PACRIM's Summary for Beer in Panama
Curious about the alcoholic beer market in Panama? Here is some data we’ve pulled to help you in your search!
craft beer panama
Country Insight
Consumption of alcohol is socially acceptable at all socioeconomic levels. Consumption of beer in Panama is the highest in the region. Socialising and enjoyment are widely associated with the consumption of alcoholic drinks, with many viewing these drinks as an important component of having fun. Many also drink to relax or for refreshment in the country's hot weather. Panama's heritage and cultural identity is also linked to spirits, with seco sugarcane spirit viewed with pride as a national drink and used as a base for many cocktails.
No cultural or religious barriers discourage consumption of alcoholic drinks. Consumption is part of the culture, particularly in rural areas. For example, alcohol is readily available at country fairs such as the Thousand Pollera fair at Las Tablas and the Sea Fair at Bocas del Toro. Health campaigns are promoted to decrease consumption and discourage drinking and driving but alcoholic drinks remain popular.
Typically, alcoholic drinks are consumed with celebratory meals and wine is a popular accompaniment at lunch and dinner gatherings. “Happy hours”, usually from 17.00hrs to 20.00hrs, are common and operate daily, with beer and refreshing drinks such as gin and cocktails popular choices. Going to the beach is a popular weekend activity and consumers often take food and alcoholic drinks with them. Many hotels switched to the increasingly popular all-inclusive system to attract more customers – the package price includes alcoholic drinks and meals..
Traditional/unpackaged alternatives to packaged alcoholic drinks include chicha and guarapo. Chicha is a popular artisanal beer in the Kuna indigenous communities of the San Blas islands. It is made from maize and often contains fruit. Chicha is generally consumed during and after community work parties and at local dances and celebrations. Guarapo is a cane spirit. These are produced at home but rarely sold through informal channels. These drinks are commonly found in villages in the interior of the country and in indigenous communities. The government tends to ignore such production due to its small scale. Traditional/unpackaged products are not expected to pose a threat to packaged products sold through formal retail distribution channels.
Alcoholics Anonymous is present in Panama and the Ministry of Health has detoxification clinics and treatments nationwide. They also do joint work with people who have violated traffic laws while under the influence of alcohol. ▪ Alcoholic drinks is expected to register slow but stable retail volume growth over the forecast period thanks to economic growth, rising disposable income levels and a further increase in tourist numbers. Since the Panama Canal expanded in 2016, the country’s role has also increased as a regional logistics hub. The country is also attracting a growing number of affluent expatriate retirees thanks to its safe image.
Beer is expected to benefit from ongoing expansion in domestic production capacity. In addition to investment from leading brewers Cervecería Nacional and Cervecería Barú Panamá, craft brewing is expected to see strong expansion by existing players and could attract new entrants. Panama's annual Beerfest festival and the country's widening range of domestic craft beer brands are increasing its reputation for craft beer.
Socioeconomic Trends
Panama continues to face strong income disparity, resulting in stark differences between the consumption habits of low-income and high-income consumers. However, income disparity reduced dramatically during the review period thanks to economic growth and social reforms. While the country has the region’s highest minimum wage and low inflation, prices remain high for most families. However, most consumers can afford alcoholic drinks, particularly as beer and seco sugarcane spirit face low taxes and thus offer accessible prices in retail channels. These are the most popular alcoholic drinks among low-income groups. Consumption at home is common as retail outlets offer lower prices than foodservice venues although large quantities are consumed in bars and restaurants when people gather for special occasions.
The population continues to grow – despite rapidly declining birth rates – largely thanks to an increase in immigration. The legal age for consumption of alcoholic drinks is 18 although it starts informally at 13. Young people prefer to go bar hopping and seek good offers while older individuals consume alcoholic drinks socially at home and on special occasions outside the home. Beer is popular across all age groups while wine and sparkling wine products are less popular among younger adults.
There are a large number of mid- to high-income consumers in Panama, with these consumers generally able to make purchasing decisions based on brand and taste preferences. While some older consumers have established brand and product preferences and some low-income consumers are restricted in the range of drinks they can afford, Panamanians generally enjoy exploring flavours, brands and products. Many have established preferences but still welcome the chance to try alternatives, particularly in foodservice outlets and at celebrations.
The population is split evenly between the genders. In terms of consumption of alcoholic drinks there are no significant differences between men and women. It is common for entertainment venues to offer free entry to women while men must buy a ticket. As such, some male consumers consume alcoholic drinks at home before going out so as to spend less at the venue.
More urban areas are developing in Panama. Many restaurants and bars have become chains and opened branches in new urban neighbourhoods that previously had no facilities. With local access to foodservice outlets, urban consumers no longer have to travel long distances to city centres to socialise. However, in the interior of the country and in indigenous communities the range of packaged alcoholic drinks products consumed is limited and unpackaged/traditional alternatives remain popular.
Logistics/infrastructure
Panama offers few logistical challenges, with a sound road infrastructure in most areas. While some rural roads are in poor condition, the leading players report no major issues and generally find distribution easy. During 2018 some important roads were completed, such as the new road in the province of Chiriqui, in Los Santos and in Veraguas. Panama also benefits from being a logistical hub for North and Latin America, due to the Panama Canal, which expanded in 2016. The customs system thus runs efficiently while also benefiting from the extensive Colón Free Trade Zone. The country is small, which facilitates transportation, while the strongest demand for alcoholic drinks is in Panama City.
Packaged alcoholic drinks products are widely available across the country. In more remote areas Chino stores facilitate ready access, although typically the range of products and brands offered is limited.
Supermarkets and independent small grocers are the most significant retail channels, with the former offering a wide range of brands and products and the latter offering the convenience of proximity and long opening hours. While low-income consumers are most likely to buy via retail channels, mid-to-high-income consumers also shop in these channels for at-home consumption and parties. Food/drink/tobacco specialists are also significant, with many acting both as importers and retailers and offering exclusive products and price promotions. Food/drink/tobacco specialists also benefit from many outlets offering Consignment Sales, with this system enabling consumers to buy a large quantity of alcoholic drinks for a party or event and to return unconsumed products in exchange for a credit note.
Foodservice sales are strong, accounting for around one third of total volume. This is thanks to tourist demand while many urban Panamanians also enjoy socialising in bars and restaurants. Many outlets boost sales by offering Happy Hour discounts, price promotions and tasting events. Popular bars and nightclubs also often employ demostradoras (demonstrators) to entice customers, with these generally being attractive young women offering free samples. Happy Hour discounts are commonly offered at bars from 17.00hrs to 19.00hrs to attract office workers and from 22.00hrs to 24.00hrs at nightclubs, with many of the latter also offering free drinks for women on set nights of the week.
There is little evidence that smuggling is growing in the country. This indicates that there has been no deterioration in customs controls, free zone controls or in tax collection. Smuggling is known to occur across country’s border with Costa Rica, with beer and white spirits the most commonly smuggled products. Although the manufacture of artisanal alcoholic drinks is illegal it is widely permitted, despite the potential health implications of unregulated production. The law covering selective tax also covers this area in an effort to ensure that all products are produced under correct sanitary controls. Nevertheless, controls are expected to become much stricter in the forecast period, with visits by authorities to businesses becoming more frequent in a bid to confiscate contraband products and ensure that production is compliant with regulations. This should also help prevent the further growth of contraband or artisanal drinks without sanitary permits that could cause damage to health.
Corruption is the main factor behind consumption of illicit products. However, authentic products are affordable to the majority of consumers.
Cross-border/private imports are not significant in Panama. Most consumers can easily afford to buy alcoholic drinks within the country, while low-income consumers are less likely to travel abroad. In addition, taxes are low on alcoholic drinks in Panama, with the country thus offering attractive retail prices.
Inbound duty free allowances are generous for alcoholic drinks, including up to three litres of spirits. Panama Tocumen International airport also offers an extensive range of premium and super premium wine and spirits, particularly in Scotch whisky and regional rum. ▪ Panama is also home to the Colón Free Trade Zone (FTZ), a duty free area. However, most operating within this vast FTZ are wholesalers, with the few operators offering retail sales mainly focused on apparel and accessories. The FTZ is also huge and can be difficult to navigate, while the city of Colón's high crime rate deters many casual visitors. Furthermore, all FTZ purchases must be sent in-bond to Tocumen International Airport for buyers to collect prior to departure. Sales of alcoholic drinks via the Colón Free Trade Zone are thus insignificant.
Legislation
The legal drinking age is 18, as is the legal purchasing age, with no changes to this legislation during the review period.
Over the review period the tradition of celebrating a child’s 15th birthday by holding a party, at which alcoholic drinks would be consumed, began to change. It is increasingly common to hold a party – with alcoholic drinks – when a child turns 13 and send them on a trip to Europe when they turn 15. This is contributing to lowering the age at which young people start drinking. Underage drinking tends to be more common among boys than girls and is more common in rural than urban areas.
Panama has strict drink driving legislation, with the limit set at a blood alcohol content of zero. Those caught drink driving face at least a fine, compulsory driving safety awareness talks and the deduction of points from their driving licences – potentially ending in licence suspension – with repeat offences seeing heavier fines. Moreover, no allowances are made for having alcohol in the blood or breath from other sources, such as from medication
Advertising is permitted for alcoholic drinks within set limits. Advertising must not encourage unhealthy consumption levels, target or feature minors or be aired during children's TV programmes. TV advertising for alcoholic drinks must not be aired prior to 18.00hrs, except during sports events or on satellite TV. Advertising must also not feature obscenity, illegal activities or associate consumption with driving. One of a number of specified Ministry of Health warnings must feature on advertisements.
Since 2008, smoking has been banned in enclosed public spaces, including restaurants, bars and nightclubs. This part of the smoking ban is generally strictly enforced. This legislation also bans smoking in outside dining areas and on balconies. This element of the smoking ban is however rarely enforced, with foodservice outlets generally permitting smoking in outdoor areas.
For retail outlets, there are no time or quantity restrictions on sales, although outlets do need to have the licence introduced in 2015 to sell alcoholic drinks. There are a number of days a year when the sale of alcoholic drinks is not permitted in retail outlets, such as 2 November (Day of the Dead), 9 January (Day of the Martyrs) or during presidential elections. This rule has been set out in a legal decree, which applies to all retail outlets.
Law 55 of 1973 states that permits for the sale of alcohol will not be granted exceeding one establishment per 1,000 inhabitants. Similarly, no commercial licence will be granted for the operation of canteens in neighbourhoods or residential areas or in premises located in the immediate vicinity of public or private schools or colleges, religious centres or institutions or camps where workers or other groups are concentrated.
Taxation and Duty Levies
The IBTM (Impuesto de Transferencia de Bienes Muebles or Tax Transfer of Movable Goods) is the country's retail tax and is imposed on alcoholic drinks at 10% of retail price, which is higher than the standard IBTM of 7%. Foodservice outlets' generally high mark-ups mean low tax rates have little impact on prices in bars and restaurants however.
Excise tax is also imposed, with this based on alcohol content and volume.
Import tariffs on imported alcoholic drinks are also low, reaching a maximum 15% and averaging 12% of CIF (Cost, Insurance and Freight) value.
Beer in Panama.JPG