December, 2016

ELANbiz is a project financed by the

European Union

2

Food sector opportunities fpr EU business in LATAM

Overview

• LATAM is the largest net exporter of food in the world

• LATAM accounts for 16% of total global food and agriculture exports and 4% of total food and agriculture imports.

• 43% of imported foods are correspond to intrarregional trade

• The region is one of the few parts of the world with significant resources of unexploited agricultural land (concentrated in Brazil and Argentina)

• Raising productivity will be essential to meet domestic food needs or to maintain or enhance export competitiveness.

Overview

Overview

• Global influences: health, urbanization, sustainability, food safety,

• Increased demand for high-quality foodstuffs

• Convenience foods, organic products and functional foodstuffs impressive growth rates, albeit starting from a relatively low level.

• Dual economy within each individual country: market niches vs mass market

• Opportunities for smaller and medium-sized EU businesses in niche markets

Consumer trends

Convenience & packaged foods

• Population ageing • Increase in single and

smaller households • Lifestyle in big cities

• One portion sizes • Frozen/ refrigerated

food • Smaller packages • Reseleable packages • Prepared food

Consumer trends

Indulgence & pleasure

• Income growth • Higher educational

level

• Gourmet and premium products

• Use of ingredients: chocolate, cheese, milk

• Food service

Consumer trends

Health

• Population ageing • Higher education

level • Lifestyle in large cities • Obesity and general

health concerns

• “Healthy” foods • Organic / ecological

certifications • Functional foods • Light and diet foods • Label information

Consumer trends

Safety

• Increase in income • Higher education

level • Health consciousness

• Traceability • Brand reliability • Label information

Consumer trends

Sustainability & ethics

• Increase in income • Higher educational

level • Tourism and travel • Environment

concerns

• Recyclable packaging

• Reduction of packaging

• Fair trade certification

• Label information

Consumer trends

Local flavors

• Growth of local manufacturers

• Increase in consumption of lower income levels

• Local flavors and ingredients

• Traditional receipes

Consumer trends

Imported foods

• Increase in income • Higher educational

level • Tourism and travel

• Attractive packaging • Food service, hotels

and restaurants • Chocolate, cheeses,

premium olive oil, snacks, premium wines and spirits

Packaged food

Health concerns

• Functional food and beverages market in LATAM will value US$ 21 billion in 2020

• Change in lifestyle and increasing of disorders such as diabetes and cardiovascular diseases create opportunities for stevia, amino acids, antioxidants, enzymes, fibers, proteins, probiotics, prebiotics, phytosterols and polyphenols

Health concerns

Health concerns

Health concerns

Health concerns

Sustainability & ethics

• LATAM accounts for almost 20% of global organic food trade.

• 2.2 million organic producers worldwide, 400.000 in LATAM

• Mutual recognition and equivalence systems: Chile (2016), Colombia (in progress)

• Consumer awareness of sustainability issues is rising; however awareness is translating slowly into demand

• Many Latin American perceive organic, fair trade and other eco-labeled products as luxuries.

Snacks

Yogurt

• With rising population demand for yogurt and other dairy products are also increasing in LATAM

• Probiotic curd, frozen yogurt, soy yogurt, low fat variety, flavored yogurt are some of the most popular varieties in the market.

• Since increasing obesity is serious threat in LATAM, people are demanding variety of low fat yogurt for meal replacement.

• Demand for drinking yogurt is soaring in Latin America. • Demand for flavored yogurt with low sugar content is increasing. • Because veganism is increasing in Caribbean Nations, people are looking for

dairy free alternatives: demand for soy yogurt is increasing substantially. • Since gourmet food items are gaining admiration throughout the Latin American

region, demand for Greek yogurt, yogurt with expensive berries and nuts, yogurts with exotic flavors is rising.

Soft drinks

• Coca Cola still KING • Healthy trend: although CSD consumption is high in

many national markets (notably Mexico and Argentina), consumer-led health and wellness trends could affect their demand. Stevia and alternative sweeteners offer a natural

way for consumers to enjoy indulgence soft drinks RTD tea a possible alternative.

• Young consumers in urban areas: the average age of consumers in Brazil, Mexico and other countries in the region is low, relative to EU markets.

Alcoholic drinks • LATAM is the second highest per capita consumer of alcohol

worldwide

• Huge surge in demand for alcoholic drink products.

• Unregulated marketing, policies and low taxes are contributing to the growth of alcohol consumption

• Packaging has played an important role, with a wide range of offerings by alcoholic drink manufacturers contributing to the market growth.

• Even though, glass is the major material used for packaging, plastic packaging for alcoholic beverages is also available in some of the developing countries. Apart from these, metal cans and PET bottles are also being used for alcoholic drinks packaging.

Food service

• Despite de economic slowdown, consumers are still willing to spend on high-value dining experiences, even as they cut back in other areas: 3% annual growth to 2018

• Brazil continues to dominate the LATAM growth story: nearly 50% of all foodservice value in the region

• Growth is across the board, but moving towards fast food: burgers, bakery products, convenience stores and chicken fast food 6% annual growth to 2018

Market access for EU exporters

• Food sector has strategic value in most LATAM countries

• Traditionally protected by non-tariff barriers and technical barriers

• Tariffs & market access requirements: Brazil versus Chile

• Fundamental role of EU Free Trade Agreements in order to level the playing field

• Some sectors excluded from EU Free Trade Agreements

• Sanitary registration: prior authorization under FTAs

• Labeling:

– Spanish/ Portuguese

– Nutrition claims

– Sugar contents disclosure: Chile leading the way

• Alcoholic beverages: special taxes and contraband in some countries

Market access for EU exporters

• Spanish/Portuguese labeling

• Product Registration in the Countries’ Ministries of Public Health

• EU certificate of free sale

• Certificate of origin

• Label indicating the qualitative and quantitative formulation

• Registration fees and product samples

• Work with a local Importer

Most frequent errors made on labels by food exporters to Brazil

Food labeling in Colombia

• The Spanish text of Resolution 5109 can be downloaded from www.invima.gov.co/invima///normatividad/doc

• Technical annex to Resolution 5109 follows the recommendations of the EU about the relationship between net content and the minimum size of characters on labels

• The following information must appear on food product labels: 1. Name of the product 2. List of ingredients in decreasing order of weight content 3. Net content and drained weight in metric units (i.e., grams, kilograms) 4. Name and address of producer or processor 5. Name and address of importer 6. Lot identification or “L” to identify production date, expiration date, minimum shelf-life,

etc. This information could be in numbers, numbers and letters, bars, punched data or grooves.

7. Each package must carry the expiration date and/or the minimum shelf-life in a legible, visible and indelible way. Also, labels must include information on product preservation.

8. Instructions for product use 9. Sanitary registration number issued by INVIMA

Mexican Official Standards for foods

• Market access requirements include Mexican Official Standards (NOM), which relate to health requirements, labelling and marketing.

• Depending on the type of product, the following NOM may be applicable: 1. NOM-050-SCFI-2004 on Commercial information: General labelling of

products 2. NOM-051-SCFI / SSA1-2010 on general labelling specifications for food and

non-alcoholic beverages. 3. NOM-086-SSA1-1994 on nutritional specifications for food and non-alcoholic

beverages 4. NOM-130-SSA1-1995 on packaged foods subjected to heat treatment in

hermetically sealed containers 5. NOM-213- SSA1-2002 on products and services. Processed meat products.

Health specifications. Test methods. 6. NOM-251-SSA1-2009 on hygienic practices for food processing, beverages or

food supplements.

Nutritional labeling in Chile

The Ministry of Health published on June 26, 2015 the implementing regulation to Law 20606 that regulates the labeling of the nutritional compositions of food

products, Decree 13, 2015. The Decree aims at targeting food products that are

intended for consumption by children under 14 years of age if they exceed specified limits of sodium, sugar, energy (calories) and saturated fats.

Strategies for EU exporters

• A niche market

– Gourmet, specialized food,…

– Healthy, low sugar, functional

– Tourism and food service channel

• Differentiated products, innovation

• Introduction of new products require marketing investments

• Brand protection

• Fragmented distribution channels

• Distribution of imported products limited to and around largest cities and through modern retailers

• Fast growth of modern national and regional retailers

• Growth of private labels across the region

• Local costs must be accurately estimated and factored into pricing strategy

Strategies for EU exporters

• Well founded knowledge of the local conditions

• Careful assessment of opportunities

• Local partners

• Opportunities for food technology and food production

Strategies for EU exporters

EU-Latam trade: food and beverages Product

code Product label

Latin America and the Caribbean's imports from European Union (US$)

2013 2014 2015

220830 Whiskies 947,431 795,257 725,289

230990 Preparations of a kind used in animal feeding (excluding dog or cat food put up for retail . . . 311,677 329,281 297,724

150910 Virgin olive oil and its fractions obtained from the fruit of the olive tree solely by mechanical . . . 360,631 344,626 295,529

220421 Wine of fresh grapes, incl. fortified wines, and grape must whose fermentation has been arrested . . . 277,971 305,987 277,014

200410 Potatoes, prepared or preserved otherwise than by vinegar or acetic acid, frozen 277,468 304,102 259,327

190110 Food preparations for infant use, put up for retail sale, of flour, groats, meal, starch or . . . 236,278 230,319 241,311

110710 Malt (excluding roasted) 318,487 252,292 231,987

040690 Cheese (excluding fresh cheese, incl. whey cheese, curd, processed cheese, blue-veined cheese . . . 154,562 155,168 162,161

040221 Milk and cream in solid forms, of a fat content by weight of > 1,5%, unsweetened 148,731 145,898 149,967

220300 Beer made from malt 116,582 144,525 143,861

220820 Spirits obtained by distilling grape wine or grape marc 139,117 121,669 142,172

220290 Non-alcoholic beverages (excluding water, fruit or vegetable juices and milk) 169,798 156,536 134,972

220410 Sparkling wine of fresh grapes 133,777 141,167 134,104

040210 Milk and cream in solid forms, of a fat content by weight of <= 1,5% 71,552 121,857 111,779

190190 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing . . . 111,569 160,113 99,852

070310 Fresh or chilled onions and shallots 35,874 34,282 89,277

220860 Vodka 100,282 99,038 89,077

180690 Chocolate and other preparations containing cocoa, in containers or immediate packings of <= . . . 76,788 79,725 88,653

020329 Frozen meat of swine (excluding carcases and half-carcases, and hams, shoulders and cuts thereof, . . . 35,590 86,973 80,829

100390 Barley (excluding seed for sowing) 84,278 30,552 74,541

220870 Liqueurs and cordials 80,232 85,631 71,260

Thank you

for your attention!

Javier Sanchez, LAC Expert

j.sanchez@elanbiz.org

Coordination office in Lima:

Katelyne Ghémar, ELANbiz Coordinator

info@elanbiz.org

ELANbiz is a project financed by the

European Union