Paul Altaffer12.01.05
Brazil is the largest country in South America, occupying over two-thirds of the continent. Similarly, two-thirds of the Amazon Rainforest, the largest remaining rainforest in the world, also lies within Brazil. As a result, Brazil has more biodiversity (plant and animal species) than anywhere else in the world.
As the largest country with the largest population, highest Gross Domestic Product (GDP) and most trade in South America, it stands to reason that Brazil is regarded as the engine that leads South American affairs. Alhough Brazil is currently dealing with a political corruption scandal, many feel that it is a leading democracy in the world. Social development is also on the minds of Brazilians and their government. Though 2003 and 2004 were relatively slow growth years for the country, growth in GDP for 2005 is projected at or above 5%, as the economy rebounds and exports soar. Most of the data reported in this article is from 2003, reflecting somewhat stagnant performance for the entire Brazilian economy.
The nutraceuticals industry in Brazil is roughly divided into two major industry sectors: the over-the-counter (OTC) market, and the health and wellness foods market. Neither market is believed to have reached maturity, which indicates there is good potential for future growth. The currency in Brazil is the Real, noted as $R, and is currently trading at about R$ 2.20 = U.S.$ 1.00. In 2003, the exchange rate was closer to R$ 3.00 = U.S.$ 1.00
2003 and 2004 were relatively stagnant years with respect to the growth of the Brazilian economy. The OTC market was affected by the overall economy as well as efforts in the government to institute price controls-meaning many companies reduced their investments in the sector. Nonetheless, the OTC market grew by 3%, at or ahead of the national pace. Consumption also retracted slightly from 2002 to 2003, indicating the lack of consumer interest in what are often times considered "superfluous" purchases. Pharmacies are still the primary means of distributing OTC products, both with pharmacy chains and independent pharmacies. Sales in 2003 for the OTC market were reported to be around R$5.5 billion (U.S. $1.7 Billion) (Euromonitor, 2004).
Within the OTC market, the vitamins and dietary supplements sector and the herbal and traditional products sectors are notable. While vitamin sales have driven the category, other dietary supplements have lagged. Consumers seem to prefer single vitamins and supplements, as there is perception of greater concentration and effectiveness to them. Many herbal products (standardized extracts introduced with clinical studies) are now registered and treated as drugs (single compound activity). This is an area of growth potential with Brazilians consuming more new products. Brazil has an old tradition of using home and herbal remedies, teas and such, but these are not factored into many of the consumer trends (see Table 1 on page 32).
Estimates are that OTC markets are not near maturity yet and are poised for consistent growth, as long as there are fewer price controls and the economy is growing. An aging population, improved economy, improved personal wealth, more educated and savvy youth, as well as consciousness for health, are all encouraging factors for growth in Brazil.
The health and wellness foods market is growing rapidly and has significantly more room for growth as many categories in this market appeal to consumers' interests and values. Almost all sectors report growth, as well as potential for additional growth (see Table 2).
Much of the growth potential for health and wellness foods is a result of changing demographics. The aging population is concerned about the increased risk of diseases like diabetes, heart disease and cancer. Obesity is also a concern, as the rates have risen from over 9% of population in 1990 to 11% in 2000 among those 15 years of age and older. Alarmingly, the Brazilian youth is also experiencing high overweight/obesity rates. Some estimates claim up to 15% of children are overweight or obese. Interestingly, Brazil has undergone a "nutritional transition" in the past few decades. It has become a country that has gone from being a malnourished society to being an overweight/obese society. As a result, healthy lifestyles, including diet, are becoming part of mainstream awareness. One example of this awareness is the emergence of "light food" restaurants, which offer healthy and convenient foods and snacks. These light food restaurants are beginning to steal market share from fast food type restaurants.
Also of note is the steadily growing "diet" category in Brazil. The market for slimming products should reach the R$1 billion mark by the end of the decade.
Organic foods are also becoming part of mainstream production, capturing over R$350 million in 2003, according to Euromonitor. Sugar, coffee and soy were the chief crops. The mainstreaming of organic foods is also tied to a consumer desire for freshness. Fresh and organic foods are definitely en vogue, as fresh produce is abundant and inexpensive, while organic is perceived as better for the consumer.
Functional and fortified foods require registration in Brazil, in addition to the demonstration that claims are accurate, products are safe and quality procedures are in place. Functional foods also reflect a tremendous amount of new product development and creativity. An example of this is fortified/functional confectionaries, which had a market worth of R$1 billion in 2004 (Euromonitor), and which represents 10% of all confectionary sales.
Better-for-you (BFY) products with less sugar or fat are also growing in popularity. Diet, light, organic and natural foods already have an average turnover of $3 billion (U.S.) and are growing at 18% per year. This is significant compared to the 5-8% growth rate of traditional foods (Euromonitor).
Brazil is a big country, with an emerging and growing consumer base, strong, growing economy and a strategic role in South America. As such, nutraceuticals and functional foods in Brazil offer real promise.NW
As the largest country with the largest population, highest Gross Domestic Product (GDP) and most trade in South America, it stands to reason that Brazil is regarded as the engine that leads South American affairs. Alhough Brazil is currently dealing with a political corruption scandal, many feel that it is a leading democracy in the world. Social development is also on the minds of Brazilians and their government. Though 2003 and 2004 were relatively slow growth years for the country, growth in GDP for 2005 is projected at or above 5%, as the economy rebounds and exports soar. Most of the data reported in this article is from 2003, reflecting somewhat stagnant performance for the entire Brazilian economy.
The nutraceuticals industry in Brazil is roughly divided into two major industry sectors: the over-the-counter (OTC) market, and the health and wellness foods market. Neither market is believed to have reached maturity, which indicates there is good potential for future growth. The currency in Brazil is the Real, noted as $R, and is currently trading at about R$ 2.20 = U.S.$ 1.00. In 2003, the exchange rate was closer to R$ 3.00 = U.S.$ 1.00
The OTC Market
2003 and 2004 were relatively stagnant years with respect to the growth of the Brazilian economy. The OTC market was affected by the overall economy as well as efforts in the government to institute price controls-meaning many companies reduced their investments in the sector. Nonetheless, the OTC market grew by 3%, at or ahead of the national pace. Consumption also retracted slightly from 2002 to 2003, indicating the lack of consumer interest in what are often times considered "superfluous" purchases. Pharmacies are still the primary means of distributing OTC products, both with pharmacy chains and independent pharmacies. Sales in 2003 for the OTC market were reported to be around R$5.5 billion (U.S. $1.7 Billion) (Euromonitor, 2004).
Within the OTC market, the vitamins and dietary supplements sector and the herbal and traditional products sectors are notable. While vitamin sales have driven the category, other dietary supplements have lagged. Consumers seem to prefer single vitamins and supplements, as there is perception of greater concentration and effectiveness to them. Many herbal products (standardized extracts introduced with clinical studies) are now registered and treated as drugs (single compound activity). This is an area of growth potential with Brazilians consuming more new products. Brazil has an old tradition of using home and herbal remedies, teas and such, but these are not factored into many of the consumer trends (see Table 1 on page 32).
Estimates are that OTC markets are not near maturity yet and are poised for consistent growth, as long as there are fewer price controls and the economy is growing. An aging population, improved economy, improved personal wealth, more educated and savvy youth, as well as consciousness for health, are all encouraging factors for growth in Brazil.
Health and Wellness Foods
The health and wellness foods market is growing rapidly and has significantly more room for growth as many categories in this market appeal to consumers' interests and values. Almost all sectors report growth, as well as potential for additional growth (see Table 2).
Much of the growth potential for health and wellness foods is a result of changing demographics. The aging population is concerned about the increased risk of diseases like diabetes, heart disease and cancer. Obesity is also a concern, as the rates have risen from over 9% of population in 1990 to 11% in 2000 among those 15 years of age and older. Alarmingly, the Brazilian youth is also experiencing high overweight/obesity rates. Some estimates claim up to 15% of children are overweight or obese. Interestingly, Brazil has undergone a "nutritional transition" in the past few decades. It has become a country that has gone from being a malnourished society to being an overweight/obese society. As a result, healthy lifestyles, including diet, are becoming part of mainstream awareness. One example of this awareness is the emergence of "light food" restaurants, which offer healthy and convenient foods and snacks. These light food restaurants are beginning to steal market share from fast food type restaurants.
Also of note is the steadily growing "diet" category in Brazil. The market for slimming products should reach the R$1 billion mark by the end of the decade.
Organic foods are also becoming part of mainstream production, capturing over R$350 million in 2003, according to Euromonitor. Sugar, coffee and soy were the chief crops. The mainstreaming of organic foods is also tied to a consumer desire for freshness. Fresh and organic foods are definitely en vogue, as fresh produce is abundant and inexpensive, while organic is perceived as better for the consumer.
Functional and fortified foods require registration in Brazil, in addition to the demonstration that claims are accurate, products are safe and quality procedures are in place. Functional foods also reflect a tremendous amount of new product development and creativity. An example of this is fortified/functional confectionaries, which had a market worth of R$1 billion in 2004 (Euromonitor), and which represents 10% of all confectionary sales.
Better-for-you (BFY) products with less sugar or fat are also growing in popularity. Diet, light, organic and natural foods already have an average turnover of $3 billion (U.S.) and are growing at 18% per year. This is significant compared to the 5-8% growth rate of traditional foods (Euromonitor).
Brazil is a big country, with an emerging and growing consumer base, strong, growing economy and a strategic role in South America. As such, nutraceuticals and functional foods in Brazil offer real promise.NW
