Processed Food and Beverage Equipment in Colombia

A Hot Tip about Beverages in Colombia

Last updated: 10 Mar 2011

Overview

The processed food and beverage equipment industry (FPP) is highly diversified and one of the fastest growing sectors of the Colombian economy. End-users of equipment and technology in most of the sub-sectors of this industry vary widely in terms of revenues and production. Although there are a significant number of large food processors, the segment with the highest market potential for U.S. equipment is the SME group (small and medium sized companies).

 

These companies need to invest in modern and more efficient production equipment to expand their installed capacity in order to stay abreast of demand for their products. In Colombia there are approximately 1,600 large companies and 44,000 small and medium businesses devoted to manufacturing food and beverages. The food and beverage industry has sustained its growth during the last five years. In 2006, growth exceeded nine percent and by year-end 2009, due to the global economic crisis, growth is expected to slow to three percent, with total industry sales nearing US $2.6 billion. The sector currently represents 27 percent of the total domestic industry production, positioning it as a leader of Colombia´s industrial development. This industry changed drastically during the 1990’s in order to adapt to market opportunities resulting from Colombia’s liberalization of its economy. The high degree of foreign investment in this sector also reflects its importance in Colombia’s economy1.

 

The changes in the 1990’s produced rapid growth and expansion as the industry took advantage of export opportunities for Colombian products. As Colombia’s economy strengthened beginning in 2001, the country became a significant processed food supplier within the Latin America and Caribbean region. Given the ambitious objective of the processed food and beverage industry to compete with even greater success internationally, it is imperative for companies to constantly invest in newer and more efficient technologies.

 

The ready to-eat-and beverage sub-sectors also benefited from the stronger domestic economy. Despite the global economic crisis, these segments seek to improve their competitiveness by producing innovative products, such as beverages with value-added properties and/or additional holistic benefits. This sub-sector corresponds to one fifth of the total industry’s activity, and production has increased 15 percent since 2006. The implementation of the U.S.-Colombia Trade Promotion Agreement (TPA) will have a positive effect on the industry as costs related to U.S. importers will decline and thereby improve companies’ return on their investment (ROI).

 

Market Demand

In Colombia, capital investment in food processing and packaging is broad, given that each process requires the use of a wide range of interrelated machinery and equipment. Every food processing line requires the support and services of equipment such as refrigeration equipment, raw materials handling equipment, storage equipment and facilities, waste treatment systems, clean in place (cip) systems and packaging equipment. It is common for machinery to be custom built by the manufacturer in accordance with government product, safety and health standards and regulations.

 

In terms of market demand, the Colombian consumer is seeking value added, organic and innovative products that foster personal well being and a healthier life style. Food and beverage producers therefore seek equipment that fulfills this need. Competition among equipment manufacturers is fierce. The leading manufacturers and distributors of food and beverage processing machinery, especially hi-tech equipment and systems, are: the United States, Germany, Italy, Canada and Japan. According to industry reports, the Netherlands is also becoming a major player in the world markets and in Colombia as well. Food and beverage consumers are no longer brand loyal; they are starting to evaluate their purchases, leaning towards options that offer greater value at a lower cost. Non alcoholic beverages and dairy products are positively affected by this trend given their high value-added content, and their nutritional benefits which makes them more attractive to consumers.

 

 

By Alejandra Henao

Read the full market research report

 

 


Posted: 29 April 2010, last updated 10 March 2011

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