Youth quake: Latin America's millions of young consumers are drawing multinationals in to build brands--and to create new products for export to the emerging world.

In 2000, U.S. credit-card giant MasterCard began the global rollout of its virtual payment card, for online, mail or telephone purchases, with Unibanco, Brazil's third-largest private bank. Virtual Card is now in 120 markets worldwide, the company says. A year later, MasterCard went back to Latin America, this time to Mexico, for the global launch of mc2, a card with a curved design, see-through pattern and bold colors.

More recently, the credit-card company chose Latin America to introduce MC Black, a card with premium services, including 24-hour personal assistance for booking a tee-off time at a golf course or for paying bills. Such success has made the region one of the world's fastest-growing markets for credit cards and an incubator for products for the whole world, says Mauricio Alves, MasterCard's vice president of consumer credit products in Latin America.

Why start in Latin America? For one, customers tend to be trendy. "Consumers like to have new things to show their friends. When we launch a new product they look for it all over the place. They have to have it," Alves says. Latin American banks, too, tend to be innovative and aggressively introduce new products, since they are after the same type of customers: young people. In comparison, rollouts in developed markets like the United States and Western Europe are slower because the market is mature, and most consumers are already set in their ways, Alves says.

Latin America is young, very young, compared to the developed world. More than 57% of Latin Americans are under 30 years of age. Almost 72% are under 40. Comparatively, better than 58% of U.S. citizens are older than 30. Nearly 17% of them, the huge group of affluent consumers known as the baby boomers, are over 60. The golden rule of marketing--get them while their young and you'll have them for life--is in full force in Latin America, and major multinationals are hungry to turn the region's growing middle class into brand-loyal consumers for decades to come.

Tapping the Latin American market will be critical for multinational companies looking to grow globally. European companies in particular need to break out and embrace Brazil ahead of U.S. companies, analysts note. That's because they need new places to grow. While the population of emerging markets is young and growing fast, in Europe the population is aging and shrinking. In the United States it is aging but growing at the same time, but that growth is thanks nearly entirely to young immigrants and their offspring, the U.S. Hispanic consumer juggernaut that has many U.S. companies eyeing Latinos both abroad and at home.

Ideas that work in Latin America, too, tend to work in most any market where there are as-yet-unjaded, growing markets full of new consumers. "Multinational companies are really interested in testing products in Latin America. They are trying to capture business potential all over the world," says Alicia Enciso, head consultant in Mexico City for Zyman Group, an Atlanta management-consulting company. "Latin America is a test site for emerging markets, where consumers have different needs than in developed countries. They are as equally brand loyal as in developed countries, but to different brands."

Don't be fooled by lower incomes. Sheer size and a growing middle class can make up for a lot if products are marketed and priced right, and the lessons learned can be applied elsewhere. "If you crack the code on how to do it in Latin America, you will likely be able to repeat that in other emerging markets," Enciso says.

Local face. Global fast-food chain McDonald's is exporting concepts from Latin America. "We are a local brand with a local face," says Marta Gerdes, its vice president and chief brand manager for Latin America. "We are taking initiatives to other markets that have served us well and have applicability outside Latin America."

For instance, McDonald's has been using a hosting system for four years in Latin America. For decades essentially a self-service operation with no waiters, restaurant workers in the region help mothers get seated with their children, take their orders to the table and later offer to bring them dessert and coffee. The practice is spreading to the United States and elsewhere. So, too, are specialty menus created by well known chefs to meet local tastes, such as Pablo Massey in Argentina. Similarly, fast-food giant and competitor Burger King has added its Churrasquito steak sandwich, which was created in Argentina to much success, to menus in Bolivia, Paraguay and Peru and plans to take it to Mexico later this year. The U.S. burger chain is also considering taking it to other regions of the world.

The future of product development for developing countries is Brazil, the largest market in Latin America, says John Price, president of InfoAmericas, a Miami consulting firm. "Brazil is very multicultural. As the Canadian and U.S. populations get older, Brazil will be more in step with global trends, as they are a younger population," Price says. "If they are on the cutting edge of music, dance, arts, it will become a great place for product development and association."

To date, the United States, France and Italy have created most of the world's pop culture. As products are born in emerging markets, and begin to work abroad, that will change, according to Price. "These countries are sharing that leadership with Brazil and Japan. India is becoming an exportable culture, too," he says.

One likely Brazilian export brand is Guarana Antarctica, a soft drink flavored by the fruity seeds of a shrub common in northern Brazil and Venezuela. The stimulating beverage is hugely popular in Brazil and is marketed by Brazilian beverage giant AmBev. In the right hands, it could do well as a global product, says Jason Holway, who follows the global beverage market for Zenith International, a consulting firm in London. Not coincidentally, AmBev merged last year with Belgian beer company Interbrew to form InBev, and the global marketing drive, as well as an international bottling deal through PepsiCo, is well under way.

As Brazil gets more fashionable, watch for more products--and branding--associated with the country. Besides the ubiquitous Brazilian models for Victoria's Secret lingerie, there's Reef Brazil, a California surf brand created by two Argentine brothers. In New York, you'll find dance-funk-pop quartet Brazilian Girls (a band that includes only one actual girl). For its latest global ad campaign for deodorant Rexona, Dutch consumer-goods company Unilever cast Brazilian soccer star Ronaldinho for a 60-second commercial, created by Argentine ad shop VegaOlmosPonce.

"Argentines are naturally non-conformists, in a positive way," says Sebastian Stagno, a general creative director for VegaOlmosPonce, a Buenos Aires agency backed by Interpublic Group that handles the advertising for Unilever in Argentina and other markets. "We have a hunger to do creative things. We want to be like in the first world."

Strong advertising and marketing talent helps drive that creativity into global markets, sometimes in surprising ways. This is especially so in Argentina and Brazil, where ad campaigns regularly win at the Cannes Lions International Advertising Festival, the most prestigious in the industry.

Going upscale. For instance, South Korean electronics company LG's products normally are displayed in computer and electronics-goods stores, where they can get lost in the sea of blinking screens. Laura Antebi, marketing manager of LG Electronics Argentina, instead put LG's Flatron flat-panel monitors, with their crisp image and fashionable design, in the windows of upscale clothing shops.

The screens project images of the fashions in the window display alongside the clothes and mannequins. Below the monitors are signs that read, "Las Pepas shoes look just as good on you as they do on an LG monitor." Seoul was impressed. The company now plans to repeat the effort in Puerto Rico and possibly elsewhere. "When an idea works in a country, if the idea is good it will be replicated," Antebi says.

Unilever regularly exports marketing ideas hatched in Argentina. For a new fragrance of its Axe male body spray, it set up classes in the art of seduction in bars, discos and universities and at popular beaches. Young men could apply the spray then step in front of a large screen, upon which a half-dozen virtual women would immediately appear. As the man moved, the women followed, thanks to a three-dimensional, interactive projector.

In various formats, Unilever has replicated the seduction-school idea elsewhere in Latin America, as well as in India, Spain, Thailand and the United States. Argentine creativity is a product of the country's constant economic and social crises, says Javier Kolliker Frers, brand manager for Axe in Argentina. "Something chaotic in our culture has favored creative development," he says.

Many products, too, can cross borders--if sized and priced right. While hulking SUVs may be a favorite in the United States, sales of small cars under $10,000 are growing the most in Latin America, where incomes are lower. India and other emerging markets have similar tastes. Many upscale consumer-goods makers are selling expensive shampoos, for example, in more-affordable sachets in Latin America, a strategy applicable throughout the developing world.

Volume. Aiming low at first can result in volume, acceptance and, eventually, brand power. Royal Philips Electronics wanted to reach more of Brazil's 45 million television households, but less than 8% pay for cable or satellite signals. To promote its set-top boxes, the company developed an analog model for free broadcast TV for the 41.5 million lower-income homes perfectly happy to watch news, sports and telenovelas hits like A Grande Familia, a sitcom about a lower-middle-class family trying to make ends meet, over traditional airwaves. "Brazilians don't want to pay monthly subscriptions for TV because they don't have the money, and because free-to-air content is very good" says Fernando Stinchi, Philips' vice president of entertainment solutions, marketing and strategies for consumer electronics products in Latin America.

This month, Philips launched an analog box, developed in Brazil, which allows viewers far from the city to get better reception of Globo and other broadcast channels. Philips expects to sell up to 2 million of the analog boxes a year, compared to just 200,000 pay-TV boxes, Stinchi says. "Pay TV is strong in Europe and the United States, but free-to-air transmission is almost the entire market in Brazil," he says. "We need to supply this market." Philips expects the idea to travel to Russia, India and China. Stinchi is in talks with Philips in India and other emerging markets for the Brazilian-designed box.

By letting emerging markets dictate product design, Philips is decentralizing operations. Previously, the company adapted global products to the local market as needed. Now it is starting to greenlight local initiatives that can be developed for other markets if they prove successful, Stinchi says. The Dutch company this year appointed a team to oversee development of products in its global portfolio to meet consumer needs in Brazil, China, India and Russia.

Companies have not been afraid to think up-market as well. Microsoft launched its TV Foundation Edition software for television first through Mexican cable companies--clearly only for customers who can pay for cable service. The software lets cable companies offer an interactive program guide and advanced digital services such as high-definition television, interactive services, multi-language support and video on demand.

As a result of the Mexican rollout, Microsoft TV is "thinking globally" when it comes to product development and implementation, says Microsoft spokesman Jim Brady. It is now including functions that allow consumers to choose languages for audio and subtitles. "Such adoptions enable us to serve an even larger number of customers that want to embrace such technologies," he says. Microsoft now has more than 400,000 subscribers using Foundation Edition in Latin America since first entering the region with the service in 2003.

Of course, domestic companies haven't gone away. Last year, Argentina's Arcor, one of the world's biggest candy makers, broke into the packaged ice cream business in its home market. This led Unilever to withdraw its Kibon brand of ice cream from the market, on the fear that already weak sales would slide more against Arcor's superior distribution network.

Swiss food company Nestle answered the call instead. It expects to open 200 ice cream parlors in Argentina, tapping a huge market. Argentines buy 45% of their ice cream at mostly family-owned parlors and premium chains around the country. So what do you do when you run out of new customers? Go abroad. Arcor plans to take its ice cream to the rest of Latin America as part of a $170 million expansion in 2006 and 2007.