NUTRITIONAL PRODUCT MARKET
The nutritional product industry as a whole continues to expand its reach, dominating markets in Asia, North America, and Europe. However, recent economic trends show significant growth in South America. As the middle class economy increases in South America, driven by agriculture and exports, so does its attention to personal health and wellness.
The market in South America used to be only 1/10th the size of the market in the US and now has grown by a fourth, with US$8.35 billion spent on retail sales. South America has been showing fast growth since 2007 and will likely continue to grow at about 4.3% CAGR, surpassing the global average. In particular, Brazil is dominating the South American nutritional supplement market.
Brazilians have been turning their attention to personal health as their nutritional supplement market is flourishing and still has room to grow. According to a report by NUTRA, in 2007, Brazil’s nutritional product market was at a strong US $306 million dollars. Nonetheless, in 2014, the Brazilian market plummeted to a staggering US$520 million. Other countries in the South American region also contain markets that display healthy growth. In 2012, both Argentina and Colombia contain nutritional product markets, reaching over US$50 million. Venezuela is also one of the top countries in South America but has recently been affected by product shortages. Venezuela’s shortages are primarily the result of players facing severe difficulty accessing foreign currency and import products.
At this time, the growth of the nutritional product market is driven by an increase in disposable income, a growing of the aging population, and an increase in health awareness. Hot products in South America include supplements that involve beauty positioning—such as supplements for skin health, digestive health, bone health, omega (3, 6, and 9) fatty acids, and calcium. The aging population is likely the cause of the push in bone and heart health supplements but will likely cause an increase in categories such as eye and brain health, cognition, and relaxation. South America, like many other regions at this time, is hot about pro-natural products. Any nutritional product that pursues a more natural approach in ingredients and packaging will likely do well.
Of course, there are restrictions and regulations in place in many South American countries. As with many other regional industries, there is constant movement between the regulatory process and the demand for new products. This constant push and pull is a necessary component of cultivating a healthy industry. It is also important that industry standards are at an acceptable level to support the consumer’s interests as the subsequent growth of the industry. The regulatory environment in South America is not congruent at this point but is said to become more heterogeneous. The countries are coming together, pursuing structure for the market and a reduced risk for consumers. Before, every country’s regulations were different, making it difficult for small businesses to enter the industry. Now, the region is slowly moving into better-defined rules with certain common patterns between countries. Most countries involved are currently on legislation review mode, making the future look optimistic. At this time, supplements—including botanicals, herbs, and combinations—will continue to struggle with entering into the industry, even after the new regulations go into effect.
Multinational pharmaceutical companies continue to lead the nutritional products market in South America. Consumers are pursing traditional and well-known brands that are supported by smart publicity. It is thought that the region’s current complicated regulatory puzzle is likely the reason consumers lean toward well-known, multinational brands to ensure the quality and safety of the product. As the regulatory issues become resolved, it is likely that we will see a growth in independent, direct sellers. Trends are already showing that the direct selling and local players in the nutritional product market are beginning to make more of an impact.
According to Euromonitor, the vitamin and nutritional supplement market is projected to grow by 25% in value from 2012-2017. The nutritional products market is projected to grow not only in Brazil, but also Venezuela, Columbia, Peru, and Argentina. Most countries’ markets are hot and will be beneficial sites in which to invest. Independent players looking to invest in the nutritional product industry in South America should continue to watch the resolving of the regulation process, as that has a large role in the success of the industry. The trends within the business seem to be relatively stable. Focusing on the aging population as well as pro-health ingredients will likely be fruitful for investors. With a tough, well-regulated market and economies that continue to see a larger, more health-conscious middle class, the potential for growth in the nutritional supplement industry in Brazil and all of South America is limitless.
