ARGENTINA

Group-10
 About Argentina
 Argentina is the world's eighth largest country, covering an area
of 2.8 million square km. Argentina possesses some of the
world's tallest mountains, expansive deserts, and impressive
waterfalls, with the diversity of the land ranging from wild,
remote areas in southern Patagonia to the bustling metropolis of
Buenos Aires in the north.
 Argentina gained independence from Spain on July 9th, 1816.
 Located between the South Atlantic and the South Pacific
Oceans
 Argentina is one of the world’s largest beef producers.
Anywhere you go, you can get a great meal…sorry vegetarians!

 The wine industry is becoming more well-known throughout the

world as well. Most of the wine comes from the central valley of
Mendoza.
 Capital: Buenos Aires
 Argentina
 Climate:
From tropical climates in the North to tundra in the far South.
Practically every climate imaginable can be found in some part
of the country.
 Currency:
Argentine Peso (ARS). 1.00 USD=3.72850 ARS (May 2009)
 Language:
Spanish, but also Italian, English, French and German
 Religion:
Roman Catholic (92%), Protestant (2%), Jewish (2%), other
(2%)
 Population:
40,913,584 (July 2009 estimate). Ethnic groups are composed
by white (97%) mestizo (3%)
 About Argentina
Literacy rate :  97.2% (2001 census)
Work force: 
Industry and commerce-35.8%
Agriculture-9.5%
Services-54.7
Major religion: Christianity
 ARGENTINA ECONOMY

 Rich Natural Resources

 Highly literate population

 Export-oriented agricultural sector

 Diversified Industrial Base

 Argentina has a strong middle class, supported largely

by a strong agriculture sector
 Cont……..

Argentina has been long struggling with political and economic

instability, watched its economy begin to slump in 1999 and
completely crater in 2003.

That was the year the peso was devalued by 270% in a matter of
months with double-digit inflation following close behind.

Needless to say, consumer spending fell into a black hole as

shoppers spent what little money they had on bare necessities
 Some Figures
 GDP $351.015 billion (nominal)
$632.223 billion (PPP) (23rd, 2010)

 GDP growth 0.9%(2009)

 GDP per capita $8,663 (nominal)

$15,603 (PPP) (52nd, 2010)

 Inflation(CPI) 10.2%

 Population below 13.2% poverty line

 Unemployment 8.3%
 Economy 

• Natural resources:
minerals--lead, zinc, tin, copper, iron, manganese, oil, and
uranium. 

Agriculture: Products--oilseeds and by-products, grains,

livestock products.
 
• Industry: food processing, oil refining, machinery and
equipment, textiles, chemicals and petrochemicals. 
 Cont..
• Trade: 
Exports ($55.5 billion)-oilseed by-products, vegetable oils, cars,
fuels, grains. 

• Major markets-MERCOSUR 25%; EU 19%; NAFTA 9%. 

Imports ($38.8 billion)-machinery, vehicles and transport
products, chemicals

• Major suppliers-MERCOSUR 33%; EU 17%, NAFTA 17%.

Imported goods from the United States totaled approx. 13.2% of
Argentine imported goods.
 Retail in Argentina

Discount, Variety Store, and General Merchandise

Retailers in Argentina increased at a compounded annual
growth rate (CAGR) of 13% between 2003 and 2008.

Food and Grocery market sales accounted for an 34%

share of the discount, variety store, and general
merchandise retailers format in 2008.
 Cont….
 Retailers are expected to continue with their plans to open new
stores, but focusing on close-by smaller formats, which carry
mostly food products.

 Sales of less expensive private label products are forecast to

increase.

 Purchases of imported products are expected to remain flat or

begin to grow again after a marginal drop in 2009.
 Cont….
 Argentine total F&B retail sales for 2009 are estimated at $26
billion.

 In 2008, hypermarkets, superstores, and warehouse stores

(locally known as “hard discount stores” and mostly operated by
large retailers) accounted for approximately 31 percent of the
total F&B sales; and small supermarkets, grocery stores, and
kiosks, accounted for about 69 percent.

 Hypermarkets and superstores are the retail formats which have

most grown since 1990. They focus on competitive prices,
strong discounts, company credit cards, and loyalty programs.
 Cont….

 Several of the leading international retail companies are

operating in Argentina: WalMart, Carrefour, Casino, and Jumbo.
Coto and La Anonima are the only large retailers which still have
local ownership.

 Strong competition and concentration in Buenos Aires city and

suburbs. However, during the past few years, hypermarkets and
superstores have expanded into the interior of the country
through the purchase of smaller chains and the opening of new
stores.
 Cont….
• Large retail companies have great negotiating power, putting
strong pressure on their suppliers.
• F&B sales in hypermarkets and superstores account for
approximately 65 percent of total sales.
• As an average, Argentines spend about 33 percent of their
income in F&B.

• Approximately 70 percent of all imported F&B are sold through

hypermarkets, superstores and supermarkets.
• Overall, imported products include those “commodities” which
are not domestically produced, such as canned palm hearts,
tuna fish and pineapple, corn, peas, tomatoes, and also some
fruits.
 Value of Retail Sales of Imported Food and
Beverage vs. Domestic Products (in $ billion)
 TOP FIVE RETAILERS IN ARGENTINA BY MARKET
SHARE

• Company Corporate HQ 2003 sales 2002 sales

Carrefour France $1,696 $1,615
Coto Argentina $817 $770
• Ahold Netherlands $722 $694
Cencosud Chile $493 $474
La Anonina Argentina $348 $347

Note- The above mentioned rankings are before the economy of

Argentina collapsed in 2003
Food Retail in Argentina
 The Grocery Retail and Food
service Sector

 Food purchases have shifted from specialty

retailers such as bakeries and butchers to
modern supermarkets and hypermarkets
 These modern stores are known for their
quality, choice, and discounts
 Profiting from the boom in consumer
expenditure and grocery sales, hypermarkets
and supermarkets are set to expand their
presence in the Argentine market
 Consumer Market
Food Consumption:
• families eat together six out of seven days a week

• It is predicted that premium products, as well as full-

service restaurants that offer different types of
cuisine such as European and Middle-Eastern, will
grow by 30% between 2008 and 2013.

• fresh food will remain the dominant food source, with

per capita consumption of fresh foods, predicted to
increase by 6.5% between 2008 and 2013.
 CONT…
 Argentine consumers demand low prices and good value, with
lower income consumers currently preferring price over quality.
Consumers want a product that not only tastes good, but looks
good. Packaging is important in this market.

 Argentina is home to the largest Jewish community in Latin

America. Kosher products are becoming fashionable with
younger consumers in this segment. These products are also
viewed as being of higher quality by the general consumer.

 Argentina's population enjoys drinking alcoholic beverages,

particularly wine and beer, which make up 93% of the entire
alcohol market.
 Cont..
 In 2008, wine sales increased by 27% in current value terms.

 Both the soft and hot drink sectors have experienced increased
sales since the Argentine economic crisis in 2001, growing by
23% and 33% respectively.

 Argentina is forecasted to become the world's largest per capita

consumer of soft drinks, with the average person consuming
134 litres a year. By 2012, this amount is expected to increase
to 165 litres, surpassing the United States (US).
 Lucrative Consumer Segments

 Argentina's middle aged population (between the ages of 45 and 65)

represents approximately 25% of the 40 million person population and
is expected to grow until 2015.
 This group represents a lucrative consumer segment as they have
higher disposable incomes. Their increasingly sophisticated taste for
gourmet goods, particularly in the food and drink sectors provides
significant opportunity .These consumers are demanding higher quality
products, focusing on their health and wellness.
 Approximately 17% of the population is composed of people in their
twenties. This consumer group is particularly important for marketers to
build brand loyalty as they will become main consumers as they grow
older. In general, it is this group that is more adventurous when it
comes to trying new products on the shelves, making them a major
target for marketing campaigns.
 Cont….
 Wine consumption has become increasingly popular within this
segment, as it is considered to be a symbol of sophistication.
 Many consumers are focusing on their health by consuming
healthy fruit and vegetable juices that contain increased
amounts of vitamins and minerals.
 Functional and light products performed very well in 2009,
gaining popularity among the Argentine population.
 Argentina was the third largest country in Latin America to
launch new yogurt and chilled dessert products, accounting for
20% of new introductions. The top claims were no/low/reduced
fat, calories, and allergens.
 WALMART Entry into ARGENTINA

 Wal-Mart’s entry to Argentina was really unique as Wal-Mart for the first time
entered the foreign market by itself.

 Wal-Mart had at the first glance good prospects for entering Argentinean
market with its strategy.

 Wal-Mart was the first American retail seller that offered American style service and
much lower prices than local stores that were mostly sole proprietorships

 Wal-Mart has maintained a slow-growth approach in Argentina since it opened for

business there in 1995 with four stores, two Supercenters, and two Sam’s Club.
Wal-Mart had located all of the stores in Buenos Aires region which is the largest
region of the country that subsequently has the largest number of potential buyers

 It currently has just 11 supercenters for a market of 39 million

 PROBLEMS WALMART FACED
 The nature of supermarket industry in Argentina is totally different from that
one in America and a number of cultural influences had a great impact on
Wal-Mart’s strategy while entering Argentina market.

 At the time Wal-Mart was entering Argentina, Argentineans were not that
happy with American supermarkets and the company was not receiving the
profits that were expected before entering Argentinean market

 Wal-Mart used its approach of offering low prices and a tremendous number of
discounts to Argentinean consumers. However, the competitors in Argentina
reacted immediately by opening new stores and rejecting Wal-Mart’s discounts
and advertising campaign.

 However, Wal-Mart is expected to capture 3% of the Argentine retail market by

2008 with estimated sales of $3.1 billion. Some, economists, although, advise
Wal-Mart to close business in Argentina and some other countries and better
concentrate on the U.S. market.
 Scenario after the collapse

Rank Retailer
1 Carrefour
2 Cencusud

3 Coto
4 La Anonina
5
Casino(France)
• Thank You…..