For the next five years, it is expected that the functional foods and drink market will grow. Consumers in South America have an increased awareness of the importance of a healthier lifestyle and a greater understanding of the relationship between diet and health, driving growth in the industry. Also, the increased purchase-power reached by the middle class in recent years helps drive growth.

Although there is steady growth in the forecast, the region is relatively split in terms of the popularity of functional foods and drinks. The countries that see the most promise in the market include: Brazil, Chile, and Peru. Most other countries in the region—including Argentina, Venezuela, and the lower economic population in Columbia—see purchasing more costly foods as an expense that they are not willing or able to make.

Brazil recently received new dietary guidelines from the Ministry of Heath, which are having major impact on processed foods and beverages. The new guidelines place emphasis on fresh foods, discrediting processed foods and beverages of all kinds. The new guidelines are also impacting the sales of health&wellness-positioned products, representing a new challenge for functional foods and beverage manufacturers.

Despite the new regulations, the market is still growing, and multinational companies are dominating health and wellness sales in Brazil. Most companies are investing in the hottest trends in the market, such as fortified/ functional dairy products and energy drinks. Supermarkets in Brazil remain the biggest retail channels for health and wellness products; however, specialist stores tend to offer a broader range of functional products—including gluten-free—and will likely gain popularity, as Brazilians continue to purchase value for money when it comes to food. The market for functional foods and beverages is expanding rapidly in Peru and Chile with an increased awareness of poor feeding habits. Products, such as bottled mineral and flavored water, and the switch from coffee to healthy teas has boosted functional drink sales in these countries.

The double-digit inflation proved to be a key downside in the functional foods and beverages market’s performance in many South American countries. The high inflation decreased consumer purchasing power, making naturally healthy products too expensive compared to traditional foods and beverages. The trend toward functional products remains strong with the growing consciousness of healthy eating habits, but value for money is a major hurdle impinging stronger sales growth. Fortified products—such as fortified rice, cereals and breads, and beverages (such as almond milk or rice drinks)—seem to be doing well in countries with lower economic status, as they typically are less costly and more practical than other products, such as gluten-free foods.

Functional foods and beverage products sales tend to follow economic trends in most countries in South America. Supermarkets continue to dominate the health and wellness market, primarily supplying products from mass multinational companies. Due to the increased awareness of health and wellness in South America, coupled with an increase in middle class, the market is definitely worth observing. As long as manufacturers focus on specified trends in particular countries, the functional foods and beverage products market is a worthy investment.