Paul Altaffer03.01.04
What are the images that come to mind when thinking of South America? For many people, South America represents tremendous biodiversity and cultural diversity. This is usually seen as tropical rainforests, exotic herbs and indigenous people, but often as poverty, misery and bad political structures. The truth is, South America is a continent in a developmental boom, host to many emerging democracies, a major producer of agricultural and industrial commodities as well as high valued products and services. As South America emerges, it is becoming a more attractive supplier and market for natural products, nutraceuticals, functional foods and dietary supplements. South America shares many geographic, historic and cultural similarities with its cousins to the North. For these reasons, South America is prime for partnerships of all kinds.
One misconception is to think of South America as the "Amazon Rainforest." It is true that South America is home to the largest rainforest in the world and enjoys a tremendous wealth of biodiversity. The Amazon Rainforest takes up nearly two-thirds of the continent, of which two-thirds are in Brazil. Although the exact figures are disputable, Brazil is the country with the greatest plant biodiversity in the world with an estimate in excess of 55,000 species catalogued. In comparison, North America (the U.S. and Canada) only has a total of 700 plant species catalogued (Wilson, 1992). Most of the world's biodiversity is found along the equatorial belt of South America, Africa and Asia. Colombia, Ecuador and Peru have more than 40,000 plant species in an area that is less than 2% of the world's land mass.
Even now with the advent of biotechnology and genetic medicine, it is estimated that nearly one-quarter of new drugs' principal compounds are found in nature-in some plant. Additionally, many of the important medical discoveries have come from tropical rainforests, including the Amazon, and the opportunity for new product development certainly still exists. However, this is not where South America ends; rather, it is just the beginning.
The diversity South America enjoys is not limited to its tropical flora; it is diverse in many other ways. The continent has more ecosystems and climates than any other in the world, from the tropical to the Antarctic, from high mountains (the Andes) to huge swamplands. This diversity is seen as well in its people and the fact that South America is a melting pot for people all over the world, a new frontier, filled with opportunity as well as risk.
As each economy in South America develops and grows, they become more sophisticated in their consumption patterns. While not nearly as wealthy as some of its North American or European counterparts, South America has a population similar in size to that of the U.S. and is growing rapidly, with a consuming public that grows with it. The major economies of South America include Brazil, Argentina, Chile, Colombia, Peru and Venezuela. Their economies and political structures vary significantly, but they share a path toward development that seems true for the continent.
The United Nations Commission for Latin America and the Caribbean (Cepal) estimated that the gross domestic product of Latin America would grow at 1.5% in 2003 and 3.5% in 2004. However, it is also estimated that 45% of the Latin American population lives below the poverty line and that unemployment is still high (collectively at over 10%). The numbers reflect recession in some countries and wonderful recovery stories in others. Argentina, for example, was at the brink of bankruptcy two years ago and in fiscal chaos, but it grew at a rate of over 7% in 2003 (negative growth in 2002). And although Brazil had nearly no growth in 2003, it is estimated it will have growth of over 3% in 2004.
As these countries continue to grow so too does consumption. Furthermore, South Americans have become increasingly interested in wellness and food. Combine this trend with a solid practice of utilizing home and traditional remedies, and this becomes a market ripe for manufacturers of functional foods, supplements and nutraceuticals.
Brazil has established the eradication of hunger as a priority for the government of President Luiz Inacio (Lula) da Silva. This presents an opportunity for the emergence of functional food and nutritional companies. If nutrition, prevention and health support can be linked to the mission against hunger, the opportunities become staggering.
While the regulatory climate is still confusing in many of the South American countries, many have or are molding regulations based on European and North American models. Brazil for example, may allow for two types of label claims on their foods and supplements. These include claims, which have a structure/function basis (relating the metabolic or physiological function of a nutrient to the development, maintenance and other functions related to normal human functions) or claims based on a health state (that which affirms, suggests or implies a relationship between the food or ingredient and an illness or health related condition). As is the case in the U.S., the bar for approval of these different types of claims is different and nutrients can fall in different categories as a result. Brazil also has an accepted definition for functional foods and an established regulatory bureaucracy to deal with such.
Other countries in South America have adopted regulations of their own and there have been recent efforts to reach a basis for standardization in regulations, similar to current plans in Europe. This is led by the Mercosur, a group of countries in South America that have developed a free-trade zone similar to that of NAFTA (the North American Free Trade Agreement). (See below for more information.)
The South American people are becoming more educated and sophisticated as consumers. They are developing affluence, and as mentioned previously, are becoming increasingly concerned with health, image and longevity. These trends are likely to continue. As nutrition and food programs develop throughout the continent, even the poorer segment of the population will become involved in the consumption of functional foods and supplements.
South America becomes even more impressive when one looks at its productive capacity. From the most exotically tropical to the temperate, South America has the most incredible variety of fruits, vegetables, grains and botanicals one can imagine.
Let's begin with the tropical fruit. The variety of flavors, textures and colors one has to choose from is nothing short of spectacular. Several fruits merit a mention since they have or are just now developing a following in the U.S.
Aai (Euterpe oleracea) (Pronounced ah-saa-eee): There has been considerable recent attention given to this palm fruit, grown in the North of Brazil, and one of the tree sources for hearts of palm. Aai is being sold as an "energy" drink, and in Brazil it is often mixed with sources of caffeine, like guarana, which gives it its "kick." Aai is a rich source of antioxidants (anthocyanins), essential fatty acids and nutritional minerals.
Acerola (Malpighia glabra): Acerola is the most broadly cultivated source of natural vitamin C. Also known as Caribbean or Barbados cherry, it is native to Central America and the Caribbean, but was adapted and thrives in South America.
Camu-Camu (Myrciaria dubia): Camu-Camu is another rich source of vitamin C and grows wildly in the flooded river basins of the Amazon.
Cashew Fruit (Anacardium occidentale): Cashew fruit is often perceived as the nut, but the rest of the fruit produces a delicious, albeit exotic, flavored juice that is rich in vitamins and minerals.
Cocoa (Theobroma cacau-also known as cacau): Cocoa, the base material for chocolate, is the subject of a tremendous amount of recent attention as a rich source of antioxidants, thermogenic and "energy" compounds, as well as mood modulating qualities.
Graviola (Annona muricata): Graviola has become popular due to a study that pointed to it as a possible treatment for certain cancers. Although this needs to be reviewed further, the fruit has a wonderful flavor.
Jaboticaba (Myrciaria cauliflora Berg.): Although the health benefits of jaboticaba are still un-documented, it contains vitamins, minerals and antioxidant pigments. It is also appreciated for its exotic flavor and is used in jellies and jams.
Passion Fruit (Passiflora edulis): Passion fruit has a tremendous flavor and has many uses. The leaves and stems are used in sedating formulas, while the fruit is appreciated for its flavor.
Pitanga (Eugenia uniflora): Pitanga is a source of antioxidant vitamins and minerals, with an interesting profile of carotenoids.
In addition to the wealth of tropical fruit, South America is also a significant producer of temperate climate fruits and vegetables. Chile, Argentina, Uruguay and the South of Brazil have climates similar to many regions in the U.S. and Canada. And, as the seasons are inverted (the U.S. summer is South America's winter and vice versa), South America can offer the same types of produce we enjoy during the summer all year round. Argentina and Chile, for example, are major producers of apples, pears, berries and grapes, being among the major producers of wine in the world. As a result, they export their produce around the world, but especially to Northern hemisphere countries. Few people imagine that South America can support temperate climates, but anyone who has skied in the Southern Andes realizes how close it is to being home.
South America is also a major producer of cereals, grains and starch plants. Maize, or corn, and potatoes are discoveries from South America and a trip through Peru will dazzle visitors with the quantity of potatoes and edible tubers one will be exposed to. This is not to mention that yucca or manioc is a major starch staple throughout South America. Quinoa and amaranth are examples of some of the interesting grain crops being produced in South America that have potential for broader development.
The number of botanical, nutrient and functional food ingredients that come from South America is staggering. Guarana, mat, maca, cat's claw, suma, pau d'arco, mara puama and catuaba are just a few of the more commonly known herbs from South America, but there is so much more, and since most of the flora in South America is yet unstudied or under-studied, there remain many, many opportunities for development. In other words, the extent of South America's biodiversity is still virtually untapped.
Another exciting area for South America is in the area of organics. Up until recently, most of the certified organic produce in the world was produced in Europe or the U.S. with few species, all of which came from these Northern hemisphere countries. Today, South America leads the way and the entire Southern hemisphere is following in the development of certified organic crops, not just of Northern species, but of tropical and other Southern hemisphere species. As worldwide consumption of organics increases, South America is very well positioned to become a key supplier.
The question of GMO (Genetically Modified Organisms), on the other hand, is a little more complex. Argentina has been a major GMO producer and continues to grow the amount of acreage available for GMO crops. Much of the rest of South America, and Brazil especially, as a major grain producer, resisted this trend up until recently. Brazil has permitted the test production of the first lots of GMO soy, yet there is considerable resistance in Brazil, pitting a dispute between the traditional family farmer and agri-business interests.
South America also has tremendous manufacturing capacity, especially when it comes to the development and manufacture of natural ingredients. As these markets grow, the number of quality manufacturers is growing very quickly. South America has a high certification rate to ISO 9000 series standards, as well as cGMP, HACCP and other quality norms. Manufacturers are investing a tremendous amount of resources in becoming more attractive to export customers.
In order to make great products, it is necessary to have the raw material, the manufacturing capacity and the technical know-how. South America is quickly developing such know-how, creating partnerships with universities, governments and corporate customers. As a result, one can expect more interesting products, not just raw materials, coming from South America.
As the markets for functional foods and ingredients worldwide grow, it is likely South America will be viewed as a key player for many of the reasons described herein. Not only is there the raw material basis, but there is the manufacturing and technical capacity to develop products with great success.
It is often said that the Northern hemisphere is rich in technology but poor in genetic (natural) resources, while the Southern hemisphere is rich in its biological diversity and poor in technology. This is no longer the case. The Southern hemisphere is developing technologies and capacities, making it ideally placed for partnerships with its cousins from the North.NW
About the author:
Paul Altaffer is the founder and president of Nat-Trop, an ingredients company developing and trading primarily in South American products. Nat-Trop is now operated by RFI Ingredients, Blauvelt, NY, a manufacturer of global innovative natural products and Mr. Altaffer is managing director of RFI South America. He also works as a consultant on product and business development, as well as strategic sourcing. He can be reached at 415-334-7199; E-mail: paulo@nattrop.com.
One misconception is to think of South America as the "Amazon Rainforest." It is true that South America is home to the largest rainforest in the world and enjoys a tremendous wealth of biodiversity. The Amazon Rainforest takes up nearly two-thirds of the continent, of which two-thirds are in Brazil. Although the exact figures are disputable, Brazil is the country with the greatest plant biodiversity in the world with an estimate in excess of 55,000 species catalogued. In comparison, North America (the U.S. and Canada) only has a total of 700 plant species catalogued (Wilson, 1992). Most of the world's biodiversity is found along the equatorial belt of South America, Africa and Asia. Colombia, Ecuador and Peru have more than 40,000 plant species in an area that is less than 2% of the world's land mass.
Even now with the advent of biotechnology and genetic medicine, it is estimated that nearly one-quarter of new drugs' principal compounds are found in nature-in some plant. Additionally, many of the important medical discoveries have come from tropical rainforests, including the Amazon, and the opportunity for new product development certainly still exists. However, this is not where South America ends; rather, it is just the beginning.
Exploring South America
The diversity South America enjoys is not limited to its tropical flora; it is diverse in many other ways. The continent has more ecosystems and climates than any other in the world, from the tropical to the Antarctic, from high mountains (the Andes) to huge swamplands. This diversity is seen as well in its people and the fact that South America is a melting pot for people all over the world, a new frontier, filled with opportunity as well as risk.
As each economy in South America develops and grows, they become more sophisticated in their consumption patterns. While not nearly as wealthy as some of its North American or European counterparts, South America has a population similar in size to that of the U.S. and is growing rapidly, with a consuming public that grows with it. The major economies of South America include Brazil, Argentina, Chile, Colombia, Peru and Venezuela. Their economies and political structures vary significantly, but they share a path toward development that seems true for the continent.
The United Nations Commission for Latin America and the Caribbean (Cepal) estimated that the gross domestic product of Latin America would grow at 1.5% in 2003 and 3.5% in 2004. However, it is also estimated that 45% of the Latin American population lives below the poverty line and that unemployment is still high (collectively at over 10%). The numbers reflect recession in some countries and wonderful recovery stories in others. Argentina, for example, was at the brink of bankruptcy two years ago and in fiscal chaos, but it grew at a rate of over 7% in 2003 (negative growth in 2002). And although Brazil had nearly no growth in 2003, it is estimated it will have growth of over 3% in 2004.
As these countries continue to grow so too does consumption. Furthermore, South Americans have become increasingly interested in wellness and food. Combine this trend with a solid practice of utilizing home and traditional remedies, and this becomes a market ripe for manufacturers of functional foods, supplements and nutraceuticals.
Brazil has established the eradication of hunger as a priority for the government of President Luiz Inacio (Lula) da Silva. This presents an opportunity for the emergence of functional food and nutritional companies. If nutrition, prevention and health support can be linked to the mission against hunger, the opportunities become staggering.
While the regulatory climate is still confusing in many of the South American countries, many have or are molding regulations based on European and North American models. Brazil for example, may allow for two types of label claims on their foods and supplements. These include claims, which have a structure/function basis (relating the metabolic or physiological function of a nutrient to the development, maintenance and other functions related to normal human functions) or claims based on a health state (that which affirms, suggests or implies a relationship between the food or ingredient and an illness or health related condition). As is the case in the U.S., the bar for approval of these different types of claims is different and nutrients can fall in different categories as a result. Brazil also has an accepted definition for functional foods and an established regulatory bureaucracy to deal with such.
Other countries in South America have adopted regulations of their own and there have been recent efforts to reach a basis for standardization in regulations, similar to current plans in Europe. This is led by the Mercosur, a group of countries in South America that have developed a free-trade zone similar to that of NAFTA (the North American Free Trade Agreement). (See below for more information.)
The South American people are becoming more educated and sophisticated as consumers. They are developing affluence, and as mentioned previously, are becoming increasingly concerned with health, image and longevity. These trends are likely to continue. As nutrition and food programs develop throughout the continent, even the poorer segment of the population will become involved in the consumption of functional foods and supplements.
South American Production Potential
South America becomes even more impressive when one looks at its productive capacity. From the most exotically tropical to the temperate, South America has the most incredible variety of fruits, vegetables, grains and botanicals one can imagine.
Let's begin with the tropical fruit. The variety of flavors, textures and colors one has to choose from is nothing short of spectacular. Several fruits merit a mention since they have or are just now developing a following in the U.S.
Aai (Euterpe oleracea) (Pronounced ah-saa-eee): There has been considerable recent attention given to this palm fruit, grown in the North of Brazil, and one of the tree sources for hearts of palm. Aai is being sold as an "energy" drink, and in Brazil it is often mixed with sources of caffeine, like guarana, which gives it its "kick." Aai is a rich source of antioxidants (anthocyanins), essential fatty acids and nutritional minerals.
Acerola (Malpighia glabra): Acerola is the most broadly cultivated source of natural vitamin C. Also known as Caribbean or Barbados cherry, it is native to Central America and the Caribbean, but was adapted and thrives in South America.
Camu-Camu (Myrciaria dubia): Camu-Camu is another rich source of vitamin C and grows wildly in the flooded river basins of the Amazon.
Cashew Fruit (Anacardium occidentale): Cashew fruit is often perceived as the nut, but the rest of the fruit produces a delicious, albeit exotic, flavored juice that is rich in vitamins and minerals.
Cocoa (Theobroma cacau-also known as cacau): Cocoa, the base material for chocolate, is the subject of a tremendous amount of recent attention as a rich source of antioxidants, thermogenic and "energy" compounds, as well as mood modulating qualities.
Graviola (Annona muricata): Graviola has become popular due to a study that pointed to it as a possible treatment for certain cancers. Although this needs to be reviewed further, the fruit has a wonderful flavor.
Jaboticaba (Myrciaria cauliflora Berg.): Although the health benefits of jaboticaba are still un-documented, it contains vitamins, minerals and antioxidant pigments. It is also appreciated for its exotic flavor and is used in jellies and jams.
Passion Fruit (Passiflora edulis): Passion fruit has a tremendous flavor and has many uses. The leaves and stems are used in sedating formulas, while the fruit is appreciated for its flavor.
Pitanga (Eugenia uniflora): Pitanga is a source of antioxidant vitamins and minerals, with an interesting profile of carotenoids.
In addition to the wealth of tropical fruit, South America is also a significant producer of temperate climate fruits and vegetables. Chile, Argentina, Uruguay and the South of Brazil have climates similar to many regions in the U.S. and Canada. And, as the seasons are inverted (the U.S. summer is South America's winter and vice versa), South America can offer the same types of produce we enjoy during the summer all year round. Argentina and Chile, for example, are major producers of apples, pears, berries and grapes, being among the major producers of wine in the world. As a result, they export their produce around the world, but especially to Northern hemisphere countries. Few people imagine that South America can support temperate climates, but anyone who has skied in the Southern Andes realizes how close it is to being home.
South America is also a major producer of cereals, grains and starch plants. Maize, or corn, and potatoes are discoveries from South America and a trip through Peru will dazzle visitors with the quantity of potatoes and edible tubers one will be exposed to. This is not to mention that yucca or manioc is a major starch staple throughout South America. Quinoa and amaranth are examples of some of the interesting grain crops being produced in South America that have potential for broader development.
The number of botanical, nutrient and functional food ingredients that come from South America is staggering. Guarana, mat, maca, cat's claw, suma, pau d'arco, mara puama and catuaba are just a few of the more commonly known herbs from South America, but there is so much more, and since most of the flora in South America is yet unstudied or under-studied, there remain many, many opportunities for development. In other words, the extent of South America's biodiversity is still virtually untapped.
Another exciting area for South America is in the area of organics. Up until recently, most of the certified organic produce in the world was produced in Europe or the U.S. with few species, all of which came from these Northern hemisphere countries. Today, South America leads the way and the entire Southern hemisphere is following in the development of certified organic crops, not just of Northern species, but of tropical and other Southern hemisphere species. As worldwide consumption of organics increases, South America is very well positioned to become a key supplier.
GMOs and Manufacturing Capacity
The question of GMO (Genetically Modified Organisms), on the other hand, is a little more complex. Argentina has been a major GMO producer and continues to grow the amount of acreage available for GMO crops. Much of the rest of South America, and Brazil especially, as a major grain producer, resisted this trend up until recently. Brazil has permitted the test production of the first lots of GMO soy, yet there is considerable resistance in Brazil, pitting a dispute between the traditional family farmer and agri-business interests.
South America also has tremendous manufacturing capacity, especially when it comes to the development and manufacture of natural ingredients. As these markets grow, the number of quality manufacturers is growing very quickly. South America has a high certification rate to ISO 9000 series standards, as well as cGMP, HACCP and other quality norms. Manufacturers are investing a tremendous amount of resources in becoming more attractive to export customers.
In order to make great products, it is necessary to have the raw material, the manufacturing capacity and the technical know-how. South America is quickly developing such know-how, creating partnerships with universities, governments and corporate customers. As a result, one can expect more interesting products, not just raw materials, coming from South America.
Summary
As the markets for functional foods and ingredients worldwide grow, it is likely South America will be viewed as a key player for many of the reasons described herein. Not only is there the raw material basis, but there is the manufacturing and technical capacity to develop products with great success.
It is often said that the Northern hemisphere is rich in technology but poor in genetic (natural) resources, while the Southern hemisphere is rich in its biological diversity and poor in technology. This is no longer the case. The Southern hemisphere is developing technologies and capacities, making it ideally placed for partnerships with its cousins from the North.NW
About the author:
Paul Altaffer is the founder and president of Nat-Trop, an ingredients company developing and trading primarily in South American products. Nat-Trop is now operated by RFI Ingredients, Blauvelt, NY, a manufacturer of global innovative natural products and Mr. Altaffer is managing director of RFI South America. He also works as a consultant on product and business development, as well as strategic sourcing. He can be reached at 415-334-7199; E-mail: paulo@nattrop.com.
