Brazilian Flavors Market, published this week by consultants Frost & Sullivan, shows that the market value in 2006 reached $197.5m, and is estimated to reach $283.7m by 2013, representing a 43 percent increase.
It says that innovation is the key in maintaining success in the growing market.
"The main challenge faced by manufacturers is the exact imitation of natural flavors and expansion of its application across a spectrum of product categories," said Taly Nahmias, research analyst for Frost & Sullivan's food and beverage ingredients group.
"Flavor companies have presented constant technological developments to identify the main volatile components emitted by products found in nature, allowing them to reproduce similar flavorings in a laboratory."
An example of companies tapping into some of the natural flavors sourced from Brazil, one of the world's top four flavor and fragrance companies.
Last year, Symrise began expansion of its citrus fragrance and flavor activities with a new centre located close to the source of high-quality, natural fruits in Brazil.
It has a dedicated citrus innovation team, clearly viewing the market for fresh citrus tasting foods and scents as enduring.
The centre provides a base to bring together Symrise's basic in-house research and new in-house technologies.
The Brazilian flavoring industry is also being driven by the strong growth of the food segment which is benefiting from healthy overall economic growth.
The report claims the Brazilian market has a demanding customer base, and product developments do not simply stop with R&D efforts for natural taste imitation.
Consumers are looking for products differentiated in textures and health benefits.
Companies are launching innovative products in sectors such as milk drinks with fruits, milk shakes with yogurts, juices, cereals, diet and light options, desserts and petit-suisse cheeses.
Nahmias said: "End users are increasingly demanding ready-to-eat foods that are tasty, nutritious and have easy-to-cook options in order to accomplish their daily diet and be more productive.
"Flavors are one of the main additives that impart taste and hence are essential to a food product's success."
In terms of categories targeted by Brazilian flavors, manufacturers' diversification into the ice cream industry and increased production of flavored water and functional yogurts are likely to open opportunities for the market.
The beverage industry in Brazil has experienced recent growth, and its established credibility has meant market growth for flavor companies as consumers are looking for flavors with health benefits.
Overall, the beverage market consumed 31 percent of flavors in the Brazilian market during 2006.The major soft drinks flavor consumed in Brazil is the cola, accounting for almost 53 percent, followed by guarana with 23 percent.
Flavors' ability to mask the taste of sweeteners used for diet products has also helped boost demand.