Bottoms up: Paraguay’s beverage market offers interesting opportunities for CARICOM countries.
Paraguay historically has been a non-traditional destination for Caribbean exporters, but there are recent signs that that indicate it is a good moment to analyze this South American market as an interesting destination.
Paraguay’s National Development Plan 2014-2030 promotes a series of social and economic initiatives that position the country as a nation with strong growth prospects. It is based on three fundamental pillars:
- Poverty reduction and social development;
- Inclusive economic growth;
- Paraguay’s inclusion in global markets.
A fiscal responsibility law, inflation targets and the creation of a Fiscal Advisory Council are three of Paraguay’s most interesting socio-economic initiatives.
The Paraguayan government is also currently promoting its campaign “Regime Maquila” http://www.maquila.org.py/. A maquiladora or maquila is a factory that imports materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-exports the assembled product, usually back to the originating country.. Paraguay’s campaign aims to attract foreign direct investment to build local manufacturing capacity and integrate that capacity into global value chains. Some of the greatest benefits include a 1% one-time tax to recover the value added tax (IVA) and temporary entrance of raw materials, production inputs and components for its transformation and re-export, with tariffs and taxes suspended.
Paraguay is a net importer of alcoholic drinks and non-alcoholic beverages, according to the Ministry of Industry and Commerce of Paraguay. Paraguayans consume approximately 50,000 liters of soda per hour, which is the equivalent of 71.6 liters per year per capita. Disposable bottles of soda represents 74% of sales, with returnable bottles representing 26% of sales. In terms of size, there demand is greatest for two-liter bottles. That said, in regard to other markets, consumption in Paraguay is somewhat low, but there are considerable growth expectations.
Bottled still water is a segment with strong, sustained growth. In fact, in the last five years, growth has fluctuated between 10% and 15% per year. Sales reflect an acceptance among the Paraguayan people of the importance of consuming water for a healthy life. In this product, preferred sizes are half-liter, one-liter and two-and-a-quarter liter bottles.
In terms of geography and consumption, Asuncion, the country’s capital and largest city, is the main economic and financial hub.
Distribution channels are short, in fact the development level is somewhat precarious. It is very common to find a figure that acts like importer, wholesaler, representative and distributor, which has resulted in the development of a specialized logistics chain.
Depending on each specific product, Paraguay has an ad valorem tariff around 18% to 20% for drink and beverage imports. Preferential tariffs are granted some countries of the region, including members of Mercosur, Chile, Bolivia, Peru, Ecuador, among others.
At the moment a noticeable presence of Argentine, Brazilian, Chilean brands, and from the United Kingdom in the case of distilled spirits, but it is a destination that is continuously seeking foreign investment while offering a diversity of consumption, which makes it enticing.
Expo Paraguay www.expo.org.py is one of the country’s most import multi-sector fairs. It is held yearly in Mariano Roque Alonso, a city located around 15 km from Asuncion.
Another interesting stepping stone for companies interested in exploring opportunities in Paraguay is a series of business roundtables www.exporuedaparaguay.com organized within the framework of Expo Paraguay. The 2017 edition of the event was endorsed by the European Union through the program AL-Invest 5.0 in support of small and medium-sized business throughout Latin America and the Caribbean. Also present were institutional figures like the Ministry of Industry and Commerce of Paraguay, through the Network of Investments and Exports – REDIEX.
MastercardBiz is continuously on the lookout for new alternatives and opportunities for Caribbean exporters in the region and around the world. We understand that in the Caribbean region, beverage and drink exports represent a vehicle for the growth of exports. Take advantage of the site’s free foreign trade consulting services, an exclusive benefit for Mastercard Business cardholders, and find out what opportunities the Paraguayan market offers your business.