COUNTRY PROFILE
Discover more about the Nicaragua market including overviews about the retail, food service, and food processing sectors. Events, resources, and more are linked throughout the profile.
$85.3 Million
total of U.S. processed foods imports in 2023
12% Increase
growth of U.S. processed foods imports in 2023
Focus Economics reports that after accelerating in annual terms in earlier in 2023 the economy seemingly gained further momentum by the midpoint. Economic activity expanded at a brisker pace relative to the prior quarter on the back of upturns in the agriculture, communications, manufacturing, and mining sectors. Moreover, merchandise exports rebounded in the period. That said, construction output grew less, while remittances inflows eased. Early data for 2023 is promising. In October, inflation fell to a 25-month low, which should support household spending.
In other news, in late October 2023, Vice President Rosario Murillo initiated a purge of the judicial system, dismissing close to 1,000 officials and replacing them with loyalists.
The main challenge for 2024 and beyond is to stay on course to preserve macroeconomic and financial stability. Restoring confidence and external financing flows is critical to avoid a further contraction in credit and jobs, which would continue to hold back investment and consumption, implying a significant headwind to economic activity. Restoring business confidence and addressing supply-side bottlenecks are key elements to promote sustainable economic growth.
Policies to bring back private sector confidence, including a frank evaluation of the impact of recent measures, are essential to promote economic recovery and offset an increase in poverty. Euromonitor reports that gross domestic product (GDP) growth was 3.7% in 2022 but should recede down to 3% in 2023 and then 3.3% in 2024.
Nicaragua’s population was 6.3 million (CIA World Factbook Est.). The median age is 28.5 years, which means it is still a relatively young country. The percentage of those older than the age of 65 is only 6.5%. The population growth rate is only 0.97%.
USDA’s Office of Agricultural Affairs, OAA, in Managua, hereinafter referred to as FAS Post Managua, reports that some 140,000 formal sector jobs have disappeared from the economy since 2018, and Nicaraguan families now earn 15% less on average than in 2018. Remittances from the Nicaraguan diaspora through September 2023 were US$3.4 billion, up 52% over the same period in 2022; Nicaraguans remitted a record US$3.25 billion in all of 2022, equal to 20% of GDP. Remittances are supporting basic consumption in Nicaragua, preventing thousands of vulnerable families from falling further into poverty and facilitating the Central Bank’s accumulation of reserves, which can help the government avoid the most destabilizing effects of international economic sanctions.
Nearly all U.S. products have duty free access to Nicaragua under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). Remaining tariff rate quotas (TRQs) on rice, chicken meat, and dairy products will phase out by January 1, 2025. Among the best prospects for export growth are feed grains and soybean meal as well as rice, chicken meat, pork, and snack foods, but deteriorating economic conditions or terms of trade could diminish prospects.
Nicaragua is the smallest export market for U.S. processed foods in Central America, even smaller than Belize. In 2022, U.S. exports of processed food products to Nicaragua grew 20% to US$76.3 million. In 2023, U.S. processed food exports to Nicaragua increased 12% to US$85.3 million.
Top processed food exports to Nicaragua in 2023 included:
$1.3 Billion
estimated total of retail sales of packaged food products in 2023
28%
increase of retail sales of packaged food products
$1.9 Billion
estimated growth in sales of packaged food products by 2028
Euromonitor has estimated that the retail sales of packaged food products in Nicaragua will reach just over US$1.3 billion in 2023. This also represents an increase of US$296.8 million or 28.1% from 2019. Euromonitor also forecasts the packaged food market to grow to nearly US$1.9 billion by 2028, an increase of US$431.1 million and 29.6% from 2024.
High growth categories in the forecast include:
FAS Post Managua reports that supermarket chains have continued to expand and modernize, supporting increased distribution of imported high-value perishable products (like pork and chicken meat) as well as consumer-packaged goods. Expansion of supermarket infrastructure has also driven growing demand for, and popularity of, retailers’ own private label branded products. However, if the Nicaraguan economy continues to deteriorate, FAS Post Managua anticipates reduced demand for high value, consumer-oriented foods.
More than 1,000 wholesalers, retailers, and distributors operate in Nicaragua. Supermarkets with a wider variety of products are increasingly popular and expanding. Walmart operates 92 supermarkets under several banners serviced by a national distribution center. The Pali and Maxi Pali banners are discount supermarkets targeting smaller cities and towns as well as populous neighborhoods in Managua; customers generally seek the lowest prices and typically express low levels of brand loyalty. La Union and La Colonia cater to a more upscale segment, offering a variety of innovative and imported products.
Bulk-format products from U.S.-based PriceSmart, which carries a wide variety of imported products, are attractive to smaller businesses and restaurants. Two additional stores, Porta’s and Economart, target higher-end consumers in Managua with a variety of imported products. Convenience chains AM/PM and Super Express operate more than 100 locations combined across the country, featuring a variety of imported snack foods and confections, though regional suppliers more common than U.S. brands.
Among shelf-stable products, the best export prospects are food preparations, non-alcoholic and alcoholic beverages, snack foods (including cookies and crackers), rice, dry beans, canned goods, and breakfast cereals. Relative to other Central American countries, Nicaragua’s food processing sector is limited, but there are still export opportunities for ingredients and raw materials in food processing. However, if the Nicaraguan economy continues to deteriorate, FAS Post Managua anticipates reduced demand for high value, consumer-oriented foods.
FAS Post Managua reports that the hotel, restaurant, and institutional (HRI) sector had been hard hit by the 2018 social political crisis, which discouraged international tourism, even before COVID-19 pandemic caused many hotels and restaurants to close temporarily in the first half of 2020. International tourism only began to recover (albeit tentatively) in summer 2021 and has been slowly increasing as more airlines resumed flights to Nicaragua in 2022. The loss of formal jobs due to the 2018 crisis and the pandemic has contributed to a significant increase in informal economic activity, including HRI businesses like food trucks, which are becoming more popular in urban areas. A number of delivery service providers have also emerged from the pandemic – including Hugo, Piki, Jumpers, Get My Food, Aventon, Yolo, and Pedidos Ya – offering not just restaurant meals, but also groceries and home goods.
20%
increase of food imports in the last five years
23%
U.S. exports of intermediate products to Nicaragua grew 23% in 2022
FAS Post Managua reports that Nicaragua’s food processing sector is largely focused on primary processing of meat and sugar for export. Apart from a small number of snack foods and confections, there are few locally produced consumer-oriented products. Cost-competitive regional suppliers have established recognizable brands and comprised 80% of Nicaraguan snack food imports in 2022. FAS Post Managua anticipates sustained opportunities for U.S. processed products suppliers prepared to navigate the challenges of the Nicaraguan market, given the local sector’s relative underdevelopment and low levels of anticipated investment in the sector.
In addition to meat and sugar, food products processed in Nicaragua consist primarily of cookies and crackers. The local supply of various food products, especially those in the consumer-oriented groups, is limited. The Nicaraguan food industry is mostly engaged in primary processing of local products for the export market. Very few snacks, chips, biscuits, and sugar confectionery are produced locally. This provides opportunities for foreign suppliers. Nicaraguan industries import high volumes of intermediate products such as additives and ingredients from foreign suppliers. The sector is still underdeveloped when compared with the rest of Central America.
Domestic food production does not satisfy consumer demand for a variety of products; Most of the products found in the supermarkets come from Central American countries and the United States. The United States is the top trading partner, followed by China, Mexico, Honduras, and Costa Rica. Food imports have increased by 20% in the last five years.
Intermediate products are where most food processing products are classified. U.S. exports of intermediate products to Nicaragua in 2022 grew 23% to US$113 million. The top products exported included soybean meal and soybean oil, vegetable oils, sugars, sweeteners, beverage bases, essential oils, distiller’s gains and dextrins, peptones and proteins.
FAS Post Managua reports that as the Nicaraguan economy continues to contract, there will be less demand for high-value foods and greater demand for basic grains and lower priced processed products. The best prospects for 2024 are yellow corn, rice, soybean meal, pork meat, chicken leg quarters and a wide variety of lower priced processed products. Despite a surge in imports of U.S. wheat in 2021, FAS Post Managua would not classify wheat as a best prospect in Nicaragua. A 2011 arrangement between Nicaragua and Russia has practically displaced all wheat from other origins, except when Russian exportable supplies are tight, as in 2021.
After a decade of Russian dominance in the market, U.S. wheat exports to Nicaragua continued to climb in 2022, due primarily to shipping disruptions following the Russian invasion of Ukraine. At 130,000 metric tons, U.S. wheat shipments to Nicaragua through September 2022 were nearly 10 times greater than pre-COVID-19 levels in 2019. However, this export success could prove temporary, as Nicaragua is increasingly a Russian client state.