Caribbean Basin Market Profile

Market Overview:

The Caribbean Basin Agricultural Trade Office in Miami (CBATO), hereinafter referred to as “Post” reports that the Caribbean is one of the most fragmented and diverse regions in the world. This vast geographic area is covered by two regional FAS offices, the Office of Agricultural Affairs (OAA), hereinafter also referred to as “Post” in Santo Domingo and the CBATO. The Post in Santo Domingo covers the Dominican Republic, Jamaica and Haiti. The CBATO Post covers practically all other island markets. This assessment covers the markets where there is a combination of market potential, current information and activity based on overall strategic planning for the medium term. For the 2017 program year it includes Bahamas, Bermuda, Dominican Republic, Jamaica and Trinidad and Tobago.

The CBATO Post reports that the import-friendly Caribbean islands gobbled up over US$1 billion in U.S. consumer-oriented foods and fish products in 2016, continuing years of solid results in U.S. exports to the region in these categories. With limited agricultural production, most Caribbean islands rely heavily on imported food products, particularly from the U.S. As tourist arrivals in most islands continue to improve, prospects for further market expansion are always present.

The Caribbean is an excellent market for U.S. suppliers; due in large part to the fact that demands for imported food products is largely inelastic. These island nations must import the majority of their food requirements due to production constraints - insufficient arable land, scant water resources available on some islands, no economies of scale, and a limited food-processing sector. Due to familiarity, the nearly 4 million island residences hold strong appeal for U.S. products. Annually between six and seven million stop-over tourists (over half of which are from the U.S.) visit the region which also helps spur the Caribbean food service sector’s demand for U.S. ingredients.

According to International Monetary Fund, (IMF) estimates, Gross Domestic Product (GDP) growth in the tourism-dependent economies of the Caribbean (which makes up most of the CBATO’s region of coverage) was expected to increase from 0.8% in 2015 to 1.4% in 2016. Continued growth in tourism, which is expected to moderate in 2016, and lower fuel prices over the past year, are helping these small island markets generate economic activity and keep inflation in check while giving public finances much needed breathing room. However, a different situation is emerging in several key markets.

While tourism has continued to improve in most islands, Barbados has seen its tourist activity decelerate in 2016. Trinidad and Tobago (T&T), the largest economy in the CBATO region, has also seen its economic performance slump as a result of lower oil and gas export revenues. The effect of Britain’s exit (Brexit) from the European Union impact on the region which relies heavily on tourists from the U.K. remains unclear. The Zika Virus epidemic has also spread throughout the Caribbean and could affect tourism as well. Last but not least, many islands continue to rely heavily on oil from Venezuela, making them vulnerable to any developments that might take place there. While the region’s economic recovery slowly improves, demand for U.S. foods remains as strong as ever.

The U.S. is the largest supplier to the Caribbean of food products, largely in part on the strength of these favorable conditions. In 2016, the United States exported US$1.8 billion worth of consumer-oriented products to the entire region, with growth of 5% over 2015. Consumer-oriented products account for nearly 56% of U.S. agricultural total, with poultry meat & products (excluding eggs), dairy products, prepared foods, beef & beef products, and snack foods rounding out the top five export categories. In 2016, the U.S. also exported US$60.8 million worth of fish products to the region.

The Caribbean market is witnessing increasing competition from Europe, Canada, and South and Central America. While the U.S. still enjoys several major location advantages, U.S. suppliers should remain mindful that in coming years rising competition will necessitate closer market monitoring in order to capitalize on emerging market opportunities around the region. In islands where there is a high dependence on U.S. tourism as the principal source of income (e.g., The Bahamas, Bermuda, Cayman Islands, Aruba, and Turks and Caicos) this is more evident than in those that retain close ties with Europe, particularly in the French Antilles, Turks and Caicos Islands and the Dutch Caribbean. Canada has close relations with its many Commonwealth partners in the region.

Cuba, the largest and most populated country in the region, maintains diplomatic relations with most of its Caribbean neighbors and reportedly plays an important role in terms of offering graduate and post graduate education to students from the Caribbean. China also has a growing presence in the Caribbean. Many islands have welcomed aid from China, particularly in the form of large infrastructure projects (stadiums, hospitals, airports, performing art centers, etc.). In The Bahamas alone, a US$3.5 billion mega resort (the largest of its kind in the Western Hemisphere) which was scheduled to open in March 2015, but is being delayed by legal and financial issues, is being built largely with Chinese labor and financing from the EXIM Bank of China.

But Caribbean importers have a longer history of doing business with the U.S. Their strong interest in U.S. suppliers and products is mainly due to the following: close proximity, long-standing reputation of high quality products, and superior quality of service. As a testament to the reputation of U.S. products in the Caribbean, many local importers have noted that they are able to source a variety of products from other countries, but few match the reliability in quality of their U.S. counterparts.

Many of the orders that importers place are small but frequent, so they often do not order full containers from each supplier. Caribbean importers rely heavily on consolidators in South Florida for shipment of mixed container-loads to their local ports. As a result, a crucial part of doing business with Caribbean importers is building a relationship with a consolidator in North or South Florida and in some cases New Jersey.  

Since some resorts and larger supermarkets often order larger shipments directly from suppliers, the main resource for medium to smaller sized retail and food service businesses are local importer/wholesalers, making them a good target for smaller U.S. exporters. These importer/wholesalers will work with prospective U.S. suppliers to find the best means of product delivery, and meeting local standards and regulations. Local importers will usually stay informed of changing regulations and duties on food and beverage products. The majority of Caribbean countries accept standard U.S. labeling including the standard U.S. nutritional fact panel. Enforcement of labeling and other product standards, which usually falls under the jurisdiction of a National Standards Institution, is carried out mostly at the port of entry but routine and random checks at the retail and wholesale levels are also conducted.  

Retail Sector:

Post reports an estimated 55% to 65% of consumer-oriented agricultural imports in the Caribbean are destined for the retail sector. Most of the products stocked on the shelves of Caribbean retail stores are imported. As in the food service sector, smaller retailers such as neighborhood ‘mom and pop’ stores will buy most if not all of their products from local import wholesalers. These retailers have a slower turnaround on product sales and have limited space for storage, which both lead to wholesale as a preferred option for sourcing food and beverage products.

In contrast, supermarket chains often have both local and U.S. or foreign-based purchasing offices. They work closely with U.S. suppliers to find the best prices for products of interest. Again, a consolidator in South Florida remains crucial to the equation in this market segment. International retail chains in the Caribbean include: PriceSmart (U.S.), Cost-U-Less (Canada), Save-A-Lot (U.S.), Carrefour (France), and Albert Heijn Zeelandia (Holland). While these retail outlets do quite well, 'mom and pop' stores will continue to supply a large share of consumers’ needs for basic supplies. In addition, national and international convenience stores and gas marts play a small but growing role in consumer food purchases, contributing about 5% of total retail food sales.

Food Service Sector:

Post reports that the considerable investment in tourism infrastructure that has taken place in recent years has certainly strengthened the long term potential of the region’s hotel, restaurant, and institutional (HRI) food service sector. As mentioned one such investment is the Baha Mar gaming resort project in The Bahamas, which is being billed as the largest resort development currently under construction in North America and the largest single-phase resort development in the history of the Caribbean. The $3.5 billion, 1,000 acre development is located five miles west of Nassau along a half mile stretch known as Cable Beach.

Unfortunately, nearing its completion in 2015, the project ran into financial/legal difficulties and has yet to open. Provided these obstacles can be overcome, when it opens its doors Baha Mar will include four resort hotels, the Caribbean’s largest casino, The Bahamas’ largest convention center, and 20 full service restaurants and bars among other attractions. Bahamian tourism and demand for U.S. foods are expected to increase accordingly.

Overall, the Caribbean HRI food service sector is estimated to account for roughly 35% to 45% of consumer-oriented agricultural imports. The percentage of Caribbean hotels and restaurants that are independently owned varies from approximately 90% in Grenada to 25% in The Bahamas (Nassau in particular). This characteristic impacts the flow of imports to the island. The independently owned restaurant or hotel is more likely to source its food and beverage products from local importers/wholesalers, while larger chain restaurants and hotels have both the connections and the economies of scale to also make direct imports from U.S. suppliers.

While corporate-owned resorts and hotels have boomed over recent years, independently-owned food service businesses are still strong on all Caribbean islands. Local independently-owned restaurants remain especially popular in countries such as Aruba, Barbados, Bermuda, and Sint Maarten/St. Martin. Some of the world’s most acclaimed chefs are working in the Caribbean. Using high quality ingredients, these chefs and their restaurants often are a valuable platform for U.S. food and beverage products. However, many chefs are European-trained and thus breaking their preference toward European products can be challenging. Heightened interest of chefs in the use of locally produced ingredients is a recent trend, similar to other parts of the world.

Food-Processing Sector:

Post reported that the food processing in the broad Caribbean Basin is highly concentrated in the larger countries such as the Dominican Republic and Jamaica. In their islands of coverage, which have very limited food production and practically no economies of scale, food processing is much less prevalent. In fact, bulk and intermediate agricultural products account for only a quarter of U.S. agricultural exports to the CBATO islands. Nonetheless, there is processing of wheat flour, pasta products, rice, bakery products, soy products, dairy products, and animal feeds in some countries, particularly in Trinidad and Tobago and Barbados. Food processors within the region buy roughly 20% of raw materials and food ingredients from local suppliers and import 80% from international suppliers.

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