Focus on Latin America – Introduction

October 2012

Over the last twenty years Latin America as a whole has experienced an unprecedented phase of sustained economic growth, driven by the increase in commodity prices, and helped along by the extraordinary growth of China and its increasing investment in the region (and in practically every region of the planet). This has been accompanied by the rise of regional economic associations such as the Andean Community of Nations (CAN) and the consolidation of Mercosur (created in 1991), a fully-fledged regional common market responsible for 82.3% of Latin America’s gross domestic product (GDP). Within the confines of Latin America we have the explosive growth of Brazil, a continental growth engine, which is creating a solid middle class never before seen in the country, putting it on an equal footing with the giant to the north, the USA; and we must not forget the financial and political leadership role taken by Mexico, a touchstone between the economies of the south (it has observer status with Mercosur) and the north, to which it also belongs by virtue of the North American Free Trade Agreement (NAFTA). All these factors have led Latin America to enjoy an economic situation that is the envy of many other regions of the world. According to the OECD, GDP is expected to grow by 4.3 per cent over the course of 2012.

Focus on Latin America – Introduction
An advertisement for Gondolo timepieces

The most visible result of this solid macro-economic performance is the growth and consolidation of the existing middle classes in some of the region’s countries (e.g. Argentina and Chile), and the emergence of a new and thriving middle class in others (e.g. Brazil, Peru and Mexico); one effect has been to give access to affordable luxury goods to significant sectors of the population. Not so long ago this market was reserved for a wealthy elite: long-standing clients of the luxury watch industry who could afford to make their purchases as far away as Miami, or even in western Europe.

The watch industry has not been immune to these developments, for two main reasons: first, given the worldwide climate of uncertainty, the major groups have made a strategic decision to diversify their markets; no one wants to put all their eggs in one basket, particularly when, as is the case with all the big watchmaking groups, they have to report annually to shareholders who are keen to see sustained and sustainable growth. And second, and perhaps no less importantly, the watchmaking industry has a long-standing love affair with Latin America.

Continue reading our focus on Latin America with the following articles:

In a second part of this market focus, we will look at the large and small groups, as well as the independent brands, who are targeting the region with strategies that are as diverse as the market itself.

Source: Europa Star October - November 2012 Magazine Issue