John Price, Managing Director of AMI, presents the most relevant business, economic and political trends shaping Latin America over the next four years. The meteoric rise in Chinese influence in the region, the looming threat of falling commodity prices, the shift in North-South energy trade, the pace of reform, improving income disparity and the expansion of the base of the pyramid consumer.

1. Latin
America
The immediate
The longer term
Opportunities
Miami
November, 2012

2. Legal notice
Wherever possible, AMI has verified the accuracy of information provided by third
parties, but does not under any circumstances accept responsibility for such
inaccuracies should they remain unverified.
It is expected that the reader will use the information provided in this report in
conjunction with other information and with sound management practices. AMI
therefore will not assume responsibility for commercial loss due to business decisions
made based on the use or non-use of the information provided.
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3. Your Presenter
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4. What we do…
bespoke that answers strategic in Latin America
Market Intelligence questions
• Should we enter the market?
• How do we compete against
Customer the dominate local player?
• Market Research • What do local customers
expect from their supplier?
• In which market will we gain
the most growth in 2013?
Climate • Should we buy or greenfield?
• Economic
Competitor • Who is the best local firm with
analysis • Competitive whom to partner?
• Political risk Intelligence
analysis • Do we face regulatory risk?
• If the opposition wins, will they
support our investment?
• What products will our
competition launch next year?
• What is the optimal product
mix to serve our target
market?
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5. Eight strong industry practices
Financial Services Industrial
• 160 LatAm projects since 1994 • 105 LatAm projects since 1994
• Consumer & corporate cards, pre-paid • Transportation, manufacturing,
cards, insurance, banking, consumer loans, chemicals, metals, plastics, paper,
trade finance, more.. packaging, safety
Retail & CPG Natural Resources
• 170 LatAm projects since 1992 • 90 LatAm projects since 1992
• Food, beverage, snacks, appliances, beauty • Mining – exploration, equipment;
products, toys, entertainment Energy – oil & gas, alternatives,
petrochemicals; Agriculture –
commodities, fertilizers, technology
Healthcare Automotive
• 80 LatAm projects since 1993 • 110 LatAm projects since 1993
• Pharmaceuticals, supplements, vaccines, • Cars, trucks, buses, OEM parts,
medical equipment, devices, hospital aftermarket, service, finance
services, health policy, more…
Telco, IT, Media Logistics
• 70 LatAm projects since 1993 • 75 LatAm projects since 1993
• Telco – wireless, ISP, services, equipment; • 3PL, air cargo, FTL, LTL, rail, ocean,
IT – computers & accessories, ERP, AMT; warehousing, distribution, equipment,
Media – gaming, pictures, print, TV, radio, software
signage
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6. AMI enjoys a global partnership with the GIA, the
world’s largest network of market intelligence companies
• GIA Group embodies 24 offices globally, of which AMI operates Mexico and Miami.
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7. The Immediate (2013)
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8. Exogenous Forces – trending positive
Europe
+ ECB
? Merkel
USA China
+ manufacturing + Migration
+/- Energy sector + New political cycle
? Fiscal cliff Syria & Iran ? Economic shift
+/- Oil shock
- Financial instability
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9. Spheres of Economic Influence – China predominates
Europe
- Caribbean tourism
- Caribbean private banking
- Caribbean exports
- South American commercial
and institutional lending
China
- Food imports from Brazil,
Argentina, Paraguay,
Uruguay
USA - Metals imports from Peru,
- Mexican manufacture exports Chile, Bolivia, Brazil
- Mexico bound FDI - Energy imports from
- Central American, Caribbean Venezuela, Peru, Colombia
and Mexican remittances - Mining investment in
- Central American manufacture Ecuador, Peru, Bolivia,
exports Venezuela
- Caribbean tourism - Infrastructure investment in
- Caribbean banking Panama, Caribbean,
- Andean bound FDI Central America, Peru,
- Andean product exports Ecuador, Venezuela, Brazil
- Bi-lateral loans in most
markets
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10. Country Forecasts – a predictable tale of the usual suspects
Regional growth will increase from 3.1% to 4.0%
- Commodity prices are rebounding
- Credit is loosening
Consumption Growth X-change rate (2010 =
2013
(%) 100) versus
2011 2012 2013 2011 2012 2013 2012
Brazil 4.8 3.5 5.1 100 83.0 80.5
Mexico 4.5 3.8 3.7 100 93.7 96.5
Argentina 9.5 4.3 3.5 100 93.2 84.0
Colombia 6.6 4.6 5.3 100 102.7 102.3
Venezuela 4.0 7.5 1.0 100 100.0 74.1
Chile 8.8 5.9 5.9 100 99.0 98.0
Peru 6.4 5.9 5.6 100 104.2 106.6
Ecuador 5.8 4.4 3.1 100 100.0 100.0
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11. US Elections – Latin America still won’t matter come Nov 7th
Possible overhaul of immigration including Lessen enforcement of employers, possibly
amnesty to illegals, might expand H1B Immigration expand temporary worker plan, expand H1B
Record levels (due to sharing databases) helps
justify amnesty Deportation Likely to continue because of lack of amnesty
Latecomer to the political benefits of trade.
Wants to sign more free trade agreements in
Would support symbolic new trade agreements if Trade LatAm, Brazil especially
politically convenient.
Gun shy on further liberalizing of relations with Wants to reverse Obama’s easing of Cuba
Cuba after Castro snub. Continue non- Sanctions embargo. Strong rhetoric against Chavez –
intervention with Venezuela. possible sanctions?
Likely shrink as a result of other priorities. Aid Likely shrink as a result of budget cuts.
May push for “Plan Mexico”. Strengthen DEA
Cited as a priority but not acted upon as such.
Drug trade to US is in decline on its own. Drugs enforcement efforts. Deepen investigation in
Venezuela.
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12. The Longer Term (Societal Trends)
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13. Latin America is entering an optimal demographic phase
LatAm’s 40
year
GLOBAL RANK COUNTRY MEDIAN AGE
demographic
33 Cuba 38.4
window
48 Uruguay 33.6
56 Chile 32.1
61 Argentina 30.5
71 Brazil 29.3
78 Colombia 28.0
82 Mexico 27.1
85 Peru 26.2
86 Dom Rep 26.1
86 Venezuela 26.1
87 Ecuador 25.7
94 El Salvador 24.3
95 Jamaica 24.2
103 Bolivia 22.5
114 Guatemala 20.0
13 Source – www.investmentu.com

14. Modernizing LatAm Household structure
the age of segmentation has arrived
100%
Non Family Nuclear Family Other Family Types
14.5% 61.6% 23.9%
Composite Family
Unwed, Students
Single Parent
(Female) 9.9%
Couple, no kids
(Male) 1.5%
Living Alone
Single Parent
Friends 5.0%
Two Parents with Kids
9.5%
Extended Family
2.2%
8.1%
42.0% 21.7%
Working Mother
Single Income
Dual Income
Latin America’s Emigration and divorce
Dual Income Single Income have created more
3.4%
4.7%
Mother 3.6%
6.3%
fastest growing
Unemployed
segment is elderly 19.8% 22.2% single mothers
living without
children
Often brutal economic reforms in the 1990’s
eroded the real incomes of middle and
CAGR
working class segments, forcing both parents Percentage Growth
Source: ECLAC to work. Modernizing ways encouraged SES A, of market share
1990-2010
B, C+ women to hold onto their careers.
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15. USD Billions
Credit will continue to expand but at a slower rate
15 Source - EIU

16. The emergence of a new viable market
2015 Analysis using 2005 constant USD prices
ABC1
• 34.4 million homes
• $1,342 bn total spend
ABC1 = HH income of over $20k USD or
$15k per year (constant 2005 prices)
Top of the
Base of the Pyramid
• 40.3 million homes
• $417 bn total spend
Based upon WRI and EIU figures
and AMI Analysis
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17. Crime & corruption will continue to plague the region
The World’s Deadliest Cities
City Murders
/100,000
1 San Pedro Sula, Honduras 158
2 Ciudad Juarez, Mexico 147
3 Maceio, Brazil 135
4 Acapulco, Mexico 127
5 Tegucigalpa, Honduras 99
6 Caracas, Venezuela 98
7 Torreon, Mexico 87
8 Chihuahua, Mexico 82
9 Durango, Mexico 79
10 Belem, Brazil 78
21 New Orleans 69
Sources – Transparency
International, World Bank 30 Detroit, USA 48
31 Bagdad, Iraq 48
43 St. Louis, USA 35
44 Cape Town, South Africa 34
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18. Latin Americans clamor to connect
80%
70%
60%
50%
40%
30%
20%
10%
0%
2009 2010 2011 2012 2013 2014 2015
Source - EIU
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19. Latin Americans are the greatest consumers of social
media on earth and distrustful of traditional media
250 Facebook subscribers
Newspaper Readers
200
millions
150
100
50
0
2010 2011 2012 2013 2014
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20. Older & Wiser
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21. 1990 versus 2020
• 5.3 pph • 3.3 pph
1990 household
2020 household
• Ages 30-40 fastest growing • Age 60+ fastest growing
• US$2,720 GDP per capita • US$15,390 GDP per capita
• 3% car ownership • 21% car ownership
• <3% have credit cards • >25% have credit cards
• Shrinking middle class • Expanding middle class
• Economic crisis • Social crisis
• Conform to tradition • Seek pleasure
• Fitting in (collective) • Gaining power (individual)
• Undemanding consumers • Very demanding customer
• Cost conscious • Value & convenience driven
• Traditional • Social media, unpredictable
media, Predictable opinions
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22. Opportunities - How to win tomorrow’s
Latin American customers
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23. Utilize Modern Segmentation Techniques
Traditional Modern Consumer
Segmentation Segmentation
Geography Income
Income Psychographics
Age Lifestyle
Gender Values
Interests & Hobbies
Loyalty
Purchase Timing
Usage level
Geodemographics
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24. Build value, service & convenience and they will come
Choice
Best value, not
lowest price
Time
Solve my
Demanding problems
Consumer
Credit Treat me as an
individual
Empowerment Inform me now
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25. Introduce a wider spectrum of products
Old thinking: New thinking:
Introduce (dump) three Introduce multiple
products into the LatAm niche products
market
Luxury
1
3
Mid-price
2 4
6 8
Value
5 7 9
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26. Embrace testimonial marketing via social media
• Did I tell you I test-drove the new Harley-
• Our product is great Davidson?
• You’ll love our product or your money
back
– What did you think of it?
• Recall our brand, recall our brand, recall – Loved it. You should try it.
…. – 54 of your friends liked it, 6 disliked it
• Traditional advertising • Don’t take our word for it, ask your friends
• Unsubtle PR techniques (journalists for
• Convince credible opinions to try your
sale)
product
• No objective 3rd party opinion in sight
• Metrics: Eyeballs, awareness • Metrics: brand
• Research methods: surveys
emotion, usage, recommendations
• Research methods: Observational
research
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27. Leverage Latin America as a Base of the Pyramid
Laboratory
Why start your global Base of the
Pyramid strategy in Latin America?
• Middle income
• Distribution systems
• Communication
• Homogeneity
• Free trade
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28. John Price
Market Intelligence
jprice@americasmi.com
+1.305.773.1141
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