Honduras Country Profile

Market Overview:

Euromonitor reports that the Honduran economy grew at a moderate but steady pace in 2016, thanks to sound macroeconomic policies and structural reforms. Real Gross Domestic Product (GDP) growth of 3.6% was reported in 2016, the same rate as the previous year. Agriculture, construction and public sector investment are the main drivers. Confidence in the private sector is also increasing. Steady credit growth and an expected increase in net international reserves are encouraging trends. Structural reforms are also progressing on schedule. Growth should reach 3.8% by 2018 and remain steady through the rest of the decade.

The government sees participation in the Central American Free-Trade Agreement (CAFTA-DR) as a key element of its strategy. Policy changes associated with the new trade agreement should lead to higher levels of foreign and domestic investment over the medium term. The real value of private final consumption rose by 3% in 2015 and growth of 3.7% is forecast for 2016. Remittances are an important contributor to private consumption. In 2015, remittances rose by 10.7% and growth of 6% is forecast for 2016.

USDA’s Office of Agricultural Affairs, OAA, in Tegucigalpa, hereinafter referred to as “Post” reports that the growth of the food processing industry, the expansion of supermarkets in urban areas, in addition to the developing hotel, restaurant, and institutional sector have advanced U.S. agricultural products to Honduras. The U.S. is the main trading partner with Honduras, both in terms of total trade and in agricultural products. U.S. agricultural exports increased with the implementation of Dominican Republic-Central America (CAFTA-DR) trade agreement. A wide variety of U.S. agricultural products have duty-free access with CAFTA-DR. Regional integration should spur investment, growth, trade, and continued market opportunities for U.S. exporters in the coming years.

Post reports that regional integration should spur investment, growth, trade, and continued market opportunities for U.S. exporters in the coming years. Honduras is the 4th largest market for U.S. agricultural products in Central America.  U.S. total food and agricultural product exports in 2016 totaled US$649.4 million, an increase of 12% from that of 2015 and a new record high. U.S. Consumer ready food product exports rose 3% to US$221.7 million in 2016, which was a new all-time record high and 34% of the agricultural total. Honduras imported US$167.4 million in U.S. processed food products in 2016, down 1% from 2015. Top processed food exports to Honduras in 2016 included food preparations, fats and oils, prepared/preserved meats, condiments and sauces, chocolate and confectionery, prepared/preserved dairy products, processed vegetables and pulses, beer and wine and snack foods.

Retail Sector:

Euromonitor has estimated that retail sales of packaged food products in Honduras were US$569.3 million in 2016. Of the Central American region, this is the smallest market in the study with the exception of Nicaragua. This also represents an increase of US$75.1 million or 15.2% from 2012. They also forecast the packaged food market to grow to just over US$820.5 million by 2021, an increase of over US$217.2 million and 36%. High growth categories in the forecast include processed meat and seafood, savory snacks, sauces dressings and condiments, ready meals, processed fruit and vegetables, dairy products, sweet biscuits, snack bars and fruits snacks.

Post reports that Honduras' retail food sector is by far the largest market for imported food. Consumers in urban areas shop at open markets, American-style supermarkets, mini-markets, specialty stores, convenience stores, and local “mom & pop” stores. Retail sales of imported consumer-oriented products are conducted mostly by supermarkets, mini-markets, and convenience stores.  However, pulperias in Tegucigalpa and San Pedro Sula also sell imported products, mostly snacks.

The retail sector in Honduras is dominated by three supermarket chains: La Colonia, PriceSmart, and Walmart (Paiz/ Maxi Despensa). The target markets are high, middle and low income families. The supermarket retailing industry is expanding and has opened stores in various urban locations. The entry of wholesale clubs has forced supermarkets to conduct more aggressive advertising and price discounting promotions for U.S. products. 

Supermarkets and wholesale clubs carry a varied inventory of imported food products on a consistent basis, thus accounting for the largest volume of sales of consumer-ready (canned, preserved, processed, frozen, and chilled) food products. Sales of fresh fruits and vegetables continue to rise, as increased investments in the cold chain allow for longer shelf life of perishable items, including sausages, hams, pork cuts, and other deli meat products, which are available year round. Smoked pork and ribs have taken a strong foothold, as prices have become extremely competitive compared to local products and the demand for this type of products has also increased.  

Honduran convenience stores are the only businesses that offer late hour services. Most of these stores are located in the main boulevards of the mayor cities. Convenience stores specialize in fast foods, hotdogs, sandwiches, chicken, and pizza, but also carry high-quality imported goods such as snacks, cookies, assorted candy, chocolates, ice cream, sodas, beer, deli meats, and fruits. Pricing strategies vary among convenience store chains and location, typically ranging from 10% above supermarket level prices, to those competing with supermarket pricing on basic food items and beverages.

Post reports distribution channels in Honduras are similar to those in the United States. Honduras has fewer levels of distribution and a more limited number of specialty, chain, and department stores. New investments in construction of large shopping malls and other smaller mixed-use commercial centers in strategic urban areas, as well as big retail stores such as PriceSmart and HyperPaiz (Walmart), are good indicators of increasing opportunities in the retail distribution sector.

Best Product Prospects:

Post reports that under CAFTA-DR, tariffs on a wide range of consumer-oriented products for U.S. products are being eliminated, and market demand for U.S. products in this sector looks promising. The category of other consumer-oriented products has witnessed significant increases in the past few years for products such as red meats, fresh fruit, vegetable and animal oil/fats; popcorn; preparations for sauces; and sauces, spices, mustard. Other consumer-oriented products offering good export opportunities are snack foods, packaged and canned foods, breakfast cereals, food additives, dairy products, wine, and pet foods.

Food Service Sector:

Post reports that the tourism industry in Honduras has experienced substantial growth supported by the interest of the Government of Honduras (GOH) and the private sector in developing the industry. Whether for interest of cultural and historic attractions, sporting activities or just relaxation; tourism plays a significant role in nearly all of the Central American countries economies, something which has stimulated growth in the hotel and restaurant industries. U.S food products geared toward the hotel, restaurant, and institutional (HRI) sector are therefore increasing in demand for high quality products.

The hotel industry is rapidly expanding into urban and rural tourism. Among the new projects are those with bungalow-type resorts, ecological type hotels and resorts, apartment-hotels, cabins, hostels, and inns. Convention traffic is also increasing, and the restaurant industry is growing at an even faster rate. Many high-end restaurants, fast-food chains, and franchises are opening due to attractive incentives. Honduras has the largest number of U.S. fast food and casual dining franchises in Central America with more than 200 establishments in two major cities. The increase of modern shopping malls and commercial centers has prompted the establishment of an increasing number of restaurants as well.

The U.S. franchises are in need of raw materials, and the local market cannot always fulfill their needs. Also, some of the franchise agreements require raw materials from the U.S. as part of the contract. Many of the major sandwich, burger, and pizza and chicken franchises operate in this country.

Food-Processing Sector:

Post reported that the total market for food processing in Honduras has increased steadily over the past few years and further increases are expected in the years to come. The U.S. continues to be the largest supplier of food processing ingredients enjoying a high level of acceptance and reputation for high quality products for human and animal consumption. Honduran exporters are pursuing expansion plans to increase production and improve the quality of their exports, particularly non-traditional agricultural products such as melons, watermelons, oriental vegetables, okra, winter vegetables, shrimp, jalapeno peppers, and flowers. With CAFTA-DR, producers are looking forward for opportunities to export new products to the U.S. market.  

Colombia, Mexico, Chile, Sweden, Argentina and other Central American countries are the leading competitors of the U.S. Consumption trends influencing the type and quality of inputs being used in processed foods are as follows: a wide variety of ingredients are used for mass consumption products such as bread, poultry, snacks and food preparations. Honduras imports a significant amount of bulk and intermediate products from the U.S. mostly used for food ingredients.   

Central American Customs Union (CACU) members agreed that for products produced or processed in their countries, when a product obtains a Sanitary Registration Number (SRN) in a CACU country, it does not need to be registered in another. Products produced in the U.S. are not eligible for the registration exemption. However, it is important to note that the origin of the product is considered to be a CACU country if the product is processed in a CACU country, even if the raw material is not from a CACU member country.

Best Product Prospects:

Best prospect products for U.S. exporters in this sector include coarse grains, mechanically de-boned meats, wheat, animal fats, cocoa, snack food ingredients and tomato paste, as well as mixes and bakery preparations, sugars and sweeteners.

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