WHAT'S NEW IN PERU'S LOCAL MARKET?
In the past 15 years, Peru has experienced its highest economic peak of the previous 60 years. Not since the fishing “boom” in the 1950s, when Peru became one of the main fishmeal and hydrobiological goods producers, has the Peruvian economy experienced such a steady growth, with rates that led to an almost three-fold increase of its GDP over the last 15 years.
Obviously, these changes have brought about some important transformations in the socio-demographic structure of Peruvian families. According to ECLAC (Economic Commission for Latin America and the Caribbean), in the past 15 years almost a million Peruvian families have overcome extreme poverty, generating a population pyramid that looks more like a diamond. This has also resulted in the development of a thriving middle class that has been the driving force behind domestic consumption, leading to growth in some industries and sectors. For instance, the market of new car sales increased from 40,000 new cars in 2003 to over 210,000 in 2013. Likewise, the construction sector grew at 12% average annual rate in the last ten years, while over 120,000 mortgages for the purchase of private homes were granted.
According to the data on mass consumption, the basic basket of an average Peruvian household has grown from around 48 categories of products in early 2000 to around 58 categories in 2015, with two-digit growth in the consumption of many of these categories.
WHERE ARE THE WEAK POINTS?
Not everything has gone so well. During these years of the highest macro- economic growth, we have failed to resolve structural issues such as casual labor and sub-employment, our industry has not strengthened, and we still have a 70% dependence on exports of primary and traditional products, mainly commodities such as copper, silver, gold, and zinc, among others. We continue to be one of the countries in this region with the largest number of households receiving daily or weekly wages – about 45% of Peruvian households obtain their income this way, due to casual labor and employment scarcity. This results in a country with the highest purchase frequency in the region, with 296 visits to points of sale to buy basic basket goods, with one of the lowest average purchase ticket in the region – around $6 US per visit – comparable only to Mexico, Bolivia, and some countries in Central America.
In this environment, with so many “moments of truth” in the purchase process, a still predominantly traditional channel – warehouses and markets – and a compulsive need among Peruvian housewives to spread the budget as far as possible, the work for brands in Peru is a constant challenge. There is no doubt we Peruvians are “brandists”: we have emblematic Peruvian brands with high affinity, bonds and history with local consumers, which makes us quite traditional. Thus, building new brands in Peru is almost a handicraft, a task that requires patience, clear strategies, perseverance and consistency.
It is clear that the golden years of the world and particularly Latin America are already over, and that the macro- economic environment will not be as favorable as some years ago, a fact that has become evident in Peru since 2014. Nonetheless, it is also clear that there are business opportunities and that, despite the economic slowdown, some brands and products keep growing. The important thing is to continue building strong brands on the basis of sound knowledge of consumers, leveraged by the innovation demanded by those consumers according to new market trends and needs.
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