In 2018, Latin America's functional food market represented just 7.2% of the global sector, generating US$11.53bn, according to a report from Grand View Research. But, the regional market is forecast to grow at a CAGR of 7.9% between 2019 and 2025 – exactly the same growth forecast as the world's market.
Harshika Maakan, food and beverages analyst at Grand View Research, said within this growing category, prebiotic and probiotic products would show fastest growth; set to surge at over 9.5% CAGR.
“Similar to the growth factors for protein ingredients, there is increasing awareness among LATAM consumers regarding the benefits of consuming functional foods, primarily probiotics and prebiotics-based formulations, with the major intent of improving general health and wellbeing,” Maakan told NutraIngredients-LATAM.com.
“Moreover, there is increasing willingness among consumers to pay premiums for healthy products,” she said.
Asked if prebiotics and probiotics would eventually overtake vitamins – the largest contributor to Latin America's functional food sector – Maakan said: “While the prebiotics and probiotics segment is projected to grow the fastest during the forecast period, the vitamins segment is also expected to witness considerable growth, thereby remaining the dominant segment throughout the forecast period.”
'Most significant potential'
Considering the global functional food market, where pre- and probiotics would also grow fastest, Maakan said there was a particularly positive outlook for Latin America.
“The LATAM region offers the most significant potential for growth of the functional foods industry over the coming years, led mainly by the Brazilian market. The market in Brazil is expected to witness above-average growth of about 8% over the forecast period, thereby have a lasting impact on the functional foods industry growth.”
In 2018, Brazil represented more than 56% of regional revenues – the lion's share of the market.
Maakan said growth throughout wider Latin America would be driven by a “growing awareness among consumers regarding benefits of functional foods” and manufacturers leveraging this with new product launches. So far, dairy dominated - pulling in almost 30% of total 2018 revenues, she said.
In the coming years, weight management, immunity and cardio health would be “major drivers” of growth, she said. Cardio health and digestive health combined accounted for more than 40% of overall market revenues in 2018.
However, Maakan said there would be certain challenges in growing the market - in particular, the need to “educate more consumers” but also gain access to advanced probiotic technologies.