Sauce too reduced in South America (5)
I believe the answer is:
salsa
'sauce' is the definition.
(I've seen this before)
'too reduced in south america' is the wordplay.
'too' becomes 'also' ('also' can be a synonym of 'too').
'reduced' means to remove the last letter.
'in' indicates putting letters inside.
'south' becomes 's' ('S' can be a synonym of 'south').
'america' becomes 'a' (common abbreviation - e.g. in organisation names).
'also' with its final letter taken off is 'als'.
's'+'a'='sa'
'als' placed inside 'sa' is 'SALSA'.
(Other definitions for salsa that I've seen before include "that's hot and saucy?" , "Latin American dance - spicy Mexican sauce" , "Saucy dance" , "Hot dance - hot sauce" , "Latin American dance music" .)