Top Product Categories to Source from by Latin American Country
Latin America’s GDP is set to grow in 2020 thanks to Latin America’s four biggest economies: Brazil, Mexico, Argentina, Peru, and Colombia. Those economies have become very big in importing and exporting. Forecasted GDP for all four countries is set to grow next year, contributing to the region’s growth of 6% and beating the Asia-Pacific growth rate of 5.3%. That’s a significant vote of confidence for the region and has caught the attention of investors and businesses worldwide. Although Latin America economies have suffered various degrees of crises in the last decade, 2020 is the year for moving up. We look at importing and exporting opportunities in Latam’s biggest four economies. Top Latin American Countries to Source From While the overall projections for certain product categories are encouraging, the numbers are less compelling as we drill down into specific markets. We’ve looked at hot-selling products for LatAm in both 2018 and 2017, and this time out, it was much harder to find high growth indicators.
Below, we outline the top product categories to source from based on Latin American Country:
1. Mexico
Consumption growth in Mexico remains strong relative to other Latin American coutries. These are some of the top-selling products in Mexico in 2019:
● Smartphones: According to the Competitive Intelligence Unit (CIU), the smartphone market in Mexico grew by 1.9% in Q2 2019. While not a huge amount of growth, this is significant considering the drops in mobile phone and smartphone sales in other LatAm countries in recent months. Overall, CIU estimates that 106.8 million smartphones were operating in Mexico at the end of Q2 2019, a 3.8% increase versus the same period in 2018. Samsung leads the Mexico smartphone market with 35.4% market share, followed by Motorola with 14.2% and Huawei with 12.1%.
● Videogames: While no figures for 2019 appear to be available yet, CIU reports that the videogame industry in Mexico grew by 9.1% in 2018. While in Brazil the growth trend seems to be occurring with mobile gaming, in Mexico, of the 27 billion Pesos in revenues generated by the videogame industry in 2018, nearly 86% came from video console sales: around 23 billion pesos. Of this mount, 12.4 billion Pesos came from videogame sales and 10.8 billion from hardware sales.
● Premium Spirits: A recent report from Diageo indicates that premium spirits sales have gone up by 8% in Mexico over the past year: the report corresponds to the company’s fiscal year, stretching from July 1, 2018 to June 30, 2019. Scotch was the spirit that grew the most, spurred by a sales growth of 7% with Johnnie Walker Black and a 4% uptick with Black and White.
● Hybrid Cars: Despite the sales drops in regular cars in 2018 and 2019 in Mexico, hybrid and electric cars are doing well. According to the Asociación Mexicana de la Industria Automotriz (AMIA), hybrid and electric car sales in Mexico leapt by 68% in 2018. For Q1 2019, AMIA reports that hybrid and electric sales in Mexico grew by 64% compared to Q1 2018. Of course, overall volumes are still quite small: only 2,160 units.
● Beverages: According to the Industria Refresquera Mexicana (ANPRAC), sales volume for the beverage industry in Mexico grew by 2% in Q1 2019, compared to Q1 2018. Flavored beverages (like sodas) grew the most, with a 3% uptick in sales volume during Q1 2019.
2. Peru
Consumer growth in Peru continues to impress with 5.3% recorded in the first half of 2019. As a smaller market, few categories are tracked by published sources. These are the top-selling products in Peru in 2019:
● Cosmetics: The cosmetics market in Peru grew by 3.3% in 2018 and is projected to grow by another 4% in 2019, according to the Cámara de Comercio de Lima (CCL). Sales of body treatment products in Peru grew the most in 2018 (5.4%), followed by facial treatment products at 4.4%. This growth is expected to continue: the CCL projects that the cosmetics market in Peru will grow by 3% in 2020 and by 4% in 2021.
● Clothing and Footwear: Over the past five years, clothing purchases rose by 36% in Peru, while sales of footwear in Peru increased by 18%, as indicated by a report from the Ministerio de la Producción en Perú
● Cars: New car sales dropped by 7% in Peru between January and May 2019, according to the Asociacion Automotriz de Peru. However, due to changes to the Impuesto al Consumo tax, Scotiabank projects that overall, new car sales in Peru should increase by 2% during 2019. It’s not clear if this sales will benefit motorcycle sales in Peru: these increased by 3.5% in 2018 but then dropped by more than 6% in the first half of 2019.
3. Colombia
Colombia has kicked off 2019 with two solid quarters in a row. According to the Departamento Administrativo Nacional de Estadística (DANE), GDP grew by 3.1% in Q1 2019 and then by another 3% in Q2. Beyond GDP, there are more direct indicators of economic growth in the country, such as an increase in retail sales of 5.7% in the first half of 2019 in Colombia, as recently reported by DANE. The most recent numbers available were for June 2019, in which retail sales in Colombia went up by 7.2% compared to June 2018.
In June 2019 among the products with robust sales increases in Colombia were footwear and leather goods (17.8%), home cleaning products (14.4%), appliances and furniture (13.8%) and food (11%). In looking at 2019 thus far and a bit forward, here are some of the top selling products in Colombia in 2019:
● Cars: According to trade group Asociación Nacional de Movilidad Sostenible (ANDEMOS), Colombia’s car market is performing strongly this year. New car sales in Colombia went up by 4.7% between January and July 2019 to total 139,114 units. Used car sales in Colombia also went up significantly in 2019, with an 8.8% increase. The strong 2019 new car sales in Colombia come after a 7.2% increase in new car sales in 2018 that was reported by the Federación Nacional de Comerciantes (FENALCO) and the Asociación de Empresarios de Colombia (ANDI).
● Motorcycles: According to ANDEMOS, new motorcycle sales in Colombia increased by 12.6% between January and July 2019 to reach a total of 346,804. Used motorcycle sales grew by even more: 14.2% in the same period.
● Home Appliances: Between 2018 and 2023 sales of home appliances in Colombia (such as washers, dryers, dishwashers) will grow by 8.8% to reach more than 15 million units sold.
● Cosmetics: After posting revenues of US$3.4 billion in 2018, Raddar and Inemxoda project that the cosmetics and beauty sector in Colombia will reach revenues of US$4.1 billion by the end of 2020, a 20.5% increase.
● Sportswear: According to figures from the Colombian government, sportswear sales have gone up by 11% so far in 2019. A Euromonitor study from last year projects that sportswear sales in Colombia will increase by 28.5% between 2018 and 2020.
4. Brazil
2019 saw sluggish growth in retail sales, with a 0.3% in Q1 followed by a corresponding drop of 0.3% in Q2. Notwithstanding, the Brazilian consumer market offers some bright spots, and these are some of the top-selling products in Brazil in 2019.
● Cars: New car sales rose by 11% during the first half of 2019 in Brazil, according to trade association Fenabrave. Overall 1,065,888 new passenger vehicles were sold in Brazil in the first semester of 2019. Thus far, the top-selling car makes/models in Brazil for 2019 include the Cheverolet Onix, the Ford Ka and the Hyundai HB20.
● Wearables: More than 88 million smart watches and bracelets were sold in Brazil during Q1 2019. Overall, IDC projects that over 461,000 wearable devices will be sold in Brazil during 2019: a 91% increase compared to the 241,000 sold in 2018.
● Cosmetics and Personal Care Products: Sales went up by more than 10% during Q1 2019, according to Associação Brasileira de Redes de Farmácias e Drogarias, with R$4.7 billion in sales, beating the 4.5% increase posted in Q1 2018. Overall, Brazil accounts for 6.2% of the world’s consumption of health, beauty and wellness products but only 2.75% of the world’s population and 2.5% of global GDP.
● Gaming: According to PwC’s Global Entertainment and Media Outlook, the gaming market in Brazil should grow by 5.3% by 2022. Mobile games are the area with the biggest projected growth: revenues are expected to grow from $878 million in 2017 to $1.7 billion by 2022.
● Smartphones: Among the top 5 markets in overall smartphone sales in the world, Brazil grew the most in Q2 2019, posting a 1.3% increase, according to Gartner. China posted modest growth of .5% and the other 3 markets (Indonesia, the U.S. and India) all dropped in sales.
5. Argentina
As part of MERCOSUR and home to free trade zones and special customs areas, Argentina makes an appealing import and export destination. Furthermore, investor-friendly reforms and policies make business in Argentina easier for foreign nationals and firms.
Given the free trade zones and special customs area, Argentina acts as a gateway to South America, particularly to other MERCOSUR countries. Importing products through these zones can save on tariffs costs.
E-commerce is on the rise in Argentina, with the number of online shoppers, and their spending, growing each year. This presents opportunities for those interested in the development of online vendor technologies and selling their products online. 20 million people are expected to shop online by 2021 with the most popular payment method of credit cards, followed by prepaid cards. The e-commerce platforms themselves need innovation in order to facilitate the industry’s growth, as well as improvements to logistics. Furthermore, with 92% of the population living in rural areas, the ability to deliver products quickly will further boost the use of e-commerce in Argentina.
Exporting from Argentina
● Foodstuffs: Top exports for Argentina are foodstuffs (more than half is soy based), vehicles, cereal, animal/vegetable fats and meat. Top export destinations are Brazil, the US, China, Chile and Vietnam. Meat was the fastest growing export category in 2018, followed mineral fuels, vehicles and fish. Given Argentina has over 30 million hectares of arable land, the agricultural industry holds promising prospects for those looking to secure high-quality products. Exports of Argentina’s world-famous meat are on the up and as the fastest growing export category last year, lucrative opportunities exist. Argentina beef exports are now able to be sent to the US after a 17-year ban. Subsequently, the distribution of Argentinian beef in the United States is a growth destination for Argentinian meat exports.
● Petrochemicals: The oil and gas sector also holds opportunities for those with a competitive advantage in hydrocarbon technologies. The government has lowered tariffs on the importation of equipment that can facilitate the exploration and exportation of hydrocarbons.
Conclusion
If you’d like to obtain deeper consumer insights for Latin America, please contact us at Papaya Marketplace. We’ve helped companies with competitive intelligence, sourcing new vendors, building long-lasting relationships with suppliers, brand awareness, and more, conducting LatAm market research and intelligence for sectors such as beauty, cars, food/beverage, appliances and electronics, among others.
At Papaya Marketplace, we aim to facilitate the increasing transition of US buyers nearshoring their manufacturing operations to Latin America. Papaya Marketplace provides U.S. buyers access to hundreds of manufactures in Mexico and Colombia, all of whom are pre-vetted to ensure high quality standards for our carrier partners.
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