Latin America. Since its discovery in late 2019 and before its rapid advancement around the world, COVID-19 has caused great concern. In the face of the pandemic, many countries chose to close their borders and instructed populations to avoid gatherings and resort to social isolation to prevent the spread of the disease; these measures have impacted various sectors and segments of the economy. Faced with a situation of social isolation for the first time, consumers in Latin America changed their purchasing and consumption behavior.
This sudden change in habits has challenged the food and beverage industry, and especially the food service sector, which are forced to seek new information and reinvent themselves.
When analyzing latin America's largest markets, we see similar attitudes across different cultures. Known around the world for their friendliness and responsiveness, Latinos are changing the way they shop among the most diverse age groups, accelerating the use of online media to buy prepared foods and groceries.
Despite not having the opportunity to plan, the acceleration of online sales of food and ready meals can have an unprecedented impact on the sector, new ways of selling strengthen not only new sales channels, but also new analyses and especially innovative opportunities that are communicated to the customer and business management.
Another trend in the food service sector, which promises to stand out during the period of social isolation, is the concept of "dark kitchen" or ghost restaurant; this is an establishment that offers takeaway or delivery only services. In addition to having a lower operating cost, without expenses related to the premises, this type of restaurant has a lower initial financial investment and can have more flexibility in the menu adapting to the taste of its audience if necessary. Another advantage of this business model is that deliveries can be made directly by the company or outsourced due to the various food delivery applications and services currently available on the market.
Mexico
In Mexico the rapid adaptation is based on comfort and safety, the number of people who ordered meals through delivery applications in some market segments is already 6 out of 10 and 20% of people make their supermarket purchase through the website. In Rappi alone, orders have tripled, and several establishments no longer charge for delivery. Therefore, home delivery is the new operating model for restaurant chains, even establishments that do not use applications such as Uber Eats or Rappi, are now available through WhatsApp and Instagram, which also offer various promotions and discounts on delivery value.
The number of partners on one of the main delivery platforms in the country increased by more than 250%, and some restaurants have implemented the Pick n Go model, which consists of ordering by phone and then picking up at the store or point of sale. In the bakery and confectionery industries, some local businesses opted for a DIY (Do It Yourself) model, selling the materials in a package so customers can make their own creations at home. Some brands also offer online bakery and confectionery classes through Instagram Live, while renowned chefs are offering online classes.
To prolong the shelf life of food, all types of establishments now use packaging such as vacuum bags, which were previously only used by major brands. To help restaurants continue their business, a large network of solidarity has developed and people are buying vouchers to use whenever they want in 2020, when the crisis passes. In retail, sales of foods such as rice, beans and eggs grew by 400% during the first two weeks. The demand for canned food, which has a longer shelf life and rapidly reduces the need for a new purchase, has also increased, especially sardines and herring (155%) and tuna (151%).
Consumption has increased not only in relation to panic buying for storage, but also by emergency purchases, such as alcohol gel, napkins and health products, that is, items considered as a way to prepare for life in quarantine. According to market research agency Zinklar, Mexican consumers are buying not only more units of products, but have also preferred larger or multiple packages, with a preference for domestic items.
This information also shows an opportunity to increase products with homemade perception, as they are easy to supply and bring back memories of family courtesy. And we must not forget that condiments can also help consumers improve their daily meals and replicate family recipes, in this country, some restaurants have included concepts and stories about their ingredients and local production, which has become a USP (Unique Selling Proposition) for their products.
Brazil
We see a significant increase in Brazilians' adherence to so-called cash and carry markets and hypermarkets where consumers can find all essential items in one place. According to Kantar data, cash, transport and hypermarkets together recorded a 53% penetration in mass consumption and more than 2.5 million new households have joined these purchasing models. In terms of items classified as indispensable by the population, the highlights of the highest consumption are industrialized breads (+52%), sausages (+16%), prepared juices (+15%), beers (+15%), absorbent hygienic products (+21%) and toilet paper (+15%). On the other hand, products that used to be on the shopping list for a large part of the population recorded a decrease in sales, such as fermented milk (-21%), yogurt (-17%), razor blades (-12%), hair dye (-4%) and soy drinks (-7%).
The relationship with food also points to a big change, the decrease in the preparation of homemade meals at the expense of an increase in deliveries on weekends, has been increasingly recurrent. Comparing the first week of March with the second, the number of households ordering food increased, mainly through direct orders from restaurants and bars, but the use of apps for this purpose was also high (19%), according to Rg Nutri com TechFit. The same institution also shows that supermarkets recorded a 74% increase in online sales between March 16 and 22.
Consumer preferences in the beverage sector are also changing. According to the Brazilian Beverage Association (Abrabe), with bars and restaurants closed due to the advance of the coronavirus in the country, this market has slowed by 52% since March 15. According to Kantar, in January and February there was a positive variation in sales of prepared juices (+15%), beers (+10%) and soft drinks (+6).
Central America, the Caribbean and the Andean region
In the central region of Latin America, the preference for digital shopping also ceased to be a trend and quickly became a reality. According to the Association of Exporters and the Chamber of Digital Commerce of Guatemala, in Panama, Costa Rica and Guatemala, the first three days of quarantine tripled the demand of small businesses interested in updating and expanding their digital platforms. And also, Kantar found that more than 25% of people in Colombia and Guatemala (higher than the LATAM average) mentioned that they are buying and using the digital channel more for their purchases.
Despite the decline of the beverage sector in other countries, during the early days of the crisis, products such as orange juice, still drinks and powdered beverages had a great growth in sales. Also, there was a change in the places where people buy food and drinks. They are buying more in the modern channel (such as supermarkets and hypermarkets) and pharmacies, and less in the traditional one, the reason is the perception of cleanliness and security. As of April 20, more than 1000 "pulperías" or small grocery stores have closed in Costa Rica, and this situation is repeated throughout the region.
In food service, the opportunity seems more latent in the delivery of dishes such as chicken, pizza and hamburgers. In addition, families have increased the percentage of expenditures on food, especially with non-perishable products, fruits and vegetables. Some major food brands are donating products and meals to medical staff and emergency services such as the Colombian Red Cross.
In Peru, several large restaurant chains have made donations to the food bank, volunteer seafarers and the Navy. For Guatemala and Costa Rica, delivery has become a norm for the food and beverage industries.
Chile
Although their income is affected by the impact of COVID-19, Chileans are seizing the opportunity to devote more time to healthcare and food quality. More than half of the population that participated in the Customer Trigger survey said the top priorities when it comes to consumption right now are food and cleaning supplies. Which shows an even greater opportunity for products low in sodium, calories and sugar, as well as ready meals that consider natural extracts, sauces and spices with a fresh appeal.
And what more opportunities are in common in Latin American countries?
Due to the constant concern for health, many consumers have changed their perception and sensitivity in many aspects. Products that improve or promote immune health have great potential for growth. The fear of becoming infected drives diets that improve the immune system, as well as personalized nutrition in people at risk.
