The consumer picture in Colombia looks relatively positive over our five year forecast period. A reduction in credit, higher unemployment and high personal debt levels mean that the pace of growth is likely to be lower than that witnessed in the boom years leading up to the global financial crisis. However, with strong fundamentals and indications of growth starting to re-emerge Colombian consumers look set to continue steadily increasing the amount they spend, with positive implications for the food and drink industry. This will continue to encourage investment in the region, with firm's such as Coca-Cola Femsa, Exito and Grupo Nacional de Chocolates all announcing new expansion plans in recent months.

Key Company Trends ; International Expansion - Colombian food and drink companies are increasingly pursuing international expansion, attracted by the close proximity of markets which are larger and/or less mature than the domestic market. Opportunities abound across the Latin American region and Colombian firms, with their local market knowledge and regional expertise are well placed to take advantage. Colombian firms are also expanding into the US attracted by the size of the market and the country's growing Hispanic population.

Retailers Investing Again - Colombia's two biggest retailers both massively reduced investment in 2009. However, both are now once again ramping up expansion as consumer spending once again moves back towards growth. As a sign of this. at the end of 2009 Colombia's largest retailer Almacenes Exito successfully raised COP435bn (US$223mn) through a share issue. The firm has said the extra capital is to be used to acquire the 22.5% stake in its Carulla Vivero unit that it does not already own and to finance expansion.

Key Risks to Outlook
Faster Credit Expansion - With consumer spending in Colombia tied closely to credit expansion, a key risk to our outlook is any change in this dynamic. As consumer confidence returns and economic growth picks up this balance will have to be maintained through an increase in interest rates, with perhaps the possibility of low rates being retained for too long putting upside risks to our consumer consumption forecasts.

Faster Growth In GDP - A second risk to our forecast is that Colombia will experience more rapid economic growth than we are currently predicting. Either a swift increase in foreign direct investment (FDI) or global oil prices could have a positive impact on the broader economy, with positive implications for our consumption forecasts. This represents an upside risk.