Retail Foods

An Expert's View about Retail Sales in Peru

Posted on: 20 Jan 2012

In 2010, Peru’s total food retail market reached $18 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: 12/22/2011 GAIN Report Number: Peru Retail Foods 2011 Approved By: Emiko Purdy Prepared By: Alvaro Loza Report Highlights: In 2010, Peru’s total food retail market reached $18 billion, 80 percent of which is concentrated in Lima. Supermarket chains reached almost $2.5 billion in food sales, a 12 percent increase from 2009. Food sales by these supermarket chains accounted for 30 percent of the retail market share in Lima in 2010, which is considered to be low in comparison with neighboring Latin American countries. The implementation of the U.S. - Peru Trade Promotion Agreement, supported by favorable market conditions in Peru, has and will continue to have a significant impact on U.S. food exports for the retail market. Post: Lima Executive Summary: Section I. Market Summary Peru has demonstrated to the world its economic stability and continuous growth within the region, even during times of world financial crisis. Peru posted impressive results in 2010, such a GDP of 8.8 percent -proof that Peru’s economy is highly dynamic, driven mostly by private investment, foreign trade, and domestic demand. The commercial sector appears amongst the sectors that have contributed the most to this growth. Last year South America survived the recession better than most regions and posted an impressive 6 percent GDP growth. Peru led the list of best performing economies and was one of the countries least affected by the 2008 crisis. Peru’s good economic position has also been validated by the World Bank’s ranking of Peru as 36 of 183 economies in its 2011 Ease of Doing Business report, gaining 10 positions in comparison with 2010 as a result of introducing positive reforms in 4 categories. Peru's strength lies in its sound regulations although the amount of red tape is still relatively high despite the aforementioned improvements. Similarly, credit rating agencies as Standard and Poor, Fitch and Moody’s, acknowledge the good fiscal and economic performance of the country, placing it amongst the economies that are certain to comply with their obligations. Fostered by higher levels of employment, income and consumption, Peru’s retail market exhibits a large list of opportunities for consumer goods. Peru has experienced a spectacular growth in the modern retail channel in the last ten years. This year A.T. Kearney’s ranking included Peru amongst the 10 favorite emerging countries for retail investment, based on its low retail penetration and average young age of consumers (26 years old). The three major supermarkets chains in Peru achieved sales for $2.5 billion in 2010; this represents a 12 percent growth in respect 2009 (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 which currently account for 45 percent of Peru’s population. Chart 1 Source: Skotiabank Economic Department There were 156 stores (all formats included) by the end of 2010, with 121 in Lima and 35 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 (convenience stores, grocery stores or “bodegas”) remains to be the main channel for distributors, wholesalers, etc. As 75 percent of food retails sales occur within the traditional market, companies often have to consider their strategies for traditional channels. 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 ticket will increase by 9 percent in grocery and average receipt in the traditional market may increase 9 percent also. Consumption in 2010 increased by 3.8 percent, with increases in both the traditional channel (2.9 percent) and the modern channel (7.8 percent). Also, supermarkets are gaining more preference among consumers, which is why beverage and food sales have increased by 10 and 8 percent, respectively. 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. 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 known that Peruvian food retail markets have become attractive to foreign investors. Recently, 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. While Chilean supermarkets have made the first step entering Peruvian retail market, other large players, such as Wal-Mart, are expected to also enter the market. In 2009, Wal-Mart acquired the largest Chilean food retailer company D&S (D&S has more than 180 stores, 10 shopping centers and 85 Presto financial services branches) which also owned 35 percent of Alvi's supermarket chain and is also Mayorsa's main shareholder. After D&S acquisition, Wal-Mart had the intention to enter Peru’s retail sector using D&S’s format known as “A Cuenta” but it did not happen at the end. Subsequently it was speculated that Wal-Mart Mexico would be the company that would enter Peru. However, it did not happen and Mayorsa was sold to the Saieh group, ending Wal- Mart’s opportunity to start operating in the country. Other players that have demonstrated their interest in Peruvian market are Almacenes Exito S.A. from Colombia, Corporacion Favorita and Importadora el Rosado, both from Ecuador, and the supermarket chain Ketal from Boliva. According to Peru’s customs data, total agricultural imports to Peru from United States grew to $787 million in 2010, up 41 percent from the 2009 level. Moreover, consumer oriented products reached $107 million in 2010 growing 81 percent in respect 2009. The United States became the second largest supplier of consumer oriented products, accounting the 14 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. In 2010, Peru’s total food retail market reached $18 billion, 80 percent of which is concentrated in Lima. Supermarket chains reached almost $2.5 billion in food sales, a 12 percent increase from 2009. Food sales by these supermarket chains accounted for 30 percent of the retail market share in Lima in 2010, 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 2008 2009 2010 Supermarkets and hypermarkets 1,800 2,216 2,483 Traditional Channel (grocery stores, we 8,720 14,428 15,520 t markets, convenient stores, etc.) Total 10,520 16,644 18,002 Source: Post Estimated values 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 1. Peru TPA grants duty free access to 1. Consumers have a preference for buying two-thirds of U.S. food and fresh products in traditional markets. agricultural products, including most h 2. Supermarkets, the main source of igh-value foods. imported food products, account for only 2. Proactive supermarket industry that 30 percent of retail market share in Lima will result in increased demand for and 14 percent in the country. high-value products. 3. New local food brands are appearing in 3. Supermarket sales are growing fast, the market at very low prices. mainly through the opening of new outlets in the suburbs of Lima and 4. Supplies in the Provinces still depend on other cities. companies that are based in Lima. 4. Appreciation for U.S. food quality and 5. Lack of brand awareness among culture. consumers. 5. Growing perception of retail outlets 6. A government-promoted campaign called as cleaner, more convenient and “Buy Peruvian.” time saving than traditional markets. 7. Traditional markets strongly dominate 6. People are becoming aware of diet, retail sales in secondary cities. lite, and healthy food products through the media. 8. Domestic Producers1 7. Income growth, especially of middle- class. 8. 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 constituted 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. Market Structure 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 2010 Reta Sales Market hasing iler Ownershi Name (million Sha No. of Purc re Agent p $) Outlets Location (percent) Type Lima, Trujillo, CENCOSUD Chile 1,118 45 p 0 Chiclayo, ercen 6t Cajamarca, Arequipa, Ica Lima, Trujillo, Ch Direct icalyo, Arequ Importers, ipa, Sup Local Food ermercado Peru 844 34 Huancayo, p Processors s Peruanos ercen 69t Chimbote, and Ica, Producers Juliaca, Piura, Tacna Lima, ujillo, To 21 Tr ttus Chile 521 p 23 Chiclayo, ercent Ica, Piura, Arequipa Source: Supermarket contacts Type of Outlets by Major Supermarket Chains in 2010 Retailer Type of outlets Number of outlets CENCOSUD Supermarkets Wong 12 Super/Hyper Metro 36 Vivanda 8 Sup Super / Hyper Plaza Vea 49 ermercados Peruanos Mass stores 8 Economax 4 Tottus Hypermarkets Tottus 23 Source: Supermarket contacts The three major supermarket chains (Cencosud, Supermercados Peruanos and Grupo Falabella) have a total of 152 stores nationwide. In 2010, 25 new more stores were opened throughout the country; this means 18 percent more sales area. As previously , 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 15 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). Traditional and Modern Retail Channels Jan – Dec 2009 vs Jan – Dec 210 Food Quantity variation Value variation Bread -1% 2% Cravings 4% 5% Butter 5% 7% Milk 4% 3% Yogurt 1% 1% Bottled oil -2% -8% Cookies 6% 4% Chocolates 5% 8% Snacks 8% 10% Pasta -- -2% Beverages Water -5% -7% Fruit punches 3% 4% Beer 2% 3% Carbonated drinks 10% 19% Sports drinks 1% -- Energy drinks 3% 9% Soda 7% 9% Source: CCR consultants 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. People's consumption preferences focus on groceries and fresh products that account 42 and 28 percent of total demand at supermarkets, respectively. 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 35 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 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 2010, six new malls opened and their construction demanded $290 million in investment. This commercial centers sector reported sales for $3.2 billion in 2010, an increase of 24 percent from 2009. According to the president of the Peruvian Malls Association, provinces reported $180 million in investments for new malls in 2010. This is a proof that Lima no longer has the exclusivity for retail market development. 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. 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). 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. Cencosud stopped its aggressive expansion since it acquired Wong, including new outlets and formats such as Paris and Easy. According to the new administration, the reason for this has been an increase in credit cost and fluctuations in exchange rates. Cencosud Peru has started its expansion plan and is planning to invest $220 million, basically for new store opening. So far, Cencosud has 14 stores outside of Lima (3 Wong and 11 Metro). 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 will destin $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 76 stores in the country. Only 16 have been opened in 12 major cities of the country. Economax is the latest SP format that has been recently launched. Three outlets will open in 2011 and will demand 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 23 outlets in 2010. 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 21 percent in respect to 2009, 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 aims to open seven stores within the country; which will represent a $30 million 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 le racter High and Middistics ow-income consumer income consume Lr 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: t food 58 en markets: 72.7percen.3percen Opt Preferences for daily visits to open markets Frequency of a week or small stores. Supermarket visits once a supermarket attend Once ance 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 82 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 2010, open market sales increased by 12 percent. Open markets are very popular among Peruvians for providing staples, diary, 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 (2010) 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 force and Free Trade Agreement In Colombia) MERCOSUR (Argentina, Brasil, Uruguay, Economic Complementation Paraguay) Ag In force reement Cub Economic Complementation a Ag rce reement In fo 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 Thailand Third Protoco To come into l force Japan Economic Partnership Agreement To come into force European Union Free Trade Agreement To come into force Co come into sta Rica Free Trade Agreement To force Panama Free Trade Agreement To come into force Guatemala Free Trade Agreemnent Negotiating El Salvador Free Trade Agreemnent Negotiating Honduras Free Trade Agreemnent 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 2010 Product Ca Ma Advantages and jor Supply tegory/ Ne Sou engths of Key Supply Countries Disadvantages of Local rces Str t Imports Suppliers New Zealand: 31 percent U.S.: 21 Dairy Products percent - Only two companies are - New Zealand is a major supplier of dairy (Excl. Cheese) Chile: 12 major producers of ingredients, especially HS 040210 milk ($127.85 percent evaporated milk and mi accounting 36 percent of total imports. llion) Bolivia: 12 yogurt. percent Argentina: 6 percent U.S: 38 percent Argentina: 15 Che percent Local homemade cheeses ese Uruguay: 15 Argentina and Uruguay are part of are commonly sold. 2,431 tons percent MERCOSUR and have tariff preferences Gourmet cheeses are not ($11.59 million) Netherlands: 7 made locally. percent New Zealand: 7 percent Colombia: 52 percent Ecuador: 10 Sna - Local producers are major ck Foods percent 19 food processors. They ,505 tons Chi - Tariff preferences are applied to le: 7 ing countries. import food ingredients for ($54.1 million) p neighborercent U.S snacks and snacks in bulk. .: 7 percent Argentina: 6 percent Chile: 60 percent Chile sells at cheaper U.S.: 12 Processed Fruits pe prices due to proximity rcent - Local processors are and Vegetables A and tariff preferences. rgentina: 6 major exporters, but their 47,885 tons percent - EU products are viewed as good quality. local supply is limited. ($65.93million) Ne - Argentina has increased its potato therlands: 4 percent exports and fruit jellies Italy: 3 percent China: 3 percent Chi - There is an open window le: 93 ier because of from November to Fresh Fruits p - Chile is the main supplercent 69 proximity, price and duty free entrance. February for that will ,174 tons Argentina: 5 - Argentina has a window for pears and benefit the United Stated ($49.83 million) percent U.S apples. - Local fruit sold in retail .: 2 percent markets is of lower quality. U.S.: 31 percent Fruit and Brazil: 23 - Chile has tariff and proximity - Local brands are well vegetable juices percent advantages. 1,422,272 L Chile: 13 - Brazil has incr positioned in the market at eased its exports of ($ 2.5 million) percent p competitive prices. ineapple juice Argentina: 11 percent Argentina: 41percent Chile: 22pe - Major local breweries are rcent Spa well positioned, price in: 11 competitive, and belong to W percent - Proximity and recognized quality of ine and Beer Brazil: 8 Chi international companies, lean and Argentinean wines. 17.42 Million pe representing 95 percent of rcent - Brazil is the major supplier of imported liters Italy: 7percent bee the market. r. ($29.5 million) France - Local wine is well : 3 pe positioned and price rcent Ecuador competitive, but does not : 3 pe satisfy demand. rcent U.S.: 2 percent Brazil: 29 percent U.S - Peru’s market for U.S. .: 22 meats reopened in October R percent ed Meats - Major imports come from nearby Chi 2006. le: 14 (fresh, chilled or countries. p - U.S. meats are of ercent frozen) Colombia has grown very rapidly due to superior quality. 22 Colombia: 11 ,995 tons low prices. p - Peru imports three times ercent ($45.67 million) A more offals than meats. rgentina: 11 p - Local meat does not ercent satisfy the demand. Paraguay: 8 percent Chile: 29 percent Bolivia: 15 percent Red Meats A - The pork products rgentina: 11 (prepared, percent - Chile has ta industry also imports riff and proximity preserved) Spain: 11 advantages. prepared meats. 1,238 tons p - U.S. product tariffs will ercent decrease throughout 5 to 7 ($5.00 million) Italia: 10p years. ercent U.S.: 8 percent Denmark: 8 percent Poultry Meat Brazil: 32 - Imports of U.S. poultry products - TRQ for U.S. chicken leg 24,410 tons percent reopened in October 2006. quarters ($29.32 million) Chile: 25 - Brazil and Chile are major suppliers of - Local poultry producers percent poultry cuts. are major suppliers with U.S.: 20 good distribution channels. percent - Imports are mainly Argentina: 16 chicken and turkey parts. percent Bolivia: 8 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 (2010) A. Products Present in the Market Which Have Good Sales Potential: Average Produ Ma rket Annua l ct/ rt Key Constraints Market Produ Size Imports Impo Impo rt ct Tariff Over Market Attractiveness for Ca 2010 2010 Growth tegory es Rate Development the U.S. t. (2005- 10) 2,341 14 040610, - U.S. competitors - U.S. cheeses are .4 Cheese 18,480 tons pe uguay mainly used in the rcent 20 and are: Ur (HS 0406) MT 40 (16percent) and food processing ($11.59 0 Netherlands sector, but have million) percent (16percent). potential in the HRI 040630 - Strong and Retail Food 040690 preference for EU Sectors. 0 cheese at high- - In 2010, the United percent end HRI and States was the first Retail Sectors. supplier with a market share of 38 percent. - TPA*: 17 years linear, 2,500 MT quota with 12 percent increase per year. - Major suppliers are - United States Colombia($26 represents 2 percent 14,492 of total imports, Confectionary 0 million) and tons – $4 however, U.S. non Ecuador (N/A 16.1 percent million). imports grew 14% in chocolate percent - Local industry is 2010. (HS 1704 ($37.4 ) mi llion) strong. Major . owners are foreign companies. - The U.S. is the - Chile is the second major 3,663 0 major supplier supplier with 17 Confectionary tons 12.2 pe (24 percent of rcent percent. The U.S. – chocolate N/A percent MS). strength is in (HS 1806) ($13.6 - Local industry is chocolate for the mi llion) competitive. retail sector. Imports grew 46 percent in 2010. - United States is the 14,229 - Local Production second largest Food tons 16.4 is strong supplier and holds Preparations N/A percent 0 per - Chile is the 17 percent of market cent (HS 210690) ($120 major importer share. million) (33 percent). - In 2010 imports grew 28 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 1,435 0 quality meats Prime and offa - U.S. imports have ls tons 7.9 percent from Colombia, choice beef ma grown 75 percent rket: ($5.73 percent Argentina, (HS 020230) 274,425 mi respect 2009 in this llion) Uruguay, Brazil MT and Bol category ivia. - United States became the second largest beef supplier in 2010 and holds 25 percent of import market share Edible Beef 3,911 Offa Local production - The United States ls (liver) 10,000 tons 16.4 0 (HS, MT ($5.4 p covers most of holds 95 percent of ercent percent 020622) the market size. import market. million) U.S. imports grew 15 Frui - Brazil is the t and 14,222 percent in 2010 and Vegetable hl 30 0 second largest hold United States s juices N/A pe supplier and rcent percent 23 remains as the percent of (HS 2009) ($2.5 ma largest importer rket share in million) 2010 holding 31 percent of . market share. - Growing local pet industry. - There is an 12,250 informal industry - The United States MT arising. holds 22 percent of Pet foods 45,000 17.6 0 - Colombia 42 the market, with an (HS 230910) MT percent percent ($13.84 percent), and 21 percent increase million) Argentina (31 from 2009. percent) are major competitors. - Peruvians are major consumers of - Major exporters turkey during are Brazil (52 Christmas and New 4,598 percent) and Chile Year’s. tons Tur (34 percent) - The food retail key 13,000 27.2 6 sector is becoming (HS 020727) MT percent percent followed by the (7.6 United States with more popular not million) 14 percent. only in Lima, but also - Local poultry in the province. industry is strong. - USAPEEC has initiated a market penetration plan. 10 - Peruvians are ,050 TRQ: - Strong local Poultry meat tons major consumers of 56.2 $23,000 13,997 industry. poultry. cuts percent tons - Frozen - TRQ: 6 percent (HS million 020714) ($8.53 0 presentation is mi increase per year. llion) percent not common - Colombia is the major import B 4,449 read, pastry, tons 21.1 0 supplier and holds United States holds cookies N/A 22 percent of 14 percent of import ($10.2 percent percent (HS 1905) mi market share. market share. llion) Local companies are very strong. - United States grew 1,363 38 percent in 2010 Soups & tons and is the major B 20.6 0 - Local companies roths N/A p ry import supplier in ercent are ve percent (HS 2104) ($2.9 competitive this category.holding million) 33 percent of import market share - United States grew 5,557 16 percent in 2010 tons S - Local companies and is the major auces 15 0 import supplier in (HS 2103 N/A ) percent, p are very ercent ($9.87 competitive. this category. million) Holding 32 percent of import market share Nuts and 452 tons 40 0 - Chile (37 - U.S. imports have almonds N/A p grown 161 percent in ercent percent percent of the (HS 0802) ($2.7 market) is the respect to 2009. The million) second largest United States is the supplier. major supplier with 61 percent of the import market. - Importers recognize that U.S. quality of nuts and almonds is better than competitors. - Argentina (53 - There is a niche percent), Chile market for quality (32 percent), and wines for which the 8.1 0 Spain (7 percent) United States can be W 21 mi 15.7 llion ine mi pe are major appreciated and price rcent percent llion liters exporters. competitive. (HS 2204) liters ($24.87 - Only regular - Peru’s wine mi llion) wine consumers consumption is recognize U.S. growing. Right now is wine quality. above 1.3 liters. 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 Annual t/ Import Key Constraints Over Produ Imports c Import t Tariff Market Developmen Market Attractiveness t Ca 2010 Growth tegory Ra for the U.S. te (2005-10) Peaches, 2,968 - Importers are e is major supplier interested in U.S. cherries and tons 13.6 0 - Chil Ne with 99 percent of the peaches and nectarines. ctarines ($2.3 percent percent market. - Duty free access for (HS 0809) million) this category. - Chile is the major - There is a window of 61,859 0 supplier with 92 percent opportunity for the Apples and Tons 20.2 percent of the market. United States between Pears percent - The United States is November and February. (HS 0808) $44 the third largest supplier Local consumers mi llion with 2 percent of the recognize U.S. apples market. and pears quality. 6,633 - U.S. window: 0 Gr September to December. apes, tons percent In 2010 U.S. imports raisins 22 Chile holds almost 88 percent - percent of the market. reached $1.1 million due (HS 080620) ($14.3 mi to a less Chilean llion) production. - United States holds 60 percent of import market 2.4 35 - Recognized quality of tons Citrus percent - Chile is the second U.S. oranges and -23 percent major supplier with 40 (HS 0805) tangerines. $30,546 percent of the market. - Export window for the United States is from January to March. - Peruvians are not used to eating pork. - Local industry produces more than 3,005 - Pork imports are 100,000 MT growing. tons - The industry is the Pork Meat - U.S. pork benefit from 63 percent 2.4 same as the poultry (HS 0203 ) percent TPA implementation. ($6.9 industry. mi - llion) - Chile is the major supplier with 79 percent of the market and second is Canada with 15 percent - There is a high-end segment for gourmet sausages, in which the United States can compete. S 547 tons ausages - Major exporter is Chile United States holds 19 (HS 1601) 28 percent 2.4 with 44 percent of the percent of import ($1.6 percent mi market market. Imports has llion) grown 142 percent in 2010. Fast food restaurants are main channel for this category. - The United States has H 74 quality products to tons - Major suppliers are am, introduce to the gourmet p rocessed 32 Italy (43 percent of the p 3.42 ercent market HS 160241 ($0.84 percent market) and Spain (39 million) percent). - TPA: 7 years U.S. imports grew 95 percent in 2010. - Local breweries are very strong and owned - Niche market for 8.9 by international premium beers. mi companies. llion - Growing consumption B - Local breweries eer liters 5.6 p 0 of beer (over 40 lts per ercent produce and import new (HS 2203) percent b capita) rands for introduction ($4.5 - Duty free entrance. mi in the market. llion) B Lack of U.S. brands razil is the major within the market. supplier (53 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: For further information, check the FAS web site or our web site 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. Author Defined:
Posted: 20 January 2012

See more from Retail Sales in Peru

Expert Views    
Retail Foods   By Foreign Agricultural Service
Retail Foods 2012   By Foreign Agricultural Service