Following Argentina’s economic crisis in 2001, the country had – for nearly a decade – been steadily growing in terms of activity, consumption and employment levels. It is noteworthy that these positive movements began to slow down this year, partly due to the peso devaluation of nearly 20% in January, and to inflation, which was close to 10% in the first quarter of this year. In the face of this scenario, the Government took action to continue stimulating consumption and launched the "ProgresAR" and the "Procreauto" plans, keeping the existing "ProCreAr" plan (launched in 2012 to address the housing deficit).
Confronted by the devaluation, many multinational companies reflected it in their prices, and improved their profitability. However, the Government has sought to reduce inflation rates for January-July (around 16% - 25% depending on whether the source of information is public or private) by launching the “Precios Cuidados” program and by trying to make wage agreements that do not differ much from the official inflation figures.
One year ahead of the elections, we are starting to notice the electoral bid, either among the opposition parties or within the Justicialist Party, which governs today. The President, Cristina Fernández de Kirchner, re-elected in 2011, cannot be elected for a third term.
Brazil is Argentina’s main strategic partner, and the place where most cars are exported to, an activity that has been record-breaking levels of production and sales in recent years. This year however, the growth has declined due to a price increase triggered by the devaluation of the peso, coupled with increased tax on high-end vehicles.
Argentina remains mainly a commodity-exporting country, with soy still being a key product in the market, and the Chinese market is the world’s largest consumer. Cereals, such as wheat and corn, are also important.
Many goods are imported, including many of the brands that Argentine people consume. As a result, Argentina has had fewer local brands historically, compared to countries like Brazil, Mexico and Colombia. Consequently, it’s worth highlighting the work done by Quilmes as a benchmark for the beer category; YPF, with its history and identification with the national stake in the Argentine oil industry; and companies such as La Serenisima, Arcor and Molinos, which have a wide range of brands and categories within the food industry. All of these brands have a strong distribution and presence at the point of sale, with significant investment in communication focused on television, although online media is increasingly gaining share. In fact, Argentina has one of the greatest internet penetration rates in Latin America (more than 60% broadband), significant growth rates in use of social networks and even smartphones’ (more than 200% in 2013). This is also reflected in the use of internet and social networks, with a penetration of more than 55% active users.
Account Director, Millward Brown Argentina