Voluntary Report - public distribution

**Date:** 10/27/2003

**GAIN Report Number:** C13015

C13015

**Caribbean Basin**

**Retail Food Sector**

**Bahamas**

**2003**

**Approved by:**

![](media/image1.wmf)Margie Bauer, Director

Caribbean Basin Agricultural Trade Office

**Prepared by:**

Joanna Apergis, Agricultural Marketing Specialist

**Report Highlights:**

With the continued external investment into the Bahamian economy, the
third highest number of stop-over visitors in the Caribbean, and the
resulting high per capita GDP, the Bahamian consumer has the benefit of
more variety and quality in food purchases. The Bahamas imports nearly
\$107 million in food and beverage products each year from the United
States. This is mainly due to the influence of American culture, which
has made U.S. food products preferred and most commonly visible on
supermarket and gas mart shelves in the Bahamas.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\]

\[C1\]

**SECTION 1: MARKET SUMMARY**

Combined, the 700 islands and 2000 cays that make up the Bahamas have an
area slightly smaller than that of the state of Connecticut, which is
inhabited by over 308,000 people. The majority of the population resides
on the island of New Providence around the nation's capital, Nassau, and
Freeport, on Grand Bahama Island. With one percent arable land and zero
percent permanent crops and pastures, tourism is by far the largest
industry in the Bahamas. Since 1851, tourists from the United States
have been drawn to these islands, located just 45 miles from the
southeast Floridian coastline. The country's economy and its continued
growth, is dependant on economic conditions in the United States largely
due to the fact that 85 percent of visitors to the islands are U.S.
residents. In total, the Bahamas attracted 4.4 million tourists in the
past year, which accounts for about 60 percent of the national GDP.
Furthermore, roughly two-thirds of jobs are supplied by tourism and
related services.

Most Bahamians buy their basic food necessities from the well
established supermarket industry with outlets ranging from over 200
small independent grocers in New Providence, and Grand Bahama two major
supermarket chains, hypermarket chains, two club stores, several small
market "mom and pop" chains and the growing number of gas marts. While
these outlets are doing well, there is a disparity between the quality
of the appearance and efficiency of these stores, which are both still
below American standards.

The Bahamian tourism sector and overall economy is doing very well and
is forecasted to continue. Second to tourism, the offshore banking
industry, a sector promoted by the free trade zone in the Bahamas,
accounts for 15 percent of the GDP and employs over 3,800 Bahamians. The
Bahamian per capita GDP, \$17,500, up 15 percent from 2000, is among the
highest in the Caribbean (U.S. Commercial Service, 2003).

The island of Grand Bahama is also experiencing its own growth and has
pulled out of a recession with the aid of the tourism sector and
shipyards. The construction of a new Japanese owned Freeport container
transshipment facility has impacted the local and overall Bahamian
economy significantly. Japanese investors have also purchased and
renovated three previously government-owned hotels. Along with these
major changes, the Our Lucaya resort at Port Lucaya also opens a new
Royal Oasis Casino to increase tourism-related jobs in Freeport, the
Bahamas\' second major city. And as incomes rise, it is expected that
Bahamians will venture to try more new food and beverage products;
although price is still an important factor in many of their purchasing
decisions.

Bahamians cling to their traditional \"made from scratch\" diet of rice,
beans, evaporated milk, corned beef, flour and homemade macaroni and
cheese. Bahamians also purchase cheeses, sweets and occasionally fruits.
Generally, the Bahamian retail market follows American brand and product
trends because of the traditional ties, frequent travel to the United
States, exposure to U.S. tourists and access to U.S. television
advertising. "Hot" items right now are processed chicken pieces, hot
dogs, salty snacks and individually packaged cookies and candies for
school lunch programs. In addition, food purchasing from gas marts is on
the rise due to this increasingly disposable income and the need to save
time. While convenience foods and home-meal replacements seem to
gradually increase in popularity, other trends such as organic,
"healthy" low-fat and organic meals are somewhat lagging in demand.

In recent years health-food trends have been present in the Bahamian
food market, to a varying extent. Some of the more affluent areas of the
Bahamas, like Cable Beach, on New Providence Island, have had small
surges of health and gourmet food store openings. Several factors have
contributed to the increasingly health-conscious Bahamian consumer
including: An alarming number of adult Bahamians have recently been
diagnosed and are living with diabetes that has been attributed to the
high sugar intake of the traditional Bahamian diet. Also, a large number
of Bahamians are members of the Seventh-day Adventist church, which
adopts a lifestyle of healthy eating. Both these and other influences
have resulted in a rapidly growing interest in healthy foods,
particularly soy products. Tofu and soy milk are the most sought after
"health food" products; where variety is desired, but not present in the
Bahamian marketplace. The Bahamian retail food customer profile is a
married woman with children and relatives. They are usually low
middle-income families with private transportation.

In an effort to protect local fruit, vegetable and poultry farms, the
Bahamian government uses increased tariffs and stamp taxes on the import
of such goods. The tariffs on consumer food items range from zero to 35
percent plus the two to seven percent stamp tax on certain items. While
there is no duty on market basket items, which include breads, rice,
sugar, and baby foods, the 70 percent duty on bottled water is a good
example of the protection for local manufacturers of certain goods.
Permits are also required for imports of certain items like poultry and
fruit. Usually, it is the importer who must personally visit the customs
office to file applications for these permits each time an import is due
to clear customs. This has proven frustrating for Bahamian importers and
businesses that find the local production of these commodities
insufficient for consumption, making import still necessary, resulting
in higher prices for the consumer. The increasing direct import by
smaller retailers and businesses has reduced some cost involved in
providing these protected products.

However, given the proximity and historical business ties, U.S.
manufacturers will find that Bahamian import policies and procedures
compliment and are in accord with U.S. export regulations. The
often-difficult process of exporting becomes relatively easy for
exporters because of the familiarity of documentation and the efficiency
in which it can be processed. All business orders on the islands are
placed by telephone or fax. A select few importers are operating web
sites. Online ordering via a web site however, has not yet begun.

Although larger chain supermarkets are slowly replacing some independent
grocers, independent grocers will always remain to some extent.
Solomon's Hypermarket and Cost Rite's Wholesale Club outlets, the only
two club type stores, are doing well but are not expected to open new
outlets in this saturated market.

Of the total retail market in food, 65 to 80 percent of products
imported are shipped directly from the United States and, 50-98 percent
of U.S. manufactured items are acquired from local wholesalers. In large
part, this is due to the positive attitude Bahamians have towards U.S.
goods. Most major U.S. food products and labels are already represented
in the market, presenting some challenges for new product penetration.
However, industry leaders predict that the American domination of the
market will continue to expand. The major internal drivers pushing the
success of U.S. goods are the availability, abundance and quality of the
products imported. U.S. products are also competitively priced when
compared to local goods.

**Advantages Disadvantages**

  ------------------------------ ----------------------------------------
  U.S. exports dominate the food New product introduction can be as
  retail industry with 85%       difficult as it is in the United States
  percent of the market share.   because of the extensive establishment
                                 of major brands.

  Distribution systems, health   Tariffs on a several select products are
  and safety regulations, tariff high because of the government's role in
  and duty regulations           protecting local businesses. The
  compliment U.S. systems making protected food listing includes: fruits
  exporting easy.                and vegetables, sodas, bottled water,
                                 juices, fresh poultry, eggs, live fish,
                                 nuts, crustaceans/mollusks, prepared
                                 meats and spirits. And tariffs range
                                 from zero to 35 percent.

  The tourist industry attracts  Tourists typically eat at restaurants,
  4.4 million tourists a year,   rather than purchase food at retail
  mostly from the United States. stores while visiting.

  Many local wholesalers are     It may be difficult for supermarkets to
  well established with proven   purchase directly because of the small
  track records. In addition,    size of the market and the resulting
  distributors offer competitive lower purchasing power.
  pricing, a working             
  distribution network and       
  marketing support.             
  ------------------------------ ----------------------------------------

**SECTION II: ROAD MAP FOR MARKET ENTRY**

A. SUPERMARKETS, HYPER MARKETS AND WHOLESALE CLUBS

### Entry Strategy

Breaking into the market in the Bahamas can be difficult because of the
extensive presence of many well-known brands already established in the
market. The best way for a U.S. manufacturer to enter the market with
success is to first search the market for potential niches, develop a
customized marketing plan, followed by initiating export via a local
distributor. Researching the market structure and competition is key in
assessing current market conditions and making sound decisions. Travel
to the Bahamas is recommended for a first-hand view of the market.

**[Market Structure]{.underline}**

The club warehouse type stores and the two largest supermarket chains
have been selling enough volume to buy direct from U.S. wholesalers,
resulting in a partial loss in market share for importers/ distributors.
However, distributors continue to dominate the retail import industry.
Because of the limited number of total retail outlets that are necessary
to serve the relatively small population, prospects for further
development and growth in direct purchasing from a U.S. wholesaler is
slim. Therefore, using a local Bahamian distributor will ensure
maximized brand distribution and effective product management.

Nassau, the capital city of the Bahamas, is home to the majority of
retail outlet stores in the Bahamas. Supermarket outlets are spread
across the main island (New Providence) with locations in downtown
Nassau and in the center of outlying towns. The average supermarket size
is between 25,000 and 30,000 square feet. The wholesale club outlets and
the three hypermarkets are located in shopping centers that have a
significant amount of traffic and public visibility.

Company Profiles

+-------------+-----------+------+--------+----------+---------------+
| **Name of   | **        | **   | **     | **L      | **Type of     |
| Retailer    | Ownership | Food | Number | ocations | Purchasing    |
| and type of | (Local or | Sa   | of     | (city or | Agent(s)**    |
| retail      | F         | les, | Out    | is       |               |
| outlet**    | oreign)** | CY   | lets** | lands)** |               |
|             |           | 02** |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| City Market | U.S.      | N/A  | 10     | New      | Distributor,  |
| (S          | (Winn     |      |        | Pr       | Dire          |
| upermarket) | Dixie and |      |        | ovidence | ct/Wholesaler |
|             | local)    |      |        | Island   |               |
+-------------+-----------+------+--------+----------+---------------+
| Super Value | Local     | N/A  | 10     | New      | Distributor,  |
|             |           |      |        | Pr       | Dire          |
| (S          |           |      |        | ovidence | ct/Wholesaler |
| upermarket) |           |      |        | Island   |               |
+-------------+-----------+------+--------+----------+---------------+
| Solomon's   | Local     | N/A  | 3      | N        | Direct/       |
| (Hyper      |           |      |        | assau-1, | Wholesaler    |
| Market)     |           |      |        | Fr       |               |
|             |           |      |        | eeport-2 |               |
+-------------+-----------+------+--------+----------+---------------+
| Cost Rite,  | Local     | N/A  | 2      | Nassau   | Direct/       |
|             |           |      |        |          | Wholesaler    |
| Wholesale   |           |      |        |          |               |
| Club (Club  |           |      |        |          |               |
| Outlet)     |           |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| John Chea & | Local     | N/A  | 8      | Nassau   | Distributor,  |
| Sons,       |           |      |        |          | Dire          |
| (           |           |      |        |          | ct/Wholesaler |
| Independent |           |      |        |          |               |
| Grocer)     |           |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| Harding     | Local     | N/A  | 1      | Nassau   | Distributor   |
| Food Sales  |           |      |        |          |               |
|             |           |      |        |          |               |
| (           |           |      |        |          |               |
| Independent |           |      |        |          |               |
| Grocer)     |           |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| Winn Dixie  | U.S.      | N/A  | 3      | Freeport | Direct        |
|             | (Winn     |      |        |          |               |
| (S          | Dixie and |      |        |          |               |
| upermarket) | local)    |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| Grand Union | Local     | N/A  | 1      | Freeport | Distributor,  |
|             |           |      |        |          | Direct/       |
| (S          |           |      |        |          | Wholesaler    |
| upermarket) |           |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| Food World  | Local     | N/A  | 1      | Freeport | Distributor,  |
|             |           |      |        |          | Dire          |
| (S          |           |      |        |          | ct/Wholesaler |
| upermarket) |           |      |        |          |               |
+-------------+-----------+------+--------+----------+---------------+
| ##### Gou   | Local     | N/A  | 1      | Cable    | Distributor,  |
| rmet Market |           |      |        | Beach    | Dire          |
|             |           |      |        |          | ct/Wholesaler |
+-------------+-----------+------+--------+----------+---------------+
| ##### Or    | Local     | N/A  | 1      | Nassau   | Distributor,  |
| ganic Store |           |      |        |          |               |
|             |           |      |        |          | Direct        |
+-------------+-----------+------+--------+----------+---------------+

**B. GAS MARTS**

**[Entry Strategy]{.underline}**

Independent grocers purchase their items through local wholesalers.
Small independent grocery stores carry less selection and quantity then
the chain outlets. Stores are smaller, often less sanitary and are not
as modern.

Wet market vendors either grow or purchase their goods from a local
farm, or purchase them from a local wholesaler. These market vendors
have very little purchasing power because of the low volume they
purchase and sell. These vendors have to compete with larger supermarket
prices, product freshness and variety of choices. The best method for
penetration would be via a local distributor.

**[Sub-Sector Profile]{.underline}**

The traditional "mom and pop" stores in the Bahamas usually consist of
one outlet located in rural areas around the island to support the local
neighborhood needs. There are over 220 independent stores in the Bahamas
today. On average the stores are usually 6-8000 square feet in size.
Independent stores account for roughly 20-25 percent of the retail food
sales in the Bahamas.

**Section III: Competition**

Bahamian supermarkets look very similar to U.S. markets. Very little
competition exists for the U.S. manufacturer from local or other foreign
countries. The only reason a U.S. manufacturer may find it difficult to
export a product into the Bahamas is if there already is an established
competing American product in the market. Most major brands are already
licensed and distributed. The only items not from the United States that
were consistently seen were flour from Canada, lamb from New Zealand,
several pork items from Venezuela, canned beef from Argentina and
certain jams and cookies from the United Kingdom. Little competition for
dry goods exists, however importers have found lower prices for other
products such as beef and pork in Canada and produce in South America.

The following countries compete with U.S. in these product categories:

-   **Beef:** Argentina, Brazil, Canada and New Zealand

-   **Pork:** Canada, Brazil and Denmark

-   **Fresh Produce:** other Caribbean countries, Argentina, Brazil,
    Chile and Australia

-   **Juice:** Canada, and Holland

-   **Dry Goods:** other Caribbean countries, U.K., Canada, Denmark,
    Italy and Holland

-   **Seafood:** Mexico

-   **Dairy Products:** U.K., Canada, France, Holland, Denmark, and New
    Zealand

-   **Specialty Foods:** U.K., France, and Canada

Even with competition over various products, in 2002 the United States
had more than 99 percent market share for fresh fruit and vegetables,
poultry, red meats (fresh/chilled/frozen), processed fruits and
vegetables, and salmon and several other food and beverage products (UN
Trade Data, 2002).

**Section IV: Best Product Prospects**

A.  **Products present in the market which have good sales potential**

Market opportunities exist for a wide array of products.

-   Beef

-   Poultry

-   Pork

-   Dairy Products

-   Produce

-   Fruit Juices

-   High End Specialty Products

-   High End Seafood Products

B.  **Products not present in significant quantities but which have a
    good sales potential**

It has been difficult for interested consumers to find a variety of the
soy-based products, which have recently become very popular in the
Bahamian diet.

-   Soy Milk

-   Tofu

-   Soy-based and related products

#### C. Products Not Present Because They Face Significant Barriers

Though the restricted import of chicken and produce through high tariffs
and import licensure inhibits the supply of such products, there is
sufficient demand to allow certain quantities to remain on the market.

**Section V: Post Contacts**

**A. For more information and importer list, please contact:**

Caribbean Basin Agricultural Trade Office

Foreign Agricultural Service

United States Department of Agriculture

909 SE 1st Ave, suite 720

Miami, Florida 33131

Phone: (305) 536-5300

Fax: (305) 536-7577

Email: cbato@cbato.net

##### Margie Bauer, Director

####### Email: margie@cbato.net

**Omar González, Deputy Director**

####### Email: omar@cbato.net

**Graciela Juelle, Marketing Specialist**

**Email: cbato@cbato.net**

Please visit our website for promotional activities, trade statistics
and more reports on the retail and food service sectors and on food
import regulations for several Caribbean islands.

**http://www.cbato.fas.usda.gov**

Basic country information may be found in the Central Intelligence
Agency's World Fact Book under the Bahamas.

**http://www.odci.gov/cia/publications/factbook**

Department of Commerce

U.S. Commercial Service

Information on marketing U.S. products and services is in the Country
Commercial Guide for the Bahamas.

**http://www.export.gov**

Click on *Market Research* link, then select *Country & Industry Market
Reports*.

**B. Other sources of Information on the Bahamas:**

######## **American Embassy of the Bahamas**

Ann Marie Bain

Economic/Commercial Assistant

P.O. Box N-8197

Nassau, Bahamas

Tel: (242) 322-1181

Fax: (242) 328-3495

**Bahamas Department of Statistics**

P.O. Box N-3904

Nassau, Bahamas

Tel: (242) 325-5606

Fax: (242) 325-5149

**Bahamas Hotel Association**

SG Hambros Bldg. \
Goodman\'s Bay\
P.O. Box N-3318\
Nassau, Bahamas\
Email: info@bhahotels.com\
Phone: (242) 322-8381/2\
Fax: (242) 502-4219

Website: www.bhahotels.com

**Bahamas Ministry of Tourism**

Head Office\
P.O. Box N-3701\
Market Plaza\
Bay Street\
Nassau, Bahamas\
Phone: 242-356-4231 or 242-356-5216\
Fax: 242-356-5904\
E-mail: tourism@bahamas.com\
Home Page: www.bahamas.com

**Bahamas Customs Department**

Berchenal A. Bethel

Deputy Comptroller

Thompson Boulevard

P.O. Box N155

Nassau, Bahamas

Phone: (242) 325-6550

Fax: (242) 325-7409

E-mail: bbethel@bahamas.gov.bs

######### **Bahamas Chamber of Commerce**

P.O. Box N 665

Nassau, Bahamas

######### Phone: (242) 322-2145

######### **Grand Bahama Chamber of Commerce**

######### P.O. Box F 40808

######### Freeport, Bahamas

Phone: (242) 352-8329