Central America Food and Drink Report Q1 2012

Growth in organised retailing is playing a major role in the development of Central America’s consumer sector, with the local unit of US retailer Walmart currently the driving force behind this expansion. Walmart is the undisputed market leader in Central America, and we see no sign of this changing over our forecast period, as a sustained investment programme will only strengthen its position. The retailer’s dominance could have negative implications for the region’s consumer sector over the longer term, and also on mass grocery retail market competition. In a market where less than 50% of food sales are made through organised channels, the continued development of the mass grocery retail sector will be a key factor driving the consumer segment.
Headline Industry Data (regional averages)
?? 2012 per capita food consumption (US$) = +5.0%; forecast to 2016 = +28.3%
?? 2012 alcoholic drink sales (litres) = +6.2%; forecast to 2016 = +35.5%
?? 2012 soft drink sales (litres) = +5.3% ; forecast to 2016 = +30.8%
?? 2012 mass grocery retail sales (US$) = +6.0%; forecast to 2015 = +35.0%
Key Company Trends
Costa Rican Farmers Setting Up Micro-Processing Plants To Sell Coffee Directly: A growing number of coffee farmers in Costa Rica are setting up their own micro-processing plants in a bid to serve international buyers directly, reports CentralAmericaData. The Instituto del Café de Costa Rica (Icafé)’s figures revealed that the number of processing plants has increased to 161 in 2011 from 94 in 2010. According to Marvin Barquero, the establishment of micro-processing plants allows small coffee farmers to sell directly to roasters on the international market by skipping exporters. Information from Icafé shows that the processing plants are enabling farmers to receive up to US$100 more per quintal (46 kilos) of processed coffee.
Walmart Opens New Discount Format : In December 2011 mass grocery retailer Walmart de México opened a new store in El Salvador under the banner Maxi Despensa. The discount-focused store is targeted at lower-income consumers, and the new format demonstrates the firm’s renewed focus on its ‘everday low pricing’, which is designed to attract a greater customer base to its network. The launch in El Salvador follows the opening of the firm’s first Maxi Despensa outlet in Honduras in November 2011.
Key Risks To Outlook
Political Risk: For some Central American markets, political risk is a significant factor for consideration. Central America remains one of the worst-affected areas in the world in terms of non-political violence, and we are concerned particularly about the potential for unrest in countries such as Honduras, Nicaragua and Guatemala. These states are among the poorest in the region and share the potentially explosive combination of high unemployment, youthful populations and stark inequality, as well as a high proportion of income spent on food and energy.

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BMI Industry View 7
SWOT Analysis 9
Central America Food Industry SWOT 9
Central America Drink Industry SWOT 10
Central America Mass Grocery Retail Industry SWOT 11
Business Environment 12
BMI’s Core Global Industry Views 12
Table: Agricultural Commodity Prices 14
Table: Core Views Q112 23
Latin America Sector Focus 24
Brewing Consolidating Around Heineken, SABMiller And ABI 24
Latin America Risk/Reward Ratings 29
Table: Brazil Food & Drink Risk/Reward Ratings – Q112 31
Table: Latin America Food & Drink Risk/Reward Ratings – Q112 32
Macroeconomic Outlook 33
Guatemala Economic Outlook 33
Table: Guatemala – Economic Activity 34
El Salvador Economic Outlook 35
Table: El Salvador – Economic Activity 36
Honduras Economic Outlook 37
Table: Honduras – Economic Activity 38
Costa Rica Economic Outlook 39
Table: Costa Rica – Economic Activity 40
Industry Forecast Scenario 41
Consumer Outlook 41
Food 42
Food Consumption 42
Table: Guatemala – Food Consumption 43
Table: Costa Rica – Food Consumption 43
Table: El Salvador – Food Consumption 44
Table: Honduras – Food Consumption 44
Prepared Food 45
Table: El Salvador – Confectionery 45
Table: El Salvador – Meat 46
Table: El Salvador – Jams And Jellies 48
Table: El Salvador – Pasta 49
Prepared Fish 50
Table: El Salvador – Fish 50
Table: Coasta Rica – Fish 51
Oils And Fats 53
Title: Guatemala – Soya Bean Oil 53
Table: El Salvador – Margarine 54
Table: Costa Rica – Soya Bean Oil 55
Dairy 56
Table: El Salvador – Dairy 56
Central America Food & Drink Report Q1 2012
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Drink 60
Hot Drinks 60
Table: Guatemala – Coffee Sales 60
Table: Costa Rica – Coffee Sales 60
Table: El Salvador – Coffee Sales 61
Table: Honduras – Coffee Sales 61
Alcoholic Drinks 61
Table: Guatemala – Alcohol Sales 62
Table: Costa Rica – Alcohol Sales 62
Table: El Salvador – Alcohol Sales 63
Table: Honduras – Alcohol Sales 63
Soft Drinks And Bottled Water 64
Table: Guatemala – Soft Drink Sales 64
Table: Costa Rica – Soft Drink Sales 65
Table: El Salvador – Soft Drink Sales 65
Table: Honduras – Soft Drink Sales 65
Mass Grocery Retail 66
Table: Regional Sales Breakdown By Retail Format (%) 66
Table: Guatemala – Mass Grocery Retail Sales 67
Table: Costa Rica – Mass Grocery Retail Sales 68
Table: El Salvador – Mass Grocery Retail Sales 68
Table: Honduras – Mass Grocery Retail Sales 69
Trade 70
Table: Guatemala – Trade Balance 70
Table: Costa Rica – Trade Balance 70
Table: El Salvador – Trade Balance 71
Table: Honduras – Trade Balance 71
Food 72
Key Industry Trends And Developments 72
Costa Rican Growers Must Adhere To New US Food Safety Law 72
FEMSA Moves Into Dairy Segment 72
Nestlé Makes Guatemalan Acquisition 73
Walmart Giving Producers a Hand 73
Market Overview 74
Drink 75
Key Industry Trends And Developments 75
Costa Rican Farmers Setting Up Coffee Micro-Processing Plants 75
SABMiller Raises Volume Forecasts At Expense Of Price Growth 75
Regional Consolidation In Soft Drinks 77
Increased Competition In Brewing Sector 78
Market Overview 79
Hot Drinks 79
Soft Drinks 80
Alcoholic Drinks 80
Mass Grocery Retail 82
Key Industry Trends And Developments 82
Walmart Launches New Discount Format In El Salvador 82
Walmart Investing In Expansion 82
Colombian Retailer Olimpica Moves Into Central America 83
Central America Food & Drink Report Q1 2012
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Market Overview 84
Competitive Landscape 85
Table: Key Players In Central America’s Food & Drink Sector 85
Table: Key Players In Guatemala’s Mass Grocery Retail Sector (2010) 86
Table: Key Players In El Salvador’s Mass Grocery Retail Sector (2010) 86
Table: Key Players In Costa Rica’s Mass Grocery Retail Sector (2010) 87
Table: Key Players In Honduras’s Mass Grocery Retail Sector (2010) 87
Company Monitor 88
Food 88
Diana Food 88
Drink 89
Central America Beverage Corporation (CABCORP) 89
SABMiller 91
Mass Grocery Retail 93
Walmart Centroamerica 93
BMI Methodology 95
Food & Drink Business Environment Ratings 95
Ratings Methodology 95
Ratings System 95
Indicators 95
Table: Limits Of Potential Returns 96
Table: Risks To Realisation Of Potential Returns 97
Weighting 98
Table: Weighting 98
BMI Food & Drink Industry Glossary 99
Food & Drink 99
Mass Grocery Retail 99
BMI Food & Drink Forecasting And Sources 101
How We Generate Our Industry Forecasts 101
Sources 102
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