Emerging Markets #1

Regulation relaxation may unlock Brazil's massive natural products market

If you want to be in Latin America, you want to be in Brazil – but watch out for those regs. Mark J. Tallon sifts through the trends and demographics defining the region and takes a close look at Brazil's big role.

As one of the BRIC (Brazil, Russia, India, China) countries predicted to share increasing dominance of the world economy, expectations for Brazil's economic growth have been high. Yet despite its rich source of food ingredients such as soybeans and botanicals (e.g. mate tea, camu camu and guarana), the country lags behind other developing food markets such as Venezuela.
Although Brazil may not be reaching its lofty growth potential, signs suggest the functional food and beverage markets are flourishing. For example, in 2009 the soy beverage market had $497 million in total sales. And in spite of concerns about the fragile recovery from the global recession, forecasts for Latin America and specifically Brazil are robust. According to Brazil's central bank, gross domestic product growth for 2010 could reach 7.3 percent, which is the nation's fastest expansion in 24 years.

Nutrition Business Journal (NBJ) data suggest a jump in sales across all supplement categories in 2009, including vitamins and minerals (up 18 percent), herbs and botanicals (eight percent), sports and speciality (16 percent).

According to NBJ, the reason for the interest in Brazil's functional food and dietary supplement market is that the economy is stable, inflation is under control and wages are on the increase. These conditions allow for an increase in spending by the lower middle class, about 200 million people. Although the economic downturn suppressed sales in some markets (US, UK and Japan), sales in Brazil for food, beverages and supplements have grown substantially.

Brazil’s healthy food market expansion is also affected by urbanization, with convenience emerging as a category trend in 2005. Until the late '50s, Brazil was mostly rural, but now more than 80 percent of the population lives in urban areas. These changes in population demographics will have significant implications for food and drink design, and will likely increase the demand for convenience-driven products.

In addition, the aging population is a perfect fit for supplements companies. According to Euromonitor, the over-60 market is going to contribute about 13 percent of Brazil's total income. It's not surprising that in 2008, calcium supplements (bone health) were the number one best seller, followed by other well-known anti-aging products, such as Ginkgo biloba for cognitive function and circulation. The next big push is expected to be with fish oils, particularly DHA for cholesterol management and as a cardio protectant, and beauty foods fortified with antioxidants such as vitamins C and E.

Continued tomorrow

http://www.functionalingredientsmag.com/content/print.aspx?topic=Regulation-relaxation-may-unlock-Brazils-massive-natural-products-market

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