Tapping into the full potential of Latin America, for Amer sports

Growing economic prosperity coupled with the trend towards leading a healthy lifestyle as well as the increasing popularity of activities such as cycling and running makes Latin America an attractive market for Amer Sports.

Juan Carlos Aziz, General Manager for Amer Sports Latin America, discusses the potential and Amer Sports’s strategies to tap into the full potential of the region.

“We added Salomon to our brand portfolio at the end of 2006, and since then we have expanded our footprint to most Latin American countries and all relevant capitals. We have chosen two different business models to develop our growth plans: directly, like on the Mexican market or through our distributors, which we have done in basically five regions within Latin America. We have strong distributors and partners covering the region. One way of developing the brand has been through Salomon and Wilson Brand Stores. We are proud to have at least one brand store in most major capitals in Latin America.”

“My primary responsibilities lie in pursuing every single opportunity that will yield brand positioning, brand recognition and improving revenues in a profitable way”, Juan Carlos sums up.

Growth driven by expanding middle class and development of retail business

According to Juan Carlos, there are four main factors behind Latin America’s business potential: consumer spending, increasing interest in sports and wellness, retail development and e-commerce.

Economic and demographic growth can be regarded as one of the main drivers in Latin America during last five years. For example in Peru and Brazil, poverty has decreased dramatically. Moreover, the growing middle class is more and more interested in a healthier lifestyle in terms of sports and wellness activities.

“Brazil will soon be hosting the World Cup and Olympics, so there is a boom in the sports apparel and equipment industry. This means Amer Sports needs to be at the top of the game in this region”, Juan Carlos adds.

Retail business is developing fast with big investments in the largest countries, especially in Brazil and Mexico. Apparel, electronics, sporting goods and luxury brands are growing aggressively in own retail, providing an outstanding opportunity to project an upscale brand image and increase sales and margins. Also e-commerce is growing rapidly, especially in Brazil. For example, today the largest sporting goods retailer in the region with more than 120 stores gets more than 15% of their total revenue via e-commerce.

Opportunities and challenges

To succeed in Latin America, Amer Sports focuses on own retail and especially developing its Apparel and Footwear business. Growing the number of Wilson and Salomon brand stores provides the company an excellent opportunity to present its brands as a whole concept in the mass merchant driven market. This is particularly important for Wilson, because of the diversity of various sports the brand is involved in, and also an excellent opportunity to develop the Apparel and Footwear business.

The biggest challenges that need to be taken into account in Latin America are increasing competition and economical factors. The competition is particularly fierce in Brazil, with a growing economy, fast growing consumer spending and sophistication. “We support our distributors and develop more local sourcing to compete in this high duties and high taxes market”, Juan Carlos explains.

“Two years ago, we changed our business model in Brazil from an Amer Sports subsidiary to a business run by distributors. This new business model allows us to increase our EBIT in the region with a better brand development”, Juan Carlos Aziz explains.

The biggest challenges are currently in Venezuela and Argentina. Venezuela is currently facing deep social, economic and political problems which limit business opportunities, and Argentina, one of Amer Sports’ main markets, is also facing imports restrictions and a high inflation process, which makes it more difficult to grow the business. Also increasing protectionism could be a critical factor in the future years in the region.

“Mexico is a rapidly growing, mass merchants driven market with a stable economy and high team sports participation. Our own retail for Wilson and Salomon has been a tremendous success there. We have been able to improve brand perception and grow our Footwear and Apparel business. For example, the special Inflates collection has brought us to a dominant position in this extremely competitive market.”

For Wilson, most potential lies in own retail and apparel and footwear. Retail is developing and growing fast as a business opportunity and we have strong brand concepts. Apparel and Footwear are growing faster than hardgoods, and the market size is very attractive.

For the mountain brand Salomon, the biggest potential lies in the Andean countries, led by Peru. Also Colombia and Costa Rica represent good opportunities as well as Chile, which has a very solid economy.


Driving scale and synergies

Salomon has a solid retail platform to develop the business in Latin America, while Wilson has a strong brand concept. For Wilson, retail has been successful in terms of sales but also bringing a better brand perception as an upscale sports brand. Multibrand stores have been a success for both brands. At the same time, having distributors in main countries provides synergy benefits, allowing to maximize market opportunities with a controlled opex budget.

The operations and marketing of Amer Sports’ brands in Latin America are led from Mexico City.

“Strong cooperation between our regional marketing and commercial teams and our local distributors is key to participate in major sports events such as ATP Tournaments in Acapulco, Buenos Aires, Sao Paulo and Rio de Janeiro, just to name a few”, Juan Carlos Aziz highlights.

“Our region is rich in talented baseball, soccer and tennis players, so we need to work closely with our local marketing teams to find the next Juan Martin del Potro, Carlos Beltran or Miguel Cabrera. Moreover, we are working with a new online training program to assure good knowledge about our products and technologies and a consistent communication with our regional and local commercial teams.

“In the end, the most important ingredient for our continued success in this challenging market is our great team. Without these professionals, we would not be where we are today.”

Source  Amer Sports

More news about amer sports or Brands ? Use the search engine at the right top of the site.