Senior Research Executive, Firefly Practice
Kantar Millward Brown
Isolated by a mountain range to the East, the Pacific Ocean to the West, a desert to the North, and a maze of lakes, fjords, forests and glaciers to the South, it would be easy to say that Chile is one of the countries with the most marked natural borders in the world. Although it is true that for a long time these geographical conditions significantly restricted interaction between Chile and even its closest neighbors, Chile has sought more and more to connect with the world surrounding it, recognizing the opportunities that trade abroad represents.
With more than 20 trade agreements connecting it to over 50 countries around the world, Chile has established itself as one of the economies with the highest disposition to global commercial openness. Since its first trade agreement, signed with Canada in 1997, to the last one, signed with Thailand last year, the Chilean government has sought access to countries in all four corners of the world. This trade policy has allowed brands from the most varied origins and categories to enter the Chilean market to compete. They have found a more and more sophisticated consumer, hungry for new brands and experiences, with a relatively high income against the Latin American average. It constitutes a territory that, despite its relatively small population, can represent an important business opportunity for any brand willing to make the right bet.
AHEAD OF THE CURVE
However, there is another side to this story – that of Chilean brands going abroad, searching for opportunities in other places. A quick view of the BrandZ™ Top 15 Most Valuable Chilean Brands reveals some of the great Chilean brands that have seen the opportunity to operate outside their country’s borders. A closer analysis enables us to identify an important feature in them: in contrast with other major international brands in the region, Chilean brands have been able to distinguish an opportunity in trans-regionalization, and are becoming specialists in that.
What are the reasons behind these dynamics? First, the nature of the ranking. The Top Chilean Brands ranking is characterized by being significantly made up of retail brands, which influences the expansion patterns we see. In this category, expansion has taken place in geographically close places, due to the dependence on operative factors.
Brands such as Falabella, Sodimac, and Ripley have sought to expand their operations to other countries within the region, leveraging the experience acquired in the potentially hardest retail ecosystem in the region. The experience of these brands has allowed them to achieve, in a relatively short period of time, a place within the new markets where they compete, through robust shop and brand experiences. Likewise, these brands have known how to leverage cultural similarities in the region, and investigate what makes the differences, so as to be able to create powerful bonds with their consumers.
Now, it is not only retail that is expanding and looking beyond the borders of their country of origin. Another important case of trans-regionalization is LATAM, which in the past few months has joined two important Latin American brands, merging them into what aspires to become one of the most important carriers in the world. This brand seeks to align all their points of contact and brand efforts to turn this vision into a reality.
With a relatively small population pool, Chilean champion brands have sought success in other places, and their sophisticated practices have managed to generate impact in the markets they entered. How will they be able to maintain this steady growth? They will have to face important adaptations to their Chilean business model, so that they can compete in other markets, like the Peruvian and the Colombian markets. For despite their closeness, they show important differences that might have an impact on the path towards bonding.