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Latin America Producing Over $1B Worth of Sustainable Food Each Year, But Not Consuming Much of It

Brazilian retailer Pão de Açúcar, which has partnered with local farmers to secure supply of certified products, markets about 700 organic products under its Taeq private label. It is one of the few successful outlets for sustainable foods in Latin America. | Image credit: Pão de Açúcar

Latin America has become a large producer of sustainable foods but has yet to become a significant consumer, according to recent research from Organic Monitor. The study finds that while Brazil is now a global source of sustainable coffee, soybeans, sugar, juices and herbs; Argentina and Chile are well-established southern hemisphere sources of organic fruits and vegetables; and Colombia and Peru are important exporters of natural ingredients, regional consumption of sustainable foods remains negligible.

With 6.8 million hectares, Latin America has 18 percent share of global organic farmland. More than US$1 billion of organic products is exported from the region per year, however local markets are insignificant in size. The region is also a major source of fair trade products, such as cocoa, sugar and coffee, yet there is no domestic market. Most Rainforest Alliance and UTZ Certified products grown in the region are also destined for Europe and North America.

As will be discussed at the Sustainable Foods Summit in São Paolo this week, a major challenge for Latin America is to develop local markets for sustainable products. Various studies show consumer awareness of sustainability issues is rising, but awareness has yet to translate into demand. Low consumer knowledge of sustainable production methods and high product prices are cited as barriers to market growth.

Brazil has the largest market for sustainable foods in the region. Its most successful retailer is Pão de Açúcar, which has partnered with local farmers to secure supply of certified products and markets about 700 organic products under its Taeq private label. Other retailers, including Walmart and Carrefour, are also investing in sustainable product ranges.

Native Products is one of the few Latin American sustainable food companies to build a strong market presence, with products are in over 20,000 Brazilian outlets. Its success is partly due to its wide product range, spanning from sugar, coffee and juices to breakfast cereals and snack bars.

Organic Monitor says it sees product portfolio as a ‘key ingredient’ for local markets to develop. Most Latin American producers are focusing on agricultural commodities for export markets. Lack of domestic production is leading some retailers to import finished products such as organic baby food and beverages from the US. High transportation and import costs further inflate product prices.

A bigger obstacle however is changing consumer behavior. Many Latin Americans perceive organic, fair trade and other eco-labeled products as luxuries. Consumers maybe becoming more aware of sustainability issues, but perceptions will have to change if local markets are to take root.

On the flipside of that, recent research by Cone Communications found that a surprisingly high percentage of US consumers are willing to sacrifice variety and dollars in order to eat more consciously. According to the 2014 Cone Communications Food Issues Trend Tracker, although family satisfaction reigns supreme (97 percent), health and nutrition (93 percent) and sustainability (77 percent) are now also important factors when deciding which foods to buy.

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