Panama Country Profile

Market Overview:

Euromonitor reports that Panama’s economy cooled somewhat in 2018.  The economy is supported by a recovery in construction, transport, logistics and exports from a new copper mine.  Steady gains in private consumption provide additional support.  Real Gross Domestic Product (GDP) growth will average about 4.7% per year in 2019 to 2020, before climbing to 5.5% through 2025.

  • Real GDP rose by only 3.4% in 2018, after growth of 5.3% in 2017.
  • The real value of private final consumption rose by 2.6% in 2017 and gains of 3.3% are expected in 2018.
  • 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.

Over the past decade Panama’s economy has been growing much faster than other countries in the region. Key sectors such as ports, construction and transportation all enjoyed strong gains.  During this period, the economy was driven by private demand, the implementation of an ambitious public investment program and the Panama Canal expansion project.  The economy’s performance led to a sharp reduction in poverty as well as a rapid fall in the debt ratio.  However, the pace of growth slowed somewhat in recent years owing to a drop in public investment and delays in the Canal expansion.

Panama can now claim the highest per capita GDP on a Purchasing Power Parity, (PPP) basis, in the region at US$25,400 (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 67.4% 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 Panama is one of the top markets for U.S. consumer-oriented products in Central America.  Each year Panamanian importers keep up with the food retail industry and new trends by attending USDA endorsed food trade shows. In recent years, the consumption of more health conscious food has significantly contributed to increased U.S. exports of consumer-oriented products.  These products had nutrient claims, such as low fat, low sodium, gluten free, baked and sugar free.  In addition, an increase in dual-income households has resulted in a growing demand for ready-to-eat frozen and prepared foods.

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 clearly 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 oriented food products continue to be the most important category of U.S. agricultural exports to Panama.  They totaled US$398.4 million in 2018, 58.2% of the agricultural total and up 6% from the same period in 2017.  Panama is the largest export market in Central America for processed food products from the U.S., importing US$394.1 million in processed foods from the U.S in 2018, up 8% and nearly 60% of the agricultural total.  Top processed food exports to Panama in 2018 included:

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

Retail Sector:

Euromonitor has estimated that the retail sales of packaged food products reached nearly US$1.9 billion in 2018.  This also represents an increase of US$339.5 million or 22.1% from 2014.  They also forecast the packaged food market to grow to US$2.4 billion by 2023, an increase of US$444.3 million and 22.5%.  High growth categories in the forecast include:

  • Ready meals
  • Soups
  • Baked goods
  • Breakfast cereals
  • Ice cream and frozen dessert
  • Sauces dressings and condiments
  • Processed meat and seafood
  • Processed fruit and vegetables

According to Euromonitor the leading players in 2018 retained their positions from the previous year. Grupo Rey remained in the lead followed by Importadora Ricamar with its Super 99 brand.  Both have similar prices, product range, and quality of offering, customer service, store location, store design, loyalty schemes and credit facilities, making the competitive environment intense.

Supermarkets and hypermarkets performed well in 2017/2018, a trend set to continue. Moreover, all existing modern grocery retailers have expansion plans to extend to other areas of the country.  However, at the end of the review period private label remained 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 aisles and cafeterias, making them more likely to continue attracting a loyal client base.

However, some consumers are changing their preferences, such as opting for healthy organic produce or even vegan products, preferring to visit specialty stores to buy gluten-free and other health food/specialty products.  Supermarkets are therefore likely to face increased competition from specialty stores, unless they are able to diversify their product range to cater to consumers with special interests or needs.

Convenience stores are not a growing channel in Panama and are in fact almost non-existent. Forecourt retailers recorded the fastest growth and provide consumers with a new way to shop.  Discounters are stagnating and are being displaced by warehouse clubs.

Best Product Prospects:

In recent years, Panamanians have been consuming both more convenience foods and more healthy foods. This has resulted in good prospects for U.S. food exports such as, low fat, low sodium, gluten free, sugar free, fresh fruits (such as apples, grapes, peaches and pears), organic foods, processed fruits (especially canned fruits), and snack foods (including corn chips, popcorn, cookies and candies), processed canned vegetables (especially canned mixed vegetables, yellow sweet corn, peas, mushrooms, and garbanzo beans), and frozen processed products (pizzas, ready-to-eat food) all have high 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’s 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.

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
  • Margarine

Food-Processing Sector:

Post reports that the food processing ingredients market in Panama has an estimated value of US$110 million, with U.S. products having a 60% market share.  The food processing industry has experienced a steady growth of over 10% during the last couple of years, due to the increase in tourism and foreigners relocating to Panama.  The beverage and food industries constitute one of the main manufacturing and export sectors of the economy, and the U.S. Panama Trade Promotion Agreement (TPA) is helping facilitate investment opportunities.

Panamanian consumers are demanding more convenience and healthy food products. This trend has resulted in good prospects for U.S. exports of fresh fruit (mainly apples, grapes, peaches and pears), organic foods, healthy food products such as gluten free, low carb, low sodium, low sugar, low fat, 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, because most of the food products found in the supermarkets are not processed locally.

Best Product Prospects:

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

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