U.S. wines cast a spell in Jamaica

AgExporter, March, 1999 by Carol L. Miller

It's not just the tourists on holiday who are sipping U.S. wines in Jamaica's island paradise, though they down 80 percent of imported wines. Residents of the Caribbean country are also savoring the pleasures of premium U.S. wines.

Making the most of a promising opportunity, local importers/distributors, with help from U.S. winemakers, have added promotions to include wine tastings in stores and catchy ads in newspapers and magazines, especially around holidays and other special occasions.

And the extra effort has set cash registers ringing. In 1995, the United States sold 2,080 hectoliters(1) of wine in Jamaica, most of it originating in California. By 1997, this amount had topped 3,590 hectoliters, worth almost $530,000 to U.S. wine producers.

Other factors have also helped fan the market. The vaunted health benefit of moderate wine consumption hasn't been lost on the island's population. Meanwhile, the influence of the U.S. market's proximity, which has always directly affected local market patterns, was recently fortified by increased tourism and cable TV.

Simple, Effective Distribution System

Although there are a few small informal commercial importers (known locally as higglers), the bulk of the imports is handled by the larger established companies. These importers also act as distributors and sell their products directly to the hotels, restaurants, supermarkets and large individual customers.

Less than 5 percent of wine sales are funneled through wholesalers who handle lower quality, less expensive wines, usually sold to small bars and grocery shops.

For the average consumer, the supermarket is the most likely point of purchase, as there are no specialty shops.

Who Are the Competitors?

Jamaica has only one local domestic producer. But competition from imports and the perception that imports are of better quality continue to dampen domestic sales. The lone local vintner purchases equal amounts of red and white grape must - over 1,000 hectoliters annually from California, Spain and Brazil - to make red and white table wines.

The United States is the single largest exporter to the Jamaican market, but its market share adheres to a worldwide trend. Although U.S. wine's export value to Jamaica increased over 50 percent from 1995 to 1997, market share was only 39 percent, up from 32 percent in 1995.

The fruity flavor of German wines, which are competitively priced, appeals to Jamaican tastes. Chilean wines, which arrived on the scene with avid promotion, have also been upping market share. Most French and Italian wines are sold to the hotel tourist sector.

Watch Out for Add-ons

While grape must attracts no duty, this isn't so for wines. The Common External Tariff(2) (CET) assesses 30 percent. Also tacked on to the original price is a 34-percent additional stamp duty, as well as a 14.5-percent special consumption tax. Then there's the 15-percent value-added tax levied at sale.

On top of the government's due, don't forget the retail margin that ranges from 30 to 40 percent. Final tally comes to over 150 percent of original cost.

U.S. Export Credit Programs

Happily, due to the tendency of Jamaican importers to develop good relationships with their suppliers, U.S. wine exporters can benefit from USDA's Supplier Credit Guarantee Program (SCGP). The program ensures a portion of the bill for exporters who wish to extend short-term credit (up to 180 days) directly to the Jamaican importer. Direct credits must be secured by promissory notes signed by the importer.

If you would like further information on this USDA program, contact:

Yvette Wedderburn Bomersheim USDA/CMP/H&TP Room 5946-S, Ag Stop 1049 Washington, DC 20250-1049 Tel.: (202) 720-0911 E-mail: wedderburn@fas.usda.gov

Other information about the Jamaican wine market is available from:

Office of Agricultural Affairs U.S. Embassy, Kingston, Jamaica Washington, DC 20250-6000 Tel.: (876) 920-2827 Fax: (876) 920-2580

1 1 hectoliter = 100 liters

2 Jamaica is a member of the Caribbean Common Market, which has no duty on alcoholic beverages for member countries.

Carol L. Miller is an agricultural specialist at the FAS Office of Agricultural Affairs in Santo Domingo, Dominican Republic. Tel.: (809) 688-8090; Fax: (809) 685-4743; E-mail: amemb.fas@codetel.net.do