The International Toy Box: A Deep Dive Into Latin America’s Toy Industry

No matter what part of the world they live in, a need for connection, a desire to create, and a willingness to learn will always draw kids to toys. The recent growth of streaming services, digital content, and e-commerce platforms has made connecting with families in international markets easier than ever. And over the past few years, one fact has become clear: There is a huge audience waiting to play in Latin America.

Latin America (LATAM) is a flourishing region, and toymakers and distributors are discovering new ways to cater to the increased demand for toys in markets like Brazil and Mexico. According to Bonafide Research, the LATAM toy industry was worth $5 billion in 2021. Further research from The NPD Group indicates that arts and crafts, dolls, R/C, and ride-on toys have remained popular in the region. Fan events like Comic Con Experience (CCXP) and trade shows such as Abrin welcomed hundreds of thousands of visitors last year to experience the latest toys, games, and entertainment properties. While the market is growing, some regions still face economic hardships and retailers are using competitive pricing and well-recognized intellectual properties (IP) to engage consumers. NPD has found that American properties like Hot Wheels, Barbie, and Marvel’s Avengers dominate store shelves and playrooms throughout LATAM. However, there is a growing demand for smaller properties that come from digital influencers, Roblox, and streaming services. 

While business is growing in LATAM, challenges in the region can stifle projections. Sales can be impacted by reduced purchasing power, middle class retreat, rising inflation, and high unemployment rates. “Each territory has its regulations, its certifications, [and] its drawbacks,” says Federico Machabanski, CEO of Padres and Selectio, two South American toy manufacturers. LATAM is a huge market consisting of 33 countries, each with its own laws regarding imports, manufacturing, and distribution. “Argentina has great problems importing products and Brazil has certification regulations that are very difficult to comply with, and thus we can find different variables in each territory,” Machabanski explains. 

Brazil stands out for its major achievements in the toy market through established retailers, dedicated manufacturers and licensors, and trade shows that welcome industry leaders.

Abrin, a trade show frequented by manufacturers, licensors, and distributors, is the largest such event in LATAM with more than 130 exhibitors and around 1,500 product launches annually. “There you will find stands of Brazilian manufacturers, Brazilian importers … most of the visitors are stores from Brazil or distributors from the interior of Brazil, and you can also find some customers from Argentina, Uruguay, Bolivia, and Paraguay, who visit the factories in Brazil to review their novelties,” Machabanski recounts. 

Brazil also hosts CCXP, a fandom event that attracted a whopping 280,000 visitors last year. The attendance level exceeds that of New York Comic Con.

Last year, Mattel, Hasbro, Funko, and Iron Studios were among the major toy and collectible makers that had a presence at CCXP, alongside ZAG, the international entertainment studio that’s launching its ZAG Play Toy Division this year. ZAG’s booth featured decorations from Paris and New York to celebrate the Brazilian support of Miraculous: Tales of Ladybug & Cat Noir. 

Miraculous, an animated series following the adventures of two Parisian teenagers who moonlight as superheroes, airs on Mundo Gloob in Brazil. “More and more parents are seeking content that adds value to their children’s education, and therefore toys that are developed from that content are in demand,” says Angela Cortez, Vice President of Licensing, LATAM and Canada at ZAG . “This emotional connection makes it possible to see it as a ‘novel,’ in which the viewer waits for the next chapter to see what will happen. In fact, I think this is precisely one of the keys to our success in Latin America — we love soap operas.”

International manufacturers should understand the nuanced approach required to enter LATAM successfully, including obtaining licenses from properties that excite and inspire Brazilian kids. Typically, Brazilian manufacturers focus on non-licensed and traditional toys like ride-ons, puzzles, and large dolls. “They offer competitive prices that are more affordable to their target consumers,” says Jose Antonio Espinoza, Vice President of Business Development and General Manager of LATAM for Alpha Group USA. “The main difference between the U.S. and Brazil is that in Brazil there is not much innovation from manufacturers,” he explains. “Strong protectionist duties, which are the highest in LATAM, minimize motivation to invest in new technology and development of better toys. These duties also make Brazil’s retail prices the highest in the region.” 

Despite the hefty price tag for toys in Brazil, data from The NPD Group still shows that the market is broadening, with a growth of 14% and revenue estimated at around $1.5 billion USD in 2021. Bonafide Research data points to a compound annual growth rate of more than 6% between 2022–2027. 

The country also boasts a well-developed network of toy store chains, which is its main source of toy distribution. Retailers like Ri Happy, PB Kids, Cia Toys, Super Legal, and more provide a robust selection of toys that they obtain directly from manufacturers and distributors, or that they import directly. E-commerce in the region has also expanded since the creation of mercadolibre.com and americanas.com, retail websites that cater to LATAM consumers. This year, Babies “R” Us is returning to the region with 20 physical stores planned through a partnership between WHP Global and Brazil’s Ragabesh & Co.

Families in LATAM are embracing licensed toys that feature fan-favorite characters from shows and movies. In recent years, non-traditional media has had a massive impact on toy purchases due to the rise of international streaming services and the augmentation of kid-centered content on YouTube. This year, Machabanski believes newer properties will step into the spotlight. “Taking out the big licenses from Mattel, Disney, Marvel, etc; I think properties like Bluey, Supercute, and a few others will take center stage,” he says.

In the past, regional licensees have focused on evergreen IP to guarantee profits, but streaming services are powering growth for modern titles, including Bluey, Stranger Things, and other international hits that are connecting with the LATAM audience. “There is an aversion to risk in the LATAM market, due to the economic situation of certain countries, so perhaps we find [and avoid] very strong licenses in other territories of the world that are not developed in LATAM, for fear that this license will not work in the region,” Espinoza explains. “I think it is something that should change since many Netflix and Youtube series and games like Roblox and Fortnite are a success. Little by little the market is adapting to all this.” The accessibility of content has sparked an interest in kids throughout LATAM that want products based on their favorite character, YouTube channel, or influencer when they walk up to that glimmering store shelf.

While recent developments continue throughout Latin America some experts believe the innovation and excitement is far behind places like Hong Kong, where the annual toy industry trade show circuit begins in January. “For now nothing replaces Hong Kong, not because of the HKTDC fair, but because of everything that happens in Kowloon’s Tsim Tsa Tsui region. Having all the offices, showrooms, and exhibits within 10 blocks — it’s something that will be hard to replace,” Machabanski says. 

Just as the rise of inflation and the ever-constant pressure of China’s supply chain dilemmas have pushed American manufacturers and retailers to look elsewhere to source great toys and games, — including nearshoring and reshoring efforts — companies in Brazil, Mexico, and elsewhere are looking into how to best develop their own supply chain.

While there is much work left to be done, the foundation has been laid for LATAM as a growing market to which everyone in the global toy industry should be paying attention.

A version of this article was originally published in the 2023 edition of The BIG Toy Book. Click here to read the full issue! Want to receive The Toy Book in print? Click here for subscription options!