Busy Argentines Opt for Dry Convenience Foods

By Maria Julia Balbi, Anna Malz and Kenneth Joseph

The consumer-oriented dry food categories composed of packaged pasta, rice and soups are taking up more shelf space in the Argentine retail grocery, as consumers discover their convenience, nutrition and health properties.

With sales in this dry food category up 25 percent over the past five years, future growth appears almost certain. Argentina imported almost $22 million worth of the dry convenience foods in 1997, and the U.S. share, just shy of $1 million, has a lot of room for dramatic increases.

The improved Argentine economy of the 1990s, which has fostered such positive development and growth, was the direct result of three economic phenomena that occurred early in the decade: opening of the import market, deregulation and a new market stability.

These improved market conditions led to surging imports and the entry of multinational companies that greatly diversified product selection.

Make It Pasta, Please

Almost everyone loves pasta, and Argentines prove to be no exception to the rule--their dry pasta sales rank fifth overall in the retail food market, making up almost 6 percent of all groceries sold. The popular packaged dry pasta products (and the accoutrements needed to serve them, such as tomato sauce and grated cheese) accounted for almost $1.1 billion in sales during 1997.

Uncooked rice is also a popular item, ranking eleventh in grocery sales with a 2.7-percent market share. Served as a main or side dish, sweet or salted, or in a broth, it complements many Argentine meals. And processors take note: "instant" and "precooked" rice products, fairly new to the market, are slowly catching on.

Other just-introduced products that have caught the fancy of Argentine shoppers are consumer-ready rice and dry pasta with sauce. Most popular sauces include mild cheese, tomato or vegetables. The strong sales early on suggest long-term large gains--up to 10 percent yearly--with these products.

Dry soups, with a 1.1-percent market share, have been an important sales item since their market entry. They're eaten mostly in the winter months, with veggie varieties the favorites. Not surprisingly, busy consumers are popularizing instant soup in individual packets.

A predictable future trend: As consumers become more health-conscious, diet and reduced-calorie/low-fat products will gain market share.

Proceed With Care

While Argentina’s economy has been performing fairly well amidst the after-effects of the Asian and, most recently, the Brazilian financial crises, exporters can hedge their bets by watching for the following conditions to ensure best opportunities:

• Continuation of the stable and open economy that has served Argentina so well.
• Expansion of the self-service retail system, which recognized the sales potential for the dried food market early on and has cornered 70 percent of total sales.
• Changing lifestyles: women entering the workforce, consumers' interest in novel foods and a growing trend toward fast food.
• Expansion and maturation of the MERCOSUR¹ agreement among Latin American countries, which would signal significant market potential.

Who’s Who in Dried Convenience Foods

About 20 companies compete in the dry convenience food market. There are some familiar names in Argentina:

Top Companies	Brand Name
Quimica Estrella	Gallo
Nestlé	Maggi
Refinerias de Maiz Knorr (a subsidiary of CPC)
Nabisco	Terrabussi

Molinos Rio de la Plata, Campos del Pilar and Teknofood, though not readily recognized in the United States, hold significant shares of the marketplace.

Supermarket chains have targeted this food sector for private labeling. Each chain has its preferred source: Norte imports mainly from Spain; Jumbo has a large German inventory; and Wal-Mart sells U.S. brands.

Main players in the pasta market include Molinos Rio de la Plata and Nabisco, which make up 30 percent of market share. Refinerias de Maiz, a subsidiary of CPC, leads the pasta-with-sauce market with a 49-percent share. (However, the real competition for dry pasta is fresh pasta.)

Quimica Estrella leads the rice market, followed by main competitor Molinos Rio de La Plata, then Molinos Ala and Carogran.

Quimica Estrella and Nestlé dominate the instant soup market.

Market Characteristics

Marketing margins for these dry products are slightly higher than those of traditional dry foods. Adding on duties and other taxes will raise the product’s retail price up 150 percent over the FOB price.

When it comes to packaging and labeling, U.S. exporters get off lightly--consumers accept dried food products in their original packaging, preferring small packages of 350, 500 and 1,000 grams. A Spanish-language label with the following data is needed, although nutritional information isn’t required:

Name and brand of the product
Country of origin
Expiration date
Name and address of the importer
R.N.P.A. (National Register of Food Product).

All products must be registered with the government. Imported food ready for retail sale and consumption only needs to be registered in the National Food Institute (INAL).

The Foreign Agricultural Service homepage has further information on requirements for exporting food to Argentina: http://www.fas.usda.gov.

Argentina has no import quotas or non-tariff barriers for dried foods. All imports have an 0.5-percent statistical tax in addition to the duty. The tax on rice is 15 percent; pasta, 19 percent; and soups, 21 percent.

¹MERCOSUR trade agreement members include Brazil, Argentina, Paraguay and Uruguay. Chile and Bolivia are associate members.

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The authors are with the Buenos Aires Office of Agricultural Affairs. Balbi is a marketing assistant; Malz, an intern; and Joseph, an agricultural specialist. Tel. (54-11) 4777-8054; Fax: (54-11) 4777-3623; E-mail: agbuenosaires@fas.usda.gov

Last modified: Thursday, October 14, 2004 PM