+2%

CHILE
THOUGHT LEADERSHIP
TOP 50 MOST VALUABLE LATIN AMERICAN BRANDS 2015
CHILE AMIDST THE
PERFECT STORM
In terms of Chile’s sporting performance, 2015 has been the
opposite of 2014. In 2015, the America Football Cup took
place in our country and Chile was the star – unlike the 2014
World Cup in which we were knocked out by Brazil.
The country’s economic situation however looks worse than
before. Consumers’ and entrepreneurs’ expectations are
pessimistic, and there is an additional element: a massive
unveiling of cases of corruption, something new in Chile.
This has destroyed people’s trust in politics, precisely at a
time of structural reforms that require a high degree of trust
in institutions so that these processes can be legitimized.
The picture could not be more different:
we were proud and happy about our
sporting victory, but once the event was
over our feelings were quite the opposite.
1Economic predictions announced a
low growth rate – 3.0% in August,
2014 – but in fact this growth
is even lower than expected:
2.4% in the first quarter of 2015,
according to Banco Central de Chile. The
future does not look any better: current
expectations anticipate a 2.2% growth.
All of this is taking place in the context
of a significant decrease – 25% according
to COCHILCO – in the price of copper,
our main export. Due to the slowdown of
China’s economy, this price is expected
to continue decreasing. There is one
more element: private investment has
already gone into the red.
2
This situation has had an impact
on consumers: sales growth
is about 1%, due exclusively to
clothing and shoes, but sales
of durable goods and even food
have decreased (source: Chile’s National
Chamber of Commerce). Households
have restricted consumption although
their income has not been reduced, and
expectations for them are as low as those
prevailing during the sub-prime crisis.
3Concerning institutions, just
as Chile has been undergoing
the most important process
of structural transformations
in the past 50 years, a political
scandal has emerged as a result of cases
of illegal funding of political campaigns
by companies. For the first time in Chile’s
history, there are serving legislators,
mayors, members of Congress, heads of
political parties, officials and businessmen
facing judicial proceedings, making us
Chileans question our reputation as a
country without major corruption.
What have brands done in this scenario?
Many of them have substantially
reduced their marketing budgets, merely
communicating promotions and low
prices. But there are also brands that
have somehow taken charge of the
situation, for instance communicating
values of transparency and reliability.
Here is a seeming contradiction: a
number of sources present a sustained
premiumisation of consumption.
However, amidst this ‘perfect storm’,
this is not actually a new phenomenon.
Other critical periods have shown that in
times like these, consumers tend to take
refuge in the most solid brands. In this
case, consumers seem to prefer safe
investments, choosing therefore higher
quality products.
In this context of disappointment,
mistrust, and pessimism, those brands
that adapt by making something
different – different even to the
strategies employed during the subprime
crisis – will be the ones riding out
the bad weather.
CLAUDIO APABLAZA
Business Development Director
Millward Brown, Chile
Claudio.Apablaza@millwardbrown.com
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