15 December 2005 - Report Highlights:
The Argentine retail food and beverage sector for 2006 is projected to continue recovering after the 2002 economic crisis. Increased sales of imported products are expected, especially in large supermarket chains. Large retailers will make strong investment in store openings, primarily in medium-large cities in the interior of the country.
INTRODUCTION
The Argentine food and beverage (F&B) market is expected to continue to expand further in 2006.As Argentina continues to recover from the 2002 economic crisis, its Gross Domestic Product (GDP), after falling 10.5 percent in 2002, is expected to grow for the fourth year in a row.
The retail market, as well as the economy in general, has been recuperating strongly, but with significant changes.Some of these will remain for some time, but others are rapidly going back to what they were prior to the crisis.The main impact of the economic crisis in 2002 on the retail sector was: higher food prices in peso terms; lower food prices in dollar terms, which encouraged many local processors to export; a steep drop in domestic sales and consumption; a reduction in the size of packages; disappearance of many lines of products; appearance of old, discontinued brands; increased sales of basic foods; a drop in sales of higher-value products, such as frozen foods and imported products; and, the increase of F&B sales in small grocery stores.
The Argentine retail sector, after the devaluation, lost much of what it had gained in the past decade.However, from mid-2003 onwards there have been good signs of recovery in the market.Following are the main trends for 2006:
·continued price increases (inflation was 12 percent in 2005, and it is projected at over 11 percent in 2006);
·continued growth in sales;
·recovery in sales of brand names and high value products;
·increased purchases of imported F&B (primarily in large supermarket chains, not in small supermarkets nor grocery stores);
·improved deli/gourmet sections in upscale stores;
·expansion of private label products;
·company credit cards offered by large retailers;
·continued marketing activities through brochures and in-store promotions;
·consumers´ continued emphasis on price and “sales”;
·incorporation of some strategic stores by large retailers to compete with wholesalers (lower prices and larger volumes);
·increase of product lines and supply of informal credit by kiosks and grocery stores;
·strong investment in new openings of supermarkets and wholesalers; and,
·expansion primarily in the interior of the country (large and mid-size cities).