As World Cup fans descend on Brazil in the coming weeks, many will board domestic flights operated by Azul, an airline whose brief history tells us a lot about the trends reshaping Latin America.
In 2008, David Neeleman was eased out of his CEO position at JetBlue, a company he founded, and the following year resigned from the company’s board. Where did one of America’s most successful CEOs turn his attention for his next act? Brazil.
Over the past 15 years, Latin America’s economic growth and stability has moved more than 50 million people from poverty to the middle class, now totaling more than 152 million. Most already in the middle class have seen their incomes rise in this same period. Neeleman, who was actually born in São Paulo to an American family and later did his Mormon mission work in the country, understood that the growing middle class in Brazil and Latin America would transform the airline industry, and he wanted in. Today, his airline Azul Linhas Aereas is Brazil’s fastest-growing air carrier with 17% of the domestic market focused primarily on the value segment.
Latin America’s "new" middle class is having a transformative effect on nearly every aspect of the region’s economies and political systems. These are "new consumers" and "new citizens" in the sense that a degree of economic security is allowing them to participate in consumer markets and civic life as never before. And their impact has been intense.
Latin America is a very diverse region, and there are important differences among economic laggards such as Venezuela or Argentina and economic standouts like Colombia or Chile. As a region, however, nearly every category of consumer spending is up significantly. Passenger traffic through Brazilian airports doubled between 2003 and 2010. In 2012 and 2013, year-over-year smartphone sales were up over 50% across the region. In the same period, sales of tablets, albeit starting from a lower baseline, were up more than 200%.
And while the new middle class is moving markets at the value end, the high end is also very active. According to Euromonitor, between 2011 and 2013, Latin America had the greatest increase in luxury goods sales growth and outlet openings of any region in the world.
Latin America’s consumers are also highly connected. The region was the world’s fastest growing in terms of internet user growth in 2012, growing 12%. Brazil, the world’s seventh-largest economy and fifth-largest population, is the world’s second-largest Facebook community and ranks behind only the US in number of Twitter accounts. Latin Americans also spend a significant amount of their online time on social networks – an average of 10.3 hours monthly versus 5.8 for the rest of the world. Finally, five of the world’s top 10 social media using countries are in Latin America. Latin Americans are highly communicative culturally, and social media provides a place for this characteristic to flourish.
The mix of new consumers and intense use of social media presents a great opportunity for brands and companies. Consumers are using social and other digital platforms to educate themselves prior to purchase, engage with brands over time, and access new services. And given the intensity of conversation on social platforms, smart marketers are leveraging listening and analytics tools to spot trends, address product issues quickly, and identify new product opportunities.
The economic trends that have brought millions of Latin Americans out of poverty over the past 15 years have taken place simultaneously to the arrival of new communications technologies that connect and empower consumers. The combination of these two major trends are rapidly evolving consumer markets and posing new opportunities and challenges to marketing communications professionals. Just like at the World Cup, the competition is intense and the rewards of are winning significant.
Ramiro Prudencio is president and CEO of Burson-Marsteller Latin America.