Colombia Country Profile

Market Overview:

Euromonitor reports that the Colombian economy’s rate of growth will improve in 2019. Moderate gains in private consumption and exports, along with a pickup in investment in mining and acceleration in fixed investment will support the economy.  Growth of real Gross Domestic Product (GDP) will improve to about 3.3% in 2020 and climb to about 3.5% per year through 2026.  However, the economy will still be vulnerable to a sudden tightening of global financial conditions and the escalation of trade tensions.

  • The Colombian economy will continue to grow moderately in 2019.  Real GDP will grow by 3% in 2019 after gains of 2.6% in 2018.
  • The real value of private final consumption rose by 3% in 2018 and a rise of 3.2% is expected in 2019. High levels of household debt are a drag.
  • The jobless rate was 9.6% in 2018 and it will fall to 9.4% in 2019. A majority of workers are employed in the informal sector. The high minimum wage hinders employment growth in the formal sector. The government has ambitious plans to create 2.4 million new jobs in the medium term.

Colombia’s population was 49.5 million in 2018, up from 40.4 million in 2000.  Total population will reach 53.1 million by 2030.  The share of those of 0-14 years was 40.6% of the total in 1980 but had fallen to 23.1% by 2018 (still high by regional standards).  The share of those over 65 years represented 8% of total population in 2018 and it will rise to 12.8% by 2030.

Trade in U.S. agricultural products to Colombia has expanded as a result of the U.S.-Colombia Trade Promotion Agreement (CTPA), implemented in May 2012.  Colombia is eager for access to other markets and has signed Free Trade Agreements (FTAs) with various countries and trade blocs, such as Canada, the South American Common Market (MERCOSUR), the European Union, South Korea, Costa Rica and a larger trade bloc, the Pacific Alliance, which includes Mexico, Peru and Chile.  Colombia is awaiting final legislative and judicial approvals for FTAs with Israel and Panama.

Colombia is now the largest U.S. South American market (and 12th overall) for the export of U.S. agricultural products, which totaled over US$2.9 billion 2018 and a record high. That is also more than twice as much as the US$1.4 billion more Peru imported, which is the 2nd largest South American market for U.S. agricultural exports.

In 2018, U.S. exports of consumer oriented food products to Colombia totaled US$655 million, growth of 16% over the same period in 2017 and another record high level.  This makes Colombia the 2nd largest export market for consumer food products in South America after Chile.  Colombia is now the largest importer of processed food in South America as well, importing US$599.5 million in 2018, a significant increase of 28% and a another new all-time high.  Top processed food exports to Colombia in 2018 included:

• Food preparations
• Fats and oils
• Processed/prepared dairy products
• Prepared/preserved meats
• Dog and cat food
• Nonalcoholic beverages
• Processed vegetables and pulses
• Chocolate and confectionery
• Snack foods
• Condiments and sauces

Advantages and Challenges for U.S. Exporters of Food Products to Colombia:

The U.S. enjoys some competitive advantages in the Colombian food market:

  • The U.S.-Colombia CTPA expands opportunities and market potential for many agricultural products.
  • U.S. agricultural products have a reputation for high quality.
  • Colombia is the largest agricultural trade destination for U.S. food product in South America.
  • The growth of tourism and the hotel and restaurant sectors will require a greater array of raw materials and ingredients to make final products more appealing to foreigners and fast changing domestic consumer tastes and preferences.
  • The growing lower and middle income population, specifically youth and working women of Colombia, are stimulating new food consumer trends and a growth in processed foods.
  • Market opportunities for health foods and organic products are expanding given growing obesity trends and Government of Colombia (GOC) support for healthy living campaigns.

Challenges for U.S. exports of food products to Colombia include:

  • Colombia has trade agreements with many other countries increasing competition with U.S. products.
  • Colombian per capita consumption for processed and semi-processed products is low - For example bread consumption (24kg/year) is low compared to other Latin American countries.
  • U.S. products will have to maintain the reputation of higher quality in order to be competitive with local food processing companies, guaranteeing a consistent and uniform supply of products year round.
  • There is a cultural misperception that frozen products are unhealthy and lack quality.
  • Internal transportation costs from ports of entry are costly due to extremely poor infrastructure.
  • Cold chain is deficient and Colombians have no clear understanding of this need to maintain product quality.
Retail Sector:

Euromonitor has reported that retail sales value of the packaged food market in Colombia reached nearly US$12.4 billion in 2018.  That ranks Colombia as the 5th largest packaged food market in Latin America.  The 2018 figure also represents an increase of 19.6% from the 2014 value, or US$2 billion.  They also forecast the value of retail sales in packaged food to increase to US$15.7 billion by 2023, an increase of nearly 20.2% or over US$2.6 billion from the 2018 amount.  High growth products in the forecast include:

  • Sweet biscuits, snack bars and fruit snacks
  • Ice cream and frozen desserts
  • Baby food
  • Savory snacks
  • Ready meals
  • Edible oils
  • Confectionery
  • Processed meat and seafood
  • Rice, pasta and noodles
  • Processed fruit and vegetables
  • Sauces, dressings and condiments

Western style; large supermarkets are part of a noteworthy retail transformation in the last decade with major, domestic and international grocery chains opening new stores, of varying sizes, at intense rates.  Over the past seven years, the U.S. retail chain PriceSmart has developed a significant presence in Colombia, opening a total of seven stores in the country.  Discount stores have increased market share and continue opening outlets throughout the country offering.  Recent tax reform led to a Value Added Tax (VAT) increase from 16% to 19% that increased prices and affected Colombian consumer purchase decisions.  As a consequence, consumers started looking for more affordable, good quality products, leaving room for private label options and hard discount stores.

Best Product Prospects:

Colombia is a fast growing market for value-added food products. Surveyed retailers and food importers feel there is significant potential for new products in all food categories including healthy and ethnic food categories are especially new and fast growing, wines, craft beers and gourmet products are penetrating the market with excellent results, and organic food products are a new trend and retailers are searching for the best suppliers.

Food Service Sector:

The restaurant and food service sector is expected to expand as a consequence of growing incomes, higher participation of women in the labor force and more demands on a household’s time, resulting in a stronger incentive to dine out of home or demand home delivery food services.  Colombians preferences on home delivery foods are roasted chicken, hamburgers and pizza.  Restaurant chains are expected to perform better than independent, local restaurants.  Ethnic food categories are especially new and fast growing.  Gourmet products are penetrating the market with excellent results.  Organic food products are a new trend and retailers are searching for the best suppliers.

The Colombia Restaurant Association (ACODRES) estimates that there are 65,000 restaurants throughout the country.  The market share of the informal restaurant sector is 86%. Colombia is undergoing a gastronomy revival to attract tourists, resulting in a significant increase in high-end restaurant establishments in all major cities.  The gastronomy revival supports more sophistication in restaurant opportunities, especially in the large cities, where the quality and service are comparable to high-end restaurants in other parts of the world.  In addition, the fast food sector has grown rapidly, providing an excellent alternative to higher-end restaurants in times of economic slow-down. Colombians are becoming more inclined to eat in fast food restaurants due to dual income, working families who look for convenience and affordability in their dining out options

Experts in the Colombian restaurant sector claim that Colombian consumers have changed tastes and preferences in the last ten years, seeking out different kinds of menus and products offered, as well as becoming more demanding in food quality and product innovation.  Survey results show that restaurants offering high quality meals, while charging minimal prices, are the preferred choice of Colombian consumers. Although chain restaurants are growing exponentially, strong competition from local, more informal restaurants remains.

High-end restaurant sales will continue to grow as long as income distribution improves and the middle class continues to expand. The high-end restaurant market has opportunities in Bogota, Cali, Medellin, Barranquilla and Cartagena.  The growth in restaurant chains has demonstrated that the franchising model, distributing costs with more points of sale and uniform prices and quality, has shown the most opportunity for restaurant industry investment.

Quick service and fast food restaurants represent one third of the market and are very popular in large cities. Quick service and fast food outlets are strategically located around working areas, food courts in shopping malls and on the side of main roadways. The convenience of fast food restaurants has supported dual income, working households with little time to prepare traditional meals on a moderate income. Competition among fast food chains is intense.  For example, there are four fast food hamburger chains, both domestic and international, competing throughout Colombia: McDonald’s, Presto, El Corral and Burger King.  In addition to Colombian preference for fast food restaurants, consumers are becoming more attracted to fast casual restaurants where they can find higher quality food at affordable prices.

Best Product Prospects:

Colombia is a fast growing market for value-added food products. Industry surveyed retailers and food importers feel there is significant potential for new products in all food categories and among them uncooked pasta, pork meat and products, processed turkey, yogurt cups, fresh fruits, processed fruits and vegetables, soy sauce, tree nuts and sugar confections.  

Food-Processing Sector:

Opportunities for U.S. agricultural products abound in Colombia abound after implementation of the CTPA.  Colombia remains a net importer of many agricultural products and cannot sufficiently source domestically the raw materials and ingredients to meet the growing demand of the food and beverage processing industry.

Even though Colombia is a major producer and consumer of palm oil, the Colombian fats and oils sector must still import significant quantities of unrefined soybean oil, sunflower oil, and other oil seeds to meet industrial demand.  The milling, bakery and starch sectors have benefited from innovation in packaging, flavors and healthier ingredients.  Bread consumption has decreased due to low carbohydrate, “healthy eating” trends that have marginally changed food eating habits.  

Best Product Prospects:

Colombia is the largest U.S. export market in South America for intermediate products which is where most food ingredients are aggregated.  Through 2018 U.S. exports of intermediate products reached US$855.5 million, growth of 30% and a new record high.   That figure is also just over 40% of the regions total, as well as 29.3% of the Colombian agricultural total.  Top U.S. exports of intermediate products to Colombia in 2018 included soybean meal and oil, vegetable oils, sugar, sweetener and beverage bases, protein concentrates and textured substances, food flavorings, enzymes, corn starch, dextrins and protein isolates.

 
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