This means that anyone doing business in Colombia, or considering doing so in the near future, needs to keep a close eye on these changes – particularly the new players in the market. Could any of them be your direct competition, or perhaps a potential partner?

Here are some outstanding developing players, which bring remarkable new options to consumers – and should be on your radar:

1. Tostao’

A company incorporated in Panamá, with German banker Michel Olmi leading the project, Tostao’ opened for business in 2016. While the company’s motto of “coffee and bread” may be simple, its efforts to open more than 100 sites in two years were far more complex. You can now find a Tostao’ almost anywhere in Colombia.

Tostao’ brings frozen raw products from Barcelona, Spain, and bakes them at individual stores. Customer reviews demonstrate an appreciative clientele. The baguette, a type of bread that, curiously, is not usually found in Bogotá’s bakeries, leads in popularity. Tostao’s premium quality coffee is sold at the same prices as the lower quality coffee commonly sold in the city.

Tostao’ does a good job of listening to its customers, upgrading its restaurants with more seating and serving sizes based on its clients’ feedback. Bottom line: you can now find predictable, high value coffee and bakery products all around the city, whenever you need a snack.

2. D1

Owned by Grupo Santodomingo, one of the largest economic groups in Colombia, in association with the Albrecht family from Germany (owners of discount grocery chain Aldi), D1 brought the concept of discount supermarkets to Colombia in 2009, and started a massive development in 2014.

D1 offers a few prime brands, such as premium beer Club Colombia, and low cost brands with hard-to-beat prices. Among its most attractive products is a brand of Italian pasta that outperforms local options in quality, at a fraction of the price. D1 also provides great value in snacks, cleaning products and canned food for its customers.

The stores are drawing increasing numbers of customers, and are making room for more cashiers in their stores. The ability to have packaged goods at affordable prices close to your home is new for many consumers, and clearly popular with this market.

3. Ara

Owned by Jeronimo Martins S.A. from Portugal, Ara opened its first stores in Colombia in 2013. The first locations were in Pereira, a city of 474,000 inhabitants, located in the “Coffee Axis” region of the country. In 2016, a large-scale expansion began in Bogotá.

The format is that of a small supermarket, easy to see from a distance because of the intense orange color of its storefronts and logo. Prices are usually attractive, with a strategy similar to hard discount stores: offer special pricing on prominent products for a limited time.

I bought a pot in Ara for a below-market price, and it’s proven to be a high quality product. I also discovered high quality roasted chickens sold with potatoes, on sale for just USD $3.50. Ara has done an excellent job of bringing a variety of fruits, vegetables and fresh foods to the market at affordable prices.

4. Rappi

This startup led by Colombian entrepreneurs was incorporated in 2015, after being selected by Y Combinator (a startup incubator) for finance support. Basically, Rappi will purchase items for you and deliver them to your home – groceries, tech, medicine, liquor, restaurant food, and anything else you can think of. Even when you need cash, they will withdraw it, take it to your home, and charge it to your registered credit card.

You can see Rappi’s employees in supermarkets with their orange phosphorescent suits and backpacks, or on their bikes and motorcycles moving from place to place. Success has been so rapid and overwhelming that some months ago they published a letter in the newspapers apologizing for delivery delays. It seemed a sincere recognition that the company was attempting to handle more orders than it was initially prepared to receive, and is committed to working on it.

With this service you can save time while getting the same prices as you would at the store, for only a small additional fee for the service. This is something people in Bogotá can do for many stores, now that Rappi’s technology has put the ability to use it in people’s hands.

The new kids on the block are dominating Colombian business – how do you stack up?

The bottom line is that consumers in Bogotá, and increasingly throughout all of Colombia, have a growing selection of interesting and useful new options.

One immediate impact is that some small shops will have difficulty competing with new players equipped with large amounts of capital to invest. Other companies will have a tougher time standing out in this increasingly saturated market.

Their success proves, however, that Colombian customers are willing to try new products and services, and that the right offerings have the potential to attract a sizeable market.

So what’s your next step – is it time to fold on your ambitions for Colombia? Or is now the time to stay the course, or even double down on your strategy?

The post Get inspired by these 4 new companies that are kicking the competition’s butt in Colombia appeared first on Trade Ready.

Now a tricky question: which is the second most populated country in South America? A fairly educated guess could lead us to answer Argentina. It looks pretty big on the map, and is the kind of country that has made headlines several times in the past few years.

You may be surprised to find that the second most populated country in South America is actually Colombia, home to 48.7 million people, five million more than Argentina.

So, if you’re looking for a new market to expand your business to, Colombia is an option you should consider. With such a sizable population, there’s a lot of market potential for many businesses. Even just the city of Bogotá, with over 9 million inhabitants in its metropolitan area, is a larger market than any of the individual countries in Central America.

Who is your target market in Colombia?

So, let’s look at some Colombia statistics to help identify the best opportunities. In 1994, Colombia put in practice a household economic classification system comprised of  six “Estratos” (strata or layers). This was intended to charge differentiated rates for services such as water and electricity. Estratos 5 and 6 pay an extra quota that subsidizes Estratos 1 to 3, while Estrato 4 neither pays extra nor receives a subsidy.

This method of stratification produces a socio-economic classification that highly correlates with marketing relevant variables, such as purchasing power. Graphically, the Colombian population sorted by Estrato looks like this:

So 87% of the households, and consequently more than 90% of the population, belong to these three subsidized Estratos. The average monthly income per household in Estratos 1, 2 and 3 is around $300, $420 and $600 USD respectively, as of June 2015. The number rises to $700 USD for those in Estrato 4, $1,400 in Estrato 5 and $2,350 for Estrato 6.

The first insight you can draw from these statistics is that Colombia is a large market of low income consumers. This is a very normal picture for a Latin American country, with the exception of Chile.

Higher growth means higher future purchasing power

Now let’s take a look at how the purchasing power of these low income consumers has evolved in the previous 20 years. The following chart compares the evolution of minimum wage vs. inflation rate in Colombia:

Successive governments have committed to increase minimum wage by more than the inflation rate year after year. In parallel, they have controlled inflation, which hasn’t been a two-digit figure since it hit 16.7% back in 1998. This marks an important difference between Colombia and the rest of the countries in South America, many of whom have struggled with higher inflation.

Colombia’s gross domestic product (GDP) has also consistently grown over the past 20 years, with the sole exception of a -4.19% rate in 1999. By 2015, Colombia’s GDP was 3.17 times that of its GDP in 1995, while Brazil and Argentina’s GDPs were only 2.25 times what they were in 1995, demonstrating Colombia’s continued potential as a market.

It turns out that this large, lower income country has a recent history of steady growth in terms of purchasing power. In the future, it is likely that this trend will be sustained and even grow.

An open economy offers enticing opportunities

It is clear that Colombia has several structural limitations, which are common to countries under development. But there are some distinctive traits that make Colombia an interesting market to explore.

Its economic system is quite open. You can register a company by yourself in just one week.

Prices go up and down depending on demand, with little to no government intervention. Both customers and vendors are used to having plenty of options, often composed of a mixture of national and imported products and services.

Politics makes a big difference between Colombia and its neighboring countries. For several administrations the country has been ruled by presidents with important academic and political backgrounds, whose policies have promoted an open market. The same has been true for ministers and those who hold key positions such as the president of the General Bank. Overall, a close relationship with the U.S. has also been a constant, making trade with Colombia easier for American businesses.

Some of the limitations to Colombia’s economic development have come from armed guerrillas that have ravaged the country for more than 50 years. Potential business opportunities, like oil exploration, have been limited by the security issues associated with this conflict.

The good news is that the military power of irregular forces has been gradually reduced over last 10 years, and peace negotiations seem to be leading them to an end. Improvements in transportation infrastructure has recently started to develop as well, replacing old small roads and allowing goods to move more quickly throughout the country.

Big companies are already here, so make sure you don’t fall behind

Technically, Colombia is a country under construction. It has about the same population as Spain, spread across a geographical area that is twice as large.

Many international companies have successfully launched businesses here. In most of the high level malls, you can find many of the same stores as in New York or London.

You can also buy a Ferrari, if you have the money, in the recently opened authorized dealer of Bogotá’s Carrera 19. Or maybe you prefer to simply enjoy a Starbucks coffee in one of more than 10 locations opened since July 2014.

There is, by far, much more to discover in Colombia. If you are considering expanding your business to South America, make sure it’s at or near the top of your list. If it’s not, you could be missing out on one of the region’s best opportunities for decades to come.

The post Colombia – a market worth exploring appeared first on Trade Ready.