Voluntary Report - public distribution

**Date:** 5/26/2006

**GAIN Report Number:** BR6007

BR6007

**Brazil**

**Market Development Reports**

**Diet & Light Products in Brazil**

**2006**

**Approved by:**

![](media/image1.wmf)Morgan Perkins, Director

U.S. AGRICULTURAL TRADE OFFICER

**Prepared by:**

Fabiana Fonseca, Agricultural Marketing Specialist

**Report Highlights:**

Brazilian consumers are beginning to reappraise their diets as health
and nutritional values develop. In 2005, sale of diet and light products
increased 17 percent. The local industry is responding to this trend but
the variety of products offered to consumers is below expectations. US
companies may find a new segment to explore.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Sao Paulo \[BR3\]

\[BR\]

# I. Market for Diet and Light Products

Traditional foods --such as rice and beans - are losing their importance
in Brazilian dining. According to the Ministry of Health (MS), the
consumption of beans, for instance, has decreased 31 percent in the last
30 years and the downward trend continues. Changes in eating habits are
also observable in decreasing consumption of vegetables and fish:
Consumption of these items has fallen by 19 percent and 50 percent,
respectively, over that period. Brazilians have broader access to
processed products but the quality of what they are eaten has
deteriorated. In the same 30-year period, consumption of industrialized
food products grew 82 percent.

Consumption of processed products is unlikely to decline. However, the
number of consumers trying to compensate the lack of healthy eating
habits is also growing. According to the Brazilian Food Industry
Association for Diet and Functional Products (Abiad), the market for
products containing less fat, less cholesterol, less additives, etc, is
growing. Fitness awareness, improved knowledge of proper dietary
patterns, and the desire to prevent illness by eating properly are a few
of the motivations leading Brazilian consumers to change their behavior.
Sales of diet and light products are benefiting from this trend.

![](media/image2.wmf)

Source: Abiad

To capitalize of this trend the Brazilian food industry has broadened
product lines and launched new brands. According to a recent study
conducted by AC Nielsen and published by the Brazilian Supermarket
Association (Abras), brands of healthy products are gaining market
share. This research demonstrates that sales of this "healthy" foods
increased 17 percent in 2005.

![](media/image3.wmf)

Source: AC Nielsen

Large retail stores (10 check-outs and plus) accounted for more than 50
percent of healthy products sales. However, small stores (less than 10
check-outs) have shown growth as well, as indicated on the table below.

+------------+-------+-------+-------+---------------+---------------+
| ###### Wh  |       |       |       | ###### Y      |               |
| ere are He |       |       |       | ear to year i |               |
| althy Prod |       |       |       | ncrease in sa |               |
| ucts Sold? |       |       |       | les of Health |               |
|            |       |       |       | y Products (% |               |
| Sales by   |       |       |       |  total sales) |               |
| Store Size |       |       |       |               |               |
| (% total   |       |       |       |               |               |
| "healthy"  |       |       |       |               |               |
| food       |       |       |       |               |               |
| sales)     |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+
|            | **2   | **2   | **2   | **∆ 2003 to   | **∆ 2004 to   |
|            | 003** | 004** | 005** | 2004**        | 2005**        |
+------------+-------+-------+-------+---------------+---------------+
| Over 20    | 30.7  | 29.0  | 29.5  | 1.7           | 15.7          |
| check-outs |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+
| From 10 to | 26.7  | 26.5  | 25.1  | 6.8           | 21.3          |
| 19         |       |       |       |               |               |
| check-outs |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+
| From 5 to  | 14.7  | 14.8  | 15.4  | 8.5           | 21.3          |
| 10         |       |       |       |               |               |
| check-outs |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+
| From 1 to  | 15.7  | 16.9  | 17.5  | 15.6          | 10.7          |
| 4          |       |       |       |               |               |
| check-outs |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+
| T          | 12.2  | 12.8  | 12.5  | 13.2          | 19.0          |
| raditional |       |       |       |               |               |
+------------+-------+-------+-------+---------------+---------------+

Source: AC Nielsen

######## II. Consumption Patterns

Brazilian consumers tend to follow Europeans on eating habits.
Researchers (such as Glaucia Pastore from the University of Campinas
(Unicamp), Sao Paulo) claim that Brazilians are more receptive to
functional foods than to supplements. During interviews conducted by AC
Nielsen to find out why consumers purchase healthy products, four major
motivational factors were revealed. Fifty-two percent of individuals
responded they are becoming more health conscious (mainly those from 30
to 45 years old and from 46 to 60 years old). For 13 percent medical
reasons are a key factor. Consumers for whom weight control is the
bottom line represented 12 percent, while those seeking "well-being"
encompassed another 12 percent. "Self-image" orientation is responsible
for 6 percent of purchases and "self-satisfaction" another 4 percent.
One percent of consumers buy diet and light products out of curiosity.

Today, sales of healthy products are mainly concentrated in the most
affluent areas of the country, in particular the state of Sao Paulo (41
percent of total sales) and Southern Brazil (Santa Catarina, Parana and
Rio Grande do Sul), which accounts for 18 percent of sales volume. For
these markets, hot products categories include: chocolate (powder),
sweeteners, olive oil, soy beverages, cake mixes, instant cappucino,
tea, spirits/sodas, yogurt, fruit juices, bread, jello, cereal bars,
juices (powder), milk, cheese, soups, breakfast cereals and ready-to-eat
meals (frozen).

**III. Legislation**

According to Brazilian parameters diet and light products are defined as
follows:

*Diet:* food products for consumers with dietary restrictions. "Diet"
also means products with no sugar.

*Light:* food products with at least 25 percent less calories or other
nutrient(s) compared to the regular version.

Diet and Light products are under the regulation of the Ministry of
Health (ANVISA). All local food products claiming to have special
functions are subject to ANVISA's prior authorization. In addition, such
products should be registered by the same government agency. The
importer must prepare and file a request and obtain approval before
importation (for more information on labeling, packaging and
ingredients, please see FAIRS report).

The specific legislation on this topic include:

-   Decree #38, January 13^th^, 1998

-   Decree SVS/MS #27, January 13^th^, 1998

-   Decree SVS/MS #29, January 13^th^, 1998

-   Decree SVS/MS #30, January 13^th^, 1998

-   Decree SVS/MS #222, March 24^th^, 1998

-   Resolution #449, September 9^th^, 1999

-   Resolution #18/1999

# IV. Market for US products

US companies may benefit from the narrow variety of products offered by
local industry, as Brazilian production of healthy foods is still
shaping-up. In general, consumers of healthy foods are not a segment
that drives Brazilian food processors to launch a significant range of
food and beverage items in the short run, which demands significant
investment on clinical and scientific investigations. This opens
substantial opportunities for imported products. To illustrate: after
the findings of a research pointing to a 30 million potential consumers
for the product, the multinational Danone introduced the yogurt
*Activia* in Brazil just one year ago. The same item had been present on
the French market for 20 years, but no comparable product had been
available in Brazil. US companies may find room to compete in this
segment due the slow response of the food industry versus the increasing
demand from this specific consumer.

**V. Post Contact**

Please do not hesitate to contact the offices below for questions or
comments regarding this report or require assistance to export processed
food products into Brazil:

U.S. Agricultural Trade Office (ATO)\
U.S. Consulate General

Rua Henri Dunant, 700\
04709-110 Sao Paulo - SP\
Tel: (55 11) 5186-7400\
Fax: (55 11) 5186-7499\
E-mail: atosaopaulo@usda.gov\
              atobrazil@usdabrazil.org.br

**Office of Agricultural Affairs (OAA)**

**U.S. Embassy\
**Av. das Nacoes, quadra 801, lote 3\
70403-900 Brasilia - DF\
Tel: (55 61) 3312-7000\
Fax: (55 61) 3312-7659\
E-mail: agbrasilia@usda.gov