The most important lessons for doing business in Latin America for dietary supplement companies

Now, while this is true, companies must not disregard the existing diverse scenario between markets in the region, displaying some challenges next to the opportunities.

The market and the consumer​

A common trend among companies is to focus its business strategy on launching products first in the country with highest population rates. While this is understandable, business opportunities could be missed by not identify those markets that have the most favorable conditions for the characteristics of the dietary supplements and ingredients that companies plan to launch.

In order to identify those markets with the most interesting conditions, companies need to observe the features of each market by looking at the profile of the population, including the social changes and the evolution of lifestyle. We will be seeing different growth rates in relation to different population groups, such as an increasing middle class with a growing purchasing power, which will also help identify where the most interesting rising incomes arise and where the consumers of today and tomorrow are located.

In this sense, a key element to focus on is the consumer. This means understanding what the consumers in each market want; what their main interests are; what the health benefits are that the consumers pursue through the consumption of dietary supplements; where consumers look for information; which are the most likely channels that consumer will use to buy supplements, etc. These are some of the key aspects that help companies define how to launch and position their supplements products, including the development of attractive packaging and prices, the most interesting marketing, advertising and communication mechanisms to promote dietary supplements, and the distribution channels with greatest access to consumers.

A core element in the marketing of dietary supplements lies on the possibility to use claims on their labels, or to include them in advertising campaigns via different media channels. It is important to bear in mind that in order to effectively communicate the nutrition and/or health benefits that products bring, the claims should be easily understandable for the consumer. Thereby a low profile claim that is easy to understand by the consumer could go further than a more sophisticated claim which could face regulatory challenges and/or difficulties to be understood by specific population groups in certain markets.

Economic aspects and trade​

In developing a business strategy, companies will need to look at the economic aspects and government policies of each market, particularly for those cases where companies are seeking local partners for the manufacture and/or distribution of dietary supplements, and also when setting the conditions for an efficient supply chain. In this regard, elements like ease of doing business, starting new business, enforcing contracts, importing products, among others, should be also observed.

In all this, the trade agreements reached bilaterally or multilaterally between countries, such as is the case for example of Mexico and Colombia with the USA, should be taken into account when looking particularly at routes for import and export of supplements products, ingredients or any other raw materials, where applicable.

This brings us to a key element in developing a successful strategy, which is the regulation.

Regulatory disparities: Getting strategic and regulatory guidance​

Dietary supplements are subject to different regulations across Latin America, and thereby the same product may be classified differently in some markets compared to others. In this regard, an important rule is to identify the product category to understand the regulation that will be applicable to each supplement product. For example, the same supplement product could be classified as a food, a dietary supplement or a drug depending on the country.

In relation to this, another important rule is to anticipate, monitor and evaluate key dietary supplements regulatory and policy developments both at national and regional level. Although harmonization is limited in Latin America, there are, for example, harmonized labelling regulations and standards applying to dietary supplements. In the meantime however, work is underway for the development of harmonized dietary supplement regulations by the Pacific Alliance of Chile, Colombia, Mexico and Peru.

When looking at the regulation, companies should be evaluating its impact over the composition of the product. This includes the use of ingredients and their levels, the use of other components such as additives and the form in which supplements are presented. This latter issue is still unresolved in a few Latin American markets. In some cases, companies will also need to observe whether a certain ingredient in the supplement product could be considered “novel or innovative” to which additional regulatory steps and/or requirements may be applicable prior to their marketing.

In addition, other key aspects of the regulation that should be followed very closely are the compliance with labelling and advertising requirements, including the mandatory food and nutrition information that must be declared on labels and/or any media communication as well as the permitted claims that can be used to communicate their benefits. It is also important to appreciate that regulations broadly defer in relation to market access and importation requirements.

The existing regulatory disparities do not facilitate the marketing of products with just one formula and marketing strategy. Therefore, a clear understanding of diverse legislations from country to country is required to successfully launch dietary supplements across Latin America. In this sense, getting the right strategic and regulatory guidance is key before entering a market in the region.

Furthermore, dietary supplements are at the top of the regulatory agenda, which brings opportunities for the industry to engage. Such an engagement is highly recommended in order to develop a proactive strategy well in advance.

An additional thought worth sharing is that, despite the increasing difficulty to launch novel ingredients in other regions, innovative ingredients are welcome in Latin America. Here again, getting the right guidance to comply with the additional regulatory steps and requirements is critical for a successful ingredient launch.

David Pineda Ereño
Regional Director
EAS Latin America