South America Specialty Food Ingredient Market - Growth, Trends, and Forecasts (2023-2028)

The South American Specialty Food Ingredient Market is projected to witness a CAGR of 3.82% over the next five years.

The industry for specialty food ingredients essentially thrives on the wider technological and functional benefits that these ingredients confer, in terms of high quality, safety, affordability, nutrition, and deliciousness of processed food products. The preference for certain types of food products is now core to some consumers’ identities, especially in developing economies in South America such as Columbia, Brazil, and others, which is driving the demand for specialty food ingredients. Brazil is the world's fifth-largest economy and South America’s largest economy. It is the largest country in South America, with the highest population, the largest GDP, and the greatest number of trades on the entire continent. Hence, it provides good opportunities for specialty ingredient manufacturers to offer their products in the country and establish a good consumer base.

South American consumers’ interest in high-quality food products has increased the demand for fortified drinks and functional foods with low or no added sugar, owing to the increasing incidences of obesity across the region. As a result, to meet rising consumer demand, players are innovating and introducing low-sugar sweeteners.For instance, Pure Circle offers sweeteners like stevia ingredients for food and beverage manufacturers and owns an innovation center in Brazil to strengthen its presence in the market. Moreover, the region's aging population has led to a growing interest in attaining wellness through healthy diets. Therefore, this is resulting in an increased demand for specialty food ingredients across the region. Owing to the above opportunities, the players have been expanding in the market to take advantage of the opportunities in the market.

Foreign players' expansion and joint ventures in Argentina's food processing sector are increasing the use of specialty food ingredients. For instance, in 2021, Ingredion signed an agreement with Argentina food producer Grupo Arcor to form a joint venture (JV) to broaden food and beverage ingredient offerings to customers in Argentina, Chile, and Uruguay. According to the agreement, Arcor holds a 51% stake in the venture, while Ingredion holds the remainder. The joint venture is expected to have a combined turnover of more than $300 million.

South America Specialty Food Ingredient Market Trends

Increase in Consumption of Healthy and Vegan Food and Beverages

The industry for specialty food ingredients essentially thrives on the wider technological and functional benefits that these ingredients confer, in terms of high quality, safety, affordability, nutrition, and deliciousness of processed food products. ​Processed food products include various categories, such as ready meals, baked foods, breakfast cereals, confectionery, meat substitutes, dairy substitutes, and non-alcoholic beverages. Specialty food ingredients are a vital part of a wide range of processed foods, thereby contributing to competitiveness in the food & beverage industry.​

The demand for convenient foods has recorded robust growth in South American countries such as Brazil, Argentina, Colombia, and others, owing to changing lifestyles and dietary preferences. Specialty ingredients, such as preservatives, emulsifiers, stabilizers, enzyme preparations, and others, enhance the nutritional profile of the packaged food and extend their shelf-life, thereby pushing for higher demands of these specialty food ingredients. ​Health and wellness, along with the rising preference for better-for-you foods in South America, have brought specialty ingredients to center stage, as they are increasingly customized to cater to wider functionalities and broader applications in the processed food industry.

Brazil as the Dominant Region in Specialty Ingredients Market

Brazil is the world's fifth-largest economy and South America’s largest economy. It is the largest country in South America with the highest population, the highest GDP, and the greatest number of trades in South America, which has in turn led to an increase in sales of food and beverages in the country. Hence, it provides a good opportunity for the ingredient manufacturers to offer their products in-country and establish a good consumer base in the Brazilian market. Brazil is known for the increasing purchasing power of consumers and their appetite for innovative, safe, and high-quality food products. As the income levels of consumers have increased, the consumption of premium foods has also increased.

Moreover, the success of other prominent specialty food ingredients, like sweetener ingredients, has been quite evident from the recent success of the Brazilian sugar mills. As per the USDA data, these sugar mills are responsible for over 90% of the domestic sugar output, and they crushed over 42.06 billion metric tons in the early period of 2020-21, a significant increase from the 29.93 billion metric tons of the previous year. Brazilian consumers’ interest in high-quality food products like specialty bread, cakes, and other such products has increased the demand for fortified drinks and functional foods across the region. Moreover, an aging population has a growing interest in attaining wellness through a healthy diet, which is resulting in the rising demand for specialty food ingredients in Brazil. ​

South America Specialty Food Ingredient Market Competitor Analysis

The South American specialty food ingredient market is highly competitive and fragmented in nature due to the presence of a number of players in the market across the region. The region's implementation of advanced research and development and technological innovations is attracting key players to expand their footprints in these developing markets and gain a competitive advantage over their competitors by introducing their products proactively in the developing market. Some of the top players in the market include those in the South American specialty food ingredient market, including The Archer-Daniels-Midland Company, International Flavors & Fragrances, Inc., Ingredion Incorporated, Cargill, Inc., and Kerry Group Plc.

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