OTN - Private Sector Trade Note - vol 2 2011


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OTN - Private Sector Trade Note - vol 2 2011

  1. 1. A product of the Private Sector Outreach of the Office of Trade Negotiations (OTN), formerly the + CRNM Private Sector Trade Note CARICOM Sauces & Mixed Condiments Trade GLOBAL SAUCES/MIXED CONDIMENTS somewhat between 2008 and 2009. TheTRADE OVERVIEW level of global import expenditure on sauces/mixed condiments indicates thatSauces/Mixed condiments1 trade is there is strong demand for these products.another robust international business The global sauces/mixed condiments sectoropportunity for a number of reasons. This includes trade in soya sauce; tomato outturn represented a strong growth trendindustry represents what can arguably be ketchup; prepared mustard; and sauces and in import expenditure with an averageseen as one success story of value preparations/mixed increase in global spending on condiments andretention with the region making some seasonings. sauces/mixed condiments of 11.9% sinceachievements at migrating to the higher 2001, (see figure 1 below), compared to avalue layers of production. Additionally, In 2009, US$8.1bn was spent on worldwide total global import spending increase ofexporters in this industry have been imports of sauces/mixed condiments. This 9% annually between 2001 and 2009.accessing more non‐traditional markets,an indicator of growing levels of In 2009, the top 10 markets for spendinginternationalization. However, amidst the on imported sauces/mixed condimentsglobal possibilities, there are some were: the United Kingdom (US$831mn);regional challenges which will need to be the USA (US$728mn); France (US$562mn);addressed for the realization of the true Germany (US$456mn);potential of the industry. Some of these Canada(US$411mn); Thechallenges are detailed below. Netherlands(US$291mn); Japan(US$259mn); Belgium(US$234mn);Global Sauces/mixed condiments trade Australia(US$202mn); and Swedenhas exhibited significant dynamism since (US$177mn).2001, however sales have flattened www.crnm.org
  2. 2. The markets that exhibited the greatest whilst CARICOM economies spent importers of sauces/mixed condimentsdynamism in import expenditure on US$62.8mn on imports of these products. between 2005 and 2009 were Haiti (55%sauces/mixed condiments between 2005 CARICOM member state’s expenditure on annual growth rate in importand 2009 included The Philippines (62% imported sauces/mixed condiments did expenditure), Guyana (24%), and Trinidadgrowth per annum‐ p.a.); Haiti (55% growth not outpace the growth in sauces/mixed & Tobago (18%).p.a.); Algeria (51% growth p.a.); Romania condiments exports sales between 2001(37% growth p.a.); Cambodia (32% growth and 2009. Based on mirror statistics, Belize overtookp.a.); Ghana (32% growth p.a.); Brazil (29% Jamaica as the top sauces/mixedgrowth p.a.); The Cayman Islands (25% However, the region lost international condiments exporting member state ingrowth p.a.); Guatemala (23% growth p.a.); competitiveness which was reflected in an 2009 with Belizean firms generating overArgentina (22% growth p.a.); and Trinidad expansion of the trade deficit from a third (33.9%) of regional exportand Tobago (18% growth p.a.). Figure 1: Global Sauces/Mixed condiments Import Spending (US$bn).In 2009, sauces and preparation and mixed 9 8.1 8.1condiments and seasonings (HS 210390) 8 6.8were the largest sub‐group traded globally 7 5.9with 72% of global import sales. Tomato 6 5.4 5ketchup (HS 210320) was the second largest 5 4.3 3.7sub category of sauces/mixed condiments 4 3.3etc traded in 2009 representing 20% of 3global import sales, and soya sauce and 2mustard accounted for the remainder of 1global import sales. 0 2001 2002 2003 2004 2005 2006 2007 2008 2009Between 2001 and 2009 the fastest growing Source: TradeMAP. Retrieved January 5, 2011.sauces/mixed condiments sub‐group wastomato ketchup with average annual salesgrowth of 11.5%. This sub group outpaced US$18mn in 2001 to over US$27mn in revenue. Other top exporters wereglobal merchandise import sales growth 2009 (see figure 2 below). Furthermore, Jamaica and Trinidad & Tobago whobetween 2001 and 2009. This showed that between 2001 and 2009, CARICOM’s jointly with Belize accounted for 95% oftomato ketchup could be a viable sauce/mixed condiments export sales regional sauces/mixed condiments exportinternational business opportunity. grew more slowly than the global import sales in 2009. Belize was the most growth rate of these products between dynamic major regional exporter of 2001 and 2009. This shows that the region sauces/mixed condiments between 2005 CARICOM SAUCES/MIXED CONDIMENTS may have lost global market share in the and 2009, (i.e. with export sales in excessTRADE OVERVIEW sauce/mixed condiments industry. of US$100, 000) growing export sales by 118% annually. Antigua & Barbuda wasEven though CARICOM has negligible global The Bahamas was the top CARICOM the second most dynamic CARICOMmarket share, the sauces industry still has importer of sauces/mixed condiments in exporter between 2005 and 2009,tremendous opportunity based on the 2009, spending some US$13.8mn in recording 77% growth in export sales ofdynamism in import expenditure observed import spending. Other CARICOM sauces/mixed condiments. Suriname andbetween 2001 and 2009. In 2009, CARICOM member states with significant Barbados also exhibited dynamism insauce/mixed condiments exporters sauces/mixed condiments import sauces/mixed condiments exportsgenerated US$34.2mn in international sales, spending in 2009 were Jamaica between 2005 and 2009, however their (US$9.6mn), Haiti (US$8.9mn) Trinidad export share was negligible. and Tobago (US$8.2mn), and Barbados (US$7.7mn). The most dynamic CARICOM In 2009, sauces and preparation and mixed condiments and seasonings (HS 210390) was the largest sub-group traded globally with 72% of global import sales 1 Sauces/Mixed condiments here refer to sauces, mixed condiments and mixed seasonings classified under Harmonised Tariff System (HS) 2103. All data from the International trade Centre (ITC) tradeMAP database. www.trademap.org . Retrieved January 5, 2011 www.crnm.org
  3. 3. top markets from which CARICOM Figure 2: CARICOM Sauce/Mixed condiments Trade. importers sourced sauces/mixed 120 condiments were the USA, Trinidad & 100 Tobago; The Dominican Republic; Mexico; and Costa Rica. The USA, the Dominican 80 Republic, Mexico, Hong Kong and The 60 Netherlands gained tremendous import share between 2001 and 2009. Again, 40 these trends show the growing 20 internationalization in the trade of sauces/mixed condiments between 2001 0 and 2009. 2001 2002 2003 2004 2005 2006 2007 2008 2009 Import expenditure (US$mn) 34.9 34.8 35.7 37.3 43 45.8 52.9 61.6 62.8 export sales (US$mn_ 16 15.7 16.9 15.5 16.9 19.6 20.4 24.5 34.2 CARICOM’s sauces/mixed condiments industry is at a maturing stage of Source: TradeMAP. Retrieved January 5, 2011. internationalization, signaled by the large number of export markets that areIn 2009 CARICOM mainly exported major non‐traditional market in Africa currently serviced. There is also evidencesauces and preparations (HS 210390) since 2008 (see figure 3 below). of involvement of some regional sauceswith this category of sauces/mixed Interestingly, the most dynamic markets manufacturers in licensing arrangementscondiments generating 79% of the between 2001 and 2009 for exports of with major multinational firms (e.g. Kraft).region’s export sales. Tomato ketchup CARICOM sauces/mixed condiments were There are other metrics ofand other tomato sauces (HS 210320) Nigeria; the Netherlands (45% growth in internationalization which have not beenwas the other dominant sauces/mixed export sales per annum); Japan(18% discussed (such as level of foreigncondiments sub group exported growth annually); and Canada (13% growth investment, etc). But it is also publiclytraditionally between 2001 and 2009. annually). This indicates that regional known that there are great possibilities sauces/mixed condiments exporters for inflows of Foreign Direct InvestmentIn 2009, CARICOM sauces/mixed focused on penetrating extra‐regional into the region’s sauce industry tocondiments suppliers found international markets between 2001 and 2009. capitalize on the intellectual property andmarkets for their products in 36 Additionally, export sales to the traditional global brand recognition. It is howevercountries. Also, Nigeria overtook the USA markets such as the USA and the UK grew also noted that this industry continues toto become the top export market for more slowly at 3% and 5% annually suffer from intellectual propertyregional sauces/mixed condiments respectively between 2001 and 2009, challenges internationally, withgenerating over one third of total showing some shift in the strategic infringements being alleged in manyregional export sales. Export sales are marketing focus even within extra regional export markets.concentrated in a few markets as in markets to more non‐traditional2009, Nigeria, the USA, the UK, geographical regions such as Africa. TheBarbados, Guyana, Canada and Jamaicajointly accounted for approximately 90% Figure 3: CARICOM Export markets for Sauces/mixed condiments Tradeof total export revenue. However, thisalso indicates that even amidst theglobal recession, the region’s exports ofsauces/mixed condiments have beensomewhat internationalized, finding a Source: TradeMAP. Retrieved January 5, 2011. www.crnm.org
  4. 4. In examining the region’s exports to Nigeria more closely CARICOM based firms are mainly exporting sauces to that market.CARICOM supplied approximately one‐fifth of Nigeria’s import spending on sauces in 2009. Nigeria was the 27th largest importer ofsauces in 2009, accounting for 1% of global import spending. However, with average import sales growth at 27% annually between2005 and 2009, this economy was second only to the Philippines as a dynamic major sauce importer, and as such, a seemingly robuststrategic market.Belize was the top global exporter of sauces to Nigeria in 2009 with one fifth of the import share. Belize’s exporters paidapproximately 17% duties to access the Nigerian market as there is no trade arrangement amongst the parties. However, Belize’sexporters are penetrating Nigeria’s market based on significant price competitiveness as the average export price for sauces wasalmost 50% cheaper than Nigeria’s average import price in 2009. Therefore, Nigerian retailers of Belizean sauces are able to absorbthe tariffs. However, where the price margin erodes, then the tariff may become more of an issue for Belizean sauce exporters. Thereis no discussion towards the negotiation of a trade agreement between CARICOM and Nigeria at the moment. ************* Produced by the OTN Information Unit, 2011 DIRECT ALL COMMENTS OR QUERIES Mr. Lincoln Price Private Sector Liaison lincoln.price@crnm.org www.crnm.org