Get inspired by these 4 new companies that are kicking the competition’s butt in Colombia

22/12/2017

Colombia competition

Colombia competitionTake a walk down any street in Bogota, the capital of Colombia. Now, if you leave and come back only a month later, you will find something new when you return. From the old house that has been demolished and will soon become a modern residential or office building, to the new store that arrived in the neighborhood, the landscape changes so fast in this city.

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?

Disclaimer: The opinions expressed in this article are those of the contributing author, and do not necessarily reflect those of the Forum for International Trade Training.

About the author

José Rondón

Author: José Rondón

José Rondón is a statistician, and an expert in marketing research. Born in Venezuela, he moved to Spain in 2009 and then to Colombia in 2013. He is the owner of Tricolor Research, a boutique market research service provider.

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