Diageo: Alcohol Beverage Consumer Dynamics In Latin America Among The Most Attractive Globally

Brunch With Randy Millian, President, Diageo For Latin America and Caribbean -Transcript

EXCERPT:

“Consumer dynamics in our region are among the most attractive globally. The total population of the region has been growing at an annual rate of just over 1%. The legal drinking age, however, has been growing faster than this. And the emerging market is growing quickly as well. There are 50m households able to afford our brands. That number is steadily rising. In addition, the increase in household income and higher levels of affluence are causing fundamental shifts in demographics.

“As this trend continues we anticipate 10m to 15m new consumers entering the middle class in Latin America every year. In Brazil alone household income for middle-class families between 2003 and 2009 increased by 40%. This is a significant and exciting opportunity for us, as the number of consumers able to afford premium brands such as ours grows.

“We see the same trends across the region. Over half of the population in Mexico, Argentina, Brazil, Uruguay and Costa Rica are now middle class. This is a significant difference between other emerging markets such as China and India, where the middle income group represents a much smaller portion of the population. It means a much faster and grounded shift in consumer dynamics and a much greater financial stability. This domestic consumption is now a key economic driver in markets previously dependent on exports.

“On the upper end of the economic scale the millionaires and multi-millionaires in our region are also increasing, making Latin America a high potential market for reserve brands. Forbes magazine published an article at the end of November mentioning that Brazil’s booming economy is creating 19 new millionaires every day, and has been since 2007.

“How does the development in the economies of the region define the total Beverage Alcohol market? The structure of the Beverage Alcohol market is a direct reflection of income distribution. The value segment represents over 40m equivalent units – roughly 75% of the volume and 66% of the value for total Beverage Alcohol. The standard and premium sectors, on the other hand, represent 25% of the volume, translating to over 34% of sales value.”

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