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International Resources: Global Market Profile: Colombia

Colombia

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As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information from the Colombian Ministry of Agriculture and Rural Development and Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette reference guides.

Fresh Fruit, Vegetable, and Flower Market
Consumer Trends
Entering the Colombian Market
Trade Agreements
Food Standards and Regulations
Business Protocol
Export Business Reminders
Government Resources and related links

Fresh Fruit, Vegetable, and Flower Market

Fruit and Vegetable Market

Fruit cropping represents almost 20% of total production from the domestic cropping area in Colombia. More than 70 types of fruits are produced in the country, but Colombia exports mainly bananas, baby bananas, cape gooseberries, grenadines, tree tomatoes and pitahayas. Colombia is the fourth-largest banana exporter in the world. Colombia is also important in the exotic fruit trade, producing fruits such as guavas, mangoes, and papaya. Cape gooseberries, grenadines, and tree tomatoes have exploded in the European market.

The main markets for Colombian exports are the United States, the European Union, Canada, Chile, Mexico, and the countries of the Andean Community. Colombia is the largest market for United States food and agricultural products in Central and South America. In 2005 U.S. vegetable imports cost US$2.3 million; fruit and nut imports added up to $14 million. Other countries that export to Colombia are Argentina, Ecuador, Brazil, and Canada.

Currently agriculture counts for 12% of Colombia’s GDP and 22.7% of the country’s labor.

Fresh Flower Market

Colombia is the second largest flower exporter in the world. In 2007 flowers exported by Colombia amounted to US$967 million. Nearly 80% of Colombian flower exports are sent to the United States. Other markets include Russia, the United Kingdom, Spain, Japan, Canada, and the Netherlands. Major flowers exported are roses, carnations, chrysanthemums, and alstroemeria. Colombia is the number one supplier of carnations worldwide.

Exports by market (source: Asociación Colombiana de Exportadores de Flores)

Exports by product (source: Asociación Colombiana de Exportadores de Flores)

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Consumer Trends

Nearly 80% of the population lives in 39 large or medium-sized cities, all with supermarkets. Almost 60% of the population is younger than 30 years; these young consumers more readily accept and seek new products and trends. There is a strong demand for food products. The rise in female labor has contributed to this demand as well as prompted a call for more convenient and healthy products.

Rural areas are the new market for food products as rural consumers account for 25% of consumption. High- and medium-income groups are good markets for imported products; in addition the medium-income group is fueling demand for value-added products.

Consumers base their decision to buy a particular product mainly on its quality and price. They have benefitted from the “price war” between competitors. Current consumers are also more selective and health conscious.

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Entering the Colombian Market

Strategic partnerships with major economies provide expanded market access for Colombia’s products and services. Indeed, through major integration agreements, Colombia has access to many countries in LATAM.

When introducing new products to the market, it is extremely beneficial to use innovative and social marketing strategies. Many supermarkets in Colombia participate in social programs that directly engage consumers.

The demand for consistent supply is very high, and a trade partner who can promise consistency is highly valued in most trade relationships, particularly with large stores, institutional markets, and hotel chains. Colombia’s supermarket sector is one of the most modern in Latin America, and the hotel, restaurant and institutional sector is expanding its role in food and beverage sales. Shelf space is of great value in supermarkets, and is often given to products at an added expense/cost.

Most imports are handled through agents and distributors, but in an effort to reduce costs large companies import directly. Importers and distributors are also establishing more contacts abroad. Supermarket chains continue to seek strategic alliances with foreign partners to try to capture market share.

Tips and strategies for entering into the Colombian market:

Visit the market.
Seek a local representative or partner.
Exporters may consider using freight consolidators during initial shipments if orders are small.
Marketing material should be in Spanish and focus on products and services available.
Open direct relations with leading companies to develop a low cost, direct sales approach and to offer products and services.
Exporters compete on the basis of free on board (FOB) price and quality.
Take advantage of food fairs and exhibits, such as Alimentec, the Colombian trade show for food products and ingredients.
Provide after-sales service and customer support, which are key purchasing factors.
Determine your competitiveness based on level of quality, price and service to meet increasing competition from non-Colombian exporters.
Create relationships with top executives such as marketing directors and purchasing managers. Category managers are also important because they can offer valuable services.

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Trade Agreements

Colombia has free trade agreements with the following countries and organizations:

Chile (Colombia-Chile Free Trade Agreement)
Bolivia, Ecuador, Venezuela (Andean Community Free Trade Agreement)
Mercosur (Mercosur Free Trade Agreement)
Central America and the Caribbean (Central America and Caribbean Free Trade Agreement)
El Salvador, Guatemala, Honduras (Colombia-El Salvador, Guatemala, and Honduras Free Trade Agreement)
Canada (Colombia/Peru-Canada Free Trade Agreement)
Switzerland, Norway, Iceland, and Liechtenstein (Colombia-EFTA Free Trade Agreement)
Mexico and Venezuela (G-3 Free Trade Agreement)
United States (Colombia-United States Free Trade Agreement)
European Union (Andean Community-European Union Agreement)
ALADI (Asociación Latinoaméricana de Integración): Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela

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Food Standards and Regulations

The basic legislation that deals with food products and human health is Law 8 of January 24, 1979. The Ministry of Commerce, Industry and Tourism (MOCIT) (note:link to ) has all responsibilities in dealing with Colombian foreign trade including issuing import licenses and registering imports. Most agricultural products require permits or approval by another government agency, and so they need an import registration at the MOCIT to enter Colombia.

There are two import categories for food and agricultural products:

Licencia Previa, imports that need prior government approval.
Libre, imports that do not require government approval. These products may enter the country without restriction, though require registration at the MOCIT.

Government agencies applying food standards and regulations:

Ministry of Agriculture – Products are subject to import registration for restricting imports for non-scientific reasons, either to protect local production from competing with imports or to set imports under tariff-rate quotas. Examples are products such as poultry parts, which are banned, and products subject to tariff-rate quotas (beef, corn, sorghum, rice and cotton).

INVIMA – Most imported products intended for the final consumer (such as meat and food products for retail sales) register with INVIMA under the Ministry of Social Protection.

ICA, Colombian Agricultural Institute, is the Ministry of Agriculture agency responsible for sanitary and phytosanitary regulations and issues. ICA deals with products requiring sanitary or phyto-sanitary registration such as meat, fresh fruits, vegetables, and dairy products. Colombian importers must have an import permit from ICA before requesting a MOCIT import registration.

Click here to view import regulations (in Spanish).

Specific phytosanitary regulations can be viewed here.

View the ICA Import and Export Guide, with comprehensive information and regulations.

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Business Protocol

Dress professionally and conservatively; formality increases as you move inland. It is important to adopt conservative business attire. Suits in dark colors are preferred. Women should dress conservatively and modestly, in a suit or dress.
Prior appointments for meetings are necessary. It is advisable to make meeting arrangements two weeks in advance and confirm them upon arrival.
At business meetings, punctuality is necessary for visitors. Your counterpart, however, may not arrive on time for meetings. Do not expect an apology for their tardiness
At social gatherings it is acceptable for guests to arrive 15-30 minutes late.
Colombians stand close when conversing, though there is less physical contact in Colombia than in most other South American cultures. Direct eye contact is important and shows interest and sincerity.
A firm handshake with a smile and appropriate greeting is normal in a business setting; however, do not rush a handshake. Colombians feel that taking time during a greeting conveys respect. Some women may not shake hands with men, although this is becoming less common.
Be prepared to answer inquiries about your health, trip, family, and common friends and acquaintances prior to formal discussion. It is important not to rush a greeting, because this shows a lack of respect.
Make sure you have a large supply of business cards available. Have one side of your business card translated into Spanish. When presenting your business card, have the Spanish side facing your Colombian counterpart. Make sure to include your title, if you have one, because they are important.
Use titles where they apply. If no title exists, simply use Señor (male) or Señora (female) followed by the surname. Doctor is the only professional title commonly used (whether or not a Ph.D. is held) and is often applied to any accomplished or educated person.
Like many South Americans, Colombians use both their maternal and paternal surnames. The father's surname is listed first and is the one used in conversation.
Always let your Colombian counterpart progress to the stage of formality. First names are used between close friends; wait until invited to move to a first-name basis.
Meetings are not always linear in their progression, and issue can be tackled all at the same time.
Remember that decisions are not made at meetings, so it is important to provide all necessary information during the meeting. Decisions are made by senior staff, though opinions, suggestions, and consensus from subordinates are usually sought.
It is important to be patient as time is not of the essence in Colombia– meetings will last as long as they need to last.
Colombians tend to be friendly, straightforward, and direct in doing business.
Do not change members of your negotiating team, because changes can cause a halt in negotiations. Colombians feel they are negotiating with a person, not a corporation.
Maintain good after-sales service arrangements, not only in the original buying decision, but also in maintaining the sales relationship. Warranties on imports are important factors that support after sales service in Colombia
It is common to interrupt someone while they are speaking. However, never openly criticize anyone.
Colombians frequently invite guests to their homes. Formal dress is normally the acceptable attire for dinner parties or social events, but do not hesitate to ask your host if invited to a social event.
Dinner parties often start after 8:00 p.m. with the meal being served later. It is advisable to eat something before attending a dinner party to avoid starving or becoming inebriated before the meal is served.
Dinner parties often end shortly after the meal is served, but cocktail parties, which include dancing, can last until the next morning.
If invited to a home for a meal, wait to be shown where to sit. The host/hostess invites everyone to begin eating, normally with the expression “buen provecho” (meaning “enjoy” or “have a good meal”), and keep hands visible (wrists resting on the table, but never elbows).
Always use utensils, even when eating fruit.
It is considered polite to leave some food on your plate.
Never use a toothpick while seated at the table.
Wait for a toast to be made before taking the first sip of your drink. The host makes the first toast. You might want to offer a toast following the host.
It is impolite to yawn in public.
Colombians often make a hissing sound or clap their hands over their head to summon wait staff in restaurants; it is highly inappropriate for non-Colombians to use these gestures.
Holding both your pointer fingers up (common in North America to indicate length or width of something) is an obscene gesture in Colombia.
Do not put your feet up on a table, chair, or other furniture.
Never go barefoot, unless on the beach.
The North American symbol for “OK” (thumb and pointer finger touched together to make a circle) is used over one’s nose to indicate homosexuality.
The tapping one’s fingers on the elbow indicates a person is stingy.

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Export Business Reminders

Build at least a minimum team within your company to help with the Colombian market.
Use metric terms.
Ensure that all sales documentation is correct.
Be patient regarding requests for documentation, ingredients lists, production process, and quality assurance, and respond to such requests with diligence and in a timely fashion.
Remember the date is written Day/Month/Year.
Use letters of credit to reduce risk.
Hedge export values with your bank if you are concerned about exchange rate risk.
Set up wire transfers for payments.

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International Resources: Global Market Profile: Colombia

Table of Contents

Fresh Fruit, Vegetable, and Flower Market

Consumer Trends

Entering the Colombian Market

Trade Agreements

Food Standards and Regulations

Business Protocol

Export Business Reminders

Related Links and Government Resources