C O N T E N T S
Introduction 2
Methodology 3
Executive Summary 5
RESEARCH FINDINGS & PRODUCT PROSPECTS 7
Juice 7
Milk 7
Claytons Kola Tonic 8
Rum 9
Coconut Oil 10
Soya Bean Oil 10
Margarine 11
Biscuits 12
Specialty Flours/Pancake Mix 13
Windows & Doors (uPVC) 13
Solar Water Heaters 14
Pepper Sauce/Condiments 16
Market Trends 17
GUIDE TO DOING BUSINESS WITH THE DOMINICAN REPUBLIC 18
Country Overview 18
Ease of doing business in the Dominican Republic 19
Challenges of doing business in the Dominican Republic 19
Economic Prospects 19
Free Trade Agreements 20
CARICOM/Dominican Republic Free Trade Agreement 21
Barbados and the Dominican Republic Trade 23
Distribution Channels 23
Legal considerations 28
Standards and technical regulations 28 Labeling regulations 29
Importing Into the Dominican Republic: General Timeframes and Costs 29
Other Import Requirements 30
Customs 31
Shipping Information 31
Intellectual property rights 31
Tax considerations 32
Value Added Tax (VAT) 32
Corporate income tax 32
Capital gains tax 32
Asset tax and withholding tax 32
Selective consumption tax (ISC) 32
Banking 32
Free trade zones 33
Entry requirements 33
Travel advice 33
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Introduction
A market research visit was made to the Dominican Republic over the period November 7-11, 2016 aimed at identifying opportunities for increased trade and investment between Barbados and Dominican Republic. The research is intended to help and encourage Barbadian companies to make sound business decisions on:
Whether or not to enter the market; How the product could be supplied to the market; Whether the product is likely to require further How the product could be promoted within the market. development before launching in the market;
This report presents major highlights of the market visit, offers recommendations on market penetration as well as some insight into doing business with the Dominican Republic. Barbados investment & development corporation Market Research Report – Dominican Republic 3
methodology
A consultant was contracted to arrange business meetings and and intellectual property registration, the Ministry of Trade, to collect market information prior to the market visit of two BIDC business support organisations including the Caribbean Export officers during the period November 7-11, 2016. The consultant Development Agency, the counterpart BIDC agency Centre for was given a list of Barbadian products deemed to have the Export and Investment Promotion of the Dominican Republic best prospects for export sales. Meetings were held with the (CEI-RD), the Dominican Exporter Association (ADOEXPO) Chambers of Commerce in the two major cities of Santo Domingo and the Industry Association of the Other Region (AIREN). and Santiago, the agencies responsible for product standards Visits also extended to supermarkets and hardware stores.
Information was collected from both primary and secondary sources on:
Accessibility of Barbadian Current size of market Potential customers’ views suppliers to the market Market segmentation Customer needs, usage and attitudes Policy initiatives designed to Market trends and promote trade opportunities Do they see a need for the product/service Regulations and Legislation How do they source new Import policy/ Market Access/ Distribution channels suppliers/selection criteria used Licensing Import Tariffs Agents or distributors used Is the product/service Customs procedures and How the market is best acceptable in its current format practices supplied
Terms of Trade (payments) Costs of distribution The specific mechanisms, Pricing and general pricing Economic and financial formal and informal for structure entering the market statistics Recently published trade statistics The general experiences of companies that have operated Competition Major products traded and major trading partners in the market Is existing competition more or Major industries and new Non-Tariff barriers to market less sophisticated developments entry Presence of local/international Transport and communication Foreign exchange controls competitors facilities Marking/labeling/packaging Key players’ activity, strategy General information on the requirements and performance country
Barbados investment & development corporation 4 Market Research Report – Dominican Republic
List of Products Selected for Market Research in Dominican Republic table I
product name description USE TARIFF CODES
Barbados Alcoholic beverage An alternative to brandy/whisky and can be 2208401 Rum used in homes, bars, hotels in drink mixes 2208409
Milk Tetra Pak fresh pasteurized, A beverage which can be used in homes, bars, 0401 ultra pasteurized, evaporated, hotels in drink mixes. Available in a range of 0402 low fat, full cream, lactose free sizes. or flavoured
Juice Tetra Pak flavoured 100% juice A beverage which can be used in homes, bars, 2009 and juice drinks hotels in drink mixes. Available in a range of 2202 sizes
Claytons Non-alcoholic beverage made A beverage which can be used in homes, bars, 2202909 Kola tonic from Kola nut hotels in drink mixes
Pepper Sauces Barbadian styled pepper sauce Pepper sauces are spicy spreads for use in 2103901 gravies, or spreading on slices of ham, turkey, fish, meats, etc. Can also be mixed with salad dressings as a “dip”.
Condiments/ Sauces and Sauce These are indigenous spices used in sauces, 2103 Seasonings Preparations, Mixed and gravies, in the preparation of meats, Condiments and Seasonings chicken/turkey, pork, and fish; it is a particularly good marinating product for local hotel, restaurant and domestic dishes.
Margarine Chilled/shelf stored butter Butter substitute for use in homes or in 1517 substitute commercial quantities by bakers, kitchens, etc.
Specialty Flours made of sweet potato, For use in baking, pastries and doughs 1106 Flours cassava, coconut, breadfruit
Pancake Mix Instant mix made of sweet Used to make crepes, pancakes 1901209 potato, cassava, coconut, breadfruit
Biscuits Sweetened and non- Used as dessert or convenient snack 190531 sweetened biscuits 1905901
Coconut Oil Cold pressed For use in cooking 151311 151319
Windows uPVC Used in construction 392520 & Doors
Solar water Photovoltaic panels for heating For domestic/commercial use 841919 heaters water Barbados investment & development corporation Market Research Report – Dominican Republic 5
Executive Summary
The Dominican Republic is undergoing rapid development with Beyond consumer goods, most fruit, vegetables and meat are the installation of new infrastucture and the construction of high produced locally. A large proportion of processed food and rise homes, hotels, schools, hospitals and commercial buildings. drink products available in the country are however imported, It is described as a consumption oriented market with significant especially from the USA, under the DR-CAFTA Agreement. consumer spending on articles such as designer clothing, The range includes several well- known and well-established jewellery and accessories. American products and services brands. have a strong reputation for quality and due to the DR CAFTA The sole Barbadian product observed in supermarkets in the agreement are highly competitive in the market. Many US Dominican Republic was Rum. A keen interest was shown in franchises are present in the country and top end retail outlets Barbadian products presented during the market visit. Findings such as Louis Vuitton, Chanel and Salvatore Ferregamo are however suggest it will take a strong combination of quality, present throughout the capital Santo Domingo. Opportunities price and unique niche appeal for a product to break into the however exist for lower end brands. Consumer purchases are market. Research findings show that the best prospects for driven by a mix of quality and price, with customers willing to Barbadian companies would likely be in the following areas: pay more for those products with perceived value added.
Premium Rum Soya Bean Oil Provision of uPVC windows and doors* Claytons Kola Tonic Assembly and sale of solar water Provision of uPVC roofing shingles* Juices heaters Provision of uPVC drainage systems* Specialty Flours & pancake mixes Products and services for the Coconut Oil (cold pressed & multi- use) ‘green building’ sector * Eligible for duty free entry
Export opportunities also exist for sausages, bacon and meat The arrangement of a Dominican Republic programme preparations; sweetened and unsweetened biscuits; animal to facilitate Spanish Immersion training for business persons and vegetable oils and fats; pepper sauce; Portland cement; who want to do business with the Dominican Republic. paints and varnishes; washing and cleaning preparations given their eligibility for MFN treatment under the provisions The Dominican Republic market is highly complex. Navigating within the CARICOM/Dominican Republic Trade Agreement. the requirements for successful market entry will require a keen Market demand may however be minimal given the existence sense of how to do business. of intense competition as well as consumer dietary preferences for alternatives. There are significant non-tariff barriers to entry, which can only be overcome with requisite knowledge of compliance With respect to services, export opportunities exist in Education. factors. A common market entry option is to appoint an agency The Ministry of Higher Education has a generous budget. It has or distributors with the assistance of legal counsel to ensure signed agreements with universities around the world, in order agreements can be terminated for non-performance. Forging to send Dominican students to study abroad at postgraduate relationships with well-connected, reputable, established level. They are looking to sign more agreements, especially in players is key. Good after-sales service is also a pre- technical subjects such as engineering and mathematics. requisite to successfully conducting business in the country.
The main opportunities for Barbadian companies are in: Trade between Barbados and the Dominican Republic is High quality English teaching for Dominican teachers characterised by a trade surplus in Dominican Republic’s favour. Barbados investment & development corporation 6 Market Research Report – Dominican Republic
The minimal exploitation of the CARICOM/Dominican Republic to the Dominican Republic are Caribbean Label Craft, Free Trade Agreement at the Barbados end suggests there is Mount Gay Distilleries and Carlisle Laboratories. Exports a need to promote and educate Barbadian companies on the averaged around US$2 million annually between 2011-2015. instrument as it affords duty free and MFN treatment for several Major exports include printed labels, Ponche Kuba Crème categories of product made here. Liquors, Rum and Pharmaceuticals. The three (3) major Barbadian companies currently exporting Barbados investment & development corporation Market Research Report – Dominican Republic 7
RESEARCH FINDINGS & PRODUCT PROSPECTS
Juice
The leading brands of juice on the market are Rica and Sun Isle, one third is shared by other brands of juices including Motts, which are locally produced; Tropicana, imported from the US; Tampico and Ocean Spray and chilled products like yogurt and Dos Pinos from Costa Rica. These brands dominate more and vegetable and juice shakes. Tetra paks are the preferred than two-thirds of shelf space in retail outlets. The remaining packaging option. retail Prices table II Product Country of Origin Volume/Size Price (US$)
Rica Dominican Republic ½ gallon $2.50
Dos Pinos Costa Rica 1 Litre $1.07
Santal Italy 1 Litre $1.28
Santal Italy 200ml $0.38
Jumex Mexico 1 Litre $1.26
Tree Top Brazil 1 Litre $1.25
Prospects
The PHD line was deemed to have significant potential with the that significant sums would have to be spent on marketing and caution that its successful market entry would require a large positioning the product against competing US brands which distributor which could generate the volume needed to make dominate the market as well as other Central American brands. it a profitable venture. The packaging was considered to be Orange, grapefruit and passion fruit juices are subject to MFN very attractive and the product range impressive. It was noted rates of duty while all other juices are eligible for duty free entry.
Milk
The three brands dominating fat-free and flavoured options the market are Rica, Parmalat are available in 1l ml and 250 and Milex, all locally produced. ml sizes. Tetra Paks are the Dos Pinos, out of Costa Rica popular packaging option. comes in at position number Increasingly more attractive 4, imported by distributor plastic bottles are however Corripio, a very diversified being used to package company of Spanish origin. flavoured milk such as that Milk in full and semi cream, produced by Califia Farms. Barbados investment & development corporation 8 Market Research Report – Dominican Republic
retail Prices table III Product Country of Origin Volume/Size Price (US$)
Flavoured Milk
Rica Dominican Republic 350ml $0.98
Rica Dominican Republic 1 Litre $1.09
Rica La vaquita Dominican Republic 1 Litre $0.96-$1.00
Parmalat Dominican Republic 1 Litre $1.02-1.34
Parmalat Dominican Republic 200ml $0.43
Milex Denmark 1 Litre $1.07-$1.28
Dos Pinos Costa Rica 1 Litre $0.93-$1.26
Del Monte USA 1 Litre $0.98
Bravo store brand Dominican Republic 1 gal/3.75 L $2.15
Evaporated Milk
Cardinal Ontario 377g $0.82
Nestle Dominican Republic 315g $0.84
Prospects
Given the dominance of local brands of milk in the market, Indulgent line offer the best prospects for market entry given successful market entry for a new milk brand is dependent on their unique flavor profile. the ability to offer something which is not on the market, at a The milk products are eligible for duty free entry into the competitive price. The PHD flavoured milk products such as the Dominican Republic.
Claytons Kola Tonic
This product was deemed to be interesting given its unique distributor to test market. No other product similar was seen selling properties. The packaging was considered to be in the retail outlets visited. Competitive pricing and packaging attractive. It was suggested however that it requires a large information therefore could not be ascertained.
Prospects
It was suggested that significant marketing and education be beverages. undertaken to promote the product and its uses and that it be This unique non-alcoholic beverage is eligible for duty free positioned through specialty wine and spirits bars. The product entry into the Dominican Republic. was considered excellent for pairing with rum and alcoholic Barbados investment & development corporation Market Research Report – Dominican Republic 9
Rum
Alcoholic beverages are sold produced Brugal , with Barcelo, Brugal mainly through cash and carry also locally produced, coming in Papa Andres Limited retail outlets where persons meet second. Together they occupy Edition Rum to buy and drink alcohol. There 75% of shelf space in retail outlets. are several competing brands of The third most popular brand is rum, the majority locally produced, Zapata from Guatemala. Mount available in both white and brown Gay Extra Old was seen in the varieties. There are also several major super market chain Jumbo flavoured rums. Prices vary occupying a fair amount of shelf significantly from the cheaper space. It was also seen at the high brands to high quality premium end specialty supermarket, Super brands as does the packaging. Fresh, however it was placed The dominant brand is the locally among the Whiskey. retail Prices table IV Product Country of Origin Volume/Size Price (US$)
Brugal Papa Andres limited edition Dominican Republic $1, 266 ( 1000 bottles produced)
Brugal Extra Viejo Dominican Republic 750 ml $30
Brugal Extra Dry Dominican Republic
Brugal XV Dominican Republic 700 ml $10.87
Brugal 1888 Dominican Republic 750 ml
Brugal Ron Anejo the original Dominican Republic 750 ml $20
Ron Barcelo Imperial Dominican Republic 750 ml $26
Ron Barcelo Gran Platinum Dominican Republic 750 ml $24
Ron Barcelo Anejo Dominican Republic 750 ml $19
Ron Macorix Coco Splash, Appletini y Coolpina Dominican Republic 750 ml $9.76
Ron Macorix 8 year old vieja reserva Dominican Republic 700 ml $9.78
Ron Macorix Dominican Republic 700 ml $6.72
Ron Macorix 8 year old Dominican Republic 750 ml $7.59
Ron Clasico Matusalem Cuba (Produced in the DR) 700 ml $18.46
Ron Anelo Matusalem Cuba (Produced in the DR) 700 ml $10.87
Ron 15 anos gran reserva Matusalem Cuba (Produced in the DR) 700 ml $43.48
Ron Viejo Bermudez Dominican Republic 700 ml $8.59
Prospects
There is significant interest in Barbadian rum, as its reputation space to exhibit and host product tastings. as a high quality product is known. It was suggested that Rum is eligible for MFN rates of duty on importation into the Barbadian rum, given its reputation, be positioned among high- Dominican Republic. end brands in the specialty wine and spirits stores with floor Barbados investment & development corporation 10 Market Research Report – Dominican Republic
Coconut Oil
This is an increasingly popular product, produced locally and increasingly being sought for use in hair care, skin care and imported. The local brand Eva, is sold in supermarkets and cooking and is retailed as a pure oil as well as in a cold pressed retails from US$1.29 based on size. Organic coconut oil is formulation. It is also a main ingredient is several cosmetics. retail Prices table V Product Country of Origin Volume/Size Price (US$)
Eva Dominican Republic 33.8 oz $15
Solo Coco (organic multi purpose) Dominican Republic 14 oz $11.99-$13.64
Prospects
Given the increasing demand for organic coconut oil, it was personal grooming. suggested that coconut oil both in liquid and cold pressed As a vegetable oil, coconut oil would be eligible for MFN duty form could be successfully marketed for healthy cooking and treatment on importation to the Dominican Republic.
Soya Bean Oil
Use of vegetable oils in the market is growing. There is a heavy in plastic bottles, glass bottles and metal cans. The dominant presence of soya bean oil, and competing sunflower seed soil, brand is Cristol. Consumers are however purchasing less soya grape seed oil and avocado oil. Soya bean oil was packaged bean oil and more coconut oil for cooking. retail Prices table VI Product Country of Origin Volume/Size Price (US$)
Joya Dominican Republic 64 oz $2.64
Cristol Dominican Republic 15 lbs $13.31
El Gallo Dominican Republic 640z $3.59
Aciete Diamante Dominican Republic 128 oz $5.41
Prospects
Depending on the price at which it can be offered in the vegetable oils. market, there may be scope for sales of soya bean oil. This As a vegetable oil, soya bean oil would be eligible for MFN duty is in consideration of increasing use of perceived healthier treatment on importation to the Dominican Republic. Barbados investment & development corporation Market Research Report – Dominican Republic 11
Margarine
The market for margarine is saturated with consumers uses healthier high quality alternatives. The packaging used is purchasing less and less. The preference is the healthier similar to that used by Roberts Manufacturing but it was noted coconut oil in a cold pressed formulation for cooking. In that the smallest size of Roberts Margarine was too big for addition to domestic consumers, hotels and restaurants are domestic purposes and that the largest size was too small for moving away from the use of margarine and are in search of commercial purposes. retail Prices table VII Product Country of Origin Volume/Size Price (US$)
Shurfine USA 45oz $2.70
Dorina Regular Dominican Republic 3lb $4.20
Dorina Regular Dominican Republic 425gr $1.53
Dorina Light Dominican Republic 425gr $1.53
Mazorca Dominican Republic 425gr $1.17 Mazorca Dominican Republic 3lb $3.75
Margarina Ricamesa Ecuador 16oz $0.86
Margarina Ricamesa Ecuador 1lb $1.08
Margarina Ricamesa Ecuador 16oz $0.86
Flora UK 1276g $5.00
Flora UK 425g $2.17
Prospects
This is not a market suited for margarine. Given dietary preferences and the growing disinterest in margarine, there are no positive prospects for sales. Barbados investment & development corporation 12 Market Research Report – Dominican Republic
Biscuits
There are several brands of biscuits both sweetened and on retail shelves. unsweetened in the market. All the major brands of sweetened In the non-sweetened line the major brand is Aviva, produced biscuits such as Oreo, Chips Ahoy, Pepperidge Farm, and locally. Several varieties are available under this label including Keebler from the US and McVities and Cadbury from the UK lightly salted, unsalted, whole wheat, whole grain with honey, are in the market. There are also several Latin American brands and fine herbs (oregano, basil, parsley).
retail Prices table VIII Product Country of Origin Volume/Size Price (US$)
Unsweetened
Aviva Dominican Republic 300g $2.72
Aviva Dominican Republic 780g $1.41
Hatuey Soda Dominican Republic 654g $5.00
Sweetened
Galletas Maria England 100g $0.50
Galletas Maria England 200g $0.83
Casino Peru 400g $1.37
Guarina Sandwich Dominican Republic 423g $1.20
Dino Dominican Republic 425g $1.72
Duetto Dominican Republic 423g $1.63
Oreo USA 432g $2.61
Prospects
Given the high level of competing brands, large packaging options and low costs of biscuits imported under the DR/CAFTA agreement this market does not appear very favourable for this product. Biscuits both sweetened and non- sweetened, are eligible for MFN duty treatment on importation. Barbados investment & development corporation Market Research Report – Dominican Republic 13
Specialty Flours/ Pancake Mix
Given the increasing demand almond, corn, flaxseed and for gluten free products, tapioca. The dominant brand specialty flours are now on the market is Bob’s Red available on the market in Mill , imported from the several varieties. None are USA. Well-known brands of produced in the Dominican pancake mixes were also Republic. There are flours dominant on retail shelves, made of sweet potato, most of them sourced from coconut, cassava, hazelnut, the USA. retail Prices table IX Product Country of Origin Volume/Size Price (US$)
Bob Red Mill Flour USA 453g $6.96
Shurfine Pancake Mix USA 907g $3.02
Aunt Jemima USA 907g $3.83-$4.13
Avena Cakes Italy 907g $2.93
Betty Crocker USA 907g $3.91
Prospects
Given the increasing demand for healthier products, the stores like the Superfresh Supermarket as well as the healthy prospects for the introduction of new specialty flours are products section of leading supermarkets is recommended. favourable. Barbadian brands must however be able to compete Non-wheat flours are subject to duty free eligibility on on price and should be packaged in convenient resealable importation. packages with a freshness seal guaranteed. Placement in health
Windows & Doors (uPVC)
The construction sector in the Dominican Republic has grown bridges; construction of hospitals; construction of hotels in significantly over the past 30 years due to the availability of low response to the country’s growing popularity as a destination rate loans and mortgages. among Europeans and Americans; rehabilitation of ports; urban, regional and transportation planning and project management. Construction activity is evident with: Continuity of the Santo There are also possible future projects with: a railway project Domingo underground; Construction of the second phase of linking Santo Domingo and Santiago; development of the Santo Domingo Beltway; construction of highways, roads and San Souci district of Santo Domingo; and construction of Barbados investment & development corporation 14 Market Research Report – Dominican Republic
two international airports (north and south western regions). commercial buildings. One company visited took brochures to Construction is also buoyed by the tearing down of smaller pass on to the buyers for the hotel segment. The representative homes and the construction of new high rise accommodation. was particularly impressed by Oran’s distributor presence in the The windows and doors produced in Barbados were considered English speaking Caribbean and was very interested in meeting to be excellent products, given their attributes of being light with the companies should they visit on a trade mission. weight, easy to clean, rust/corrosion free and storm resistant. It was however indicated that there will unlikely be any domestic One company visited however expressed an interest in sales as houses are not built to standard. Windows and doors sourcing uPVC roofing shingles. The representative has vary considerably in size and are custom made to fit housing requested information from Duratile on how the units are sold needs. It was suggested that the products would be better and packaged and priced and whether there is any possibility pitched to hotels primarily, hospitals and schools and maybe of exporting to the Dominican Republic.
retail Prices table X Product Country of Origin Volume/Size Price (US$)
Everlight door Imported by Corripio 90x210 $42.95
Pato Marco Everlight Door Imported by Corripio 90x210 $30.26
Prospects
There are opportunities for Barbadian companies in the buildings, hospitals and schools. This suggests that partnerships provision of: will have to be established with contractors and architects. There is a heavy concentration of builders and contractors in Products and services for the ‘green building’ sector the Bavaro region working directly with the tourism and hotel uPVC windows, doors sectors. uPVC roofing shingles It will be very important to define target market segments and uPVC drainage systems to outline the product attributes and advantages for each. These products must however be positioned for retail to the Windows and doors are eligible for duty free entry on commercial building sector namely hotels, high rise residential importation.
Solar Water Heaters
The Dominican Republic has traditionally depended on The grid is state-owned and distributed through three (3) state imported diesel oil and hydro power for electricity generation. entities. Electricity generation is by private companies. Costs to In 2013 work started on two (2) new state financed coal fired the consumer are very high due to losses, theft and corruption, power stations and a private sector financed Liquified Natural low collection rates and frequent power cuts. Most businesses Gas (LNG) terminal. Improvements to renewable energy and many private homes provide their own back-up sources. production are also underway. Gas cylinders are installed for domestic and commercial Barbados investment & development corporation Market Research Report – Dominican Republic 15
energy needs and water heating, with significant monthly costs the systems makes them unaffordable within most homes. attached for gas used. No local manufacturing of the systems is done. Brands are The country’s first wind-farm is already in service, providing imported mainly from Europe and assembled locally. The Units 5% of the demand. There are some European companies are displayed at the hardware stores and persons interested associated with the importation/assembly of solar water heaters in a purchase are directed to the supplier who will then install. but the systems are poorly designed, very expensive to acquire There is a reluctance to import the system largely given the lack and not very popular among consumers. of expertise on installation and after sales service maintenance There is significant scope for construction and servicing of and trouble shooting. power generation facilities and equipment; development of Given the dominance of high rise housing units with central gas bio-fuels, bio-mass, wind power, wave turbines and solar/ installed for heating and cooking, it was suggested that solar photovoltaic (PV) power; construction of mini hydro-generation water heaters would be better suited for small to medium sized plants to supply electricity to isolated rural areas of the country; hotels, commercial buildings and the heating of swimming supply of equipment for hydroelectricity, such as dam building pools. equipment and engineering machinery etc. It was suggested that any company looking to enter the market Despite an increasing awareness of renewable energy and will have to establish a presence in the market, setting up a the availability of incentives to encourage investment in manufacturing/assembly operation, appointing a sales team to environmentally-friendly technologies, solar water heaters drive sales and an installation team to offer technical support. are not popular. Hardware outlets visited reported sales of With those things in place, hardware stores indicated there 1-2 units a month and as low as one unit a year. The price of would be a greater interest in carrying them instore. retail Prices table XI Product Country of Origin Volume/Size Price (US$)
Megasol Europe assembled locally $1, 977.77
L&G Eurosolar Systems Europe assembled locally 52 gallons $1, 171.11
Trace Sol Europe assembled locally
Delpaso Solar Europe assembled locally 52 gallons $1, 244.44 (without installation) $1, 533.33 (with installation)
Prospects
There are opportunities for Barbadian companies in the market entry should extend to setting up a manufacturing/ assembly and installation of solar water heaters. Consumer assembly operation, appointing a sales team to drive sales and education is however important as well as product affordability. an installation team to offer technical support. Manufacturers will have to put facilities in place to offer credit Solar water heaters are subject to MFN duty rates on financing for purchase of the systems. Considerations for importation. Barbados investment & development corporation 16 Market Research Report – Dominican Republic
Pepper Sauce/Condiments
Dominicans prefer a bland diet with a tendency toward sweet. US$0.9 million worth in 2015, down from $1.2 million in 2014. Hot spicy food is not popular. Seasonings preferred are the This is very likely products from the Goya brand. Goya operates dried, loose variety namely Basil, Oregano, Parsley, Bayleaf; a 220,000-square-foot (20,000 m2) manufacturing facility Cinnamon and Nutmeg are also used heavily. There is a wide in San Cristóbal, Dominican Republic. Founded in 1936 by range of pepper and picante sauces available but these are Spanish immigrants, Goya Foods, Inc. is the largest Hispanic- very mild and thin in body. The leading brand is Baldom, owned food company headquartered in the United States and produced locally. The most popular size is 3 oz. No interest was the premier source for authentic Latin cuisine. Goya provides expressed in the condiments and sauces made in Barbados. consumers from the Caribbean, Mexico, Spain, Central and Interestingly condiments is one of Barbados’ leading imports South America with over 2,500 seasonings and food products. from the Dominican Republic. Barbados in fact imported
retail Prices table XII Product Country of Origin Volume/Size Price (US$)
Baldom DR 3 oz $0.68
Baldom DR 6 oz $0.97
Ranchero DR 5 oz $0.82
Goya USA 6 oz $1.04
Shurfine Lousina Style Hot Sauce USA 3 oz $0.64
Tabasco USA 2 oz $2.42
Prospects
Despite the provisions for MFN treatment under the CARICOM/ offers services for special events including anniversaries and Dominican Republic Agreement, given dietary preferences, Christmas parties. there appears to be no prospects for large scale sales of pepper sauces and condiments in this market. One owner of The retailer, while keen on partnering with a Barbadian producer a “mom and pop” store however expressed interest in the to build interest in the product range, is however requesting hot sauces, having sampled a selection. This small retailer market support to introduce the products in the form of free also has a catering business with clientele including Jet Blue samples and a promotional budget. and several large corporations in the Dominican Republic and Pepper sauce is subject to MFN rates of duty on importation. Barbados investment & development corporation Market Research Report – Dominican Republic 17
Market Trends
Consumer attitudes and brand preferences are similar to those in the USA.
Dominicans travel frequently to the US for business, vacation, medical treatment, study and family visits.
Consumer buying patterns and tastes mimic those in the US.
There is growing number of US styled supermarkets and shopping malls in the capital city Santo Domingo where the small but affluent middle class (estimated at 90 000 persons) shop.
Large impoverished rural communities buy essentials from family-run Colmados, small shops that double as bars.
Consumer purchases are driven by a mix of quality and price, with customers willing to pay more for those products with perceived value added.
Those products with unique selling properties and with a captivating story behind them sell best as customers are seeking differentiation.
Niche marketing is increasingly popular with customer choice leaning more toward products that are healthy, green, organic, natural.
There is increasing interest in health and wellness, evidenced by a growing number of fitness studios and gyms in Santo Domingo.
Most restaurants add a whopping 28% (ITBIS of 18% and an automatic 10% service charge) to every bill. Menus don’t always indicate whether prices include the tax and tip- a shock to many first-timers.
Several wine and spirits bars are emerging offering samplings and pairings with new food products. Barbados investment & development corporation 18 Market Research Report – Dominican Republic
GUIDE TO DOING BUSINESS WITH THE DOMINICAN REPUBLIC
Country Overview
The Dominican Republic has the largest economy in the services. The country’s strategic geographic position, ports and Caribbean and Central American region. It has a Gross airports allow easy access to the United States, Latin America Domestic Product (GDP) of US$71.3 billion. It is a developing and the Caribbean. It is a highly sought after tourist destination country primarily dependent on agriculture, trade, tourism and and is infact the most visited Caribbean country.
area Population Population per km2 Population Growth
48,442 km2 10.2 million 193.6 inhabitant 1.47%
Urban Population Political System Form of Government
3.8 million Republican democracy Presidential
Language Currency Administration English National National widely Spanish spoken Dominican Peso rd$45=US$1 31 provinces 1 district
Religion Capital City Major Exports Gold, silver, cocoa, sugar, Roman Santo Domingo coffee, tobacco
Business Hours Major Imports Catholic mon - Fri 8/9am - 5/6pm Petroleum, food, cotton sun 9am - 1pm or 9am - 8pm and fabrics, chemicals, /Protestant large shopping centers only pharmaceuticals
Major Trade Partners (exports) Major Trade Partners (imports) USA, Haiti, Canada USA, China, Venezuela, Trinidad, Mexico Barbados investment & development corporation Market Research Report – Dominican Republic 19
Ease of doing business in Challenges of doing business the Dominican Republic in the Dominican Republic
The following factors lend to the ease of doing The following factors lend to the ease of business with the Dominican Republic: doing business with the Dominican Republic: Low wage costs English widely spoken as a business language Corruption- the Dominican Republic Strong legal framework scores 123rd on Transparency International’s Connecting flights via the US into Santo Domingo Perceptions of Corruption Index Free trade agreement with CARICOM Bureaucracy No exchange controls Open economy with strong appetite for imported goods and Energy crisis which could affect technology operations Stable political environment Existence of non-tariff barriers Currency stability Modern transportation infrastructure
Advanced and reliable telecommunications infrastructure
Economic Prospects
The Dominican economy has grown more climate to facilitate international trade and than any other Latin American economy in export growth. Further reforms are however the last 50 years. GDP grew by 7% in 2015 needed to maintain competitiveness. driven by construction, manufacturing and tourism. Private consumption is strong as a The new government which took office in result of low inflation, job creation and a high August 2016 is concentrating on improving level of remittances. competitiveness and the investment climate, The World Bank has however noted ensuring stringer backward linkages from “In the last 10 years the that despite its strong growth and tourism and export processing zones to country has transformed macroeconomic stability, the country has domestic manufacturing and agriculture, its economic base, not witnessed any significant welfare strengthening the quality of education and diversified its exports and improvements until recently. Poverty which implementing job training policies to create soared to 50% in 2004 only fell in the last more and better jobs. improved its business two years toward 32%. Efforts are also being made to ensure climate to facilitate In the last 10 years the country has adequate financing for basic public services international trade and transformed its economic base, diversified such as water and sanitation, education and export growth” its exports and improved its business health and strengthening public financial Barbados investment & development corporation 20 Market Research Report – Dominican Republic
management systems. The government is also looking to program targeting. improve public service delivery to persons living in poverty The Central Bank of the Dominican Republic predicts the with an expanded national health service, constructions of economy will grow 6.7% in 2016 and expand 5% in 2017. thousands of classrooms to reduce overcrowding and better
Free Trade Agreements
The Dominican Republic is a member of the World Trade influx of products from the US as and the Central American Organization (WTO) and the CARIFORUM. market in the Dominican Republic, taking advantage of duty The Dominican Republic has 2 main free trade agreements free entry. under which it trades: Under the EPA, 80% of the goods produced in the EU will DR-CAFTA, an agreement with central America, Dominican receive duty free access to Caribbean markets by 2024. Many Republic and the US tariffs have already been reduced. As a result there are many Economic Partnership Agreement (EPA), an agreement with European products mainly from Spain, Italy and France on the the EU and CARIFORUM supermarket shelves as well as companies associated with the importation/assembly in the local market. The historical ties to As a result of the DR-CAFTA Agreement there has been an Spain are also a factor in this regard.
us agricultural exports to cafta-dr region, 2005 - 2015 Billions U.S S5
El Salvador, Guatemala, Honduras and Nicaragua begin implementation Costa Rica begins Total U.S. Implementation Exports, 2015 $4.2 billion S4 Dominican Republic begins implementation Dominican Republic $1.1 billion
S3
Guatemala $1.1 billion
S2 Costa Rica $650.5 million
S1 Honduras $579.5 million El Salvador $497.2 million Nicaragua $219.8 million 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: USDA-FAS Global Agricultural Trade System (GATS) Barbados investment & development corporation Market Research Report – Dominican Republic 21
CARICOM/Dominican Republic Free Trade Agreement
There is also the CARICOM/Dominican The More Developed Countries (MDCs) of GOODS WHICH SHALL BE SUBJECT Republic Free Trade Agreement which CARICOM are required to grant reciprocal TO PHASED REDUCTION OF MOST FAVOURED NATION (MFN) RATE OF has so far resulted in a trade surplus in the treatment to goods originating in the DUTY (Appendix II) Dominican Republic’s favour. The CARICOM/ Dominican Republic. Dominican Republic Framework Agreement Ex 06.03 Anthuriums, ginger lilies, orchids and heliconias, fresh was signed on 22 August 1998. This This agreement also sets up a framework 09.01 Coffee whether or not roasted or Agreement provisionally entered into force for greater customs cooperation and decaffeinated, coffee husks and skins, in 2001. This Agreement is wide in scope. establishes safeguard measures for coffee substitutes containing coffee in Its coverage includes: trade in goods, trade Parties to protect them from threats to any proportion in services, government procurement and their domestic industries and external Ex 16.01 Sausages, except salami, food preparations based on sausages and intellectual property rights. It also provides financial position. similar products for the development of cooperation in a Ex 16.02 Bacon and other meat of swine number of areas such as trade financing, All goods except those which appear prepared or preserved, including mixtures the development of economic sectors, and on the Appendix II and III were subject 19.02 Pasta, whether or not cooked or private sector alliances. This agreements to immediate tariff reduction. Goods stuffed (with meat or other substances) or otherwise prepared, such as spaghetti, provides CARICOM exporters with access to on Appendix II, which includes pasta, macaroni, noodles, lasagna, grocchi, a market in excess of 8 million consumers. sausages, jams and biscuits, became ravioli, cannelioni, couscous, whether or eligible for phased reduction of MFN duty not prepared Under the agreement, the goods originating to 0% by January 1, 2004 in the Dominican Ex 19.05 Biscuits, unsweetened or sweetened, whether or not containing in Member States of CARICOM which satisfy Republic and the MDCs of CARICOM. cocoa
the conditions contained in the Rules of Goods on the second list Appendix III, Ex 20.07 Jams, fruit jellies and * T his item was subject to phase reduction of most favoured nation rate over a 5 year period Origin that appear as Appendix I to this which includes meats of bovine animals, marmalades Agreement shall receive the following fish and milk, are subject to MFN rates Ex 20.09 Passion fruit juice treatment on entry into the market of the of duty in the Dominican Republic and Ex 21.04 Soups and broths and Dominican Republic: CARICOM (LDCs and MDCs). A list of preparations thereof agricultural products subject to special Ex 22.08* Rum Ex 33.01 Essential Oils of Lime Duty-free access for all goods other trade arrangements has also been drafted. 33.03 Perfumes and toilet water A than those set out in Appendices II and III (of the The LDCs were not required to grant any Ex 3923.10 Boxes Agreement); treatment other than the MFN rate of duty 3923.21 Snacks and bags of polymers of ethleyne to goods originating in the Dominican Phased reduction of the Most 3923.29 Snacks and bags of other b Favoured Nation (MFN) rate of Republic until the year 2005. plastics duty on goods as set out in Appendix Ex 3923.90 Trays and cups II; The lists adjacent outline the products Ex 39.24 Tableware of plastics allowed MFN duty rates into the Dominican Ex 48.19 Crates and boxes of paper or The application of the MFN Republic from CARICOM and by extension paperboard rate of duty to those goods as c Barbados under the DR CARICOM 64.02 Other footwear with outer soles set out in Appendix III; Agreement: and uppers of rubber or plastics Ex 94.04 Mattresses Barbados investment & development corporation 22 Market Research Report – Dominican Republic
GOODS WHICH SHALL BE SUBJECT TO MOST FAVOURED NATION (MFN) RATE OF DUTY (Appendix III) Ex 11.011 Wheat flour Ex 33.06 Toothpastes and dental creams rectangular (other than square) cross section Chapter 15 Animal or vegetable fats and oils and Ex 33.07 Pre-shave, having, after shave 7214.99 Other bars and rods of iron or non alloy their cleavage products; prepared edible fats; preparations, personal deodorants and steel animal or vegetable waxes antiperspirants 7215.90 Other bars and rods of iron or non alloy 1602.412 Hams and cuts thereof, of swine 34.01 Soap, organic surface active products steel 1602.42 Shoulders and cuts thereof, of swine and preparations for use as soap in the form of 7216.10 Sections of iron or non alloy steel U, I or bars cakes, molded pieces or shapes whether H sections, not further worked than hot rolled, 17.01 Cane or beet sugar, and chemically pure or not containing soap; paper, wadding felt and sucrose in solid form hot drawn or extruded, of a height of less than nonwovens, impregnated; coated or covered 80 mm Ex 20.07 Guava cheese with soap or detergent 7216.21 Sections of iron or non alloy steel L Ex 20.08 Ground nuts (peanuts) prepared or 34.02 Organic surface active agents (other than sections, not further worked than hot rolled, hot preserved whether or not containing added soap); surface active preparations, washing drawn or extruded, of a height of less than 80 sugar or other sweetening matter preparations (including ancillary washing mm Ex 20.09 Orange, grapefruit, and lime juices preparations) and cleaning preparations whether or not containing soap, other than those of 7216.22 Sections of iron or non alloy steel T Ex 21.03 Pepper sauce Heading 34.01 sections, not further worked than hot rolled, hot drawn or extruded, of a height of less than 80 Ex 22.01 Waters including natural or artificial Ex 34.06 Candles mineral waters mm 3808.40 Disinfectant Ex 22.02 Waters, including mineral waters and 7216.99 Other sections of iron or non alloy steel aerated waters containing added sugar or other Ex 38.14 Organic composite solvents and Ex 72.27 Bars and rods of other alloy steel, of sweetening matter or flavoured, and other thinners circular section with diameter equal to or greater non-alcoholic beverages, not including fruit or 7010.92 Bottles, greater than 0.331 but less than than 7mm and other bars and rods of other alloy vegetable juices of Heading No. 20.09 or equal to 11 steel of non-circular section 22.03 Beer made from malt 7010.93 Bottles, greater than 0.151 but less than 7306.30 Other tubes and hollow profiles, 2401.20 Tobacco, partly or wholly stemmed/ or equal to 0.33l welded of circular cross-section of iron or non stripped Ex 72.07 Intermediate products of iron or non alloy steel 2402.20 Cigarettes containing tobacco alloy steel, of cross section less than 100 cm2 7306.50 Other tubes and hollow profiles, 7213.10 Bars and rods or iron or non alloy welded of circular cross-section of other alloy 2403.10 Smoking tobacco whether or not steel containing tobacco substitutes in any proportion steel, containing indentations, grooves or ribs, produced during the rolling process 7306.60 Other tubes and hollow profiles, Ex 25.23 Portland cement and cement clinkers Ex 7213.20 Bars and rods of free cutting steel, welded of noncircular cross-section 32.08 Paints and varnishes (including enamels of circular section, with diameter equal to or 7306.90 Other tubes and hollow profiles of iron and lacquers) based on synthetic polymers or greater than 7mm and other rods or free cutting or steel chemically modified natural polymers, dispersed steel of non circular section or dissolved in a non-aqueous medium; solutions Ex 84.19 Solar water heaters as defined in Note 4 to this Chapter Ex 7213.92 Bars and rods of iron or non alloy steel, of circular cross-section with diameter 1 The MFN Treatment will not be applied by 32.09 Paints and vanishes (including enamels equal to or greater than 7mm but less than Barbados, Jamaica, Suriname, Trinidad and Tobago and lacquers) based on synthetic polymers or 14mm and others of non circular section and the Dominican Republic. However, the MFN chemically modified natural polymers dispersed 7213.09 Other bars and rods of iron or non alloy Treatment will be applied by the Dominican or dissolved in an aqueous medium steel Republic with respect to any imports from Guyana. 32.10 Other paints and varnishes (enamels, 7214.10 Bars of iron or non alloy steel, forged lacquers and distemper); prepared water 7214.20 Bars of iron or non alloy steel, containing 2 This item does not include the products which pigments of a kind used for finishing leather indentations, grooves or ribs, produced during based on ham, turkey or other meat, along with Ex 33.04 Body lotions the rolling process of twisted after rolling proteins, corn starch and other ingredients, fall Ex 33.05 Shampoos and hair conditioners 7214.91 Bars or iron or non alloy steel of in sub-heading 1602.39, 1602.49 or 1602.90. Barbados investment & development corporation Market Research Report – Dominican Republic 23
Barbados and the Dominican Republic Trade
Barbados’ exports to the Dominican Republic were Imports from the Dominican Republic meanwhile average valued at US$2.3 million, up from US$1.9 million in 2014. US$10 million annually between 2011 and 2015, with the main imports being: Exports averaged around US$2 million annually between Flasks and Thermos 2011-2015, with the top products being: Potato, tortilla and corn chips Printed labels T-shirts Ponche Kuba Crème Liquors Sauces, condiments and seasonings Rum Chemical Products Pharmaceuticals Ice-cream
The three (3) major Barbadian companies exporting to the Dominican Republic are Caribbean Label Craft, Mount Gay Distilleries and Carlisle Laboratories.
Barbados Trade with dominican Republic
250,000,00
200,000,00
150,000,00
100,000,00
5000000
0
2011 2012 2013 2014 2015
Source: Barbados Statistical Service Imports (Bds $ cif) Exports (Bds $ fob)
Distribution Channels
Over the last three decades, the Dominican meters (in the early 1990’s) up to sizes of retail sector has undergone significant 10,000 square meters in the early 2000’s. changes. This transformation took place in This growth in size was due to a focus response to sustained economic growth and on serving the expanding urban middle has been reflected in evolving retail formats, and upper middle classes which were store sizes, and diversification of products experiencing rapid increases in income. In and services offered. recent years however, supermarket chains During that time, supermarkets developed are turning their attention towards the lower- from average store sizes of 200-500 square income sectors which make up close to 50 Barbados investment & development corporation 24 Market Research Report – Dominican Republic
percent of the population. This has resulted in the construction In a related development, super market chains now offer of smaller stores with an average size of around 3000 square an increasing number of products under their own brand. meters, stores which offer mainly perishable foods and home Consumers have benefited from special promotions and lower supplies. prices as stores seek to attract customers for these products. While there has been a negative impact on some local product This expansion in store size and number of outlets also means manufacturers, who have seen their revenue decrease by up a greater selection of products for consumers. Supermarkets to 15 percent, this development also offers and opportunity for have increased their item selections from 30,000 products in private label manufacturers. the 1990’s to up to 85,000 products (during the high season) in recent years. There has also been an expansion in availability Meanwhile, substantial changes have also been seen of non-grocery goods and services for supermarket clients among smaller retail operations such as the “Colmados and as “one stop-shopping” concept takes hold. Goods and Colmadones” (neighbourhood stores or mom-and-pop stores). services such as banking, household appliances, fast food, These outlets have also increased in number and evolved telecommunications and pharmacies are commonly co-located increase product offerings, including domestic and imported with supermarkets. products as well as services, to their clientele.
Composition of the Retail Sector
The Dominican retail sector can be divided into two distinct the modern retail channel. segments or channels; the modern and the traditional. The The traditional retail channel is also subdivided in two main modern retail distribution channel is comprised of three main components: neighborhood stores known as “colmados”, components: super market chains, the independent super and “almacenes” or walk-in food warehouses located markets, and the convenience stores known as “Food Shops”. mainly in traditional street markets. Almacenes, in addition Super market chains dominate this segment. Despite the to direct sales to the public, serve as suppliers to colmados. prominence of local supermarket chains it is estimated that only It is generally estimated that about 60% of retail food sales are 20-25% of retail sales in the Dominican Republic are posted via recorded by the traditional retail segment.
Supermarkets and International Retailers
The number of Dominican supermarket operators has doubled regional chains serving the eastern Dominican Republic. Of over the last twenty years. Supermarkets are concentrated all these groups, Grupo Ramos is believed to be the largest in the greater Santo Domingo area and other large urban employer and tax payer in the food retail sector. areas. There are currently 120 supermarkets nationwide and the main players include: Centro Cuesta Nacional (owners The second component of the modern food retail channel of Nacional Supermarkets, Jumbo, Jumbo Express, Cuesta is made up of the independent super markets. They can be Librería and Cuesta Centro del Hogar), Grupo Ramos (La found in major cities, especially Santo Domingo and Santiago Sirena, Pola and Aprezio Supermarkets), Plaza Lama (Plaza which are the two largest cities in the country. They include Lama, Suepr Lama, and ElectroLama), Bemosa (Bravo forty (40) points of sale. Most of these independent super Supermarkets), MercaTodo (La Cadena Supermarket), markets have joined together in an umbrella group known as PriceSmart, the Dominican Hypermarkets Company or the National Union of Low-Cost Supermarkets (UNASE). Compañía Dominicana de Hipermercados Carrefour, and According to UNASE, its members tend to target the medium Olé Hypermarkets. Los Iberia and Zaglul are important and lower-income segments of the population. There is some Barbados investment & development corporation Market Research Report – Dominican Republic 25
coordination on imports but members are still purchasing scout new products and suppliers. imported products on their own; mainly from independent The last component of the modern food retail channel is importers. However, UNASE has expressed interest in comprised of “food shops” or “Gas Marts”. These convenience establishing import capacity to allow its members to make stores are mainly located in gas stations and focus on pre- joint purchases and take advantage of the benefits provided packaged foods and beverages. There are no regional or by the U.S.-Dominican Republic-Central America Free Trade national chains in this subsegment, and there is no development Agreement (CAFTA-DR). UNASE is active in helping members of the convenience store segment apart from these outlets. attend international commercial fairs in order to help members
The main supermarket chains are
Plaza Lama Groupo Ramos Plaza Lama is a large chain with frequently in US food shows in 12 stores catering to the middle order to increase their business Groupo Ramos has a total of 42 convenience stores known as “A income segment of the population. contacts. Gold Select, Hytop and stores in different formats around Prezio,” with 11 outlets. This chain Plaza Lama regularly imports Better Value are their major brand the country. The largest format is caters more to the medium and directly from the US, or buys from suppliers. known as “La Sirena.” There are lower income levels. Grupo Ramos major brokers. It participates 24 of these. The medium format also has its own brand, First Class, is known as “Pola” supermarket. as well as two exclusive brands, There are 7 of these. Finally, the Shurfine and Shurfresh.
Mercatodo Bravo This company owns 6 supermarkets, wines. This company also buys Mercatodo owns the business contacts. This company 5 in Santo Domingo, and one in fruits and vegetables from Chile and Supermercados La Cadena with is mainly interested in importing Santiago. These stores cater more Europe. Supermercados Bravo has a total of 10 stores. Mercatodo poultry, shrimp, rice, and beans. towards the middle income sector started an in-house cheese factory maintains a very active Mercatodo does not yet have a of the population. Bravo imports named Mu using a new customer communication with the Office of private label brand. U.S. cold sausages, cured meats, experience model called “see it Agricultural Affairs for help with frozen and special products, and while we make it”. has expressed interest in California
Carrefour Centro Cuesta Nacional (CCN) Carrefour (France owned) is an country, the Autopista Duarte, has a total of 34 stores in different known the Panera bakeries. CCN in international franchise with allows it to attract many customers formats. The largest format is is a major importer of U.S. meat, its regional headquarters in from lower income levels. Jumbo Hypermercados. There dairy, and fruits and vegetables. Martinique. It has only one store Carrefour handles between 45 and are 7 of them. The medium size They rely heavily on the Food Club, in the DR with no plans to expand 50 thousand different products. It format is known as “Nacional” Value Time and Full Circle brands. in the near future. Though it mainly has its own private label brand; supermarket. There are 13 of Additionally they have a locally caters to higher income customers, however, it is open to handling them. The smallest format is the produces private label marketed its strategic location in one of the both local and foreign brands. Jumbo Express, of which there under the Líder brand. most important highways of the are 6. The remaining stores are Barbados investment & development corporation 26 Market Research Report – Dominican Republic
Hipermercados Ole PriceSmart Hipermercados Ole has 13 stores are located in some of the larger (USA owned) well-known Club/ rents space in their stores to other of which 5 are supermarkets and cities around the country. Warehouse Outlet, with two big businesses which provide additional 8 are hypermarkets. These stores stores in the Santo Domingo area, services to its customers such as and one in Santiago. PriceSmart banking, utility payments, ETC.
Given their growth in importance, Supermarket chains have become more sophisticated in their negotiations with new suppliers. Here is a list of the most common requirements from the Supermarket chains for new product placements in their establishments:
Presentation of the product´s organoleptic characteristics. Policy of support for activities such as: Profile, samples, and samplings of the brand. Seasonal promotions A marketing plan for the brand. Thematic promotions Approval by the retailer’s New Products Committee. Sponsorship of internal activities Payment for the introduction of new products. Support for opening of new points of sale Definition of a commission for logistical expenses (usually 3-5%). Payment for presence of promoters Fixed discount for visibility of brand Policies on returns (may be as high as 20%). Policies on 90-day payments.
The traditional retail channel
The traditional food retail channel is made up of the two oldest no statistical information available on sales and operations. retail models in the Dominican Republic: The “colmados” or the Industry sources estimate that there are fifty thousand neighborhood grocery store (i.e. mom-and-pop stores), and the colmados around the country, and they serve as a major source walk-in food depot or warehouses known as “almacenes”. of informal employment in both rural and urban areas. Though they are mainly individually owned, there is at least one case in In the Dominican Republic the colmado is the cornerstone of which a single person owns fifty colmados. retail food distribution. As with the modern retail segment, these stores have increased their product and service offerings Finally, there are the walk-in food depots or warehouses known to accommodate a wider audience. Colmados have developed as “almacenes”. These businesses, located mainly in street from offering an average of 300 products to over 1500 products markets, are the main wholesale suppliers for the colmados. in their larger establishments. However, almacenes also serve individual customers. Just While focusing on the middle and lower-income segments like the colmados, they exhibit a high degree of informality, of the population, colmados provide a variety of additional low levels of concentration and there is very little information services, which may include financing options, direct loans, and available regarding their operations and sales. delivery service. These walk-in warehouses sell with a relatively large margin In addition, many colmados function as bars and operate slot (estimated at up to 18%) and the top 20 almacenes represent up machines or other entertainment options. There is a prolific to 70% of the total sales volume of manufacturers or importers number of cash and carry retail outlets where persons meet to that supply them. Some of these wholesalers have larger buy and drink alcohol. purchasing volumes than retailers in the modern segment. The Given the lower level of formality in this sector, there is almost principal players in this segment are: Hermanos Jerez, Casa Barbados investment & development corporation Market Research Report – Dominican Republic 27
Evelyn, Marte y Reyes, Hermanos Guzmán, Chavón, Casa credit facilities, and ease of delivery. Madeline, Pérez Mata, Eufemio Vargas, Grupo Nacional Identify competitors, strengths and weaknesses. de Distribution, Catelly, Kardisa, Hermanos Leroux, Max Develop a defined sales plan Distribución, Samuel Abréu, Hermanos García, and others. (projections and expenses). Consider establishing an incentives For the traditional retail channel (colmados and model. almacenes): Design a support model targeted to the independent owners of Define the sales strategy to be used. colmados. Always use more than one ally in distribution and sales Limit credit policies. activities. Even so, don’t expect to be able to reach all Protect yourself from losses due to theft, improper use colmados. of promotions, returns, sponsorships, or other promotional Diversify your sales, taking into consideration the 20 activities. main warehouses in the country, each of which has Large importers/distributors exert considerable power at the strong influence over their clients thanks to preferential pricing, ports of entry to stave off competing products. They can also
Distributors put pressure on smaller retailers to force them to stop selling newspapers, film making, and the main importer if well-known new, competing products. The main distributors are: brands such as Pampers, Huggies, Gillette, Pantene, V8, Gatorade; and Grupo Vicinini A conglomerate with investments in electricity, windpower, Rica banking, agriculture, sugar and film making Which dominates the milk and juice markets.
Given the diversity and the rapid pace of change within Corripio the Dominican retail sector—as well as the broad mix of Also a conglomerate with interest in cars, television,
Market entry considerations Manufacturer Retailer Consumer domestically produced and imported products in the Manufacturer importer Wholesaler Retailer Consumer market place-- there are a wide variety of avenues for product entry. With several of the large [modern] Manufacturer importer Distributor Retailer Consumer retail chains active in directly sourcing products, in cases product entry involves few intermediaries. Manufacturer importer Distributor Wholesaler Retailer Consumer However, given the prevalence of low purchase volumes, specialization among importers and the Manufacturer Wholesaler Retailer Consumer prominent role played by freight consolidators, it is more common that multiple intermediaries are Note: With any of the requirements above, responsibility for supporting involved in product importation and placement. any/all of those activities should be clearly outlined in the contract with your Common combinations might include: intermediary/importer. Frequently, the manufacturer assumes responsibility for: samples; marketing plan; promotions and exhibitions, while the intermediary assumes responsibility for sales; trade marketing; and handling of low stock levels (out-of-date and losses). Barbados investment & development corporation 28 Market Research Report – Dominican Republic
Barbadian companies can approach the Dominican Republic anticipated sales. market in several ways: Consider an estimate of between 10% - 15% as percentage appoint a local agent or distributor margin of profit for the retail partner. form a joint venture Clearly define the pricing policies for the product portfolio. manufacture under license agreement with a Dominican company The distribution and representation of foreign made goods acquire all, or part of a Dominican company and services in the Dominican Republic are governed by Dominican Law 173. To export successfully to the Dominican Republic, companies Foreign Companies are advised to seek legal counsel in will probably need to employ an agent or a distributor. In examining and interpreting all clauses of the Law prior to the some cases where health certification is required, a local signing of contracts with agents and distributors as it assigns agent is a legal requirement. Exporters are advised to: several rights to appointed distributors and agents, with Evaluate the likely participation of intermediaries substantial penalties to terminate or exit contracts. Foreign (wholesalers, distributors, or importers), and determine the companies are also advised to register all contacts with most effective/promising avenue of entry for your product. the Central Bank of the Dominican Republic as a means of Define a clear and effective market entry strategy. protection and security. Be aware that some retail chains ask for a fixed There are laws which offer incentives investment into the investment in order to guarantee product placement. In some cases Dominican Republic. Information on these can be found on those investments amount to between 10% - 15% of the Latin American Trade & Investment Association (LATIA)
Legal considerations
Good legal advice should always be sought prior to doing investment and registration of companies and products in the business. The company Pallerano Y Herra has been singled Dominican Republic. out as a reputable law firm specializing in International
Standards and technical regulations
Suppliers and manufacturers have an obligation to make Ingredients sure products are safe. Products must meet relevant safety Sanitary registration standards, have clear instructions for proper use and include Industrial registration warnings against possible misuse. Storage instructions The General Directorate of Quality Standards System Use/application instructions (DIGENOR) is used to enforce mandatory product safety and Expiry date information standards and bans on unsafe goods. Net contents using international metric system The Quality Institute of the Dominican Republic (INDOCAL) Barcode oversees products standards, packaging and labelling Home address requirements. County of origin RTD 675 (Dominican Technical Regulation 675) applies for all Norm 53 (2014) is the overarching standard for imported pre- food products and governs nutritional content. packaged products. In addition, there are 11 other requisites In addition there is a RTD for each specific product which must which must be complied. All products must bear on the label be met. The website www.indocal.gob.do lists the standards in Spanish: specific to each product (In Spanish only). Standards are revised every five years. Foreign companies are Product name Barbados investment & development corporation Market Research Report – Dominican Republic 29
advised to take note of the RTD date when considering market entry. No building codes/standards were listed.
Labeling regulations
Goods not complying with the abovementioned companies are therefore advised against applying adhesive requirements may be imported but will be held at customs labels over English labels as these can be removed and not sold to consumers until compliance is made. and a claim made that the product does mean labeling Foreign Companies have been advised that there is requirements. significant corruption pervading the Customs Department, Foreign companies are also advised to cross reference largely as a result of large importers and distributors import requirements with the Customs Department to using their power to keep out competing imports. Foreign reduce any problems on importation.
Importing into the Dominican Republic: General timeframes and costs
The Dominican Republic has made trading across and pay taxes before shipment arrival. borders easier since 2015 by reducing documentation According to the World Bank’s “Doing Business 2017” requirements for export and import, making improvements series, “Economy Profile: Dominican Republic”, the in the area of the online portal, risk-based inspections and average time for importing a standard shipment of banking sector to decrease export and import time. The goods into the Dominican Republic is now 38 hours at automated customs systems SIGA (Sistema Integrado de an average cost of US$619 per 20-foot container and Gestion Aduanera) is in operation at two ports- Rio Haina requires four documents. These documents include a and Caucedo, and will eventually be implemented at all bill of lading, a certificate of origin, a commercial invoice, ocean ports airports and land borders. and a customs import declaration (Declaracion Unica The Dominican Republic offers two types of expedited Aduanera). A packing list is recommended though not customs clearance procedures: required. Average costs and times for procedures are as follows: Advance Declaration (Declaracion Anticipada) Border Compliance: US$579 over 24 hours 1 requires the submission of documents 25 days in This includes Customs clearance and inspections; advance of the shipment’s arrival; inspections by other agencies; port handling; processing
Express Dispatch (Despacho Expresso) includes of documents: 2 declaration of shipment information in advance and Documentary Compliance: US$40 over 14 hours verification of the shipment at the importer’s This includes obtaining, preparing and submitting warehouse. documents required and covers all documents required by law and in practice including electronic submissions Shipments not cleared using one of the above expedited as well as non-specific documents necessary to complete procedures must be declared for consumption or for trade.
storage within four working days after the vessel has Domestic Inland transportation and handling: US$296 arrived. Clearance generally takes about three days over 4 hours and 46 once complete documentation is submitted. With SIGA, This includes loading and unloading of shipment at pre-clearance of shipment can be obtained electronically. warehouse, dry port or border and transport by most Under the new system, importers can register the widely sued mode between warehouse and terminal:, shipment, submit the documentation, verify the shipment landing at Caucedo Port. Barbados investment & development corporation 30 Market Research Report – Dominican Republic
Other Import Requirements
In some cases, such as for chemical and pharmaceutical Commerce. This is not a legal requirement but it provides products, import licences are required. Furthermore, certain protection for the owner. permits are required for the import of agricultural products. To release shipments valued over US$100, Customs requires: Some of these products, like rice, sugar, corn, onions, garlic, Bill of Lading; chicken parts, milk and milk powder are subject to import Commercial invoice; quotas. A consular invoice that approves the transaction Insurance certificate (issued by a local insurance company); usually must accompany all imports. The cost of this invoice Non-objection certificate issued by the Ministry of depends on the value of the goods imported into the country Agriculture; and may be obtained at the Dominican consulate closest to Import permit issued by the Department of Internal Taxes the port of loading. for alcoholic beverages only. All products and brands must be registered in the market; however, the brand must be registered before the product, as After 10 days in port, shipping lines assess a daily charge for follows: the use of their containers. Port authorities also charge for the use of their space. 45 days: brand registration; 3 months: food and beverage registration; To summarise the import procedures (this may generally takes 1 year: chemical registration (including personal care, 3-5 days but may take as long as 20 days in some instances): cleaning products and pharmaceuticals). The importer contacts a customs agent or broker, since according to the General Customs Law, the customs All registration documents must be translated into Spanish. agent is the person authorised by the Customs Import licences are required for food products. Department to provide customs services; The customs agent fills out a “merchandise product list” With respect to new food products, the first step for an on form 3480, if there are more than nine items, an exporter’s representative in the Dominican Republic is product additional form 3480a is added; registration with the Ministry of Public Health. A certificate The importer provides the customs agent with the is issued to the importer or local legal representative with a following documents: commercial invoice, bill of lading or sanitation registration number, which must be printed on the airway bill depending on the transportation means, label of the product or as an additional sticker. The fees for certificate of origin and copy of the importer’s identification documents (passport, cedula or legal identification in the animal products are as follows: US$55 for a zoo permit per case of a business entity) to request custom verification; category (or twice that amount if two categories are contained Custom verification: an inspector, a verifier and a within a permit request) and an additional US$44 for the supervisor as well as the customs agent perform the actual second part of the permit. For plant products, the fees are as inspection; follows: US$55.55 and an additional US$44 for the second The customs agent classified the imported product list and determines the type of no-objection certificate (zoo, part. In order to register, the following documents are required: phytosanitary, etc.) if any, are required. There is a fee for Certificate of free sale; verifying SEA documentation; Certificate of origin; Once the necessary permits have been processed and Label indicating qualitative and quantitative formulation; inspected, the customs agent submits the documentation to the Customs Office for duty payment; Copy of the letter of assignment or contract with a local Payment is made; agent (if one exists); Shipping agents require a deposit from the customs agent Registration fees and product samples. paid to Despacho Portuario Hispaniola to ensure containers are returned to port within seven days; The trademark must also be registered through the National Port Authority Service Charge is paid for port services Office of Intellectual Property of the Ministry of Industry and (based on the Bill of Lading, there is a service charge, Barbados investment & development corporation Market Research Report – Dominican Republic 31
which is between US$15-US$26 per container); representative (no warehouse) or as a distributor (warehouse Finally, an additional service charge is paid to the Customs and technical personnel). A representation company must Department of US$100 for a 40-foot container or half for a register a fee (US$348) with an appropriate form (documents 20-foot container; include copies of the company’s legal constitutional Port Authorities release the product. credentials, commercial name registration from the Ministry of Industry and Commerce, the represented company There are other licences required for the representatives information, affidavit and its legal representative information) handling the importing aspect of the transaction. Importers and then register the products individually for a five-year term. must register with the Central Bank (Banco Central) as This procedure requires 1-6 weeks. After the company has importers or representatives. Importers will receive a receipt been registered, each product file has to be deposited for a of payment and the process should take around 20 days to five-year period for a product fee of US$139 and half of this complete. They should also register with the Registro Nacional amount thereafter for the renewal of a five-year term. The de Contribuyentes (National Register of Contributors), which product registration fee with all the appropriate documentation provides importers with a tax identification number. Importers in place takes 3-6 months to process. All products require of alcoholic beverages also must register with the Department laboratory testing. of Internal Taxes. Commercial documents provided by the exporters or their Additionally, commercial pesticides must be registered at the representatives are often required in Spanish or, at the very Pesticide Registration Unit at the Plant Health Department, least, must be accompanied by an official Spanish translation. Secretary of Agriculture. The procedure may be done as a
Customs Shipping Information
For countries belonging to the WTO, the customs office of From Barbados, goods may be shipped to Rio Haina, the Dominican Republic now uses the General Agreement Dominican Republic in 7 days via Kingston, Jamaica according on Tariffs and Trade (GATT) rules of valuation. This uses the to CMA CGM schedule. It takes 9 days from Bridgetown value of the goods including Insurance and Freight (CIF) to Caucedo, Dominican Republic via Kingston. It takes 19 listed on the commercial invoice. days from Bridgetown to Puerto Plata, Dominican Republic You can find more about import tariffs in the Market Access according to Tropical Shipping (Freship S.A) schedule. Database (MADB). It should be noted that schedules are subject to change and the cost of shipping often fluctuates alongside the price of oil.
Intellectual property rights
Dominican law regulates the transfer and diffusion of tobacco and pharmaceuticals. The Attorney General’s technology and protects industrial property rights. This law Department is taking action but so far there have been no is in accord with the provisions of the agreement on Trade large scale prosecutions. It is proving difficult to reduce the Related Aspects of Intellectual Property Rights (TRIPS) and scale of the problem. other international agreements. Applications (In Spanish only) for company name, brand, logo, The National Industrial Property Office (ONAPI) is in charge of patents, trademarks, and industrial designs must be done granting patents and registering industrial property. Civil and at ONAPI at a cost of approximately US$100. It can also be criminal sanctions may be applied in case of an infraction of done online at www.onapi.gob.do (In Spanish only). Approval industrial property rights. usually takes 5 business days. There is currently a serious problem in the Dominican Republic On incorporation, the company RNC (tax Identification number) with counterfeit products, especially with alcoholic beverages, must also be registered with the Chamber of Commerce. Barbados investment & development corporation 32 Market Research Report – Dominican Republic
Tax considerations Taxes are governed by the Dominican Tax Code (11-92) and applicable to Dominican and foreign investors and are are collected by the General Directorate of Internal Revenue payable at the same rates. (DGII). Taxes and mandatory contributions are equally Social Security must be paid for employees
Value Added Tax (VAT) Asset tax and withholding tax VAT (known as ITBIS) is charged at a rate of 18%. Goods and An annual tax amounting to 1% of total assets will services which are exempt from ITBIS include basic foods, be payable if your assets exceed RD$ 700 million medicines, fuel and books. (approximately £100 million). Dividends are subject to 10% withholding tax. Corporate income tax Both asset tax and withholding tax may be credited against The current corporate rate of income tax in the Dominican corporate income tax. Republic is 27% of taxable profits. Resident corporations are subject to tax on their Dominican Selective consumption tax (ISC) source income and foreign source income derived from ISC is applied on the purchase price or import of certain investments and financial gains. luxury goods. The rate of ISC tax varies according to the Capital gains tax item being taxed. Capital gains on assets located in the Dominican Republic are currently subject to 27% tax.
Banking
The banking system is well-established, composed of private institutions that are regulated by the Central Bank and Superintendent of Banks. Below is information on the major banks in the Dominican Republic.
Banco Popular www.popularenlinea.com Banco BHD Leon www.bhdleon.com.do Banco Popular is providing a wide range of financial services (e.g. retail This bank is a result of a merger between Banco BHD and Banco Leon. banking, commercial banking, services focused on SMEs etc.). They Like Banco Popular it has a wide branch network and offeres multiple operate one of the largest branch networks within the country and are services ( retail banking, commercial banking, services focused to working closely with the private sector. In addition, they have received SMEs). They were among the first banks in theD ominican Republic several prices, e.g. best bank in the Dominican Republic and enjoy a high offering specific servic es to SMEs, via their BHD PyME program (PyME credit rating. Banco Popular has also financed a series of training courses means SME in Spanish). for SMEs in cooperation with the Industry Association of the Dominican Republic and supported several programs of the Dominican Exporter Association (ADOEXPO).
Scotiabank www.scotiabank.com Banreservas www.banreservas.com/ They are not among the largest banks but do offer a wide portfolio of Banreservas is related to the state and is offering as well a wide range of financial services as well (retail banking, commerical banking etc.). They financial services. They are supporting a project for exporters together are also organizing from time to time training courses for SMEs together with the Dominican Exporter Association (ADOEXPO) and also have a with the National Vocational Training Institute of the Dominican strong presence in the tourism sector (financing of projects). Their branch Republic (INFOTEP). network within the country is also among the larger ones. Barbados investment & development corporation Market Research Report – Dominican Republic 33
Below is an indication of bank loan rates. Note rates vary depending on individual credit profile:
Loan (for consumption): 25% Loan for buying used car: 18% Loan (real estate): 15% Loan for buying new car: 12%
Free trade zones Entry requirements
Law 8-90 encourages the establishment of new free Travelers are not required to hold a visa for the Dominican zones and the growth of the existing ones. It regulates Republic for short visits. However, passports must be valid their operations and development. Free zone operators for at least twice the length of intended stay. and companies located in industrial parks enjoy 100% All visitors require a Tourist Card which can be obtained on exemption from various taxes. There are currently 53 arrival at the airport for US$10 (payable in cash) Industrial Parks, housing over 500 companies. Tourist Cards are initially valid for a 30 day stay, but can be extended locally by paying for an extension when departing Travel advice the country. Persons who wish to work in the Dominican Republic will Persons travelling to the Dominican Republic for business need a resident permit. should check for travel advice beforehand.