Skip to content

Panama Country Profile

Market Overview:

Euromonitor reports that Panama's economy continued to be among the region's leaders in 2017. The economy is supported by the expanded Panama Canal and a wide range of other investment projects. Steady gains in private consumption provide additional support. Lags in public investment are a drag on the economy. Growth of real Gross Domestic Product (real GDP) will average about 5.5% per year in the medium term.

  • Panama's economy has been one of the fastest growing in the region and is expected to remain among the most dynamic in the next several years
  • Real GDP rose by 5.3% in 2017, after growth of 4.9% in 2016
  • The real value of private final consumption rose by 3% in 2016 and gains of 4% are expected in 2017
  • The government is spending up to US$13 billion to develop various infrastructure projects including the first subway system in Latin America
  • Colón and Balboa, the canal's two ports for the Panama Canal, are the busiest in Latin America
  • In the medium term, an increase in canal transit, a flourishing service sector, and investments in the energy, mining, and logistics sectors should be the main drivers

Panama can now claim the highest per capita GDP on a Purchasing Power Parity (PPP) in the region at US$24,300 (2017 Est.). Growth is spearheaded by the transportation, telecommunications, and commercial and tourism sectors. Panama's economy is based primarily on a well-developed services sector, accounting for about 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, and flagship registry.

USDA’s Office of Agricultural Affairs (OAA) in Panama City, hereinafter referred to as “Post” reports that Panama continues to be one of the healthiest economies of the region. Major infrastructure projects such as line two of the metro, a new bridge over the canal, and the completion of the canal expansion during 2016 boosted to the economy. The amount of hotels continues to increase and restaurants are always on the rise. That, in conjunction with Panama’s location and modern infrastructure and convenient laws makes it the perfect place for multinational companies, retirees and holding international meetings and conventions.

Panama recognizes the clear link between free trade and competitiveness and seeks to join an elite group of countries that have achieved growth and development through trade. Panama has Free Trade Agreements in force with: Canada, European Union, (EU), Mexico, Colombia, Peru, Chile, Taiwan and the Central America (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). Currently Panama is negotiating a Free Trade Agreement with South Korea.

The U.S.-Panama Trade Promotion Agreement (TPA) entered into force on October 31, 2012. U.S. agricultural exports have already benefitted. Almost half of current trade received immediate duty-free treatment, with most of the remaining tariffs to be eliminated within 15 years. Panama will eliminate duties on high-quality beef, frozen turkeys, soybeans, soybean meal, crude soybean and corn oil, almost all fruit and fruit products, wheat, peanuts, whey, cotton, and many processed products. The Agreement also provides duty-free access for specified volumes of some agricultural products through Tariff Rate Quotas (TRQ).

Consumer attitudes and many brand preferences are similar to the U.S., whose television, radio and magazines are all available and popular in Panama. Panamanians frequently travel to the U.S. for vacation, medical treatment, study and business. Their buying patterns and tastes are similar to those of U.S. consumers. U.S. goods and services enjoy a reputation for high quality and are highly competitive.

Consumer oriented food products continue to be the most important category of U.S. agricultural exports to Panama. They totaled US$376.7 million in 2017, 58% of the agricultural total but down 3% from 2016. Panama is the largest export market in Central for processed food products from the U.S., importing US$364.8 million in processed foods from the U.S in 2017, down 2% and 57% of the agricultural total. Top processed food exports to Panama in 2017 included:

  • Food preparations
  • Processed/prepared dairy products
  • Non-alcoholic beverages
  • Snack foods
  • Prepared/preserved meats
  • Distilled spirits and other alcoholic beverages
  • Chocolate and confectionery
  • Processed/preserved vegetables and pulses
  • Beer and wine

U.S. food exporters enjoy some relative advantages in the Panamanian food market:

  • Panama’s political situation has been stable and democratic for 27 consecutive years, after the end of military dictatorship
  • Its strong political alliance with the United States provides for a favorable disposition towards U.S. policies and interests in international organizations
  • The U.S. - Panama Sanitary/Phytosanitary (SPS) and Technical Barriers to Trade (TBT) Agreement that entered into force in February 2007 eliminated SPS barriers
  • Importing products from the United States is now easier than from other countries - The Panamanian Food Safety Authority (AUPSA) works quickly with respect to the enforcement of food import and food registration regulations
  • Panama has been a U.S. dollar economy since 1904
  • Economic future looks promising with expansion of the Panama Canal project.
  • Strong preference for U.S. way of life, products and its manner of doing business
  • Increasing number of expatriates retiring to Panama, which is driving the increased demand for U.S. high value food and beverage products
  • Strong financial, logistical and transportation sectors facilitate international trade flows

Challenges for U.S. Food Exporters include:

  • Competition from other countries such as Canada, European Union, Guatemala, Costa Rica, Chile and China, especially those with Free Trade Agreements
  • For the last decade, Central America countries and China have been strong competitors in the snack and processed food sector
  • Mexico is a strong competitor for fruits and other products, while Argentina, Canada and Brazil compete with the United States for market share for grains and oilseeds imports
  • Canadian beef products have gained footing in the market, and Costa Rican, Argentinian, New Zealand and Australian dairy products are competitive
  • Poverty and unemployment limit consumer buying power
  • Rising energy costs, commodity prices, and food prices impact consumers and small businesses
  • Continued improvements in the areas of educational and judicial reform will be critical for Panama to improve its business competitiveness standing in the region   

Retail Sector:

Euromonitor has estimated that the retail sales of packaged food products reached US$1.8 billion in 2017. This also represents a decrease of US$335.4 million or 21.9% from 2013. They also forecast the packaged food market to grow to US$2.1 billion by 2022, an increase of US$207.8 million and 10.9%. High growth categories in the forecast include:

  • Ready meals
  • Soups
  • Baked goods
  • Ice cream and frozen dessert
  • Sauces dressings and condiments
  • Breakfast cereals
  • Processed meat and seafood
  • Processed fruit and vegetables
  • Sweet biscuits, snack bars and fruit snacks.

Panama’s grocery market is dominated by supermarkets, hypermarkets and independent food stores. Other popular retail structures in Panama include membership club stores, discounters and open markets that concentrate on domestic produce. The largest and most popular market is the Mercado de Abastos, located in Panama City.

Supermarkets are the leading channel in retailing in Panama as these outlets are the most numerous in the country and are characterized by several chains, all of which have a nationwide presence. These supermarket chains have increasingly diversified and now offer additional services, such as pharmacies, multipago (utility bill payment), and cafeterias. As such, consumers can meet most of their shopping needs under one roof, which has made them appealing to a wider variety of consumers and boosted their sales.

  • Grupo Rey, for instance, acquired a pharmacy chain and also bought a chain of small supermarkets in the province of Chiriqui
  • Alliances between supermarket owners with large distributors, such as Tzanetatos and Tagaropulos, are also common in these businesses
  • This is closely linked to price competition but has led to accusations of unfair competition, although the Consumer Protection Authority is vigilant in its prevention of such occurrences
  • In terms of price, range and quality of offering, customer service, store location, store design, and loyalty schemes, supermarkets are strategically located and it is common for consumers to frequent the same supermarket every time they shop - As a result, consumer loyalty is very important
  • Independent grocery stores are also located in convenient, generally neighborhood locations and number around 11,000 throughout the country
  • However, they are usually smaller and more expensive than supermarkets
  • As such consumers who frequent these outlets tend to buy only a handful of items they have forgotten during their supermarket shopping trips or buy items they have run out of

In terms of the population, there has been considerable growth of the foreign population in the country, which is having an impact on modern grocery retailing. In terms of trade agreements and logistics improvements, Panama recently re-established diplomatic relations with China. As such, commercial sales are expected to grow in Panama as a result of several potential trade agreements with that country. This will impact supermarkets, hypermarkets, and forecourt retailers, which will be able to offer better prices and more efficient logistics, with such outlets also able to offer a wide variety of products and achieve the best locations for their outlets, maximizing consumer foot traffic.

Supermarkets and hypermarkets performed well in 2016/2017, a trend set to continue. Moreover, all existing modern grocery retailers have expansion plans to extend to other areas of the country. However, as yet, private label remains fairly undeveloped, with only Grupo Rey present with its own private label line. One of the main factors in driving modern grocery retailing is the ability and willingness of each of the players to diversify. As such, most supermarkets now offer other services, such as pharmacies, wine cellars and cafeterias, making them more likely to continue attracting a loyal client base.

Post adds that the majority of consumer food imports in Panama are purchased through a local importer, distributor or wholesaler. However, it is common practice for larger Panamanian retailers to assume the role of the middleman and cover all or most aspects of the product supply chain. For instance, two of the largest supermarket chains in Panama, Supermercados REY and Super99, import products from food manufacturers directly and distribute goods to their own stores, as well as to other smaller distributors and retail stores. El Rey, El Machetazo and Super99 are also members of Supermercados de Centroamerica y Panama - SUCAP (Panama and Central American Supermarkets).

Post advises that in recent years, consuming more convenience and healthy foods has been the trend and has resulted in good prospects for U.S. exports of:

  • Fresh fruit (mainly apples, grapes, peaches and pears)
  • Organic foods
  • Snack foods (including corn chips, popcorn, cookies and candies)
  • Processed canned fruits and vegetables, especially mixed fruits, mixed vegetables, yellow sweet corn, peas, mushrooms, and garbanzo beans generate strong import demand

Food Service Sector:

Post reports that Panama continues to be an attractive market for U.S. food products, especially for the food service sector. The country’s major logistical facilities, such as the Panama Canal and ports on both oceans, make it an important hub in the Americas. Major hotels, fine restaurants and international corporations have a home in Panama as does a huge expat community all of which fuels demand for imported U.S. food, beverages, and agricultural products.

Even though Panama has not had an aggressive tourism campaign in recent history, its tourism sector has seen tremendous growth over the last 10 years prompting the construction of many new hotels, restaurants and convention centers. To aid this trend, the Panamanian government will release a new international campaign starting in 2017 which is expected to boost tourism even further over the next few years.

Since Panama has always benefited from its strategic geographical location and its service-oriented economy that arise from being a natural transit point for cargo and passengers, there are plans to continue to strengthen its ports and logistics centers over the next few years. Panama will build an additional port facility on the Pacific side of the canal and will improve logistical facilities in various parts of the country to be able to compete with new competition in the region such as the ports in Colombia, Costa Rica, Jamaica and Cuba.

The food service industry is among the strongest in the country due to the many restaurants, hotels, and institutional facilities located in Panama. There are approximately eight established food service companies in Panama. However, two of the major supermarket chains recently established their own food processing and food service facilities, consequently opening more opportunities for U.S. exporters in line with the food service industry. There is also a group of food service companies that supplies local restaurants and is a major provider to the institutional sector. Growth in the food service industry is estimated at 1.4% annually primarily due to Panama’s expanding population.

Due to the steady growth of tourism, the hotel industry has doubled in size over the past five years, from 5,863 rooms in 2011 to 10,455 rooms in September 2015. U.S. and international hotel chains present in Panama include Waldorf, Hilton, Marriott, Bristol, Country Inn, Sheraton, Radisson, Holiday Inn, Intercontinental, Riu, Westin, Manrey, Wyndham Garden, Courtyard Marriott, Novotel, Hotel Las Americas Golden Tower and Tryp. Panamanian hotels and resorts primarily purchase from food service companies and/or directly from supermarkets and restaurants.

Thanks to the diverse ethnic backgrounds of the thousands of tourists and expats coming to Panama each year, there is a wide variety of restaurants with ample offerings of international and ethnic foods. Restaurants in Panama City are well developed and world class chefs that are highly ranked at the international level. There are no statistics as to the current amount of restaurants in Panama. However, due to expanding tourism, growing immigration, and higher consumer purchasing power, the selection of restaurants and international cuisine is expected to continue to grow. Currently, the Panamanian Association of Restaurants and related business have more than 400 members.

The institutional sector includes private and public hospitals and the national police, and incarceration systems. Private hospitals have their own logistical operations for patient meals and to supply their cafeterias while public hospitals and the police usually bid their requirements on yearly or 5-year term contracts with local food service providers, restaurants, or food processors. Panama is a service based economy with a very small manufacturing and processing industry. Agriculture only represents 2.8% of the economy so most goods and food products for this sector are imported from abroad. Price used to be the main factor for the Panamanian market. But now there is growing demand for higher quality, healthy and trendy products with willingness to pay more for such products. This is due primarily to an increase in consumer purchasing power and additional income from younger working professionals that still live at home.

There is a large number of catering service companies and well over 100 local and international food franchises such as T.G.I. Friday’s, Bennigan’s, KFC, Domino’s Pizza, Pizza Hut, Dairy Queen, Church’s, Dunkin’ Donuts, McDonald’s, Burger King, Popeye’s, Subway, Quiznos, Wendy’s, Baskin Robbins, Sbarro’s, Papa John’s, Macaroni Grill, Little Caesar’s, Taco Bell, Hooters, Wing Zone, Hard Rock Café and Tony Roma’s. Starbucks just opened its first coffee shop in Panama this year, and will soon open new shops in the main malls of the city.

Post reports that high value products offer good market opportunities in Panama, especially ready-made or convenience food, wholesome and healthy products. A list of favorite imports from the HRI sector includes:

  • Pre-cooked potatoes
  • Snacks
  • Frozen or ready-made food
  • Seafood
  • Cheese
  • Vegetable oil
  • Frozen vegetables
  • Condiments and dressings
  • Margarine

Food-Processing Sector:

Post had reported that the food processing ingredients market in Panama is estimated at US$110 million, with U.S. products leading with an approximate 65% share of the market. The beverage and food industries constitute one of the main manufacturing and export sectors of the economy, and the TPA is helping facilitate investment opportunities.

Panama’s food processing industry is not as large as in other Latin America countries; however, it has experienced a steady growth of over 10% during the last couple of years, probably due to the increase in tourism and foreigners relocating to Panama. Even though Panama is a service based economy, there is still growth in this sector and there exists a great opportunity for raw materials in bulk, additives, preservatives, flavorings, vegetable coloring, etc. for the food processing sector.

The Panamanian market offers good opportunities for exports of raw materials (meats, poultry, dairy, grains, and others) and specialized food ingredients such as additives, preservatives, and flavorings. There is high demand for high value products and processed food products for the burgeoning tourist industry. As indicated, Panama was designated the home port for several cruise companies, including Royal Caribbean and the Spanish cruise line Pullmantur, which means more cruises arriving in Panama.

Panama has nearly 140 food processing companies. These include dairy processors, meat and poultry products processors, fishery products processors, fruits processors, beverages and spirits, bakery, snacks, among others. The food processing ingredients market was estimated at US$107 million in 2012, and it is expected to reflect a 3% growth at the end of 2013. The beef, pork and chicken sectors will continue to grow at a 4.6%, 6.2 % and 6.7% rate respectively. The production of beverages, liquor in particular, will grow approximately 6.3%. The production of processed milk has shown an increase of 6% to 6.8%

To cope with this rising demand, to a large extent as a result of the FTAs, and to remain competitive, the industry has made short and long term investments in new plants, equipment and technology, as well as improvements in the compliance with sanitary, safety and environmental regulations. Many large international conglomerates have bought out or entered into alliance with well-established local companies as part of their strategic globalization program. Such is the case with Grupo Alimenticio Pascual, the country’s main cookie and cracker manufacturer, which was acquired for US$25 million by the Colombian group, Casa Luker; Cerveceria Nacional, with a beer market share of 81%, purchased by SAB Miller; and Grupo Melo, which made a joint investment of US$15 million in a poultry plant, with Tyson Foods.

Post reports that the Panamanian market offers good export opportunities in the food processing sector for:

  • Additives, preservatives, flavorings
  • Vegetable colorings
  • Sauces and condiments
  • Grains (wheat, yellow corn, and rice)
  • Semi-processed products, such as soybean meal and soybean oil
  • Bakery products
Loading...

View Calendar

Natural & Organic Products Europe
April 22-23, 2018
London, United Kingdom

Interzoo
June 12-14, 2018
Nuremberg, Germany

EXPHORE - Expo Hoteles y Restaurantes
June 23-14, 2018
Belen, Costa Rica

FOOD TAIPEI
June 27-30, 2018
Taipei, Taiwan

View Calendar

Export Intelligence Video Series -Panama

See more videos