Fire arm murders in Latin America are triple the global average. Thirty out of every 100,000 people are murdered annually in the region. Kidnappings in Latin America, although highly disguised by the local authorities, represent of 60 percent of all kidnappings worldwide. According to the Global Peace Index, the most peaceful of the three largest Latin American countries is in 79th place in the world. According to the World Bank, crime in Latin America represents a loss of $30 billion to the region’s economy.
Although the Global Peace Index figures for most Latin American countries are not the highest in the world, they help leverage growth of the security industry. Hundreds of local and global players have become very active in the region across a variety of security services. The three largest sectors in the Latin American security industry are security guard service, electronic security and vehicle security.
SECURITY GUARD SERVICES
Private security services are still by far the largest security product in Latin America. Although labor intensive, this segment has developed very sophisticated players throughout the region, providing skilled staff well-equipped with radios, cars and cameras. Although a big industry, even the largest markets remain very much untapped in several non-urban centers, representing the highest opportunity for growth in Latin America.
This sector in Brazil, the largest market, reached $5 billion in 2006, with 1,400 companies. The working conditions in this industry are intensive, with security guards averaging 12 hour shifts. Grupo Haganá and Grupo GR are among the two largest players in the region, servicing both the residential and commercial segments.
Residential security guards are still very common among SES A and B+. Collective condominium security services have been used in SES A and B and now are becoming increasingly utilized in SES B- and C+. These are usually well-trained security guards, usually supported by an outsourced organization to service the entire condo. Neighborhood/block security guards are common among SES C. These are often unskilled security guards, frequently hired by the neighborhood residents out of fear of being assaulted by the security guards themselves. SES D and E are not serviced and often reside in the same neighborhoods as the crime executors.
Commercial office buildings in metropolitan centers generally hire third-party organizations. These are often the same organizations that allocate security guards to residential condominiums. Factories tend to hire their own security guards. Small stores hire their own security guards or go without service and rely heavily on electronic security services. Rural establishments are usually under-serviced or tend to hire individual guards.
Increasing access to technology is providing affordable alternatives for SES B and C. As the economies develop and labor intensive services become more costly, these consumers are purchasing alarms and presence-detectors instead of paying someone to watch over commercial points or houses.
In SES A, expensive solutions such as GPS and armored vehicles are replacing or complementing private security escorts. In this segment, however, technology does not necessarily imply a substitution of labor intensive services, but rather an additional resource.
Larges cities in Latin America are much more advanced in security than rural areas, albeit far behind developed economies. The following items are becoming standard (though usually not compulsory) throughout most LatAm metropolitan areas:
ELECTRONIC SECURITY EQUIPMENT
The electronic security market is where most attention is being directed in Latin America. In Brazil alone, the size of this market in 2006 reached $1.0 billion, up from $900 million in 2005. The market grew 14 percent in 2006 and is expected to grow 12 percent in 2007.
TV circuit systems and digital recording account for 50 percent of sector sales, with an average set up cost of $250 to $2,000. Sales grew 35 percent from 2005 to 2006. Electric fences comprise 30 percent of 2006 sales. Set up costs are increasingly affordable, averaging $200 to $500. The remaining 20 percent of sales corresponded to alarm systems, with set up costs that average between $250 and $1,000. According to leading distributors in the region, there is a trend to migrate and/or expand from alarm systems to cameras.
The biometrics market has not been measured, but it is viewed by consumers as extremely high tech and inaccessible. In fact, consumers often overestimate the accessibility to biometrics. The three segments that this technology has had most success in penetrating are banks, athletic centers and residential complexes.
The largest market in the region for electronic security equipment is Brazil, with 420,000 buildings monitored by electric alarms. Eighty-eight percent of these are located in the south-southeast region. The country has 8,000 firms in this segment that generate 80,000 direct jobs.
The three top markets for armored vehicles in Latin America are, in order of sales, Brazil, Mexico and Colombia. InfoAmericas estimates that the Latin American market for armored vehicles is $135 million. This market grew more than 850 percent in the last eight years. While Colombians prioritize vehicle protection against kidnapping and the terrorism, Mexicans protect their vehicles against assaults and Brazilians protect their vehicles against both assaults and kidnappings.
Brazil is the largest producer of armored vehicles worldwide, with a market size of $106 million. The country produced almost 4,000 armored vehicles in 2006 and the market is expected to grow 10-15 percent in 2007. The country is becoming an exporting hub, and currently 10 percent of production is exported.
Protechtor, the country’s leading exporter, increased exports by 70 percent in 2006 with 4,500 windows. The average cost to armor a vehicle in Brazil is $28,000, although it can cost as little as $10,000. According to a recent study conducted by the Brazilian Armored Vehicle Association, women and men correspond for 29 percent and 71 percent respectively of armored vehicle users.
Similar in concept as armoring vehicles, although much more accessible, is window tinting. Tinted windows have been one of the largest and most immediate responses to crime in Latin America, and have been highly active in the region for more than 10 years in the automotive industry. The market is beginning to grow in the residential sector now as well. Window tinting is an extremely competitive market with hundreds of local players, meaning that volumes are high and margins are very low. It can cost as little as $50 to tint an automobile‘s windows.
InfoAmericas’ analysis reveals that Brazil, Mexico, Colombia and Argentina are the four largest markets in the region. Of these four countries, Argentina presents the highest growth, a reflection of high GDP growth and a recovering economy. Colombia’s security industry is at a more mature stage, and its growth rate is consistent with its GDP growth.
InfoAmericas identified difference within in security demands and target markets across Latin American countries. With exception of Colombia, most other Latin American short term opportunities in the security industry are in the private sectors. The Colombian government is ahead of the game with its public security investments, which is partially a result of its close alliance with the US, which stimulated investments in the industry several years before the sector began taking off in other Latin American countries