Market and Trade Data
Red, White, or Sparkling, U.S. Wine
Exports to Jamaica Expected To Rise Sharply
November 2006
Printable version
By
Sylburn Thomas
See also . .
.
FAS Report JM6007
The Jamaican wine market is highly competitive, with
U.S. wines edging out a lead position with a 26-percent
market share in 2005. Last year, the country imported
about 2.8 million liters of wine, worth about $5.5
million. Of the top competitors, Chile came in with a
23-percent share, and France, 22 percent, while Italy
trailed at 7 percent.
With recent duty adjustments, Jamaica conferred an
overall 19-percent duty advantage that gave U.S. wines
increased competitiveness in the marketplace. This
windfall resulted from computing some import duties at a
fixed rate, rather than by price.
So far this year, the United States retains its market
leadership, capturing about a 30-percent share. However,
Australia, Argentina, and South Africa are expected to
up the ante over the next few years.
While Chile provides the main competition for U.S. wines
now, newcomer Australia is expected to make strong gains
in the next few years. Australian suppliers garnered an
impressive jump in sales from 2004 to 2005--from less
than 1 percent to about 5 percent of the market.
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Why Jamaica? |
As a service-oriented economy, Jamaica is a
net importer of food and beverages. The
United States accounted for half, or $192
million, of the country’s food imports in
fiscal 2005.
Jamaica’s 2.6 million people enjoy a
relatively open economy with a stable
democratic government. Half of the
population is under 30 years old, with per
capita income averaging $3,000 annually.
Services (tourism, communication, and
distributive trade) and bauxite mining
provide the primary income for the economy.
The economy has averaged 1- to 2-percent
annual growth over the past few years, but
this is expected to increase to 3 to 4
percent in the near term. |
Distribution Simple, But Evolving
Currently, importers distribute wines to the HRI (hotel,
restaurant, and institutional) and retail sectors.
However, larger hotels, supermarkets, and club stores
are exploring direct imports.
The evolving nature of the distribution channel expands
the possibilities of market entry strategies. U.S. wines
have traditionally fallen in the mid- to high-price
range in the retail sector. While wine with strong brand
recognition is still best distributed through an
importer positioned to market the product through the
retail system, direct sales of medium- or higher priced
products to hotels may suit small- to medium-sized
exporters.
Due to increased competitiveness, retailers and hotels
often include U.S. wines when their food and beverage
purchases are consolidated in containers before leaving
the United States.
Tourism Driving Increased Consumption
By 2007, consumption of wine in Jamaica is expected to
reach about 6 million liters, worth $12 million to
suppliers.
The 2.6 million tourists (73 percent from the United
States) that visited Jamaica during 2005 consumed about
2.2 million liters of wine valued at $4.4 million. The
island country’s growing luxury tourism sector--fueled
by Spanish-financed hotels and government-backed
development--is expected to generate exponential
increases in wine imports, as tourism accounts for 80
percent of wine consumption.
All-inclusive hotels are generally price-sensitive and
make purchase decisions on value, tending toward low- to
medium-priced wines. At these hotels, Chilean and U.S.
wines dominate. Higher end U.S. and European wines are
usually the fare at upscale and specialty hotels.
Marketing Important
Jamaicans have not been traditional wine consumers.
However, exposure to North American lifestyles,
increasing availability of affordable wines, and
marketing and promotion have bolstered acceptance and
consumption of wines in Jamaican households.
While the expatriate and business communities are the
largest retail customers for wine, the large and growing
middle class is rapidly embracing the wine culture. This
acceptance is evidenced by the burgeoning number of
brands and varieties, and range of prices in retail
stores. While still in the introductory stage, retail
sales are expected to grow by 10-12 percent yearly
through 2007.
At the retail level, Chilean wines are the low-price
leaders, with 65 percent of Chilean brands selling below
$8 per 0.75-liter bottle. Italian, French, and Argentine
wines are generally positioned in the lower price
ranges.
U.S. wines, mostly from California, target all price
ranges, but are skewed toward the middle- and upper
income ranges, with 85 percent priced above $8. So far,
U.S. marketing does not differentiate brand-specific
attributes; consequently, consumers are likely to base
purchase decisions about U.S. wines on price.
Australian wines, now being marketed on the basis of
quality, brand recognition, and customer loyalty, are
likely to be accepted with middle- to higher income
consumers, and for special occasions.
Best Prospects, Entry Requirements
Currently, U.S. wines are associated with California,
but other regions could profitably market comparable
quality wines. While red, white, and sparkling wines
present good market potential in retail and HRI
segments, wines selling for $5-8 are expected to show
the fastest growth in retail.
The Jamaican Bureau of Standards publishes wine labeling
requirements. Jamaica follows metric measurements and
International Organization for Standardization or
European date conventions. Each bottle should be labeled
with manufacturer’s and distributor’s contact
information. Import duties include a 30-percent of value
assessment plus $2 in fixed assessment fees per liter.
Sylburn Thomas is an agricultural specialist with the
FAS Office of Agricultural Affairs in Kingston, Jamaica.
E-mail:
agkingston@usda.gov
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