The economic activity is on a slow and uneven rebound. That was the mood last Tuesday at the annual meeting of the Argentine Industrial Union. Far from a V-shaped recovery, large consumer goods companies expect to reach their 2022 and 2023 sales levels “within two or three years.” According to the latest survey by consulting firm Scentia, in October the drop was more than 20% year-over-year. Data from the National Institute of Statistics and Census (INDEC) also shows a slight drop in their month-over-month (MoM) indicator, as businesses are trying to rebuild the profit margins they lost this year.

As the worst of the drop is over, the controversial issue is now the speed of a seemingly multi-faceted recovery. The blow to production was one of the main topics of conversation between businessmen during the Annual Conference of the Argentine Industrial Union held this week.

The effect of the recession is uneven, sources say. Those that were hit the hardest are the metallurgical, textile and clothing sectors. 

“I had the worst October since my factory opened,” said an industrialist with extensive experience in the manufacturing of chemical products for construction. 

“We are doing everything possible to keep the machines running, even selling below costs,” said a big player in the textile sector.

Mass consumption is another sector lagging behind. A manager of one of the main companies in the area told Ámbito that sales are still approximately 20% below 2023 levels. The drop is even more pronounced when compared to 2022.

Commerce and distribution felt the hit stronger in the first quarter. In the second, they started to notice an uptick. In the third and so far in the fourth, the curve seems to have stagnated at historically low levels. At any rate, the general consensus is that 2025 will be better than 2024.

The issue lies in how slow the economy is taking to rebound. “We expect to recover the volumes we had in 2023 and 2022 in two or three years minimum,” said an experienced executive in the sector. Two other sources with specific weight in the mass consumption industry agreed with that diagnosis.

Consumption: the data of the drop

According to data from consulting agency Scentia, mass consumption fell 20.4% year-over-year in October, with all product categories showing abrupt declines. The worst mark was noticed in “impulse buy” products, with 29.1%, followed by “hygiene and cosmetics” (25.8%), “alcoholic beverages” (22.3%), “non-alcoholic beverages” (17.1%), “breakfasts and snacks” (19.3%), “clothing and household cleaning” (18.2%), “perishables” (17.2%) and “food” (17.1%).

Several analysts pointed out that, still, “the base for this comparison is high,” because of the macroeconomic imbalances that existed at this time last year. But if we look at the full picture, the current levels are historically low. What worries the industry most is that when they look at the MoM variations, the volumes have been practically stagnant since April.

In fact, the latest INDEC survey showed a year-over-year drop of more than 12% in September and a month-over-month decline of close to 0.3% compared to August. Without the impact of the credit rebound, mass consumption doesn’t seem to be catching up.

The strategy to face the crisis

In this scenario, companies are reconfiguring their business models and aiming to recover lost margins: “We have to grow in the segments that increase profitability in order to have a bit more profit in all of the categories,” explained the director of a leading company.

On this issue, she specified that companies this year sought to compensate for the volume drop of their top brands with other products in their portfolio that are less profitable — what is commonly known as second and third brands. They also launched new items that did not exist in the market before.

In order to achieve a more profitable mix of brands, they need purchasing power to bounce back. This occurred following the collapse of late 2023 and early 2024, but has slowed down and/or even stagnated in recent months. Registered jobs are barely below the levels of last November, while informal workers and retirees are far lower, and with little prospect of recovering lost ground.