Across Latin America, COVID-19 food and beverage trends mirror behaviors seen elsewhere, including a preference for delivery and shelf stable staples
As COVID-19 spreads through Latin America (LATAM), countries are closing borders, consumers are practicing social isolation and Latin American food purchasing and consumption habits are changing. The sudden shift in behaviors is challenging the LATAM food and beverage industry to study changing information and reinvent business practices.
Get KerryDigest articles delivered to your inbox
Latinos across diverse age groups and geographic locations are embracing digital technologies and accelerating the use of online media to purchase ready-made foods and groceries. These sales are having unprecedented impact on the sector, strengthening new sales channels, improving our purchase tracking abilities and inspiring a clearer dialogue between suppliers, manufacturers, brands and consumers.
Sales data shows there’s a growing interest in products perceived to help enhance or strengthen immune health as well as those low in sodium, calories and sugar content. There’s also demand for good taste, such as products that use natural extracts and sauces and spices with fresh appeal.
Another growing trend in LATAM is the concept of "dark kitchens", or ghost restaurants. These establishments offers food services only for takeout or delivery. In addition to having a lower operating cost, thanks to the absence of a dining room, these restaurants come with a lower initial financial investment and have greater flexibility for menu changes, allowing them to rapidly adapt changing audience tastes.As the Strategic Marketing Vice President for Kerry LATAM, I collaborated with five of our regional experts to analyse data from across regions and report on the impact of COVID-19 on Latin America’s food and beverage industry. Insights came from Agnes Azevedo and Nathalia Molon in Brazil and the South Cone; Susana Garcia in Mexico; and Katrina Heredia and Malu Larriva, who covered Central America, the Caribbean and the Andean region.
Although many of the trends we're seeing mirror those happening worldwide, including in overall restaurant delivery growth, North American grocery trends and China’s industry-wide adaptations, the diverse preferences and practices in Latin America make for differing food industry reactions to COVID-19.
Brazil’s market response to COVID-19
We see a significant increase in Brazilian consumers’ commitment to the so-called cash and carry markets and hypermarkets, where a variety of essential items are offered for sale in one place. According to Kantar data, cash and carry and hypermarkets together registered a 53% penetration in mass consumption, a new high due to the more than 2.5 million new households that recently began shopping in these stores.
At cash and carry and hypermarkets, in-demand products include industrialized breads, sales for which are up 52%; hygienic absorbents, which have grown by 21%; and sausages and toilet paper, each of which are up around 15%. According to Kantar, in January and February there was also a positive variation in sales of ready-made juices, beer and soft drinks, which were up by 15%, 10% and 6%, respectively.
Products that have registered a decline in sales include fermented milk, which is down 21%; yoghurt, which is down 17%; soy drinks, for which sales have shrunk by 7%; and self-care items such as razor blades and hair dye, which are down 12% and 4%, respectively.
According to the Brazilian Beverage Association (Abrabe), with many bars and restaurants closed due to COVID-19, the dine-out market has slowed by 52% since March 15. However, restaurant data shows that the consumer relationship with ready meals is also changing, with a recurring decrease in homemade meals, especially on weekends. Comparing the first week of March with the second, the number of households that ordered food increased, mainly through direct orders from restaurants and snack bars. The use of apps for this purpose was also high, growing by 19%, according to Rg Nutri com TechFit. The same source also shows that supermarkets registered 74% in the increase in online sales between March 16 and 22.
Food and beverage in Mexico during COVID-19
Territorially distant from Brazil, but very close in terms of preferences, in Mexico, rapid adaptations in the food industry are largely based on consumer demand for convenience and security. The number of people who ordered meals through delivery apps in some market segments was 6 out of 10 by March, with 20% of people already making their supermarket purchase online, too. On Rappi, a well-known delivery app, the orders have tripled in recent weeks, and several establishments no longer charge for delivery.
Delivery is the new operating model for restaurant chains. The number of restaurant partners available through one of the country’s main delivery platforms increased more than 250% in recent weeks. Even establishments that do not use apps such as Uber Eats or Rappi are now communicating directly with consumers via WhatsApp and Instagram to satisfy delivery demands in-house. Many are also offering several promotions and discounts on delivery rate or implementing a “pick-n-go” model, in which consumers order by phone and then pick up at the restaurant.
In the bakery and confectionery industries, some local businesses are embracing the new consumer interest in “take and make” DIY kits, selling the packaged materials for popular products so people can make their own creations at home. Other brands are offering bakery and confectionery classes online through Instagram Live, a practice some of the country’s most recognized chefs are also testing.
In order to extend the life of prepared food, packaging such as vacuum-sealed bags, which were not long ago only used by major brands, is now used by all types of establishments.
To support restaurants in continuing their business, a large solidarity network has been developed and people are buying vouchers to use when the crisis passes.
In retail, sales of food such as rice, beans and eggs grew by 400% in the first two weeks of March. Demand for canned food, which has a longer shelf life and thus reduces the need for repeat trips to the store, has also increased, especially sardines, herring and tuna, which are all up more than 150%.
Consumption has increased, too, for emergency readiness purchases including alcohol gel, napkins and health products, all of which are items considered to necessary for life in quarantine.
Across the board, Mexican consumers are buying more product units or larger packs with a preference for national items, according to Zinklar. This highlights the opportunity for products with a homemade or authentic perception, the popularity for which can be tied to their role in bringing back memories of family.
Condiments, too, will play an important role in helping consumers improve their daily meals and replicate family recipes. In this country, some restaurants have been including concepts and histories about their ingredients and local production, using storytelling as a unique selling proposition for products.
Central America, the Caribbean and Andean region during COVID-19
In the central region of Latin America, too, the preference for digital shopping went quickly from trend to reality. In Panama, Costa Rica and Guatemala, the first three days of quarantine the number of small businesses interested in updating and expanding their digital platforms tripled, according to the Association of Exporters and the Digital Commerce Camara of Guatemala. In tandem with this statistic, Kantar found that more than 25% of people in Colombia and Guatemala are using digital channels for their grocery purchases, bringing the country averages above those of much of LATAM.
Non-virtual shopping habits are also changing. People are increasingly buying food and drinks in “modern” channels such as super- and hypermarkets and drugstores versus more traditional markets. Part of this shift is due to a perception of cleanliness and safety, and it’s having widespread effects: as of April 20, more than 1,000 “pulperías”, or small grocery shops, have closed in Costa Rica, and the situation is repeating itself throughout the region.
Despite the decline of the beverage sector in other countries, during the first days of the crisis, products such as orange juice, still drinks and powder beverages had great growth in sales in this region. In addition, families have increased their food expenses, especially with the addition of more non-perishables.
In foodservice, the opportunity seems more latent in the delivery of dishes such as chicken, pizza and hamburgers. Restaurant rules vary by country. For example, in Guatemala and Costa Rica, the respective governments declared restaurants “essential” to the population, but only able to operate via delivery or the pick and go model.
Community support appears to be a high priority in the region. Many of the main food brands are making donations of products and meals to medical staff members 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.
To learn more about how COVID-19 is affecting the food and beverage industry, including changes in consumer preferences and purchasing behaviours, visit Kerry’s COVID-19 resource page.