Central America, a region known for its unique and diverse beverage industry, has seen the rise of iconic brands. With its distinctive flavors and innovative products, this sector has won awards and the hearts and palates of discerning consumers.
The region’s beverage industry in Central America is vast, with standout products such as multi-award-winning rums. These century-old beers have earned accolades in global competitions, sodas that evoke nostalgia among consumers with flavors reminiscent of their childhood, and a new generation of innovative beverages.
The Central American beverage industry is not just about drinks; it’s about economics. Over the past two decades, it has experienced significant dynamism and continues to rise. It generates foreign exchange, is a major driver of employment, and has become a source of national pride.
The beverage industry in Central America is not just about what’s in the bottle; it’s about people. Julio César Orozco, Executive Director of the Food and Beverage Guild of Guatemala (GREMAB), explains that in Guatemala, the industry’s economic impact goes beyond its contribution to the Gross Domestic Product (GDP). Thanks to its evolution in recent years, it has become a significant employment engine, providing jobs and livelihoods to many.
The beverage industry in Central America is not just about taste; it’s about jobs. According to an economic impact and footprint study conducted by GREMAB, the manufacturing sector generates more than 440,000 direct jobs, an increase of nearly 60,000 over the past decade. This is comparable to the services sector and exceeds the finance, telecommunications, and real estate industries. It’s not just about what’s in the bottle; it’s about the people behind it.
Guatemala, the home market for highly recognized and successful regional and global brands such as Zacapa (rum) and Gallo (beer), also boasts a diverse range of other industry players. With their unique offerings and unwavering commitment to quality, these players stand out in the global market.
According to the Bank of Guatemala (Banguat) figures, the food and beverage industry contributes approximately US$5.63 billion annually. Orozco notes that this represents 6.65% of GDP. “Regarding the specific non-alcoholic beverage subsector, it is estimated to contribute 11% of the total food and beverage sector.”
El Salvador: Resilience and Innovation
Karla Domínguez, Industrial Intelligence Manager at the Salvadoran Association of Industrialists (ASI), explains that the beverage industry in Central America is broad and can be grouped into two main categories: non-alcoholic beverages (such as refreshing drinks, pure water, carbonated drinks, fruit juices, coffee derivatives, among others) and alcoholic beverages, which include wines, liquors, and beers.
El Salvador is home to brands with significant consumer recognition, such as the soda Kolashanpan. In recent years, however, the sector has gained new strength, developing a product offering that includes juices and rums, thanks to business groups that have invested in the sector’s growth and sophistication.
“Today, you can walk into a supermarket and see a variety of beverages produced in El Salvador, tailored to all ages and tastes, addressing nutritional needs. But this has required significant investments in cutting-edge technology to preserve flavors and maintain the consistency of the liquid, adopt more environmentally friendly practices in production processes, and promote a healthier lifestyle,” said Domínguez.
The researcher highlights that many local brands have been creative in generating specific flavors and rethinking their packaging with innovative designs and labels that emphasize aspects of the country and appeal to national identity.
Domínguez adds that in El Salvador, the Central American beverage industry has managed to integrate into national and international markets due to its resilience. This quality has allowed it to overcome disruptive events like the COVID-19 pandemic and inflationary pressures, which present significant challenges for businesses in the sector. They also face a market that is not static and demands new product offerings and quality qualities.
“It is evident that there is a new generation of consumers (…) Flavors, consistency, preparation formulas, and the creativity of the presentation of these products are essential,” she notes. Domínguez adds that Salvadoran offerings generally stand out for telling a story or highlighting a sense of identity, underscoring the need for strategic alliances to continue innovating in processes, safety, and flavors.
According to ASI data, El Salvador’s beverage production reaches more than 25 destinations worldwide and shows an upward trend. “In the last five years, from 2019 to 2023, the sector posted an average annual growth of 6.4% in exports,” said Domínguez.
The specialist praised the sector’s performance despite the global context. Companies like Beliv, a subsidiary of the multilateral CBC, operate in El Salvador. Beliv’s portfolio includes well-known regional brands like Petit and key players like La Constancia (an AB InBev subsidiary), which produces iconic brands such as Pilsener.
Domínguez described the beverage industry in Central America as dynamic. Its characteristics facilitate links with other industries since it involves sectors such as plastics, paper and cardboard, and graphic arts.
Costa Rica: New Opportunities
According to an analysis by the Costa Rican Foreign Trade Promotion Agency (Procomer), the beverage industry in Central America is constantly evolving, and 2024 will witness its reinvention and innovation.
“The beverage segment is known to be one of the most active in global launches and innovations,” says a report published this year.
Procomer’s analysis emphasizes that companies must recognize innovation as a key strategy for successfully entering international markets.
Between 2018 and 2022, Costa Rica’s beverage industry in Central America maintained an average annual growth of 6%. Panama was the leading destination for these exports (accounting for 51%), followed by Nicaragua (25%), Guatemala (5%), and the United Kingdom (5%).
One of the key players in Costa Rica is FIFCO, a company operating in 13 markets and owner of relevant brands such as Imperial and Bavaria beers. In recent years, the company has evolved and explored new niches, such as flavored alcoholic beverages, a popular offering among new generations but not the only one.
Procomer’s study highlights that the Central American beverage industry is constantly evolving and that 2024 “promises to witness a series of innovations.”
It cites the popularization of kombucha, known for its health benefits and variety of flavors, as an example.
According to data from the international consulting firm Nielsen, cited by Procomer, the non-alcoholic beverage category is also one of the fastest-growing segments for adult consumers. “This could signal a growing demand in international markets for these alternatives (non-alcoholic beverages), which could benefit Costa Rican exporters able to meet this demand,” notes a report from the entity.
The agency’s analysis adds that this results from a trend where modern consumers are more concerned about what they put into their bodies and prioritize health. Non-alcoholic beverages made with clean, natural ingredients appeal to international markets, presenting opportunities for Costa Rican producers focusing on sustainable and organic production.
Challenges Ahead
Julio César Orozco adds that the beverage industry in Central America generally faces challenges related to infrastructure development, regulatory stability, and inflationary trends.
Domínguez from ASI shares this view, adding that vulnerabilities affect not just the beverage industry in Central America but the world as a whole.
“Disruptions in the supply chain and the rising costs of raw materials and capital goods due to the current situation have caused price increases. Likewise, since much of the sector’s products are sold internationally, additional effects are being analyzed, such as in the United States, where domestic consumption is slowing due to economic conditions,” she said.
Orozco emphasizes that while significant challenges exist, good commercial opportunities are also on the horizon.
“A key factor that continues to drive the beverage industry in Central America is Guatemala’s solid network of trade relations and agreements with countries and commercial partners, especially in the Central American region. These agreements have helped establish clear and technical rules, facilitating smooth and consistent trade.
The sector is confident that we can continue strengthening these agreements and rules to foster sustainable long-term growth,” he said.
Domínguez, for her part, believes that as international regulations related to the consumption of these products advance, the beverage industry in Central America is also progressing in its commitment to a healthy lifestyle.
“Many aspects are more related to raising awareness and recognizing that different demographic groups and regions have varying consumption patterns, which also align with the consumers’ health conditions and lifestyles,” she concludes.
In conclusion, the beverage industry in Central America stands as a testament to the region’s rich tradition and innovative spirit. From the esteemed rums of Guatemala to El Salvador’s evolving soda and juice market and Costa Rica’s dynamic sector poised for new opportunities, the industry showcases a blend of heritage and modernity. Despite facing challenges such as infrastructure development, regulatory stability, and inflationary pressures, the sector’s resilience and adaptability highlight its potential for continued growth. As Central American companies embrace innovation, sustainability, and strategic trade relationships, they are well-positioned to meet regional and international demands. The future of the beverage industry in Central America promises to be vibrant and transformative, driven by a commitment to quality, creativity, and consumer satisfaction.