are looking to expand within this channel, such as Carrefour Express, Coto and Mini Libertad, while others intend to open their first outlets, such as Wal-Mart de Argentina and Jumbo Retail Argentina. Discounters are set to be the second most dynamic channel after convenience stores over the forecast period. Internet retailing within grocery retailers will continue to grow over the forecast period, although participation from store-based retailers will continue to be low.

Source: Euromonitor International


Income & Expenditure

Per capita annual gross income rose by 10.3% in real terms between 2009 and 2014 to reach ARS83,698 (US$10,302) by 2014. Growth of annual per capita gross income during the period of 2009-2014 was the fastest amongst Latin American economies, reflecting Argentina’s robust economic expansion in this period (backed by large levels of government spending and public investment), as well as understated inflation figures by the Argentinean government (which result in faster income growth rates in real terms).

Over the period of 2015-2030, the rate of expansion of Argentina’s per capita annual gross income is expected to decelerate in real terms. This will reflect challenges to the Argentinean business environment, including government intervention in the economy; high total tax rates; and excessive levels of red tape, which will weigh on the expansion of the Argentinean economy in the long term.

Social class D (low income earners) is predominant in Argentina, accounting for 34.4% of the country’s population aged 15+ in 2014. Compared to Latin American averages, the share of Argentina’s social class D is larger than the regional average of 31.0% in that year. This is the result of measures implemented by the Argentinean government, including large spending on social programs, subsidies and price controls, which have supported income growth of individuals in the lowest social class (social class E) and have allowed a portion of them to transition to higher social classes.

Social class D is expected to remain as the largest social class in Argentina by 2030, although its share of the country’s population aged 15+ is forecast to increase only slightly to reach 34.8% by that year, reflecting expected slower growth rates of per capita gross income for lower-income deciles during that period.

Income inequality in Argentina is expected to keep gradually decreasing in the long term, although at a slower pace than observed since the early 2000s, as the country’s decelerating economic expansion will curb growth of social spending by the Argentinean government over the long term.

Per Capita Annual Disposable Income, Spending and Savings Ratio: 2009-2014

Argentina I&E Graph

Consumer expenditure per capita totaled ARS79,819 (US$8,612) in 2015. In 2016, the indicator will decline by 1.2% in real terms. For the period 2015-2030, total consumer expenditure will grow at an average annual rate of 3.0% in real terms..

Household Expenditure by Region: 2014

Argentina Region Graph

Source: Euromonitor International


Demographics

Argentina's population has been slowly growing over time and totaled 43.4 million in 2015. The median age is also rising. It was 30.8 years in 2015 - 3.0 years higher than in 2000. The birth rate is gently falling and the downward trend will continue in the future. Fertility rates have decreased over the past several decades but other factors (such as the growing number of women of childbearing age) slow the decline in the number of young children.

Argentine society is ageing at an accelerating pace. The number of those over 65 years totaled 4.7 million in 2015 - more than one million more than the figure for 2000. This group currently represents 10.9% of the total and the share will rise to 13.1% by 2030.

Source: Euromonitor International


Economy & Trade

Argentina can expect a modest contraction as the economy slowly adjusts to the new government's macroeconomic policies. Real GDP will fall by 1.1% in 2016 after growth of 1.4% in 2015. Exports will be weak despite the recent currency depreciation. A lack of investment, the prolonged depression in Brazil and the slowdown in China will also undercut prospects.

Officially, inflation was 17.9% in 2015 and prices will rise by 30.6% in 2016. Capital controls were lifted in December 2015, allowing virtually unlimited access to foreign currency. Following the move, the peso immediately fell by nearly one third. The depreciation will create upward pressure on prices as will the recent cut in various subsidies.

Unemployment stood at 7.2% in 2015 and it will drop to 7.0% in 2016. Real wages have fallen by more than 10% since the beginning of 2014 owing to high rates of inflation.

The real value of private final consumption rose by 3.3% in 2015 but a decline of 0.2% is expected in 2016.

Source: Euromonitor International


US Exports to Country (2015)
Value (US$, thousands) 724.7
Volume (metric tons) 2883
US Imports from Country (2015)
Value (US$, thousands) 7368
Volume (metric tons) 3888.5


VALUE by month - US Exports to Country (US$, thousands)
Year January February March April May June July August September October November December
2012 753 8 215 664 589 275 72 409 347 119 763 454
2013 201 396 579 769 552 240 694 691 580 25 845 902
2014 355 167 160 573 708 478 1030 325 404 310 130 180
2015 268 212 105 518 185 400 169 206 193 318 250 60
2016 382 444 224

VOLUME by month - US Exports to Country (metric tons)
Year January February March April May June July August September October November December
2012 165 1 68 134 124 33 27 58 88 23 180 98
2013 38 90 157 109 98 43 129 106 112 7 144 145
2014 82 52 41 118 138 106 213 52 77 58 35 21
2015 84 45 46 132 46 82 41 68 50 47 74 10
2016 60 89 48


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