Sunny sales prospects ahead in Costa Rica and Panama - food product sales

Strong economic growth, more open import policies and increased promotional efforts are boosting U.S. exports of consumer-oriented food products to Costa Rica and Panama. From snack foods to pet foods, sales are growing. In 1993, U.S. exports of these types of products to Panama and Costa Rica reached record levels of $49.3 million and $24.9 million, respectively.

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For Costa Rica, this was an increase of approximately 65 percent over 1992, while for Panama the increase was roughly 3 percent. In short, Panama's consumer-oriented-products market is about twice the size as Costa Rica's, but U.S. exports to Costa Rica are growing much more rapidly.

Costa Rica has a population of 3.2 million and Panama has 2.6 million. In 1993, Costa Rica had an estimated per capita income of about $1,860; Panama's was $2,325.

Economic Growth Fuels Sales

Panama's economic growth was 8.0 and 5.9 percent in 1992 and 1993, respectively, with the outlook for 1994 forecast at 4-5 percent. In Costa Rica, the Gross Domestic Product grew 7.3 and 6.3 percent in 1992 and 1993, respectively. Growth is expected to slow in 1994, possibly to 5 percent. Despite the lower growth expected this year for both countries, these are still solid growth rates.

Trade liberalization also has been a factor behind the increased sales of U.S. consumer-oriented products to these countries. For Costa Rica in particular, tariff reductions that began in 1992 and continued in 1993 have resulted in tariffs on most consumer-oriented products falling from 40 to 19 percent. This has been a major factor behind the increase in U.S. exports of these products to Costa Rica since 1992.

These tariff cuts were required as part of structural adjustment programs with the World Bank/International Monetary Fund.

In Panama, the government has been slow to liberalize agricultural trade but did make some changes in 1993. These included shifting from fixed to ad valorem tariffs for most products, reducing some tariffs and eliminating some import permits. Tariffs, however, still remain relatively high with levels of 50 percent for some consumer-oriented products.

The government of Panama has submitted its foreign trade memorandum to join the General Agreement on Tariffs and Trade (GATT), and interested GATT parties, including the United States, are providing comments. Panama's entry into the GATT would result in lower tariff levels for consumer-oriented products and improved U.S. export prospects. Opposition to GATT membership, however, remains among many agricultural sectors and elections this year may slow the liberalization process.

Promotional efforts, many resulting from USDA's Market Promotion Program (MPP) funds, also have helped boost U.S. sales.

Especially effective have been promotion efforts undertaken for apples, grapes, pears and other fruits from the U.S. West Coast. In-store promotions (tastings), television advertising, point-of-sale displays in supermarkets, along with seminars on optimum fruit handling have been held in both Costa Rica and Panama. Branded promotion activities (partly funded under MPP) for many supermarket products ranging from sauces to ethnic foods have increased sales in both countries.

Best Bets for U.S. Sales

Recently, import prospects were discussed with key importers in Panama. The following items showed good potential for growing sales: snack foods (potato chips, corn chips, snacks with new flavorings), breakfast cereals, sauces (soy and barbecue), grape and apple juices, new beverages, canned fruits and vegetables, fresh apples, grapes and pears, cookies, specialty pork products (in brine), some frozen foods (desserts) and beer (this last product is exported to the Colon duty-free zone for sale to U.S. military bases and South American countries).

Although dairy products are heavily protected, potential exists for sales of some items such as "gourmet" ice cream.

For Costa Rica, the best prospects are for sales of fresh fruits (apples, grapes and pears), canned fruit and vegetables, snack foods (chips), fruit juices and beverages, cookies, breakfast cereals and pet food.

Getting on the Shelf

In Panama, modern supermarkets sell the majority of the imported consumer foods, although smaller stores, called tiendas and mini-supers, also are important. There are several large importers who buy for their own supermarkets and also sell to other stores. The main chains are Super 99 (11 stores), Gago (9) and El Rey (13). By law, there is no legal exclusive distributor, but some importers recognize this by practice.

Many products are imported from brokers in Miami. Registration of new products takes time (three to six months) but sometimes small quantities of products are allowed in as a trial import for sale before registration. No labels are currently required in Spanish, but foods must carry an expiration date or production date in code somewhere on the product. (This can be inside the lid, if appropriate.) Certificates of free sale (a letter issued by a state government or other group stating that the product is sold freely in that state or area) also are required.

In Costa Rica, imports of consumer-oriented foods are made by both wholesalers and supermarket chains directly. The main supermarket chains are Perifericos (13 stores), Mas Por Menos (11), Rayo Azul (11) and AutoMercado (5). An exclusive distributor relationship can be contracted by both parties (importer/exporter) if desired, but this is often not practiced.

As in Panama, many products are imported to Costa Rica through brokers in Miami who are willing to deal with smaller shipments and mix containers if needed. Registration of new products takes three to six months; importers usually work with lawyers to register new export products.

Currently, labels are required in Spanish that include the product name, ingredients, weight and the importer's name and address. Labels are usually attached to the products by importers. A "best if used by" date or expiration date is helpful but not required.

The Costa Rican government has proposed much stricter labeling requirements, including expiration dates and new nutritional labeling (supposedly modeled on U.S. regulations), but no new laws have been put into effect thus far.

In both countries, import demand is especially strong in November and December because workers receive an extra month's salary and purchase extra food and beverages for the holidays.

Eye on the Competition

The United States supplies about one-fourth of Costa Rica's imports of consumer-oriented products and an even larger share of Panama's. Guatemala (breakfast cereals and soups), Chile (fresh fruits and wines) and other Central American countries (canned foods) are important suppliers to these two markets.

Consumers in both countries prefer products that are attractively packaged as well as new-to-market. The influence of U.S. television and large tourist and student interchanges has made U.S. products generally well known and desired. Promotion of products remains helpful, as does a good distributor.

Neither Panama nor Costa Rica has a big food exhibit, as such, but food products (imported and domestic) are displayed at the FERCORI exhibit during the second half of February in Costa Rica and the EXPOCOMER show during the first half of March in Panama. For more information, contact the U.S. agricultural attache's office in San Jose:

Office of the U.S. Agricultural Attache American Embassy - San Jose Unit 2507 APO AP 34020 Tel. (011-506) 231-6483 Fax. (011-506) 232-7709

Mark Your Calendar for Upcoming Trade Events in Panama, Costa Rica

In 1995, the U.S. Department of Agriculture will sponsor two trade events that will be of value to exporters interested in selling to Panama and Costa Rica.

The Great American Food Festival will be held April 3-7, 1995, at the Caracas Hilton Hotel in Caracas, Venezuela, and the Caesar Park Hotel in Panama City, Panama. The registration deadline is Dec. 15, 1994. For more information, contact Willis Collie at USDA's Foreign Agricultural Service. Tel. (202) 720-3623 or fax. (202) 690-4374.

The USDA Trade Show Office will sponsor a sales mission to San Jose, Costa Rica, and Guatemala City, Guatemala, in September 1995. Space is limited to 10 firms. For more information, call (202) 690-1182.

COPYRIGHT 1994 U.S. Department of Agriculture
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