Peru on a roll
17 April 2013
Peru on a Roll as Global Economy Struggles
As many countries still struggle in the grip of the global economic crisis, Peru is bucking the trend. The country is registering one of the most solid, and also the fastest growing, GDP rates in Latin America, up 6.3% in 2012. Buoyant domestic demand is leading to the creation of thousands of new jobs which in turn is boosting disposable income. Peruvians also enjoy an atmosphere of political stability. This positive environment is clearly being reflected in their consumption habits. Beverage sales last year also benefited from the exceptionally hot summer weather and relatively mild winter, due to low effect of the 'El Nino Phenomenon'. All these factors combined encouraged commercial beverage consumption to jump up by 6% in 2012, with almost every category contributing towards this excellent result.
Soft drinks, which represent the bulk of beverage consumption, led growth last year with gains in the important packaged water and carbonates markets being ably supported by the encouraging success of smaller categories, like iced/rtd tea drinks and energy drinks. Within alcoholic drinks, beer added the most volume, driven principally by Backus y Johnston SA, whilst dairy drinks owed much of their expansion to evaporated milk. According to Canadean, this category represents the mainstay of the liquid dairy market owing to traditional values and an historic lack of household refrigeration. Sales of hot coffee grew driven by demand from young people who are learning to enjoy the drink, complimented by the opening of more cafes. Hot tea progress was less dramatic but still positive. Half of total tea sales are still made in Lima, the country’s capital.
Two major themes were obvious in the beverage industry last year: a shift in favor of value added and healthier lifestyle products plus increasing environmental concern. These issues were reflected in both product choice and product development. Health is now a major factor influencing the purchasing decisions of consumers. Still packaged water benefited from this because it is perceived to be natural and pure. Juice and juice based drinks similarly profited. Not to be left out, Coca-Cola focused on the development of ‘zero’ calorie products, in order to be able to attract health-conscious consumers who nevertheless still wish to enjoy a carbonated soft drink.
‘Green’ initiatives are accelerating. Last year Coca-Cola launched its EcoFlex pack for San Luis still packaged water, which is 28.6% lighter than standard PET, and introduced a new eco-friendly cap for its Frugos nectar. In addition to this, some players have also ventured into individually promoting environment sensitivity, as is the case of PepsiCo with its Eco-Challenge. This competition encourages ideas or projects in order to mitigate or solve environmental problems. Likewise, Coca-Cola launched Eco Efficiency, a contest that seeks to recognize the best initiatives on the effective management of natural resources.
In tandem with these developments, Canadean’s latest research has also discovered that there has been a noticeable increase in beverage consumption in the provinces as purchasing power has risen. Per capita intake is significantly lower here than in the capital and both retailers and producers have identified the latent opportunities. With no sign of a change in Peru’s circumstances, 2013 looks set to be yet another positive year for both beverage consumption and for the country as a whole.