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Ice Cream, in Central America?
By Charles R. Bertsch
There was little or no market
for ice cream exports to Central America in 1994. Since then,
consumers in three Central American countries--Costa Rica, Panama
and Nicaragua--have discovered the frozen pleasures of U.S. ice
cream products.
How did these markets develop? It doesn't hurt to have a World Trade Organization (WTO) commitment in a country's resumé, or a sharp international promoter bound on revving up sales in a new market.
Costa Rica Cranks Its Markets Open
In July 1997, honoring its WTO commitment, Costa Rica implemented its first-ever tariff-rate quotas (TRQ's) for ice cream, set at 500 tons with a 44-percent tariff rate for the year. This in-quota tariff dipped to 39 percent in 1997 as quantity went up to 532 tons. While the in-quota tariff on imported ice cream may seem high, it shrinks when compared to the 109 percent now tacked onto out-of-quota imports.
Costa Rica allocates the TRQ in monthly installments, filled on a first-come, first-served basis through the Balsa de Product or Agropecuarios (Agricultural Commodities Board of Trade) office.
An Ice Storm in Panama: Specialty Bars
Fortunately for U.S. exporters, a European producer, Wall's, shook up a slumbering local market in 1996 with its specialty ice bars. The company promoted its products via ads on television, radio and the streets and blanketed the market with its products. It wasn't long before the bars became a fad, especially among children. Any retailer with freezer space now stocks Wall's specialty ice bars.
Nestle soon followed Wall's lead and
started selling similar products--with outstanding results.
Seeing a good thing, Borden's of Costa Rica and a Baskin- Robbins
franchise jumped into the market.
In March 1997, Panama's largest supermarket chain unveiled Well's ice cream products in its stores. The U.S.-owned Well's (not to be confused with Wall's) offered not only novelty bars, but also ice cream packaged in one-pint and half-gallon containers.
After these initial introductions, the demand for U.S. products rose so high that local manufacturers started making "American" ice cream, with look-alike packaging.
Nicaragua: Double-Dipping
Nicaraguan consumers are
joining the overall trend in Central American countries, queuing
up for popular ice cream products. Their total consumption of ice
cream, ice milk and yogurt almost doubled in one year from just
over 960,000 kilograms in 1995 to 1.8 million kilograms in 1996.
U.S. suppliers exported only 2,300 kilograms of ice milk in 1995 to Nicaragua.
The following year brought a sevenfold increase in ice milk sales and the introduction of U.S. frozen yogurt.
Biggest competitors for U.S.
suppliers in this market are other Central American
countries--Costa Rica, El Salvador and Honduras.
U.S. exporters looking for new markets need to move now to gain market share in these fast-developing markets. They do have two advantages over producers from other countries: U.S. products are held in high regard in these Central American countries where their reputation for quality can smooth the way for new exporters. Then too, the United States enjoys the advantage of proximity, which keeps shipping costs cool.
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The author is the agricultural attaché at FAS' San Jose office
in Costa Rica. Tel.: (506) 231-6483; Fax: (506) 232-7709; E-mail:
fassjcr@sol.racsa.co.cr
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