The market for food processing ingredients in Honduras has increased steadily over the past few years and further increases are expected.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
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GAIN Report Number:
Food Processing Ingredients
Henry Schmick, Regional
The market for food processing ingredients in Honduras has increased steadily over the past few years
and further increases are expected. The United States continues to be Honduras’ largest supplier for
food processing ingredients due to a strong acceptance for high quality. The Central American –
Dominican Republic Free Trade Agreement with the United States (CAFTA-DR) provides new trade
SECTION I. MARKET SUMMARY
Although the food industry in Honduras is not as developed as other Central American Countries, the
Honduran food processing sector remains promising for U.S. exporters. The sector is expected to
experience growth supported by advances in the retail, restaurant, and tourism industries for the
The tourism industry in Honduras, for instance, has experienced substantial growth: Total visitors were
1.8 million in 2011, and U.S. dollar income from tourists increased from US$627.2 million in 2010 to
US$638.8 million in 2011. With growing tourism, the hotel industry is rapidly expanding into both
urban and rural areas. New supermarkets have been opened in the in the country, especially with the
entrance of Wal-Mart in the Central American region. The restaurant industry is growing at an even
faster rate with many first-class restaurants, fast-food chains, and franchises opening in Honduras. The
development of modern shopping malls and commercial centers has prompted the establishment of an
increasing number of restaurant businesses. Honduras currently has the largest presence of established
U.S. fast food and casual dining franchises in Central America.
The United States continues to be the largest supplier of food ingredients to the Honduran food
processing sector, something which can be partly attributed to U.S. products having a strong high-
quality reputation. Colombia, Mexico, Chile, Sweden, Argentina and other Central American countries
are the leading competitors of the United States.
Consumption trends influencing the type and quality of inputs being used in processed foods are as
follows: a wide variety of ingredients are used for mass consumption products such as bread, poultry,
snacks and food preparations. Honduran importers prefer U.S. products due to their high-quality and
fitness as inputs for processed foods.
Honduras imports a significant amount of bulk and intermediate products from the United States mostly
used for food ingredients. The graphic below shows the export increase of these products over the
years. Please note that the data of this year is up to September 2012.
Source: Global Agricultural
Trade System (GATS)
The following chart indicates the advantages and challenges for United States exports of ingredients for
the processing food sector in Honduras.
Advantages and Challenges for U.S. Exporters Targeting Honduran’s
Food Processing Sector
The United States continues to be the leading supplier Proximity and price of Central American countries.
of ingredients for processed food products, and
Honduran consumption of processed foods is
U.S. products are considered to be high-quality The current economic situation in the country limits
resulting in consumers having a strong preference for purchasing power and customers are price sensitive.
CAFTA-DR eliminates most tariffs and other barriers Promote investment, maintain macroeconomic
to U.S. goods destined for the Central American stability, and to increase the private sector’s
market, provides protection for United States competitiveness in order to reap the benefits of Free
investments and intellectual property, and creates Trade Agreements such as CAFTA-DR.
more transparent rules and procedures for doing
Because of the close proximity of Honduras to the Direct competition from Central American
United States, containerized cargo from gateway countries, Mexico, Colombia, Argentina and Chile.
cities can be transported to Honduras in two to three
days. With the lowest logistical costs in the region,
Honduras serves as a distribution platform for the rest
of Central America.
The rapidly development of new restaurants, casual Unclear and occasionally restrictive labeling,
dining, fast food and new hotel chains in the main zoosanitary and phytosanitary import requirements.
cities are also contributing to the processed food
Honduras Imports of Ingredients from the World
(in millions of US$)
Commodity 2009 2010 2011 % Change (2011/2010)
Wheat 53.8 38.9 76.7 97.07
Coarse grains 70.3 82.6 146.2 76.97
Soybean oil 5.7 4.7 6.3 33.20
Tomatoes, prepared or preserved 11.2 10.3 13.3 28.72
Other bulk commodities 0.105 0.241 0.304 26.29
Vegetable oils 19.9 42.3 49.9 17.99
Animal fats 17.3 32.4 37.2 14.71
Soybean meal 58.0 64.2 72.9 13.57
Cocoa 8.9 10.7 11.9 12.03
Baking related 151.7 151.9 166.4 9.60
Sweetener/Beverage Bases 4.7 4.9 5.3 8.97
Sugars and Sugar Confectionary 27.2 30.9 32.7 6.0
Mechanically deboned meat 6.2 7.7 8.0 5.04
Source: Global Trade Atlas (GTA)
SECTION II. ROAD MAP FOR MARKET ENTRY
A. Entry Strategy
In order to effectively export products to Honduras, strong relationships with prospective buyers are
fundamental. While it may take a little longer to establish a business relationship in Honduras than is
customary in the United States, the investment in time can provide long-lasting, mutually profitable
alliances. Although a U.S. firm may export directly to Honduran companies, it is suggested that U.S.
firms have a local representative or a representative who can personally travel to Honduras. U.S.
companies can also benefit from opening their own offices in Honduras.
U.S. exporters enjoy a strong position in the Honduran market bolstered by CAFTA-DR which
eliminates most tariffs and other barriers for U.S. goods destined for the Central American market.
Furthermore, the CAFTA-DR provides protection for U.S. investments and intellectual property, and
creates more transparent rules and procedures for doing business.
The Government of Honduras (GOH) is generally open to foreign investment and welcomes it;
restrictions and performance requirements are fairly limited. The Honduran openness to investment, its
geographical proximity to the United States, and the Honduran port of Puerto Cortés, which is the
largest deep water port in the region, have made Honduras increasingly attractive to investors.
Additionally, Honduras has almost concluded a brand new highway, known as Canal Seco or the Dry
Corridor, which will connect Puerto Cortes on the Caribbean with the Pacific Ocean giving U.S.
companies easier coast-to-coast access.
B. Market Structure
Price is one of the most important elements that influence the receptivity score of most Honduran
imports. In many cases, Honduran firms buy directly from exporters if cost reductions can be achieved.
Honduras: Product Distribution Channel Flow
Food Retailers Food Service/HRI Sector
Domestic Ingredient Producer
C. Company Profiles
The table below shows a variety of large and medium-sized food processing companies in Honduras.
Some of these companies are already using U.S. food ingredients, while others are potential users.
Company Production Channels L Procurement ocation
C Snacks, oils and fats, orporación Honduras and
D condiments, seasonings, Retail kers inant N Direct & Broicaragua
L Milk, shakes, juices, cheese, acthosa Retail Honduras Direct
cream, ice tea, butter, yogurts
Especies Don Seasonings, condiments, Retail and
Julio sauces, pastas, soft drinks HR Honduras Direct & Brokers I
C Poultry Retail and adeca HR Honduras Direct I
Alimentos de Beverages Retail and Distributors
Cortes HRI H
Alimentos Seasonings, condiments, Distributors &
Marvisa sauces HRI Honduras Brokers
Panificadora La Bakery Retail Honduras Direct & Brokers
Inversiones Prepared meals, plantains
Am HRI Honduras Direct algamadas
Servi 2000 Beverages Retail, HRI Honduras Direct
Corporación Prepared meals, refried beans
A Retail Honduras Direct tlántico
Industrias Sula Snacks Retail, HRI Honduras Direct & Brokers
Panadería Bakery Retail Honduras Direct & Brokers
G s, oils and fats, rupo Jarem Snackar Retail, HRI Honduras Direct
D. Sector Trends
The food processing industry has limited foreign direct investment (FDI); some of the foreign
companies that were formerly established in Honduras have been transferred to other Central American
countries or Mexico due to a variety of issues.
A description of the consumption trends according to the Global Trade Atlas (GTA) the major
ingredients used by the food processing sector in Honduras follows:
Coarse grains: The United States is the leading exporter of course grains to Honduras: in 2011, U.S.
coarse grains made up almost 100 percent of total Honduran coarse grain imports. The main
competitors of the United States are Argentina and Mexico followed by Nicaragua and Chile.
Given the dominance of the United States, it is positioned to expand overall exports to Honduras as
demand for coarse grains increases. Coarse grains are an important basic input for the growing poultry,
shrimp, and tilapia sectors in the country.
Wheat: The United States is the main exporter of wheat to Honduras. Exports have increased steadily
over the years. In 2011 U.S. wheat exports to Honduras increased 97.07% in comparison to last year.
Bolstered by the strong demand for bread, bakeries in Honduras range from many small, family bakeries
to a handful of large commercial bakers. The bakeries largely source their flour from Honduran mills
which import wheat from the United States.
Mechanically Deboned Meat (MDM): The United States has 98.31 percent of the country’s market
share for Mechanically Deboned Meat (MDM). There are various food processors that use MDM as a
key ingredient in the production of cold cuts, hot dogs, and sausages. A wide sector of the Honduran
population demonstrates preference for cold cuts and other processed meat products for their
convenience and cost attributes. Restaurants and hotels also demonstrate high levels of demand for
processed meat products.
Animal fats: Honduras is a strong market for U.S. exporters of animal fats with limited competition
from Nicaragua, Canada and Guatemala. The U.S. market share of animal fat imports has increased to
nearly 100 percent in 2011. The U.S. dollar value has increased for animal fats in Honduras, from 31.7
million in 2010, to 37.1 million in 2011.
Mixes and bakery preparations: U.S. exporters have substantially increased their exports within this
sector from US$17.3 million in 2010 to US$19.8 in 2011. U.S exporters face strong competition from
other Central American countries and Mexico; however, many of the regional products may include
Sugar/sweetener/beverages: The United States continues to be the biggest supplier of the sector and
has considerable market share potential, with limited competition from Guatemala, China and El
Cocoa: Cocoa is an important market that needs to be considered. The United States has increased its
exports considerably from US$3.9 million in 2010 to US$4.2 million in 2011. U.S. companies have a
34.94 percent market share. The United States is the leading country in this sector with strong
competition from Mexico and Guatemala. Thus U.S. companies have ample room for growth in a
Snacks food ingredients: There has been a slight decrease in this export sector due to Central
American countries competition. The market share for U.S. ingredients can expand since there is a
widespread consumption of snacks in the domestic market, particularly within young people, and the
middle and low-income population.
Tomato paste: Tomato paste preparations have a tremendous growth potential for U.S. exporters
holding over 34.65 percent of the market share. Costa Rica has shown tremendous growth and is the
main competitor in supplying this product. However, the United States still holds a strong position in
the sector and its export value has increased in the last year.
Expansion of food processors: Honduran exporters are pursuing expansion plans to increase
production, processing and improve the quality of their exports. Honduran exports of processed fruits
and vegetables have increased in the last years, from US$18.6 million in 2010 to US$20.2 million in
2011. These types of exports, as well as others, will require different food ingredients in the future as
Honduran firms are looking forward to opportunities to expand exports to the United States.
The table below describes the competitive situation facing U.S. suppliers in terms of domestically
produced goods and imports from other countries.
Strengths of Key Supply
Product Category Countries 2009 2010 2011 C Disadvantages of Local ountries
1.United 4.0 4.1 4.8 U.S. quality and enough supply to Supply is not enough to
States meet demand meet demand
Sweetener/Beverage 2.Guatemala 0.38 0.38 0.33
Bases 3. China 0.04 0.053 0.087
4.El 0.077 0.093 0.080
1.United 69.8 82.3 146.0 Importers trust quality of U.S. Supply is not enough to
States products and availability during meet demand.
2.Argentina 0.076 0.085 0.049 most of the year
3.Mexico 0.18 0.062 0.041
1.Guatemala 60.1 43.3 47.3 Proximity, transportation and price Supply is not enough to
2.Mexico 24.9 37.7 38.5 meet demand.
B 3. El 33.0 32.1 37.2 aking related
4.United 15.3 17.3 19.8
1.United 6.0 7.5 7.9 Companies trust the quality and There is no local
Mechanically deboned States effectiveness of U.S exporting production of
meat 2.Panama 0 0 0.13 process. And excellent customer mechanically deboned
3 service meat .Costa Rica 0 0.009 0.0075
1.United 53.8 38.9 76.7 U.S. quality and strong business There is no local
W States relationships have been proven production of wheat heat
2.Costa Rica 0 0.00068 0 throughout the years
3.Guatemala 0.0002 0 0
1.United 51.4 61.9 72.4 U.S. quality and availability There is no local
Soybean me States throughout the years production of soybean al
2.Belgium 0.49 2.2 0.48 meal
3.Guatemala 0.00029 0 0
1.Argentina 0.83 0.55 2.5 Cost and Price There is no local
2.Mexico 0 1.7 1.7 production of soybean oil
Soybean oil 3. Nicaragua 0.42 1.2 0.74
4.United 2.2 0.032 0.52
1.Mexico 0.22 14.7 12.1 Proximity, transportation and price Local production of
2.Guatemala 7.0 7.3 10.8 African Palm oil is mainly
. Costa 2.1 7.1 10.6
3.United 5.9 4.7 7.7
1.United 17.3 31.7 37.1 Quality and availability throughout There is not enough local
ates the year production
Animal St fats
2.Nicaragua 0.0002 0.0062 0.0050
3.Canada 0.00060 0.62 0.042
1.Canada 0.0012 0.10 0.21 Cost and Price There is no local
Other bulk 2.China 0.0005 0.0004 0.0019 production
commodities 3.United 0.030 0.015 0.017
1.Costa Rica 6.4 6.8 7.4 Proximity, transportation cost and Local production is for
Tomatoes, prepared or 2.United 3.6 1.3 4.6 price domestic consumption
3.Chile 0.87 2.1 1.1
1.United 3.1 3.9 4.2 Importers trust quality of U.S. There is no enough local
States products and availability during productions to satisfy
2.Mexico 1.2 2.2 2.8 most of the year demand
3.Guatemala 1.6 1.4 2.1
Source: Global Trade Atlas (GTA)
IV. BEST PRODUCTS PROSPECTS
The CAFTA-DR brought a wide range of U.S. products that can enter Honduras duty free. Among
those products, the food processing sector can utilize goods such as: bacon and pork offals, raisins,
fresh sweet corn, mushrooms, canned sweet corn, tomato paste, canned pears, peaches and mixed
canned fruit, potato flour, dehydrated granules and pellets, french fries, frozen orange juice, grapefruit
and cranberry juice, mixed concentrates, shelled walnuts, almonds, pistachios, peanut, soups and broths.
Honduran tariffs on the remaining goods are currently within a 15 percent range. Under CAFTA-DR,
there are Tariff Rate Quotas (TRQ) for pork, chicken leg quarters, milk powder, butter, cheese, other
dairy products, rough rice, milled rice, yellow and white corn. As of 2013, most of the TRQs phase out
within 10 years. The table below shows the best product prospects for the food ingredients market in
2011 Market 2011 imports
P Size (Sales) roduct Market Attractiveness for U.S. Products
(volume) In millions of
C Demand for coarse grains will continue to rise with the oarse grains 99 52.4
increase of poultry, shrimp and tilapia sector
W The U.S. is the major supplier. Bakery industry is heat 100 53.8
increasing its growth
Sweetener/beverage Local production of non-alcoholic and alcoholic
bases beverages has increased
m 98 6.0 There is no local production eat
Soybean meal 99 51.5 There is no local production
Fats and oils 100 17.3 There is no enough local production to satisfy demand
Source: Global Trade Atlas (GTA)
V. POST INFORMATION
Foreign Agricultural Service (FAS)
United States Department of Agriculture (USDA)
Avenida La Paz, Tegucigalpa, Honduras
Phone: (504) 2236-9320 ext. 4354, 4544
Fax: (504) 2236-8342
For more information on exporting U.S. agricultural products, please visit the Foreign Agricultural
Service home page: http://www.fas.usda.gov