Packaged food manufacturers that can hold the line on price increases in Latin America are best placed.
BY MARY TABION
Healthy eating is big business across Latin America, and packaged food manufacturers are responding with products that deliver nutritional value in convenient formats. Companies are rethinking traditional packaged food lines in order to incorporate products that contain naturally healthy ingredients as well as nutritional fortification to stay competitive in a marketplace where consumers are becoming more aware of the link between diet and health.
While Latin American consumers are aware of the important role of fruits and vegetables in a balanced diet, packaged foods are increasingly competing with fresh produce, primarily because of the time and labor required for preparation. Promotions for boosting fruit and vegetable intake are widespread in Latin America, coming from a variety of groups. The World Health Organization, for example, has made a daily intake recommendation of 400g of fruits and vegetables. In Mexico the Programa de Desarrollo Humano – Oportunidades, sponsored by the Secretaria de Desarollo Social (SEDESOL), provides a monthly stipend to low-income and rural families as long as they attend workshops on health, nutrition and send their children to school everyday. According to SEDESOL, the program helped to increase the consumption of healthy products by 11 percent in one year. These include local fresh produce, reduced fat dairy products, and healthy breads and snacks. Programs sponsored by non-profit corporations promoting 5 servings of fruits and vegetables a day are underway in Argentina, Chile and Mexico.
In response to such educational programs, packaged food companies are formulating products containing natural ingredients that make it easier for consumers to get their 5 daily servings of fruit and vegetables. Soups are a good vehicle for the “convenient 5-a-day” concept, since traditional recipes are often vegetable-based. Furthermore, Latin American consumers were already accustomed to eating dehydrated soups, either prepared according to the package instructions or as a base for a homemade recipe.
Unilever stirred up the soup category in 2008 by launching its Knorr Eat in Color line of soups in Argentina (Comé con Color) and Brazil (Coma Colorido). The Knorr brand has a long legacy in Latin America with its culinary and soup products; the brand captured a 25 percent market share in Latin America in 2008, largely due in part to the formulation of packaged versions of local recipes, such as instant and dehydrated bean soups in Brazil. The inspiration of the Knorr Eat in Color line comes from the concept of eating foods from the entire color spectrum. The brand’s marketing theme is based on the principle that a diet rich on fruits and vegetables of all colors is likely to include a wide variety of vitamins, minerals and other nutrients. The soups are made without preservatives, colorants and artificial flavors and are naturally high in vitamins C, E and fiber. The colors of the soups reflect their ingredients: green (spinach and peas), orange (carrot and squash), red (tomato and red pepper) and yellow (corn and squash). The Eat in Color line features both dehydrated soups and instant soups, which can be quickly prepared away from home with boiling water.
BEYOND VITAMINS AND FIBER
With natural food products at one end of the new product development spectrum, fortified foods are also gaining ground in Latin America. The addition of vitamins and minerals to packaged foods has a long established history in Latin America, and such fortifications have become standard, as in the case of the addition of vitamins A and D to milk. Fortification has moved to another level, now focusing on other dietary supplements, such as Omega-3 fatty acids and probiotics.
Omega-3 fatty acids tend to occur naturally in oily fish and some nuts (walnuts) and oils (canola, flaxseed) and help reduce inflammation and promote heart and skin health. Packaged food companies have been quick to add this ingredient to products positioned as heart-healthy. Omega-3 can be found in spreadable margarines like Unilever’s Becel brand in Brazil and Mexico and milk products such as Serecol from Mastellone Hnos in Venezuela or Leche Omega-3 from Parmalat in Venezuela and Colombia. Among the newest products containing Omega-3 launched in 2008 are grain-based products, like Grupo Bimbo’s Orowheat con Linaza y Omega-3, which was launched in Mexico and Empresas Carozzi’s Viva Plus pasta, which is enriched with Omega-3 and additional fiber.
Probiotic products have quickly proliferated across Latin America. Probiotics are living micro-organisms that can provide health benefits to their hosts. Live, active bacteria cultures are the most common probiotic ingredients and are primarily used in dairy products like yogurt. The majority of probiotic products are positioned as digestive health aides. Danone’s Activia brand is a Latin American success story, leading the region in probiotic yoghurt sales in 2008 with a 70 percent market share after just five years on the market. Activia is sold in Argentina, Brazil Colombia and Mexico. Danone’s aggressive campaign not only included traditional advertising and point of sale promotions, but also featured Internet websites explaining the concept of probiotics and the role they may play in improving digestive tract functioning. One of the most successful tactics was the challenge to try Activia for two weeks. Advertisements and testimonials on the Activia websites report the stories of women who saw an improvement in their digestive health after consuming Activia for a consecutive 14 days. These stories were influential in getting consumers to try the product and encouraged repeat purchases.
Other important Latin American players in probiotic yogurts include Nestlé, which produces Sveltesse (Chile and Mexico) and Chamyto (Mexico), Yakult Honsha Co Ltd with its eponymous Yakult brand, which has a strong following in Brazil and Mexico, and Sodiaal’s Yoplait, which has a presence in Chile and Colombia. Regional and national players have also joined the probiotic yogurt category. Examples of these smaller-scale players include Sancor in Argentina, Perdigão Agroindustrial and Batávia in Brazil, Soprole in Chile, Industrial Lala SA de CV in Mexico and Lácteos Los Andes in Venezuela.
The quick adoption of probiotic yogurts and Omega-3 fortified foods indicates that Latin American consumers’ awareness of diet and nutrition issues is on the rise. Looking forward to 2009, one important concern for the growth outlook is pricing of natural and fortified food products compared to standard versions. Given that many countries across the region have faced higher prices primarily due to shortages of ingredients such as wheat, milk or sugar, manufacturers will need to monitor prices closely. Weaker economic conditions may force some consumers to reconsider their food budgets, and manufacturers that can hold the line on price increases while continuing to offer natural ingredients and nutritional fortification should be able to reinforce their status within packaged foods, as well as their positioning as health and wellness- oriented companies.
Mary Tabion is the Latin America Research Manager for Euromonitor International. This article was written for Latin Business Chronicle.
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