Voluntary Report - public distribution

**Date:** 5/6/2004

**GAIN Report Number:** BD4001

BD4001

**Bermuda**

**Retail Food Sector**

**Report**

**2004**

**Approved by:**

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

Caribbean Basin ATO

**Prepared by:**

Angel F. González-Trápaga

Agricultural Marketing Specialists

**Report Highlights:**

With a GDP per capita of \$35,200, Bermuda enjoys one of the highest
living standards in the world. Bermudans are under heavy fire from
American media advertising, and, as a result, are oriented to American
name-brand food products. The United States is Bermuda\'s leading
trading partner exporting nearly \$56 million in food and beverage
products. This report will help U.S. exporters assess the existing and
challenging opportunities in the island\'s retail food sector.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\]

\[BD\]

Section I. Market Summary

# Country Snapshot

Bermuda is an overseas territory of the United Kingdom with internal
self-government. It is located about 600 miles off the coast of Cape
Hatteras, North Carolina. With approximately 21 square miles in size and
a population of 65,000 (2003 est.), Bermuda has one of the highest
population densities in the world. The island is divided into nine
parishes: Devonshire, Hamilton, Paget, Pembroke, Saint George's, Sandys,
Smiths, Southampton, and Warwick. Pembroke, which includes the nation's
capital, Hamilton City, has the most inhabitants of any parish (nearly
11,500) and Paget the least (under 5,000). The rest of the population is
evenly distributed throughout the other parishes.

With a per capita GDP of \$35,200 (2002 est.), Bermuda has one of the
wealthiest populations in the western hemisphere. Unemployment is
virtually nonexistent, making minimum wages and cost of living high.
Bermuda's economy is based primarily on international business and
tourism. One reason for the high GDP is that Bermuda has successfully
exploited the international financial services sector. International
business constitutes over 60 percent of Bermuda's economic output. Both
offshore banking and insurance companies are offered attractive business
incentives. The world headquarters of many high profile companies are
located on the island.

The tourism industry traditionally contributed the most to the local
economy, although international business has grown extensively and has
become the number one activity on the island. Tourism is still very
important to the island's economy due to the fact that it employs the
largest number of Bermudans. The industry accounts for an estimated 28
percent of GDP and attracts 77 percent of its business from the United
States. Bermuda has luxury tourist facilities that accommodate almost
half a million visitors annually.

Agriculture is almost nonexistent given that only six percent of the
island's land is arable and the high population density. Local
agricultural production is limited to bananas, grapefruit, citrus, other
fruit and vegetables, flowers, honey, eggs and dairy products. Fishermen
harvest lobster (available only from September-March due to fishing
restrictions), Bermuda's rockfish, red snapper, shark and mussels. There
are also some commercial flower growers who supply a variety of long
stemmed cut flowers for the local market.

When certain locally grown food products are in season, temporary
embargoes are placed by the Government Marketing Center on the
importation of competing products to protect local farmers. Embargoes
can be imposed and lifted several times throughout the year. In 2002,
Bermuda enacted 153 embargoes on 81 items including: broccoli, cabbage,
cucumbers, cauliflower, lettuce, tomatoes, potatoes, eggplant, and
spinach.

In mid 2003, Bermuda formally joined the Caribbean Community (CARICOM),
as an Associate (non-voting) Member. Although this is supposed to
encourage and facilitate trade between Bermuda and Caribbean nations, no
air or sea cargo services exist between them. All imports to Bermuda
from the Caribbean must transit the United States or Canada.

# Market Summary

The United States maintains a dominant presence in the market as
Bermuda's primary trading partner. The major drivers pushing the success
of U.S. goods are the availability, abundance and quality of the
products imported. Other major trading partners include the United
Kingdom, Canada, Italy, France, the Netherlands, and New Zealand. In
2002, 76 percent of Bermuda's food and beverage imports were from the
United States totaling \$56 million. Imports are shipped either out of
Newark, New Jersey or Jacksonville, Florida. U.S. food imports destined
to the retail sector are estimated to be between 55-65 percent of total
imports. The remaining 35-45 percent is channeled through the HRI food
service sector.

![](media/image2.wmf){width="6.0in"
height="3.3333333333333335in"}Source: FAS' Global Agricultural Trade
System using data from the United Nations Statistical Office

The nation's retail sector is composed of 22 supermarkets and grocery
stores, and over 35 convenience stores including gas marts. They are all
well spread out across the island. Every parish and municipality has at
least one retail outlet. The average supermarket size is between 20,000
and 30,000 square feet. Grocery stores usually support villages and
towns. However, a large supermarket is but a short distance away for
everyone. Only locally owned stores are allowed in Bermuda and this
explains why no international supermarket chains have entered the
market.

Bermudian's high GDP per capita is reflected in their purchasing of very
high-end, premium quality, and name brand products. Locals are very
brand loyal and thus, difficult to sway. Major U.S. brands present in
the market include: Del Monte, Nestle, Heinz, Kraft, Kellogg's, and many
others. Another unique market characteristic is the noticeable lack of
shelf space, making competition for the little space available quite
fierce. As a result, only the products with the most demand are awarded
prime shelf space. For many stores, if a new product is brought in,
another is bumped out.

The majority of Bermuda's retail stores do not have bulk purchasing
power or other economies of scale. They are also faced with very high
import duties imposed by the local government. This is reflected in the
high prices of food and beverage products on the island. One bright spot
is that, although retail prices could be as high as 350 percent of those
in the United States, Bermuda has no sales tax.

# 

# Import duties are a major source of revenue for the Government of Bermuda. Tariffs on food products can reach up to 33.5 percent. The following list contains some agricultural items and their respective duty rates:

# Beef, poultry and pork: 5 percent

# Fish: 5 percent

# All other seafood products: 10 percent

# Dairy: 5 percent

# Ornamental plants: 33.5 percent

# Fruits and vegetables: 5 percent 

# Sugars and sugar confectionary: 22.25 percent

-   **Prepared foodstuff**: between 5 and 22.25 percent

-   **Dog or cat food**: 22.25 percent

# Fruit juices: 10 percent

# Coffee, tea and spices: 5 percent

# Wine: \$2.63 per bottle

# Spirits: \$24.15 per litter

# Mineral waters: between 15 and 35 percent

# Market Trends

Television stations in Bermuda pick up over sixty American channels via
satellite, which are seen in virtually every residence and hotel room.
The market is flooded with advertising for U.S. products, which brings
American food trends to the island.

Some of the current market trends in Bermuda's retail market are:

-   Organic and \"healthy\" foods

-   Prepared foods and ready-to-eat/ready-to-cook meals

-   Specialty items produced by specific brand names

-   Retail island-wide delivery of foods

-   Food sales through Internet

-   Private labels

Organic and \"healthy\" foods that are popular in the United States are
rapidly catching on in Bermuda. The faster-paced Bermudan lifestyle is
attracting prepared foods and ready-to-eat/ready-to-cook meals into the
market. These are selling well during lunchtime and for home diners in
the populated areas of the island. Bermudan tastes have gradually
matured over the years, moving from canned foods to high-end specialty
items and brand name products. More and more women are working allowing
them less time and energy to prepare a meal from scratch. Bermudans can
afford trade higher prices for convenience and this is why retail stores
are now offering delivery services island-wide. In addition, a new
Internet retail sales portal called BermudaGrocer.com, offers locals the
convenience of ordering their food supplies online. Sales of private
label, thought impossible by the trade, are increasing.

Section II. Road Map for Market Entry

A. SUPERMARKETS & GROCERY STORES

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

Local importers/wholesalers are the gatekeepers of 70 percent of the
food retail sales. The other 30 percent are direct imports from the
island's largest food retailers. Penetrating the market is a difficult
endeavor in Bermuda because of the high degree of brand loyalty. The
best way for a U.S. manufacturer to enter the market with success is to
first search the market for potential niches, develop an excellent
marketing plan and then begin exporting via a local distributor.
Researching the market structure and competition is key in assessing
current market conditions and making sound decisions. If possible,
travel to Bermuda to get a first-hand experience of the market. Sample
the public's opinion and offer quality goods at a reasonable price.
Finally, provide the product with a great deal of marketing support and
television airtime.

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

Large supermarkets purchase their goods from local wholesalers because
they offer convenience and reliability of the items being supplied.
However, some supermarkets have significant purchasing power and import
directly from U.S. manufacturers. For example, The Market Place and
Lindo's Market import from the United States on a regular basis. In
addition, all supermarkets and grocery stores will order mixed container
loads to their New Jersey "jobbers" if they can offer better prices than
the local wholesalers. It is important to emphasize that although direct
imports due take place, it is not the norm in the nation's retail
sector. Bermuda has a well-established distribution network that
channels most food imports through local importer/distributors.

*Product Flow for Imported Products:*

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

+-----------------+-------+-------+---------------+------------------+
| **Retail Name   | **O   | **No. | **Location    | **Purchasing     |
| and Type**      | wners | of**  | or**          | Agent**          |
|                 | hip** |       |               |                  |
|                 |       | *     | **Parish**    |                  |
|                 |       | *Outl |               |                  |
|                 |       | ets** |               |                  |
+-----------------+-------+-------+---------------+------------------+
| The Market      | Local | 8     | Hamilton,     | Local and Direct |
| Place,          |       |       | Smith's,      | Importer         |
| Supermarket     |       |       | Pembroke(2),  |                  |
|                 |       |       | Paget (2),    |                  |
|                 |       |       | Sandys,       |                  |
|                 |       |       | Southampton   |                  |
+-----------------+-------+-------+---------------+------------------+
| Miles Market,   | Local | 1     | Pembroke      | Local and Direct |
|                 |       |       |               | Importer         |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Lindo's Market, | Local | 1     | Devonshire    | Local and Direct |
|                 |       |       |               | Importer         |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Lindo's Family  | Local | 1     | Warwick       | Local and Direct |
| Foods,          |       |       |               | Importer         |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| The Supermart   | Local | 1     | Pembroke      | Local and Direct |
| Ltd.,           |       |       |               | Importer         |
|                 |       |       |               |                  |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| White & Sons    | Local | 1     | Warwick       | Local and Direct |
| Ltd.,           |       |       |               | Importer         |
|                 |       |       |               |                  |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Hayward's       | Local | 1     | Warwick       | Local and Direct |
| Supermarket,    |       |       |               | Importer         |
|                 |       |       |               |                  |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Garden Market   | Local | 2     | Pembroke,     | Local and Direct |
|                 |       |       | Devonshire    | Importer         |
| Supermarket     |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Somers,         | Local | 1     | St. George's  | Local and Direct |
|                 |       |       |               | Importer         |
| Grocery Store   |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Harrington      | Local | 1     | Smith's       | Local and Direct |
| Hundreds,       |       |       |               | Importer         |
|                 |       |       |               |                  |
| Grocery Store   |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+
| Arnold's        | Local | 3     | Sandys,       | Local and Direct |
| Markets,        |       |       | Pembroke,     | Importer         |
|                 |       |       |               |                  |
| Grocery Store   |       |       | Somerset      |                  |
+-----------------+-------+-------+---------------+------------------+
| Manuel Soars &  | Local | 1     | Pembroke      | Local and Direct |
| Sons,           |       |       |               | Importer         |
|                 |       |       |               |                  |
| Grocery Store   |       |       |               |                  |
+-----------------+-------+-------+---------------+------------------+

The above list constitutes Bermuda's major supermarkets and some
well-known grocery stores. Bermudan supermarkets look very similar if
not identical to U.S. markets. They have large, full service premises
with an extensive range of meats, seafood, fruits and vegetables, and
other products. The Market Place, the largest supermarket chain with 8
branches island-wide, carries both Shop Rite (USA) and President's
Choice (Canada) private labels. Miles Market is the island's most
upscale supermarket with a large selection of hard-to-get specialty food
items. Both Lindo's Market and Lindo's Family Foods are medium-sized
stores that carry a good selection of quality and gourmet foods. In
addition to the typical goods, the Supermart store also has an in store
bakery and ready-to-eat foods including a well-stocked salad bar and
prepackaged sandwiches.

Grocery stores tend to carry only the most demanded brand name products
and often try to carry specialty items that are not found in
supermarkets. To differentiate themselves from their larger competitors
with limited space, groceries have to be very strategic with regards to
what products to carry. Harrington Hundreds, for example, has the
island's best selection of trendy "healthy" foods. It is also considered
one of the more upscale food outlets on the island. At least one grocery
store is located in each rural area throughout the island. Grocery
stores account for roughly 15-20 percent of Bermuda's retail food sales.

B. CONVENIENCE STORES & GAS MARTS

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

Convenience stores and gas marts both purchase 90-95 percent of their
goods from local wholesalers. It is very unlikely that they will be
capable of importing their food products directly. The best method of
targeting this market is via a local wholesaler.

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

*Product Flow for Imported Products:*

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

+-----------------+---------+-------+----------------+---------------+
| **Retail Name & | **Owne  | **No. | **Location or  | **Purchasing  |
| Type**          | rship** | of**  | Parish**       | Agent**       |
|                 |         |       |                |               |
|                 |         | *     |                |               |
|                 |         | *Outl |                |               |
|                 |         | ets** |                |               |
+-----------------+---------+-------+----------------+---------------+
| Caribbean Food  | Local   | 1     | Hamilton       | Local         |
| Mart            |         |       |                | Importer      |
|                 |         |       |                |               |
| Convenience     |         |       |                |               |
| Store           |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| Dismont         | Local   | 1     | Hamilton       | Local         |
| Robinson        |         |       |                | Importer      |
| Convenience     |         |       |                |               |
| Store           |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| Happy Valley    | Local   | 1     | Pembroke       | Local         |
| Mini Mart       |         |       |                | Importer      |
|                 |         |       |                |               |
| Convenience     |         |       |                |               |
| store           |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| C-Mart          | Local   | 1     | Pembroke       | Local         |
|                 |         |       |                | Importer      |
| Convenience     |         |       |                |               |
| Store           |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| Tony's Fine     | Local   | 1     | Hamilton       | Local         |
| Foods           |         |       |                | Importer      |
|                 |         |       |                |               |
| Convenience     |         |       |                |               |
| Store           |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| Esso, Tiger     | Local   | 14    | Every Parish   | Local         |
| Mart            | (Fra    |       |                | Importer      |
|                 | nchise) |       |                |               |
| Gas Mart        |         |       |                |               |
+-----------------+---------+-------+----------------+---------------+
| Shell           | Local   | 15    | Every Parish   | Local         |
|                 | (Fra    |       |                | Importer      |
| Gas Mart        | nchise) |       |                |               |
+-----------------+---------+-------+----------------+---------------+

Convenience stores are not abundant in Bermuda. They are strategically
located in high traffic areas or near tourist attractions. They carry a
small selection of foodstuffs, which are normally higher priced.

Gas marts are well spread out around the island. Located mostly on main
roads and urban areas, they choose their location where traffic is the
heaviest. This location in turn provides them with access to a large
number of drivers, public visibility and presence in the community.
Traffic is increasing and more families have two breadwinners. While on
the road, more and more Bermudans are finding that stopping for gas and
purchasing something to eat or drink is the best and easiest way to
satisfy their needs. In addition, gas marts are usually open later than
supermarkets; some of them are open 24 hours.

C. TRADITIONAL MARKETS

Traditional markets obtain their food supplies from local farmers. Fruit
and vegetable stalls dot Bermuda's roadsides year-round but the island's
official Farmer's Market only runs during the primary growing season --
from December through June. Locally produced fruits and vegetables,
honey, eggs, preserves, and fish are some of the foods commonly found.

Section III. Competition

With 76 percent market share, the United States clearly dominates
Bermuda's retail market for food and beverage products. The only reason
a U.S. exporter may find it difficult to sell a product in Bermuda is if
an established competing American product is already in the market. For
the most part, all the major brands are already present in the market.

The following products and countries compete with U.S. products:

-   **Beef:** New Zealand, Canada, United Kingdom, Netherlands, and
    Germany.

-   **Poultry:** United Kingdom and Canada.

-   **Pork:** Canada, Germany, United Kingdom, Italy, France, Ukraine,
    and Ireland.

-   **Fresh Produce:** United Kingdom, Italy, and Canada.

-   **Seafood:** United Kingdom, Canada, Netherlands, China, Denmark,
    France, Ireland, and Thailand.

-   **Dry Goods:** Canada, Germany, United Kingdom, Netherlands,
    Switzerland, Belgium, and Italy.

-   **Dairy Products:** New Zealand, Brazil, Canada, Switzerland,
    France, United Kingdom, Jamaica, Panama, Denmark, and Italy.

-   **Alcoholic Beverages:** Australia, United Kingdom, Netherlands,
    Chile, Germany, Spain, France, Italy, Barbados, Bahrain, South
    Africa, Trinidad & Tobago, Sweden, and Mauritania.

-   **Non-Alcoholic Beverages:** Canada, United Kingdom, France,
    Belgium, Italy, Denmark, and Germany.

-   **Specialty Foods:** Canada, Switzerland, France, United Kingdom,
    Ireland, Brazil, Jamaica, Kenya, and Italy.

-   **Bakery Ingredients:** Canada, United Kingdom, and Jamaica.

  ------------------------- ---------- ------------------------- ----------
  Top 10 U.S. Food Products                                      
  in Bermuda Import Market                                       
  for 2002                                                       

  **U.S. High Value Food    **Market   **U.S. High Value Food    **Market
  Product**                 Share**    Product**                 Share**

  Fresh Fruit               99%        Breakfast Cereals &       97%
                                       Pancake Mixes             

  Pet Foods                 98%        Red Meats                 97%
                                       (Prepared/Preserved)      

  Fruit & Vegetable Juices  98%        Red Meats                 93%
                                       (Fresh/Chilled/Frozen)    

  Eggs & Products           98%        Mixed Container Loads     92%

  Fresh Vegetables          97%        Fishery Products          91%
  ------------------------- ---------- ------------------------- ----------

Source: UN Trade Data

Section IV. Best Prospects

##### A. Products Present in the Market Which Have Good Sales Potential

> Bermuda is a very high-end market in search of quality products.
> Market opportunities exist for a wide array of retail products,
> including:

-   Ready-to-eat and ready-to cook products

-   High-end specialty items and gourmet products

-   Meat products

-   Premium jams, jellies and honey

##### B. Products Not Present in Significant Quantities but Which Have Good Sales Potential

> Bermuda has a well-stocked retail market for food and beverage
> products. The island's rapid development has permitted an inflow of a
> vast array of different products. The following products are present
> in small volumes in the local market but good opportunities still
> exist for further penetration. They include:

-   Organic and "healthy" foods

-   Ethnic foods

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

> Products that are not allowed into Bermuda include:

-   Citrus fruit from Florida

-   Carrots

-   Potatoes and sweet potatoes

-   Corn

> Others that are heavily restricted by high tariffs include:

-   Spirits

Section V. Contact Information

##### A. For more information on Bermuda and a list of importers for your U.S. product, please contact:

> **Caribbean Basin Agricultural Trade Office**
>
> **Foreign Agricultural Service**
>
> **United States Department of Agriculture**
>
> 909 SE 1st Ave., Suite 720
>
> Miami, FL 33131
>
> Phone: (305) 536-5300
>
> Fax: (305) 536-7577
>
> E-mail: <cbato@cbato.net>
>
> Margie Bauer, Director
>
> E-mail: <cbato@cbato.net>
>
> Omar González, Deputy Director
>
> E-mail: <omar@cbato.net>
>
> Graciella Juelle, Marketing Assistant
>
> E-mail: <grace@cbato.net>
>
> Please visit our website for more reports and information on Bermuda
> and other Caribbean Islands:
> [http://www.cbato.fas.usda.gov](http://www.cbato.fas.usda.gov/), click
> on "U.S. Exporters"

##### B. Other Sources of Information on Bermuda:

> **Department of Environmental Protection\
> **Claire Jessey, Plant Protection Officer
>
> P.O. Box HM-834\
> Hamilton HM-CX Bermuda
>
> Tel: 441-236-4201\
> Fax: 441-236-7582\
> Email: <ag_fish@gov.bm>

######## Department of Health

> Estlyn D. Harvey, Chief Environmental Heath Officer
>
> P. O. Box HM 1195
>
> Hamilton HM EX, Bermuda
>
> Tel: 441-239-3453
>
> Fax: 441-232-1941
>
> Email: <s@northrock.bm>

######## Bermuda Chamber of Commerce

> P.O. Box HM 655
>
> Hamilton HM CX, Bermuda
>
> Tel: 441-295-4201
>
> Fax: 292-5779
>
> Email: <bbc3@ibl.bm>
>
> Website: [www.bermudacommerce.com](http://www.bermudacommerce.com/)

######## H. M. Customs Bermuda

> Mr. Kenneth G. Stone, Principal Customs Officer
>
> P. O. Box HM 2084
>
> Hamilton HM HX, Bermuda
>
> Tel: 441-295-4816
>
> Fax: 441-295-5392
>
> Email: <hmcbm@ibl.bm>
>
> Website: [www.customs.gov.bm](http://www.customs.gov.bm/)

######## Bermuda Department of Tourism

> P.O. Box HM 465
>
> Hamilton HM BX, Bermuda
>
> Tel: 441-292-0023
>
> Fax: 441-292-7537
>
> Website: [www.bermudatourism.com](http://www.bermudatourism.com/)

######## Bermuda Tourist Office in the United States

> 205 East 42nd Street
>
> 16th Floor
>
> New York, NY 10017
>
> Tel: 800-223-6106