This document provides an overview of business opportunities in Latin America (LATAM). It discusses LATAM's large economy of $5.3 trillion and growing middle class. Key sectors highlighted include agroindustry, food and beverages, building materials, and infrastructure. For each sector, trends, opportunities and country-specific information is presented. The document emphasizes that LATAM offers significant opportunities for EU exporters, particularly in niche markets, through differentiation and innovation. However, common mistakes made by exporters include a lack of cultural understanding and not adapting to local conditions.

1. BUSINESS OPPORTUNITIES IN LATAM
Thessaloniki, April 6th 2017
Program funded by the
European Union
Implemented by the consortium led by AESA

2. Why LATAM?
• A US$5.3 trillion economy
• Approximately 600 million citizens
• Latin America is a rapidly-growing market
• A fast growing middle class
And because diversifying export markets is always
a good idea…

3. Why Latin American?
US$ 5.3 trillion economy
GDP almost x3 in 15 years

4. Why Latin America?
Despite economic uncertainty…things are expected to improve

5. Why Latin America?
Fast growing middle-class

6. What does Latin America look like?
Population disparities

7. What does Latin America look like?
Fast-growing urbanization

8. What does Latin America looks like?
LATAM aging population +65 years %

9. What does Latin America look like?
Uneven economic growth across the region

10. What does Latin America look like?
GDP per capita disparity across the region

11. What does Latin America looks like?
Income inequalities within countries

12. What does Latin America looks like?
Women in LATAM
 53% of working population
 33.5% of Directorship positions

13. What does Latin America looks like?
Women in LATAM – MERCER Research 2015

14. What does Latin America looks like?
Latin America trading blocs

15. Doing business in Latin America
World Bank ease οf doing business index

16. Doing business in Latin America
Corruption perceptions

17. Doing business in Latin America
161.000 million US$ will be invested in the next 5 years
• Transportation and logistics
90.417 million US$
• Oil and gas infrastructures
35.500 millions US$
• Energy
26.226 MUS$
In 2030 50% to be covered with
renewable energies

18. Doing business in Latin America
Fastest growing consumers markets 2010-2015

19. Doing business in Latin America
EU-LATAM trade

20. Doing business in Latin America
EU-LATAM trade

21. Doing business in Latin America
FDI in LATAM

22. Doing business in Latin America
FDI in LATAM

23. Doing business in Latin America
EU FDI in LATAM
EUR 2.260 billion
= 40.2%
EUR 591.1 billion
= 10.5%
EUR 490.6 billion
= 8.77 %
EUR 651.4 billion
= 11.6%
EUR 168.7 billion
= 3%
EUR 1.157 billion
= 20.6%

24. Doing business in Latin America
EU Free Trade Agreements with LATAM countries
Colombia (2013), Peru (2013),
Ecuador (2016)
Mexico, 2000.
Undergoing an upgrading process
Chile (2003)
Probable modernization
MERCOSUR, under negotiation,
relaunched 2016
Central America, 2013
Guatemala, Honduras, El Salvador, Nicaragua,
Costa Rica and Panama

25. Agroindustry

26. Food sector in LATAM
• LATAM is the largest net exporter of food in the world
• LATAM accounts for 16% of total global food and agriculture exports
and 4% of total food and agriculture imports.
• 43% of imported foods are correspond to intrarregional trade
• The region is one of the few parts of the world with significant
resources of unexploited agricultural land (concentrated in Brazil and
Argentina)
• Raising productivity will be essential to meet domestic food needs or
to maintain or enhance export competitiveness.

27. Food sector in LATAM

28. Food sector in LATAM
• Global influences: health, urbanization, sustainability, food safety,
• Increased demand for high-quality foodstuffs
• Convenience foods, organic products and functional foodstuffs
impressive growth rates, albeit starting from a relatively low level.
• Dual economy within each individual country: market niches vs
mass market
• Opportunities for smaller and medium-sized EU businesses in
niche markets

29. Agroindustry
Food and beverage trends
Convenience &
packaged foods
• Population ageing
• Increase in single and
smaller households
• Lifestyle in big cities
• One portion sizes
• Frozen/ refrigerated
food
• Smaller packages
• Reseleable packages
• Prepared food

30. Agroindustry
Food and beverage trends
Indulgence
& pleasure
• Income growth
• Higher educational
level
• Gourmet and
premium products
• Use of ingredients:
chocolate, cheese,
milk
• Food service

31. Agroindustry
Food and beverage trends
Health
• Population ageing
• Higher education
level
• Lifestyle in large cities
• Obesity and general
health concerns
• “Healthy” foods
• Organic / ecological
certifications
• Functional foods
• Light and diet foods
• Label information

32. Agroindustry
Food and beverage trends
Safety
• Increase in income
• Higher education
level
• Health consciousness
• Traceability
• Brand reliability
• Label information

33. Agroindustry
Food and beverage trends
Sustainability
& ethics
• Increase in income
• Higher educational
level
• Tourism and travel
• Environment
concerns
• Recyclable
packaging
• Reduction of
packaging
• Fair trade
certification
• Label information

34. Agroindustry
Food and beverage trends
Imported foods
• Increase in income
• Higher educational
level
• Tourism and travel
• Packaged foods
• Packaging
• Food service, hotels
and restaurants
• Chocolate, cheeses,
premium olive oil,
snacks, premium
wines and spirits

35. Agroindustry
Health concerns
• Functional food and beverages market in LATAM will value US$ 21 billion in 2020
• Change in lifestyle and increasing of disorders such as diabetes and cardiovascular
diseases create opportunities for stevia, amino acids, antioxidants, enzymes, fibers,
proteins, probiotics, prebiotics, phytosterols and polyphenols

36. Agroindustry
Health concerns

37. Agroindustry
Health concerns

38. Agroindustry
Health concerns

39. Agroindustry
Sustainability & ethics
• LATAM accounts for almost 20% of global organic food trade.
• 2.2 million organic producers worldwide, 400.000 in LATAM
• Mutual recognition and equivalence systems: Chile (2016),
Colombia (in progress)
• Consumer awareness of sustainability issues is rising; however
awareness is translating slowly into demand
• Many Latin American perceive organic, fair trade and other eco-
labeled products as luxuries.

40. Agroindustry
Favorite Snacks

41. Agroindustry
Yogurt
• With rising population demand for yogurt and other dairy products are also increasing in LATAM
• Probiotic curd, frozen yogurt, soy yogurt, low fat variety, flavored yogurt are some of the most
popular varieties in the market.
• Since increasing obesity is serious threat in LATAM, people are demanding variety of low fat
yogurt for meal replacement.
• Demand for drinking yogurt is soaring in Latin America.
• Demand for flavored yogurt with low sugar content is increasing.
• Because veganism is increasing in Caribbean Nations, people are looking for dairy free
alternatives: demand for soy yogurt is increasing substantially.
• Since gourmet food items are gaining admiration throughout the Latin American region,
demand for yogurt with expensive berries and nuts, yogurts with exotic flavors is rising.

42. Agroindustry
Alcoholic drinks
• LATAM is the second highest per capita consumer of alcohol worldwide
• Huge surge in demand for alcoholic drink products.
• Unregulated marketing, policies and low taxes are contributing to the growth of
alcohol consumption
• Packaging has played an important role, with a wide range of offerings by alcoholic
drink manufacturers contributing to the market growth.
• Even though, glass is the major material used for packaging, plastic packaging for
alcoholic beverages is also available in some of the developing countries. Apart from
these, metal cans and PET bottles are also being used for alcoholic drinks packaging.

43. Agroindustry
Most common errors made by exporters

44. Agroindustry
Strategies for EU exporters
• A niche market
– Gourmet, specialized food,…
– Healthy, low sugar, functional
– Tourism and food service channel
• Differentiated products, innovation
• Brand protection
• Opportunities for food technology and food production (weak
domestic supply)

45. Building materials

46. Building materials
• Fast-growing populations and middle class
• Rapid urbanization process
• Increasing demand for commercial, retail, and industrial properties has
greatly boosted building construction and related product sales.
• Government investment in public infrastructure has stimulated
construction spending and generated a considerable product demand.
• Small construction sectors and underdeveloped public infrastructures.
Overview

47. Building materials
Overview

48. Building materials
Homebuilding

49. Building materials
The outlook for the construction, homebuilding and building materials
sector in Latin America will be stable for the region as a whole in 2017
• Improvements in Mexico's homebuilding industry offset ongoing weakness in
Brazilian construction
• Revenues for Mexican homebuilders will grow between 5% and 15% next year,
largest growth will happen in the low-income housing market.
• The sector faces a more challenging outlook in Brazil, where the homebuilding
contraction began in 2012 and the recession worsened it in 2015.
 Inventories remain high and while a gradual, partial recovery is likely next year,
a complete turnaround won't come until mid-2018
Homebuilding

50. Building materials
• Latin America currently spends approximately 1.7% of gross domestic
product (GDP) on infrastructure development. This is less than any
other region of the world except Africa.
• It is estimated that the regional infrastructure market will grow to $114
billion by 2018.
Infrastructure

51. Building materials
Infrastructure Growth Potential
The top 100 Latin American infrastructure projects total US$138.7 billion
• Airports
• Electricity – Generation
• Electricity – Transmission
• Highways and Bridges
• Internet Communications Technology
• Oil and Gas
• Ports and Logistics
• Rail
• Urban Mass Transit
• Water and Wastewater
Infrastructure

52. Building materials
Infrastructure Growth Potential
The top 100 Latin American infrastructure projects total US$138.7 billion
• 21 projects valued at $48 billion are in Brazil
• 15 projects at $17 billion are in Colombia
• 8 projects at $20 billion are in Chile
• 7 projects at $12 billion are in Mexico
Infrastructure

53. Building materials
• Strong national industry: Until 2007, the Brazilian trade balance surplus – exports less
imports – of the construction sector was more then 1 billion BRL.
• Domestic industry is not competitive: since 2008, the expansion of the civil construction
and the appreciation of the real the import/export situation in the country has been
changing with imports surpassing exports by 1.1 billion BRL.
• Products with high added value, such as ceramics, fittings and metals, which have high
prices in Brazil have preference for importers.
• Cranes, freight elevators, racks and machines for construction of foundations, because of
the shortage of domestic supply, can be added to the list of the most sought-after items
to be imported to Brazil.
• Currently, Brazil's biggest partners in the marketing of construction materials are China
and Turkey focusing on steel pipes and finishing products. While Poland is very
competitive in glass.
Brazil

54. Building materials
• The National Association of Construction Materials
Retailers (ANAMACO) estimated an overall growth of 6% in
2016, after a 5.8% dip in 2015.
• Its monthly survey of sales found that, while the South and
South-East had contracted slightly in February, there was
growth of 18% and 10% in the Centre-West and the North.
Brazil

55. Building materials
• According to a 2015 study by the São Paulo Federation of
Industries (FIESP), and the Brazilian Equipment and Maintenance
Technology Association (Sobratema), the infrastructure and
construction industries are expected to receive about US$1
trillion in investment through 2022.
• As a result, annual average investment should be approximately
US$125 million, equivalent to 9.8% of GDP.
Brazil

56. Building materials
• Brazilian families will be expanding at an average annual rate of 2%
over the next 23 years
• The country will need 11.5 million new homes over the next seven
years, which means its needs to build around 1.4 million homes per
year.
• Construction company turnover, for example, will jump from R$ 53.5
billion in 2007 to R$ 129.6 billion in 2030
Brazil

57. Building materials
• The Brazilian Federal Government is also providing tax incentives
that will create opportunities for refurbishing, building, acquiring
or operating hotels, as travel and tourism continues to grow.
• As a result, new hotel construction is underway in several cities,
and several current hotels are being refurbished and upgraded.
Brazil

58. Building materials
• Spending for public works projects, including BUS Rapid Transport (BRT) and
Vehicle on Light Tracks (VLT) systems, dedicated bus lanes, subway and
commuter trains, and the implementation of integrated monitoring systems,
projects to be around US$2.7 billion each year.
• In ​​transportation and logistics, forecasts are for a total investment of US$95
billion, which includes 1,167 current projects country-wide, of which 99%
should be completed by 2023.
Brazil

59. Building materials
Brazil

60. Building materials
Brazil

61. Building materials
• Mexican construction industry grew only 2.8 % in 2015 instead of the 6.5%
initially forecasted
• Building and construction sector in Mexico is reliant on federal government
programs.
• In 2014, the 2014-2018 National Infrastructure Program (NIP) was launched,
with $586 billion investment
Mexico

62. Building materials
• The total value of federal government construction projects during 2015 was
estimated at $107 billion:
40 % was allocated to PEMEX (government-owned oil company)
22 % to highway construction
22 % to housing developments and multi-purpose buildings
16 % to other infrastructure projects.
• The Mexican states that received the most funds were State of Mexico, 10 %;
Mexico City, 9 %; Veracruz, 9 %; Chiapas, 7 %; and Queretaro, 7 %.
Mexico

63. Building materials
• The new housing initiatives announced in the NIP are intended:
 to address a shortfall of an estimated 8 million housing units
 to promote growth in the housing industry in the short and medium-
term;
 and to increase vertical housing developments in major cities across the
country.
• These initiatives will offer opportunities to developers and suppliers focused
on the low-income market
• Based on these initiatives, industry sources estimate that the housing
market will increase 5% percent from 2016 to 2018.
Mexico

64. Building materials
• Mexico is moving towards green, or environmentally-friendly, activities.
• Mexico joined the World Green Building Council (WGBC) and is learning best
practices from Europe and the US
• Policy efforts to promote green buildings are relatively new and generally focused on
the housing sector.
• Although green construction growth in Mexico continues on a positive trend, the
numbers for sustainable construction remain small. According to the Mexican Green
Building Council, Mexico has over 44 buildings with LEED certification. During 2014
and 2015, over 250 construction projects with an estimated investment of $37.5
million subscribed to the certification process.
• Projects include tourism real estate development, marine projects, thematic and
recreational parks, residential, industrial and commercial.
Green building

65. Building materials
• Demand for cement, steel bars and glass is growing faster than local
suppliers’ abilities to provide them
• There is also a high demand for plywood, another important raw
material for the construction industry.
o Potential niche markets exist in the furniture manufacturing sector
and the interior decoration sector, particularly in flooring, paneling
and molding.
Mexico

66. Building materials
• Opportunities include: wooden windows, doors, flooring, and frames
from sustainable woods; ecological paints, coverings and coatings; ecological
concrete pipes for potable water and sewage; energy saving light bulbs;
ecological pipes and fixtures for electrical applications; skylights; green-
certified electrical devices and home appliances; permeable concrete; green
roof systems and equipment; high-efficiency air conditioning systems and
equipment; high-efficiency HVAC equipment for commercial buildings and
hospitals; natural insulation materials; ecological blocks and bricks; and
insulation, acoustics, and fire retardant thermal protection materials.
Mexico

67. Building materials
• For EU firms interested in entering Mexico’s housing industry, one of the best options is to
partner with a Mexican distributor or housing developer or construction firm that is active in
the housing industry.
• Mexican companies’ knowledge of the market, the labor and legal aspects involved in this
industry is invaluable to EU firms.
In addition, it is important that manufacturers register as building materials suppliers with
INFONAVIT, FOVISSSTE, FONHAPO, PEMEX, CEF, and State housing institutes.
Mexico

68. Introduction to business culture in Latin America

69. Communication and business culture
Overview
• 19 countries
• 626 million people
• Languages:
 Spanish is spoken as first language by about 60% of
the population
 Portuguese is spoken by about 34% of the population
 About 6% of the population speak other languages
• Religion: Christians (90%), Catholics about 70%

70. Communication and business culture
Ethnic diversity
One of the most diverse regions in the world.
The specific composition varies from country to country:
 People with European ancestry are the largest single group, and along with
people of part-European ancestry, they combine to make up approximately
80% of the population.
 Most of the earliest settlers were Spanish and Portuguese
 After independence, the most numerous immigrants have been Spanish and
Italians, followed by Germans, Levantine Arabs, Poles, Irish, British, French,
Russians, Belgians, Dutch, Scandinavians, Ukrainians, Hungarians, Croats,
Swiss, Greeks, and other Europeans

71. Communication and business culture
Context- vs. Content-Focus
In many EU business settings there is a strong emphasis on the content of
communications: the data, facts and specific details.
• Both verbal and written communications tend to be brief and to-the-point.
In Latin America generally there is a broader focus that includes contextual
factors such as relationship, circumstances, timing, and social
appropriateness.
• Consequently, the Latino may seem ambiguous or evasive to the some EU
counterparts.
• At the same time, however, some EU cultures may be perceived as
impersonal and overly direct or blunt to a Latino person

72. Communication and business culture
“Molecular” vs “Atomic” social structure
• LATAM countries are usually rated low on the individualism scale.
• The use of networks and connections, the exchange of information and
favors, reflect the “molecular” structure of LATAM societies.
• This requires that one be more indirect, diplomatic, non-confrontational, and
cautious in communicating with others because there is a positive or
negative multiplier effect in every social or business transaction.
• The EU counterpart may feel that the Latin American is being excessively
diplomatic or “flowery,” which may be associated with insincerity.
• In contrast, the EU person’s individualism may be perceived as being selfish
or egotistical

73. Communication and business culture
Transaction oriented vs. Relationship building
• In many EU cultures, people who work together may develop personal
relationships over time but the task comes first.
• Latin Americans tend to feel that it is essential to invest in establishing a
relationship before focusing on the task:
 A warm-up period is typically required to create a good interpersonal
environment in which the task can be accomplished most effectively.
 An important clue in this regard is the high desirability of being considered
simpático or likeable and accessible.

74. Communication and business culture
“Time is money”...vs “Time is precious”
The pace of life and work varies within Latin America. However, it is generally less
intense than in the EU:
• Building and maintaining relationships, attending to one’s “molecular” networks,
and managing the complex contextual dimensions of business simply takes more
time.
Time is a guideline, but rarely a deadline
The EU businessperson may appear hasty, rushed, and pushy, while the Latin
American may seem to lack a sufficient sense of urgency.

75. Communication and business culture
Personal space
• The accepted amount of personal space that each person has or needs is much
smaller in Latin America than in Europe.
• People will touch you more, stand closer when they talk to you and generally get
up close and personal
• Latinos will usually stand closer together during conversations, so be prepared
for that plus casual touching
• You may even be startled to have a Latin businessman hold your elbow while
conversing, or walk down the street arm-in-arm

76. Communication and business culture
Negotiations according to polychronic cultures
Negotiations do not follow a linear logic
Negotiations stages are not neatly sequential:
a new stage may begin while the earlier stage is still being
discussed, and
 issues already agreed are open for subsequent discussion

77. Communication and business culture
Negotiations according to polychronic cultures
Negotiators from polychronic cultures
 tend to start and end meetings at flexible times
 take breaks when it seems appropriate
 be comfortable with a high flow of information
 expect to read each others' thoughts and minds
 sometimes overlap talk
 view start times as flexible and not take lateness personally.

78. Communication and business culture
Business conversations
• Good conversation topics include sports, art, history, and family.
• Avoid topics like politics, poverty, religion, or neighboring countries.

79. Communication and business culture
Eating
• Business lunches are common throughout Latin America, and
they’re usually long.
• Dinner is a purely social event and can occur very late.

80. Communication and business culture
Become the friend of your business partner
• Latinos are very warm and friendly people and enjoy social conversation
before getting down to business.
• This is a calculated process aimed at getting to know you personally.
• Latinos tend to be more interested in you, the person, than you as a
representative of some faceless corporation.

81. www.elanbiz.org
Elanbiz
Elan Biz Social
Javier Sanchez
j.sanchez@elanbiz.org
Program funded by the
European Union
Implemented by the consortium led by AESA