USMEF Strategic Market Profile

Central And South America

• Per capita income growth and increasing tourism are important factors driving expansion in the foodservice sector. Per capita income has grown by 22% since 1990. Moreover, the number of tourists in Central America grew by 131% since 1996.
• However, poor economies still characterize the region and average per capita purchasing power ($7,353) is 30% and 40% lower than Mexico and Russia, respectively. This limits the extent to which U.S. beef can expand in the region.

• Domestic production has increased by more than 40% since 1990, with Brazil, Uruguay & Nicaragua leading this expansion.
• The weakening of the U.S. dollar is somewhat helping to narrow the price disadvantage of U.S. products relative to local products.
• The regional FMD situation plus the ban imposed by the Argentinean government on Argentinean beef exports has increased the supply of South American beef in the region.
• Popular U.S. beef muscle cuts are not price competitive, whereas beef variety meats, which are widely consumed in the region, are more competitive.

• The retail and HRI sectors are and will continue to be the main customers for U.S. beef.
• USMEF is working closely with distributors and HRI outlets to raise awareness about U.S. beef value cuts as an alternative to popular middle meats. Currently, at least 20 restaurants in Guatemala have permanently added one value cut to their menu. 
• Since UMSEF has been actively promoting U.S. beef value cuts, there is a 12% increase in awareness about country of origin and a 7% increase in awareness about the presence of U.S. beef on menus.

Product/Industry Image

• High perception about the quality of “Made in the U.S.A.” products creates an opportunity to differentiate U.S. beef products and brands.
• In many markets, such as Chile and Colombia, the awareness about the high quality of U.S. beef is nonexistent.
• Beef variety meats are largely consumed by medium and high socioeconomic classes. This creates an opportunity to increase the margins of these low-value commodities.
• Importers, distributors and HRI establishments purchase U.S. beef because of its consistency and high quality. These characteristics differentiate U.S. beef from other local and imported beef. 

Operating/Marketing Environment and Trade/Distribution Issues

• In many countries, modern retail is displacing wet markets. For example while the recent annual growth rate of the modern retail sector in the U.S. was 1%, the growth rate in the Central and South America region ranged from 2.5% in Guatemala to 4.5% in Brazil. Income growth and urbanization, as well as liberalization of Foreign Direct Investment policies for retail investments have contributed to this phenomenon.

Access Conditions

• FTAs are broadening opportunities in many markets such as Central America, Chile, Panama, Peru and possibly Colombia. However, many products such as Select grade still face a 10-15 year tariff phase-out period.

Import and market share data is based on import data of Guatemala and Peru (from GTA), and U.S. export data is from the U.S. Department of Commerce, Trade Census Bureau.

Long Term Strategy:

• Expand sales and/or profit margins of U.S. beef variety meats by gathering market information about opportunities for adding value to low-priced commodities that are consumed by medium, medium-high and high socioeconomic groups within the region.
• Educate importers and HRI operators about the profitability of U.S. beef value cuts by leveraging consumers’ positive perception of U.S. brands. Continue a consumer communication campaign to create U.S. “brand” awareness among the medium and high socioeconomic groups.
• Enhance the price competitiveness of U.S. beef cuts (primarily middle meats and value cuts) by identifying in-country partners willing to fabricate subprimals in the region and distribute them to importers and processors.

USMEF Export Forecasts: