Retail Foods 2012

An Expert's View about Retail Sales in Peru

Posted on: 29 Dec 2012

In 2011, Peru’s total food retail market reached almost $20 billion, 80 percent of which is concentrated in Lima.

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: 12/17/2012 GAIN Report Number: Peru Retail Foods 2012 Approved By: Emiko Purdy Prepared By: Alvaro Loza Report Highlights: Peru’s economic performance sustained a growth trend in 2011 at 6.9 percent of GDP, a little lower than the rate of the previous year. The economy remains highly dynamic. Once again private investments and domestic demands helped Peru to become the second best performing economy in the region in 2011. Post: Lima Executive Summary: Section I. Market Summary Peru’s economic performance maintained a growing trend during 2011 but at a lower rate than the previous year. The uncertainty generated by changes in the presidential administration along with the global economic downturn contributed to growth reduction. However, growth at 6.9 percent of GDP proves that the economy is still highly dynamic in spite of considerable uncertainty surrounding the future of global markets. Once again, private investment and domestic demand contributed to Peru's achievement to become the second best performing economy in the region in 2011. Domestic demand, however, has been the main engine for consumption growth. Demand was pushed by emergence of the middle class which according to recent studies has doubled in the last 10 years and currently accounts for 56 percent of urban population in Peru. Middle class income levels have considerably increased along with sustainable growth of the economy. High employment rates have contributed with access to credit and many other services improving welfare. During the third quarter of 2011 private consumption rebounded as a result of an increase in the minimum wage set by the Government as a countercyclical measure. Peru’s retail market exhibits a long list of opportunities for consumer goods. Peru has experienced spectacular growth in modern retail channel in the last ten years. The Global Retail Development Index (GRDI) report made by A.T. Kearney’s ranks Peru as the 8th developing country for retail expansion worldwide. Moreover, Peru remains in the opening phase which signifies that consumers are willing to explore organized formats. The study also emphasized a growing middle class situation and relaxing restrictions by the government. GRDI report also stresses that Peru’s continued growth will bring an increase in disposable income and consumer confidence. In the case of supermarkets, lower penetration and the average youth of consumers are considered potential market opportunities for investment. According to the National Institute of Statistics middle class homes have grown 78 percent from 2004 to 2011. There are almost 3.2 million homes throughout the country (43 percent in Lima) within this growing and high- demand class, considered the core engine of private consumption. Supermarket chains in Peru achieved sales of $3.1 billion in 2011; this represents a 15 percent growth in respect to 2010 (Table 1). This positive evolution is consistent with increases in private consumption and major availability to consumption credits and higher incomes, especially within middle-class families. Overall consumer expenditure in Peru grew by 6.4 percent over the prior year, in 2011. This followed an increase of 6% in 2010. This growth was particularly impressive when put in the context of the slow economic growth seen in 2009. Last year also, 37 percent of overall spending was for the purchase of food and non-alcoholic drinks. In addition, per capita disposable income grew slightly by 5 percent in respect to 2010. At the same time, per capita consumer spending increased by 5 percent in 2011. Local consumers are motivated by good prices and prefer to purchase assorted products such as yogurt, packaged bread, oil, noodles, etc., at modern retail channels. The traditional channel is still the preferred channel for beverages. Nevertheless, both channels offer products that are sharply different in terms of presentation. Table 1 Source: Skotiabank Economic Department, CCR, Apoyo & Asociados In 2011, Peru’s total food retail market reached almost $20 billion, 80 percent of which is concentrated in Lima. Food sales by these supermarket chains accounted for 35 percent of the retail market share in Lima in 2011, which is considered to be low in comparison with the neighboring Latin American countries. Retail Sales in Country by Sub-Sector (million dollars) Sub-Sector 2009 2010 2011 Supermarkets and hypermarkets 2,216 2,483 3,097 Traditional Channel (grocery stores, we 14,428 15,520 16,761 t markets, convenient stores, etc.) Total 16,644 18,002 19,858 Source: Post Estimated values There were 173 stores (all formats included) by the end of 2011, with 128 in Lima and 45 in the provinces. The results obtained outside of the capital have gone beyond any expectation. Supermarkets have founded their success on identifying and developing new market segments, which will eventually help them gain more terrain in the future. Despite how well the modern retail channel may have advanced in its expansionist phase, the traditional market (wet markets, convenience stores, grocery stores or “bodegas”) are still the main channel for distributors, wholesalers, etc. As 75 percent of food retails sales occur within traditional markets , companies often have to consider their strategies for traditional channels. Supermarkets still fail to convince consumers to buy fresh produce at their stores rather than open markets. Processed food and others are acquired preferably through them, which is not the case for fresh products. Pushed by the tough competition with modern channels, the open markets modernized their commercialization process and turned out to haveresulted in respectable participation within this category in respect to supermarkets. Even though some experts predict that traditional channels will reduce their presence or even disappear due to the growth of modern retail channels, grocery store sales are increasing. It is estimated that this year, the average sales ticket will increase by 11 percent in groceries and the average receipt in the traditional market may increase 9 percent also. The lack of large spaces in Lima is becoming a real concern to supermarket chains. It is expected that supermarkets will open about 25 stores per year. However, this obstacle, plus higher prices for land within commercial areas create a window to new smaller formats (less than 1,000 square meters) which not only might be a solution to keep a higher penetration but can be used also as a mean to gain market share from convenience store. It is well known that Peruvian food retail markets have become attractive to foreign investors. Last year, the Chilean group Saieh, which operates 350 supermarket stores and wholesaler formats in Chile, acquired Alvi supermarkets (third largest player in the wholesaler segment in Chile). Alvi supermarket acquired Mayorsa in Peru a few years ago, allowing the Saieh group to enter the Peruvian market using the same strategy as they did in Chile. The Saieh Group is planning to operate with its main brand Supermercados Unimarc (SMU) in the retail channel. In addition, SMU already handles 11 Mayorsa stores. SMU’s last acquisition was the home appliances chain, La Curacao, which already owned supermarket stores in Piura and Ica. SMU’s plan is to build at least 75 outlets in five years. However, their long-term strategy must differ from what they do in Chile and success will be determined by their ability to develop innovative and new formats that can be used for unexplored segments. According to Peru’s customs data, total agricultural imports to Peru from the United States grew to $875 million in 2011, up 11 percent from the 2010 level. Moreover, consumer oriented products reached $129 million in 2011 growing 21 percent in respect 2010. The United States became the second largest supplier of consumer oriented products, accounting the 15 percent of the market share which has certainly decreased the reach of Chile and has left Colombia as the third largest supplier of this category. Lima is the major market for consumer-oriented foods. Lima’s roughly 9 million inhabitants account for almost one-third of Peru’s total population and more than 60 percent of the national income. The U.S. – Peru Trade Promotion Agreement (PTPA) provided duty free access for two-thirds of U.S. food and agricultural products. PTPA, supported by favorable market conditions in Peru, will create opportunities to expand U.S. food exports in the retail market for snacks, fruit and vegetable juices, fresh fruits (especially pears, apples and grapes), canned fruits and vegetables, dairy products (especially cheeses), beef and poultry meats and their products, wines and liquors and pet foods. Advantages and Challenges Facing U.S. Products in Peru Advantages Challenges Consumers have a preference for buying Peru TPA grants duty free access to fresh products in traditional markets. two-thirds of U.S. food and Supermarkets, the main source of agricultural products, including most h imported food products, account for only igh-value foods. 30 percent of retail market share in Lima Proactive supermarket industry that and 14 percent in the country. will result in increased demand for New local food brands are appearing in high-value products. the market at very low prices. Supermarket sales are growing fast, Supplies in the Provinces still depend on mainly through the opening of new companies that are based in Lima. outlets in the suburbs of Lima and Lack of brand awareness among other cities. consumers. Appreciation for U.S. food quality and A government-promoted campaign called culture. “Buy Peruvian.” Growing perception of retail outlets Traditional markets strongly dominate as cleaner, more convenient and retail sales in secondary cities. time saving than traditional markets. Domestic Producers1 People are becoming aware of diet, lite, and healthy food products through the media. Incomes are growing, , especially for the middle-class. More competitors are expected in the market. Traditional retail channel (convenient stores and open markets) is improving its strategy 1 The boom of the Peruvian economy has not only benefited multinational food producers looking to export their products to Peru, but has also improved the operating environment for domestic producers which, in many cases, are in a better position to offer products in line with Peruvian consumers’ tastes and at lower prices than imported food products. Section II. Road Map for Market Entry 1. Entry Strategy Supermarket chains are considered to be the main market for imported food products whose target customers are high and middle-income consumers. U.S. exporters should contact large importers, wholesalers/distributors or supermarkets directly. U.S. exporters can approach Gas Marts, grocery and mom-and-pop stores through major local suppliers (wholesalers/distributors). Be diligent when selecting a partner (an agent or a representative) in Peru. Personal visits/meetings are highly recommended. Conduct a background check of the prospective partner before signing permanent contractual arrangement. The local partner should be able to provide updated information on consumer trends to identify niche markets, current market development (merchandising, point of sale and promotion activities), and business practices. 1. 2. Market Structure U.S. exporters have three different entry alternatives to local market: Local Importer Supermarket Chain (Retail) Wholesaler Local market comprises two major distribution channel: the modern channel (20 percent of market share), basically, represented by Supermarket chains and convenience stores and the traditional channel (80 percent of market share) featured by wet markets and corner stores. Negotiating power of major supermarkets towards food suppliers is strong. Suppliers to major supermarkets have wide range of distribution channels ranging from those for fancy foods to those for foods for mass consumption. Major food importers/distributors supply all major supermarket chains and provincial retailers. It should be noted that major supermarket chains usually request product exclusivity to new suppliers. Food is primarily imported in mixed containers. Major supermarket chains prefer to import expensive high-end products directly in order to earn higher margins. Distributors and wholesalers make constant in-store promotional activities. They count with support personnel in every store and all distribution channels. 1. Supermarkets, Hypermarkets A. Company Profiles Profiles of Major Supermarkets Chains in 2011 Retailer Owne Sales Market rshi No. of Purchasing Name llion Share ocation Agent p (mi $) (per Outlets L cent) Type Lima, Trujillo, Amazonas, CENCOSUD Chile 1,348 44 p 74 Chiclayo, ercent Cajamarca, Arequipa, t Ica Direc Importers, Lima, Local Food Trujillo, Ch Processors icalyo, Are and quipa, Producers Supermercado Pe 3 Huancayo, ru 1,032 3 s Peruanos p ercen 75t Chimbote, Ica, Juliaca, Piura, Tacna Lima, Trujillo, Tottus Chile 717 23 p Chiclayo, ercen 27 t Ica, Piura, Arequipa Source: FAS Lima estimations Type of Outlets by Major Supermarket Chains in 2011 Retailer Type of outlets Number of outlets Supermarkets Wong 16 CENCOSUD Hypermarket Wong 2 Super/Hyper Metro 56 Vivanda 8 Sup Super / Hyper Plaza Vea 55 ermercados Peruanos Mass stores 4 Economax 8 Hypermarkets 9 Tottus Hypermarket Compact 12 Supermarket 6 Source: Supermarket contacts The three major supermarket chains (Cencosud, Supermercados Peruanos and Grupo Falabella) have a total of 176 stores nationwide. In 2011, 24 new more stores were opened throughout the country; this means 16 percent more sales area. As in previous years, an increase in income and consumption have boosted supermarket sales. It is important to highlight Peru’s food retail potential due to its lower penetration level (30 and 20 percent in Lima and the rest of Peru, respectively) which remains under other countries within the region, for example: Santiago (80 percent) and Rio de Janeiro and Bogota (70 percent). One of the most striking changes in consumer behavior is the increase in frequency of purchase. In the case of Lima, average frequency of purchase in a supermarket has increased from 1 to 1.5 monthly visits, which suggests that consumers are more familiar with the modern channel. Consumers located in provinces visit supermarkets more often (more time availability), but the average receipt is lower compared with Lima. Around 10 percent of consumer oriented products that are sold in supermarkets are imported and private labels represent 7 percent of total supermarket sales. However, the lack of good quality of private labels might be an impediment for their sales improvement in high-end supermarket formats since Peruvian consumers in this channel have a tendency to consider quality before price. This might be an unexplored opportunity for U.S. companies that can easily offer both features on their products to Supermarket chains. Lima has most of the supermarket stores with only 45 supermarkets outside of the capital. While in some cities consumers now prefer the modern channel, others are still attached to traditional channels and constantly compare prices. However, Lima still represents a major market for consumer-oriented food as the level of imported food consumption in the provinces remains low. Major provincial cities include Arequipa, Trujillo (La Libertad), Chiclayo (Lambayeque), Piura, Cuzco and Cajamarca. Most market demand in these cities comes from tourism and high-income families of mining or agribusiness employees. The majority of imported food in these areas is canned, packed, or ready-to-eat. Most malls in Peru include supermarkets and department stores as anchor stores. In 2011, there were 40 shopping centers in Peru in which total sales reached $4.2 billion. There are 40 more projects in the pipeline for the period 2011-2014 and their construction will demand $920 million in investment. A.1. CENCOSUD Peru S.A. Profile In December 2007, Corporación E. Wong was acquired by Chilean Cencosud (Centros Comerciales Sudamericanos), one of the largest companies in Latin America’s retail sector. The agreement between these two important companies was to transfer the entirety of Wong’s shares to Cencosud for $500 million as well as real estate assets including commercial centers, 23 supermarkets and 17 more in the pipeline. Cencosud agreed to give 49.75 million shares to Wong shareholders, valued at 2000 Chilean pesos each ($4.00 each share). The handover took place on January 31, 2008. CENCOSUD has kept the majority of the chain brands, and has only reduced the outlets of Almacenes Eco, turning it into the “Metro” chain. Moreover, the new administration decided to sell the chain “American Outlet.” Wong Supermarket: aimed at high-end consumers and offers customer oriented service. These outlets offer a variety of imported products depending on their location. Metro Supermarket: convenient prices and less personal service for the middle income consumers. Metro Hypermarket: Semi self-service format for price sensitive low-income customers. Supermarket Wong focuses its strengthen in satisfying consumer’s demands through best quality and service. These two features gives Wong more presence in high income levels segments. Cencosud spent two years getting to know the Peruvian consumer, and even though their sales increased, total sales have decreased by 12.7 percent since 2008. These valuable points have been distributed among its two strongest competitors, Supermercados Peruanos (Interbank Group), and Tottus (Falabella Group). However, Cencosud maintains the leadership with 44 percent of market share. The group wants to recover its market share and expects to grow in the 2011-2012 period, but this will not be an easy task. The investment plan for 2012 will reach $119 million which includes over 10 new stores. Cencosud has already registered Banco Paris, the financial branch of the corporation, to strengthen its financial support for its customers through credit cards. Cencosud has everything prepared for the opening of their Paris Department Stores in 2012. A.2. Supermercados Peruanos Profile Supermercados Peruanos (SPSA) was created in 2004 when a local company, Interbank Group, acquired it from the Dutch Company Disco Ahold International Holding. Currently, IFH Retail Corp is SPSA’s principal shareholder. Interbank Bank is part of the corporation; it is the financial branch of SPSA. Supermercados Peruanos divides its points of sales into three formats: Vivanda Supermarket: aimed at high-end consumers, offering customer oriented service. Provided “a loyalty card” to its customers. Plaza Vea Supermarket and Market San Jorge: this brand new format may replace Santa Isabel stores in the near future. Opened in 2006, it is smaller in size than Plaza Vea Hypermarket and only provides food products. Plaza Vea Hypermarket: targeted customers are middle-income consumers. It offers a variety of products at affordable prices. Limited customer service is provided. This format has been chosen as the main format for the SPSA expansion plan. The number of outlets has increased from 9 in 2004 to 32 in 2009. Mass: discount grocery stores offering a limited variety of products for mass consumption. SPSA opened its first outlet in Trujillo in 2007. This was the first outlet outside of Lima. More outlets were opened later in five other cities. Between 2008 and August 2011, Supermercados Peruanos opened 22 supermarkets in their 5 formats (Plaza Vea Super, Plaza Vea Hiper, Vivanda, Mass and Economax) and destined $60 million to continue expanding. This chain has been the most aggressive in terms of growth/expansion and is determined to continue to do so nationwide. SPSA’s strategy: Strong penetration in Lima and the provinces. SP is part of Interbank Group which acquired Milenia real state agency by the end of 2010. Milenia is the landlord of four areas where Metro stores operate. The tenant agreements will expire between 2012 and 2016. This gives SP an advantage since those spaces will be used by them once the contracts expire. SP owns 75 stores in the country. Only 21 have been opened in 13 cities of the country. Economax is the latest SP format that has been recently launched. Three outlets opened in 2011 and demanded an investment of $10 million. This format aims to face the lack of space for larger formats within the market. Moreover, its smaller area allows it to place in strategic locations in order to compete against convenient stores. Private label “Bell’s” accounts for only 5 percent of total sales, with around 350 products that are mainly produced by small Peruvian companies. A.3. Tottus Hypermarkets Profile Tottus is owned by the Chilean retailer Saga Falabella. In 2002 Tottus arrived to Peru and opened its first outlet (Hypermarket format) in the northern part of Lima. It took a year to open the second outlet and since then Tottus has increased its presence through 27 outlets in 2011. Although Hypermarket Tottus is the smallest supermarket chain in Peru, it has proven its competitiveness throughout the years. The company has opened outlets in Lima and the provinces; accounting for 80 percent of its sales in Lima and 20 percent in provinces. Tottus sales grew 33 percent in respect to 2010, making it the best performer amongst the supermarket chains. Also, Tottus maintains the largest average surface since most of its formats are hypermarkets. The 2011 Tottus expansion plan included three new stores and also remodeling some existing stores which represented $40 million in investment. Its strategy is to form synergies with the rest of the group’s formats (Saga Falabella and Sodimac Home Center) and their big format sizes. This strategy has allowed the chain to lead sales in several major cities, even though they were not the first chain to arrive. A. Local Consumer Profile Local consumers perceive imported products as providing more variety while viewing local products as a source of employment. However, only one third of total consumers care about product origin. Consumers prefer local products if they are viewed as a quality product at an affordable price. Supermarket clientele in Lima can be divided into two groups: high and middle-income consumers (socio-economic levels A, B and C) and low-income consumers (socio-economic levels D and E). Supermarket market share for high and middle-income consumers is 90 percent. Supermarket expansion plans are aimed specifically at socio-economic level D and E. The weekly average expenditures for high and middle class consumers are $90, while expenditures average $10 for low-income consumers. However, low-income consumers are considered to have high growth potential because they are more than three times the number of high-end consumers. Heavy users represent 80 percent of purchases for supermarkets and can spend up to $155 per visit. Impulse buys can reach 30 – 40 percent of supermarket sales. Cha High and Middle racteristics income Low-income consumer consumer Population in Lima city 2.1 million 6.9 million Number of families 0.4 million 1.4 million Monthly family income 1,500 dollars 320 dollars Monthly food expenses 310 dollars 120 dollars Normal place to buy Supermarkets: food 58 pen markets: 72.7percent .3percen Ot Preferences for daily visits to open markets Frequency of ce a week or small stores. Supermarket visits once a supermarket attendan Once month. Source: Based on Statistics of INEI 4. Convenience Stores and Gas Marts In spite of the significant growth of modern retail channels, sales in convenience stores (CS) keep on growing. The traditional channel has started to evolve, and grocery stores are improving their infrastructure (especially product display). Net income for “bodegueros” is growing and is expected to reach 12 percent in major cities. In Peru, the traditional channel does not really compete against the modern channel, but compliments it. Convenience stores and wet markets represent 80 percent of food retail market in Lima. A few of them have started to upgrade their business into minimarkets. This is based on the fact that the administrative aspects are handled by a new generation of bodegueros, most of them sons or daughters of original owners. The modern channel has pushed them to innovate and take advantage of variables that consumers still considering as high priority. The close proximity of convenience stores influences roughly 50 percent of consumers’ purchase decision while price only influences purchases about 30 percent. While convenience stores acquire this classification when they offer massive products such as sugar, milk, rice, noodles and sodas, a few have started too modernized. The future of convenience stores is uncertain due to supermarket’s initiative to build smaller formats in middle and low income areas. However, supermarket’s aggressive penetration might start affecting directly these small businesses in the near future. These stores have wisely fared against to a long list benefits offered by supermarkets by focusing their efforts on ways to satisfy consumer needs not met by large chains. Convenience stores have started to upgrade their business structures to a well organized scheme (minimarkets) and probably this might be one of the big challenges along with implementation of new services that CS would face in the future in order to persist in the market. However, as we said before, both channels compliments their presence within the market, thus, this may not be consider as a cause-effect action derived from supermarket growth. 5. Traditional Markets A. Sub-sector Profile Traditional markets have made new strategies in order to face competition from supermarkets. These new strategies include 40 new projects, accounting for an estimated $200 million dollars in investment. According to the plan, Plaza Ceres became the first open market built in 2008. It cost $3 million to build the Plaza Ceres which houses 700 small businesses. Traditional markets in Peru include 200,000 grocery stores and 2,500 open markets. Lima has 70,000 grocery stores and almost 1,250 open markets. In 2011, open market sales increased by 13 percent. Open markets are very popular among Peruvians for providing staples, daiary, and personal hygiene products. Peruvians also visit open markets to purchase fresh fruits and vegetables and meats at lower prices. Traditional markets offer limited opportunity for sales of high-end imported goods. Most food products sold in traditional markets (open markets, street vendors and grocery stores) are locally produced inexpensive perishable products which are aimed at low-income consumers. Open markets are dominated by 25 major companies. Section III. Competition Source: World Trade Atlas (2011) Peru grants tariff preferences to the Andean Community of Nations (CAN - Bolivia, Colombia and Ecuador), and to Mexico, Paraguay, Argentina, Brazil, Uruguay and Cuba. Peru’s trade policy is oriented towards open markets. Peru has signed different commercial and trade agreements, while others have not entered into force yet and just a few still in negotiations: Country Type Status Andean Community (Bolivia, Ecuador e Trade Agreement In force and Colomb Freia) MERCOSUR (Argentina, Brasil, Uruguay, Economic Complementation Paraguay) Agreement In force Cub Economic Complementation a Ag force reement In Chile Free Trade Agreement In force Mexico Trade Integration Agreement In force United States Free Trade Agreement In force Canada Free Trade Agreement In force Singapore Free Trade Agreement In force China Free Trade Agreement In force South Korea Free Trade Agreement In force European Free Trade Association (EFTA) Free Trade Agreement In force European Union Free Trade Agreement In force Th come into ailand Th To ird Protocol force Japan Economic Partn o come into ership Agreement T force Costa Rica Free Trade Agreement To come into force Panama Free Trade Agreement To come into force Guatemala Free Trade Agreement Negotiating El Salvador Free Trade Agreement Negotiating Honduras Free Trade Agreement Negotiating The PTPA reinforces U.S. competitiveness within the Peruvian market. The quality of U.S. products is already appreciated among the high-end consumers. For a complete list of products that have benefited from PTPA, please check Competitive Situation facing U.S. Suppliers in the Retail Market in 2011 Product Advantages and Ca Major Supply tegory/ Sou y Supply Countries Disadvantages of Local rces Strengths of Ke Suppliers Net Imports New Zealand: 35 percent U.S.: 19 percent Da Argentina: 12 - Only two companies are iry Products p - New Zealand is a major supplier of dairy ercent (Excl. Cheese) Chi ingredients, especially HS 040210 mi major producers of lk le: 9 evaporated milk and ($144.3million) p accounting 35 percent of total imports. ercent yogurt. Ireland: 5 percent Bolivia: 12 percent U.S: 44 percent Argentina: 18 Che percent Local homemade cheeses ese Netherlands: 9 Argentina and Uruguay are part of are commonly sold. 3,335 tons percent MERCOSUR and have tariff preferences. Gourmet cheeses are not ($16.3 million) Uruguay: 8 made locally. percent New Zealand: 5 percent Colombia: 53 percent U.S.: 7 - Local producers are Sna percent ck Foods major food processors. 20 Chile: 7 - Tariff preferences are applied to ,606 tons p They import food ercent neighboring countries. ($66.70 million) Ecuador ingredients for snacks and : 6 p snacks in bulk. ercent Brazil: 5 percent Processed Fruits Chile: 61 Chile sells at cheaper and Vegetables p - Local processors are ercent prices due to proximity 52,747 major exporters, but their tons U.S.: 10 and tariff preferences. local supply is limited. ($80.2 million) percent - EU products are viewed as good quality. Netherlands: 7 - Netherlands has increased its potato Argentina: 5 exports. percent China: 4 percent Chile: 86 - There is an open window percent - Chile is the main supplier because of from November to Fresh Fruits 66,083 tons U.S.: 7 proximity, price and duty free entrance. February for that will Argentina has a window for pears and benefit the United Stated ($47.6 million) percent - Argentina: 5 apples. - Local fruit sold in retail percent markets is of lower quality. Brazil: 38 percent U.S.: 20 Fruit and percent - Chile has tariff and proximity vegetable juices Chi - Local brands are well le: 17 advantages. 1,429,940 L p positioned in the market at ercent - Brazil has increased its exports of ($ 3.7 million) Argentina: 12 or competitive prices. ange and pineapple juice percent Mexico: 7 percent Argentina: 39 percent Chile: 24 percent Spain: 10 pe - Major local breweries are rcent well positioned, price Italy: 9 competitive, and belong to W percent - Proximity and recognized quality of ine and Beer B international companies, razil: 7 Chilean and Argentinean wines. 26.59 Million percent - Brazil is the major supp representing 95 percent of lier of imported liters France: 4 bee the market. r. ($36.9 million) pe - Local wine is well rcent Ne positioned and price therlands: 2 pe competitive, but does not rcent Mexico: satisfy demand. 2 percent U.S.: 1 percent U.S.: 28 p - Peru’s market for U.S. ercent B meats reopened in October razil: 28 p 2006. ercent Red Meats (fresh, Chi - U.S. meats are of le: 14 superior quality. chilled or frozen) percent - Proximity and low prices of nearby 21 - Peru imports three times ,531 tons Colombia: 11 countries. more offal than meats. ($54.9 million) percent A - Local meat does not rgentina: 9 p satisfy the demand. ercent - USMEF representative Paraguay: 6 p exclusive to South America ercent Bolivia: 39 percent R - The pork products ed Meats U.S.: 13 - Bolivia processors have become main (prepared, percent supp industry also imports liers for fast food chains due to lower preserved) Chile: 11 p prepared meats. rices. 1,459 tons percent Chile has tariff and proximi - U.S. product tariffs will ty advantages. ($6.65 million) Spain: 10 decrease throughout 5 to 7 p years. ercent Argentina: 11 percent Denmark: 10 percent Italia: 8 percent Chile: 33 percent B - TRQ for U.S. chicken leg razil: 28 Poul - Imports of U.S. poultry products quarters try Meat percent 19 reopened in October 2006. - Local poultry producers ,654 tons U.S.: 20 - Brazil and Chile are major suppliers of are major suppliers with ($24.9 million) percent ltry cuts. Tariff preferences and good distribution channels. Arg pouentina: 13 p proximity are major features. - Imports are mainly ercent Bol chicken and turkey parts. ivia: 7 percent Note: Net imports correspond to the three food sectors: Food Service, Retail and Food Processing. Source: World Trade Atlas Section IV. Best Product Prospects Source: World Trade Atlas (2011) A. Products Present in the Market Which Have Good Sales Potential: Average Produ Market ct/ Annual Import Key Constraints Market Produ Size Imports ct Import Tariff Over Market Attractiveness for Ca 2011 2011 tegory es Growth Rate Development the U.S. t. (2006-11) Cheese 21,531 3,335 23 percent 040610, - U.S. competitors - U.S. cheeses are (HS 0406) MT tons 20 and are: Argentina (18 mainly used in the 40 percent) and food processing ($16.3 0 Netherlands (9 sector, but have million) percent percent). potential in the HRI 040630 - Strong and Retail Food 040690 preference for EU Sectors. 0 cheese at high- - In 2011, the percent end HRI and Retail United States was Sectors. the first supplier with a market share of 44 percent (62 percent growth). - TPA*: 17 years linear, 2,500 MT quotas with 12 percent increase per year. - Major suppliers - United States are Colombia ($31 represents 2.5 15,647 Confectionary 0 million) and percent of total tons imports; however, – non N/A 16 Ecuador ($3 .6 percent U.S. imports grew chocolate p million). ercent ($46.2 - Local industry is 57 percent in 2011. (HS 1704) mi . llion) strong. Major owners are foreign companies. - The U.S. is the second major 4,073 - Chile is the 0 ma supplier with 19 jor supplier (23 Confectionary tons 22.2 percent pe percent. The U.S. rcent of MS). – chocolate N/A percent strength is in - Local industry is (HS 1806) ($18.1 chocolate for the mi competitive. llion) retail sector. Imports grew 46 percent in 2011. - Local Production is strong. Alicorp - United States is 14 is the major ,339 the second largest competitor. Also Food tons 16 supplier and holds percent 0 foreign companies Preparations N/A 18 percent of percent are established in (HS 210690) ($131 market share. mi the country. llion) - In 2011 imports - Chile is the ma grew 18 percent. jor importer (33 percent). - Due to an increment of income levels, local consumers are demanding high Tota quality products, l - Competes with b such as beef. eef and 1,283 0 quality meats Prime and offa - U.S. imports have l tons percent from Colombia, choice beef 16 percent grown 155 percent : ($7.3 Argentina, (HS 020230 market) 283,596 mi respect 2011 in this llion) Uruguay, Brazil MT category and Bolivia. United States became the first largest beef supplier in 2011 and holds 50 percent of import market share Edib - The United States le Beef 3,924 Offa holds 97 percent of l (liver) 10,000 tons 26 production .3 0 Local import market. (HS, MT ($6.9 p covers most of the ercent percent 020622) market size. Imports have grown million) 30 percent in 2011. Fruit and 14 - Brazil is the ,299 Vegetable hl major supplier and Imports have grown juices N 30 percent 0 holds 38 percent /A percent 46 percent in (HS of market share in 2009) ($3.7 2011 respect to 2010. . It is strong million) in orange juices - Growing local pet industry. 12 - There is an ,125 informal industry tons - The United States Pet foods 45,000 18 arising. percent 0 (HS 230910) MT p holds 20 percent of ercent - Colombia 37 ($14.9 mi p the import market. ercent), and llion) Argentina (36 percent) are major competitors. - Peruvians are major consumers of - Major exporters turkey during are Brazil (48 Christmas and New 3,175 percent) and Chile Year’s. tons Tur (41 percent) - The food retail key 13,000 22 percent 5 g (HS 020727) MT p followed by the sector is becominercent ($6.5 United States with more popular not million) 11 percent. only in Lima, but - Local poultry also in the province. industry is strong. - USAPEEC has initiated a market penetration plan. - Peruvians are 9,208 major consumers of TRQ: - Strong local poultry. Poultry meat tons 98 industry. ,000 54 15,117 percent - TRQ: 6 percent cuts MT tons - Frozen increase per year. (HS 020714) ($8.6 0 presentation is not mi Only 15 percent of llion) percent common TRQ is used. - Colombia is the United States holds B 3,841 major import 13 percent of import read, pastry, supplier and holds market share. HS cookies N/A tons 21 0 .percent 32 percent of code 190590 (HS 1905 ($10.1 percent ) mi market share. llion) represents 80 Local companies percent of imported. are very strong. - United States grew 1,353 12 percent in Soup 2011and is the s & tons - Local companies B major import roths N/A 21 percent 0 percent are very supplier in this (HS 2104) ($3.2 competitive mi category, holding 33 llion) percent of import market share 6,597 ted States grew S - Local comp - Uni anies auces tons 19 48 percent in 2011 percent, 0 (HS 2103 N/A ) p are very ercent and is the major competitive. ($12.7 import supplier in million) this category, holding 36 percent of import market share - Chile is very competitive in - Importers Nuts almonds and and 479 tons recognize that U.S. a walnuts lmonds quality of nuts and 46 percent 0 (HS N/A 0802) ($2.8 p production. Last ercent almonds is better year was major million) than competitors. supplier holding 52 percent of market share. - There is a niche market for quality - Argentina (44 pe wines for which the rcent), Chile (28 pe United States can be rcent), and Spa appreciated and in (12 percent) are price competitive. major 18.8 expor - Peru’s wine ters. W 41 million 17 0 percent consumption is ine mi percent - Only regular llion liters (HS 2204) wine growing. Right now consumers liters ($32 is above 1.3 liters. mi recognize U.S. llion) wine - Import volume has quality. grown 120 percent - Small niche ma in respect 2010. rket for U.S. wines However, value only grew 28. Low cost wines are gaining territory. Note: TRQ = Tariff Rate Quota, on a first-come first-serve basis. Sources: World Trade Atlas, USTR, Ministry of Agriculture (Minag), Gestion and El Comercio Newspapers B. Products not Present in Significant Quantities, but which have good sales Potential: Average Produ c An nual t/ Import Key Constraints Over Produ Imports c Import t Market et Attractiveness Developmen Markt Ca 2011 G Tariff rowth for the U.S. tegory Rate (2006-11) - Importers are Peaches, 3,739 - Chile is major supplier interested in U.S. cherries and tons Ne 27 percent 0 ctarines ($3.1 p with 99 percent of the peaches and nectarines. ercent market. - Duty free access for (HS 0809) million) this category. - There is a window of 52 ,534 - Chile is the major 0 opportunity for the App supplier with 87 percent les and Tons percent of the United States between market. Pears 17 percent November and February. - Chile proximity (HS 0808) $41 Local consumers mi benefits from other llion recognize U.S. apples suppliers. and pears quality. 6,616 0 Grapes, tons percent - Chile holds almost 9 - U.S. window: 5 raisins 29 percent September to December. percent of the market. (HS 080620) ($15.5 mi llion) - United States holds 79 percent of import market 5 - Chile is the second 123 tons - Recognized quality of C major supplier with 21 itrus percent U.S. oranges and 56 percent percent of the market. (HS 0805) $141,612 - Strong tangerines. Local p - Export window for the roduction United States is from January to March. - Peruvians are not used to eating pork. - Local industry - Pork imports are produces more than growing. 2,648 100,000 MT - U.S. pork benefit from tons - The industry is the TPA implementation. Pork Meat 5 66 percent same as the poultry - Beef importers can also (HS 0203) percent ($7.2 industry. import pork. Best quality million) - Chile is the major and competitive prices. supplier with 88 percent - USMEF representative of the market and for the region. second is Canada with 15 percent - There is a high-end segment for gourmet sausages, in which the United States can S 620 tons compete. ausages - Major exporter is Chile wi United States holds 34 th 37 percent of the (HS 1601) 26 percent 5 percent of import ($2.0 percent market mi market. Imports has llion) - Local industry is strong grown 119 percent in 2011. Fast food restaurants are main channel for this category. - The United States has quality products to H 77 tons - Major suppliers are introduce to the gourmet am, p market rocessed 31 10.71 Italy (46 percent of the percent HS ($0.92 percent market) and Spain (40 - TPA: 7 years 160241 million) percent). U.S. imports holds 5 percent of import market share. - Local breweries are very strong and owned - Niche market for 7.8 by international mi comp premium beers. anies. llion - Growing consumption B - Local breweries eer liters 16 0 percent p of beer (over 40 lts per roduce and import new (HS 2203) percent b capita) rands for introduction ($4.9 - Duty free entrance. mi in the market. llion) B Lack of U.S. brands razil is the major within the market. supplier (50 percent of the market). Note: TRQ = Tariff Rate Quota, on a first-come first-serve basis. Sources: World Trade Atlas, USTR, Ministry of Agriculture (Minag), Gestion and El Comercio Newspapers C. Products Not Present Because They Face Significant Barriers: None. Section V. Key Contacts and Further Information If you have any questions or comments regarding this report or need assistance, please contact the Foreign Agricultural Service in Lima, Peru at the following address: U.S. Embassy Lima, Foreign Agricultural Service (FAS) Mailing Address: Office of Agricultural Affairs, Unit 3785, APO AA 34031 Address: Av. La Encalada cdra. 17, Monterrico, Lima 33 Phone: (511) 434-3042 Fax: (511) 434-3043 E-mail: Please, also refer to our other current food market related reports: Exporter Guide, Food and Agricultural Import Regulations and Standards (FAIRS), FAIRS Export Certificate, Food Processing Ingredients Sector and HRI Food Service Sector.
Posted: 29 December 2012

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