Snack Exports to Ecuador Show Smacking Good Growth

By Daryl A. Brehm

Sweet and crunchy--these are the snacks Ecuadoreans like! And they like their snacks better year after year.

The Ecuadorean market for cookies, chocolates, candies and chips is estimated to be about $40 million annually. Ecuador's imports of these U.S. snack foods jumped from $210,000 in 1990 to more than $4 million in 1995, averaging an increase of 84 percent each year.

This fast import pace parallels the dramatic growth shown by Ecuador's imports of all snack foods. What is especially promising for U.S. snack producers and exporters, the Ecuadorean market for snack foods is expected to continue its dramatic expansion because the nation's economy is projected to grow at a rate of 2 to 3 percent annually.

Ecuadoreans Love U.S. Snacks

Supermarket managers have said that U.S. snack foods start gaining popularity the moment they are introduced in the stores, and yearly sales continue to increase. Despite their higher cost, imports of U.S. snack foods are preferred over national brands. (Snack foods imported from the United States are subject to a 20-percent tariff.)

The typical Ecuadorean consumer of U.S. snack foods is urban and upper or upper middle class. Such consumers often have a lot of exposure to U.S. culture and are already familiar with leading U.S. brands. This is good news for U.S. processors because it means there is no need to adapt the product or package to local tastes. The Ecuadorean consumer is looking for high quality and associates U.S. brand names and U.S. packaging with the quality sought. Changing the customary U.S. packaging might actually reduce local receptivity to U.S. products.

Snacks Move Fast in Supermarkets

Large supermarkets are the major retailers of packaged and canned imported foods. Supermaxi and Mi Comisariato, the major supermarket chains, have more than 20 outlets each throughout Ecuador. The chains own warehouses in Miami that purchase products in the United States and ship them back home for distribution.

The second largest snack food distribution system in Ecuador is maintained by independent importers that move snack foods not only to large supermarkets but also to smaller stores and wet markets. A list of the top six Ecuadorean snack food importers is shown in the box accompanying this article.

Give a Gift: The Consumer Buys More

Distributors have developed several promotional techniques that assure snack food sales increases. One technique is to offer small samples for tasting. Another is to offer stickers or action-figure collection cards with the snacks.

In Ecuador, imports of snack foods presently account for less than 10 percent of all sales, so opportunities for growth are great. U.S. exporters who want to take advantage of these opportunities may want to keep an eye on competitors, packaging requirements and import regulations.

Jack Snacks and Frito-Lay are the largest chip manufacturers in Ecuador. La Universal controls more than 70 percent of the domestic cookie and cracker market, followed by Nabisco Ecuador with 26 percent.

In addition to these domestic competitors, U.S. exporters face large volumes of contraband snacks from neighboring countries. The Andean Countries Community, a free-trade agreement among Ecuador, Colombia and Venezuela, permits snack foods from these latter countries to enter Ecuador without tariff. Goods from these countries also have the advantage of lower transportation costs because of their proximity to Ecuador. A large volume of processed foods imported into Ecuador comes from Colombia and Venezuela.

Ecuador has a bilateral trade agreement with Chile that went into effect in January 1995. The agreement calls for mutual reduction of import duties and will lead to a free-trade zone between the countries by 1999. Most food products from Chile also enter Ecuador without tariff.

Ecuador Has Package Requirements

Ecuadorean regulations that govern the packing of products for human consumption require packaging materials to meet United Nations and World Health Organization standards of sanitation and safety. Each package must have a visible, printed or glued label with the following information printed in legible characters:

• name of product
• trademark
• lot identification with date of fabrication
• name and address of manufacturer, packager and importer
• distributor or legal representative of the product in Ecuador
• net contents in standard international units of measure
• specifications of any artificial ingredients
• sanitary registration number
• expiration date
• list of ingredients
• country of origin
• instructions for use and storage
• nutritional information
• Labels may not contain pictures or words that misrepresent the product in any way, and package size must not represent the quantity of the product deceptively.

Exporters Need Persistence

The process of obtaining an import permit is long, difficult and frustrating. A sanitary registration from the Ministry of Health must be presented in order to obtain an import permit. However, the process of obtaining the registration can take from three months to two years.

The World Trade Organization (WTO) has ruled that Ecuador's procedures for providing the sanitary registration required for an import permit is a barrier to international trade. Ecuador became a member of the WTO in January 1996 and, as a result, is expected to make this process less burdensome.

A sanitary registration is in effect for seven years starting from the date of issuance. If a snack product has been rejected during the registration process, the manufacturer may submit a reconsideration application as early as three months after the initial rejection. Once the registration has been obtained, an import permit is generally granted within 24 hours.

All certificates issued abroad must be legalized by the Ecuadorean Consul in the product's country of origin and the Ministry of Foreign Affairs, if necessary. Certificates must be translated into Spanish. Upon arrival in port, documents verifying the product's country of origin must be presented, a measure intended to minimize contraband.

Snack Foods -- Ecuadorian Importers

The author is the Agricultural Attache at the U.S. Embassy in Lima. Tel: (011) 593-2-529-088. Fax: (011) 593-2-506-283.

Last modified: Thursday, October 14, 2004 PM