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Peruvian Guinea pigs in American cuisine

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American Chamber of Commerce of Peru(AmCham Peru)

DOING BUSINESS IN
AND WITH) PERU

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Exporting good smelling, brown gold

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DOING BUSINESS IN
AND WITH) PERU

Exporting a plain white t-shirt without applications it not the same than exporting one with a special design and brand of its own. While the first one competes strongly with similar products that come from Central America, Asia an Eastern Europe, the second can be distinguishes itself very well and therefore exporters can benefit from an additional revenue margin.

Fair trade certified organic coffee

The case of coffee exemplifies this situation as well, given that certified organic coffee with an additional fair trade label – a term used to identify a product whose production process meets international labor standards- can be sold at better prices. Hence, according to Transfair USA, the volume of total imported fair trade labeled coffee reached 181,392 sacks during 2004, 92% more than the previous year. It should be noted that also 83% of that amount had an organic product certification.

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Market Niches: Organic Tropical Fruits in the United States

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The United States is the main market for organic products, with sales considered between $15 and $17 billion in 2005. Fresh fruits and vegetables are, by a large margin, the segment of organic products with the highest sales ($ 2.9 billion in 2002), which represents an increase of 24% compared to the previous year. Milk products occupy second place, with $635 million in sales[1].

“Transition” is the word used by the expert Roberta Cook to describe the present situation of the fresh product industry in the United States. Sales and consumption of organic foods in the United States continues to grow. Food establishments increasingly demand organic products such as purées, juice concentrate, fresh, frozen and dried fruits, among others, which has lead the food industry to adopt a series of changes in order to be able to respond to the increasing interest in these products. The conventional retail supermarkets in the U.S. have also begun to sell fresh organic products, and they now represent nearly 42% of the total sales of organic products[2]. Not to be excluded, the main food companies of the U.S. are expanding towards the organic segment of the market, and the fusion that is taking place between the natural and organic food companies will result in the greater publicity and promotion of these products, which will also increase the interest of the U.S. consumers for organic products, including fresh products.

In this context, the supermarket chains have made inroads with the introduction of new products, where organic foods have been the most important and those that have generated the greatest profit margins, taking advantage of the segment the population identified with a healthy life style. According to a study by The Hartman Group, health and nutrition are the principal reason to consume organic products (66% of the consumers), the second reason is the flavor (38%), third is food security (30%) and the fourth is environmental concerns (26%). The same study identified 14% of the population as regular (daily or weekly) consumers of organic products, equivalent to 40.8 million inhabitants.

General Structure of the Sales Channels

• The sales of these products begin in the producing countries of Latin America. The major producers of organic tropical fruits are mostly associations of small producers who are not structured to export directly. They make use of companies that gather and export the fruits, and negotiate directly with the importers.

• The medium and large producers, those with plantations of more than 50 to 100 hectares that are certified as organic, export directly. The use of an intermediary is infrequent, because the importers must maintain direct contact with the producers in order to verify the status of their organic certification. Nevertheless, there are occasions when the importers need fruit urgently, and so they use intermediaries to locate it in the producing countries.

• In any case, the exporting companies send their products through independent transport companies. The shipments enter via the various ports of entry: Long Beach and Oakland (California) and Seattle (Washington) are among the main ports for these products. They also enter through Philadelphia (Pennsylvania), Newark (New Jersey) and New York (New York). There are also importers located in the state of Arizona, where fruits such as mango from Mexico, enter overland. The importer is in charge of customs procedures, storage of the product and its subsequent distribution.

• There are between four and six importers of organic fruits (banana tree, mange, pineapple, papaya, among others). Among the principal buyers from the importers are the consolidators, companies dedicated to the distribution of fruits and vegetables that are located near the ports and that "consolidate" more than 100 products of different importers for their later distribution. Almost all of them work with conventional fruits and, more recently, with organic fruits, and distribute to several regions of the country or to the nation as a whole. A second group of buyers are the general distributors, who are located in different regions of the country, which supply from a large quantity of edible products (over 1,000), including fruits and vegetables. A third group of buyers are the distributors that specialize in fruits and vegetables who are located in the major cities and handle volumes smaller than the general distributors and sell to independent stores and food services, such as restaurants, hotels and hospitals.

• Importers also provide to the conventional supermarket chains, which have their own storage centers for subsequent distribution to their supermarkets. These chains divide their operations among several regions, each one serving a number of supermarkets. Each region then assigns a buyer who makes the orders directly to provide all the supermarkets in its region.

• Depending on the region, these are also supplied from general distributors. Something similar happens with the two natural supermarket chains, called "supernaturals," which are supplied by importers or distributors. Altogether, it is estimated that there are 25 to 30 distributors that work with organic tropical fruits in the Unites States.

• Natural stores surpass 12,000 points of sale, including the 245 natural supermarkets that belong to the supernaturals Whole Foods and Wild Oats. These stores specialize in offering organic and natural products[3], as well as occasional conventional products. The independent natural stores and cooperatives initiated the consumption of organic products at the beginning of the 1960s, motivated by a change towards a more healthful life style, increasing the consumption of healthier products and making a contribution to caring for nature.

• The principal distributor of natural and organic products is United Natural Food Inc. (www.unfi.com). The major conventional supermarket chains (Kroger, Albertsons and Safeway) now also sell organic tropical fruits. The “conventional" consumer is showing an increasing interest in organic fruits that originated in an improvement in the quality and a lowering of the prices. For the first time, in 2002 the level of sales of organic tropical fruits was greater in the conventional stores that in the natural food stores.

• The multinational fruit companies have only recently begun to enter the sales channels in Latin America. In 2003, Dole began the sale of organic banana and pineapple in the U.S. and is studying the sale of other tropical fruits.

These ideas offer a panorama of this market. For more information on the market for organic fruits or conventional fresh and processed fruits, market requirements and regulations for the sale of these products, lists of fruits and vegetables allowed into the U.S., and on North American buyers of fruits and vegetables, please contact InfoCenter.

[1] Nutrition Business Journal, 2003. US Natural & Organic Foods Penetration Rates into Total U.S. Food Markets: 1997-2010. Chart 82. Penton Media. California, United States.

[2] See “Los Mercados Mundiales de Frutas y Verduras Orgánicas” by the Centro de Comercio Internacional, el Centro Técnico para la Cooperación Agrícola y Rural y la Organización de las Naciones Unidas para la Agricultura y la Alimentación. ROMA, 2001.

[3] Natural products are understood as those products whose processing does not use chemicals or non-natural additives.

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