Voluntary Report - public distribution

**Date:** 6/8/2004

**GAIN Report Number:** C14011

**Caribbean Basin**

**Market Development Reports**

**Pet Food Market Report**

**2004**

**Approved by:**

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

Director

Caribbean Basin Agricultural Trade Office![](media/image2.wmf)

**Prepared by:**

Joanna Apergis

Agricultural Marketing Specialist

**Report Highlights:**

A strong affinity for pets combined with minimal production of pet foods
leads Caribbean countries to import over \$17.6 million of pet food
products from the United States. Steady growth in U.S. pet food exports
over the past ten years resulted in a 95 percent U.S. market share for
pet food in the Caribbean in 2003. Although most pet owners purchase
premium pet foods at supermarkets, the hottest trend is specialty pet
foods with nutritional benefits. In addition, the expansion of retail
outlets offering pet food products now includes more veterinary offices
and pet supply stores.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\]

\[C1\]

**SECTION 1: MARKET SUMMARY**

The U.S. pet food's thriving industry has spurred worldwide exports to
grow over the past decade to reach over \$1 billion in 2003. One of the
top ten regional export markets for U.S. pet foods, the Caribbean,
produces minimal pet food products for local pet owners. As a result of
the rapid growth in demand, pet food retailers often run out of supply
before the next shipment arrives. The quality and recognition of U.S.
brand pet foods explains why Caribbean supermarkets, pet supply stores
and veterinarians rely on imports from the United States, the leader in
pet food export to the Caribbean, to meet local demand.

A.  **Market Size**

In 2003, U.S. exports of pet food products destined for the Caribbean
reached their highest level ever, totaling \$17.6 million, making this
region the sixth largest export market for U.S. pet foods. On average,
we estimate that the U.S. market share of pet food products in the
Caribbean is 96 percent, with the remaining imports coming from Canada
and Europe.

![](media/image3.png){width="4.833464566929134in" height="3.0in"}With
over 27 percent share of the total U.S. pet food product export to the
Caribbean, the Netherlands Antilles (St. Martin, St. Eustatius, Saba,
Curacao and Bonaire), are the largest market in the Caribbean for U.S.
pet food products. This report covers all of the Caribbean islands
including Bermuda and excluding Jamaica, the Dominican Republic and
Haiti. Please consult our office in the Dominican Republic for
information on these countries (see Section VIII). Other major Caribbean
importers of pet food products include the Bahamas, the Cayman Islands,
Aruba and the Leeward-Windward Islands (Anguilla, Antigua-Barbuda,
British Virgin Islands, Dominica, Grenada, Montserrat, St.
Christopher-Nevis and St. Lucia) (see figure 1). The relative
percentages of market share between Caribbean islands have not changed
significantly over the past 10 years with several Caribbean countries
dividing the market relatively evenly.

A current trend among Caribbean pet owners is to opt for a pure bred
dog. The historic British and European rule may have influenced the
Caribbean preference for dogs as pets, over cats and other animals.
Although the current ownership of dogs in Great Britain has declined in
response to changes in local lifestyle in recent years, most Caribbean
pet owners have held to the tradition of dog ownership. This coupled
with the relaxed atmosphere of the Caribbean and higher social status
has dogs outnumbering cats by about three to one.

Dry dog and cat foods are respectively the most imported pet food
products in the Caribbean. In most islands dry pet food comprises the
majority of these imports. One exception is the Cayman Islands, where
wet pet food imports are now increasing due to the aggressive marketing
of several brands of wet foods for dogs and cats. Treats are less often
imported yet retain potential for growth because of their immediate
availability from the U.S. supply and the ever-present American cultural
influence on Caribbean markets. Pet foods for small animals and birds
are present, but in far smaller quantities.

**B. Contributing Factors**

While pet food products differ from other Caribbean agricultural imports
in that they are not directly dependent on tourism, several other
characteristics contribute to the variation in the pet food markets
among the Caribbean islands. Population, per capita income, location and
preference are just some factors which affect a Caribbean country's
demand and, consequently, their import of pet food products. Although
the Caribbean market is for the most part consistent, any individual
country of interest should be explored for effective market entry.

Specific to each market, overall demand differs most according to both
the level of per capita income and population size. Household incomes in
countries such as Bermuda and the Cayman islands are higher than most in
the Caribbean, and prove that population size can be outweighed by
economic wealth, producing growth in pet food imports (see table 1).
Nevertheless, most islands have low per capita gross domestic product
(GDP), which makes pet ownership and pet food a luxury. Overall, most
consumers in the Caribbean are very price conscious, and as a result,
place less importance on name brands.

## 

## Table 1. Comparison of GDP Per Capita and Annual Per Capita Spending Based on U.S. Exports to Each Island, by Value

+-----------------------+-----------------------+-----------------------+
| ###                   | **GDP Per Capita**    | **Per Capita**        |
|  Country {#country-1} |                       |                       |
|                       | **(USD 1,000, 2002    | **Annual Spending**   |
|                       | est.)**               |                       |
|                       |                       | **on Pet Food**       |
+-----------------------+-----------------------+-----------------------+
| Bermuda               | \$35,200              | \$22.07               |
+-----------------------+-----------------------+-----------------------+
| Cayman Islands        | \$35,000              | \$5.94^1^             |
+-----------------------+-----------------------+-----------------------+
| Aruba                 | \$28,000              | \$21.98               |
+-----------------------+-----------------------+-----------------------+
| The Bahamas           | \$17,000              | \$6.79                |
+-----------------------+-----------------------+-----------------------+
| Barbados              | \$14,500              | \$3.56                |
+-----------------------+-----------------------+-----------------------+
| Netherlands           | \$11,400              | \$15.48^2^            |
| Antilles^2^           |                       |                       |
+-----------------------+-----------------------+-----------------------+
| Antigua & Barbuda     | \$11,000              | \$3.80                |
+-----------------------+-----------------------+-----------------------+
| Trinidad & Tobago     | \$9,500               | \$2.53                |
+-----------------------+-----------------------+-----------------------+
| Guadeloupe            | \$9,000               | \$0.27^4^             |
+-----------------------+-----------------------+-----------------------+
| St. Kitts & Nevis     | \$8,800               | \$2.73                |
+-----------------------+-----------------------+-----------------------+

The location of an island can also play a role in the import of pet
food. For example, 10 to 20 percent of St. Martin's pet food imports are
products that are re-exported to neighboring countries like St.
Eustatius with fewer direct shipments available. The island of Dominica,
for example, imports roughly 25 percent of its pet food supply from
neighboring Caribbean countries, which are imports originating from the
United States. In addition, since St. Martin is duty free, individuals
often take a day shopping trip from neighboring islands where tariffs on
grocery products in general are high.

The scores of retiring American baby-boomers becoming permanent or at
least seasonal residents of Caribbean countries are impacting the market
broadly through population, per capita GDP and most of all, product
preference. Affluent expatriates and returning Caribbean-Americans are
bringing pets from their previous homes or buying pets, mostly dogs,
from local and foreign breeders. Many of these consumers prefer
specialized products for pet health and are more disposed to the
purchase of high priced pet foods and treats.

Traditional custom on each island can also vary and influence consumer
preference. While local veterinarians are trying to spread the word that
table scraps and other foods are not fit for pet consumption, a subset
of the population still believes that buying commercial food for cats,
dogs and other animals is unnecessary or too expensive. St. Lucia, for
example, only began importing pet food four years ago. Conversely, most
pet-owners living in countries with a high GDP like the Cayman Islands
and Bermuda feed their pets primarily commercial foods, and increasingly
the highest end pet foods.

Various circumstances, in addition to those previously mentioned will
affect the quantity and dollar value of pet food imports. To illustrate,
the highest percentage of Caribbean pet food imports goes to the
Netherlands Antilles, which does not have a comparatively large
population. However, the large volume can be explained by a combination
of re-exports to islands and neighboring St. Martin and a considerable
amount of large-sized bags of dry dog food exported to the relatively
small island of Curacao. In Curacao, dog ownership is popular and many
households have multiple dogs.

Because of its minimal connection to the tourism industry, pet food
product export to the Caribbean was nearly unaffected by the economic
downturn experienced as a result of the events of September 11^th^,
2001. Although a downturn in the local economy occurred as it did in the
United States, most countries continued to show a slight increase in
importing U.S. pet foods (see figure 3).

![](media/image7.png){width="7.7in"
height="3.97007874015748in"}![](media/image8.png){width="6.3799212598425195in"
height="0.9381889763779527in"}

Import duties on pet foods are usually higher in countries with a low
per capita GDP. When comparing per capita GDP or average income to local
pet food duties, the duties have surprisingly less importance in product
demand. In countries with a higher GDP, duties range from about 12 to 20
percent, while duties in lower GDP countries have a higher range of
about 35 to 60 percent.

The local government officials in finance and customs have jurisdiction
over pet food imports to their respective islands. Barbados and Trinidad
and Tobago are countries that also engage the local agriculture
authority to monitor pet food imports made with beef as a result of the
Bovine Spongiform Encephalopathy (BSE or Mad Cow Disease) outbreak.
Where requirements ban the import of pet foods with specific byproducts,
officials can confiscate them and either destroy or return the shipment.
However, this is rare, and most pet food shipments to the Caribbean
encounter no difficulties.

  -------------------------------- --------------------------------------
  **Advantages**                   **Challenges**

  U.S. pet food products are well  Many Caribbean importers already have
  recognized, recommended by local established U.S. pet food export
  veterinarians and preferred by   relationships with major
  Caribbean residents.             manufacturers.

  Specialty pet foods are          Caribbean importers in countries with
  gradually increasing in demand.  lower per capita GDP do not have much
                                   interest in pet treats.

  Barbados is the only island      Many Caribbean residents with pets
  producing pet food and still     traditionally feed them table scraps,
  imports significant quantities   against the advice of local
  from the United States.          veterinarians.

  The market for pet food products Some Caribbean countries have high
  has remained stable, even in the duties on pet food products, which are
  recent economic downturn.        often seen as luxury items.

  Importers typically use one or   Few importers have a large enough
  several consolidators in Florida market to import full containerloads
  for their grocery products.      of pet food.
  -------------------------------- --------------------------------------

# 

# SECTION II: ROAD MAP FOR MARKET ENTRY

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

The market for pet food products can flow through several paths in the
import sequence. By far, the largest quantity is sold through
supermarkets, which import directly from suppliers in the United States.
Importers and distributors also play an important role, importing large
quantities for local retailers. Caribbean pet supply stores, growing in
number and size, carry a variety of supplies for pets either imported
directly, or sourced through the local distributor. Veterinarians
usually acquire their imports through local distributors or will
occasionally import directly. Caribbean pet owners purchase from a local
pet store, veterinarian or supermarket depending on the availability of
the product and/or the brand demanded. Other consumers of pet food
products in the Caribbean include animal shelters and veterinary
clinics.

Pet food products are primarily shipped to Caribbean importers via sea.
In fact, many Florida shipping companies offer weekly service to the
main ports in the Caribbean (see section VII for more details). It is
important to note that few markets are large enough to order full
containerloads. For this reason, it is important to get information from
importers on their consolidators, most often located in Miami, Florida.

Embarking on new export business with Caribbean islands can be a
demanding yet rewarding venture for U.S. exporters of pet food products.
Recognizing the special needs of the region, as with any export
scenario, will help make the process smoother and more lucrative.

##### 

##### 

A. Supermarkets

## Entry Strategy

Supermarkets generally import pet food products directly from
manufacturers and, less regularly, through local distributors
representing a brand name. However, the major brands all have in-country
product representative. Depending on the strength of the supermarket
versus the product representative and how strictly laws for exclusive
agreements are enforced, the product representative may or may not
receive payment for products imported directly. For example,
supermarkets in St. Lucia do not pay the product representative when
they import directly. With temporary lower cost pricing available
occasionally from U.S. discounters, Caribbean supermarkets increasingly
bring in parallel imports, much to the chagrin of the product
representative. On the other hand, the product representative for
Pedigree in St. Martin receives their commission, even when the
supermarkets import directly. Direct import by the supermarket makes
sourcing these products easier and will include special incentives that
might not have been passed down from the local representative. Pedigree
and Purina, the largest pet food manufacturers in the Unites States, are
maintaining the most shelf space in Caribbean supermarkets. Some
supermarkets, will import private label and other sought-after products
directly.

Private label products are key to the Caribbean supermarket inventory.
Most Caribbean customers will rely on a supermarket more than any other
source for lower-priced products as well as the major name brands.
Typically, the majority of imported products for supermarkets are dry
dog food, dry cat food, wet dog food and wet cat food respectively. The
average pet owner and supermarket customer in the islands that can
afford to buy pet food is buying mainly premium pet foods featured in
the product lines of major brand names. The client base for supermarkets
consists of mainly individual pet owners, but also includes pet shelters
and some veterinary clinics.

Very few Caribbean supermarket pet product buyers have attended past
trade shows held by U.S. pet product trade associations and individual
exporters. However, they do visit pet food producers at the U.S. Food
Export Showcase at FMI (see section VI). They, along with most pet food
importers, prefer to make contact with exporters at these trade shows
and events.

Last year, an average of 15 new pet food products were introduced in
Caribbean supermarkets, with almost all of them becoming permanently
stocked. However, almost all of these were new products introduced by
Pedigree and Purina. Trial samples are an ideal way to introduce a new
pet food product to supermarket customers. Caribbean buyers often remark
that the more marketing and promotion behind a product, the more success
in sales will result. In addition, since supply seems to run out often,
keeping in close contact with buyers should help alleviate this problem.

##### **B.** **Distributors**

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

Distributors, who all import, supply supermarkets, pet stores and
veterinarian clinics. Pet food products imported by distributors
primarily consist of the largest brand names and about 15 to 20 percent
of upper premium brands. Large, economy sized bags of dry dog food are a
favorite of many distributors and wholesalers. In general, dry outsells
wet dog and cat food. Overall, both wet and dry dog food is dominant
over cat food sales at around 75 percent.

Contacts made at trade shows are the preferred method of introducing pet
food products to distributors. Knowledge of the recent development
patterns on the islands through distributors can give U.S. exporters a
better idea of the size of market and an opportunity to collect the top
local contacts.

Distributors generally import items that are requested by their retail
business clients, including supermarkets, pet supply stores and
veterinarians. U.S. companies may also meet with this driving force for
maximum import.

# C. Pet Supply Stores

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

Most pet supply stores are importing directly from their U.S. suppliers,
which are typically wholesalers. Some premium brands represented
locally, such as Pedigree or Purina, are purchased through the local
distributor. They supplement these premium brands with upper premium
brands to offer the customer the widest possible selection.

At pet supply stores, requests for pet food products are usually made
from past preference or by patrons who travel to the United States and
have knowledge of products sold there. Their customers, a higher income
group, are more concerned with brand than price, buying more upper
premium brand products. More pet stores exist on islands with a high per
capita GDP, like Bermuda or with high populations, such as Trinidad.
Sourcing new varieties is very important for importers since islands are
only so large and holding a wider assortment of products gives them an
advantage over the competition.

The owners of pet supply stores make most, if not all, of the purchasing
decisions.

The best choice for approaching this market is through U.S. trade shows.
Trial samples at some of the larger local dog or cat shows would reach
the mostly likely customers. When talking to pet store retailers, ask
what pet food products local pet owners and veterinarians are
requesting. Determine what products veterinarians and supermarkets are
already selling, which are in fierce competition to the pet supply
store.

# D. Veterinary Clinics

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

Veterinary clinics will import prescription dog or cat foods one pallet
at a time or go through a local distributor. On islands where per capita
GDP and pet food spending is low, the pet clinic or veterinarian's
office is a very minor route for sale of pet food products, yet should
still be considered when evaluating the market preferences.

Veterinarians usually select brands through word of mouth within the
profession. Veterinarians do not attend trade shows or pet shows as
often as other importers, so product samples and literature provide a
better opportunity to introduce pet foods to clinics and offices around
the Caribbean. Upper premium brands are most often the products of
choice in this sector. Veterinarians have a hard time dealing directly
with companies who manufacture leading upper premium brands since the
size of their orders are so small. Weight loss, joint health and vitamin
supplemented pet foods also top the list of trends now in demand in this
and the pet supply sector.

If a local veterinarian is interested in selling pet foods for the first
time, check with the local distributors to determine if it can be
consolidated with their shipment to lower transportation costs for the
importer.

# SECTION III: COMPETITION

Imports from Canada and Western Europe also occur, but together they
only account for about 3 to 4 percent of the Caribbean market. Minimal
imports from the European Union are usually present on islands with a
stronger British or European influence, while Canadian imports are
usually sought for the economical private label brands they offer such
as the President's Choice line of pet food. The Netherlands Antilles
also imports pet food from Holland, which arrives on containers with
other grocery products from the Netherlands.

Among the Caribbean countries, Barbados has the only locally
manufactured dry dog food, VitaPet, a well-known and trusted product
which supplements the local supply of U.S. dry dog food imports. In
addition, imports from other Caribbean islands are most often re-exports
of U.S. pet food products.

Some stores on islands with high import duties on pet food find
competition with U.S. businesses when individual pet owners bring bags
of pet food home from their trips to the United States. The Caribbean
perception of the quality of both product and service of U.S. brands far
outweigh those of any other country.

######## Section IV: Best Product Prospects

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

Private label dry dog and cat foods

Upper-Premium dog and cat foods

Special diet pet foods: weight loss, joint health and vitamin enriched
(in upper end markets)

Economy-sized, large bags of dog food

Bird food (Cayman Islands)

All-in-one nutrition dog and cat foods

Pet food retailers are very interested in inexpensive private label
foods in many Caribbean countries like the Bahamas, St. Lucia and
Trinidad to meet the demands of customers with lower incomes. In
countries like Barbados, demand is growing for upper premium pet food
brands in pet supply stores and veterinarian clinics. Veterinarian and
pet supply stores are especially interested in specialty pet foods,
recommended for various conditions. Along the same lines are all-in-one
nutrition pet foods, sought to satisfy most nutritional needs for one
low price.

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

Treats and bones (Bermuda and Cayman Islands) are less significant in
the Caribbean market. Meanwhile, interest in these products among higher
income consumers is steadily growing.

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

In an effort to protect the population from Bovine Spongiform
Encephalopathy (BSE), Barbados and Trinidad & Tobago have new
requirements for pet foods from the United States.

Section V: Export Requirements

Each Caribbean country has different requirements for pet food products
that are imported from the United States. The customs or finance
ministries in each country can provide detailed information on import
requirements. For more information on tariffs visit
www.ita.doc.gov/td/tic/tariff/. U.S. exporters may also need an export
certificate from APHIS Veterinary Services as specified by the country
of import of an updated list visit
www.aphis.usda.gov/NCIE/iregs/products/.

However, we encourage you to talk with your importer to find out how the
regulations are actually implemented.

###### SECTION VI: Trade Shows

The following are some of the trade shows attended by Caribbean pet food
importers:

-   APPMA Pet Products Show Mid-March, 2005 New Orleans, LA

www.appma.org

-   Pet Industry Spring Trade Show\
    & Educational Conference April 1-3, 2005 Atlantic City, NJ

> Christmas Trade Show October 8-10, 2004 Chicago, IL
>
> www.hhbacker.com
>
> Tel (312) 663-4040\
> Fax (312) 663-5676

-   Food Marketing Institute Show (FMI) May 1-3,2005 McCormick Place,
    Chicago www.fmi.org/events/may/2005/

> Tel (202) 852-8444
>
> Fax (202) 429-4519

## SECTION VII: Selected Transportation and Shipping Lines

![](media/image11.wmf)

![](media/image12.wmf)

######### Section VIII: Post Contacts

**A. For more information and 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

##### Margie Bauer, Director

####### Email: cbato@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

# 

# Dominican Republic Agricultural Affairs Office

David Salmon, Agricultural Attaché

Foreign Agricultural Service

United States Department of Agriculture

Ave. Pedro Henriquez Urena #133 4to. Pi\
Edificio Reyna I (COMSER) La Esperilla\
Santo Domingo, Dominican Republic

Phone: 809-227-0112

Fax: 809-732-9454

Email: agsantodomingo@usda.gov

http://www.usemb.gov.do/FAS/fasindex.htm

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

**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 most Caribbean countries.

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

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

## Department of State

Bureau of Consular Affairs

Links to United States Embassies and Consulates Worldwide

## http://travel.state.gov/links.html

## Foreign Agricultural Service, USDA

BICO Reports

Provides bulk, intermediate, and consumer-oriented agricultural product
data per calendar or fiscal year.

**http://www.fas.usda.gov/scriptsw/bico/bico_frm.asp**

## APHIS- Veterinary Services

Animal and Plant Health Inspection Service, USDA

Miami, Florida

Phone: 305-526-2825

Fax: 305-871-4205

**http://www.aphis.usda.gov/vs/**

**B. Other sources of Information on the Caribbean pet food market:**

CARICOM

Caribbean Community Common Market

P.O. Box 10827

Georgetown, Guyana

Phone: 592-226-9280

Fax: 592-226-7816

Home Page: www.caricom.org

## Pet Food Institute

## 2025 M Street, NW, Suite 800

## Washington, DC 20036

Phone: 202-367-1120

Fax: 202-367-2120

Home Page: www.petfoodinstitute.org