Food Processing / Packaging Global Market
Insights and Opportunities
Overview: The Colombian manufacturing sector is divided into 61 industry groups and the food and beverage processing and packaging (FPP) industry ranks among the top 14 manufacturing groups. The industry employs about 19.3 percent of the domestic labor force, concentrated in the five main metropolitan areas: Bogota, Medellin, Cali, Cartagena and Barranquilla. U.S. FPP equipment enjoys an excellent reputation and wide acceptance in the domestic market. High quality, outstanding customer service, a favorable exchange rate and lower shipping costs make U.S. products stand out in this market.
The total market for FPP grew consistently during the last three years. On average, the growth rate was 7.5 percent. In 2008, the market reached USD 176.1 million representing 11 percent growth over 2007 (USD 158.9 million). In 2008 U.S. products represented 23.9 percent of the total imports. In 2009, the total market size increased over four percent to USD 183.3 million, despite the global economic crisis. Next year, 2010, forecasts are positive; the total market is projected to grow by 5.8 percent. U.S. share is expected to be of 19.5 per cent, equivalent to 23.5 percent of total imports.
Imports of food FPP equipment from the United States increased at the same rate of 11 percent in 2009, however, less than expected due to the international financial crisis. Nonetheless, this was one of the more robust sectors of Colombian industry, growing well above the estimated 2009 GDP growth rate of zero percent. U.S. equipment is well positioned given its high quality and excellent technical and support service. It is also the fastest growing supplier, whose total share rose from 13.4 percent in 2007 to 21.3 percent in 2008. In 2009, U.S. FPP equipment reached 22.4 percent of all imports. Strongest U.S. competitors included: Italy, Brazil and Germany with market shares of 19.6, 14.2 and 11.3 percent respectively. Percentagewise, U.S. product participation grew at nearly twice the rate of the total market’s growth for 2009, with an actual increase of 12 percent, while the overall market has grown almost six percent.
Colombian exports of food and beverage products grew, mostly as a result of government support programs that encouraged technological advancement and export preparedness of small and medium companies, known as PYMES. Thus, PYMES are excellent prospects to import U.S. equipment that features small/medium production capacity. Colombian FPP exports ranked second, as part of the agro industry macro sector which represented 27 percent of all Colombian exports in 2008 after manufactures, with 47 percent, as a result of government efforts and significant improvements in production and industry competitiveness.
Competition from local equipment producers in this sector is modest. The quality of local technology has improved for basic equipment and spare parts manufacturing. Local production is still undeveloped, when compared to the U.S. and other countries, especially in terms of competing with the latest technologies such as nanotechnology and electronic/robotics used for production/packaging lines. The prospective CTPA will emphasize the importance of improving the competitiveness of this sector, and will broaden sales and export opportunities for U.S. manufacturers. If the CTPA is approved, it will eliminate the current five to 15 percent Colombian tariffs on U.S. products.
Best Products/Services: Colombia is the third largest dairy products producer in Latin America, after Brazil and Mexico. The accelerated growth of the dairy industry has already surpassed projections for 2011. The dairy sub-sector, along with the following services and equipment offer the best market potential for U.S. exporters: Dairy production equipment; Bottling services (alcoholic and non-alcoholic); Brewery equipment; Mixing, grading and filtering apparatus; Heat exchangers; Filling, sealing and capping; Preserved/canned meat and fish products; and Horticulture packaging equipment.
Oils and fats processing is another promising industry segment, given that Colombia produces nearly 37.7 percent of total regional production and is listed among the top four producers of crude palm oil yield in the world. The sugars and syrup segment, followed by canned meat, poultry and fish products, as well as fresh vegetable and fruit packaging, are also promising industry niches. Another key prospect is snack processing and packaging equipment. Beverages have been the fastest growing segment so much so that the National Industry Association (ANDI) has recently created a Beverage Chamber, to provide assistance to companies devoted to this sector.
Opportunities: In terms of production, economic impact and growth projection, the food and beverage processing and packaging industry has sustained its rapid growth. It remains a promising sector for U.S. businesses, given the constant local demand for food that is processed and packaged in a long-lasting and practical fashion. Bottling and packing machines and equipment, as well as finished materials and recipients, are also products with solid market potential. Medium-term opportunities will be determined by the continued and increasing purchasing local capacity and the escalating demand for food.
The sector is highly diversified. End-users of equipment and technology in most of the sub-sectors vary widely in terms of revenues and production. Market opportunities for U.S. manufacturers also vary broadly, determined by equipment size and production capacity. Although there are a significant number of large food processors capable of handling large production capacity (such as SAB Miller-Bavaria, Nacional de Chocolates, Colombina, Postobon and Frito Lay), the largest segment with the highest purchasing potential is the PYME group, which requires less installed capacity.