The market in Latin America

Latin America is a broad term, encompassing Mexico in the north down to the southern tips of Argentina and Chile, some 10,000km away. As such, it is a diverse territory with internal label and packaging markets of vastly differing sizes.
Label Summit Latin America took place in Santiago, Chile, for the first time, focusing on the country’s dynamic wine label market; the event returns to Mexico in 2018

Economically speaking, the region as a whole is still adjusting to the end of the 2003-2010 commodity boom, which was fueled by Chinese demand. Commodity prices fell during the following five years; shrinking export revenue weakened the region’s currencies and pushed up inflation. After five years of deceleration and one of recession, Latin America should register modest economic growth of 1-1.5 percent in 2017, according to forecasters. This growth is largely due to Brazil and Argentina coming out of recession.

Venezuela’s economy is collapsing. Mexico, Chile, Colombia and Peru are expanding at a rate of 2-3 percent. Only in Central America, the Dominican Republic and Bolivia is growth a more respectable four percent or so, says The Economist magazine. Inflation is now falling, so there is hope for a pick-up in growth in 2018. But challenges remain. The region’s economies are hampered by poor infrastructure, while political uncertainty caused by Donald Trump is also having an impact.

The region’s two biggest label and packaging markets – Mexico and Brazil – both have cause for optimism despite sluggish economic growth in the former and a period of recession in the latter. According to research from Mexican magazine Label Pack and Canagraf, the national chamber for the graphic arts industry, the number of label printers in Mexico has risen over the last decade from around 300 companies to some 450-550, while growth of the local label and packaging market is estimated at eight percent.

Brazil, meanwhile, is at last coming out of recession, with industrial production rising after a two-year slump. There are burgeoning signs within the country’s label and packaging industry that a period of much-needed growth is around the corner.

In Argentina, president Macri’s cessation of his predecessor’s ruinous economic policies is beginning to bear fruit; installations of presses and ancillary equipment are on the rise now that import restrictions have been abolished.

Chile remains the region’s most stable label and packaging market, thanks to its highly developed wine export sector. The strength of the local market was amply demonstrated by the two-day conference and table-top exhibition Label Summit Latin America, part of the Labelexpo Global Series. Held in Santiago in May 2017, the event drew 815 attendees – more than previous editions of the event in Brazil, a label market 15 times larger in terms of volume.

These four countries – Brazil, Mexico, Argentina and Chile – have in recent years been the focus for multinational converting groups looking to acquire local printers; in 2018 and beyond, companies in Peru and Colombia are the most likely targets for these ever-widening networks. The two Andean countries have two of the region’s major success stories in recent years, with their local label sectors benefitting from economic stability and widening competition as new companies move in to take advantage of the sector’s growth.

As covered previously in L&L, the region’s smaller markets – such as Ecuador, Bolivia and Paraguay – all host companies which have installed top-of-the-range equipment in recent years. It may be termed a developing region, but in terms of technological development, Latin America is closer to North America and Europe than it is to the likes of China and India.

James Quirk

James Quirk

  • Latin America Correspondent