Food and beverage to Peru

(Last updated: 08 May 2008)

Trends and opportunities

The market

Consumer consumption in Peru during the last two years has grown at a rate of more than 10 per cent annually according to government figures. Imports are beginning to boom due to increased economic power. Opportunities exist for the introduction of new products.

High-quality imported food and beverages have a definite market in Peru among the top socio-economic sector of the population which is largely concentrated in the capital, Lima. 

The Socio Economical Levels (SEL) in the country are specified by letters as follows:

(Source: Ipsos-Apoyo Opinion de mercado / CCR-IRI)

Note: SEL A and B consumers are usually combined because their behaviour is similar. SEL C, D & E have some differences and since they are statistically large, syndicated data companies tend to show them separately.

• Sixty-two per cent of consumers in the top (A and B) levels shop at supermarkets at least once a month.
• Purchasing decisions of consumers C, D and E are based more on location and available money. They shop at market stalls where there’s a concentration of vendors, or family-run shops which sells to neighbours in the block. Market stalls and family-run shops offer limited opportunity for sales of value added imported food products.
• In cities outside Lima; the level of consumption of imported value added products is low due to the absence of adequate shops or supermarkets and also because culturally they are slow to try new things. This is changing in the A and B groups due to contact with their counterparts in Lima.
• Distributors generally supply locally produced products to retailers in cities outside Lima.

Opportunities

Australia enjoys a highly positive reputation in Peru and Australian products would have an immediate appeal to A and B consumers in Peru.

Australian meat and dairy products free of contamination and diseases also have a competitive advantage over more traditional European and Argentine products.

Products considered high value prospects for exporters of Australian food and beverages and general consumer goods include:

• Ready-to-eat food
• Canned food and fruits
• Dairy products (eg. butter, cheese, ice-cream)
• Chocolate, sweets and biscuits
• Savoury snacks
• Meat cuts (eg. beef, lamb, pork, and exotic ones like kangaroo or crocodile)
• Smallgoods
• Wine, including sparkling wine
• Beer, premium and rare
• Bulk commodities such as milk, butter and industrial meat (eg. beef heart is a delicacy in Peru)
• Production and packaging equipment
• Health and beauty products
• 'Over-the-counter'
• Sports equipment (suitable for sale in supermarkets or similar)
• Health supplies (eg. vitamins)
• Health devices (eg. transcutaneous electrical nerve stimulator, ultrasound, lasers for therapy)

The booming economy equals opportunities for Australian products, however competition is strong. There is scope to set up a manufacturing operation in Peru and export to the USA as well as the others countries with which Peru has treaties.

Competitive environment

Many of the food products currently available in supermarket chains, specialty stores, hotels and restaurants are primarily imported from Chile, Argentina, Brazil, USA and Europe.

Tariffs, regulations and customs

Most importers face equal custom duties for products they are exporting to Peru, except its Andean neighbours of Ecuador, Colombia and Bolivia. Chile, Brazil and Mexico have a preferential custom duties treaty for some importing sectors. Thailand has a Free Trade Agreement (FTA) with Peru. Last year the USA-Peru FTA was ratified and is being implemented. There are FTAs with China, Canada, Singapore, Mexico and Chile. Peru is initiating a feasibility study for an FTA with Australia in 2009.

Imported food and beverages are subject to a customs duty (ad valorem) of nine per cent to 20 per cent according to the type of product. Health and beauty products attract a nine per cent duty. Health devices for medical rehabilitation have zero per cent duty.

Insurance and freight (CIF) on an item of $100 attracting zero per cent custom duty would result in an in-store/customs-cleared value of A$120 with all duties, taxes and demurrage charges paid. A nine per cent custom duty would mean a value of A$130 approximately while a 20 per cent custom duty, would be approximately A$150.

Alcoholic beverages are subject to an additional luxury tax of 20 per cent (most alcoholic beverages) to 27.8 per cent (for malt beers), assessed on cost, insurance and freight (CIF) value.

Peruvian value added tax (VAT) of 19 per cent, comprising a two per cent municipal promotion tax, is levied on the duty-paid value. However, the amount paid by an importer or to their local vendors, becomes a credit on their future payment for this tax.

Industry standards

Every shipment imported is required to have:

• Invoice
• Bill of lading
• Packing list
• Proof of insurance
• Inspection certificate for consignments valued at US$5000 FOB or more

Imports of processed food products and health and beauty should have the food health certificate issued from the Dirección General de Salud Ambiental (DIGESA) or the Ministry of Health - General Office of Health and Environment. Peruvian importers can obtain the health certificate by presenting the following information to DIGESA:

• Importer’s name, address and tax registration
• Description and brand name of the product
• Exporter’s name and address
• Laboratory test results
• Product components
• Conservation and storage conditions
• Production date
• Production batch code
• Date of expiration

Once the health certificate is obtained, it can be used by any other company or person because the authorisation is for the product not the company.

For commercial distribution there are no restrictions in size or colours for labelling. When the label is in a foreign language, a Spanish translation must be included in a separate adhesive label. Importers are also required to indicate the importer’s name and tax registration number in the product label or by placing a sticker in the packaging.

In the case of health and beauty products, importers must have a registered chemist listed, his/her name should also appear on the sticker.

The Servicio Nacional de Sanidad Agraria (SENSA) or National Agricultural Sanitary Service is part of the Ministry of Agriculture and controls and supervises the sanitary condition of animals, fresh vegetables, commodities and raw imported agricultural and animal products.

It is critical that exporters of these products obtain all the necessary clearances prior to shipping and to ensure that originals of inspection certificates are included with the shipping papers. Failure to do this could lead to significant delays clearing Peruvian customs.

Marketing your products and services

Market entry

Visit the market. Austrade can help organise a visit program with the key contacts. Start with twice a year visits.

Search for a local representative or partner.

Given the distance and freight costs, Austrade usually recommends that the products destined for market have a premium value added. Imports cannot compete with commodity type products. With this in mind Austrade can identify suitable partners or representatives according to the preferred commercialisation method. 

Australian food or beverages would need extensive promotional trialling to raise awareness. It needs to be competitiveness in terms of price, quality and presentation.

There are only three major supermarket chains and only a handful of qualified distributors with adequate infrastructure. Restaurants and hotels usually purchase food products through importers and distributors. Consider the following when selecting an importer or distributor:

• Contacts and coverage in the distribution network.
• Financial solvency (as most supermarket chains, hotels and restaurants work on 90–120 day receivable credit).
• Infrastructure to store and deliver products in good condition.
• Marketing and promotional efforts. Experienced importers and distributors know the structure of the market and the sales infrastructure across the country and usually effectively advertise their products in supermarket chains using their own commercial team.
• The three major supermarket chains, Wong (owned by Chile’s Cencosud), Supermercados Peruanos and Tottus (owned by Chile’s Falabella) would consider importing directly where volume and in-store turnover make it viable.

Exporters may need to consider the use of freight consolidators during initial shipments, as orders can be relatively small to begin with. While this will increase costs initially, freight consolidation from Australia via New Zealand is possible.

Exporters compete on the basis of free on board (FOB) price and quality, so Australian exporters in this sector will face some freight differential disadvantages with competitors from North America and Europe, particularly with regards to airfreight.

Distribution channels

Food and beverages and consumer goods are distributed through the following channels and outlets:

• Modern trade:
  • Hypermarkets
  • Supermarkets
  • Mini-markets
  • Pharmacy/drugstore chains
  • Department stores
  • Warehouse self-service stores
  • Street hawkers
    

• Traditional trade:
  • Family run 'corner shops'
  • Market stalls
  • Independent pharmacies/drugstores
  • Independent warehouse store
    

• Direct sales:
  • Multi-tier systems, mainly for health and beauty that hire 'home promotion' sales reps.

Most import companies deal directly with modern trade outlets, and indirectly via a distributor or wholesalers network with traditional trade outlets.

Modern trade outlets are evolving. There are plans are to build sufficient complexes within the next two years to gain a further 10 per cent of the total value. Direct sales do not compete in these stores therefore it is measured apart.

In response to the growing market, a few large local and multinational companies are upgrading their plants and products to compete with the quality of value added product imports. There are also a large number of small local manufacturers of teas, organic agriculture, bread and baked products, candies, spirits, wines, etc and health and beauty products.

Production, packaging and storage equipment are in high demand. This is being driven by the increasing desire of the three major supermarket chains to stock ‘own brand’ food items.

Links and industry contacts

Government, business and trade resources for Peru

Ministry of Agriculture – www.minag.gob.pe (Spanish only)
The National Sanitary Service of Agriculture (SENASA) – www.senasa.gob.pe (Spanish only)
Ministry of Health, General Office of Health and Environment (DIGESA) – www.minsa.gob.pe/portal
Lima Chamber of Commerce – www.camaralima.org.pe (Spanish only)
National Society of Industry – www.sni.org.pe
Superintendencia Nacional de Administracion Tributaria (SUNAT) – www.aduanet.gob.pe/aduanas/informai/tra_ar.htm  Information on custom duties and import structure cost (need to have custom duty numbers)

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

Share this content