Myanmar Country Profile

Market Overview:

Euromonitor reports that Myanmar saw another year of strong growth in 2016. Real Gross Domestic Product (GDP) rose by 8.1% - after growth of 8.5% in 2015. The economy is driven by domestic demand, agriculture and a steady increase in Foreign Direct Investment (FDI). Gas and oil exports are expected to surge upon completion of a huge pipeline to China. A large current account deficit is of some concern although much of the country’s trade is thought to be unrecorded. Real GDP should grow by about 8% per year in the remaining years of the decade.

The current account deficit was 8.7% of GDP in 2015 and it should narrow to 8% in 2016. However, much of Myanmar’s jade trade is thought to be unrecorded. Outsiders estimate that jade exports (mainly to China) are worth as much as half the country’s entire official economy and benefit top figures in the military and politics. Myanmar’s growth prospects are relatively bright owing to continued inflows of FDI and further reforms. The country’s strategic location and its proximity to a dynamic East and Southeast Asia should serve it well as manufacturers move around the region in search of lower labor costs.

Myanmar’s economic growth is still narrowly-based, depending almost exclusively on energy and agriculture. Foreign investment in natural resources and exports of commodities will be crucial economic drivers in the medium term. However, the country has a young labor force and could benefit significantly from its strategic location in a dynamic region.                                                   

The USDA Office of Agricultural Affairs, OAA, in Bangkok Thailand covers Burma, hereinafter referred to as “Post”. They report that Nay Pyi Taw is the new capital of Burma, but Rangoon is still considered to be the business center and the most important city with a population of more than 1.25 million. Most businesses focus mainly on the Rangoon market, which is the largest consumer market in Burma. Rangoon generates more than 20% of the country’s revenues and it has the largest port handling about 90% of Burma’s international trade activities.

Direct U.S. Exports of agricultural products to Burma totaled US$82.4 million in 2016, which was an increase of 115% from the prior year. Soybean meal, distiller’s grains and other intermediate products counted for much of total growth. U.S. exports of consumer oriented products also grew 60% to US$4.5 million. Burma is also an active importer of U.S. processed food products as well, totaling US$24.9 million in 2016, an increase of 25% over the previous year. Top U.S. processed food exports to Myanmar in 2016 included food preparations, protein concentrate, processed/prepared dairy products, prepared/preserved seafood, processed vegetables and pulses and beer and wine. It is duly noted that the actual U.S. exports of agricultural products is likely much higher but are procured through Singapore and perhaps elsewhere. 

Burma remains strategically located between two large emerging market economies (China and India) with populations totaling more than 1.3 billion and 1.2 billion. Burma is a strong untapped market of more than 55 million people and a rapidly increasing middle class. The large number of unemployed population provides sufficient labor force necessary for the growth of a basic manufacturing sector, which will constitute a sizable consumer market. The easing of sanctions by the U.S. and the European Union (EU) is a positive signal and important for encouraging economic development and foreign investments in Burma. Burma is a member of ASEAN Economic Community (AEC), which in itself requires countries to harmonize regulations and standards in order to facilitate trade. As indicated it has been given an extension to fully integrate into the AEC.

There are also an increasing number of tourists and expatriates, which are targets for U.S. products, which has led to a growing number of western styled retail food markets.  There is also good potential for strong economic growth due to the country’s rich natural resources, low cost labor force, and attractive tourist destinations. This can also lead to good potential for future expansion of domestic and export-oriented food manufacturing sector, which could lead to an increase in demand for food ingredients. There is growth in bakery shops which provides new opportunities for U.S. bakery ingredients, and the fact that Burma’s population retains a positive view of the U.S.

But like in any other emerging market there are distinct challenges as well. There is vigorous competition from other Asian countries such as China, Japan, Singapore, South Korea, and Thailand. Burma also has low disposable income, compounded by low skills and high illiteracy rate. There is also an underdeveloped logistical and financial infrastructure and high transportation and port costs. Shortage of and unstable power generation makes it challenging to maintain quality and quantity of chilled and frozen products. There is a combined challenge of low awareness of U.S. products, and limited knowledge of the Burma market among U.S. exporters.

Retail Sector:

According to Euromonitor, retail sales in the packaged food market in Burma had been estimated to reach nearly US$1.7 billion in 2016. That represents a growth rate of over 92% or US$812.7 million since 2012. The forecast for growth in this market is also promising. By the year 2021, the retail sales in the packaged food market in Burma is expected to reach over US$3.1 billion, a growth rate of 60.4% or US$1.1 billion. High growth categories in the forecast include ready meals, processed meat and seafood, savory snacks, ice cream and frozen desserts, baked goods and sauces dressings and condiments.

Euromonitor reports that Myanmar is identified as one of the “20 Markets of the Future” that will offer the most opportunities for consumer goods companies. Young and growing population, abundance of natural resources and liberalization of economy is anticipated to foster sales of consumer goods across all categories. Packaged Food, Consumer Electronics and Apparel are expected to remain the largest categories over the forecast period, while Hot Drinks and Soft Drinks are forecast to be the fastest growing categories.

Post reports that the retail market value is expected to grow significantly as the young and sizable population increases their purchasing power. The country’s retail market is made up of traditional and modern retail food markets.The rise and growth of supermarkets in Burma, especially in Rangoon, is mainly attributed to a growing middle income consumer segment and expatriates working in the mineral and natural gas sectors. Burmese citizens returning from abroad have also contributed to these changing demographics. This has increased demand for a wider range of food and beverage products, especially imported products. The imported food distribution network in Burma primarily flows through importers/distributors and retailers. In Rangoon in particular, the modern distribution sector includes hypermarkets and supermarkets owned by local business operators.

Modern retail food stores in Burma are dominated by a few players who import directly mainly through agents in Singapore and currently carry a large selection of quality imported products. The main modern supermarkets and hypermarkets are City Mart Supermarket and Ocean Supercenter, which are owned and operated by City Mart Holding, Orange Supermarket by Creation, and Capital Hypermarket by the Capital Diamond Star Group, and Sein Gay Har supermarket. Most of the supermarket outlets are located in Rangoon with a few outlets in Mandalay. Nay Pyi Taw has two Ocean supermarkets and one Capital Hypermart and their customer base are upper and middle class locals, expatriates, hotels, and restaurants. A wide range of imported food and beverages are available in these retail stores.

U.S. grocery products such as snacks, breakfast cereals, jams, and some fresh fruits are available in Burma’s retail food markets, currently done through Singapore. The easing of international sanctions and the expectation of an improvement in its modern financial system has importers thinking about importing international products directly. Post recommends that to capitalize on the growing opportunities in Burma, U.S. exporters should consider marketing strategies such as pricing alternatives, shelf life training, and influencing consumer preferences. The modern retail markets and food service establishments will remain the ideal entry points for U.S. exporters.

Food Service Sector:

With more than 50% of the land covered in natural forests and one of Southeast Asia’s last vestiges of traditional hill-tribe life, Burma draws a large number of tourists interested in eco-and cultural-tourism. With the changing political climate, this sector is rapidly growing. According to Burma’s Ministry of Hotels and Tourism, the number of tourist arrivals totaled 1.3 million between January and September 2013, which is higher than the total tourist arrival in 2012 when it totaled 1 million.

Burma generated more than US$534 million in 2012 from the hotel and tourism sector, up 67% from US$319 million in 2011. A severe shortage of hotel rooms, especially in Rangoon, has limited the number of tourist arrivals and increased rates. Food and beverage sales in hotels account for about 30% of its total revenues. Imported products that are currently offered in Burma hotels include: Norwegian salmon and Chilean salmon roe, New Zealand mussels, Australian/New Zealand beef and lamb, cheeses from Australia, New Zealand, and Switzerland; wines from Australia, France, Italy, and South Africa but very few products from the U.S.

Affluent Burma citizens like to dine out with their families on weekends and with business associates during weekdays. Opportunities in this sector abound, especially in modern bakeries and ethnic foreign restaurants. Indian, Chinese, Thai, Japanese, Italian, and Korean tourists have increased noticeably in recent years. The tourism sector offer great sales opportunities for U.S. high-value food products. The Burma government is expected to build more than 50 hotels across the country over the next two years. Burma’s government plans to upgrade the Yangon International Airport to accommodate more planes and passengers, which is expected to increase opportunities in the airline and cruise catering sectors for U.S. exporters.

Food-Processing Sector:

Burma’s food manufacturing industry is still in its developing stage and is beset with difficulties in procuring food products. Its food processing sector consists mainly of sugar, beer, soft drinks, instant coffee, etc. Burma also exports rice and frozen seafood. However, most food products produced in Burma are sold in the domestic market. Some of the popular local products are candies, ice cream, bakery products, and nutritional supplements.

Best Product Prospects:

Post advises the best-selling U.S. food products are apples, frozen fries, potato chips, breakfast cereal, cookies, and instant coffee. Products that are not currently present in the market in significant quantities, but have good sales potential are American beers and wines, fresh fruits such as cherries, grapes, and berries, dairy products (cheese, UHT milk, yogurts, and whipped cream), frozen vegetables, beef, turkey, processed meat, pie fillings, dried fruits, nuts, canned fruits, pickles, seafood including lobster, Alaska King crab legs, scallops, confectionary, soup, cookies, biscuits and wafers, fruit juice, and jams.

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