Required Report - public distribution

**Date:** 3/23/2004

**GAIN Report Number:** JM4003

JM4003

**Jamaica & Dep**

**HRI Food Service Sector**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)David G. Salmon

U.S. Embassy

**Prepared by:**

Sylburn Thomas

**Report Highlights:**

Despite declines in real per capita consumption, the non-tourism segment
of the Jamaican market continues to present opportunities for the
consumption of high-value U.S. agricultural products. The strong
recovery of Jamaica\'s tourism industry during 2002 and the positive
outlook for 2004 and 2005 will present increased opportunity for U.S.
food and beverages.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Kingston \[JM1\]

\[JM\]

# I. Market Summary

A. **Non-Tourism Market**

Following four consecutive years of contraction (1996-1999), the
Jamaican economy grew marginally by 0.7 percent during 2000, and by a
further 1.7 and 1.0 percent in 2001 and 2002. The economic performance
during 2001 and 2002 were particularly restricted by the plummet in the
tourism sector, which resulted from the terrorist attacks in the Unites
States and the resultant declines in global travel. The Central Bank has
projected continued modest economic growth between 2.0 to 4.0 percent
per year over the next three years. For the first two quarters of 2003,
the economy expanded by 3.4 and 3.1 percent, respectively. With record
performance in the tourism industry and increased agricultural output,
the annual growth in the economy during 2003 is expected to be within
the proximity of 2.5 percent.

The structural shift in the Jamaican economy from the productive to the
services sector which began in response to trade liberalization and
structural adjustment during the 1980's have intensified through the
ensuing decades and has pushed services, particularly tourism,
telecommunication, and transportation and storage to the helm of
Jamaica's economic activities. Over the past decade, the services sector
has expanded by an average 3.5 percent per year and its contribution to
GDP increased from 62 to 85 percent. Conversely, output from the
goods-producing sector has, in general, declined over the period.

The magnitude and horizon of Jamaica's economic growth is not sufficient
to generate any meaningful change in the general pattern of household
consumption. Over the four-year period between 1999 and 2002, Jamaica's
real mean per capita annual household consumption expenditure has
declined at an average annual rate of 3.5 percent. With the exception of
2001, where household consumption expanded by 8.5 percent, all other
years over the period (1999 to 2002) recorded declines in consumption
expenditures of significant magnitudes. This pattern was observed across
all five socio-economic groups (quintiles) of the population and in the
two major geographic segments of the market -- Kingston metropolitan
area (KMA) and other towns. As was expected, however, the declines were
not evenly distributed, showing relatively less severity in the KMA and
in the upper socio-economic segment. Noticeably, during 2002, real mean
per capita consumption expenditure declined by 6.2 percent, almost
entirely eroding the 8.5 percent increase during the previous year.
Jamaica's per capita consumption expenditure, at current prices, stood
at US\$1,737 during 2002. With an estimated population of 2.6 million
people, total consumption expenditure in Jamaica's non-tourism market is
estimated at US\$4.5 billion.

While food and beverage accounts for the largest proportion of
Jamaica\'s mean per capita consumption expenditure, its relative
contribution has trended downward over the last five years, declining
from a high of 54.7 percent during 1995 to 43.5 percent during 2001, and
by a further 3.5 percentage points to 40.09 percent during 2002. Except
for the wealthiest stratum (20 percent) of the population, which
committed a marginal 1.6 percent more of total expenditure to the
purchase of food and beverages, all other strata spent a substantially
lower proportion of total expenditure on food and beverage during 2002.
The 12.8 percent decline in food and beverage consumption from US\$2.03
billion to US\$1.8 billion during 2002 was more that twice the 6.2
percent decline in total consumption. Similarly, consumption of
meals-away-from-home has declined from US\$548 million to US\$486
million over the same period. Given the present consumption pattern,
total consumption and consumption on food and beverage in Jamaica\'s
non-tourism market is expected to, at best, remain stable over 2003 and
2004. Despite the short-term decline in consumption of
meals-away-from-home, Jamaica\'s restaurant market remains very
attractive to U.S. food and beverages.

For the first in three years, Jamaica\'s food and beverage consumption
pattern showed an appreciable change during 2002. The most noticeable
change was observed in the proportion of food and beverage consumption
expenditure that was spent on meals-away-from home. The proportion of
food and beverage expenditure spent on meals-away-from-home peaked at 31
percent during 1999; declined to 27 percent during 2000; remained
constant over 2001; and declined by an unexpected 6 percentage points to
21 percent during 2002. The decline in expenditure on
meals-away-from-home during 2002 was interpreted as the effect of a
general expected consumption reaction to the uncertainties in the
Jamaica labor market which has restricted household income. Changes in
real mean per capita consumption expenditure (a proxy of household
income) will directly affect consumption of meals-away-from-home as
indicated by the strong positive correlation (0.83) between these
variables. Although fast food restaurants, the largest segment of the
restaurant market, have, in general, experienced decrease in the number
of patrons per day over 2002 and 2003 cash register sales have increased
by virtue of cost controls and menu diversification. Increased
government taxes, increasing inflation, and the current public sector
wage freeze \-- which is likely to be largely imitated in the private
sector\-- will further restrict household income, and consequently
consumption of meals-away-from-home during 2004 and 2005. The other
observable consumption changes during 2002 included increases in the
consumption of meat, poultry and fish; cereals and cereal products;
vegetables; and fruit juices. There were marginal consumption declines
across a wide array of other products categories.

**B. Tourism Market**

Jamaica's tourism industry recovered fully during 2003 from the plummet
which occurred during 2001 in response to the terrorist attacks in the
United States and the resultant decline in global travel. During 2003,
Jamaica recorded historic cruise ship passenger arrivals of 1.1 million,
while stopover visitors totaled 1.4 million. The 2003 performance
represents a 6.6 percent increase in stopover visitors and an alarming
30 percent increase in cruise ship passenger arrivals, generating a 16.5
percent increase in total tourist arrivals during 2002. When compared to
2000 (Pre-September 11^th^), stopover and cruise ship passenger arrivals
increased by 2.1 and 24.8 percent during 2003, producing an increase in
total arrivals to 11.3 percent. The 2.0 million and 2.2 million in total
tourist arrivals during 1999 and 2000 were also far surpassed by the 2.5
million arrivals during 2003. The recovery and growth in the industry
are heavily skewed toward the cruise ship sector. Excluding 2001 and
2002 as outliers due to negative international influences, cruise ship
passenger arrivals to Jamaica have increased by an average 13 percent
per year over the last five years relative to a 3 percent increase in
stopover arrivals over the same period.

Jamaica's tourism industry is well positioned to experience further
growth and diversification over the medium-term. The increasing interest
of Spanish investors in Jamaica's tourism sector will significantly
expand the available stock of hotel accommodation; diversify the
available domestic tourism products; and naturally broaden the source
markets. The upscale Riu hotel, which entered the Jamaican market with
the construction of a 396-room hotel, is expected to open its new
450-room hotel during 2004, and should commence construction of a third
hotel in the near future. The acquisition of property on Jamaica\'s
north central coast by Grupo Pinero to construct three 600-room hotels
is closely followed by the acquisition of a similarly size property by
A&H investments in the same general area for the construction of hotels
to be operated by a Spanish hotel chain. The Barcelo Hotels and Resorts
and Grupo Iberostar are both scheduled to enter the Jamaican market with
the construction of one 850-room hotel each. With investments of these
magnitudes and relatively short time horizon, the proportion of Spanish
hotels in the total stock of hotel accommodation is expected to increase
significantly from the projected 4.23 percent during 2004 to over 16
percent by 2007. The arrivals of Spanish tourist to Jamaica are expected
to grow at an even more impressive rate over the corresponding period.
Despite the decline in global travel during 2001 and 2002, Spain has
contributed an increasing number of tourists to Jamaica each year since
2000. In fact, the arrival of Spanish tourist to Jamaica has almost
doubled each year since 2000, with actual growth of 92 percent per year.

This development, coupled with the Jamaica Tourist Board's initiative to
intensify its marketing efforts in other markets, particularly in
European and Asia, should improve performance of the sector, change the
demographic composition of Jamaica's tourist arrivals, and diversify the
tourism product. The United States accounted for approximately 71.8
percent of total tourist arrivals to Jamaica during 2003, down 4.6
percentage points. European tourist, particularly Germans, British,
Italians and Spanish, represented 16 percent of total stopover arrivals
during 2003, up two percentage points from the 2002 figures.

With average length of stay of 10.2 nights, average nightly stopover
expenditure of US\$98.10 per capita, and average daily cruise ship
passenger expenditure of US\$80.6 per person, total food and beverage
expenditure in Jamaica's tourism market is estimated at US\$85 million
per year. The inclination of U.S. visitors to purchase food items, with
which they are accustomed, has skewed approximately US\$62 million of
Jamaica's total tourist expenditure towards the purchase of U.S. food
products.

The tourism market will remain the fastest growing segments of the HRI
sector and will continue to present excellent opportunities for the
consumption of U.S. food and beverages. Foods consumed in public
institutions (hospitals, infirmaries, schools and prisons) are mostly
supplied through government contracts with domestic producers groups,
including the Jamaica Dairy Farmers Federation, the Beef Farmers
Association, Rural Agricultural Development Authority and the Jamaica
Agricultural Society. The Institutions segment of the HRI market is not
attractive for U.S. high valued agricultural products. However, bulk,
unbranded commodity-type products, and nutritionally enhanced lower
valued products can find opportunities in this segment.

Total food and beverage consumed in the HRI sector, excluding
institutions, was estimated at US\$571 million during 2002.

# C. Factors Affecting Consumption 

Macro economic factors that affect consumption patterns are as follows:

**Macro Economic Recovery** - Should the growth in the economy
accelerates or be maintained over a longer horizon, the associated
increase in per capita income could generate increasing demand for
consumer goods, including food and beverages. Ongoing structural shift
in the economy from the productive sector to the service sector will
increase Jamaica's dependence on imported products.

**Smaller Households -** More than 43 percent of households in Jamaica
has one or two persons. Almost half (44%) of the two wealthiest
quintiles of the population are single member households and 46.5
percent of households in the wealthiest 40 percent of the population are
single male households. This continues to help fueling the demand for
meals-away-from-home.

**Increasing remittances** - Total remittances to Jamaica increased
steadily over the last 5 years, reaching US\$960 million during 2001.
Remittances from Jamaicans overseas contribute significantly to
household income / consumption in Jamaica and will continue to support
demand for imported products.

**Income Disparity -** Wealth disparity in Jamaica has fostered the
presence of distinct social groups within the society, dictating
different norms in communication, social appreciation and consumption
pattern among strata. The mean per capita annual consumption expenditure
of the wealthiest 10 percent of the population is 12.5 times that of the
poorest 10 percent. Further, 38 percent of the total consumption
expenditure of the wealthiest one-fifth of the population \-- where
consumption declines are less apparent \-- is spent on food and
beverages, translating into a market of approximately US\$730 million.

**Declining Goods Production -** Consistent declines in the goods
producing sector vis-à-vis the services sector have influenced increased
dependence on imports. Jamaica's visible trade deficit widens to US\$1.3
billion (22 percent of GDP) during 2002. During the year, exports
declined by US\$142.7 million to US\$1 billion while imports increased
by US\$38.4 million to US\$2.3 billion. Consumer goods continue to
account for an increasing proportion of total imports, moving from 25
percent during 1996 to over 30 percent of total imports during 2002.
Food imports, which accounts for the largest proportion of consumer
goods imports, increased by US\$20.1 million during 2002, mainly due to
increases in imports of meats and cereals.

**Fiscal Deficit and Public Debt -** Jamaica continues to be plagued by
a huge fiscal deficit, which is underpinned by mounting debt servicing.
The stock of debt (domestic and international) has almost doubled over a
four-year period, moving from US\$6.5 billion (101 percent of GDP) at
the end of 1998 to US\$11.4 billion (149 percent of GDP) at the end of
2002. Approximately 62.5 percent of the national budget has to be
committed to debt servicing. During fiscal year 2002/03 Jamaica's fiscal
deficit climbed to 7.7 percent of GDP. To achieve its target of reducing
the fiscal deficit and attain a balanced budget by 2005/06, the
Government of Jamaica has implemented one of the highest tax packages in
the country's history. Almost 60 percent of the new tax package is
expected to come from General Consumption Tax, which coupled with
increased inflation and creeping devaluation of the Jamaica currency, is
expected to negatively affect consumption in the short-term.

**Advantages and Challenges for U.S. Products in the Jamaican Market**

+-----------------------------------+-----------------------------------+
| Advantages                        | Challenges                        |
+-----------------------------------+-----------------------------------+
| The United States accounts for    | High tariff barriers, strict      |
| the overwhelming majority of      | sanitary/ phytosanitary           |
| Jamaica's annual tourist          | requirements, burdensome labeling |
| arrivals, creating demand for     | and other standards, and strong   |
| U.S. high-value products (fruits  | government support for domestic   |
| and vegetables, wines, beef,      | agriculture have caused most fast |
| etc.).                            | food franchises to revert to some |
|                                   | local products, e.g., beef,       |
| U.S. fast food franchises have    | fruits and vegetables, chicken    |
| already dominated Jamaica's       | and fish.                         |
| restaurant segment and continue   |                                   |
| to enter the market.              | Higher prices for U.S. products   |
|                                   | (e.g., wines, beers and frozen    |
| The proximity of Jamaica to the   | French fries) have caused U.S.    |
| U.S., the prevalence of U.S.      | products to lose market share to  |
| cable television, and travel has  | cheaper products from Canada,     |
| created a distinct preference for | Chile, Italy, New Zealand and     |
| U.S. foods and other consumer     | domestic production.              |
| goods in Jamaica.                 |                                   |
|                                   | Inefficient customs procedure and |
| Seasonality of domestic           | inadequate refrigeration          |
| production and inconsistent       | facilities at the port of entry   |
| quantity and quality of local     | have reduced the quality of       |
| products creates opportunity for  | imported perishable products and  |
| imported products in the HRI      | increased final prices to         |
| sector during certain periods.    | consumers.                        |
|                                   |                                   |
| The growth of the tourism         | Green Globe Certification         |
| industry and the services sector  | influences hotels in favor of     |
| in general fuels greater demand   | certain local food and beverages. |
| for imported products.            |                                   |
|                                   | Advances in CARICOM negotiations  |
| Increasing direct importation by  | will allow cheaper products       |
| large hotel chains and fast food  | (breakfast cereals, bakery        |
| franchises.                       | products, fish and rice) from     |
|                                   | other CARICOM countries to        |
|                                   | dominate the Jamaican market.     |
+-----------------------------------+-----------------------------------+

**II. Road Map For Market Entry**

**a. Entry Strategy**

The best way to enter the hotel and traditional/fine dining restaurants
segments of the Jamaican HRI food service sector is through an
institutional-type local representative. Most independent hotels either
do not import or import smaller quantities of specialty products that
would not be economical for a local distributor to focus on. Direct
sales to local hotel chains can be successful, since in some cases the
local purchasing department acts on behalf of branches in other parts of
the Caribbean. Most fast food restaurants are involved in direct import
and, as such, the best way to enter the fast food segment is direct
sales.

Most traditional restaurants procure a wide variety of imported products
from local intermediaries at frequent intervals due to the small
quantities demanded. In addition to careful pricing strategies and
follow-up product support on the part of the U.S. exporter, the success
of imported products in the HRI sector is highly dependent on the
intermediary's knowledge of and focus on institutional distribution.

**b. Market Structure**

The market structure of Jamaica's HRI food service sector has changed
slightly over the past three years, but is still very simple and
straightforward.

###### Structure of the HRI Sector

The three major changes in the structure of the HRI sector \-- the
increasing direct importation by larger hotels, increased proportion of
all-inclusive hotels in the total hotel stock, and the increased
emphasis on environmental/eco-tourism -- has resulted from three major
factors:

1\. Market liberalization and increasing price competition from
all-inclusive hotels.

2\. The continuous aggressive expansion, promotion and positioning of
the all/super-inclusive concept by Jamaica's two largest hotel chains -
Sandals and Couples Resorts- and the increasing demand for these
products/services by North American visitors.

3\. The introduction of Green Globe Certification as a marketing tool in
the tourism industry.

Since the late 1990\'s, all-inclusive hotels have outgrown other hotels
by 4.25 percent compared to 2.3 percent. The growth in the number of
all-inclusive hotels has exerted pressure on the entire hotel sector to
reduce overall cost, and particularly the cost of food and beverages to
consumers. To achieve cost competitiveness, approximately 30 percent of
the larger hotels, a few with elaborate storage facilities, have started
direct importation of consolidated containers of less perishable food
products and specialty items that are not available from local
intermediaries. Large chain hotels, some with a Caribbean network,
import products directly through a central purchasing department. Most
hotels still rely on local importers, due to the lack of adequate
storage facilities, low quantities demanded of individual products and
lack of specialized skills to effectively handle import procedures and
logistics.

In the Jamaican tourism industry, the highly desired Green Globe
Certification, an eco-tourism thrust, has being changing all aspects of
hotel's operations, from architectural design, equipment and
furnishings, food and beverage procurement to sporting activities. The
certification is based fundamentally on a holistic approach to
environmental preservation and tourism. Under the Green Globe
Certification, hotels are encouraged to, *inter alia*, maximize the use
of local products, particularly food and beverages. This has sparked an
increased propensity by certified hotels to procure products of domestic
origin. Five of Jamaica's larger hotels are Green Globe certified and
several others are modifying operations to fulfill the certification
criteria. The Green Globe concept is widely embraced as an effective
tool in targeting the European market.

Local products are typically procured from large highly integrated food
processing companies in the case of meat, fisheries products, and frozen
and canned products. Fresh fruits and vegetables are procured through
agricultural marketing agencies, e.g., the Jamaica Agricultural Society
and Rural Agricultural Development Authority. Fast food restaurants
acquire local products from food processors and local intermediaries.

**c. Sub Sector Profile**

**Hotels and Resorts**

During 2002, hotels accounted for 69 percent of Jamaica's total tourist
accommodation, resort villas 15.5 percent, guesthouses 10.86 percent,
and apartments 4.35 percent. The total stock of hotel rooms stood at
16,986 during 2002, with all-inclusive and non all-inclusive accounting
for 59.84 and 40.16 percent, respectively. The expected completion of a
450-room RIU hotel and a 360-room Sandals hotel during 2004 should
accelerate the 1.4 percent growth in hotel rooms during 2003 to over 4.4
percent during 2004. Growth in hotel room is expected to remain within
the range of 4 to 5 percent per year over the next three years, reaching
a total stock of approximately 20,2386 by 2006/7. Local hotel chains,
which are well represented in the stock of hotel accommodation, have
being expanding into other Caribbean markets, such as the Bahamas, Cuba,
and the Eastern Caribbean. Most existing properties in Jamaica have
embarked on ongoing renovation and expansion instead of constructing
entirely new properties.

With most hotels currently running occupancy levels of 90 percent, the
momentum experienced in the industry during 2003 is expected to continue
through 2004. The tourism sector, backed by concerted private and public
sector support, is expected to remain a primary growth area in the
Jamaican economy, presenting enormous opportunities for the consumption
of high-value imported products. In addition to private investment in
the tourism sector, public sector efforts to develop Jamaica's south
cost into a main tourism area will greatly accelerate growth in the
sector. International business and leisure travel drives overall growth
in the tourism sector and food and beverage consumption. With U.S.
visitors accounting for the overwhelming majority of tourist arrivals to
Jamaica, total consumption of food and beverage in the hotel/resort
sub-sector will continue to be skewed in favor of U.S. products.

**Company Profile**

+--------------+--------------+-----------+-----------+--------------+
| **Name of    | **Location** | **Number  | ## To     | **Purchasing |
| hotel/       |              | of        | tal Rooms | Agents**     |
| Resort**     |              | Hotels**  |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Jamaica      | Ocho Rios    | 1         | 720       | Dir          |
| Grande       |              |           |           | ect/Importer |
+--------------+--------------+-----------+-----------+--------------+
| Halfmoon     | Montego Bay  | 1         | 419       | Dir          |
| Hotel        |              |           |           | ect/Importer |
+--------------+--------------+-----------+-----------+--------------+
| FDR          | Runaway Bay/ | 2         | 172       | Importer     |
|              | Trelawny     |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Holiday Inn  | Montego Bay  | 1         | 500       | Importer     |
+--------------+--------------+-----------+-----------+--------------+
| Super Clubs: |              |           |           | Dir          |
|              |              |           |           | ect/Importer |
+--------------+--------------+-----------+-----------+--------------+
| Grand Lido   | Neg          | 2         | 582       | N/A          |
|              | ril/Trelawny |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Hedonism     | Negril /     | 2         | 514       | N/A          |
|              | Runaway Bay  |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Breezes      | Montego Bay/ | 2         | 400       | N/A          |
|              | Runaway Bay  |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Wyndham      | Montego Bay  | 1         | 487       | Importer     |
+--------------+--------------+-----------+-----------+--------------+
| Sandals &    | Ocho Rios /  | N/A       | 2,315     | Dir          |
| Beaches      | Montego Bay  |           |           | ect/Importer |
| Resorts      |              |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| Couples      | Negril/ Ocho | 3         | 577       | Importer     |
| Resort       | Rios         |           |           |              |
+--------------+--------------+-----------+-----------+--------------+
| RIU          | Negril       | 1         | 396       | Importer     |
+--------------+--------------+-----------+-----------+--------------+

**Restaurants**

  -------------- -------------- -------------- -------------- -----------------
  **Name of      **Type**       **Location**   **Number of    **Purchasing
  Restaurant**                                 outlets**      Agents**

  Wendys         Fast Food      Kingston       2              Importer

  Kentucky Fried Fast Food      Country wide   22             Direct/Importer
  Chicken                                                     

  Pizza Hut      Fast Food      Kingston       4              Direct/Importer

  McDonalds      Fast Food      Kingston/      8              Direct/Importer
                                Montego Bay/                  
                                St. Catherine                 

  Island Grill   Fast Food      Country Wide   10             Importer

  Norma\'s       Traditional    Kingston       2              Importer
                 Family Type                                  

  Rib Cage       Steak House    Kingston       1              Direct/Importer

  Bull\'s Eye    Steak House    Kingston /     2              Direct/Importer
                                Montego Bay                   
  -------------- -------------- -------------- -------------- -----------------

Fast food restaurants are the single largest segment of the restaurants
sub-sector in Jamaica and provide excellent marketing opportunities for
U.S. high-value food products. Fast food restaurants account for an
estimated 48 percent of total expenditure on meals-away-from-home,
amounting to US\$233 million during 2002. Despite the recent declines in
consumption of meals-away-from-home, for some U.S. franchises demand
customarily exceeds supply during peak hours, limiting the availability
of certain augmented services such as home delivery. In Jamaica, fast
food restaurants, with relatively less expensive products, provide a
convenient and cost effective alternative to certain types of
traditional restaurants. The concept also provides an opportunity for
low to middle income consumers who desire meals-away-from-home. As
Jamaican consumers continue to embrace North American culture, fast food
franchises are expected to remain strong in the Jamaican food service
market.

Over the last five years more than 30 restaurants have being added to
the stock of fast food restaurants in Jamaica and a further 20
restaurants are projected to be added within the next two to three
years. During 2001, another U.S. franchise, Churches Chicken, entered
the Jamaica market while Taco Bell exited the market. Only a small,
uneconomical portion of Jamaican consumers had developed a preference
for Taco Bell's products. TGIF (Thank God It's Friday) is slated to
enter the Jamaican market during 2004, initially with one restaurant in
Kingston. Several Jamaican restaurateurs have also expressed strong
interest in joint venture arrangements to introduce Papa John's pizza
into the Jamaica food service market.

U.S. fast food franchises are well represented in Jamaica, including
Wendy's, Burger King, Popeye's, Kenny Rogers, Kentucky Fried Chicken,
Pizza Hut, Domino's Pizza, Churches Chicken, Subway and McDonald's. Two
of the most successful local fast food chains, Island Grill and Mother's
Restaurant, have experienced reasonable success and expansion. Island
Grill, which boasts mostly local Jamaican cuisine, has doubling its
total outlets from 5 to 10 restaurants and is now competing directly
with the major U.S. franchises. Since opening in 1981, Mother's
Restaurant, a hybrid of local and U.S.-type fast food products, has
expanded by an average of one new store per year, totaling 22
restaurants across the country. Other local restaurants have recently
entered the market and are capturing market share by virtue of their
delivery services. In a highly competitive Jamaican fast food restaurant
market, most U.S. franchises have modified their menu to meet Jamaican
consumers' taste preferences.

It is the general belief by fast food operators, that, while certain
segments of the market in the corporate and resort areas are maturing,
there are still underserved market segments, particularly in the eastern
and western provinces and certain corporate areas that are usually
ignored because of social instability.

While mid-level restaurants have lost market share to fast food
franchises, fine dining restaurants, which are very few in numbers, are
thriving on the country's income disparity, demographic profile
(youthfulness) of the employed labor force, and social stratification of
the society.

Fast food franchises use between 10-50 percent U.S. food products. The
major local products that are used by fast food franchises are beef,
chicken, fruit juices, vegetables, eggs and pork products. The major
imported products are potatoes, French fries, oils, sauces and salad
dressings, bakery products, chicken fillet and cheeses. High duties and
questionable sanitary/phytosanitary regulations have created a
preference for local meats, dairy products, fruits and vegetables and
eggs in the restaurants sub-sector. Fine dining restaurants depend
largely on imported high-value / specialty food products.

# Institution

The Institutions segment of the Jamaican HRI food service sector does
not present substantial opportunities for U.S. high-value exports.
Institutions demands are typically fulfilled from domestic production.

# III. Competition

In general, the primary competition to U.S. products in the HRI food
service sector is from local production. Most hotels and fast food
franchises source beef, chicken, pork, fruits and vegetables from the
domestic market. However, local products typically loose market share to
imports due to inconsistent quantity and quality. High-priced U.S. wines
have captured only a small share of the estimated US\$21 million market
for wines and other alcoholic beverages in the hotels sub-sector. The
major competitors to U.S. wines are Chile, Italy, France and Spain. In
addition to local production, high-end U.S. beef, lamb and specialty
dairy products face competition from Australia and New Zealand. Guyana
is the major competitor for U.S. seafood. French fries and whole
potatoes from the U.S. have been losing substantial market share to
price-competitive products from Canada and the Netherlands. Most sauces,
salad dressings, some fruits, vegetables, bakery products and nuts are
imported from the U.S. As U.S. products become more expensive, their
overall share of the Jamaican HRI food service market could decrease in
the medium term. Perceived value (price-quality relationship) is the
main variable in the purchase decisions, particularly for all-inclusive
hotels.

Imported food and beverages in the hotels sub-sector varies between 40
and 60 percent of total food and beverage consumption, with the U.S.
presently accounting for approximately 82 percent of total imported
products. The relative size of the restaurants sub-sector and its high
consumption of local products have drastically reduced the position of
U.S. products in the overall HRI food service sector.

**IV Best Product Prospects**

A. **Products present in the market with good sales potential**

In the Jamaican hotel and restaurant sub-sectors, there is high demand
for wine, lamb, seafood (fish, lobster, shrimp), special cut beef and
veal, pork products, pasta, nuts, cheeses, French fries, potatoes,
bakery products, sauces, vegetables and fruits (especially apples,
grapes, peaches, pears). Hotels are targeting particular groups that
will create seasonal demand for certain products, such as kosher.

**Products not present in significant quantity but which have good sales
potential.**

All sub-sectors of the Jamaican HRI sector have unmet demand for pork
products. However, the presence of Pseudo rabies in the U.S. precludes
the export of U.S. pork products to Jamaica unless they are hermetically
sealed. Specialty cheeses are not available in sufficient quantities to
hotels. The demand for seafood and kosher products is greater than
supply.

5.  Post Contact and Further Information

Foreign Agricultural Service

U.S. Embassy

1^st^ Floor - Mutual Life Building

2 Oxford Road

Kingston 5

Jamaica W.I.

Telephone: (876) 920 - 2827

Fax: (876) 920 - 2580

email: [agkingston@usda.gov]{.underline}

####### Other Sector Report

View other reports on the Jamaican market at
http[://www.fas.usda.gov]{.underline}