Food Export Opportunities

An Expert's View about Food , Beverages and Tobacco in Nicaragua

Posted on: 21 Dec 2012

The Nicaraguan market offers good opportunities for grains (wheat, yellow corn, and rice) as its local production is not sufficient to supply the domestic demand.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 12/04/2012 GAIN Report Number: Nicaragua Food Processing Ingredients Food Export Opportunities in Nicaragua Approved By: Kelly Stange, Agricultural Attaché Prepared By: Jimmy Bolaños, Ag Specialist Report Highlights: The Nicaraguan market offers good opportunities for grains (wheat, yellow corn, and rice) as its local production is not sufficient to supply the domestic demand. There are good opportunities for semi- processed products, such as soybean meal and soybean oil, and a wide a range of consumer oriented products that are attractive to a young market segment. Post: Managua Executive Summary: The Nicaraguan market offers good opportunities for grains (wheat, yellow corn, and rice) as its local production is not sufficient to supply the domestic demand. There are good opportunities for semi- processed products, such as soybean meal and soybean oil, and a wide a range of consumer oriented products for a young market segment. About 49 percent of the Nicaraguan population is younger than 19 years old. Among the best prospects for consumer oriented products are: bread and biscuits, non alcoholic beverages, cigarettes, breakfast cereals, sugar confectionary and food preparations for infants’ use. The Nicaraguan food industry, on the other hand, is mostly involved in primary processing activities of local products for the export market, leaving good opportunities in the domestic market for foreign suppliers. Even though this industry has been growing in the last years, it is still under-developed when compared with other Central American Countries. Two key market trends that are changing the Nicaraguan market are the expansion of the modern marketing channel, which exposes consumers to greater variety of food, and the rise of the middle class, which contributes to a greater demand for higher quality products. Market Description Nicaragua is a country of young people; the median age is 23 years and about 49 percent of the population is younger than 19 years old. It’s the fourth most populated country in Central America (5.9 million) after Guatemala, El Salvador and Honduras. Even though it is the second poorest country in the Western Hemisphere, its economy has experienced an average growth of 3 percent in the last ten years, increasing the buying capacity of the medium class. In 2011, the Nicaraguan Central Bank reported a GDP per capita of U$ 1,133, a 9 percent increase compared to the previous year. The Nicaraguan economy heavily depends on agriculture (23 percent of the GDP) which employs about 30 percent of the work force. In 2011, three fourths of the Nicaraguan exports (U$ 2.3 billion) came from the agricultural sector. Even though Nicaragua is a food producer, it is not self sufficient. Nicaragua is a large importer of grains (rice, yellow corn, and wheat and soybean meal), semi- processed foods such as edible oils and a great variety of processed food. Most of the food products found in the supermarkets are not processed locally. In 2011, food imports of intermediate products such as vegetable oil, wheat flour and other food preparations increased 17 percent compared to the previous year reaching over US$ 799 million. The Central Bank of Nicaragua also reported an increase of 10.5 percent in non-durable consumer products, which are mainly food products, reaching over U$ 1.33 billion. Among the products have showed substantial growths in the last years are: grains, edible oils, beverages bread and biscuits, cigarettes, sugar confectionary, powder milk and breakfast cereals. The Food Industry The Nicaraguan food industry is under-developed when compared to other Central American countries. However, the annual Nicaraguan food industry sales accounts for about 30 percent of the GDP. In general, the food industry is involved in primary processing activities of local products for the export market. Top Nicaraguan exports include coffee, beef, sugar cane, fisheries, dairy products and peanuts. On the other hand, there are food industries which target the domestic market and depend on the import of primary products from foreign markets. Among these food industries are grain millers, edible oil processing plants, beverage plants (non-alcoholic and alcoholic beverage plants) and sausage processing plants. Please refer to following table to see the food industry sales in 2011. Manufacturing Sector Output for Selected Industries (In U.S. millions) 2009-2011 Industries 2009 2010 2011 Percentage Increase Meat and Fish 699 756 851 22% Sugar 196.7 236.5 286.5 46% Dairy Products 312 324.7 333.4 7% Other food of Industrial Source 564 575.2 598.9 6% Beverages 311.4 312.7 347.2 11% Total 2,083.10 2,205.10 2,417 10% Source: Nicaraguan Central Bank Growth of the Food Industry According to the Central Bank, in 2011, food and beverage production accounted for 65.3 percent of all manufacturing industries. The Central Bank has reported an average growth of 4.4 percent for this food industry in the last years. This average growth is higher than other manufacturing industries. Just in 2011, total food industry sales reached over US $2.4 billion, a 10 percent increase compared to the previous year. Food Trade Balance In terms of food trade balance, according to FAO statistics, Nicaragua exports more food than it imports. However, when looking at processed food, Nicaragua has a negative trade balance. Most of the products found in the supermarkets come from Central American Countries and the United States. According to the Central Bank, in 2011, Nicaraguan processed food imports reached over US $542 while exports reached over US $440 million. This only includes processed food such as sugar, processed coffee, cooking oil and rum. Most of the food industries in Nicaragua are involved in the processing of export products, as shown in the above table. On the other hand, there is still limited integration between the primary sector and local industry. This provides great opportunities for foreign suppliers. One factor that has reduced the Nicaraguan negative trade balance is the increase of Nicaraguan exports, especially after the signing of the Central America Free Trade Agreement-Dominican Republic (CAFTA-DR). In 2011, Nicaraguan exports reached over US$ 2.3 billion, a 23 percent increase compared to the previous year. From this total, about three fourths of the export products come from the agricultural sector. Main Nicaraguan Food Import Products (In thousands of dollars) Imported Imported Imported Imported Imported 2007-2011 Code Product label value in value in value in value in value in Percentage 2007 2008 2009 2010 2011 Increase Wheat and '1001 meslin 34624 42985 34431 35393 56158 62% '1006 Rice 57808 78715 53364 49007 48461 -16% '1005 Maize (corn) 28732 30360 25100 28132 41661 45% Soybean oil & its '1507 fractions 24531 26545 25171 42365 63640 159% Palm oil & its '1511 fraction 31286 45589 35983 32134 41933 34% Bread, biscuits, wafers, cakes and '1905 pastries 29396 30636 33849 37116 43148 47% Malt extract; food preparations of flour, meal, starch or malt '1901 extract 26321 28372 24542 26085 30680 17% Non-alcoholic beverages (excl. water, fruit or vegetable juices '2202 and mi 23373 29864 33424 37007 32211 38% Cigars, cheroots, cigarillos & '2402 cigarettes 15995 17132 20523 23485 27998 75% Soya-bean oil- cake and other '2304 solid residues 20234 26981 22467 26795 27950 38% Sugar confectionery (incl white choc), not containing '1704 cocoa 15340 18136 16412 19326 22537 47% Fruit & vegetable juices, '2009 unfermented 9715 12048 13219 14570 13604 40% Sausages and similar products, of meat, offal or '1601 blood 5713 6688 7042 7947 9197 61% Chocolate and '1806 other food 5316 5496 5169 5970 7560 42% preparations containing cocoa Source: International Trade Center (ITC). Origin of the Nicaraguan Food Imports Costa Rica is the number one supplier of processed food to Nicaragua with 24 percent market share, followed by the United States with 22 percent and Guatemala and Honduras, with 13 and 12 percent respectively. On the other hand, the United States is the leading supplier of grains and semi-processed products such as soy bean meal and soy bean oil. U.S. Food Exports to Nicaragua In 2011, U.S. agricultural exports to Nicaragua increased by 10.45 percent compared to the previous year, reaching over US$ 264 million. Grains and feeds continue to be the leading exported products holding 51 percent of total exports, followed by Soybean meal and oil (22 percent), consumer oriented products (18 percent) and others (9 percent). Source: Office of Global Analysis/FAS/USDA. Under consumer oriented products, dairy products, processed fruit and vegetables, poultry and read meats and snack foods experienced a significant increased in 2011. For more specific statistical breakdowns of export products by value and volume, please refer to the following link: C&PC=NU&PN=Nicaragua&SY=2005&IP=N Nicaraguan Food Distribution Chain For the Food Processing Industry Almost all Nicaraguan food industries import directly from foreign exporters. This is due to the large volumes local industries import. Some examples of these industries are edible oil plants, wheat millers, breweries, non alcoholic beverage processing plants and sausage plants. For Consumer oriented Products The Nicaraguan market for consumer oriented products is characterized by the wide involvement of the traditional channel (big local markets and small shops) which makes logistics complicated for foreign suppliers. For this reason, having a local distributor is a key aspect of the product entry strategy. The following diagram shows the different actors and possible options for the entrance into the Nicaraguan market. Source: Deteccion Alimentaria de Oportunidades para la Industria Alimentaria de Nicaragua. Description of Main Chain Actors Distributors In Nicaragua, there are big distributors with the capacity to reach many markets without the need of using intermediaries. In general, distributors target either the traditional or modern channel. There are distributors that just target hotels and restaurants. Traditional The traditional channel is formed by the main local markets (Mercado oriental, Mercado Channel Huembes, and El Mayoreo, among others), small supermarkets, and shops which have a limited number of products. Total sales in the traditional market are still the largest. Some of the unique services small shops provide in this channel are sales of small units, short term credit and convenient shop location. Modern The modern channel is formed by large supermarket chains: Walmart, which owns La Union, Channel Pali and Maxi Pali; La Colonia and Pricesmart. Wal-Mart has opened many supermarkets around the country as a result of the growing middle class. These types of customers look for more than basic food items. Some supermarkets have their own brands. Hotel and Nicaragua has become a tourist destination during the last years. Hotels and restaurants try to Restaurants offer good quality food at the most competitive prices. Some hotels and restaurants buy their food from local distributors. Others buy in local supermarkets. Consumers In general, the Nicaraguan consumer is price driven due to high unemployment rate. However, due to the growth of the middle class, there is another group of consumers who look for a variety of products with higher quality. These types of consumers are increasing and are the ones who buy at the local supermarkets. Some of the products that have increased through the modern chain are snacks, cereals, soups, sauces, etc. Market Trends: Competitive Prices Due to the high unemployment rate, price is still the most important buying decision factor. Most of the consumers look for products which have an acceptable quality level at the most competitive price. Therefore, having a competitive price is essential to enter into the traditional and modern distribution channel. Convenience and Added Value The increase of income in the middle class has made consumers to look for products of better quality that add value and are convenient. Most of these consumers buy in supermarkets. Among these products are light products, fat free, sugar free, among others. The added value products are mainly sauces, soups, cereals, snacks and beverages. There is also a niche market for gourmet products which is beginning to grow. For gourmet products, there are small shops such as Bavaria and Stop and Go that target a high income market segment. Products for a Young Segment The Nicaraguan median age in Nicaragua is 23 year old and about 49 percent of the population are younger than 19 years old. Ready to eat products, such as potato chips, biscuits, chocolates and beverages, have experienced a considerable growth during the last years. Competition Overall, U.S. food products are very competitive; the economies of scale for food processing in the United States are simply larger and more diverse than Central American countries. However, due to the distance, the U.S. shipping costs are higher than most of the countries in the region. For the specific case of Nicaragua, the lack of port in the Atlantic Coast raises the shipping costs of U.S. products. The United States has a leading market share in supplying the following products to the Nicaraguan market: cereals (wheat, rice, yellow corn and soybean meal), animal fats, vegetable fats and oils (soybean oil), residues, wastes of food industry, animal fodder (soybean oil and cake and animal feed preparations), edible fruits (apples and grapes), cocoa and cocoa preparations and meat and edible meat offal. Among the products supplied to Nicaragua where the United States could increase market shares are sauces and mixed condiments, bread and biscuits, malt extracts, breakfast cereals, beverages and seafood products. Other Central American countries have the highest market share in supplying these products except seafood, which come from Vietnam and China. Advantages and Challenges for U.S. products Advantages Challenge Nicaragua Consumers trust the Some U.S. food/ingredients are more expensive than Central America’s. quality and wholesomeness of The shipping costs of the United States are higher than most Central U.S. food and ingredients. American countries. In addition to that, Nicaragua does not have a port in the Atlantic Coast which could significantly reduce these costs. U.S. grains are very Yellow corn and soy beans in the United States are Genetically Modified competitive in terms of price (GM). According to Nicaraguan regulations, it is forbidden to import GM and quality. products for human consumption. Yellow corn and soybean meal imports are only used for animal feeds. This limits the usage of grains by Nicaraguan industries. U.S. food products have Food product’s labels are printed in English. In Nicaragua most of the excellent marketing population just speaks Spanish. presentation. Best Prospects The best prospects for the Nicaraguan food industry were based on growth of food imports and interviews with local key stakeholders. For the Food Processing Industry Cereals (wheat, rice, yellow corn and soybean meal): The imported value in 2011 reached over US $146.2 million. Soybean oil and palm oil and its fractions: Nicaraguan edible oil imports have increased in 30 percent in volume since 2007, reaching over 77,824 tons in 2011, with a total value of US $105 million. Malt Extract: The importation of food preparations of flour, meal, starch or malt extract have increased in 20 percent in 2011, compared to the previous year reaching over 10,411 tons and US $30.6 million. Consumer oriented products: Bread and Biscuits: Nicaragua does not have sufficient industrial plants. As a result, Nicaragua imports bread from neighboring countries. In 2011, Nicaraguan bread imports reached over 25,392 tons with a total value of US $43 million. Non-alcoholic beverages: the importation of water, including mineral and aerated, containing sugar or sweetening matter (Codes: 220210 and 220290) have increased by 15 percent since 2007, reaching over 82,353 tons with a total value of US $42 million. Breakfast Cereals and Cereal Bars: The importation of cereals has increased in 10 percent since 2007, reaching over 25,392 tons with a total value of US $15 million. Please refer to Attachment A to see list of companies’ profiles. Appendix A: Companies’ Profiles Read Meat and Poultry Meat List of Companies Types of Products Processed Industria Comercial San Martin S.A. Beef, bait, bone meal Matadero Central S.A Beef, bait, bone meal Nuevo Carnic S.A. Beef, bait, bone meal Novaterra S.A. Beef cuts Tip Top Industrial S.A. Poultry meat Avicola La Estrella S.A. Poultry meat Industrias Delmor, S.A. Chicken and pork sausages Carnes Industrializadas S.A. Chicken and pork sausages Delicarnes S.A. Sausages and hams Empresa de Alimentos Bavaria S.A Sausages and hams Industrias Cárnicas Integradas De Nicaragua, S.A. Vacuum packed boneless beef Fish and Seafood Products List of Companies Types of Products Processed SHALMAN SEAFOODS Frozen Shrimp Camaronera de Nicaragua (CAMANICA) Frozen Shrimp Nica-Fish Frozen Fish, Shrimp and Lobster Expomar S.A Frozen Fish, Shrimp and Lobster Camarones del Pacifico (CAMPSA) Frozen Shrimp Central American Fisheries Fish, lobster and shrimp Corea de Nicaragua Camaronera S.A Frozen Shrimp Gulf King Seafoods Frozen Shrimp INTERNICA, S.A Shrimp and Lobster PAN PACIFIC FISHERIES DE NICARAGUA Frozen Shrimp PACIFIC SEAFOODS DE NICARAGUA Frozen Shrimp Dairy Products List of Companies Types of Products Processed Compañia Centroamericana de Productos Lacteos (PROLACASA) Pasteurized milk, cheese Lacteos Centroamericanos S.A (CENTROLAC) High temperature short time milk Parmalat Centroamerica S.A. Pasteurized Milk, cheese, orange juice. COOPERATIVA SAN FRANCISCO DE ASIS (CAMOAPAN) Cheese, pasteurized milk COOPROLECHE Pasteurized milk and cheese Oilseed Products List of Companies Types of Products Processed Aceitera Real Peanut Oil, Soybean Oil & peanut flour. Fraccionadora de Occidente S.A. (Fracocsa) Soybean Oil Agroindustrial de Oleaginosas (Agrosa) Soybean Oil E. Chamorro IND Soybean Oil Baked Goods List of Companies Types of Products Processed Academia Nicaragüense de la Industria de la Panificación S.A. (ANIPASA) Bread & Pastry Aromas y Sabores SMAVI S.A. Bread Flavorings Bimabel de Nicragua S.A. (BIMBO) Bread & Pastry Cooperativa de Panificadores Marcos García Escobar Bread & Pastry Delikatessen la Granja Bread & Pastry Industrial Don Pan S.A. Bread Panaderia Corzon de Oro Bread & Pastry Panaderia El Aguila Bread Panaderia el Esfuerzo Bread Panaderia La Baguete Bread Panaderia la Fuente Bread Panaderia Leon Dorado Bread Panaderia Miriam Bread Panaderia y Pasteleria La Suisse Bread and Pastry Panaderia El Trigo Dorado Bread Pasteleria y Terraza Margarita Bread & Pastry Pasteleria Sampson Pastry Reposteria y Panaderia Norma Bread and Pastry Reposteria y Queques Duya MAGICA Pastry TonallI Bread & Pastry Krafts food/Nabisco de Nicaragua Cookies Industrial Carphil S.A. Cookies and Chocolates rolls Confectionary Products List of Companies Types of Products Processed Dulceria el buen gusto Candies Dulceria el Carmen Candies Dulceria el Encanto Candies Dulceria Karol Candies Dulceria Marina Candies Dulceria La Miel Candies Snack Foods List of Companies Types of Products Processed Dinant Nicaragua Snacks Distribuidora America Snacks-Frito Lay Distribuidora Unimar Mr. Snack *Most of the snack products available in Nicaragua are imported from Central America and the United States. Beverages List of Companies Types of Products Processed Aguardiente Extrafino Mombacho Alcoholic beverages Compañia Licorera de Nicaragua (Flor de Caña) Alcoholic beverages; Rum Compania Cervecera de Nicaragua Beer, purified waters, juices, milk and energy drinks Embotelladora de Occidente Mineral water Embotelladora Nacional (ENSA) Mineral water Industrias Nacional de Refrescos S.A. Rum Khola Shaler Industrial Sodas, mineral water, wine Industria Innovadora S.A. Purified water, mineral water Hielera la Pinolera Purified water and mineral water Eskimo S.A. Orange juice Parmalat S.A. Orange juice Industrias Kojak S.A. juice Panamco- Nicaragua Coca Cola Sodas, juices, water, mineral water Distribuidora EDT Nicaragua Sodas and juices Condiments List of Companies Types of Products Processed Commercial MSW Spices and Condiments Procacsa Spices and Condiments Specialized food ingredients List of Companies Types of Products Processed Brentrag Additives, preservatives, sweeteners, thickeners Industrias Quimicas Termoking Additives, preservatives, sweeteners, thickeners Food Service Distributors List of Companies Types of Products Offered ADIM & CIA Ltda. Juice, tea, granola, honey MAGNA, S.A Tea, cereals imported meat OCAL,S.A. Cereals, Juices, Tomato Sauce, evaporated milk Café Soluble Coffee, Soups, Pasta, Tomato Sauce, Soya drinks Comercializadora America S.A. Frozen Vegetables Dicegsa Soups, juice, sauces, snacks, soybean oil Distribuidora Nacional DINSA Margarine, soups, juice, Snacks, etc Post Contact and Further Information E-mail address: Phone: (505) 2252-7100 Ext. 7621 Fax: (505) 2252-7276
Posted: 21 December 2012

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