Guatemala Country Profile

Market Overview:

Euromonitor reports that the Guatemalan economy continued to grow at a steady pace in 2016. Guatemala’s economy has been one of the stronger economic performers in Latin America in recent years and that should continue in 2017. Real Gross Domestic Product (GDP) was estimated at 3.1% growth in 2016 – after gains of 4.1% in 2015. Moderate gains in household spending and steady growth in both exports and remittances provide support. But public investment is weakening and high levels of crime and violence impose huge economic costs on the country. Economic reforms by the new government could be derailed by legislative gridlock. Growth of real GDP should average about 3.9% per year throughout the remainder of the decade. Guatemala’s economic prospects depend mainly on the U.S. economy.

The real value of private final consumption rose by 3.9% in 2015 and growth of 2.7% was expected in 2016. With over 1.6 million Guatemalans working outside the country, remittances are an important source of support for consumer spending.  Unemployment was 2.7% in 2015 and it will rise to 2.8% in 2016. The percentage of the workforce that is employed has been falling for a number of years. A large share of population is employed in the informal sector. Female participation is also low and only 18% of the economically active population have completed a primary education.

USDA’s Office of Agricultural Affairs, OAA, in Guatemala City, hereinafter referred to as “Post” reports that the CAFTA-DR has had a positive effect on bilateral trade. Besides CAFTA-DR, Guatemala has a free trade agreement (FTA) with Central America (including Panama), Colombia, Mexico, Dominican Republic, Taiwan, Chile, and the European Union (EU.) Other partial free trade agreements were signed with Belize, Cuba, Ecuador, and Venezuela. These negotiations, but specifically the FTA with the EU, are forcing greater integration within the Central American Customs Union. The customs union between Guatemala and Honduras was officially announced on December 2015, through the unification of the customs facilities at Agua Caliente border.

Culturally speaking, Guatemalans have adopted much of the U.S. culture such as music, sports, fashion, and fast food. Through remittances sent by Guatemalans in the U.S., local food tastes are changing and more high-value foods are now affordable. Guatemalan consumers are aware of U.S. products. In addition, many Guatemalans travel to the U.S. and are introduced to American food products, therefore, consumers prefer U.S. products over other products as they are viewed as higher quality.

Approximately 43% of all Guatemalan imports of agriculture, fish, and forestry products come from the U.S. Guatemalans have also followed the U.S. trend towards more natural and healthy products, and consumers are demanding food with less sugar, saturated fat, and cholesterol. Convenience products have more demand and there is a niche market for refrigerated, ready-to-eat products, and organic foods. The local processing industry is taking advantage of this trend and is developing and increasing the production of processed products such as beans, tacos, tortillas, burritos, and corn-based tamales, which are among the preferred foods in the supermarkets because they are easy to cook/heat and cheap. 

Guatemala is the largest market for U.S. exports of agricultural products in Central America. Total U.S. food and agricultural exports to Guatemala increased 1% to nearly US$1.1 billion in 2016. Consumer ready food product exports from the U.S. increased 5% to US$385.3 million in 2016 which was a new record high. That amount was also 35.6% of the agricultural total. Guatemala imported US$305 million in U.S. processed foods in 2016, growth of 7% and also a new record high. Top processed food exports from the U.S. in 2016 included food preparations, fats and oils, processed vegetables and pulses, prepared/preserved meats, processed/prepared dairy products, chocolate and confectionery, snack foods and condiments and sauces. 

Retail Sector:

Euromonitor has estimated that the 2016 retail sales of packaged food products in Guatemala reached over US$5.5 billion. Guatemala remains the largest packaged food market in Central America. This also represents an increase of nearly US$1.4 billion or 35.4% from 2012. They also forecast the packaged food market to grow to US$8 billion by 2021, an increase of US$2.5 billion and 46.4%. High growth categories in the forecast include processed fruit and vegetables, rice pasta and noodles, soup, baby food, processed meat and seafood, ice cream and frozen desserts and breakfast cereals.

Post reports that the retail sector in Guatemala is dominated by three supermarket chains:  PriceSmart, Wal-Mart, and Unisuper (La Torre/Econosuper). It is estimated that only 30% of food sales are made through the supermarkets. There are some other smaller supermarkets present in the country that are trying to gain market share in the retail sector, but these supermarkets are more targeted to the middle-low and lower income consumers. They are stores smaller than a regular supermarket and in consequence have smaller shelf space to display their products.

Super Elmar, S.A., is a family-owned company with eight stores in Guatemala City. This supermarket has stores located within walking distance of residential areas and far away from the traditional commercial areas where most of the bigger supermarket chains are located. The company buys imported products from local distributors and is not currently planning to import directly. For the past five years Super Elmar has not opened any new stores.

Comercializadora Gigante, S.A., also known as La Barata, has 10 stores that are mainly located near the open-air markets within Guatemala City and Mixco, Villa Nueva and Amatitlan. They carry very few imported products and more than 80% of their food items are locally produced goods. Super Del Barrio started its operations in 2007 and by the end of 2014 had opened 28 stores. In 2016, the company opened 5 new stores. The store offers daily discounts for food items and competes with larger stores attracting costumers that live in nearby residential areas.

Supermarket sales continue growing and new supermarket units are being built not only in Guatemala City, but also in the interior of the country. Around 70% of the Guatemalan consumers still shop in the open-air markets and corner stores. Walmart Mexico y Centroamérica is Guatemala’s largest supermarket chain. In 2010, Wal-Mart Mexico bought Wal-Mart Central America and became “Walmart de México y Centroamérica”, currently Guatemala’s leading supermarket chain, accounting for more than 31,000 direct jobs within their 718 units in Central America (as per the company’s last report in August 2015.)  

In Guatemala, the company also has smaller stores like Despensa Familiar and Maxi Despensa. Total stores in Guatemala are 218: Supertiendas Paiz (28), Walmart (9), Despensa Familiar (152), and Maxi Despensa (29). Walmart imports directly around 85% of its food products including, produce, cereals, processed foods and beverages. Walmart Guatemala and Costa Rica make most of the purchasing decisions for the rest of its Central American stores and are interested in expanding the lines of imported goods to supply their high-end hyper store and Paiz supermarket. Approximately 70% of the goods sold come from local suppliers.

UNISUPER is the second largest supermarket in Guatemala with 73 stores under the names of La Torre (65) and Econosuper (8). UNISUPER also works with two different store concepts: La Torre stores sell domestically produced and imported products and are targeted for upper and middle class consumers; and Econosuper is targeted to lower income consumers and sells mostly domestically produced products. The company is remodeling its stores and upgrading the Econosuper stores to have the same structure and quality service in all its units. In the past, UNISUPER kept the individual names of the stores because customers associate La Torre’s stores catering the more affluent sector, while Econosuper services lower income customers.

UNISUPER is also a member of Supermercados de Centroamérica y Panamá – SUCAP (Panama and Central America Supermarkets.) SUCAP incorporates the following supermarket chains: Gessa and AutoMercado (Costa Rica). La Colonia (Honduras), Súper Selectos (El Salvador), La Torre (Guatemala), La Colonia (Nicaragua), Súper 99 and El Machetazo (Panamá). These supermarkets total approximately 300 small, medium, and large stores that are present not only in the larger cities but also in the rural areas in each country. SUCAP’s main objective is to keep its market share in Central America and to compete with the largest retail chains. This alliance among these well-known Central American supermarket chains, allows them to exchange and share knowledge on software technology, to train their personnel, and to provide other market intelligence resources that allows them to transfer lower prices to their customers.    

Post also reports that for the past seven years, Guatemalan consumers have demanded more organic products despite the fact that the market is relatively small. Usually, Guatemalan consumers perceive organic products as considerably more expensive than other products. Although Guatemalans are price sensitive, organic buyers do not see price as an issue when making purchasing decisions. It is estimated that around 90% of organic products are sold and distributed through specialized stores.

Presently Orgánica (5 stores) and Fresko (1 store) sell organic fresh and processed products. Natura Foods Market is an on-line supplier of organic foods. Caoba Farms also offers organic fresh produce that is sold at farmers’ market day at their farm in Antigua, Guatemala. U.S. organic products have export opportunities to the Guatemalan market in the following product categories: processed fruits and vegetables, juices, energy drinks, cooking oils, dairy, tree nuts, snacks, breakfast cereals, condiments & sauces, confectionary products, and sweeteners.

Best Prospects:

Post advises that the best prospects for U.S. exporters in this sector include red meats, snack foods, poultry meats, fresh and processed fruits, processed vegetables, dairy products (ex. Cheese) and snack foods.  Presently, there are no banned products in the market. Guatemala is in full compliance with its commitments to food and agricultural products under the CAFTA-DR. Most fruits, nuts, processed foods, vegetables and feeds have been granted immediate duty-free access. The majority of other agricultural products had their duties eliminated in five or ten years which means 2016 was the 10th year of elimination. With the exception of products under quotas all food products should be free from duties.

Food Service Sector:

Post reports that approximately 2,700 hotels, motels and bed and breakfast accommodations operate in Guatemala. In Guatemala there are 15,000 rooms available and the hotel occupancy is around 50% year round. Antigua is the closest tourism destination to Guatemala City and has more than 150 hotels of which 15 are boutique hotels.  According to the Guatemalan Tourism Institute (INGUAT), close to 70% of all tourists that travel to Guatemala visit Antigua. In 2015, with an investment of almost US$3million, Hotel Princess Reforma upgraded its facilities and joined the Hilton group, changing the name to Hilton Garden Inn. The owners of the hotel plan to open other Hilton hotels in the interior of the country. In 2017, hotels such as La Quinta Inn & Suites, Hyatt, Four Seasons and Marriott will begin operations in the country, adding between 1,500 to 2,500 rooms more to the lodging offered in Guatemala.

INGUAT reported that 1.7 million tourists visited Guatemala generating an income in 2015 of US$1.6 billion. This sector also contributes to 2.2% of the country’s GDP. Guatemala City is where the greatest number of 3 to 5 star hotels is located.  In 2015, the highest number of travelers to Guatemala was from Central America totaling 1 million visitors, followed by North America with 519,963 visitors.

According to the annual report from INGUAT, 40% of the travelers visited Guatemala on vacation and spent 32% of their travel funds to eat. The most visited places were Antigua, followed by Guatemala City, and Petén (where the Mayan ruins of Tikal are located).  Hotels rely on food service importers to purchase high-end products such as fine wines, meats, gourmet style dips, jellies and sauces, deli-meats, dairy products, baking mixes, and seafood. The purchase of fresh produce is regularly done at the farmer markets and supermarkets. Guatemala also has a very strong food processing industry that offers a variety of food products that service most hotels and restaurants throughout the country.

According to the Guatemalan Restaurant Council (GREGUA), over the past ten years Guatemala increased the number of restaurants by approximately 10%, increasing from 13,605 restaurants in 2013 to 20,361 in 2014. Fast-food restaurants have grown rapidly not only in terms of sales, but also because of their home delivery services. Fast-food restaurants are also an option for business people in Guatemala who had to change their eating habits from eating breakfast and lunch at home to eating in restaurants nearby their work places. This has opened the opportunity for this sector.  

According to the Guatemalan Restaurant Council (GREGUA), over the past ten years Guatemala increased the number of restaurants, increasing from 13,605 restaurants in 2013 to 22,000 in 2015. Fast-food restaurants have grown in sales by offering home delivery services. Fast-food restaurants are also an option for business people.

A recent study by Millward Brow, an American research organization, said that 76 out of 100 Guatemalans prefer to eat at fast food restaurants rather than formal dining restaurants. The preference for fast food restaurants is due to pricing, the proximity to work and residential areas, and some feature kids entertainment areas. Consumer preferences are divided as follows: 19% prefer casual restaurants, 7% gourmet restaurants and the rest is divided among food stalls, (27%), food carts (17%), sales on the street (12%) and other options (17%). The most popular types of fast-food in Guatemala are: hamburgers, pizzas, tacos, and fried chicken. There are a total of 22 U.S. franchises in Guatemala and new ones are opening in the next couple of years. Guatemalan cuisine is diverse but most local dishes include the main staple of the country: white corn.   Restaurants also buy products directly from food service suppliers, local food processing companies, from importers, supermarkets, and farmer markets.  

The following sectors are considered important within the institutional market in Guatemala and depend on the Government of Guatemala (GOG) for acquisition of food products: Government social programs, Public hospitals, and Penitentiary system, Public schools for their lunch feeding programs (when budgeted and approved). In Guatemala there are also more than twenty social and sport clubs; most of them are located within

Guatemala City. These clubs buy food and beverages from local importers/distributors, farmer markets, and wholesale markets. Many of the clubs rent their facilities for social activities like weddings and baby showers, and are available for members and non-members.

Best Product Prospects:

Post reports that products present in the Hotel Restaurant and Institutional (HRI) sector which offer good potential from the U.S. include sugars/sweeteners, beverage bases, poultry meat, processed fruits and vegetables, beef, dairy products and wine. Due to other FTAs and geographic proximity and lower prices the market for most products is very competitive and price sensitive.

Food-Processing Sector:

Post advises that the food and beverage processing industry represents more than 42% of total industrial production. There are more than two hundred food processing companies that are mainly dedicated to producing products under the following categories: Beverages: juice concentrates, powder drinks, alcoholic, and non-alcoholic beverages; Preserved foods: canned fruits and vegetables, jams, jellies; Confectionary: hard candies, chewing gum, chocolates, traditional candies; other processed foods: soups, condiments, sauces, bakery, deli meats and dairy.

Since the implementation of CAFTA-DR, Guatemala has found new opportunities to increase exports of processed food products to other Central American countries and some companies are also focusing on the nostalgia market composed of Guatemalans and other Central Americans living in the U.S. The main basket of products exported to Guatemalans living in the U.S. is made up of: tamales (corn based food), alcoholic drinks, preserved foods, dehydrated fruit punch, and plantain leaves used to prepare homemade tamales. Every year exports of these products increases approximately 5% during the Christmas holidays when these products have a larger demand. 

The food processing industry is divided into several different sub-sectors, but non-alcoholic beverages and preserved foods are two main categories that capture around 40% of total national production followed by baked goods, which has 15% of total exports. And as Central American consumers become more sophisticated, opportunities for higher value‑added products increase. Many local companies are taking advantage of their lower cost to fill market niches normally filled by imported products. The food processing industry has ridden the supermarket expansion wave, and now is directing its attention to the export market.

Best Product Prospects:

Post reports that the areas with the most growth potential for the food processing industry are: processed meats: MDM; boneless picnic; pork bellies, trimmings and offals; flours (fillers); animal fats; beverages: fruit concentrates and nectars; drink bases and syrups; soy flakes and soy powder; artificial fruit flavors; baking: pancake mixes; pre-mixes; bulk cake flours; snacks: dehydrated potato flakes and powder; soy flakes; nuts; fresh potatoes; fruit  fillings; raisins; pork rind; whey powder, protein concentrates; corn; rice soups and broths: dehydrated potato flakes and powder; soy flakes; dehydrated vegetables; and condiments.   

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