Required Report - Public distribution

**Date:** 11/15/2007

**GAIN Report Number:** BF7003

BF7003

**Bahamas, The**

**Retail Food Sector**

**Annual Report**

**2007**

**Approved by:**

![](media/image1.wmf)Sarah Hanson, Director

Caribbean Basin

**Prepared by:**

Kay Logan, Agricultural Marketing Specialist

**Report Highlights:**

With less than one percent of arable land for farming and a limited
food-processing sector, the Bahamas imports the majority of its food
needs. In addition, over 1.6 million stopover tourists visit the Bahamas
each year further increasing the need for food imports. In 2005, the
Bahamas imported nearly \$338 million in food products. U.S. food
exports dominate the retail food industry with a 90+ percent market
share in all major product categories. The strong influence of American
lifestyle and culture on Bahamians has led to U.S. food products and
brands being the most preferred and commonly visible products in retail
outlets. As disposable incomes continue to increase, the Bahamian
consumer has a greater opportunity to purchase a wider variety of
high-quality food products.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Miami ATO \[C11\]

\[BF\]

#### SECTION I. MARKET SUMMARY

Combined, the 700 islands and 2,000 cays that make up the Bahamas have
an area slightly smaller than that of the state of Connecticut. Although
only about thirty of the islands are populated, over 300,000 people are
permanent residents of the Bahamas. The majority of the population
resides on the island of New Providence around the nation's capital,
Nassau, and in Freeport, on Grand Bahama Island. The Bahamian per capita
gross domestic product (GDP) purchasing power of parity (PPP) of
\$21,600 is among the highest in the Caribbean (2006 est.).

With less than one percent arable land and permanent crops, agriculture
accounts for only 3 percent of the national GDP. Tourism, on the other
hand, accounts for over 50 percent of GDP, employs two-thirds of the
workforce, and is by far the largest industry in the Bahamas. In 2006,
an estimated 1.6 million stopover visitors visited the Bahamas (tourists
who are on an island for over 24 hours are considered "stop-over"
visitors). The country's economy and its continued growth is dependant
on economic conditions in the United States. This is largely due to the
fact that 86 percent of visitors to the Bahamas are U.S. residents.
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 lack of arable land for farming to support the food consumption of
the local population and tourists has led to the importation of over 80
percent of the Bahamas' agricultural needs. In 2005, the Bahamas food
imports were valued at approximately \$388 million, a 9 percent increase
from the previous year (The Bahamas Department of Statistics). Of the
total amount of consumer-oriented food products imported into the
Bahamas, approximately 60 to 70 percent is channeled toward the retail
sector, while the remaining 30 to 40 percent is directed toward the
hotel, restaurant, and institutional (HRI) food service sector.

![](media/image2.wmf)

Source: The Bahamas Department of Statistics

![](media/image3.wmf)

Source: The Caribbean Basin Agricultural Trade Office

Most Bahamians buy their basic food necessities from the
well-established retail food industry with outlets ranging from small
"mom and pop" shops, gas marts, and independent grocers, to large
supermarket chains, hypermarket chains, and wholesale club stores. There
are 194 retail stores specializing in the sale of food and beverage
located on New Providence Island, and 71 located on Grand Bahama Island,
with annual revenues of over \$290 million and \$65 million,
respectively. The sale of food and beverage products accounts for
roughly 20 percent of all retail sales in the Bahamas (2005 data from
the Bahamas Department of Statistics). While there is no data available
on the projected growth rate of the overall retail food market in the
Bahamas, it is important to note that in recent years the food service
sector has seen more growth than that of the retail sector.

![](media/image4.wmf)

Source: The Bahamas Department of Statistics

+------------------------------+---------------------------------------+
| **Overview of the Market     |                                       |
| Advantages and Challenges**  |                                       |
|                              |                                       |
| # Facing U                   |                                       |
| .S. Exporters in the Bahamas |                                       |
+------------------------------+---------------------------------------+
| U.S. exports dominate the    | New product introductions can be      |
| retail food industry with a  | difficult due to the extensive        |
| 90+ percent market share in  | establishment of major brands already |
| all major product categories | in the market.                        |
+------------------------------+---------------------------------------+
| Locals are exposed to        | Canada and Europe offer competitive   |
| television from the United   | prices for similar quality products.  |
| States and thus to           |                                       |
| advertisements for U.S.      |                                       |
| products and brands.         |                                       |
+------------------------------+---------------------------------------+
| Distribution systems, health | In an effort to promote the use of    |
| and safety regulations       | local agricultural and food products, |
| complement U.S. systems and  | the Bahamian government uses a        |
| regulations making exporting | licensing system on the import of     |
| easy.                        | goods such as poultry and fresh       |
|                              | produce.                              |
+------------------------------+---------------------------------------+
| The tourist industry         | Stopover tourists typically eat at    |
| attracts 1.6 million         | restaurants rather than purchasing    |
| stopover tourists a year, 86 | food at local retail stores while     |
| percent of which are from    | visiting.                             |
| the United States.           |                                       |
+------------------------------+---------------------------------------+
| The majority of local        | Due to the small size of the market   |
| importers are well           | and low purchasing power, it is       |
| established with proven      | difficult for many retail outlets to  |
| track records.               | purchase products directly from U.S.  |
|                              | suppliers.                            |
+------------------------------+---------------------------------------+

####  

#### SECTION II. ROAD MAP FOR MARKET ENTRY

## Entry Strategy

Breaking into the market in the Bahamas can be somewhat difficult
because of the extensive establishment of many well-known U.S. brands
already 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, and follow by initiating export.
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}

Of the total retail food sales in the Bahamas, the lion's share of
products are imported from the United States, with the majority of these
imports being channeled through local importers (which also typically
serve as wholesalers/distributors). There are around 30 importers of
food and beverage products located on the islands of New Providence and
Grand Bahama.

The club warehouse type stores and the large-chain supermarkets sell
enough volume and have enough storage space to buy direct from U.S.
suppliers. However, the prospects for further development and growth in
direct purchasing are slim. This is due to the fact that a limited
number of total retail outlets are necessary to serve the relatively
small population of the Bahamas. Therefore, using a local Bahamian
importer will ensure maximized brand distribution and effective product
management.

In addition, gas marts obtain 95-98 percent of their products from local
importers. However, if there is a specialty item that is not carried by
a local distributor, they will attempt to buy directly from the
manufacturer. The best method of targeting gas marts is via a local
Bahamian importer.

**A. SUPERMARKETS, HYPER MARKETS, AND WHOLESALE CLUBS**

### Company Profiles

+-----------------+-------------+---------+------------+--------------+
| **Name of       | **Ownership | *       | *          | **Type of    |
| Retailer and    | (Local or   | *Number | *Locations | Purchasing   |
| type of retail  | Foreign)**  | of      | (city or   | Agent(s)**   |
| outlet**        |             | Ou      | islands)** |              |
|                 |             | tlets** |            |              |
+-----------------+-------------+---------+------------+--------------+
| City Market     | Local       | 12      | Nassau-9,  | Distributor, |
| (Supermarket    |             |         | Freeport-3 | Direc        |
| Chain)          |             |         |            | t/Wholesaler |
+-----------------+-------------+---------+------------+--------------+
| Super Value     | Local       | 10      | New        | Distributor, |
|                 |             |         | Providence | Direc        |
| (Supermarket    |             |         | Island     | t/Wholesaler |
| Chain)          |             |         |            |              |
+-----------------+-------------+---------+------------+--------------+
| Solomon's       | Local       | 2       | Nassau-1,  | Direct/      |
| (Hyper Market)  |             |         | Freeport-1 | Wholesaler   |
+-----------------+-------------+---------+------------+--------------+
| Cost Rite,      | Local       | 3       | Nassau-1,  | Direct/      |
|                 |             |         | F          | Wholesaler   |
| Wholesale Club  |             |         | reeport-1, |              |
| (Club Outlet)   |             |         |            |              |
|                 |             |         | Abaco-1    |              |
+-----------------+-------------+---------+------------+--------------+
| John Chea &     | Local       | 8       | Nassau     | Distributor, |
| Sons,           |             |         |            | Direc        |
| (Supermarket    |             |         |            | t/Wholesaler |
| Chain)          |             |         |            |              |
+-----------------+-------------+---------+------------+--------------+
| Harding's Food  | Local       | 1       | Nassau     | Distributor  |
| Store           |             |         |            |              |
+-----------------+-------------+---------+------------+--------------+
| Grand Union     | Local       | 1       | Freeport   | Distributor, |
|                 |             |         |            | Direct/      |
| (Supermarket)   |             |         |            | Wholesaler   |
+-----------------+-------------+---------+------------+--------------+
| Food World      | Local       | 1       | Freeport   | Distributor, |
|                 |             |         |            | Direc        |
| (Supermarket)   |             |         |            | t/Wholesaler |
+-----------------+-------------+---------+------------+--------------+
| #####           | Local       | 1       | Cable      | Distributor, |
|  Gourmet Market |             |         | Beach      | Direc        |
|                 |             |         |            | t/Wholesaler |
+-----------------+-------------+---------+------------+--------------+
| ##### Th        | Local       | 1       | Nassau     | Distributor, |
| e Organic Store |             |         |            |              |
|                 |             |         |            | Direct       |
+-----------------+-------------+---------+------------+--------------+

The majority of supermarkets in the Bahamas are located in Nassau, the
capital city of the Bahamas. Supermarkets are also spread across the
island of New Providence and are located in Freeport on Grand Bahama
Island. Deli counters are present in most supermarkets, and a few
supermarkets have bakeries and seafood departments. The introduction of
electronic scanners in chain supermarket stores is currently taking
place.

Although large-chain supermarkets are slowly replacing some independent
grocers, smaller independent grocers maintain a strong presence in the
market. While these retail outlets carry a more limited inventory than
the larger supermarkets, they are conveniently located throughout the
main islands of the Bahamas and typically offer products at lower
prices.

Wholesale club stores and hypermarkets in Nassau, Freeport, and Abaco
are usually located in major shopping centers. These outlets carry a
full line of food products in club and institutional-sized packs, in
addition to apparel, appliances, and home furnishings.

#### 

#### The Bahamian retail food customer profile is typically a married woman with children and relatives. They are usually low to middle-income families with private transportation. Price is still an important factor in many of their purchasing decisions. However, as personal incomes continue to rise, Bahamians are expected to try more new food and beverage products. Nonetheless, Bahamians typically cling to their traditional \"made from scratch\" diet of rice, beans, evaporated milk, corned beef, flour, and homemade macaroni and cheese (a Bahamian favorite). Bahamians also frequently purchase cheeses, sweets, and 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 include processed chicken, hot dogs, salty snacks, and individually packaged cookies and sweets used in the school lunch programs. The major internal drivers pushing the success of U.S. goods in the market are the availability, abundance, and quality of the products imported. U.S. products in the retail market are also competitively priced when compared to local and foreign goods.

The health-food trend has recently been on the rise in the Bahamian food
market. Some of the more affluent areas of the Bahamas, like Cable
Beach, on New Providence Island, have witnessed a small surge in health
and gourmet food stores openings. Factors that have contributed to the
increasingly health-conscious Bahamian consumer include the
following: 1) an alarming number of adult Bahamians have recently been
diagnosed and are living with diabetes; and 2) a large number of
Bahamians are members of the Seventh-day Adventist church, which adopts
a lifestyle of healthy eating. These factors, as well as various other
factors, have resulted in a growing interest in healthy foods. Tofu and
soy milk are the most sought after "health food" products in the
Bahamian marketplace.

**B. GAS MARTS**

#### [Company Profiles]{.underline}

  --------------- -------------- ----------- -------------- --------------
  **Name of       **Ownership    **Number of **Locations    **Type of
  Retailer and    (Local or      Outlets**   (city or       Purchasing
  type of retail  Foreign)**                 region         Agent(s)**
  outlet**                                   names)**       

  Shell           U.S.           11          Nassau         Wholesaler

  Esso, Gas Mart  U.S.           8           Nassau         Wholesaler

  Texaco, Gas     U.S.           6           Nassau         Wholesaler
  Mart                                                      
  --------------- -------------- ----------- -------------- --------------

Gas marts have been present in Nassau since 1986. However, in recent
years, larger populated areas have seen an increase in their existence.
The Bahamian economy is doing well and is demanding convenience
shopping. More Bahamians are able to purchase an automobile, which in
turn has caused the increase in vehicle traffic in Nassau. The added
traffic has spawned the convenience shopping outlets because in one
stop, consumers can purchase gas and something to eat and drink for
immediate consumption. Gas marts are well spread around Nassau and
Freeport. Positioned mostly on main roads in more urban locations, they
are more concentrated where traffic seems to be the heaviest.

#### C. TRADITIONAL MARKETS - \"MOM AND POP" SMALL INDEPENDENT GROCERY STORES AND WET MARKETS

## Sub-Sector Profile

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

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 as the larger supermarkets.

Wet market vendors either grow or purchase their goods from a local
farm, or purchase items 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.

**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 product in the market. Most major brands are already licensed
and distributed. Items not from the United States that were consistently
seen were lamb from Australia and New Zealand, bottled and canned
beverages from Canada and Trinidad, flour from Canada, wine from Italy
and France, certain jams and cookies from the United Kingdom, and jams,
pepper sauces, and other specialty items from the Caribbean. Little
competition for dry goods exists; however importers have found lower
prices for other products such as beef and pork products from Canada,
dairy products from New Zealand, and produce from the Caribbean and
South America.

With regards to local competition, there are approximately 20 food and
beverage processors of notable size located in the Bahamas.
Approximately 50 percent of these processors are manufacturers of soft
drinks and producers of mineral water. The remaining 10 processors
specialize in the production of fish and fish products, poultry, fruit
and vegetable products, dairy products, and sugar products. No beef or
pork is produced locally, and only one major poultry producer remains.
Two local seafood companies meet most of the demand for some types of
seafood like grouper, lobster, and shrimp. In regards to the supply of
local produce, the fruit and vegetable crop is seasonal and inconsistent
in quality and quantity. While the quantities of local food and
agricultural production are low, any influence due to local competition
is minimal. However, the local water and soft drink manufacturers in
Nassau and Grand Bahama supply most of the demand for their respective
markets.

+-------------------+---------+------------+--------------------------+
| ######### Overv   |         |            |                          |
| iew of the Compet |         |            |                          |
| itive Situation F |         |            |                          |
| acing U.S. Produc |         |            |                          |
| ts in the Bahamas |         |            |                          |
+-------------------+---------+------------+--------------------------+
| **PRODUCT         | *       | **U.S.     | **Other Exporters**      |
| CATEGORY**        | *Import | Market     |                          |
|                   | Value   | Share %**  |                          |
|                   | (       |            |                          |
|                   | 2005)** | **(2005)** |                          |
+-------------------+---------+------------+--------------------------+
| Meat Products     | \$70.9  | 99.55%     | Beef: Canada             |
|                   | million |            |                          |
|                   |         |            | Pork: Canada, Germany,   |
|                   |         |            | U.K.                     |
|                   |         |            |                          |
|                   |         |            | Lamb: Australia, New     |
|                   |         |            | Zealand                  |
|                   |         |            |                          |
|                   |         |            | Poultry: Canada, the     |
|                   |         |            | United Kingdom           |
+-------------------+---------+------------+--------------------------+
| Fish and Seafood  | \$10    | 95%        | U.K., Japan, Dominican   |
| Products          | million |            | Republic, Panama, China  |
+-------------------+---------+------------+--------------------------+
| Processed Meat,   | \$27.5  | 96%        | Canada, U.K., Other      |
| Fish, and Seafood | million |            | European Countries,      |
| Products          |         |            | Brazil, Jamaica, Panama, |
|                   |         |            | Other Caribbean and      |
|                   |         |            | Latin American Countries |
+-------------------+---------+------------+--------------------------+
| Dairy Products    | \$28.3  | 89%        | U.K., Canada, France,    |
|                   | million |            | Holland, Ireland,        |
|                   |         |            | France, Other European   |
|                   |         |            | Countries, New Zealand,  |
|                   |         |            | Brazil, Panama, Jamaica, |
|                   |         |            | and Guyana               |
+-------------------+---------+------------+--------------------------+
| Fresh Vegetables  | \$26    | 97%        | Canada, U.K., Germany,   |
|                   | million |            | Other Caribbean and      |
|                   |         |            | Latin American Countries |
+-------------------+---------+------------+--------------------------+
| Fresh Fruit and   | \$21.5  | 99.96%     | Other Caribbean and      |
| Tree Nuts         | million |            | Latin American           |
|                   |         |            | Countries, U.K., Canada  |
+-------------------+---------+------------+--------------------------+
| Processed         | \$23.2  | 96%        | Canada, Mexico, Panama   |
| Vegetable, Fruit, | million |            |                          |
| and Tree Nut      |         |            |                          |
| Products          |         |            |                          |
+-------------------+---------+------------+--------------------------+
| Processed Cereal, | \$27.3  | 94%        | Numerous Countries       |
| Flour, Starch and | million |            |                          |
| Milk Products     |         |            |                          |
+-------------------+---------+------------+--------------------------+
| Other Processed   | \$45.6  | 97%        | Numerous Countries       |
| Foods             | million |            |                          |
+-------------------+---------+------------+--------------------------+
| Non-Alcoholic and | \$64.2  | 87%        | Italy, France            |
| Alcoholic         | million |            |                          |
| Beverages         |         |            |                          |
+-------------------+---------+------------+--------------------------+
| Coffee, Tea, and  | \$4.7   | 96%        | Trinidad and Tobago,     |
| Spices            | million |            | Jamaica, Chile, Other    |
|                   |         |            | Caribbean and Latin      |
|                   |         |            | American Countries,      |
|                   |         |            | Canada                   |
+-------------------+---------+------------+--------------------------+
| Sugars and Sugar  | \$9.7   | 85%        | Canada, U.K., Brazil,    |
| Confectionery     | million |            | Other Caribbean and      |
|                   |         |            | Latin American Countries |
+-------------------+---------+------------+--------------------------+

Source: Bahamas Department of Statistics

#### SECTION IV. BEST PRODUCT PROSPECTS 

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

Source: Department of Commerce, U.S. Census Bureau, Foreign Trade
Statistics

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

-   Tofu

-   Products that contain no trans fats

-   Sugar-Free products

-   Fat-Free products

-   Organic products

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

In general, U.S. suppliers find it relatively easy to comply with
Bahamian import regulations and encounter few if any restrictions.
However, in an effort to promote the use of local agricultural and food
products (even though quantities are relatively low), the Bahamian
government uses a licensing system on the import of goods such as fresh
produce and poultry. 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. Nonetheless, given the proximity
and historical business ties, U.S. manufacturers will find that Bahamian
import policies and procedures complement and are in accord with U.S.
export regulations.

**SECTION V. POST CONTACT AND FURTHER INFORMATION**

**A. FOR MORE INFORMATION OR FOR AN 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

Sarah Hanson, Director

Email: Sarah.Hanson@usda.gov

Omar González, Deputy Director

Email: Omar.Gonzalez@usda.gov

Graciela Juelle, Marketing Specialist

Email: Graciela.Juelle@usda.gov

Kay Logan, Marketing Intern

Email: Kay.Logan@usda.gov

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 click on Market Research Library

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

American Embassy of the Bahamas

Economic/Commercial Section

P.O. Box N-8197

Nassau, Bahamas

Tel: (242) 322-1181

Fax: (242) 328-3495

Bahamas Department of Statistics

Clarence A. Bain Building

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- 7799

Nassau, Bahamas

Email: bha@bahamashotels.org

Phone: (242) 322-8381/2

Fax: (242) 502-4220

Website: www.bhahotels.com

Bahamas Ministry of Tourism

P.O. Box N-3701

Nassau, Bahamas

Phone: (242) 302-2000

Fax: (242) 302-2098

E-mail: tourism@bahamas.com

Website: tourismbahamas.org

Bahamas Customs Department

Mr. John Rolle

Comptroller of Customs

Thompson Boulevard

P.O. Box N-155

Nassau, Bahamas

Phone: (242) 325-6550

Fax: (242) 322-6223

E-mail: johnrolle@bahamas.gov.bs

Website: www.bahamas.gov.bs/customs/

Bahamas Chamber of Commerce

P.O. Box N-665

Nassau, Bahamas

Phone: (242) 322-2145

Fax: (242) 322-4649

Grand Bahama Chamber of Commerce

P.O. Box F-40808

Freeport, Grand Bahama, Bahamas

Phone: (242) 352-8329

Website: www.thegrandbahamachamberofcommerce.com