Probiotic SupplementsWed, 09/09/2015 - 17:05
Niche markets such as the probiotics one have seen a recent burst in Mexico, with the increased awareness of health and wellbeing. The market for healthy foods in general has expanded in the last few years with an estimated value of US$22.4 billion, which is expected to grow by 10% per year. A report by the Global Agricultural Information Network (GAIN) showed that 60% of Mexicans are trying to lose weight, of which 70% are attempting to do so by changing their diet. This opens up a huge market for probiotics, superfoods and protein supplements.
Probiotics are defined by the Food and Agriculture Organization of the United Nations (FAO) as “live microorganisms, which, when administered in adequate amounts, confer a health benefit on the host.” Products containing probiotics tend to be yoghurt drinks, kefir, and oral supplements, but the industry is developing so rapidly that a diverse range of products are being manufactured with the healthy bacteria, such as cheeses, bread and ice cream. Transparency Market Research estimates that the global probiotic market was valued at US$58 billion in 2013 and is expected to expand to US$96 billion by 2020. This emerging market has made a surprisingly compelling impact within the Mexican economy.
A study by Micro Market Monitor showed that the probiotics market across North America is expected to grow at a compound annual growth rate of 7.7% over the next five years. Although it is the third largest market behind the US and Canada, Mexico’s projected growth will be at the highest CAGR over the course of these years. Danone sells one of the most well-known probiotic products in the world, Yakult, and holds the second largest market share in the Mexican “healthy” packaged food sector, behind Cadbury Adams with its Trident gum.
The industry has seen a revolution with a series of mergers and acquisitions that have cemented its place as a lucrative industry. In 2013, it was announced that probiotic giants Chr. Hansen had begun working with sustainable agricultural research corporation FMC in order to further develop biological and probiotic food research, focusing on enzymes, cultures and fermentation. In 2014, Bayer also acquired some of DuPont’s assets in Canada, Mexico, US, New Zealand and Australia, focusing on expanding its market of biological products. Even Nestlé Mexico is capitalizing on the popularity of the probiotic market, signing a deal with firm BioGaia for exclusive rights over several products, including probiotic drops containing BioGaia’s patented lactillobacillus reuteri bacteria, designed as a formula for infants. With these major companies competing for market share, the industry is becoming more and more competitive.
Mexico is generally seen as an ideal market for probiotics. There exists encouraging research that probiotics may help to alleviate the symptoms of certain medical conditions and illnesses, such as yeast infections, irritable bowel syndrome, and intestinal infections. A study published by the British Journal of Nutrition also found that probiotics may boost the immune system, and therefore may be used as a preemptory protector against colds and flu symptoms. Other benefits claimed by the industry include promotion of weight loss, alleviation of skin conditions and prevention of colon cancer.
Another factor that has contributed to the increase in popularity of probiotic and “healthy foods” is ANSA, a federal law passed in 2010. This legislation set out requirements for healthy food in schools, mandated education about the dangers of unhealthy attitudes toward nutrition, introduced compulsory food labelling, and promoted daily physical activity. As a result, healthy food is becoming more widely available in Mexico and the market for probiotics is widening.
One drawback to health foods is that they tend to be more expensive. With 42% of Mexico’s population living below the official poverty line set by the World Bank (earning less than US$1.25 per day) this presents a challenge. In countries such as Mexico, Brazil, China, and South Korea, the cost of healthy fresh food has been rising at a disproportionate rate to the cost of processed, packaged food. In a report published by the Overseas Development Institute, the cost of products such as ready meals, chocolate and snacks has remained reasonably static in Mexico over the last 25 years. However, the cost of fresh vegetables, tomatoes, and tortilla and maize flour has increased exponentially since the mid 1990s.
Probiotics have managed to gain ground in Mexico, with growth expected to continue at a rapid rate over the next few years. If the industry giants invest the proper resources into effective research and marketing, the implications for sector development could be significant.