4.0 The Dominican Republic

Transcription

1 4.0 The Dominican Republic 4.1 Overview The Caribbean Market for Value-Added Meats June 2002 The Dominican Republic shares the island Hispaniola with Haiti. The two countries are different in most respects, including ethnicity, language, standard of living, and consumption trends. The Dominican Republic boasts one of the largest economies in the Caribbean and one of the region s major producers of sugar, coffee, cotton, cocoa, tobacco, grains, beans, potatoes, bananas, and livestock. With current annual GDP growth averaging 7-8 percent, and an inflation rate under 10 percent, the country s economic outlook is strong. The United States is a major exporter of food products to the Dominican Republic, supplying an estimated percent of total food imports annually, according to USDA, which also notes that total food imports have increased 25 percent annually over the last ten years. As the country s economic growth continues, imported foods (from the United States in particular) will play an increasingly important role in the country s food industry. 4.1a Demographics In 2001, the total population of the Dominican Republic was approaching 8.6 million. The majority (60 percent) of the population resides in cities, including the capital, Santo Domingo (2.2 million) and Santiago de los Caballeros (710 thousand). In addition, the Dominican Republic attracts a large number of tourists each year, especially to Costa del Coco (Punta Cana) in the southeast and Puerto Plata in the north. Tourism in the Dominican Republic has seen substantial growth in recent years, from 900 thousand visitors in 1989 to 2.5 million in Hotel construction has grown around 10 percent annually since 1993, while national tourism revenues were estimated at $2.6 billion in b Consumption Country Profile Per capita GDP: US $5,700 GDP growth rate: 8.0% Population: 8,581,477 Age breakdown: 0-14 years: 34.11% years: 60.99% 65+ years: 4.9% Life expectancy: 73 years Ethnic makeup: Caucasian: 16% African descent: 11% Mixed: 73% Religion: Roman Catholic: 95% Male/female ratio: 1.03 Currency: Dominican peso (DOP) US$1.00 = DOP18.28 Source: CIA World Factbook, 2001 Meat products play a substantial role in the Dominican diet. USDA reports that, among middleincome consumers, meat products figure strongly at breakfast (ham) and lunch (chicken and pork dishes), while dinner incorporates poultry and pork dishes. Beef consumption reportedly trails that of poultry, the leading meat commodity, and pork. Consumption of processed meats is estimated to have grown 10 percent annually over the period According to the Banco Central, meat products were the largest category of foods purchased by Dominican families in 1998 (22 percent of total household expenditures). With Dominican households spending some $2.7 billion that year, total annual household spending on meat products is estimated to have been $588 million. Seasonally, Christmas time is the busiest season for poultry sales when imported brands like Butterball and Pilgrim s Pride (Wampler) are commonly sold at Dominican supermarkets. During Lent, meat consumption falls dramatically in accordance with Roman Catholic tradition. 26

2 Healthier food products are growing in popularity in the major cities. These include low-fat, low cholesterol and sugar-free foods. This was in evidence during visits to local supermarkets where products such as Hormel s Turkey Spam and Spam Lite were available in the canned meats section. Store managers note that this trend, which has increased demand for turkey-based products, has gained momentum over the last couple of years and is likely to continue. 4.2 Domestic Production and Processing The Dominican Republic has a large farming sector, in which livestock (particularly poultry and swine) is a major segment. The local meat processing industry is also active and supplies the bulk of locally consumed processed meat products. 4.2a Production Table 4.1: Dominican Meat Production (MTs) Meat production in the Dominican Republic has been Chicken 148, , , , ,529 fairly static in recent years. Pork 63,000 64,000 64,000 57,656 61,190 Despite its position as the largest Caribbean producer of poultry and beef (and second largest pork producer after Beef Total Source: FAO 80, ,009 79, ,429 79, ,627 82, ,079 87, ,785 Cuba), production volumes are unable to satisfy local demand. Beef USDA reports that national beef production has remained level over the last ten years while domestic consumption has increased. This has led to high prices and curtailed Dominican beef exports. MTs 400, , , , , ,000 Figure 4.1: Dominican Meat Production Poultry Demand for 100,000 processed poultry has been 50,000 driven in part by the trend for 0 healthier food products, such as low-fat chicken and turkeybased ham and sausage. Source: FAO Chicken Pork Beef Consequently, imports of turkey meat and parts tripled from 1997 to 1999 in order for processors to be able to offer these products. Since then, however, efforts by local poultry producers to obtain import restrictions have successfully led to a quota on imports of fresh poultry and tariff levels of 40 percent (supported by the WTO). The import ban has reportedly led to an increase in local production of chicken, while turkey production remains low. Swine Although the Dominican Republic is a producer of pork and processed products such as ham and sausages, domestic production has been hurt by Classical Swine Fever. As with poultry, the restriction of import permits has reportedly helped protect local farmers from imports. 27

3 USDA claims that Dominican producer associations have successfully increased the supply of locally-produced fresh meat to retailers and processors through the imposition of trade barriers. These activities are generally opposed by processors and retailers as they have made it difficult to source product on a timely basis. 4.2b Processing There are approximately 30 companies in the Dominican meat processing industry, many that belong to the Asociación de Fabricantes de Embutidos. Industry leaders include: INDUVECA the largest meat processor in the Dominican Republic, produces under the Induveca and Don Pedro brands. Products include sausages, hams, bolognas, franks, etc. Procesadora de Carnes Checo Checo and Checo Gourmet brand products, including sausages, salamis, and hams. Productos Ja Ja Markets canned meats under the Ja Ja brand. Major product is Vienna sausage. Productos Alimenticios del Caribe products include salamis and sausages under the Stefanutti brand. Productos Chef products include hams, bacon, franks, and salamis under the Chef brand. Compañia Ganadera Sosua processes and markets ham and salami products under the Sosua brand. Dominican processors source raw product locally (from meat producers and importers), as well as from overseas suppliers directly. Of particular interest to processors are raw turkey meat for the preparation of hams, sausages, and franks given the relatively lower level of domestic turkey production. 4.3 Imports Despite problems in the domestic livestock industry such as Classical Swine Fever, meat imports are presently unable to fill current production vacuums due to restrictions aimed at protecting local producers. This has had a particular affect on imports of swine and turkey meat for the processing industry. 4.3a Import Volumes and Values Official Dominican statistics (provided below) show a significant increase in imports of processed meats in recent years, from just over 800 MTs in 1997 to 1,800 MTs in The strongest growth in 2000 was in sausages and homogenized meat products (such as franks) with imports of 703 MTs valued at $812,000 (cif value), followed by miscellaneous meat products and mixtures, with 642 MTs valued at $2.8 million, and processed poultry (primarily chicken and not including turkey) with imports of 246 MTs valued at $428,000. Processed pork trailed chicken in 2000, with imports of

4 MTs valued at $556,000. Processed turkey imports, which fluctuated significantly over the period, totaled 85 MTs worth $307,000 in Sources indicate that meat imports have declined since 2000 for two reasons: Problems with BSE in the European Union that led to a complete ban on the importation of Spanish meat products; and The decision of the current administration to protect local producers by putting import barriers into place. MTs 2,000 1,600 1, Source: ONE Figure 4.2: Dominican Imports of Value-Added Meat Products US Others 4.3b Country Suppliers In general, US foods are associated with high quality and comprise 83 percent or more of the Dominican Republic s value-added meat imports by volume in every category (see tables below). European Union suppliers include Spain, and to a lesser extent France, although a ban on meat imports following the BSE outbreak has curtailed supplies from these countries. Canada emerged as a supplier of processed pork and miscellaneous value-added meats in Although 2001 data is not yet available, it is assumed that the protectionist measures of the current administration reduced Canadian exports last year. 4.3c Import Statistics The following tables show Dominican imports of processed meats by category and supplier: Table 4.2: Dominican Imports of Sausages kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 19,309 49, , , , , , , , ,636 Spain 7,873 15,767 4,495 7, ,001 41,745 48,424 Germany 3,067 3,558 Others ,211 3, Total 19,564 49, , , , , , , , ,446 Source: Oficina Nacional de Estadísticas Includes all sausage products (spicy, sweet, breakfast links, etc.) made from poultry, pork or beef. 29

5 Table 4.3: Dominican Imports of Homogenized Meats kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 7,788 10,259 8,623 16,642 6,442 20,085 7,533 5,634 Spain 1,212 1,124 3,127 2,922 Costa Rica Italy Total 9,042 11,551 8,623 16,642 6,442 20,085 10,838 9,330 Source: Oficina Nacional de Estadísticas Includes all frankfurters, hot dogs and similar products made from poultry, pork, or beef. Table 4.4: Dominican Imports of Processed Turkey kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 7,027 18, , , , ,734 39, ,814 77, ,266 Spain 3,996 18,194 22,158 77,077 8,483 84,406 7,928 34,606 Costa Rica France Others ,513 36,124 2,345 7,550 Total 7,027 18, , , , ,934 50, ,770 85, ,260 Source: Oficina Nacional de Estadísticas Includes all processed turkey products except sausages and homogenized products such as turkey franks. Table 4.5: Dominican Imports of Chicken and Other Processed Poultry (Except Turkey) kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 7,716 13, , , , , , , , ,349 Spain 20,654 18,212 46,043 37,989 1,135 11,298 27,897 40,057 France 11,930 8,216 Canada Others ,153 15,217 1,123 1, Total 7,716 13, , , , , , , , ,344 Source: Oficina Nacional de Estadísticas Includes all processed chicken and non-turkey poultry products except sausages and homogenized products such as chicken franks. Table 4.6: Dominican Imports of Processed Pork kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 7,734 37,390 42, ,116 76, , , ,898 99, ,216 Spain 1, ,209 8,193 25,154 1,540 15,319 14,269 49,439 Canada 5,688 46,531 Others ,464 3,040 4,716 7, Total 7,734 37,390 44, ,500 86, , , , , ,313 Source: Oficina Nacional de Estadísticas Includes all processed pork products except sausages and homogenized products such as frankfurters. 30

6 Table 4.7: Dominican Imports of Processed Beef kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 1,260 2,711 7,660 14,353 7,477 16,317 2,739 8,792 12,607 22,365 Spain 323 1,237 1,078 1, France Italy ,513 27,499 Guatemala 4,296 10,740 Others ,275 1,169 1,671 Total 1,260 2,711 7,994 15,618 9,462 20,457 15,717 48,702 12,819 23,138 Source: Oficina Nacional de Estadísticas Includes processed and canned beef products (corned beef, shredded beef, etc.) except sausages and homogenized products like frankfurters Table 4.8: Dominican Imports of Other Meat Products, Mixed or Otherwise kg US$ cif kg US$ cif kg US$ cif kg US$ cif kg US$ cif US 16,729 54, , , ,976 1,229, , , ,126 2,629,800 Spain ,542 7,815 85,089 57,784 5,877 19,305 43,034 98,572 Canada 4,769 67,504 Guatemala 17,063 41,732 4,274 9,610 Holland 1,002 1,895 France 874 1, ,753 Others ,357 4, , ,622 Total 17,240 55, , , ,485 1,333, , , ,580 2,814,756 Source: Oficina Nacional de Estadísticas Includes all processed meat mixtures except sausages and homogenized products such as frankfurters. 4.4 Distribution The major trend in the Dominican Republic s distribution industry is consolidation, which is affecting all points on the traditional importer, processor, wholesaler, retailer supply chain. 4.4a Structure and Trends A notable result of the Dominican Republic s extended period of economic growth has been the evolution of the supermarket industry in urban and high-income areas. This has created pressure along the supply chain to provide value-added service and reduce intermediary costs. Many of the large retail companies, including Super Pola and Super Nacional, have vertically integrated import and distribution activities through their parent companies. Importer-distributors, such as Oceanica and Cuesta (serving Super Pola and Super Nacional, respectively), add value to their services by supplying a wide range of products, including foods, household goods, and consumer products to their sister companies. These distributors also supply other chains, and the converse happens as well, with supermarkets frequently purchasing goods from other distributors outside the parent group. Large importer-distributors frequently serve as exclusive agents for international brands. 31

7 Similarly, meat processors such as Induveca now carry out their own distribution activities and are increasingly supplying supermarkets, hotels, and restaurant chains directly. The growing involvement of importers and processors in distribution activities has reduced the role of independent wholesalers, although these remain the predominant supplier to small-scale retailers outside the supermarket sector. It is also common for Dominican food wholesalers to sell products direct to the public. 4.4b Importer-distributors A list of major Dominican importer-distributors carrying processed meat products is provided below. Table 4.9: Dominican Importer-Distributors Miguel Gonzalez Cuesta (Centro Cuesta Nacional) Av Luperon, esq Av G Mejia Contact: Jose Miguel Gonzalez, President Tel: ; Fax: Importadora Oceanica (Grupo Ramos) Av Winston Churchill, esq Angel Severino Cabral PO Box 1294 Contact: Miguel Paradas, Imports Manager Tel: ; Fax: Congelados del Caribe (Grupo Alonso) Av Respaldo Monumental #24 Contact: Diego Hidalgo, Purchasing Manager Tel: , Fax: Mercatodo Ave Abraham Lincoln #751 Contact: Luis Lopez, Purchasing Manager Tel: ; Fax: Casa Diomedes Calle Nicolas de Ovando #350 Esanche La Fe, Santo Domingo, Dominican Republic Contact: Miguel Torrez, Purchasing Manager Tel: ; Fax: Exclusive importer-distributor for the Super Nacional supermarket chain. Also supplies other retailers, restaurants, and hotels. Sources many varieties of food products from the US directly as well as through their consolidator in Miami, including several exclusive food brands. Interested in receiving product information from potential suppliers. Exclusive importer-distributor for the Super Pola supermarket chain. Also supplies other retailers, restaurants, and hotels. Sources many varieties of food products from the US direct as well as through their consolidator in Miami. They distribute Pilgrim s Pride products exclusively. Presently not interested in new products until current barriers are reduced (although they are interested in frozen pork hocks and similar low-end items). Congelados del Caribe, one of four sister companies under major distributor Grupo Alonso, is the one tasked with imports. They supply hotels, restaurants, and major supermarket chains such as Nacional, Pola, La Cadena, and Bravo with all types of frozen meats. Sister company of Supermercado La Cadena, responsible for imports and distribution. Sister company to Supermercado Plaza CD, tasked with purchasing all goods for this store. Interested in receiving product information from potential suppliers. 32

8 Table 4.9: Dominican Importer-Distributors Agrocarnes, SA Carretera Romana Juaymate, Km 10 La Romana, Contact: Mr. Pedro Balle, President Tel: ; Fax: Carnes Selectos Nellos, SA Dr. Luis Thomen #165 Ensanche Evaristo Morales Contact: Sebastian Cardella, President Tel: ; Fax: Knorr Alimentaria, SA Calle C # 6 Industrial Herrera Contact: Ing. Carlos Leon, General Manager Tel: ; Fax: Formerly the exclusive importer of Campofrio brand meats from Spain, prior to the ban on imports of EU meat products. Presently imports raw material for processing into sausage products under their Grado Cero brand. Interested in receiving information on leading US brand products. Carnes Selectos Nellos is actually a small meat processor, although they have in the past imported fresh ribeye steak, mortadela, and Genoa salami. Currently interested in receiving product information from potential suppliers, including fresh beef cuts and salamis. Importers of raw materials for dried meats only (most of their product is actually sourced locally). As a subsidiary of Unilever/Best Foods, they are presently not interested in prospective suppliers. 4.5 Retail Sales Traditionally, Dominican sales of consumer foods such as processed meats are through small grocery stores called colmados (around 40,000 stores in 1999), and food warehouses (around 1,600 facilities nationwide) which also supply the colmados. This system is changing with the fast growth of the supermarket industry, although USDA reports that colmados still accounted for 75 percent of retail food sales in 2001, versus 20 percent for supermarkets and 4 percent for warehouses. Visits to several colmados in Santo Domingo revealed only basic meat products such as salamis and hams, and no imported meats (although some imported canned goods were in evidence, such as sauces, condiments, and beverages). A typical colmado is small in size (around 600 square feet or less) and offers counter service as opposed to convenience store type self-service. With respect to imported value-added meats, supermarkets represent the major marketing channel for this category of product. This is due to high tariff-induced prices that limit their consumption to upper middle-class and wealthy shoppers, and the fact that most supermarkets are located in urban areas where these consumers reside. Demand for imports is further supported by the appreciation of higher-income consumers for sophisticated, value-added, and specialty products. 4.5a Major Supermarkets The three major supermarket chains in the Dominican Republic include Super Nacional (8 stores), Super Pola (8 stores, mainly large-scale hypermarkets), and La Cadena (6 stores). Others include Supermercado Bravo and Supermercado Plaza CD (1 store each). Larger sized hypermarkets include Hipermercado Ole (4 stores), Carrefour (1 store), and Price-Smart (2 stores, similar to Price Club or Sam s Club membership stores in the US). 33

9 Table 4.10: Major Dominican Supermarkets Supermercado Pola Av Abraham Lincoln No. 115 Contact: Miguel Paradas, Imports Manager Tel: ; Fax: Supermercado Nacional Av Luperon esp. Av. G. Mejia Contact: Antonio Fernandez, Vice President Tel: ; Fax: Supermercado La Cadena Av Abraham Lincoln #751 Contact: Luis Lopez, Purchasing Manager Tel: ; Fax: Carrefour Carretera Duarte, Km 10 ½ Contact: Agustin Santos, Director Tel: ; Fax: Hipermercados Ole Ave Duarte # 94 Villa Consuelo, Contact: Lisa de Rodriguez, Purchasing Manager Tel: , ext 231; Fax: Supermercado Bravo Ave Winston Churchill #1452 Contact: Rafael Monestina, President Tel: ; Fax: Supermercado Plaza CD (Casa Diomedes) Calle Nicolas de Ovando #350 Esanche La Fe, Santo Domingo, Dominican Republic Contact: Miguel Torrez, Purchasing Manager Tel: ; Fax: Price Smart Av Charles Summers #54 Los Prados, Contact: Pedro Uvera, Operations Manager Tel: ; Fax: Belongs to Grupo Ramos, sister company of Importadora Oceanica. Chain of six hypermarkets and two supermarket stores. All of their stores have large, modern deli counters. Chain of eight supermarkets catering mainly to higher income consumers. Part of the Centro Cuesta Nacional (CCN) group of retail companies. All of their stores have large, modern deli counters. Chain of six smaller sized supermarkets. These stores have small deli counters. Subsidiary of French retail giant, presently with one store location just outside Santo Domingo. This store, like all Carrefour supermarkets, has a deli counter. Hypermarket chain of four stores. The central store on Ave Duarte is responsible for imports and distribution. Stores have deli counters. Chain of two large stores. Stores have deli counters. Sister company to Casa Diomedes, the latter in charge of purchasing for the store. Stores have deli counters. Chain of two large-scale hypermarket stores opened in 1999, with customer membership similar to Price Club or Sam s Club stores in the US. No deli counters. 34

10 4.5b Meat Departments The Caribbean Market for Value-Added Meats June 2002 The format of the supermarket and hypermarket stores in the Dominican Republic follows the basic structure of their US equivalents, with unique departments for frozen foods, produce, meats, etc. Glass deli counters, for instance, boast refrigerated displays of clearly identifiable brand name products with prices listed per pound. Imports and domestically-produced meats are displayed together. Deli meats are offered either fresh sliced at the counter, or else in store-made pre-packs (around a half pound) in the chilled meats section. These sections commonly offer franks, sausages, whole salamis, and whole hams next to each other. It is therefore common to find cheaper Chef brand franks next to more expensive Louis Rich or Oscar Mayer products. In addition, many supermarket deli departments manage take-out centers located in or near the deli section selling lunch to working urbanites. The volume of domestic products and brands (Induveca, Checo, Chef, et al) generally outnumbers imports in the deli and chilled meats sections, although the opposite is true with respect to canned meats. The major canned product, Vienna sausage, is dominated by imports from Hormel and Libby s despite competition from local manufacturer Ja Ja. Other canned meats include Hormel Spam and Underwood Deviled Ham. Frozen food sections offered few US or local value-added meat products. Occasional products found during store visits include Banquet chicken nuggets, Wampler turkey patties, and Butterball breakfast links. 4.5c Products and Prices Value-added meat products found at two supermarket chains granting permission to record store data are provided in the tables below, along with brand names, countries of origin and retail prices converted to US dollars. Table 4.11: Products and Prices La Cadena Supermarket, Av. Cervantes, Santo Domingo Product Brand Origin Size Price Deli and chilled sections Bologna, turkey Sosua Dominican Republic 1 lb $1.54 Ham, bolo style Sosua Dominican Republic 1 lb $2.91 Ham, extra cooked El Cid Dominican Republic 1 lb $3.57 Ham, Prosciutto Citterio USA 1 lb $12.36 Ham, turkey Sosua Dominican Republic 1 lb $2.52 Ham, turkey Longmont USA 1 lb $3.68 Ham, turkey Checo Dominican Republic 1 lb $3.79 Mortadela El Cid Dominican Republic 1 lb $2.47 Pepperoni slices Citterio USA 1 lb $2.58 Salami Sosua Dominican Republic 1 lb $1.37 Salami Don Pedro Dominican Republic 1 lb $2.41 Salami Stefanutti Dominican Republic 1 lb $1.37 Salami, Especial Don Pedro Dominican Republic 1 lb $1.15 Salami, Genoa El Cid Dominican Republic 1 lb $5.54 Salami, turkey Butterball USA 1 lb $3.57 Salami, turkey Checo Gourmet Dominican Republic 1 lb $1.70 Sausage, beef El Cid Dominican Republic 1 lb $4.94 Turkey breast, smoked Butterball USA 1 lb $5.49 Canned section Chicken spread Underwood USA 4.25 oz $2.74 Deviled ham Underwood USA 4.25 oz $2.74 Meat, potted Armour USA 3 oz $

11 Table 4.11: Products and Prices La Cadena Supermarket, Av. Cervantes, Santo Domingo Product Brand Origin Size Price Meat, potted Libby s USA 3 oz $0.55 Sausage, chicken Armour USA 5 oz $0.82 Sausage, turkey Ja Ja Dominican Republic 10 oz $0.88 Sausage, Vienna Sabrosa Dominican Republic 5 oz $0.38 Sausage, Vienna Ja Ja Dominican Republic 5 oz $0.41 Sausage, Vienna Armour USA 9.25 oz $1.76 Sausage, Vienna, hot/spicy Armour USA 5 oz $1.10 Spam, Lite Hormel USA 12 oz $3.84 Spam, turkey Hormel USA 12 oz $3.84 Source: Fintrac in-store survey Table 4.12: Products and Prices Super Pola Supermarket, Av. Winston Churchill, Santo Domingo Product Brand Origin Size Price Deli and chilled sections Bacon, sliced pack Chef Dominican Republic 8 oz $2.03 Bacon, turkey, sliced pack Louis Rich USA 12 oz $5.49 Bologna Induveca Dominican Republic 1 lb $1.43 Bologna, sliced pack Oscar Mayer USA 8 oz $2.85 Bologna, turkey Cibao Dominican Republic 1 lb $1.59 Cappola Cacciatore Canada 1 lb $7.14 Franks Chef Dominican Republic 8 count $2.30 Franks Induveca Dominican Republic 30 count $5.49 Franks Induveca Dominican Republic 8 count $2.30 Franks, Little Smokies Oscar Mayer USA 1 lb $6.84 Franks, cheese Oscar Mayer USA 1 lb $6.87 Franks, chicken Louis Rich USA 1 lb $3.84 Franks, smoked, XXL Oscar Mayer USA 1 lb $4.67 Ham Chef Dominican Republic 1 lb $1.18 Ham, Especial Induveca Dominican Republic 1 lb $1.10 Ham, Picnic Sosua Dominican Republic 1 lb $1.98 Ham, Premium Checo Dominican Republic 1 lb $2.91 Ham, baked, sliced pack Oscar Mayer USA 6 oz $4.06 Ham, chicken Cibao Dominican Republic 1 lb $2.14 Ham, cooked Casserio Dominican Republic 1 lb $3.18 Ham, cooked El Cid Dominican Republic 1 lb $3.46 Ham, cooked Casserio Dominican Republic 1 lb $3.18 Ham, cooked Induveca Dominican Republic 1 lb $1.81 Ham, cooked Chef Dominican Republic 1 lb $1.92 Ham, smoked, sliced pack Oscar Mayer USA 6 oz $4.01 Ham, turkey Casserio Dominican Republic 1 lb $3.18 Ham, turkey Checo Dominican Republic 1 lb $3.24 Ham, turkey Sosua Dominican Republic 1 lb $3.65 Ham, turkey, smoked Sosua Dominican Republic 1 lb $4.01 Ham, York Chef Dominican Republic 1 lb $3.18 Head cheese Induveca Dominican Republic 1 lb $2.63 Mortadela, Sevillana El Cid Dominican Republic 1 lb $2.30 Pepperoni, slices Citterio USA 1 lb $5.33 Roast beef Checo Dominican Republic 1 lb $3.02 Salami Citterio USA 1 lb $6.87 Salami Citterio USA 1 lb $4.67 Salami, Super Especial Induveca Dominican Republic 1 lb $1.37 Salami, Super Especial Chef Dominican Republic 1 lb $1.21 Salami, Supremo Induveca Dominican Republic 1 lb $2.74 Salami, chicken Cibao Dominican Republic 1 lb $1.37 Salami, chicken Sosua Dominican Republic 1 lb $1.81 Salami, Genoa Citterio USA 1 lb $4.39 Salami, turkey Checo Gourmet Dominican Republic 1 lb $1.92 Salami, turkey Casserio Dominican Republic 1 lb $1.98 Salami, turkey Butterball USA 1 lb $3.57 Sausage Stefanutti Dominican Republic 8 oz $

12 Table 4.12: Products and Prices Super Pola Supermarket, Av. Winston Churchill, Santo Domingo Product Brand Origin Size Price Sausage Induveca Dominican Republic 1 lb $3.73 Sausage, Casero El Cid Dominican Republic 1 lb $3.57 Sausage, BBQ Chef Dominican Republic 5 count $2.03 Sausage, breakfast links Butterball USA 7 oz $2.03 Sausage, German N/A N/A 8 count $3.24 Sausage, turkey Induveca Dominican Republic 6 count $1.95 Sausage, turkey Checo Dominican Republic 5 count $1.92 Turkey Wampler USA 1 lb $4.94 Turkey, honey glazed Wampler USA 1 lb $4.94 Turkey, smoked All-American USA 1 lb $2.74 Canned section Chicken spread Libby s USA 7.5 oz $2.74 Ham Hormel Black Label USA 24 oz $8.79 Ham spread Armour USA 3 oz $1.37 Ham spread Libby s USA 7.5 oz $2.74 Luncheon meats Libby s USA 12 oz $2.74 Meat, potted Libby s USA 5.5 oz $0.88 Sausage, Vienna Ja Ja Dominican Republic 5 oz $0.38 Sausage, Vienna Ja Ja Dominican Republic 10 oz $0.71 Sausage, Vienna Sabrosa Dominican Republic 5 oz $0.38 Sausage, Vienna Sabrosa Dominican Republic 10 oz $0.66 Sausage, Vienna Armour USA 5 oz $0.93 Sausage, Vienna Libby s USA 5 oz $0.71 Sausage, Vienna Armour USA 9.25 oz $1.79 Sausage, Vienna, BBQ Armour USA 5 oz $1.26 Sausage, Vienna, BBQ Libby s USA 5 oz $0.71 Sausage, Vienna, chicken Armour USA 5 oz $0.93 Sausage, Vienna, hot/spicy Armour USA 5 oz $1.26 Sausage, Vienna, turkey Ja Ja Dominican Republic 10 oz $0.85 Frozen section Chicken nuggets Country Skillet USA 10 oz $2.28 Chicken nuggets Banquet USA 13.5 oz $3.49 Chicken nuggets, popcorn Banquet USA 12 oz $3.46 Sausage, breakfast links Butterball USA N/A N/A Turkey patties Wampler USA N/A N/A Source: Fintrac in-store survey 4.5d Products in Demand Pure beef products were not in strong evidence except in the form of fresh cuts and roast beef, occasionally offered at deli counters. Local buyers note that consumers generally favor poultry above all other meats, followed by pork. Managers noted growing demand for turkey and turkeybased meat products, including hams, salamis, sausages and franks. Canned meats also provided significant shelf-space, including Vienna sausage and Spam, some of which are turkey or chicken based. While managers note that demand for turkey products is essentially a result of healthier eating trends among urban consumers, domestic turkey production remains low. Consequently, the vast majority of the country s turkey products are imported, either in raw form by local manufacturers of turkey sausages and the like, or in finished form such as Butterball s turkey salami. Other products in demand include specialty hams and sausages, such as locally-made El Cid brand jamon serrano, based on the Spanish product of the same name that (as of 2001) is no longer allowed entry due to the ban on European meat imports. 37

13 Demand for sophisticated value-added products like frozen turkey patties and chicken nuggets, while evident, remains low. A representative of Importadora Oceanica described the market for these items as still young, catering mainly to a wealthy consumer niche since the majority of consumers remain relatively uninterested in the high price or convenience offered by these particular items. Another category noted by the representative from Oceanica is frozen swine and bovine feet. Although these items are not widely consumed in the US, they are delicacies among Dominican consumers. The fact that many US livestock firms sell these products at low prices means that imports are still feasible in spite of high tariffs. 4.6 Import Regulations and Requirements Processed meat exporters sending goods to the Dominican Republic should be aware of the country s various customs and administrative requirements. 4.6a Customs Requirements Commercial shipments of meat products to the Dominican Republic require the following documentation: 1. Bill of lading 2. Commercial invoice 3. Consular invoice - obtained from the Dominican Consular in the exporter s country 4. Insurance certificate 5. Import permit - obtained by local importing company from the Ministry of Agriculture. The first two items must be presented to the Dominican consulate in the country of origin in order to obtain the consular invoice. The cost of this invoice is $130 $170 maximum, depending on the cif value of the shipment (any shipment over $1,500 pays the full $170). Furthermore, all documents must be in Spanish with the exception of the Bill of Lading, which can be either in English or Spanish. Customs clearance normally takes three days provided all documentation has been collected and submitted. 4.6b Import Duties There are four fees associated with exporting meat products to the Dominican Republic: Consular invoice up to US $170, paid at the Dominican Consulate in the country of origin prior to shipment. Tariff Rate assessed by customs against the CIF value of the imported product, as per the cif value given on the commercial invoice. The current tariff rate on HS codes 1601 (sausages) is 40 percent, and 20 percent for products under HS code 1602 (processed meats). Exchange commission - Calculated as 4.75 percent of the product s CIF value. Mandated by the Central Bank to offset the national cost of purchasing hard currency and collected by customs. 38

14 Value-added tax - 12 percent of the product s CIF value. This tax is also called the Impuesto de transferencia de bienes industrializados y servicios (ITBIS), and is usually passed on to consumers. With the exception of the consular invoice fee, all duties are charged in Dominican pesos at the current rate of exchange. 4.6b Health Registration All Dominican food imports must be registered with the Ministry of Health. The process is usually carried out by Dominican importing companies (or their legal representatives), who are required to present a sample of the product to officials, accompanied by the appropriate registration documents and fee. The process may take several weeks to several months to conclude. 4.6c Trademark Registration Brand name products are registered with the Ministry of Trade and Commerce. As with Department of Health registration, the corresponding documents must be submitted by the importer along with the processing fee, and may take several weeks or months to obtain. 4.6d Labeling Requirements The Department of Norms and Standards (DIGENOR) is the agency responsible for monitoring product labeling in the Dominican Republic. Pre-packaged meat products must be labeled with the following information: 1. Company brand 2. Product name 3. Country of origin 4. Ingredients list 5. Net weight 6. Producer name and address 7. Importer name and address 8. Product batch code 9. Expiration date 10. Sanitation registration number (from the Department of Health) 11. Preparation instructions (if appropriate) In addition, the labeling language must be either in Spanish or bilingual (such as Spanish and English). Despite this requirement, many of the products noted during store visits bore labels in English only. This may be due to a lack of enforcement on the part of local authorities or the shipping of these items in mixed container loads from Miami. 4.7 Summary Generally, the Dominican Republic represents one of the top markets in the Caribbean for processed meats as measured by population, economic growth, and imports. Its proximity to the US (as well as strong commercial and media ties) makes it a natural market for US food products. Furthermore, the country boasts a strong internal market for processed meats, and domestic production of sausages, franks, and deli meats mirrors most of the basic product types supplied by 39

15 US manufacturers. Other important developments include the country s burgeoning supermarket industry and the fact that many wealthier, urban consumers are developing healthier diet habits, indicating opportunities for US suppliers of items such as lean, low-salt, and turkey-based products to this market. Demand for these products is also being driven by the growth of the tourism industry and retirement communities. In spite of these factors, current imports from the US are below their potential and future prospects are limited by protectionist measures adopted and maintained by the current government. These include tariff rates of percent on processed meats, as well as informal trade barriers such as the increasing difficulty noted by buyers in obtaining import permits. Despite the high level of interest displayed by importers surveyed for this report, exporters should be prepared to encounter significant bureaucratic hurdles when targeting the Dominican Republic. Nevertheless, with a consumer base of 8 million, annual GDP growth of 7-8 percent, and quickly evolving retail sector and consumer trends, the longer-term prospects for supplying this important market should not be ignored. 4.8 Surveys The following surveys were carried out during meetings with importer-distributors and visits to local supermarkets utilizing the questionnaire forms provided in the Annex. Importadora Oceanica (Super Pola Supermarkets) Activity: Food importer / consolidator / distributor Address: Av Winston Churchill/Esq. Angel Severo Cabral, Contact: Miguel Paradas, Imports Manager Tel: (809) ; Fax: (809) One of the largest food importers in the country and the exclusive importer-distributor for Super Pola supermarkets, which is owned by the Grupo Ramos holding company. Super Pola has 3 supermarkets and 5 hypermarkets in the Dominican Republic, making them one of the largest chains, along with Super Nacional, Bravo, and La Cadena. The hypermarkets are Wal-Mart style stores, including supermarket (Super Pola) and department store (La Sirena) sections. As with the other chains like Super Nacional, there is no standard store size. A couple of the supermarkets are on the smaller scale, between 1,500 2,000 square meters, while the hypermarkets range in size between 14,000 17,000 square meters. All of their activities are vertically integrated. Super Pola supermarkets, La Sirena department stores, and Importadora Oceanica are all sister companies under Grupo Ramos, which also boasts Antocha International in Miami (their consolidator/exporter) and Importadora El Navio (importer of department store goods). In addition to supplying their own supermarkets, they also carry out some distribution of food items to independent supermarkets. They are the exclusive Dominican importer-distributor for Wampler brand turkey products from the US (Pilgrim s Pride). These include whole turkeys and processed turkey products like sausages, ground meat, frozen patties, etc. Although they carry the product on a regular basis, sales are reportedly slow compared with domestic items from companies such as Induveca, Chef, Sosua, and Checo. Part of the reason is the higher price of the Wampler products, due mainly to high tariffs and transport costs. 40

16 In addition, it is generally felt that these items cater to a smaller, wealthier niche to begin with, as most Dominican consumers are relatively poor, purchase traditional meat products such as ham and pork sausage, and are generally not in the habit of purchasing more sophisticated items like turkey burgers or honey-glazed turkeys. The biggest problem with regard to importing US meats, however, is the difficulty in getting import permits for fresh and processed meat products from the Ministry of Agriculture, especially for chicken and pork, and even turkey items which are not produced domestically in any significant quantity. This is especially problematic leading up to Christmas time, which is the main season for consuming turkeys. Importers such as Oceanica have to prepare their permit requests months ahead of time to be able to assure their products arrives in time for the season. The high tariffs further erode the competitiveness of US meats. For these reasons, at the present time, they are not interested in carrying other US brand meats on an exclusive basis. One product category they might be potentially interested in from US suppliers is that of frozen pork hocks and cow s hooves, items which are a popular in the Dominican Republic but which are not widely consumed in the US. In spite of the high tariffs on meat products, US suppliers generally sell these particular items at such low prices that it is still profitable to market them imported despite high tariffs. Miguel Gonzalez Cuesta (Centro Cuesta Nacional/Supermercados Nacional) Activity: Food importer / consolidator / distributor Address: Avenida Luperon / Esq. Gustavo Mejia Ricart, Contact: Jose Pelaez, Food Division Manager Tel: (809) ; Fax: (809) Cuesta serves the Super Nacional group of supermarkets, of which there are eight total in the Dominican Republic making it one of the largest chains. This importer-distributor is a sister subsidiary to Supermercado Nacional, both under the Centro Cuesta Nacional holding company. As with Oceanica, Cuesta has its own Miami-based consolidation company and distributes food items to other supermarkets as well. Cuesta will use their consolidator depending on the volumes purchased; if full containers are ordered, they may ship direct from the supplier. Otherwise, for less than full containers they will opt for the supplier to send the product to Miami where it is combined with other goods and shipped to their distribution facilities in the Dominican Republic. The supermarket stores are of two basic sizes, they have two smaller stores akin to regular US supermarkets, and six others that are closer in size to hypermarkets and usually located adjacent to Cuesta s other retail venues such as their book stores and household goods stores. The company already distributes a number of food brands exclusively in the Dominican Republic, such as Gallo Wines and Roland canned foods from the US, and has also carried Spanish sausages and processed meats under the Latilla brand. They have noted a trend among wealthier consumers to purchase healthier food products, such as those made with turkey, as opposed to pork ingredients. Furthermore, the newest Supermercado Nacional (soon to be opened in the Casa de Campo area of La Romana) is aimed at higher-end consumers in particular and will offer healthy and gourmet foods. 41

17 The company is potentially interested in carrying additional US brands of meats under exclusive terms, provided the line of products satisfies their major criteria which are: high quality/competitive goods, competitive prices, and sufficient local market demand. Poultry products in particular tend to be seasonal and chicken and turkey consumption increases around the Christmas holidays (and drops during Lent). These factors aside, there is the issue of government policies regarding imports and restrictions that need to be taken into consideration. Their major challenge has been importing pork and chicken products (fresh and processed), given the difficulty of obtaining permits. Nevertheless, interested suppliers are welcome to submit product catalogues together with price lists for consideration. With the imported brands that they do carry, supermarket promotions are commonly carried out in conjunction with the supplier. That is, promotions are carried out on a cost-sharing basis, with their suppliers typically transferring additional funds to a marketing account that is used to finance in-country promotions. AgroCarnes S.A. Activity: Meat importer / processor / distributor Address: Carretera Romana Juaymate, Km 10, La Romana, Dominican Republic Contact: Andres Miolan, Import Manager Tel: (809) ; Fax: (809) This company was originally started as a local distributing agent for Campofrio meat products from Spain. They later carried local meat products and undertook their own processing of sausages under the Cerro brand. This was fortunate as problems with BSE have led to a ban on imports of meats from the EU. The company also branched off into the US where they have a sister company in New Jersey, although these are now separate companies and do not supply each other nor carry out other transactions due to the respective import restrictions of the US and Dominican Republic. They would like to see USDA reach an agreement with local Ministry officials to allow in greater volumes of meats, and are undertaking some lobbying of their own in this regard. They are interested in sourcing raw material from the US for the manufacture of sausages, especially turkey. The company is also interested in acting as the exclusive agent for US meat processors, provided their brand was competitive, in light of the current ban that has curtailed their imports of Campofrio meats from Spain. Nevertheless, they caution that supplying large volumes is difficult under current restrictions, and would be more interested in sourcing smaller volumes of premium items direct from suppliers. Supermercado La Cadena Activity: Meat importer / distributor / retailer Address: Contact: Luis Lopez, Purchasing Manager Tel: (809) ; Fax: (809)

18 La Cadena is a chain of 6 supermarkets served by its sister company, importer-distributor Mercatodo. Over the last two years there has been a notable uptake in the sale of turkey-based products, as sausages, spam, ham, and other items have become available with turkey as the main ingredient. This is mainly driven by the consumption pattern of urban consumers towards healthier eating, and reinforced by exposure to US television and media promoting the benefits of a healthier diet. Although import requirements stipulate that all packed/canned goods must be labeled in Spanish, (or else bilingual with Spanish included), many products found on supermarket shelves do not conform to these requirements. Since many of these products are received as mixed shipments from Miami consolidators it is not possible to check the labeling on all goods; however, it is possible that local inspection authorities may find some reason to enforce these regulations in the future, in which case suppliers would be better served by preparing items labeled in Spanish in the near term. Junta Agroempresarial Dominicana, Inc. Activity: Agricultural producers organization Address: Euclides Morillo 51, Apartado Postal 388-9, Contact: Osmar Benitez, Director Tel: (809) ; Fax: (809) This organization is the main Dominican agricultural producers group. They have thousands of members producing all varieties of crops and livestock including poultry, beef and pork. In addition to extension activities and other technical assistance, JAD also undertakes policy advocacy and promotional activities on behalf of its membership. With respect to limitations on imports, there is only one livestock item for which the Dominican Republic has obtained WTO permission to impose quotas, which is chicken. The mechanism works in such a way that once the import quota volume has been met, tariffs of over 100 percent are assessed on any subsequent imports. This notwithstanding, the main limitation comes from the Ministry of Agriculture which limits the volume of imports informally through issuing fewer permits to importers than under the previous administration. This has had the effect of benefiting local meat producers and processors of poultry and pork (although beef production has decreased). In terms of market trends, local production and consumption of specialty meats has increased as the country continues to grow economically. It is possible to find specialty cuts of ham and Spanish-style sausages, for example, which are now supplied by local processors. 43