Alcoholic Drinks in Honduras
EXECUTIVE SUMMARY
Steady economic growth in Honduras in 2023 boosted consumption and demand for beer, wine, spirits, and RTDs, with beer being the largest category. Sales through restaurants, bars, and nightclubs continued to grow, with a recovery in the on-trade channel surpassing pre-pandemic levels. Consumers continued to favour affordable or low-priced alcoholic drinks, while wine witnessed rapid growth, driven by increasing consumer knowledge about varietals and pairing.
Alcoholic drinks in 2024: The big picture
▪ In 2024 GDP growth in Honduras reached 3.8%, decelerating compared to the previous year while inflation eased registering 5.19%. Despite the adverse global economic scenario that impacted external demand, internal consumption improved, supported mainly by remittances. Beer, the largest category in alcoholic drinks, continued to see dynamic demand thanks to its low price. Wine remains a niche category but is seeing rapid growth, driven by increasing consumer knowledge with spirits and RTDs also achieving positive growth rates. Consumer preferences around alcoholic drinks remained almost unaltered from the previous year although there was some trading down to more affordable brands or switching to low-priced categories. Sales through restaurants, bars, and nightclubs sustained robust growth, benefiting from a higher influx of tourists. In relation to the on-trade channel, sales that began recovery in 2021 and surpassed pre-pandemic levels, continued on the same path in 2024.
▪ Positive growth in spirits was aided by a trading down to rum and guaro, while domestic spirits remain popular among low-income men. Despite its growing popularity wine remains a peripheral category while sales of RTDs are rising, especially among women.
Country background
▪ In 2024, the Honduran economy grew by 3.8%. In spite of the adverse global economic scenario and reduction in external demand, economic growth was driven by improvement in internal demand for food and services, as well as improvement in the construction industry. The most dynamic economic activities were financial services (15.2%), hotels and restaurants (12.1%), transportation and communications (7.9%), and private construction (7.9%). Inflation recorded in 2023 was around 5%, dropping from over 9% in 2022.
▪ Alcohol is widely consumed in Honduras, and it is considered acceptable for both men and women to drink. While men continue to account for the bulk of alcohol consumption, the volume of alcohol consumed by women has been increasing rapidly in recent years. Alcoholic drinks are regarded as staples during social gatherings such as weddings, birthday parties and holidays. Sales peak around Semana Santa (Holy Week prior to Easter Sunday) and the year-end holidays of Christmas and New Year. Celebrations and spending on alcoholic drinks also escalate in June, when the decimocuarto (a double monthly wage) is paid to most workers. Few Hondurans are teetotal, with those who are generally making this choice for health or religious reasons. The tolerant attitude towards alcohol consumption is unlikely to see any major changes during the forecast period.
▪ There are no significant cultural or religious barriers limiting the consumption of alcohol in Honduras, other than among followers of certain religious sects, notably Jehovah’s Witnesses, who abstain from alcohol completely. Alcoholic drinks are freely consumed by all demographics in both rural and urban areas. There are differences between the generations and sexes in the type of alcohol consumed, with older men, for example, often preferring
spirits, while women tend to opt for lower-strength alcoholic drinks such as wine or RTDs. Younger Hondurans tend to try beer as their first alcoholic drink as it is widely available and inexpensive and the low ABV generally helps them to avoid serious intoxication, which is generally frowned upon in public spaces.
▪ It is not uncommon for working Hondurans to have a drink after work, often with friends or colleagues. When they drink in on-trade establishments after work, they tend to consume moderate amounts as drinks in these outlets are more expensive. Weekends are generally reserved for greater levels of indulgence, with Hondurans enjoying a beer, rum-based drinks, vodka, or whisky, often accompanied by appetisers. These cultural habits are fairly deeply ingrained and unlikely to be subject to any major change during the forecast period.
▪ There is only limited artisanal production of alcoholic drinks in Honduras, with the low volumes manufactured mainly being fruit-based variants of guaro or aguardiente. These are generally produced not only for home consumption but also to be distributed via local pulperias (small local grocers) and small bars at very low prices of around HNL5.00 per serving. Ethanol is also smuggled into the country and used to produce counterfeits or guaro, with these products also generally sold via bars and pulperias. Artisanal spirits tend to attract only the lowest-income consumers, while legally-produced guaro is also popular in Honduras and preferred by those able to afford it. Beyond guaro, the most significant artisanal drink is gifiti herbal bitters. This drink is mainly popular among the Garifuna community with production strongest and availability widest along the Caribbean coast. Gifiti is viewed as medicinal and healthy, with many drinking it in small quantities daily, although it is also often consumed in larger quantities at celebrations and can also be found in some bars in Garifuna neighbourhoods. It has recently begun to appear in other regions of the country. Other drinks include chicha, which is consumed throughout Central America and cususa, or "Crazy Water", a Mayan drink often consumed in rural parts of the country.
▪ IHADFA, or Instituto Hondureño para la Prevención del Alcoholismo, Drogadicción y Farmacodepencencia, is the main state-run organisation which offers help and advice to those addicted to alcohol, drugs, or pharmaceutical products. It runs educational courses and events throughout the country, with its main focus being to prevent abuse of these substances. According to IHADFA, for 2023, about 40% of Hondurans are consumers of alcohol, mainly of beer and aguardiente.
Socioeconomic trends
▪ For 2023, unemployment remained a major concern, standing at a reputed 7.4%, although the private sector believes that this could be higher. Another concern is the high levels of informality that reach 56.1%
▪ Many Hondurans face constant and grinding poverty, with income disparity rising further during the review period. According to the latest information available, in 2023, around 72% of the population lived below the national poverty line.
▪ Alcoholic drinks purchasing trends tend to vary significantly among the different socioeconomic groups in Honduras. Beer holds wide appeal across consumers of all income groups, mainly because it is an affordable product, even for low-income consumers. Beer is consumed by adults of all age groups, although younger adults are more likely to choose beer than their older counterparts. Young adults aged 18 years old and upwards are generally attracted by the most effectively promoted beer brands. Within spirits, low-income consumers are most likely to opt for guaro (aguardiente) or economy rum, with this consumer group also most likely to buy illegally-produced spirits due to the low cost of these products. The appeal of beer and guaro applies in both urban and rural areas, while sales of other alcoholic drinks are derived mostly from major cities.
▪ In general, low-income consumers are only able to afford domestic alcoholic drinks brands, while mid- to high-income consumers are more likely to purchase imported brands, particularly within spirits. Middle-income consumers are less likely to drink guaro, preferring rum, while vodka, tequila and whiskies are mainly popular among upper-mid- to high-income groups. Mid- to high-income consumers are also most likely to buy wine, with wine most popular among men and particularly women aged 30-years-old and upwards. Wine, however, remains a niche category, with most preferring beer and spirits. Affluent young adults are those most likely to buy RTDs, especially those living in major urban areas, with these products regarded as expensive in comparison to beer and spirits. The vast majority of middle-income consumers live in major cities, with high-income consumers mainly based in the capital Tegucigalpa and San Pedro Sula, the country's second-largest city.
▪ Consumers tend to trade up or down within alcoholic drinks in response to shifts in disposable income levels. When they can afford to do so, many will switch from affordable rum to higher-priced whiskies. Those facing financial challenges will conversely often switch from rum to guaro (aguardiente sugarcane spirit), the lowest-priced option in spirits.
▪ The Honduran population is young, with a median age of 25 in 2024. This figure slowly increased over the course of the review period as the country’s birth rate declined by two percentage points over the course of the review period. The declining birth rate can be attributed to emigration over security concerns, particularly among women of child-bearing age. Population ageing is also due to high levels of child emigration, with child migration to the US rising sharply during the review period. In addition, the Zika virus outbreak of 2016 encouraged some women to avoid pregnancy.
▪ Honduras’ young population continues to benefit sales of alcoholic drinks, with those in their 20s more likely to drink while socialising as well as being more attracted by effective marketing and branding campaigns. Younger generations of Hondurans tend to earn less than their older compatriots and thus favour cheaper alcoholic drinks such as beer and rum, whereas older consumers are able to afford spirits such as vodka and whisky.
▪ The total population of Honduras stood at 10.6 million in 2024, with this almost equally split between males and females, a ratio which is expected to remain stable throughout the forecast period. Both men and women freely consume alcohol and there is little difference in consumption rates according to gender. The Honduran Institute for the Prevention of Alcoholism, Drug Addiction and Drug Dependence (IHADFA) has reported that men consume 2% more alcohol than women. There is little distinction between where men and women consume alcohol, with restaurants, discotheques, night clubs, parties, and social gatherings such as weddings and birthdays all considered good opportunities to partake. The Christmas and Easter festive seasons also witness high levels of consumption among both men and women.
▪ Some 60% of Honduras’ total population lived in urban areas in 2024, an increase of three percentage points since the beginning of the review period. Alcohol consumption is high in both rural and urban areas, although there are marked differences in the types of alcohol consumed in line with the variations in disposable incomes, which tend to be lower in rural areas. Consumers in these regions therefore usually have little choice but to opt for less expensive alcoholic drinks such as beer or guaro, whereas city dwellers are able to afford more expensive options such as wine, spirits or RTDs. However, with much of the urban migration being seen in Honduras motivated by the desire to find work among unemployed and underemployed rural dwellers, unemployment is rising in Honduras’ main cities as the ranks of the urban underclass swelled significantly in Tegucigalpa and other major cities over the review period.
▪ Beer, aguardiente, and rum are all produced extensively in Honduras. Manufacturers are closely monitored by SAR, the government entity responsible for the collection of taxes in the country. These manufacturers contribute significant amounts of taxes to the local economy, while importers also contribute, in the form of excise duties and import taxes.
▪ The presence of online food ordering and delivery services via apps such as Glovo, and Hugo (recently absorbed by PedidosYa) has had a massive impact on the Honduran consumer foodservice industry. Specifically, the advent of such services has led to increased demand for home delivery of food and drinks. These apps also offer users the opportunity to take delivery of products purchased from convenience stores and supermarkets, with the services covering all types of goods, including alcoholic drinks. These initiatives also came into their own during the pandemic among consumers in lockdown and who were enduring long periods of home seclusion and unable to visit bricks and mortar stores.
Logistics/infrastructure
▪ Honduras benefits from a well-developed road infrastructure linking the major cities and from strong spending on roads, including recent financing from the Inter-American Development Bank to modernise the country’s main roads. The distribution of fast-moving consumer goods in rural areas can, however, be problematic, particularly given the frequent flooding in some areas, although the leading players in the alcoholic drinks industry have reported no significant distribution problems as a result of poor roads.
▪ Nevertheless, it is common for imports to be delayed at the country’s ports due to poor port management and inadequate facilities, issues that are exacerbated by widespread petty corruption. Security issues can also arise at any point during the distribution process due to gang activities in certain parts of the country. Many major industry players work with third party distributors in order to navigate local issues related to corruption and crime. Cervecería Hondureña, for example, only operates direct distribution in a 20-30km radius of its production facilities and relies on third party distributors beyond this area. Many of these local third party distributors are adept at dealing with challenging situations and corruption.
▪ In Tegucigalpa, the mayor’s office is currently undertaking numerous projects to restructure and repair the city’s roads. It is expected that this will eventually alleviate many of the traffic problems that are an unfortunate fact of life in the Honduran capital, although with numerous major projects currently being undertaken simultaneously, the repair programme is having a negative effect on the ability of alcoholic drinks companies to deliver their products to both off-trade and on-trade outlets.
▪ Certain at-risk areas in major cities across the country are dominated by maras or street gangs, who charge a “war tax” to companies operating within their territory to allow them to sell their products in areas controlled by the gangs. The gangs demand protection money not only from these companies, but also from the small businesses who retail alcoholic drinks. This means that many alcoholic drinks players continue to avoid distributing their products in these gang-controlled areas.
▪ Alcoholic drinks are widely available throughout the country, although it is only in major urban areas that a comprehensive range of products and brands are on offer. In rural parts of the country, the range of alcoholic drinks on offer is much more limited, not least as rural dwellers often have lower disposable incomes and are therefore required to limit their consumption to less expensive options such as domestic lager, aguardiente and guaro.
▪ Pulperias are the most significant distribution outlets for alcoholic drinks, with these traditional grocery retailers often blurring the lines between the on- and off-trades. Many offer basic seating and enable drinking on the premises, a practice which is facilitated by the lack of licencing enforcement in some areas, with many pulperias unregistered even in terms of an off-trade licence. These outlets mainly offer beer and guaro, alongside a range of other economy spirits. Pulperias are present throughout the country and are a common feature of daily life for people in both urban and rural areas. Due to concerns over crime, many consumers prefer to shop close to their homes, which offers this widespread channel a strong advantage. Many of these outlets also offer up to 15 days’ informal credit to local customers, which is often highly attractive to low-income households. The owners of many pulperias are, however, facing difficulties due to gang crime and extortion, with most small businesses forced to pay protection money to gangs in order to continue operations or face the threat of violence, including murder. A growing number of pulperias are thus closing due to security concerns, while tax changes during the review period also eroded the profitability of many such outlets, with many stores forced to increase their prices to survive. The government of Xiomara Castro, at the end of 2023 declared the state of emergency (Estado de excepción), aiming to combat gang activity, similar to what El Salvador is doing under Bukele’s government. The state of emergency was prolonged until October 2024.
▪ Supermarkets is another significant retail distribution channel for alcoholic drinks, with these types of retailers benefiting from security concerns among mid- to high-income consumers. Many of these affluent consumers are switching from pulperias to supermarkets due to the higher levels of security that these outlets offer, with this trend also linked to the closure of many pulperias. Modern grocery retailers are spreading throughout the country due to the rapid expansion of supermarket chains such as La Colonia and Paiz (Wal-Mart) in major cities. Wal-Mart opened several new stores in Honduras towards the end of the review period, including a Wal-Mart hypermarket in Tegucigalpa, the result of a USD12 million investment. Supermarkets and hypermarkets are particularly strong in sales of wine and RTDs, with these products not generally distributed via pulperias.
▪ Although supermarkets and discounters remain the relevant channels in sales of alcoholic drinks, small local grocers, that were negatively impacted, were able to recover after the pandemic. The small but growing channel of retail e-commerce also witnessed rapid growth as the number of internet users continues to rise. Consumers are also becoming more confident in making purchases via this channel.
▪ Cross-border trading and private imports generally involves bringing alcoholic drinks into the country across Honduras’s borders with Nicaragua, El Salvador, and Guatemala, where spirits are generally cheaper than in Honduras. According to the latest available data (2022), 23% of alcoholic drinks are illicit in the country, severely impacting economy and health of population. Scotch whisky is a popular product within contraband shipments, although these imports have little impact on demand within the country.
▪ Low prices are the main factor in sales of illicit alcoholic drinks, with these products having avoided taxes and import duties, making it possible for them to be offered at much lower prices than licit products distributed through licensed channels.
▪ Though not uncommon, private imports are not a major issue in Honduras and do not have a significant impact on sales of alcoholic drinks. The majority of price-sensitive Hondurans do not travel widely abroad due to lack of resources, while the better off are content to purchase their drinks from the many established channels in the country.
▪ Duty free sales are generally limited to high-income consumers and pose little competition to overall on- and off-trade sales. Honduras previously had large numbers of duty-free shops located in close proximity to airports and customs offices. These duty-free outlets generally sold spirits openly to all comers without charging taxes. In 2007, the government closed most
of these stores and only allowed duty free shops to operate inside airports and with many restrictions on their operations. Since then, spirits have only been sold without taxes to travellers with a ticket for an international flight, and only up to a limit of one litre. While these products are tax free, the high mark-ups on duty free outlets and the focus on premium products result in duty free alcoholic drinks being expensive and unaffordable to most Hondurans. Nevertheless, the wide selection of premium wine and spirits on offer in these outlets enables duty free to record strong sales in these areas.
Legislation
▪ For 2024, there were no significant changes in legislation.
▪ Both the legal drinking age and legal purchasing age are set at 18 in Honduras under the terms of Decree 100-2000, which was passed in 2004.
▪ Underage drinking is, however, fairly common in the country, with many starting to drink at around aged 16 years old. According to the government, a growing number of 12-14-year-old Hondurans drink, with the Honduran Institute for the Prevention of Alcoholism, Drug Addiction and Drug Dependence (IHADFA) stating in January 2017 that around 31% of this group drinks alcohol. Among those aged 15-17 years old, the level is estimated to stand at 55%. Underage drinking is particularly common among boys and is linked by IHADFA to declining parental authority. IHADFA is working closely with children's charity Casa Alianza, utilising social workers and healthcare professionals in an effort to combat underage drinking.
▪ Driving under the influence of alcohol is banned, with the maximum blood alcohol level set at 0.7BAC. Breathalyser tests are used by the police to randomly check motorists and in response to accidents.
▪ If the test is positive, police officers may prohibit driving for the time necessary for recovery, which may not be more than three hours from verification, although in certain cases the driver can be stopped from driving for a longer period. During this time, the affected person must remain under police surveillance, for which purpose they must be taken to a police station or roadblock, unless the vehicle is immobilised for the set time, or another person is appointed to drive.
▪ Offenders can be fined to a level of half the minimum wage and have their driver's licence suspended for six months for an initial offence and up to a level of three times the minimum wage and cancellation of the driver's licence for a repeated offence.
▪ Advertising is permitted for alcoholic drinks but is strictly controlled. Advertising must not depict the consumption of alcoholic drinks or images or sounds that suggest satisfaction from drinking. Advertising is banned in sports facilities and stadiums and billboards promoting alcoholic drinks may not be located within 100m of police stations, churches or education or healthcare facilities. Alcoholic drinks advertising is also banned via all TV channels at weekends and on national holidays, while also being banned during children's programmes and sports broadcasts. Advertisements must also not feature athletes, students, workers, farmers, scientists, or celebrities in a manner that could encourage the consumption of alcoholic drinks. Minors and women in revealing clothing are also banned from alcoholic drinks advertising, as are religious figures, mothers, pregnant women, and elderly women. All advertising and packaging must feature an IHADFA health warning, with this covering 30% of the side of packaging or 20% of the front or back.
▪ There is a strict smoking ban in place, which was strengthened in 2011. The new amendment even restricted smoking at home, with those exposed to passive smoke able to report household members to the police. In open spaces, the law bans people from smoking within two metres of another person. The law explicitly bans smoking in education establishments,
forecourt retailers, public transport, taxis and sports facilities, alongside on-trade outlets. The legislation regulates sales to children under 21 years of age, prohibits advertising and promotion of tobacco products, establishes the obligation of labelling, and requires the use of graphic health warnings on every tobacco product.
▪ The smoking ban is very well enforced in many areas, particularly in city centres, although high crime levels make the ban difficult to enforce in many areas. There was little change in enforcement levels during the review period, with the ban having only a slight impact on on-trade sales of alcoholic drinks.
▪ In addition to the very strict operating hours that were put in place specifically due to the onset of the pandemic in 2020, the overall legal hours for the sale of alcoholic drinks had been becoming increasingly restricted during the review period. From 2014, on- and off-trade outlets were banned from selling alcohol from 17.00hrs on Sundays to 11.00hrs on Mondays. From March 2016, this legislation was relaxed but only for outlets in designated tourist areas. Legal opening hours are 11.00hrs-24.00hrs Monday-Thursday, 11.00hrs-02.00hrs Friday-Saturday and 11.00hrs-17.00hrs on Sundays, with these applying to on- and off-trade outlets.
▪ However, local municipalities may designate zones and opening hours for establishments where alcoholic drinks are consumed. Similarly, they may restrict or prohibit consumption of such beverages in businesses or establishments not expressly authorised for their sale.
▪ In establishments where alcoholic drinks are exclusively sold and consumed, billiards or adult entertainment establishments, the presence of children under 18 years of age is not allowed, with the managers of these outlets required to check customers’ identity cards. The sale of alcoholic beverages to minors is prohibited in retail stores, mini-markets, supermarkets, and grocery stores. Penalties for infraction include forfeiture of assets, closure of establishments and/or suspension or cancellation of permits. The same legal instrument (Legislative Decree No226-2001) states in its Article No103 that billiard lounges, canteens, tobacconists, and any other establishment dedicated to the sale of intoxicating beverages must be located no less than 100m away from hospitals, health centres and/or educational centres, with sanctions ranging from fines to closure of the establishment.
Taxation and duty levies
▪ In April 2024, the government issued the Acuerdo 014-2024, that increased taxes for alcoholic drinks, domestic and imported, by 6.0%. Although the increase in Consumer Price Index in 2022 was 9.80%, the maximum rate that can be applied is 6.0%. The new taxes are:
What next for alcoholic drinks?
▪ There is some optimism for economic growth over the forecast period, although no significant increases are likely. Private investment is likely to remain at low levels, and the economy will continue to be highly dependent on foreign markets and remittances, which despite remaining steady over the review period, may be affected by migratory policies from the US going forward.
▪ Consumption patterns are not anticipated to see drastic changes. Beer, being a mature category will see steady and moderate growth. Wine, despite the predicted accelerated growth, is unlikely to democratise, remaining preferred by affluent consumers. Spirits will see rapid growth, mainly white spirits and tequila as consumers are more aware of alternative ways of consumption, such as in the form of cocktails. Local spirits, such as aguardiente are likely to see flat rates, because besides being a mature category, disruptive innovations have not been observed.