Guatemala Country Profile

Market Overview:

Euromonitor reports the Guatemalan economy continued to grow at a steady pace in 2017. Gains in consumer spending and a robust recovery in exports provide most of the support. A less restrictive fiscal policy allows an increase in public expenditure. Remittances from abroad are another positive factor. A slowdown in investment represents a drag. Rising oil prices are also a concern. Growth of real Gross Domestic product (real GDP) should rise slightly in the future, averaging about 4% per year in the medium term.

  • Real GDP grew by 2.6% in 2017 – down from 3.1% in 2016
  • The real value of private final consumption rose by 2.6% in 2016 and growth of 3.2% is expected in 2017
  • With over 1.6 million Guatemalans working outside the country, remittances are an important source of support
  • The steady growth of credit also boosts consumer spending
  • Both private investment and inflows of Foreign Direct Investment (FDI) are weakened by the government’s inability to agree on the reforms necessary to fight corruption and control crime
  • These drawbacks have a negative effect on the business climate and reduce the country's attractiveness to investors
  • Guatemala’s economic prospects depend mainly on the US economy

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 FTAs 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 officially started in June 2017. Almost all external import tariffs have been harmonized in the two countries to facilitate cross-border trade and eliminate opportunities for triangulation of imports.

Approximately 43% of all Guatemalan imports of agricultural 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 consumer food products in Central America. Exports of these products totaled US$419.7 million in 2017, an increase of 9% from the prior year and another new record high. Guatemala is the 2nd largest U.S. export market for processed foods in Central America after Panama. Guatemala imported US$343.5 million in U.S. processed foods in 2017, growth of 11% and also a new record high. Top processed food exports from the U.S. in 2017 included:

  • Food preparations
  • Fats and oils
  • Processed vegetables and pulses
  • Processed/prepared dairy products
  • Prepared/preserved meats
  • Chocolate and confectionery
  • Snack foods
  • Condiments and sauces
  • Beer & wine

U.S. exporters of food products have some distinct advantages in the Guatemalan market which include:

  • Strategic geographic access to Guatemala on both the Atlantic and Pacific Oceans, with considerable infrastructure
  • Guatemala is a trustworthy partner of the United States on trade issues
  • Most imported products from the U.S. enter duty-free thanks to CAFTA-DR
  • Low cost transportation of goods thanks to the proximity of U.S. ports
  • U.S. suppliers are capable to export volumes of products that adjusts to the Guatemalan importers’ needs
  • Guatemalan consumers perceive U.S. products as high quality and safe; therefore importers prefer doing business with U.S. companies more than they do from companies from other countries.
  • The two largest supermarket chains are opening new stores in the interior of the country and are interested in increasing the number of imported goods
  • The growing food processing industry is looking for quality food ingredients for ready-to-eat products, bakery, deli meats, beverages, and snacks
  • In Guatemala, there are around 20,000 restaurants and 3,000 hotels that demand quality products - This creates an opportunity for new imported goods and ingredients
  • Shipping products from the U.S. is cheaper and quicker than shipping products from Europe

The Guatemalan food market is not without challenges for U.S. food exporters:

  • Roads throughout the country are in poor condition and transportation companies have increased their transportation costs up to 15% in 2017
  • The lack of a civil service within the government makes regulatory structures fragile - Compliance with international standards is challenging within the different government institutions that oversee imports of goods
  • FTAs with various countries force U.S. products to be more competitive
  • Many Guatemalan importers prefer that U.S. suppliers export their products through Miami to consolidate their products and reduce transportation costs
  • Weaknesses to improve the business climate in Guatemala as local government authorities are implementing more import requirements for new products’ registrations
  • Lack of cold chain procedures, and limited infrastructure and distribution for perishable products
  • Sanitary and phytosanitary rules are subject to an inconsistent regulatory structure, imposing non-technical measures on U.S. exports 

Retail Sector:

Euromonitor has estimated that the 2017 retail sales of packaged food products in Guatemala reached over US$5.6 billion. Guatemala remains the largest packaged food market in Central America. This also represents an increase of nearly US$1.5 billion or 36.4% from 2013. They also forecast the packaged food market to grow to US$6.8 billion by 2022, an increase of US$949.2 million and 16.1%. High growth categories in the forecast include:

  • Baby food
  • Processed fruit and vegetables
  • Processed meat and seafood
  • Soups
  • Rice pasta and noodles
  • Ice cream and frozen desserts
  • Ready meals
  • Savory snacks
  • Dairy products

Post reports that the retail sector in Guatemala is dominated by three supermarket chains: PriceSmart, Walmart, and Unisuper (La Torre/Econosuper.) Walmart continues to be the leading supermarket with 15% of the retail value share. There are some other smaller supermarkets that are trying to gain market share in the retail sector, but these supermarkets are more targeted to the lower-middle and lower-income consumers.

In 2016, Save a Lot opened their first store in Guatemala City and most of their products are imported store-branded goods; however, the store also offers some domestic brands.

Walmart Mexico y Centroamérica accounts for more than 35,000 direct jobs within their more than 700 units in Central America. In Guatemala, the company has stores that cater to different economic segments to satisfy the different tastes and demands of their customers. Total retail units in Guatemala are 232: Paiz (26), Walmart Supercenter (10), Despensa Familiar (161), and Maxi Despensa (35). Walmart imports directly around 85% of its food products including, meats, produce, processed foods, and beverages. Headquarters are based in Costa Rica and most of the purchasing decisions are made in Guatemala and Costa Rica. Imported products are mainly sold at the high-end stores of Paiz, and Walmart Supercenter.

UNISUPER is the second largest supermarket in Guatemala with 78 stores throughout the country under the names of: Supermercado La Torre (67), Econosuper (9), and La Torre Express (2). UNISUPER also works with two different store concepts: La Torre stores that sell local and imported products; these stores cater to upper and middle class consumers; and Econosuper is targeted to lower income consumers and sells mostly local brands. Unisuper 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.

Trends and Highlights

  • Supermarket sales continue to grow and are still competing with open markets and corner stores - For this reason, supermarkets are building stores closer to residential areas to capture more costumers
  • The membership discount club and bulk purchase concept has gained acceptance among consumers, as many find it more convenient for one-stop shopping
  • Going to the supermarkets is a family activity and therefore, marketing activities to promote new products during the weekends occur more often than any other day of the week - Many products are sampled during peak hours to motivate and attract consumers
  • In the three major supermarket chains, convenience and prepared foods are gaining acceptance as consumers try to reduce time spent preparing foods at home
  • Business people tired of fast-food restaurants for lunch, look for prepared meals sold in supermarkets - A wide variety can be found from local typical foods to imported foods
  • Overall, frozen prepared foods account for 10% of imported food sales - The product variety ,however is limited
  • Most supermarkets have a diversity of dry, frozen and ready-to-eat products - Also, organic, sugar and gluten-free products are expanding their shelf share and grow every year
  • Supermarkets offer a variety of services under the same roof from bill payment services, coffee shops, drugstores, and delis to dry cleaning services
  • Discounts of 10% on total purchases being offered by supermarkets when paying with credit cards issued by local banks

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
  • Snack foods

Food Service Sector:

Post reports that approximately 2,700 hotels, motels and bed and breakfasts operate in Guatemala and provide accommodation for both the business and the tourism sector. In 2017, four new hotels began operations in Guatemala: Hyatt Centric with an investment of almost US$29 million offering 138 rooms; and Marriott International with an investment of US$25 million, which opened two units: Courtyard Marriot with 147 rooms; AC Marriott with 114 rooms; and Hotel Latam in the interior of the country, offering 69 rooms.

A reported 1.9 million tourists visited Guatemala generating an income in 2016 of more than US$1.7 billion. This sector also contributes 3.4% to the country’s GDP. Guatemala City is where the greatest number of three to five-star hotels is located. In 2016, the highest number of travelers to Guatemala was from Central America totaling 1million visitors, followed by North America with 491,591 visitors. According to INGUAT 40% of the travelers visited Guatemala on vacations and spent 32% of their travel funds to eat.

Hotels rely on food service importers to purchase high-end products such as fine wines, meats, gourmet style dips, jellies, 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 well-developed 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 the number of restaurants increased 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 study carried out by Millward Brow, an American research organization, estimated 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, proximity to work and residential areas, and kids’ entertainment areas. The most popular types of fast food in Guatemala are hamburgers, pizza, tacos, and fried chicken. There are more than 20 U.S. franchises in Guatemala and new ones are opening each year. Guatemalan cuisine is diverse but most local dishes include white corn, the main staple of the country. Restaurants also buy products directly from food service suppliers, local food processing companies, importers, supermarkets, and farmer markets.

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
  • Wine

Food-Processing Sector:

Post reports that the food and beverage processing industry represents more than 42% of industrial production. There are more than two hundred food processing companies that produce the following:

  • 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, snacks, condiments, sauces, bakery, deli meats, dairy Guatemala is a major importer of raw materials and ingredients; therefore, U.S. ingredients have a big opportunity in the Guatemalan food processing industry

Guatemala imported a total of US$1.5 billion in 2016 of consumer oriented products from the world (from which US$385 million were exported from the U.S.) and exported $2.4 billion mainly to the U.S. and Central America. 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 United States 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. 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.

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; animal fats
  • Flours (fillers);
  • 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;
  • Tree nuts;
  • Fruit fillings;
  • Whey powder, protein concentrates;
  • Corn;
  • Soups and broths:
  • Fresh potatoes, dehydrated potato flakes and powder;
  • Condiments   

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