Dominican Republic Country Profile

Market Overview:

Euromonitor reports that the Dominican economy slowed in 2017 but still expanded at a pace roughly matching economic potential. Steady gains in private final consumption are the main driver. A well-developed tourist sector and strong inflows of Foreign Direct Investment (FDI) also provide a boost. A moderate program of fiscal consolidation is a drag on the economy. Annual growth of real Gross Domestic Product (GDP) will be about 5% per year though the middle of the next decade.

  • The Dominican Republic is one of the faster growing economies in the region Real GDP rose by 4.8% in 2017 after gains of 6.6% in 2016
  • The real value of private final consumption rose by 5.1% in 2016 and growth of 4.3% is expected in 2017
  • Unemployment was 13.3% in 2016 and it will fall to 13.1 in 2017
  • A large portion of the jobs being created has been in low-skilled and lower productivity industries in the informal sector
  • The economy should continue to perform better than most of its peers
  • Annual growth of real GDP will be about 5% per year though the middle of the next decade

The country’s tourist industry normally receives more than four million visitors each year, making it the most-visited destination in the Caribbean. The real value of tourist receipts rose by 10.6% in 2016 and gains of 6.7% are expected in 2017. More than 50% of all visitors are from the US. Tourist infrastructure is well developed.

USDA’s Santo Domingo Office of Agricultural Affairs, OAA, hereinafter referred to as “Post” reports the Dominican Republic or “DR” is now the fifth largest market for U.S. consumer oriented products in the Western Hemisphere, after Canada, Mexico, Chile and Colombia, with exports rising 2% to US$492.8 million in 2017. U.S. exports of processed foods to the DR in 2017 totaled US$488.7 million. This represented an increase of 17% from 2016 and makes the DR the top export market in the Caribbean for these products. Top U.S. processed product exports in 2017 included:

  • Fats and oils
  • Food preparations
  • Processed/prepared dairy products
  • Non-alcoholic beverages
  • Prepared/preserved meats
  • Snack food
  • Beer and wine
  • Chocolate and confectionery.

The U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) has improved the competitiveness of U.S. products; consumer-oriented product sales have increased by 228% since the implementation of the agreement in 2007. The United States is the largest consumer food exporter to the Dominican Republic, with a market share of approximately 50%. With a very active tourism sector valued at approximately US$5.3 billion in 2016 (representing 7.8% of the GDP), there are opportunities for increased U.S. exports to the Dominican market.

When it comes to exporting food and agricultural products to the DR the U.S. has some competitive advantages:

  • The implementation of the CAFTA-DR has increased the U.S. market share for food products, lowering or eliminating duties for nearly 80% of products
  • A large and growing tourist population (6.0 million in 2016), 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
  • Efficient food distribution channels, with the construction of new highways and the modernization of seaports and airports facilitating the flow of imported food products
  • Consumers greatly influenced by the U.S. culture, with a positive perception of U.S. products
  • The proximity of the DR to the United States and strong bilateral relationships throughout the public and private sectors, which facilitates trade
  • Growing population in urban centers and increased employment
  • A Dominican diaspora in the U.S. of approximately one million persons, clustered primarily in the northeastern states and Florida, whose remittance payments help support the Dominican economy

However like all export markets the DR has challenges for U.S. exporters as well:

  • Competition from other CAFTA-DR signees and other countries that have signed free trade agreements with the DR
  • Tariff rate quotas, safeguards and other CAFTA-DR provisions continue to protect local producers of rice, meat (beef, poultry and pork), dairy products, beans, garlic and onion
  • Requirement that U.S. products must comply with Spanish language labeling requirements
  • Cold chain limitations
  • Require import permits for some products
  • 18% Value Added Tax (VAT) and high internal logistic costs
  • Lack of transparency and corruption, which continue to earn the DR relatively low scores in international comparison tables (DR was 99th out of 190 countries in the World Bank’s 2018 “Ease of Doing Business” ranking)
  • A lack of institutional continuity across changes in government administrations

Retail Sector:

Euromonitor has reported that the retail sales value in the packaged food market in the Dominican Republic was over US$2.7 billion in 2017. That represents a 25.4% period growth rate from 2013, or US$549.9 million. The forecast growth rate is estimated at over US$3.5 billion by 2022, and 24.9% growth or US$714.9 million. Top growth categories in the forecast include:

  • Ready meals
  • Savory snacks
  • Baked goods
  • Sweet Biscuits, Snack Bars and Fruit Snacks
  • Dairy products
  • Confectionery
  • Ice cream and frozen desserts
  • Baby food
  • Soups

Since the start of the trade liberalization process in the 90’s and especially since the implementation of CAFTA-DR, retail in Dominican Republic has become bigger, more diversified, and more sophisticated. Supermarkets have diversified their stores, including specific stores for determined segments of the population, including high-end segments. The most important supermarket chains in DR are controlled by local investment. Even though the existing supermarket chains do not have any formal industry association, they have been effective at defending their dominant position in the local market. U.S. supermarket chains have not entered the market except for PriceSmart, which is owned by Dominican and U.S. investors. The main urban cities are well covered by several supermarket chains.

The number of Dominican supermarket operators has doubled over the last 20 years. Supermarkets are concentrated in the greater Santo Domingo area and other large urban areas. Key players include: Grupo Ramos (La Sirena, Pola and Aprezio Supermarkets), Centro Cuesta Nacional (Nacional Supermarkets, Jumbo, Jumbo Express, Cuesta Librería and Cuesta Centro del Hogar), Plaza Lama (Plaza Lama, Super Lama, and ElectroLama), Bemosa (Bravo Supermarkets), MercaTodo (La Cadena Supermarket), PriceSmart, the Dominican Hypermarkets Company (Compañía Dominicana de Hipermercados) Carrefour, and Olé Hypermarkets. Super Fresh is an important high-end grocery store in Santo Domingo and Los Iberia and Zaglul are important regional chains serving the eastern Dominican Republic.

According to Post research, there are eight major players in the supermarket sector with more than 160 stores located all across the country, as follows:

  • Grupo Ramos (59 stores) and Centro Cuesta Nacional (30 stores) are the biggest supermarket chains in the country
  • They have diversified their stores in three categories, each one aiming at one specific segment of the population
  • These major supermarkets have distributed outlets within the provinces with the largest per capita income
  • These supermarket chains import products directly from the United States and also buy from other local importers
  • Supermarkets are increasing their number of product lines
  • They are also developing the market for their own private brands and are the exclusive representatives of some name brand products

Post advises that U.S. exporters may enter this sector through importers or the major chains. Major chains prefer to do business directly with the foreign supplier, but for some products, it is easier to buy them from a specialized importer. Over thirty small and medium-sized supermarkets are members of the Small Supermarket Association (UNASE), which has developed a purchasing structure and has built a warehouse to supply its members. Other independent supermarkets buy from local importers, which are also distributors and wholesalers.

Best prospects in the Dominican Republic retail food markets include:

  • Powdered milk
  • Grape wine
  • Baby food
  • French fries
  • Apple juice
  • Craft beer
  • Cheddar cheese.

Food Service Sector:

In total, the Hotel Restaurant Institutional (HRI) sector contributed 17.3% to the Dominican Republic (DR)’s GDP in 2016, which reflected a 4.9% increase from 2015. The tourism sector continues to be very important to the DR’s economy and a key driver of trends and demand in the food service sector. According to the World Travel & Tourism Council (WTTC)’s last annual research, travel and tourism contributed 5.4% to the DR’s total GDP in 2016, and is forecast to rise by 4.8% in 2017.

According to the last official Central Bank Touristic Statistics Bulletin, nearly 6 million tourists entered the DR in 2016. This was a 6.5% increase from the previous year. Within this increase, 84% were foreigners and the remaining 16% were DR nationals residing outside of the country. The number of foreign arrivals increased annually on average by 7% for the last three years.

Most of the hotels located in Punta Cana, Puerto Plata, and La Romana operate under the “all-inclusive” business model, serving nearly 3 million foreigners every year. Most of the travelers who conduct business in the DR arrive through Santo Domingo and Santiago airports. Therefore, Post estimates that nearly 1 million foreigners stay in “non-tourism hotels” annually.

There are approximately 129 outlets from 21 fast food restaurant chains in the DR according to the Exports and Investment Promotion Agency of El Salvador (PROESA). Most of them are U.S. franchises. According to the same source, there are approximately 333 medium and large restaurants in the country; 167 of them located in Santo Domingo (of which 50 are considered high end restaurants), 61 in Santiago, 60 in Bávaro (a tourist region within Punta Cana), 23 in La Romana, and 22 in Puerto Plata.

Supply of the restaurant sector is dominated by a few major distributors and by major local confectionaries. The most important supermarkets distribute wines and other products to these restaurants.

Food-Processing Sector:

Post reports that the Dominican Republic’s food processing industry is valued at US$2.6 billion, with an additional US$723 million for processed beverages and tobacco. The United States has a strong history of supplying meat, and 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.

While some raw materials are available locally, many processed products contain imported ingredients, many from the United States. An important part of the DR’s food processing sector is meat processing, which includes cold cuts and sausages. Key U.S. ingredients include:

  • Pork and beef trimmings
  • Chicken mechanically deboned meat
  • Turkey
  • Soy protein
  • Packaging materials for processed products

One of the top products, salami, is consumed by more than 90% of the Dominican population. The meat processors are key users of the pork CAFTA-DR tariff rate quota (8,500 MT in 2016). More than 67% of processed meats are sold through the retail distribution channel; the remainder is sold in mom and pop shops and butchers.

Milled products are another important part of the food processing industry. Key products include pasta, crackers, and cookies and provide opportunities for U.S. grains. There is also a large sugar confectionary sector in the DR. While most sugar, cacao, and dairy products are sourced locally or from non-U.S. sources, other confectionary products, such as nuts, are imported. 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.

For meat products, the United States supplies more than 95% of imports and the value of U.S. meat exports continue to grow each year. The remainder is sourced from the United Kingdom, Spain, Australia, and Canada. The United States faces competition from Canada for wheat products, the majority of which are used in the local processing industry. Seasonal competitors include Russia, Australia, France, Ukraine, Germany, and Argentina. U.S. concentrated dairy products (e.g., milk powder) faces competition from Denmark, Peru, the Netherlands, and Costa Rica. The top U.S. product in this category exported to the DR is non-fat dry milk.

Best Product Prospects:

Post reports that the best high value products with potential in the food processing sector include:

  • Meat and Edible Meat Offal
  • Animal or Vegetable Fats
  • Cereal, Flour, Starch or Milk Prep.
  • Preparations of Meat or Fish
  • Oil Seeds and Oleaginous Fruits
  • Milling Products
  • Sugars And Sugar Confectionery 

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