Packaged Food in Guatemala

Stable performance expected following 2010 recovery
In 2011, the retail volume sales performance of most categories is expected to be in line with that seen in 2010. In 2009, most categories, especially those comprising non-staple items, saw a slowdown in retail volume sales growth and relatively poor performance. Guatemala was affected by the global economic crisis; remittances decreased, consumer confidence was down and consumption was depressed. In 2010, stronger retail volume sales growth was seen, as a result of a stronger economy. Expected results for 2011 show that the effects of the crisis will continue to recede, but underlying conditions in the country might still act as a barrier to growth.

Segmentation and innovation; key drivers for packaged foods
Companies that focused on segmentation and innovation retained the strongest competitive positions, even in times of crisis. Segmentation and innovation were used to attract new customers, widen the consumer base and retain or increase retail value sales share. These strategies proved successful for the leading players, as they enabled them to reach a diverse consumer base and to charge each segment what it was willing to pay. Many companies utilised a single umbrella brand with different pack sizes to reach a wide range of consumers. Other companies used several brands to attract different consumer groups. Additionally, innovative efforts were for the most part used to offer customers more added-value, which enabled players to establish a leading position in emerging formats and charge larger mark-ups.

Multinationals strengthen through mergers and acquisitions
Repeated examples have shown that multinational companies see mergers and acquisitions as the best means of entering or strengthening their position in packaged food in Guatemala. In 2008, the Mexican company Industrial Lala acquired the domestic player Foremost Diaries de Guatemala. This provided Industrial Lala with greater strength, know-how and distribution in the country. In 2010, the international giant Nestlé acquired the domestic player Malher. The acquisition strengthened Nestlé’s positioning in the country, as Malher is a key player in dehydrated packaged foods and drinks. Developments such as these lend additional dynamism to packaged food in Guatemala, as international players tend to invest heavily in research and development, marketing and advertising.

Modern channels expand aggressively
Early in 2011, the international chain Wal-Mart Centroamérica announced its plans to open and remodel 25 outlets in Guatemala. At the end of the review period, Wal-Mart was the leading modern grocery retailer in the country, with a presence in hypermarkets, supermarkets and discounters. Meanwhile, the domestic supermarket chain Unisuper opened new La Torre supermarkets. It also shifted some of its smaller EconoSuper supermarkets to the La Torre format. At the end of the review period, the number of outlets in the traditional channel continued to greatly outnumber modern grocery retailer outlets and remained essential for the distribution of daily-use staple products in the country. Nonetheless, the ongoing expansion of modern retail outlets makes it likely that some emerging categories will be primarily distributed through these outlets in coming years.

Significant growth potential
While Guatemala is a small emerging market with large future growth potential, there remain significant challenges to overcome. The country continues to offer more working opportunities, especially for young adults and women, but the economically active population also continues to grow. While remittances recovered and continued to grow following the significant decline suffered in 2009 and the early part of 2010, high inflation placed more pressure on consumers. Urbanisation and the expansion of modern retail channels will provide new opportunities for companies to reach potential customers.