The diet or "light" concept may have become ingrained with healthy drinkers in the US and Europe but fortunes for the category in Latin America have been mixed. Steve Lewis reports on how aggressive marketing and changing perceptions of health may change all that.

It has taken years for the strong emphasis on a healthy diet and lifestyle, which took hold so readily in the US and Europe, to reach Latin America. And seeing little demand for light beverages, Latin American producers have traditionally given this sector bottom priority, except for a few export brands.

The discrepancy in preferences between the US and Latin America led to a number of market anomalies, including Latin American beverage companies producing light beverages that sold only in the US (for example, Colombia's Caldas Aguardiente and Mexico's Corona Light). Products like these have finally earned a place in their home markets, but years after they gained acceptance overseas.

Until 1997, diet soft drinks were very much ignored by Latin American consumers who viewed them as products for people with diabetes and other health problems. As a result, very few low-calorie products emerged in the carbonated soft drink (CSD) sector, except for diet colas. Not surprisingly, Coca-Cola and PepsiCo products dominate the diet CSD sector.

Seeing that diet juice and powdered drinks were gaining momentum, Coca-Cola and PepsiCo began to seriously promote their light brands in Latin America during the late1990s. After converting Diet-Coke to Coca-Cola Light, Coca-Cola implemented an aggressive promotional campaign in major Latin markets.

Both Coca-Cola and Pepsi were successful in breaking away from the "diabetic" image by associating their products with a youthful and healthy lifestyle. With great fanfare, PepsiCo introduced Pepsi-Max, and later Pepsi One. Pepsi One was recently launched in Colombia, Guatemala, Puerto Rico and Venezuela with a promotional campaign that featured the popular recording star Shakira.

Heavy promotion of diet colas achieved the best result in Latin America's three leading beverage markets: Argentina, Brazil, and Mexico. And, Coca-Cola Light ultimately carved out a 12% share of the Mexican cola market.

Light powdered soft drinks have come a long way in the Latin American market over the past five years too. They were virtually unknown in the region until the mid-to-late 1990s, when Kraft Foods introduced its Clight brand. Kraft's heavy promotion of Clight caught the attention of health-minded consumers, especially in Argentina, Brazil, and Mexico.

The generalised economic slowdown in Latin America during 2001 had a negative impact on several beverage sectors, but not powdered drinks. To a degree this is because at best these products fit into the tight grocery budgets of most Latin American households.

The third quarter (2001) performance statement release by Kraft Foods states: "Double-digit volume growth in beverages was driven by the strong performance of Tang, Fresh, and Clight powdered soft drinks and Maguary juice concentrate in Brazil, as well as successful marketing programs and improved distribution of Tang in the Philippines."

Although Clight is Latin America's leading brand in the powdered light sector, it faces increasingly strong competition from proprietary brands of major supermarket chains in the region. These include for example the Soriana brand in Mexico, which has carved out a viable market share in the northern part of the country.

The demand for light juices solidified before other sectors of light beverages. To a degree this is because it is attributable to the socio-economic status of juice drinkers in the region. Given the relatively high unit price, fruit juice is primarily consumed by upper-middle and upper class households.

Upper class consumers first picked up on the health trend in the US because they are more internationally oriented than the mid-to-lower socio-economic strata. Another factor that boosted light juice consumption in the region is that several of the major players, including Jumex (Mexico) and Frutika (Paraguay), are domestic companies rather than foreigners.

Both Jumex and Frutika hedged their bets on light juices, aiming them at export markets until the domestic market evolved. In a report recently published in La Nacion de Paraguay newspaper, Frutika's president Beate Kress said: "Among our product innovations are light juices, which have gained great regional acceptance." Among the strongest export markets are neighbouring Argentina and Brazil.

Jumex was able to capitalise on its proximity to the US by landing major sales contracts north of the border. Strongest US market penetration was achieved in states with high Hispanic populations that identified with the Jumex brand.

In recent years, Jumex Light has gained acceptance in Mexico, with steady sales gains in major urban areas. Jumex bills its Light product line as the first nectars in the world to be made of 100% natural fruit and sweetened with Splenda MR.

Light beer, meanwhile, has also been slow to catch on in Latin America. Clear evidence of this is the fact that Corona Light, the 10th most popular imported beer in the US (out of 450 brands) during 2000, was not even released in Mexico. Not a single light beer places high on the Mexican popularity list, while four of the top five selling beers in the US are light.

Industry leaders attribute the aversion to light beers in Latin America to a socio-cultural factor often referred to as "machismo". This factor is most associated with mid to lower class males who are the region's primary beer consumers. However, attitudes are gradually changing as the importance of greater health-consciousness filters through all of the socio-economic strata. The gradual change in attitude bodes well not only for the future of light beer in Latin America, but also for light beverages in general.

CHART 1

The chart below shows the Mexican product mix for Coca-Cola FEMSA by percentage.

Product
% of total sales
Coca-Cola
73.2
Coca-Cola Light
2.9
Sprite
4.1
Sprite Light
0.1
Fresca
4.7
Fanta
4.5
Lift
6.2
Delaware Punch
0.9
Ciel
2.5
Etiqueta Azul
0.9
SOURCE: FEMSA annual report, 2000

CHART 2

The chart below shows the Argentine product mix for Coca-Cola FEMSA by percentage.

Product
% of total sales
Coca-Cola
67.2
Coca-Cola Light
8.6
Sprite
9.0
Sprite Light
1.4
Fanta
7.6
Quatro
4.0
Kin
0.6
Tai
1.2
Schweppes
0.3
Hi-C
0.1
SOURCE: FEMSA annual report, 2000

To view related research reports, please follow the links below:-

Beer - The International Market
The Market for Soft Drinks in Latin America