Latin America: Reason for optimism

As elsewhere in the world, the fortunes of the label market in Latin America ebb and flow with the prevailing economic currents. As noted previously in this annual review, economic growth in the region rebounded strongly in the wake of the pandemic before slowing in 2023. 

Economic indicators for 2024 continue to look sluggish, with growth across Latin America and the Caribbean seen declining to 1.8 percent this year from 2.1 percent in 2023, according to the World Bank. ‘Despite the enthusiasm for nearshoring, foreign direct investment remains below levels of 13 years ago in real terms,’ noted the bank’s report. Growth in the region’s two biggest markets, Mexico and Brazil, was forecast to decline to 1.7 percent and 2.8 percent respectively, down from 2023 expansions of 3.2 percent and 2.9 percent.

There is greater optimism for next year, however, with the region’s economy predicted by the World Bank to accelerate to a 2.7 percent growth rate as interest rates stabilize and inflation falls.

Mexico

Converters in Latin America are often reluctant to invest in an election year – with a new leader chosen in Mexico (as well as its biggest export market, the United States) this year, converters in that country can be forgiven for keeping their powder dry. ‘Mexico has been more challenging this year,’ says Nick Vindel, Latin American sales manager for Heaford. ‘Companies are opting to fix or modernize existing equipment rather than buy new. They have been wary of investing because of the election. There is also a struggle to find qualified labor. As Mexico is one of our two biggest markets, alongside Brazil, it therefore has an impact on overall regional sales.’

John Vigna, Latin American sales manager for Mark Andy, is another to admit that ‘an election year can affect business’. But if capital equipment expenditure has slowed, that doesn’t seem to be the case for material consumption. Carolina Jaramillo, marketing director for Colombia-headquartered substrate manufacturer Arclad, says: ‘Mexico this year was a market with a very interesting dynamic, driven by the supply of products to North America.’ 

“Mexico this year was a market with a very interesting dynamic, driven by the supply of products to North America”

Yupo North and South America sales manager Alex Cruz also notes the strength of the Mexican market and reports double digit growth and ‘no slowdown in sales’ in the wider Latin American region. ‘Molders are looking for locally printed products, rather than importing from the EU or Asia. Our ability to train, support and supply local printers has been key.’

Meanwhile, investment into Mexico continues, with two notable examples this year on different sides of the supply chain. Avery Dennison invested more than $100m USD in its factory in Querétaro, an industrial hub in central Mexico, making it the company’s largest RFID site globally. ProMach, a packaging machinery and label converting group with operations spread throughout the USA and Canada, made its first investment in the Mexican market with the acquisition of leading local label converter Etiflex. 

Wider region

Arclad’s Carolina Jaramillo reports ‘greater stabilization of inflation’ in the region. ‘In general terms there is an upward trend in private household consumption,’ she says. ‘Normally, most of the spending allocation is on food and beverages, which has a positive impact on the labeling industry since it generates greater demand, or at least is not as affected as other segments of the industry in which private spending is reduced.

‘We see that the market is less turbulent, we perceive greater optimism and it is an advantage for us because there is an opportunity to continue growing in agro-export, food and beverage, personal and home care, and other markets.’

She notes that increasing competition is a challenge. ‘The market has become more competitive this year, especially due to the greater presence of Asian self-adhesive manufacturers in the region. It therefore becomes important to focus on delivering consistency in quality, high value-added solutions and a differentiated service in delivery times and technical support. Defending the value of labeling solutions as a vehicle to help brands fulfil their purpose, above low prices, is key to maintaining the relevance of this industry over time.’

Mark Andy, Heaford and Yupo all report strong growth in Central America in particular. ‘Central America has been quite a surprise,’ reports Yupo’s Alex Cruz. Nick Vindel of Heaford says: ‘Central America has always been a strong market for us, particularly Costa Rica, El Salvador and Guatemala. But now we are increasingly receiving orders from smaller countries in the region, such as Honduras and Panama. In some years, after Brazil and Mexico, Central America is our strongest market.’

‘Mexico and Brazil are always our most important markets in Latin America,’ says Mark Andy’s John Vigna. ‘But we are also seeing growth in Central America and the Caribbean. We are very focused on increasing our business in these markets, offering new tools such as financing and increased technical service and support – everything we can do to support our customers.’

In Colombia, meanwhile, ‘the market has improved’, says Heaford’s Nick Vindel. ‘There has been more investment in the country. New customers are appearing and investing.’ He says Brazil ‘remains strong’, and reports sales to Brazilian converters during Drupa. ‘Brazil was probably in the top three visitors by country at our stand at the show, which shows converters there are investing.’ 

Heaford ran a seminar in Argentina alongside its local distributor, and Vindel says market conditions are improving. ‘Talking to Argentine converters was interesting. They want to invest, but it has been very difficult because of import restrictions and inflation. Things are improving. There was an optimism among converters – they were a lot more confident.’

Technology 

In terms of technology specifications, Mark Andy’s John Vigna reports increasing interest from converters across the region in hybrid presses. ‘There is increasing demand for hybrid machines because they can help you so many more things that can be done on a digital-only press, where you use another machine for finishing. If you can do everything in a single pass, so much the better. It’s the future and converters know it. Flexo presses still make up most of our sales in Latin America. Perhaps that will change in the future. But we are definitely seeing more orders for hybrid machines.’

Heaford’s Nick Vindel notes that smaller companies from some of the region’s less established markets are looking at higher specification machines and increasingly thinking about automation. ‘We sell very few manual machines nowadays. Converters even in these smaller markets have a need for automation.’

The company launched its Modular Mount at Drupa, which Vindel says attracted much interest from Latin American converters. ‘You can start at a quite basic level and upgrade to make it more automatic. Latin American converters were very keen on this. They are looking at sustainability more than before, and like the upgradability and being able to plan for the future.’

Arclad’s Carolina Jaramillo agrees that sustainability has increased in importance among the region’s converters. ‘It’s no longer just a trend; it’s a reality,’ she says. ‘In Colombia, Law 2232 came into force, banning single-use plastic and establishing important goals for recycled PET packaging by 2003, which represents an opportunity to migrate to recyclable self-adhesive solutions that help brands meet these goals.’

Yupo’s Alex Cruz says that sustainability concerns are prompting increased interest in its synthetic materials for in-mold applications. ‘In-mold offers a more sustainable alternative compared to traditional label decoration.’

Among the suppliers spoken to by L&L for this article, there is optimism that market conditions continue to improve in Latin America as inflation comes down – a positive portent for next April’s Labelexpo Mexico 2025 in Guadalajara, Mexico. ‘It’s difficult to predict how next year will be,’ says Heaford’s Nick Vindel. ‘There will be challenges, but also opportunities. There is increasing stability in the region. Argentina and Venezuela are beginning to come back online. Brazil will continue to be strong. And having Labelexpo Mexico will be an advantage. It was a good show last time – we sold three machines from the show floor and a couple more off the back of it. This time it could be even better because it is in Guadalajara, which is more of an epicenter for the local label market.’

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