largest market for U.S. agricultural products in the Western Hemisphere
the value of the market for U.S. ag products in the DR in 2020
the value of the market of U.S. exports of processed foods to the DR in 2020
Euromonitor reports that the Dominican economy experienced a recession in 2020. The domestic performance is being hampered by COVID-19 shutdowns, whilst export growth has been hindered by the global COVID-19 related slowdown. The contraction in the U.S., the main source for remittances, tourist arrivals and exports will limit economic performance most. Growth of real Gross Domestic Product (GDP) will be 5.2% in 2021 and should be around 5% per year until 2027.
Real GDP fell by 7.6% in 2020 after gains of 5.1% in 2019.
The real value of private final consumption rose by 4.6% in 2019 and a fall of 4.3% was expected in 2020. Spending has been affected by the shuttering of all but essential businesses due to COVID-19.
With close to 2 million Dominicans living abroad, remittances are a key source. Growth in remittances is slowing, due to the weakening U.S. economy.
Unemployment was 13.6% in 2019 and it will remain the same in 2020. Jobs will be lost during 2020, due to businesses that are unable to survive the COVID-19 measures, particularly SMEs which have limited financial reserves.
Assuming the pandemic is contained, the economy will back in 2021, before increasing in the medium-term, to around its potential rate of growth.
The Dominican Republic is an upper middle-income country with low and stable inflation. It is the second-largest economy in the Caribbean, just behind Cuba, and the thirdlargest country in terms of population (behind Cuba and Haiti). The DR’s major export growth has shifted away from its traditional products (raw sugar, green coffee, and cacao) to gold, Ferro-nickel, sugar derivatives, free trade zone products, vegetables and other agricultural products. Major imports include consumer-oriented products and livestock feed, with the United States as a primary partner
The Dominican Republic is the favorite country for foreign investors in the Caribbean region. However, the country’s competitiveness is adversely affected by the poor quality of its infrastructure. Improvements in the troubled electricity sector are urgently needed and will require several years to implement. Private investment in real estate, financial services and the manufacturing industry will pick up in 2021.
Population totaled 10.7 million in 2019, an increase of 2.2 million since 2000. The median age in 2019 was 27.6 years, 5.1 years greater than in 2000. Although a modest ageing process is underway, the number of those less than 20 years will still make up a significant portion of the total in the medium term.
USDA’s Santo Domingo Office of Agricultural Affairs, OAA, hereinafter referred to as “Post” reports the Dominican Republic or “DR” is the 4th largest market for U.S. agricultural products in the Western Hemisphere, valued at US$1.4billion in 2020. This is growth of 6% and a new record high. However, the COVID-19 pandemic has impacted the growth rate of U.S. agricultural exports to the Dominican market, especially for consumer oriented products. The demand for those products has decreased by 3% to US$673.8 million in 2020 due to a significant reduction in the flow of tourists coming into the country and the closure of restaurants throughout the nation.
The DR is the largest market for U.S. exports of processed foods in the Caribbean which in 2020 totaled US$504.6 million. This represented an increase of 2% from that of 2019 and another record high level. Top U.S. processed product exports in 2020 included:
Fats & Oils
Processed/Prepared Dairy Products
Food Preparations & Ingredients
Condiments & Sauces, Jams & Jellies
Advantages and Challenges for U.S. Food Exporters in the Dominican Republic
The U.S. enjoys some advantages in the Dominican food market but it also has its challenges.
The implementation of CAFTA-DR, which has lowered or eliminated duties on nearly 80% of products
A large and growing tourist population, which demands high-value food products
A growing number of consumers demanding higher quality and healthier products - they generally perceive that U.S. products meet their requirements - as well as an increasingly modern HRI sector which also seeks new, high quality products.
Efficient food distribution channels (new highways, modernized seaports/airports).
Consumers greatly influenced by U.S. culture, with a positive perception of U.S. products
The proximity of the DR to the United States and a strong bilateral relationship throughout the public and private sectors, which facilitates trade
Growing population in urban centers and increased rate of employment
A Dominican diaspora in the U.S. of approximately one million people, clustered primarily in the northeastern states and Florida, whose remittances help support the Dominican economy
The ongoing and incoming negative impact of the COVID-19 pandemic over the HRI sector and the overall purchasing power of Dominican consumers.
Competition from other CAFTA-DR signees and the DR’s other free trade agreement partners.
Delays for import permits and sanitary registration, which can affect the availability of imported products.
Requirement that imported products must have a label in Spanish that must be placed at origin or in the DR.
Remaining cold chain limitations, which have been reduced through USDA technical and financial support.
18% Value Added Tax (VAT) and high internal logistical costs.
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largest market in Latin America for U.S. consumer-oriented products
20% - 25%
of total retail sales in the DR come from local supermarket chains
the retail sales value of packaged food in the DR in 2020
Euromonitor has reported that the retail sales value in the packaged food market in the Dominican Republic was US$2.6 billion in 2020. That represents a 27.3% period growth rate from 2016, or US$566.2 million. The forecast growth rate is estimated at over US$3.3 billion by 2025, and 23.6% growth or US$638.4 million. Top growth categories in the forecast include:
Sweet Biscuits, Snack Bars & Fruit Snacks
Other Dairy Products
Ice Cream & Frozen Desserts
Post reports that The Dominican Republic (DR) is one of the most dynamic economies in the Caribbean region. With U.S. consumer-oriented product exports reaching US$673.8 million in 2020, the country represents the 3rd largest market in Latin America. The DR’s modern retail sector is growing rapidly and offers a wide variety of U.S. products. However, despite the prominence and growth of local supermarket chains, they only account for 20%-25% of total retail sales. Most sales are still in the traditional channel, which includes neighborhood stores (colmados) and warehouses, which offer largely local products.
The Dominican retail sector can be divided into two distinct segments or channels: the modern and the traditional. The modern retail distribution channel is comprised of three main components: supermarket chains, independent supermarkets, and convenience stores known as “food shops.” Supermarket chains dominate this segment and offer a wide variety of U.S. products. However, despite their prominence and growth, only 20%-25% of retail sales are via the modern retail channel. The traditional retail channel is subdivided into two main components: neighborhood stores known as “colmados” and walk-in food warehouses known as “Almacenes,” located mainly in traditional street markets. In addition to direct sales to the public, Almacenes also serve as suppliers to colmados. It is estimated that 70%-80% of retail food sales are recorded by the traditional retail channel.
After March 19, 2020, Dominican retailers faced challenges due to the COVID-19 global pandemic, including reduced hours of operations and internal decisions to maintain prices close to normal levels. For imports, retailers reported some delays at ports and changes in customs procedures, which affected product entry. These issues have since been resolved by the authorities. In addition, some U.S. imported products, mainly in the beef category, had higher prices from April through June, which forced retailers to seek alternative suppliers via meat importers who normally supply the Hotel, Restaurant and Institutional (HRI) sector. The retail sector is expected to return to normalcy in the coming weeks as the economy is opening gradually, and the U.S. Dollar to Dominican Peso exchange rate had stabilized at the end of 2020.
Supermarket Chains: The number of Dominican modern supermarkets has doubled over the last 20 years. Supermarkets are concentrated in the greater Santo Domingo area and other large urban areas. There are currently more than 150 supermarkets nationwide, which is a 30% increase in new stores over the past two years. Post has been advised that there are plans for opening four more stores from one of the largest retail groups before the end of the year.
Independent Supermarkets: The second component of the modern food retail channel is made up of the independent supermarkets. With more than 40 points of sale, the majority are based in Santo Domingo and Santiago, the two largest cities. Most of these independent supermarkets have joined forces under an umbrella group known as the National Union of Low-Cost Supermarkets (UNASE).
Convenience Stores: The last component of the modern food retail channel is comprised of convenience stores, which are mainly located in gas stations and focus on pre-packaged and ready-to-eat foods and beverages. They offer a large selection of U.S. brands (some produced outside the United States), including snacks, sodas, other non-alcoholic beverages, rum, wine, and beer. Customers generally only purchase food and drink to consume onsite, in this inexpensive and social environment. There are no regional or national chains in this sub-segment.
Best Product Prospects
Post reports that industry sources indicate that the best product prospects in the Dominican retail sector include U.S. dairy products (cheese, yogurt, and milk powder), although they continue to face onerous and time consuming import regulations. Other top categories are poultry, pork and pork products, beef and beef products, flour and other baking ingredients, spices, candies, fresh fruit, processed vegetables, prepared foods, condiments and sauces, snacks, eggs and egg products, and fruit and vegetable juices. There is also growth potential for existing and new alcoholic beverage products within the distilled spirits, wine, and craft beer categories.
Food Service Sector
of all visitors to the DR come from the U.S.
average number of annual tourists to the DR, making it the most-visited destination in the Caribbean
increase in the real value of inbound tourist and business travel in 2019
Post reports that the country’s tourist industry normally receives more than four million visitors each year, making it the most-visited destination in the Caribbean. The industry is being affected by the travel restrictions which were in place due to COVID-19 in 2020. The tourism sector resumed activity in July and a tourism recovery plan was put in operation in September. The real value of inbound tourist and business travel receipts rose by 1.7% in 2019 but a fall of 47% is expected in 2020. More than 50% of all visitors are from the US. Tourist infrastructure is well developed.
Prior to the pandemic and following CAFTA-DR, there was positive growth in the hotel and restaurant sectors in Santo Domingo and other urban areas. Based on this previous growth rate and the recent government incentives to promote tourism, including free health coverage for all tourists arriving in the country, industry leaders are hopeful of a full recovery of the sector in the coming 12-18 months
In addition to the normal demand from the tourist sector, the DR’s previous economic growth fueled consumer purchasing power, and led to a growing gastronomy sector. As well, increased local demand fueled continuous growth, innovation, and creativity among leading independent and franchise restaurants. This growth in turn has led to continued expansion and interest in premium red meat cuts, pork, poultry parts, seafood, cheeses, frozen potatoes and vegetables, fresh fruit, wine, and craft beer.
Best Product Prospects
Post reports that excellent opportunities exist for U.S. exports to the Dominican Republic’s food service sector. Leading U.S. products for distribution in hotels and restaurants include premium red meat cuts, pork, poultry parts, seafood, cheeses, frozen potatoes and vegetables, fresh fruit, wine, and craft beer. A strong preference for U.S. products exists in the sector, which incentivizes promotions under the Sabor USA branding.
the value of the DR’s food processing industry as of September 2020
the year that the CAFTA-DR free trade agreement will reach full implementation
the approximate number of companies classified as agro-industrials and processors in the DR
Post reports that As of September 2020, the Dominican Republic’s food processing industry was valued at US$2.5 billion, with an additional $0.7 billion for processed beverages and other products during the same period. Meat processing, wheat milling, bakery products, and dairy processing continue to lead the domestic food processing sector. The COVID-19 pandemic did not affect the demand for most of those product categories during calendar year (CY) 2020. The United States continues to be a strong supplier of meats, edible oils, fats, dairy products, wheat, and other key ingredients. There is potential for increased exports of those and other U.S. ingredients, especially as CAFTA-DR moves towards full implementation by 2025.
There are more than 1,000 companies classified as agro-industrials and processors in the Dominican Republic. The key products include processed meat, milling products, dairy products, oils and vegetable-origin fats, and sugar confectionary. These activities have substantially contributed to employment and growth in the Dominican Republic’s economy. Since the implementation of the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), U.S. ingredients have had an increasing role in the DR’s food processing sector.
While some raw materials are available locally, many processed products contain imported ingredients, with numerous ingredients from the United States. Imported products enter the DR by one of two channels: direct purchase by the food processing companies or via large importers and distributors. Final processed products are then distributed to retail, food service, and institutional channels.
Meat Products: During the last five years, the U.S. supplied an average of 95% of total meat exports to the DR, with an annual average value of US$181 million. These numbers continue to grow each year. Other sources include the EU, Brazil and Australia.
Wheat Milling Products: From 2016 to 2020, the United States supplied an average of 57% of total wheat exports to the DR, with an annual average value of US$69 million. Canada is the strongest (and growing) competitor for the United States in this market, with 64% of total wheat exports to the Dominican market in 2020.
Dairy Products: During the last five years, the United States exported an annual average of 17% of milk and cream (powdered milk, HS0402) to the DR, with an annual average value of US$18 million. The EU has the largest market share for this sector, exporting an annual average of 64% of total Dominican imports.
Best Product Prospects
Post reports that the United States has a strong history of supplying meat, edible meat offal, and animal and vegetable fats for the Dominican meat processing industry; this is expected to continue. There is potential for increased exports of U.S. ingredients for the Dominican milling, dairy, and confectionary industries, especially since CAFTA-DR will be fully implemented by 2025. Post anticipates this growth will be seen within products already present in the market. However, growth opportunities for U.S. dairy ingredients may continue to be limited by onerous and time-consuming import requirements.
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