At the time of writing, thousands of Colombians are protesting on the streets and joining a strike organized by Colombian farmers. Their concerns are that the conditions signed and agreed in the Free Trade Agreement (FTA) with the United States will significantly affect their income and way of working. The belief is that the agreements, which have recently come into force, will flood the market with products at prices that small-scale Colombian farmers cannot compete with. The unrest is just one of the effects of the many FTAs recently signed by Colombia.
It is only 20 years since the Colombian market underwent its first economic ‘opening’, bringing new brands and companies to compete in the local market. However, at that time, high duties and taxes continued to favor the local products. That early experience taught local brands how to compete and how to prepare for the seductive avalanche of highly desirable global brands. Today, the scenario is different: following the signing of the FTAs with the European Community, Asian countries and the United States, the competitive arena has become more aggressive. On the one hand, the taxes will no longer serve as a protective shield, on the other, the competitive conditions have evolved.
The first and most important change is that the image of Colombia abroad has improved and today it is perceived as a better destination for investors. It is certainly the most attractive market in the region, given the unpredictable nature of surrounding neighbors like Ecuador and Venezuela. Furthermore, Colombia has 44 million inhabitants (consumers), making it the third most populous country in Latin America, after Brazil and Mexico.
From a branding perspective, the battle between local and global brands has begun. However, today the mere promise of international or global will not be enough to compete in a market that is increasingly demanding and sophisticated. The Colombian consumer is more mature and aware of the value for money proposition of the brands he buys; he is also very active digitally and has a broader view of the world. According to “Digilats” (a study by JWT about the digital habits of Latin-Americans, made in 2013), 60% of Colombians have Internet access and of that group, 93% surf the web every day. Additionally, Colombia has one of the highest mobile Internet penetration rates in Latin America with an average usage time of over seven hours per week. The Colombian consumer has become more demanding and is already a high tech shopper.
To complete the picture, local industry is prepared: the quality of local products and services has improved to global standards and now are second to none. It will be interesting to see how this brand battle develops; the big winner is likely to be the consumer who every day has more power, and more choice.
Juan Pablo Rocha
CEO, JWT Colombia