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The Great Divide in Health and Wellness in Latin America

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Demand for health and wellness (HW) is not ubiquitous across Latin America despite the region as a whole set to post strong constant value growth of 7% in 2013. Nonetheless, a clear growth trajectory is apparent in the region, with Brazil leading the way and countries such as Argentina and Venezuela some way behind. Opportunities to boost HW growth across the region are explored below.

Absolute Growth of Health and Wellness in Researched Countries in Latin America, 2012/2013

HW Great Divide Table

Source: Euromonitor International

Brazil Set to Enjoy the Third Strongest Increase in Sales Globally in 2013

The Brazilian HW market, which on its own is set to account for 56% of the region’s growth in 2013, is driven by the country’s rapidly growing middle-class and demand for greater functionality from food and drink. In fact, Brazil’s sales growth over 2012/2013 is set to be the third strongest globally, behind only that of China and the US.

Appeal of Fortified/Functional Products Largely Attributable to Weight Control

Fortified/functional (FF) food is attracting the attention of more and more consumers as they increasingly understand the products’ benefits. The appeal of FF foods in Brazil is largely down to their weight control attributes. Brazilian consumers, especially women, are extremely image conscious and as their incomes rise they are willing to pay more for products which can help them to maintain a trim figure. As 50% of the population are either overweight or obese, manufacturers should focus on promoting products’ health attributes in relation to weight control. Soft drinks sweetened with the natural sweetener stevia could therefore see success if combined with other functional ingredients pertaining to beauty from within, such as vitamin C and E, or even collagen.

HW Growing in Mexico Due to Country’s High Rate of Obesity

Mexico is also a fascinating market for HW players as it has the highest rate of obesity in the world. As consumers become more aware of the link between poor nutritional habits and ubiquitous ailments such as coronary disease, diabetes and hypertension, which are affecting a large portion of the Mexican population, the growth of HW is guaranteed.

Argentina and Venezuela Lie Further Down the Growth Trajectory

Outside Brazil and Mexico, demand for HW is increasing, although the disposable incomes of the majority of the region’s populations are substantially lower. Pricing is therefore a major concern, while awareness of healthy food and drink products remains relatively low. Argentina, for example, is less developed but nevertheless is witnessing a shift from better-for-you to fortified/functional (FF) products as understanding of added value develops. In Venezuela, on the other hand, which is set to account for just 2% of Latin America’s growth over 2012/2013, HW remains a niche.

Of course, population size is a key factor behind the leading positions of Brazil and Mexico but factors such as income, health education and regulation all have a significant part to play in determining demand for HW across the region. Nevertheless, development, particularly in countries which lie further down the growth trajectory, should not be held back due to the region’s rising obesity levels.

Per Capita Spend and Population Size in Researched Countries in Latin America

HW Great Divide Table 2

Source: Euromonitor International

Argentinian Consumers Demand Fortified/Functional Products

Argentinian consumers are slowly becoming conscious of how a nutritious and well-balanced diet can help to improve general health and reduce the risk of developing certain diseases. While better-for-you food enjoys higher sales due predominantly to reduced-sugar beverages and gum, FF food is the most appealing, with the strongest predicted value growth in 2013. In a country where malnutrition problems co-exist  with rising obesity rates, functional ingredients hold stronger interest due to their perceived added value. Products which are performing well – probiotic yoghurt, FF bakery and FF soft drinks – are similar to those in Brazil but are growing at a slower rate, suggesting it is somewhat behind Brazil but on the same growth trajectory.

Blend Healthy Positioning and Affordability

Argentinian consumers are likely to see purchasing power increase over the forecast period as the country’s economy recovers but nevertheless will continue to behave cautiously. Thus, those brands which offer the best blend of a healthy functional positioning and affordability are set to perform well. For example, Activia retails at a similar price point to conventional yoghurt variants and 7-Up Green, launched in 2011 followed by Coca Cola Life in 2013, both of which are sweetened with stevia. These products target the health-conscious consumer looking for alternatives to their traditional counterparts.

HW in Venezuela to Remain Niche

In contrast, in Venezuela, products are mainly aimed at mid- and upper-income consumers as low-income earners tend to look for options that meet the needs of the entire family rather than a wider range of specialised products. Unless specific health conditions exist, Venezuelans do not commonly purchase products claiming to be healthier. Growth is being driven predominantly by naturally healthy products, such as those high in fibre or containing oatmeal and seeds. Manufacturers should therefore focus on promoting the ‘natural’ health benefits of products as well as look to offer reduced-fat and reduced-sugar alternatives. These will resonate with the 72% of the Venezuelan population who were classified as overweight or obese in 2012.

Law of Costs and Fair Prices Holding Back Innovation

Perhaps, however, the most overarching factor in Venezuela is the Law of Costs and Fair Prices, which came into effect in 2011. This regulation has discouraged domestic manufacturers from developing value-added products as products containing certain ingredients, such as fruits and vegetables, cannot be sold at a higher price. It is therefore holding back innovation in HW and discouraging players from entering the country.

Vital to Understand Each Latin American Market

With HW covering such a wide range of interests, it is evident that countries within Latin America are at different levels of development. Manufacturers must, therefore, look at demand as well as the constraints of each market before determining how to further grow health and wellness within Latin America.

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