Required Report - public distribution

**Date:** 9/15/2004

**GAIN Report Number:** CO4011

CO4011

**Colombia**

**Retail Food Sector**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)David J. Mergen

U.S Embassy

**Prepared by:**

Luz de Hernandez, Contractor

**Report Highlights:**

Colombia is our largest export market in Central and South America for
food and agricultural products. In 2003, U.S. supplied 29 percent,
\$543.2 million, of the total food and agricultural Colombian Imports.
Colombian economy is recovering and domestic demand and household
consumption is projected to increase by 3.3 percent in 2004. The
supermarket sector is expanding, and a wider offer of imported value
added food products are been displayed. The U.S. - Colombia free trade
agreement, currently in negotiations, will increase bilateral trade.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Bogota \[CO1\]

\[CO\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Economic Outlook 5](#economic-outlook)

[Market Overview 6](#market-overview)

[Market structural changes in the retail sector
12](#market-structural-changes-in-the-retail-sector)

[Market structure and sub-sector profile
20](#market-structure-and-sub-sector-profile)

[Hypermarkets and Supermarkets 20](#hypermarkets-and-supermarkets)

[Mom'n Pop / Traditional Markets 23](#momn-pop-traditional-markets)

[Gas Marts 24](#gas-marts)

[Wet Markets 25](#wet-markets)

[Best Product Prospects 27](#best-product-prospects)

[Related Reports 28](#related-reports)

[Post Contact Information 28](#post-contact-information)

# Executive Summary

In 2003, total Colombian food and agricultural imports were \$1.87
billion of which the United States accounted for 29 percent or \$543.2
million of the total, making Colombia our largest export market in
Central and South America. The 2004 economic outlook appears brighter
now than during previous years. The GDP target is a 4.2% growth rate for
2004, and 4.5% for 2005. Domestic demand and household consumption are
projected to increase by 3.3 and 2.8 percent, respectively, in 2004 and
to continue rising. The remarkably young population, 70 percent of which
lives in urban areas, has new tastes and preferences and is more
health-conscious and selective. With rising participation of women in
the workforce and greater use of fast food restaurants, demand for new
high-value products is increasing. Economic realities and current
consumer trends indicate that buying decisions are increasingly based on
quality and price. There is a general perception that U.S. products are
of good quality and value. Also, Colombia is considered a gateway to
much of South America, increasing its importance as a market for U.S.
consumer food products. The importance of Colombia as a market will
expand even more under the bilateral free trade agreement currently
being negotiated.

The supermarket sector in Colombia is one of the most modern in Latin
America, with preliminary sales estimates of **\$**7.1 billion in 2003,
of which \$4.9 billion were food products. Despite significant growth,
fierce competition characterized Colombia's retail sector in 2003,
causing a shrinkage in profits. Consumers have benefited from the "price
war" among competitors. The sector is consolidating a massive structural
change initiated in recent years. Strategic alliances, such as
Carulla-Vivero, took place in a frantic effort to modernize and capture
market share. World-class hypermarkets, such as Makro and Carrefour,
made their first incursions into the country in 1998 and continue to
expand. Carrefour´s marketing strategies led it to a larger market share
and a strong position in the industry. In 2003 Carrefour purchased 35%
of the stocks held by the Grupo Santodomingo and 10% of those owned by
the Spanish company Sigla, ending up with a 100% ownership of the chain
in Colombia. Other significant acquisitions, such as the purchase of 28
percent of Carulla by the U.S.based New Bridge, and of 28.6% of Exito by
Casino (a French enterprise) have reshaped the sector. Exito had
previously bought out the Cadenalco group, one of it's largest rivals,
and in 2003 acquired the Comfamiliar chain; Olimpica in turn, purchased
the Febor chain (former Central Bank employees Fund). Furthermore, the
arrival of French giant Carrefour and Holland retailer Makro in
Colombia, as well as the sustained strength of local players such as
Exito, Carulla, Alkosto, Olimpica, Colsubsisio and Cafam, have unleashed
a wave of concentration in 50 percent of the retail market. On the other
hand, convenience stores are a new sales venue and are expanding in the
form of GasMarts. As a result, supply channels have been rapidly
streamlined, and end-users are increasingly establishing contacts
abroad. Colombian importers are constantly seeking alternatives to
reduce high costs. The new retail market structure in Colombia and the
production-consumer chain has forced distributors/suppliers to switch
from being passive to active agents.

Despite rapid modernization in the retail sector, traditional Mom \'n
Pop stores continued to consolidate as one of the most important
distribution channels in the country. They have regained the near 50
percent of the market share they had in the past, at the expense of the
market tigers and have been extremely resilient in the face of massive
modernization in the sector. This is because the hyper/supermarkets, do
not offer services, such as credit, small-quantity sales of bulk
products, and a proximity that appeals to the vast number of middle and
lower-income consumers. Likewise, they are expanding in a format of
minimarkets that are effectively competing with supermarkets.

Several factors produce a negative impact on the market: 1. As a member
of the Andean Community, Colombia imposes a variable import duty system
on more than 140 product categories, resulting in high and unpredictable
duties. 2. Restrictive import licensing and domestic procurement
requirements hinder or block imports of a number of U.S. products such
as dairy products and beef products. 3. Despite GOC efforts,
artificially low-priced contraband produces unfair competition and
disrupts sales of legally imported products, and 4. Internal conflict
continues hindering economic growth.

However, the outlook for 2004 is excellent. Additional factors are
expected to contribute to further expansion of the retail food market:
market leaders are investing in construction of new modern shopping
centers in which super/hypermarkets and cinemas are the cardinal points;
sales areas of between 6,000 and 12,000 sq meters, offer a complete
range of products and fulfill the increasing demand for one-stop
shopping. Investment also includes state of the art technology, tailored
logistics to save consumers time and money, remodeling and improvement
of service areas. Total investment will be nearly USD 172 million
reinforcing the growth of the sector in the last three years. The target
now is to reach low-income consumers: the aggregate of low income
population has quite a large budget to spend in massive consumption
products, which are less sensitive to family earning declines.

Colombia and the United States will start negotiations for a bilateral
free trade agreement in the second quarter of 2004, which could enter
into force by 2006. It will promote equitable & sustainable economic
growth for Colombia and foster greater access for US food products.

# Economic Outlook

![](media/image2.wmf){width="2.914566929133858in"
height="2.5098425196850394in"}![](media/image3.wmf){width="2.839763779527559in"
height="2.546456692913386in"}![](media/image4.wmf){width="2.914566929133858in"
height="2.349212598425197in"}![](media/image5.wmf){width="3.044488188976378in"
height="2.27992125984252in"}

![](media/image6.wmf)

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*\*Projections*

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# Market Overview

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![](media/image8.wmf){width="4.906299212598425in"
height="2.7661417322834647in"}![](media/image9.wmf){width="3.4901574803149606in"
height="4.5in"}

# Colombian Food Production

![](media/image10.wmf)

# 

![](media/image11.wmf)

2002-2003 Food and Agricultural Imports from USA

+------------------+-------+-------+----------------+-------+-------+
| **PRODUCT**      | **2   | **2   | **PRODUCT**    | **2   | **2   |
|                  | 002** | 003** |                | 002** | 003** |
+------------------+-------+-------+----------------+-------+-------+
|                  | **U   |       |                | **U   |       |
|                  | S\$** |       |                | S\$** |       |
|                  |       |       |                |       |       |
|                  | *     |       |                | *     |       |
|                  | *MILL |       |                | *MILL |       |
|                  | ION** |       |                | ION** |       |
+------------------+-------+-------+----------------+-------+-------+
| Meat and Edible  | 7.9   | 4.2   | Gums, Resins,  | 5.4   | 6.6   |
| Meat Offals      |       |       | Other          |       |       |
|                  |       |       | Vegetable      |       |       |
|                  |       |       | Saps/ Extracts |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Fish, Shellfish, | 0.7   | 0.4   | Vegetable      | 0.4   | 0.5   |
| Mollusks         |       |       | Planting       |       |       |
|                  |       |       | Materials      |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Dairy Products,  | 1.0   | 1.2   | Animal or      | 16.9  | 16.3  |
| Eggs, Honey      |       |       | Vegetable Fats |       |       |
|                  |       |       | and Oils       |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Products of      | 3.1   | 2.8   | Preparations   | 12.1  | 12.8  |
| Animal Origin    |       |       | of Meat and    |       |       |
| and other Animal |       |       | Fish           |       |       |
| Products         |       |       |                |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Live Trees and   | 3.6   | 3.0   | Sugars and     | 3.5   | 3.0   |
| Plants, Bulbs,   |       |       | Confectionery  |       |       |
| Roots            |       |       | Products       |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Edible           | 1.7   | 1.6   | Cocoa and      | 2.5   | 1.9   |
| Vegetables and   |       |       | Cocoa          |       |       |
| Tubers           |       |       | Preparations   |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Edible Fruits    | 8.0   | 7.9   | Cereal         | 12.9  | 2.8   |
| and Nuts, Citrus |       |       | Preparations,  |       |       |
| Fruits           |       |       | Flour,         |       |       |
|                  |       |       | Starches,      |       |       |
|                  |       |       | Milk, Bakery   |       |       |
|                  |       |       | products.      |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Coffee, Tea, and | 0.1   | 0.2   | Preparations   | 5.9   | 3.7   |
| Spices           |       |       | of Vegetables, |       |       |
|                  |       |       | Fruits         |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Grains           | 327.0 | 323.6 | Miscellaneous  | 16.0  | 15.6  |
|                  |       |       | Edible         |       |       |
|                  |       |       | Preparations   |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Milling Industry | 0.3   | 0.3   | Beverages,     | 1.0   | 0.6   |
| Products, Malt,  |       |       | Spirits and    |       |       |
| Starches         |       |       | Vinegar        |       |       |
+------------------+-------+-------+----------------+-------+-------+
| Oilseeds, Other  | 53.9  | 35.9  | Residues and   | 32.9  | 40.1  |
| Grains           |       |       | Waste from     |       |       |
|                  |       |       | Food           |       |       |
|                  |       |       | Industries     |       |       |
|                  |       |       | /Prepared      |       |       |
|                  |       |       | By-Products    |       |       |
+------------------+-------+-------+----------------+-------+-------+

Source: DIAN (Revenue and Customs Agency).

# Main U.S. Food Products Imported

+--------------------------------------------------------+-------------+
| **Products**                                           | ######## US |
|                                                        | \$ Millions |
+--------------------------------------------------------+-------------+
| Fresh fruits (apples, pears, plums, oats, peaches)     | 28.5        |
+--------------------------------------------------------+-------------+
| Mechanically deboned chicken                           | 13.1        |
+--------------------------------------------------------+-------------+
| Denaturalized tallow                                   | 10.5        |
+--------------------------------------------------------+-------------+
| Chocolate in blocks, slabs or bar                      | 9.1         |
+--------------------------------------------------------+-------------+
| Miscellaneous food preparations                        | 7.4         |
+--------------------------------------------------------+-------------+
| Sweet biscuits                                         | 5.8         |
+--------------------------------------------------------+-------------+
| Brewing or distilling dregs& waste                     | 4.7         |
+--------------------------------------------------------+-------------+
| Other pork meat                                        | 4.7         |
+--------------------------------------------------------+-------------+
| Enhancers for bakery products                          | 4.4         |
+--------------------------------------------------------+-------------+
| Dog and cat food                                       | 4.2         |
+--------------------------------------------------------+-------------+
| Vegetable saps & extracts of hops                      | 4.2         |
+--------------------------------------------------------+-------------+
| Food preparation protein concentrated                  | 4.1         |
+--------------------------------------------------------+-------------+
| Poultry cuts and offal, frozen                         | 3.1         |
+--------------------------------------------------------+-------------+
| Mixture of juices                                      | 2.9         |
+--------------------------------------------------------+-------------+
| Other fish, prepared, preserved, frozen fillets        | 2.7         |
+--------------------------------------------------------+-------------+
| Other edible offal of pork                             | 2.1         |
+--------------------------------------------------------+-------------+
| Glucose                                                | 1.8         |
+--------------------------------------------------------+-------------+
| Bovine edible flours and meals of meat/meat offal's    | 1.4         |
+--------------------------------------------------------+-------------+
| Mixed condiments and mixed seasonings                  | 0.9         |
+--------------------------------------------------------+-------------+
| Lactose                                                | 0.9         |
+--------------------------------------------------------+-------------+
| Breakfast cereals                                      | 0.8         |
+--------------------------------------------------------+-------------+
| Hog guts for sausage casings                           | 0.7         |
+--------------------------------------------------------+-------------+
| Sunflower oil                                          | 0.7         |
+--------------------------------------------------------+-------------+
| Milk preparations for infant use                       | 0.6         |
+--------------------------------------------------------+-------------+
| Chewing gum                                            | 0.6         |
+--------------------------------------------------------+-------------+
| Milk and cream                                         | 0.5         |
+--------------------------------------------------------+-------------+
| Frozen crabs                                           | 0.5         |
+--------------------------------------------------------+-------------+
| Sparkling wine                                         | 0.5         |
+--------------------------------------------------------+-------------+
| Mayonnaise                                             | 0.4         |
+--------------------------------------------------------+-------------+
| Dry onions                                             | 0.4         |
+--------------------------------------------------------+-------------+
| Other vegetable preparations                           | 0.4         |
+--------------------------------------------------------+-------------+
| Nuts, peanuts, preserved, prepared                     | 0.3         |
+--------------------------------------------------------+-------------+
| Sweet corn, prepared.                                  | 0.3         |
+--------------------------------------------------------+-------------+
| Other dry vegetables                                   | 0.3         |
+--------------------------------------------------------+-------------+
| Mustard                                                | 0.1         |
+--------------------------------------------------------+-------------+
| Ketchup and tomato sauces                              | 0.1         |
+--------------------------------------------------------+-------------+
| Cheeses                                                | 0.2         |
+--------------------------------------------------------+-------------+
| Turkey meat, prepared , preserved                      | 0.2         |
+--------------------------------------------------------+-------------+

Source: Ministry of Industry, Foreign Trade and Tourism

# 

# Market Situation for Retail Food Products

![](media/image12.wmf){width="6.551574803149606in"
height="1.9708661417322835in"}![](media/image13.wmf){width="6.666535433070866in"
height="1.9716535433070865in"}

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# Distribution Channels

# Market structural changes in the retail sector

# 

+-----------------------+----------------------------------------------+
| Structural changes    | Arrival of international competitors.        |
| and consolidation are |                                              |
| occurring rapidly     | Alliances, mergers and acquisitions.         |
|                       |                                              |
|                       | New business paradigms.                      |
|                       |                                              |
|                       | Changing consumer lifestyles.                |
+-----------------------+----------------------------------------------+
| International         | Hypermarkets Makro and Carrefour have        |
| competitors have      | brought in new formats, forcing the local    |
| shaken the market     | market to adjust and become more competitive |
|                       | and creative. Competition among big retail   |
|                       | players is cutthroat.                        |
+-----------------------+----------------------------------------------+
| Foreign alliances are | Alliances such as Carulla-New Bridge,        |
| reshaping the market  | Crunch-Frito Lay, Unilever-Varela- Disa-Best |
|                       | Foods, Noel-Bimbo-Danone, Exito              |
|                       | Cadenalco-Casino, among others, have given   |
|                       | new dimensions to major players, i.e.,       |
|                       | know-how, power negotiation, market          |
|                       | distribution network and capital leverage.   |
+-----------------------+----------------------------------------------+
| In-house alliances,   | Chain stores have strengthened their         |
| mergers and           | negotiating and market-position leverage     |
| acquisitions to       | through strong vertical integration.         |
| become more           |                                              |
| competitive           |                                              |
+-----------------------+----------------------------------------------+
| New paradigms for     | Core businesses, category management and     |
| businesses            | private labels.                              |
|                       |                                              |
|                       | Internet, telemarketing and supermarket      |
|                       | home-delivery.                               |
|                       |                                              |
|                       | Direct purchases a must.                     |
|                       |                                              |
|                       | GasMarts making their presence felt in the   |
|                       | market.                                      |
+-----------------------+----------------------------------------------+
| Changing shopping     | Better-informed and more demanding           |
| habits and patterns   | consumers.                                   |
|                       |                                              |
|                       | Consumers expanding their food consumption   |
|                       | experience.                                  |
|                       |                                              |
|                       | Consumers choose hypermarkets for precooked, |
|                       | pre-packaged, and frozen products.           |
|                       |                                              |
|                       | More consumers shop at supermarkets, and     |
|                       | less at wet markets.                         |
|                       |                                              |
|                       | One to three visits per month to the         |
|                       | supermarket for a wide variety of            |
|                       | high-quality and safe food products at low   |
|                       | prices, supplemented by several trips to     |
|                       | mom'n pop and specialty shops for daily      |
|                       | products.                                    |
+-----------------------+----------------------------------------------+
| Geographical          | Concept of exclusive regional influence has  |
| expansion             | been eliminated.                             |
+-----------------------+----------------------------------------------+
| New markets niche     | Rural areas are being explored as a new      |
|                       | market niche for mass consumption products.  |
|                       | The goal is to move markets closer to rural  |
|                       | consumers and open rural-to-urban direct     |
|                       | marketing as an alternative to traditional   |
|                       | channels.                                    |
+-----------------------+----------------------------------------------+

**The Economic Groups in the Food Industry**

Successful Alliances, Mergers and Acquisitions

The \"Antioqueno Conglomerate\" Example

National de Chocolates Total portfolio amounts to USD 440.4 million of
which 74% (USD 325.9 million) is concentrated in the Food Industry

![](media/image14.wmf){width="6.502777777777778in"
height="3.609722222222222in"}

Advantages for U.S. Companies and Products

  -----------------------------------------------------------------------
  The Colombian supermarket industry is one of the most modern and
  sophisticated in Latin America.

  Colombia ranks third in the list of 11 emerging countries included in
  the index of "Global Development Retail sales". Among others are Chile,
  Mexico, Russia, Venezuela and China

  Total imports From the U.S., historically Colombia's number-one
  supplier, account for 29% (\$543 Million) of food and agricultural
  products.

  Locally established multinational firms are taking advantage of their
  brand names to position new imported products.

  There is a general perception that U.S. products are of good quality
  and value. Many Colombians have traveled and studied abroad and have
  developed a taste for U.S. products.

  The readjustment of the retail market is paving the way for the " new
  retail market structure" in Colombia. The minimarket format is a new
  and strong competitor of "Mon and Pop" stores and hyper/supermarkets.

  Major retailers have had a great expansion in the last few years. The
  trend is to continue geographical expansion. They are now present in
  major Colombian cities. The market share of hyper/supermarkets is 50%.
  They have lost some ground but continue to grow in number and square
  meters. They are increasingly offering imported food products.

  Hyper/supermarkets continue to consolidate as one of the most important
  distribution channels in the country. Many chains have gained greater
  negotiation power with manufacturers, giving them access to continuous
  price promotions and marketing activities.

  GasMart stores are readjusting their line of products. Besides snack
  foods, candy, soft drinks, ready-to-heat and ready-to-eat products,
  dairy products and cereals, they are focusing on fast food sales. Good
  market potential for new products. Imported products represent less
  than 10% of total products.

  Nearly 60% of the Colombian population is under 30 years of age and has
  been exposed to changing lifestyles. The remarkably young population,
  70 percent of which lives in urban areas, has new tastes and
  preferences and is more health-conscious. With rising female
  participation in the workforce and more fast food outlets, demand for
  new high-value products is increasing.

  Upscale and middle-income Colombian families are eating out more
  frequently, at least twice a month, devoting 24% of food spending for
  meals away from home. Fast food restaurants stand out as winners in the
  last three years.

  Information and technology have become strong tools for food marketing.
  The uniform Product Code and scanners at point of sales have been
  fundamental to collaborative planning, forecasting and replenishment
  aimed at increasing profitability and stock control.

  On line services are becoming popular. Retail leaders have renewed the
  online sales service with last e-business technology. This service is
  offered both domestically and abroad and covers around 90 percent of
  Colombian municipalities. Nearly 30 percent of customers are
  foreigners.

  A Voluntary Good Conduct Business Code was signed by industrial
  associations, suppliers, producers, hyper/supermarkets and other
  retailers, aimed at establishing fair and well-defined trading rules.
  It is a self-regulatory code that tends to avoid all existing
  complaints about unfair purchasing/ advertising/pricing practices and,
  discriminatory policies.
  -----------------------------------------------------------------------

# Challenges to U.S. Companies and Products

+-----------------------------------------------------------------------+
| Consumption of processed food is low, according to international      |
| standards and highly sensitive to price. A relatively new trend in    |
| Colombia is an increasingly strong demand for gourmet products and a  |
| growing popularity of wine which reflects a change in lifestyle.      |
+-----------------------------------------------------------------------+
| Importers demand competitive prices, good quality and consistent      |
| supply availability.                                                  |
+-----------------------------------------------------------------------+
| Category management practices by stores, including charging slotting  |
| fees for products, are overhead costs to be expected. Probably 60% of |
| price discounts are absorbed by the supplier.                         |
+-----------------------------------------------------------------------+
| The shift from essential to high-quality foods is continuing. But     |
| faced with economic difficulties, a good number of consumers opt to   |
| trade down to less expensive options of basic products. Consequently, |
| manufacturers have made great efforts in launching low-priced         |
| products and offering price promotions for well-known products. A     |
| surplus of ordinary low-priced food products coexists with a shortage |
| of high-quality food products. Colombians are now selective shoppers. |
+-----------------------------------------------------------------------+
| Consumer prices for food and beverage have declined more than total   |
| consumer price index. "Price War" among retailers has become a        |
| permanent tool to maintain market share and increase sales.           |
+-----------------------------------------------------------------------+
| Colombian consumers are now either time-constraint consumers who seek |
| good quality and essential products, or "cherry pickers" who are      |
| after sales and discount products. The excesses of the "price war"    |
| have become a burden to suppliers.                                    |
+-----------------------------------------------------------------------+
| U.S. products will have to assure high quality, reasonable price and  |
| good service to meet increasing competition from other foreign        |
| products. Category management practices by stores, including charging |
| slotting fees for products, are overhead costs to be expected.        |
+-----------------------------------------------------------------------+
| Alliances with European chains stores, such as Casino and Danone,     |
| have intensified competition. The presence of Makro and Carrefour has |
| brought in a wide selection of high-quality, competitively priced     |
| foreign products to the market.                                       |
+-----------------------------------------------------------------------+
| Investment in new outlets continues as part of the effort to          |
| penetrate regional markets and attract unattended consumers. During   |
| the 1968-2002 period, the top four hypermarkets invested more than    |
| US\$ 800 million.                                                     |
+-----------------------------------------------------------------------+
| In 2004 total investment will be near USD 172. Market leaders are     |
| investing in construction of modern shopping centers in which         |
| super/hypermarkets and cinemas are the cardinal points. Investment    |
| also includes state of the art technology, logistics, remodeling and  |
| improving service areas. Olimpica will be at "Centro Portal de la 80" |
| in Bogota, Colsubsidio at "Unicentro de Occidente" and Almacenes      |
| Exito" at "Cuidad Victoria" in Pereira.                               |
+-----------------------------------------------------------------------+
| Private brands are expanding rapidly though still incipient and       |
| limited. They represent 2.5% of total sales. Private brand margins    |
| are higher than other brand margins (20.4%). Similarly, private brand |
| prices are 25.6% lower than third party prices. Colombia and          |
| Argentina are the countries with the fastest growth in the            |
| store-brand products category (30%) in Latin America.                 |
+-----------------------------------------------------------------------+
| Wholesalers usually work with a markup varying from 15 to 20 percent. |
| Profits margins for consumer goods may reach 20 to 30 percent.        |
| However these margins have been fallen.                               |
+-----------------------------------------------------------------------+
| The limited cold storage transportation network is still a limiting   |
| factor for the future development of the food sector. Total cold      |
| storage capacity owned by the public and private sectors is estimated |
| at 175,000 cubic feet.                                                |
+-----------------------------------------------------------------------+
| Besides the basic duty, the Andean community assesses a variable duty |
| on 13 basic commodity groups and related products. This system        |
| results in high and varying duties for a number of products,          |
| including pet food, poultry and cheese.                               |
+-----------------------------------------------------------------------+
| Other non-tariff barriers to imported products are import licensing   |
| and sanitary and phytosanitary certification (poultry).               |
+-----------------------------------------------------------------------+
| Some trade agreements with U.S. competitors make several U.S.         |
| products less competitive, such as zero import duties on wine and     |
| apples from Chile and soybeans from Paraguay.                         |
+-----------------------------------------------------------------------+
| The Colombian government has changed investment policy to attract new |
| foreign investors. Joint ventures, franchising and licensing          |
| agreements are increasing in number and value.                        |
+-----------------------------------------------------------------------+
| The import process still has many layers. However, the GOC has        |
| introduced key modifications to simplify the paperwork significantly. |
| Furthermore, as of June 2004, the import declaration form will be     |
| eliminated but other requirements remain. Import/export procedures    |
| and customs clearances have become almost virtual. Documents are to   |
| be presented through electronic or magnetic media.                    |
|                                                                       |
| Nonetheless, registration of new products with INVIMA can sometimes   |
| take a long time.                                                     |
+-----------------------------------------------------------------------+
| Despite GOC efforts, artificially low-priced contraband products      |
| still produce a climate of unfair competition and disrupt sales of    |
| legally imported products.                                            |
+-----------------------------------------------------------------------+

**Illustrative Import Duties for Food Products**

  --------------------------------------- ---------------- ---------------
  **Products**                            **Basic Duty %** **Basic Plus
                                                           Variable %\***

  Chicken Parts, Frozen Turkey            20               66
  Parts/Duck/Goose                                         

  Pet Food                                20               5

  Powdered Milk/Cheese                    20               20

  Wine/Beer                               20               none

  Fruits/Vegetables                       15               none

  Raw Coffee, Tea and Spices              10               none
  --------------------------------------- ---------------- ---------------

\*As of May 31^st^, 2004

**Market Entry Strategy**

General guidance to access the Colombian food market, enhance
competitive sales position of food products in Colombia and introduce
new products:

**Market Entry Strategy**

**Importers and Distributors**

# Illustrative List of Main Importers and Distributors

+----------------+-----------------+---+----------------+----------------+
| **Importer**   | **Product**     |   | **Importer**   | **Product**    |
+----------------+-----------------+---+----------------+----------------+
| Effem Colombia | Pet food,       |   | Quala          | Meat,          |
|                | confectionary   |   |                | vegetables     |
+----------------+-----------------+---+----------------+----------------+
| Provyser       | Processed       |   | Frito Lay      | Food           |
|                | inputs for fast |   |                | preparations,  |
|                | food            |   |                | seasonings,    |
|                |                 |   |                | cereals        |
+----------------+-----------------+---+----------------+----------------+
| Frutcom S.A.   | Fresh fruits    |   | Ancla y Viento | Seafood        |
+----------------+-----------------+---+----------------+----------------+
| Burns Philp    | Bakery          |   | Procaps        | Juices,        |
| Colombia       | enhancers       |   |                | vegetables,    |
|                |                 |   |                | vegetable oils |
+----------------+-----------------+---+----------------+----------------+
| Bazaar         | Walnuts,        |   | Congrupo       | Pop corn,      |
| International  | anchovies,      |   |                | sauces,        |
|                | olives, sauces, |   |                | cheeses,       |
|                | olive oil       |   |                | vinager        |
+----------------+-----------------+---+----------------+----------------+
| Pacific        | Fish fillets,   |   | Rica Rondo     | Sausages,      |
| Seafood        | crustaceans     |   |                | meat/poultry   |
|                |                 |   |                | offal          |
|                | Ginger.         |   |                |                |
+----------------+-----------------+---+----------------+----------------+
| Insualim       | Spices, dry     |   | Nabisco Royal, | Peanuts,       |
|                | onions, walnut  |   | Inc.           | sweets,        |
|                |                 |   |                | biscuits,      |
|                |                 |   |                | pastry         |
+----------------+-----------------+---+----------------+----------------+
| Pesquera       | Seafood         |   | Fedco          | Line of        |
| Jaramillo      |                 |   |                | processed food |
|                |                 |   |                | products       |
+----------------+-----------------+---+----------------+----------------+
| DISNACO        | Beer            |   | Productos      | Juices         |
|                | (Budweiser),    |   | Naturales de   |                |
|                | Gatorade        |   | Cajica         |                |
+----------------+-----------------+---+----------------+----------------+
| Co             | Fresh and       |   | Graffith de    | Broths,        |
| mercializadora | frozen          |   | Colombia       | vegetables,    |
| Nacional de    | vegetables      |   |                | spices         |
| Alimentos      |                 |   |                |                |
+----------------+-----------------+---+----------------+----------------+
| Agrodex        | Cheese,         |   | Colanta        | Juices, frozen |
|                | poultry/turkey  |   |                | meat           |
|                | preparations,   |   |                |                |
|                | spices,         |   |                |                |
+----------------+-----------------+---+----------------+----------------+
| Franchise      | Cheese, sweet,  |   | Frigorifico    | Pork/chicken   |
| Systems de     | ham, juices,    |   | Suizo          | meat           |
| Colombia       | dry vegetables  |   |                |                |
+----------------+-----------------+---+----------------+----------------+
| Promesa de     | Breakfast       |   | Comestibles    | Pork and       |
| Colombia       | cereals         |   | Dan            | poultry meat,  |
|                |                 |   |                | frozen         |
+----------------+-----------------+---+----------------+----------------+
| Guinness UDV   | Wine, liquor    |   | Compania de    | Frozen meat    |
| Colombia       |                 |   | Galletas Noel  |                |
+----------------+-----------------+---+----------------+----------------+

# Market structure and sub-sector profile

##  Hypermarkets and Supermarkets

+------------------+------------------+-----+----------+--------------+
| **Name of        | **Ownership**    | *   | **Lo     | **Type of    |
| Retailer / Type  |                  | *\# | cation** | Purchasing   |
| of Retail        |                  | of  |          | Agent(s)**   |
| Outlet**         |                  | Out |          |              |
|                  |                  | let |          |              |
|                  |                  | s** |          |              |
+------------------+------------------+-----+----------+--------------+
| Hypermarkets     |                  |     |          |              |
+------------------+------------------+-----+----------+--------------+
| Carrefour        | 100 % France     | 12  | Bogotá,  | Importer/    |
|                  |                  |     | Cali,    | direct /     |
|                  | In 2003 Santo    |     | Pereira, |              |
|                  | Domingo Group    |     | Medellin | local        |
|                  | sold 35% and     |     |          |              |
|                  | Sigla 10% of     |     |          |              |
|                  | their shares\*.  |     |          |              |
+------------------+------------------+-----+----------+--------------+
| Alkosto          | 100% Local       | 7   | Bogotá,  | Importer/    |
|                  |                  |     | Villav   | direct /     |
|                  |                  |     | icencio, |              |
|                  |                  |     | Pasto,   | local /      |
|                  |                  |     | Ipiales  | producers /  |
|                  |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+
| Makro of         | 57% Holland      | 8   | Bogota,  | Importer/    |
| Colombia         |                  |     | Cali     | direct /     |
|                  | 43% Antioqueno   |     | P        |              |
|                  | Group            |     | ereira,M | local /      |
|                  |                  |     | edellin, | producers /  |
|                  |                  |     | Barr     | distributors |
|                  |                  |     | anquilla |              |
+------------------+------------------+-----+----------+--------------+
| Almacenes        | 28.6 % Casino -- | 94  | M        | Importer/    |
| Éxito\*          | France           |     | edellin, | direct /     |
|                  |                  |     | Bogota,  |              |
| Hypermarkets 23  | 4% JP Morgan     |     | Cali,    | local /      |
|                  |                  |     |          | producers /  |
| Supermarkets 71  | 11% GDR/ADR      |     | Other    | distributors |
| (Ley.Pomona)     |                  |     | Main     |              |
|                  | Giant Fonciere   |     | Cities   |              |
|                  | France           |     |          |              |
+------------------+------------------+-----+----------+--------------+
| Supermarkets     |                  |     |          |              |
+------------------+------------------+-----+----------+--------------+
| Carulla-Vivero   | 28% New          | 137 | Main     | Importer/    |
|                  | Bridge-USA       |     | Cities   | direct /     |
|                  |                  |     |          |              |
|                  | 13% Bank of New  |     |          | Local /      |
|                  | York             |     |          | producers /  |
|                  |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+
| Olimpica         | 100% Local       | 150 | Mai      | Im           |
|                  |                  |     | n/Middle | porter/local |
|                  |                  |     | Cities   |              |
|                  |                  |     |          | producers /  |
|                  |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+
| Cacharreria La   | 100% Local       | 15  | Cali,    | Importer/    |
| 14               |                  |     | regional | direct /     |
|                  |                  |     | small    |              |
|                  |                  |     | cities   | local /      |
|                  |                  |     |          | producers /  |
|                  |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+
| Colsub           | 100% Local       | 20  | Regional | Local        |
| sidio1/Privately |                  |     | Bogota   | producers/   |
| subsidized       |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+
| Cafam/ Privately | 100% Local       | 42  | Regional | Local        |
| subsidized       |                  |     | Bogotá   | producers/   |
|                  |                  |     |          | distributors |
+------------------+------------------+-----+----------+--------------+

###### Hyper/Supermarkets Food Sales and Population by Region

![](media/image15.jpeg){width="4.743700787401575in"
height="4.426377952755906in"}

  -------------- -------------- ---------------- --------------- --------------
  **Region**     **Food Sales % **Supermarkets   **Traditional   **Population
                 Share**        Volume Sales %   Volume Sales %  (1,000)**
                                Share**          Share**         

  Central        30.2           31.4             25.3            9,036
  Colombia                                                       

  Northern       18.6           13.4             26.5            9,409
  Atlantic Coast                                                 

  Southwestern   16.7           16.9             17.2            7,369
  Coast                                                          

  Northern       13.9           15.9             12.1            5,570
  Antioquia                                                      

  Eastern Region 11.6           12.8             10.5            5,574

  Central Coffee 9              9.7              8.3             4,981
  Region                                                         
  -------------- -------------- ---------------- --------------- --------------

**Hypermarkets**

**Hypermarket / Supermarket Sales Supermarkets**

US\$ Millions

  ------------------------------------ --------------- -------------------
  **Store**                            **Total Sales** **Food Sales**

  HYPERMARKETS                                         

  Almacenes Éxito S.A.                 1,065           686

  Carrefour                            347             226

  Makro of Colombia                    150             102

  Alkosto/Corbeta                      **140**         **56**

  **SUPERMARKETS**                                     

  Carulla-Vivero                       539             419

  Olimpica                             487             346

  Cacharreria La 14                    313             218

  Colsubsidio                          131             55

  Cafam                                168             95

  Surtimax                             68              34

  **TOTAL**                            **4,701**       **2,960**
  ------------------------------------ --------------- -------------------

## Mom'n Pop / Traditional Markets

**Where Bogota Residents do their shopping**

  ------------------------- ---------- ----------------------- ---------- -----------------------
                            **1992**                           **2003**   

  **Market Place**          **Dry      **Fruits/Vegetables**   **Dry      **Fruits/Vegetables**
                            goods**                            Goods**    

  Mom\'n Pop                18.5       22.7                    19.1       31.7

  Privately Subsidized      35.6       13.4                    37.4       18.5
  Stores                                                                  

  Supermarket/Hypermarket   36.5       17                      39.3       24.5

  Wet Markets               7          41.7                    3.2        20.0

  Others                    2.4        5.2                     1.0        5.3

  TOTAL                     100        100                     100        100
  ------------------------- ---------- ----------------------- ---------- -----------------------

## Gas Marts

**Typical Product Lines**

**Colombian Gas Marts**

  ------------------- ------------ ------------- ---------- -------------- ---------------
                      **Bogotá**   **Duitama**   **Cali**   **Medellin**   **Cartagena**

  Tiger Market --     17                         3          4              1
  ESSO\*                                                                   

  On the Run --       2                                                    
  MOBIL\*                                                                  

  Select - SHELL      14           1                                       

  Star Mart - TEXACO  17                         2          1              
  ------------------- ------------ ------------- ---------- -------------- ---------------

*\*Merged in 2001*

## Wet Markets

**COMPETITION, CONSUMER- READY FOOD**

Colombia is a strong competitor in the production of:

  -------------------------------- --------------------------------------
  **Product**                      **Company**

  Dairy Products                   Nestle, Colanta, Alpina, Parmalat,
                                   Purace

  Breakfast Cereals                Kellogg's, Nestle, Quaker

  Snacks                           Frito Lay- Margarita, Savoy Brands,
                                   Yupi, Kraft Foods, Nabisco Royal

  Baked Foods                      Levapan, Bimbo, Ramo, Comapan

  Confectionery                    Nacional de Chocolates, Colombina,
                                   Noel, Chicle Adams, Comestibles Italo,
                                   Dulces de Colombia

  Oils and Margarines              Grasas S.A., Unilever, Lloreda,
                                   Acegrasas, Gravetal

  Dry Mixes for Sauces,            Unilever-Disa-Best Foods, California,
  Mayonnaise, Ketchup, Mustard,    La Constancia, El Rey, Productora de
  Jellies, and Condiments          jugos, Frutos del campo, La Coruña

  Poultry feed Products and Pet    Solla, Ralston Purina, Finca,
  Food                             Contegral, Italcol, Nestle Pet care.
  -------------------------------- --------------------------------------

![](media/image16.wmf){width="3.2736220472440944in"
height="2.9598425196850395in"}![](media/image17.wmf){width="3.222834645669291in"
height="1.905511811023622in"}

# Best Product Prospects

There is significant space for new alternatives in ...

**Food Products Ranked by Sales**

  ----------------------- ----------------------- -----------------------
  1\. Snacks              12\. Chocolate          23\. Mayonnaise

  2 Milk drinks           13 Pastry               25\. Beer

  3\. Cooking oils        14\. Cake               26 Jellies

  4\. Biscuits / cookies  15\. Powdered drinks    27\. Pet food

  5\. Long shelf-life     16\. Margarine          28\. Precooked foods
  milk                                            

  6\. Packaged bread      17\. Pureed baby food   29\. Flavored milks

  7\. Candies             18\. Desserts           30\. Cream of milk

  8\. Cheese              19\. Broths             31\. Frozen products

  9\. Powdered milk       20\. Tomato sauce       32\. Milk modifiers

  10\. Bubble gum         21.Precooked corn       33\. Coffee
                          powdered                

  11\. Sugar              22\. Milk modifiers     34 Juices
  ----------------------- ----------------------- -----------------------

# Related Reports

Other Related Reports

  ------------ ----------------------------------------------- -----------
  **Report     Report Name                                     **Date**
  No.**                                                        

  C03002       Grain and Feed Annual                           03-10-03

  CO3040       Sugar Annual Report                             04-04-03

  CO3005       Coffee Annual Report                            05-14-03

  CO3007       Livestock's & Products: Tariff increase for     06-06-03
               beef and beef offal                             

  CO3009       FAIRS                                           08-04-03

  CO3011       USA Food festival and Chef training             09-17-03

  CO3012       American Café-Agroexpo                          01-10-03

  CO3014       Dairy and Products                              10-29-03

  CO3018       Exporter Guide                                  12-10-03

  CO3019       Pet Food Report                                 12-22-03
  ------------ ----------------------------------------------- -----------

For further information, visit the FAS home page at
[www.fas.usda.gov](http://www.fas.usda.gov/)

# Post Contact Information

**Office of Agricultural Affairs**

**U.S. Embassy, Bogota, Colombia**

Calle 22D Bis, No. 47-51

Apartado 3831

Bogota, Colombia

**David Mergen**

Agricultural Attaché

U.S. Mailing Address: U.S. Embassy - Bogotá

Agr Section, Unit 5119

APO AA 34038

Phone: (57-1) 315-2138

Fax: (57-1) 315-2181

Email: <agbogota@fas.usda.gov>

**John Shaw, APHIS Attaché**

**(Agricultural and Plant Health Inspection Service)**

U.S. Mailing Address: U.S. Embassy - Bogotá

Agr Section, Unit 5103

APO AA 34038

Phone: (57-1) 315-2192

Fax: (57-1) 315-2191

Email: usdacol@colomsat.net.co

**COLOMBIAN GOVERNMENT CONTACTS**

**Ministry of Foreign Trade, Industry and Tourism**

Directorate of Foreign Trade

Eduardo Munoz

Director of Commercial Relations

Calle 28, No. 13A-15, 6th Floor

Apartado 240193

Bogotá, Colombia

Phone: (57-1) 606-7676 Ext. 1433

Fax: (57-1) 606-7539

E-mail:eduardom@mincomex.gov.co

**Ministry of Social Protection**

National Institute for the Surveillance of Food and Medicine (INVIMA)

Division of Food and Alcoholic Beverages

(Food Products registration and Health permits)

Juan A. Hadad

Director

Carrera 68D \# 17-21 Zona Industrial

Bogotá, Colombia

Phone: (57-1) 294-87003 Ext. 3920

Fax: (57-1) 315-1762

E-mail: jhadad@invima.gov.co

**Ministry of Agriculture and Rural Development**

Colombian Agricultural Institute (ICA)

(Phytosanitary and Zoosanitary requirements office)

Calle 37, No. 8-43, Piso 4

Bogotá, Colombia

Deyanira Barrero, Coordinator

Animal Health Section

(Phytosanitary and Zoosanitary Risk prevention

Calle 37, No. 8-43, Piso 4

Tel: (57-1) 288-4334

Fax: (57-1) 288-4334

**Ministry of Agriculture and Rural Development**

Andrés Espinosa, head

Commerce & Financing

Avenida Jiménez, No. 7-65, Piso 4

Bogotá, Colombia

Tel: (57-1) 284-2758

Fax: (57-1) 282-8388

E-mail: comercio@minagricultura.gov.co

**MAIN RETAIL ORGANIZATIONS**

**ANDI**

Asociación Nacional de Industriales

Luis Carlos Villegas

President

Carrera 13 \# 26-45 Piso 6

Bogotá, Colombia

Tel: (57-1) 336-1990

Fax: (57-1) 341-9988

E-mail: <lpineda@andi.com.co>

FENALCO

Federacion Nacional de Comerciantes

Guillermo Botero

President

Carrera 4 \# 19-85

Bogotá, Colombia

Tel: (57-1) 336-7800/350-0600

Fax: (57-1) 350-9424

E-mail: guillermobotero@fenalco.com.co

**MAIN HYPER/SUPERMARKETS**

ALMACENES EXITO

Edgar Hidrovo

Commercial Vice-President

Av. Las Vegas

Carrera 48 \# 32B Sur 139

Medellín, Antioquia

Colombia

Tel: (57-4) 339-5920/339-6565

Fax: (57-4) 339-6036

E-mail: edgar.ydrovo@grupo-exito.com.co

**CARULLA-VIVERO**

Samuel Azout

President

Carrera 68D \# 21-35

Bogotá, Colombia

Tel: (57-1) 570-8646/570-7500 Ext 1000

Fax: (57-1) 411-4194

E-mail: sazuot@carullavivero.com

**CARREFOUR**

Noel Priu

General Director

Avenida 15 \# 106-57

Bogotá, Colombia

Tel: (57-1) 657-9797

Fax: (57-1) 637-5256

E-mail: <Noel_Priu@carrefour.com>

**MAKRO DE COLOMBIA**

**Jaime Moreno**

President

Carrera 39 \# 193-63

Bogotá, Colombia

Tel: (57-1) 678-1616 Ext 1101/678-1323

Fax: (57-1) 678-2874

E-mail: <jaime.moreno@makro.com.co>

**SUPERTIENDAS OLIMPICA**

Antonio Char

General Manager

Carrera 36 \# 38-03

Barranquilla, Atlantico

Colombia

Tel: (57-5) 371-0245/371-0317

Fax: (57-5) 351-0263

E-mail: anchar@olimpica.com.co

**ALKOSTO**

Rafael Londono

Commercial Manager

Diagonal 72ª \# 57-02

Bogotá, Colombia

Tel: (57-1) 437-6868

Fax: (57-1) 630-5812

E-mail:
[**rafael.londono@alkosto.com.co**](mailto:rafael.londono@alkosto.com.co)

**CACHARRERIA LA 14**

Lelia Cardona

General Manager

Calle 70 \# Carrera 1

Cali, Valle

Colombia

Tel: (57-2) 665-1817

Fax: (57-2) 665-1819

E-mail: <gerencia@la14.com>

**COLSUBSIDIO**

Luis Carlos Arango

General Director

Calle 26 \# 25-50

Bogotá, Colombia

Tel: (57-1) 343-1899

Fax: (57-1) 340-2690

E-mail: planeacion.segsocial@colsubsidio.com

**CAFAM**

Arcesio Guerrero

President

Transversal 48 \# 94-97 B-5 Piso 2

Bogotá, Colombia

Tel: (57-1) 664-8000

Fax: (57-1) 617-6400

Web: http://www.cafam.com.co