Colombia is one of the fastest growing economies in Latin America, thanks to strong GDP growth. With a population of over 47.6 million, it has the third largest Latin American GDP after Brazil and Mexico.
Colombia is the fourth largest
exporter of coal in the world and also
the fourth largest oil producer in Latin
America. During 2013, the sectors
that grew the most were construction,
social, common and personal services,
agricultural, and mining.
Due to its stable economic policy,
sustained domestic demand, increased
levels of foreign direct investment (FDI)
(especially in the oil and mining sectors),
and a current peace process, the local
economy is experiencing unprecedented
growth levels, with a projected growth
of 4.5% for 2014. Indeed, Colombia’s
bond rating has been upgraded by all
three rating agencies. For the past five
years, real GDP has grown an average
of 4.1% per year, continuing a decade of
strong economic performance due to
steady economic policies, solid fiscal
management, and the promotion of
several free trade agreements.
Colombia has 13 existing free trade
agreements, and several others already
signed or under negotiation, which will
result in new business opportunities.
In turn, the agreements will lead to
a demand for better infrastructure,
especially in the transportation and
agricultural sectors. Nevertheless,
Colombia’s sustained economic
expansion can be stymied by the
country’s exposure to external
risks associated with its reliance on
energy and mining exports, and the
externalities associated with the
commodities and financial markets.
Current challenges the country
faces include high poverty levels,
inequality (one of the highest in Latin
America), and extending educational
opportunities to rural and urban areas.
According to the World Bank, Colombia
spent around 6.8% of its GDP on health
services. Although this is high for
middle-income countries, only 35% of
the population has access to the local
public health system.
One of the most stable sectors is the
industrial sector, with weak growth,
even though it has a significant weight
in Colombia’s GDP. Here, we find that
the most valuable brands in Colombia
have been characterized by their long
tradition, constant renovation, and
their clear response to the functional
and emotional needs of a changing
market. These brands have recognized
when to generate a relevant differential
for their target markets, and last
but not least, they have maintained
a significant presence in terms of
communication, not only through high
levels of advertising investment, but
also through the increase of their share
of voice, the positive news about the
performance of their products and the
successful work on corporate social
responsibility campaigns that many
brands have implemented.
This growth has been so impressive
among Colombian consumers that
even the luxury category grew by 12.3%
in 2013-2014. The reasons for this
mainly focuses on the arrival of new
international brands, the country’s legal
and political stability, the size of the
market with a growing middle class,
and an economy with sustained growth.
Good performance of brands in
Colombia is based on a strong
advertising spend. This grew more than
10% in absolute terms in 2013, with
national TV as the primary medium,
enjoying over 34% of the investment.
It is worth mentioning radio, with 24%
share, and print, with 16.4%. Digital
investment grew over 31% in the same
period, although digital does not exceed
3% of the investment for most brands.
For some brands, such as spirits, digital
is beginning to be the most important
medium and is therefore playing a
decisive role in their media plans.
After more than five decades of armed
conflict between the government
and insurgents, Colombia is finally
approaching a period of peace. In
November 2012, the Colombian
government and the FARC began
formal peace talks in Cuba. Even with
the obvious setbacks, if the talks
make progress, there will be a greater
development opportunity for the
country and, of course, for its economy
and for brands.