Panama Country Profile

Market Overview:

Euromonitor reports that Panama’s economy continued to see strong growth in 2016. Panama’s economy will continue to grow steadily, supported by both investment and consumer spending. Real Gross Domestic Product (GDP) rose by 5.2% in 2016, and should see growth of 5.8% in 2017. The economy is driven by the planned opening of the enlarged canal and lower fuel prices, which should partially offset U.S. dollar appreciation. Steady gains in private consumption also provide support. The real value of private final consumption rose by 4.6% in 2015 and gains of 5.6% are expected in 2016. Real GDP will average about 6.4% per year over the remainder of this decade.

The government is spending up to US$13 billion to develop various infrastructure projects including the first subway system in Latin America. The Panama Canal presently handles more than 4% of world trade and that will double upon completion of the expansion project. Colón and Balboa, the canal’s two ports, are already the busiest in Latin America. A new five-year strategic plan aims to promote investment in key sectors such as logistics, agriculture, tourism, and mining. The expanded Canal and completion of the new copper mine (Minera Panama) will also provide a critical boost to the economy.

Panama can now claim the highest per capita GDP on a Purchasing Power Parity, (PPP) basis, in the region at US$22,800 (2016 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 during 2016. 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).

The U.S. faces varying competition according to product type. Strong competitors for snacks and processed foods are Central America and China. For fruits and other products: Chile, Mexico, and Peru. For grains and oils: Argentina, Canada, and Brazil. For meat: Canada. For dairy products: Costa Rica, Argentina, New Zealand, and Australia.

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.

Panama is the 3rd largest market in Central American for U.S. agricultural products. Total U.S. exports of agricultural products to Panama in 2016 totaled US$670 million, an increase of 3%. Consumer oriented food products continue to be the most important category of U.S. agricultural exports to Panama. They totaled US$388.4 million in 2016, nearly 58% of the agricultural total and up 3% from 2015. Panama is the largest export market in Central America for processed food products from the U.S. having also imported US$371.2 million in processed foods from the U.S in 2016, up 5% and 55% of the agricultural total. Top processed food exports to Panama in 2016 included food preparations, non-alcoholic beverages, snack foods, processed prepared/dairy products, chocolate and confectionery, prepared/preserved meats and beer and wine.   

Retail Sector:

Euromonitor has estimated that the retail sales of packaged food products reached US$692.2 million in 2016. This also represents a decrease of US$24.7 million or 3.4% from 2012. They also forecast the packaged food market to grow to US$865 million by 2021, an increase of US$141 million and 19.5%. High growth categories in the forecast include savory snacks, processed meat and seafood, sauces dressings and condiments, ready meals, processed fruit and vegetables, dairy products and sweet biscuits, snack bars and fruit snacks. 

Euromonitor reports that the grocery market in Panama is mostly driven by supermarkets, hypermarkets and independent food stores are the most popular among consumers. There are four main supermarket chains in Panama: Super 99, Super Xtra, Supermercado Rey and Riba Smith. Super 99 and Rey have been expanding their operations since 2006 in order to have stores in almost every province in order to have their products available throughout the country. Riba Smith, although it only concentrates in Panama City, it is a very important supermarket chain because they have products available which are only sold at their stores, which are located throughout the city.

Machetazo, the leading hypermarket in Panama, has also been expanding its operations into areas of the country where consumers previously only had access to local supermarkets and open markets, as neither of which has as wide a range of products. Hypermarkets in Panama are located in middle- to low-income neighborhoods, bringing low prices to lower-income people and allowing them to choose between shopping in hypermarkets or in supermarkets located in their neighborhood.

Other popular retail formats in Panama include membership club stores, discounters and open markets. Discounters and membership club stores are becoming more popular, although there are only a few stores located throughout the city. Open markets are usually located in the principal provinces and concentrate on domestic produce. The largest and most popular market is the Mercado de Abastos, located in Panama City. Post reported that competition is fierce, inventory stock is overly diversified, and markups and profit margins are low. Modern food retailers have been growing at the expense of more traditional outlets (grocery stores and wet market kiosks). 

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).  

Best Product Prospects:

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, processed fruits and vegetables (especially canned fruits), and 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, Trump Tower, 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.

Best Product Prospects:

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, and margarine. As a general note, high value products offer good market opportunities in Panama, especially readymade or convenience foods, and wholesome and healthy products. As a whole, best prospects for U.S. food exports to Panama are bulk commodities such as yellow corn, paddy rice, soybean meal, and wheat flour.

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 near 140 food processing companies.mThese 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.

Best Prospect Products

Post reports that the Panamanian market offers good opportunities for additives, preservatives, flavorings, vegetable colorings, sauces, condiments, grains (wheat, yellow corn, and rice) , semi-processed products, such as soybean meal and soybean oil, and a wide a range of high quality consumer oriented products, such as bakery products, snacks, ready-to-eat products, beverages, breakfast cereals, sugar confectionary and food preparations, gourmet food products, low-fat, sugar-free and fat- free food products, because most of the food products found in the supermarkets are not processed locally.


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