I am currently finishing a series of articles on traceability, transparency and decentralization technologies (30 experts interviewed)
colombia

Colombia: the Pandemic has Boosted Wine Consumption

CONTENTS
Retail
Restaurants
Wine consumption
Route-to-Market
Our Score
59

Colombia is a traditionally free-trading country with a preferential trade agreement with the EU, in force since 2013. American influence is strong, but not exclusive. Income shifts and urbanization benefit growth of wine sales. Wine is mostly related to celebrations and holiday season. There is a preference for Chilean and Argentine wines.

RATE THE COLOMBIAN WINE MARKET ATTRACTIVENESS

Colombia has shown solid and steady growth over the past decade and has a relatively diversified economy. With a GDP of 323.6 billion in 2019 (current USD), the country is the 4th largest economy in Latin America.

Colombia is the third most populous country in Latin America with 51 million inhabitants. 80% of the Colombian population resides in urban areas. Colombia is atypical of Latin America with decentralized urban centers and five cities with over one million residents: Bogota, Medellin, Cali, Barranquilla, and Cartagena. Increasingly, the Colombian population is urbanizing, stimulating changes in lifestyles and eating patterns. In recent years, urban households are also becoming more likely to contain dual incomes, resulting in an increasing demand for processed food and shopping convenience.
In Bogota, the average household contained 3.1 members in 2019. Household size is expected to decline to 2.2 members by 2050. Venezuelan immigration is another key demographic trend. The Colombian government estimates that over 1.8 million of Venezuelans live in Colombia.

READ MORE Mexico, a future market for wine
Colombia economy indicator

Colombia was one of the three countries that emerged after the dissolution of Gran Colombia in 1830 (the others are Ecuador and Venezuela). A decades-long conflict between government forces, paramilitaries, and antigovernment insurgent groups heavily funded by the drug trade, principally the Revolutionary Armed Forces of Colombia (FARC), escalated during the 1990s. More than 31,000 former United Self Defense Forces of Colombia (AUC) paramilitaries demobilized by the end of 2006, and the AUC as a formal organization ceased to operate.

Colombia heavily depends on energy and mining exports, making it vulnerable to fluctuations in commodity prices. Colombia is Latin America’s fourth largest oil producer and the world’s fourth largest coal producer, third largest coffee exporter, and second largest cut flowers exporter.

Changes to consumer habits

In 2020, private label products and discounters performed exceptionally well, altering the landscape for retailers, food industry, and food service; Colombians spent 25 % of their income on private label products, and 20 % of household expenditures were at hard discounters, representing a new threat to mom-and-pop stores.

Top 5 retailersType
Grupo ExitoSupermarket/hypermarket/ cash and carry
AlkostoHypermarket
D1 – Koba ColombiaSupermarket/hypermarket
OlímpicaHard discount
ARA – Jerónimo MartinsSoft discount

Western style, large supermarkets are part of a noteworthy retail transformation in the last decade with domestic and international grocery chains opening new stores.
Discount stores have increased market share and continue opening outlets throughout the country, offering private label portfolios.

Colombia alcoholic beverages share

101,000 restaurants, cafés, bars, cafeterias, kiosks

The Colombian food service industry is still rebuilding from the mandatory 6-month lockdown in 2020, when Colombian GDP for lodging and restaurants declined 37%. Although Colombians like eating at home and have been forced to because of the pandemic

Restaurant chains are well established and recognized by consumers. Over 30% of restaurants and 15% of bars failed during the COVID-19 pandemic due to strict lockdown regulations. The hotel sector’s recovery is led by small hotels that are preferred by clients, because they are perceived as a safer environment.

The past performance in the restaurant sector is primarily due to growth in the tourism sector and rising household incomes. There are market opportunities for health foods and organic products are expanding given growing obesity trends and GOC support for healthy living campaigns.

Colombia wine consumption, by volume

Beer represents 96% of the alcoholic beverage market

The pandemic has favored the consumption of wine at the expense of traditionally preferred spirits such as aguardiente and rum, which are usually consumed in bars and discos. Colombians have increasingly embraced wine, which they consume at home.

The production of wine in Colombia is insignificant. In the wine category, the market is dominated by the top three countries: Chile, Argentina and Spain. France is in 4th position.

France enjoys an excellent image of quality and know-how, but its products are also synonymous with high prices, in a price-sensitive market with a falling average price. As local taxes are high, there are opportunities for entry and mid-range wines and sparkling wines.

In the sparkling wine segment, Colombia’s imports increased by 10% in 2020 compared to 2019. France retains its leading position, with 37% of market share in volume. The Colombian consumer is not a connoisseur and does not differentiate between champagne and sparkling wine, the latter offering more attractive prices.

Colombia wine consumption, by value

The supermarket chain Exito, leader in the distribution of wine in Colombia, has reported a clear increase in sales. Dislicores also recorded a 25% increase in its wine sales during the year 2020.

There are almost 80 high-end social clubs in Colombia, offering sports facilities and restaurant opportunities. Social clubs are a good market for upscale imported food products. Social and country clubs source their food and beverages stocks from specialized food service establishments and importers of fine foods and wines. In 2020, membership declined, and sales decreased 95 percent, reducing their incomes to a historical low.

READ MORE Hong Kong: an Export Destination, a Re-export Hub

150 importers and distributors

Only big restaurant and hotel chains directly import food and beverages. Retail sales of wine are mainly made through the hypermarket channel. The network of wine retailers goes through these importers. The large supermarket chains can import directly. There are about 150 alcohol importers and distributors in the country.

Every Colombian importer must be registered with MINCIT (Ministry of Commerce, Industry and Tourism). Additionally, every importer must obtain an “electronic signature” from the Ministry of Finance through the Unique Window for Foreign Trade-VUCE.

Information must be provided in Spanish either on the label or, under certain circumstances, on an authorized sticker/label affixed to the product.

Critical considerations for market entry include the following:

  • Consider consolidation when exporting small amounts of product.
  • Participate in local trade and promotion shows, as well as food festivals, such as Expovinos, Alimentec and SaborBarranquilla, to learn about consumer trends.
  • Personal relationships are crucial to build trust; therefore, it is recommended to be patient when negotiating with locals, since they prefer to take time to get to know their counterpart before making business decisions

The import procedures are cumbersome and costly: between 130 and 470 days and about EUR 2,200 for the procedures prior to import (health register and other local procedures). The delays and costs are higher than the average for the region.

Colombians have always been very interested in Europe and especially in France.

colombia
Colombia: the Pandemic has Boosted Wine Consumption
Our evaluation method
The data shows key metrics, and these are combined to show a ranking calculated using a composite weighted attractiveness combining overall economic factors and wine market factors.
WINE CONSUMPTION IN VOLUME
48
WINE CONSUMPTION IN VALUE
68
IMPORTED WINE IN VOLUME
54
IMPORTED WINE IN VALUE
68
POPULATION
76
GDP PER CAPITA
6
Reader Rating0 Votes
0
59
Wine Market Attractiveness