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Central America Food and Drink Report Q3 2010
Business Monitor International, July 2010, Pages: 48
Central America Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Central America's food and drink industry.
We are forecasting that the Central American consumer market is set to grow in prominence over the next five years. This trend is highlighted in the business results of the region's most important food and drink firms and the growing investment into the region by foreign multinationals, with Wal-Mart and PepsiCo key players in the sector. The key risk to this positive outlook is the prospect of a secondary slowdown in the US – the region's main trading partner.
Headline Industry Data (Regional Averages)
- 2010 per capita food consumption = -1%; forecast to 2014 = +44%
- 2010 alcoholic drink sales = -9%; forecast to 2014 = +34%
- 2010 soft drink sales = +6% ; forecast to 2014 = +31%
- 2010 mass grocery retail sales = +7%; forecast to 2014 = +39%
Key Macroeconomic Data (Regional Averages)
- 2010 Real GDP growth = +2% (2009, -1.9%)
- 2010 Consumer Price Index = +3.4% chg y-o-y (period average) (2009, +4.0 %)
- 2010 Unemployment Rate = 8.7% (period average) (2009, 8.1%)
Key Company Trends
Increased Competition In Brewing Sector – In June 2010 the leading beer in the Chinese market, Tsingtao, launched in the Central American market of Guatemala. The launch is being handled by local distributor Impromo, which also plans to launch Tsingtao in El Salvador and Honduras. The move comes shortly after Russian brewer Baltika launched in the market and reflects the growing demand for premium beers among the country’s growing middle class. These launches also reflect the gradual increase in competition in a region where local monopolies have traditionally dominated. Retail Expansion – In June 2010 Wal-Mart Centroamerica inaugurated a new store in Guatemala and said that it is to be the first of seven planned outlets in the country in 2010. The expansion is part of the firm’s commitment to opening 30 new stores across Central America in 2010 – growth that will cement its position as the region’s largest retailer. The expansion highlights the opportunities available in the relatively unsaturated Central American market, where organised retailers account for less than 50% of food and grocery spending.
Key Risks to Outlook
US Slowdown – Central America is gradually reducing reliance on its US trade ties, exemplified by the signing of a liberal trade agreement with the EU in late May 2010. However, the US remains the region’s major trade partner absorbing 41% of its total exports.
Political risk – For some Central American markets political risk is also a significant factor that needs to be taken into consideration. Failure to address these structural and institutional shortcomings could see the region struggle to attract new investors – a process we see as key to the continued development of the consumer sector.
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