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1.2 The Argentine Consumer Profile

With a population of 40 million, Argentina is the fourth largest country in Latin America, after Brazil, Mexico and Colombia. Argentina’s population is considered young, with 85% of the total population under the age of 60, while 50% are between the ages of 20 to 59. These young working people are characterised by high fashion-consciousness and consumption power, as they are normally working full time, starting families or rearing children.

Age Distribution in Argentina, 2007

 

Not surprisingly, the abandoning of the pegged exchange rate and the resulting currency devaluation have caused a significant decline in the standards of living in Argentina, when the value of money was reduced by two thirds after the US dollar to Argentine peso exchange rate changed from 1:1 to 1:3. Yet, thanks to the revival of the Argentine economy and growing industrialisation, average earnings in Argentina have demonstrated strong growth in the post-crisis era. Over the period from 2003-2007, average gross income rose by 76%, reflecting the revival of the overall Argentine economy. Higher incomes, coupled with better economic and employment prospects, have prompted Argentine consumers who are tired of economic recession to expand consumption, while the urban poverty rate dropped to 21.0% by 2006, down from 45.4% in 2002, according to the Economic Commission for Latin America and the Caribbean (ECLAC). Compared to urban poverty rates of 33.3% and 31.7% in Brazil and Mexico, respectively, in 2006, Argentina is considered a well-off Latin American market to which more attention should be paid.

Average Gross Income in Argentina

 

Regarding income distribution, Argentina, like most Latin American economies, is considered unequal. The top 20% of households hold more than 51% of the total income, while the share of the bottom 40% is less than 13%. Meanwhile, the middle class in Argentina has been expanding after the economic crisis, and is estimated at 40% of the total population, or some 16 million. This figure is much higher than the 20% of neighbouring Brazil, although in absolute terms, Argentina’s 16 million-strong middle class is smaller than Brazil’s 40 million because Brazil’s population is nearly five times that of Argentina. In general, high-income consumers are more inclined to buy imported and branded products, with over 70% believing in the link between brand and quality. On the other hand, while lower income consumers are more price-conscious, they perceive imports to be of better quality and variety. It is therefore not uncommon to see low-income consumers choosing foreign products even when the prices are a little higher than locally produced ones.

Income Distribution in Argentina (2007)

Source: Permanent Home Survey (EPH)[1], INDEC

Social Class

Average Monthly Income

High / Middle-High

US$ 1,334.33

Middle

US$ 929.20

Low

US$ 296.17

Poverty

US$ 33.90

Source: Permanent Home Survey (EPH), INDEC

Concerning spending patterns, Argentines spend most of their income on food, beverages and tobacco, which on average accounts for more than a quarter of total consumption expenditure. Setting aside also housing expenditure, it is estimated that Argentine consumers spend some 60% of their income on goods and services.

Consumer Pattern in Argentina, 2007

Argentina is a highly urbanised country, with nearly 90% of the population living in urban areas. This compares to some 75-80% in Brazil, Chile and Mexico. In particular, the city of Buenos Aires, home to over a quarter of the total population, is considered one of the most urbanised cities in Latin America. The high concentration of potential consumers facilitates product promotion and business solicitation, and therefore offers a good base of operations for Hong Kong exporters who are targeting the Argentine market.

Major Cities in Argentina[2]

City

Population

Buenos Aires

11,600,000

Córdoba

1,460,000

Rosario

1,180,000

Mendoza

890,000

Tucumán

804,000

Source: INDEC, United Nations


[1] INDEC conducts the Permanent Home Survey (EPH) twice a year in May and October in 28 cities, which represents 70% of the country’s total population.

[2] Please refer to Appendix 1 for a map on Argentina.

Content provided by Hong Kong Trade Development Council
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