International

Markets

Bureau

MARKET ANALYSIS REPORT | JUNE 2010

The Peruvian Consumer

Behaviour, Attitudes and Perceptions toward

Food Products

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EXECUTIVE SUMMARY

INSIDE THIS ISSUE

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The Peruvian Consumer Behaviour, Attitudes and Perceptions toward Food Products

Situated in western South America, Peru is a growing and developing nation with a young and urban population. With Lima as the economic and political centre of the country, Peru is working toward improving the quality of life of its population, with efforts directed to the betterment of its economy and public health infrastructure. Income levels in Peru vary widely, and overall, the country has a relatively small market due to limited purchasing power. Nevertheless, disposable incomes are rising, and household consumption maintains a high pace of growth. Peruvian consumer behaviour has changed gradually over the past few decades. Today, Peruvians pay more attention to quality, and are interested in trying new products. In addition, a small segment of the population is willing to pay premium prices for convenient, packaged, and easy-to-prepare food products. Peru is highly dependant on imports, and presents many opportunities for Canadian agri-business firms. Trade between Canada and Peru has seen tremendous growth in the past few years; this will expand even further with the Canada-Peru bilateral free trade agreement that was signed in 2009. This report was prepared based on multiple sources of information. Its main purpose is to provide information on Peruvian consumer behaviour and attitudes toward food products. This information may be useful in supporting Canadian companies in their export strategies and helping build competitive advantage in Peruvian markets.

While Peru is a net exporter of agri-food and seafood products, the country is also highly dependant on imports, presenting many opportunities for Canadian agri-business firms. In 2008, Peru‟s agri-food and seafood imports were

CAD$ 3.3 billion. Its agri-food and seafood imports have been growing over the past five years at an average of 23.2% per year (Global Trade Atlas, 2008).

GLOBAL TRADE POSITION

GLOBAL TRADE POSITION 2

Canada-Peru Free Trade Agreement

3

Peruvians‟ Perception of Canada

3

DEMOGRAPHICS 3

Population 4

Ethnicity 4

Education 5

Households 5

Health and Lifestyle 6

Economy 9

Political Environment 9

CONSUMPTION AND EXPENDITURES

10

Expenditures Overview 10

Consumption Tastes and Preferences

11

EMERGING TRENDS 13

Organics 13

The Green Market 14

Healthy Foods 14

CONCLUSION 14

KEY RESOURCES 15

Source: Shutterstock

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Peru‟s key agri-food and seafood imports in 2009 were soybean oilcake, non-durum wheat, corn, soybean oil, and food preparations. These top imports made up over 50% of Peru‟s total agri-food and seafood imports (Global Trade Atlas, 2009).

Key supplying countries in 2009 were Argentina, the United States, Chile, Canada, Bolivia, and Paraguay (Global Trade Atlas, 2009).

Canada was Peru‟s fourth largest supplier of agri-food and seafood products with a market share of 7.7% (Global Trade Atlas, 2009).

Canadian agri-food and seafood exports to Peru were valued at CAD$238.8 million. Top agri-food and seafood exports were wheat, lentils, barley, dried peas, and canary seed (Statistics Canada, 2009).

In 2009, Canada registered an agri-food and seafood trade surplus of CAD$82.3 million with Peru. Canada‟s top agri-food and seafood imports from Peru were fish fats and oils, asparagus, coffee, fish meal, and mandarins (Statistics Canada, 2009).

Processed food imports dipped slightly in 2009, to CAD$1.7 billion. Canada supplied less than one percent of Peru‟s processed food imports. Argentina, the United States, Chile, Bolivia and Paraguay, were the largest suppliers of processed food to Peru, accounting for over 66% of Peru‟s processed food imports. Peru‟s major processed food imports included soybean oilcake, soybean oil, food preparations, sugar, and rice (Global Trade Atlas, 2009).

Canada-Peru Free Trade Agreement The Canada-Peru bilateral free trade agreement (FTA) came into effect on August 1, 2009. With this agreement, tariffs on many agri-food products were eliminated; this will be beneficial in fostering Peru‟s economic development by opening new markets and fostering trade-related cooperation between the two countries. Moreover, Peru has been identified as a country of focus for the Canadian International Development Agency‟s development assistance program. This program aims to help trade partners in the Americas maximize the opportunities and benefits of increased trade and investment (Foreign Affairs and International Trade Canada, 2009). Peruvians’ Perception of Canada A survey conducted by Grupo de Opinión Pública de la Universidad de Lima (2009) found that Peruvians still do not see Canada as a strong economic partner. In addition, the worldwide economic position of Canada is unknown to most Peruvians. Peruvians, in general, associate Canada with the concepts of development, modernism, culture, democracy, and, to a lesser extent, technology. Peruvians may need to become more aware of the Canadian brand to allow the successful development of new food markets in the country.

Peru is a country with a young population, formed by a mix of several ethnicities. It has a rich culture, great population diversity, and a strong sense of family. Education is improving, disposable incomes are rising, and more women are joining the workforce. With Lima as the economic centre of the country, Peru is working toward improving the quality of life of its population, with efforts directed to the betterment of its economy and public health infrastructure.

DEMOGRAPHICS

Source: Planet Retail

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Population Peru is a growing and developing country, with an urban, sub-employed, and poor population. Peru has a population of 29,546,963 (Central Intelligence Agency, 2009 estimate, ), with an annual growth

rate of 1.23%. This makes Peru the fifth most populous country in Latin America (after Brazil, Mexico, Colombia, and Argentina) (U.S. Department of State, 2009). According to Peruvian government sources, by 2025, the population may exceed 37 million people (Instituto Nacional de Estadística e Informática, 1995).

In terms of total area, it is the third-largest country in South America. Major cities are Lima (capital),

Arequipa, Chiclayo, Cuzco, Huancayo, Ica, Trujillo, Ayacucho, Piura, Iquitos, and Chimbote (U.S. Department of State, 2009).

Since 1940, the urban population in Peru has increased 9.5-fold. As of 2008, 71% of the population lives in

urban areas (Central Intelligence Agency, 2008) and, by 2025, this may be close to 77% (Instituto Nacional de Estadística e Informática, 1995).

Nearly 30% of the population lives in Lima and Callao‟s metropolitan areas (U.S. Department of State, 2009). The average age is around 26 years, with the majority of the population in the age group of 15 to 64 years.

Children aged 0 to 14 years represent 29% of the total population. The percentage of elderly is only 5.7 (Instituto Nacional de Estadística e Informática, 2008).

Life expectancy is, on average, 70 years: 72.7 years for women and 68.9 years for men (Central Intelligence

Agency, 2009 estimate).

Ethnicity Peru is a multilingual and multicultural country, with an identity based on the white, Spanish minority and a large mestizo1 group. For centuries, Peru‟s Indigenous people have faced a great deal of discrimination, and are still portrayed as belonging to an inferior social class. The same is reflected in the Afro-Peruvian communities, which have suffered racial and cultural discrimination and a lack of social opportunities. People of Chinese and Japanese descent also face challenges integrating into Peruvian society, mostly due to cultural differences. According to the Central Intelligence

Agency (2009), the official languages in Peru are Spanish and Quechua. Another predominant language is Aymara, and a large number of minor Amazonian languages are also used.

Peru is a natural blend of Spanish,

Italian, Chinese, and Japanese cultures, with Indigenous people making up 45%; Mestizo 37%; whites 15%; and blacks, Chinese, Japanese, and others 3%, as shown in Figure 1. (Central Intelligence Agency, 2009; U.S. Department of State, 2009).

Figure 1. Peruvian Ethnicity, 2009

Source: Adapted from Central Intelligence Agency, 2009.

Indigenous persons

Mestizo

Whites

Other

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Ethnicity (cont’d)

Lima has the second largest Japanese colony in the world, preceded only by Sao Paulo, Brazil. The Japanese population has had a strong impact on food habits and consumption in Lima, increasing the demand for seafood and oriental spices and ingredients. The Japanese influence in Peru has also created the Nikkei cuisine, which is characterized by a blend of Japanese and Peruvian cooking styles, techniques, and ingredients (Peru Gourmet, 2009).

Over a hundred years ago, Chinese immigrants arrived in Peru, influencing the dietary and social habits of

Peruvians with the introduction of new varieties of vegetables and legumes (Peru Gourmet, 2009).

Education In Peru, as in many developing nations, the population perceives education as essential to progress and personal advancement. Therefore, Peruvians commonly associate socioeconomic well-being with educational achievement.

All levels of education are highly valued. Teachers are respected and tend to

occupy leadership positions. Higher education is greatly respected, and titles are valued and seen as prestigious (Hudson, 1992). However, the educational system seems to be of low priority in the political agenda, which does not take into account the regional diversity of the population, the low wages of teachers, and the low number of schools in rural areas (Euromonitor International).

Peruvian education improved considerably in the past few decades, with an

increasing number of enrollments and educational attainment. The literacy rate has improved as well, reaching 96% in urban areas and 80% in rural areas. Nevertheless, the quality of education in Peru is still considered poor when compared to other developing nations (U.S. Department of State, 2009; Euromonitor International).

According to UNESCO, educational enrolment at the primary and secondary

(compulsory) levels in 2007 was relatively equal across both sexes. However, discrepancies have generally been seen at the tertiary level, with enrolment slightly higher for males than females (2010).

As the Peruvian population becomes more educated, especially women (who make most of the household

decisions related to food purchases), the demand for quality products tends to increase. Similar to what has been seen in other countries, as consumers become more exposed to information, the understanding of how food influences one‟s overall health also grows—consumers will seek the best value for their money, in terms of quality and price, rather than focusing solely on lower costs.

Households Two-parent families are the most common household structure in Peru. In keeping with Hispanic, Peruvian patterns, families tend to be centered around the father as the head of the family. The participation of women has been increasing as they become present in the workforce, and play a stronger role in the financial aspects of the household and in decision-making processes. In 2005, 80% of households in Lima were two-parent households (Euromonitor).

The birth rate in Peru is 1.9% and a large portion of households has five or more members (Euromonitor). The number of household members has been decreasing and, according to Euromonitor International, “the

fastest growing segments are the households with three or four persons.” In 2007, singles represented 39% of the population, and were mostly concentrated in urban areas. They are commonly young professionals who have achieved a certain level of financial independence. Men still dominate in this

Source: Shutterstock

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Households (cont’d)

category, and tend to follow the “metrosexual”2 trend, investing a great deal of attention in their appearance. They like luxury, comfort and convenience and will pay premium prices for food products (Instituto Nacional de Estadística e Informática, 2007; Euromonitor International).

In the past two decades, Peru has experienced a progressive increase in the number of people living in

common-law situations, and a dramatic decrease in the number of married people. As of 2007, married people in Peru represent only 28.6% of the population. According to Instituto Nacional de Estadística e Informática, the changes in marital status observed in Peru may be associated with the new roles people are playing in Peruvian society, specifically the increasing participation of women in the workforce as well as the increase in levels of education.

In 2009, 16.9% of households had a personal

computer, 26.9% of households had a telephone, 10.3% of households had cable television, 38.6% of households had a refrigerator, 32.2% of households had a freezer, and 46.9% of households had a microwave oven. Sales of microwaves have seen steady growth since 1990. This is due, partially, to an increase in the number of retailers, leading to increased competition in the marketplace and lower prices. Consumers also have more access to credit, which eases the acquisition of household durables (Euromonitor International). The increased purchase of microwaves by households across the country may boost the demand for frozen and ready-to-eat meals.

Health & Lifestyle The public health system in Peru faces the same challenges as many other developing nations—misinformation, poverty, and under-nutrition are chronic issues in the population. Aside from these, the country is also seeing a slow, but steady growth in overweight and obesity rates, accompanied by an increase in the incidence of chronic, non-communicable diseases, and a shift in dietary patterns toward the consumption of less healthy food items. The population is diverse, not only ethnically speaking, but also economically. Different levels of income shape lifestyle patterns and lead to different attitudes toward maintaining one‟s health.

In a recent survey, half of the people living in the areas of Lima and Callao believed their health status was

good or very good. Although herbal healers are popular among the population, 54% of Peruvians seek a physicians‟s help when facing illness, and 26.3% of people get health advice from pharmacists (Grupo de Opinión Pública de la Universidad de Lima, April 2009).

Peruvians seem to have good sleeping patterns, with eight to nine hours of sleep per night. Due to the

Spanish influence, roughly 11% of the population still have the habit of taking siesta, a short nap after lunch (Grupo de Opinión Pública de la Universidad de Lima, April 2009).

Since 1966, Peru has seen a change in its public health concerns, with a dramatic reduction of pathologies

related to transmittable and perinatal diseases, and a notable increase in non-communicable diseases such as cancer, diabetes, and cardiovascular diseases (Pérez, 2006). A survey led by Grupo de Opinión Pública de la Universidad de Lima (April, 2009) found that 30% of participants from the areas of Lima and Callao had relatives suffering from cancer, 27.5% had relatives suffering from diabetes, and 22.7% had relatives suffering from cardiovascular diseases. Nevertheless, major infectious diseases are still prevalent in the country, with a high risk of bacterial infections, hepatitis A, typhoid fever, dengue fever, malaria, yellow fever, and leptospirosis.

_________ 2 “Metrosexual”: a heterosexual man who has a strong aesthetic sense and inordinate interest in appearance and style (Dictionary.com)

Categories 1994 1999 2004 2009 2014 2019

Cable TV 0.2 7.3 6.2 10.3 12 13.2

Freezer 3.2 9.8 21.6 32.2 37 40

Microwave Oven 0 1.9 22.9 46.9 50.9 51.1

Personal Computer 1.8 5.7 11.1 16.9 22.3 27.6

Refrigerator 34.1 35.6 36.4 38.6 41.4 43.1

Satellite TV 0 0 0.1 0.1 0.2 0.2

Telephone 13 24.1 28.4 26.9 26.8 26.8

Table 1. Peru: Possession of Household Durables % of Households—Historic and Forecast

Source: Euromonitor International

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Health & Lifestyle (cont’d)

Following the same pattern as many developing nations, Peru is facing a “nutritional transition,” with increased consumption of processed foods, fat and sugar, and decreased consumption of vegetables and fruits (Ramos et al., 2006). These diet changes are strongly linked to increasing household incomes.

Half of Peru‟s population lives below the poverty line.

Therefore, many Peruvians have insufficient access to food and are deficient in numerous micronutrients. One quarter of children under the age of five years have chronic malnutrition and 11% of them have subclinical deficiency of vitamin A. In addition, 50% of children under five years of age and 69% of children under two years of age are anemic (Francke, 2005). In a study developed in Lima, 68.8% of children had low levels of iron, predominantly females aged 11 to 14 years (Fernández, Troncoso, and Nolberto, 2007). Malnutrition in Peru, particularly in children, provides opportunities for food manufacturers who can produce low-priced staple foods, and various grocery or candy products enriched with micronutrients and vitamins such as iron and vitamin A.

Sedentarism is a relatively new problem in Peru, and is being intensified by the changes in lifestyles resulting from economic and social developments. The population is clearly decreasing their levels of physical activity, resulting in increased incidence of overweight and obese people, particularly children (Pérez, 2006). A study developed in Lima that looked at school-aged children showed an alarming result—one in three children were either overweight or obese, with a concen-tration in children aged 6 to 10 years (30.6%). Interestingly, both girls and boys seemed to share the same level of risk (Bustamante et al., 2007). Although Peruvians believe that one way of preventing disease is through physical activity, roughly 80% of the population in large urban centres engage in low levels of physical activity, or none at all (Grupo de Opinión Pública de la Universidad de Lima, April 2009). Age and income seem to play a role in Peruvians‟ levels of physical activity—levels are higher in young people, aged 18-27 years, and in higher in-come brackets (Grupo de Opinión Pública de la Universidad de Lima, April 2009; Euromonitor International).

Chocotejas, launched by Il Cioccolato, are traditional upscale Peruvian treats made of fruit, nuts, and sweet caramel covered in dark chocolate. Flavour options include prunes and pecans, figs, oranges, chestnut, and raisins with Pisco (A liquor distilled from fresh fermented grape juice). (Source: Datamonitor)

Source: Planet Retail

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Health & Lifestyle (cont’d) According to a study by Ricardo Canchany (2006) urban Peruvians may be divided into

nine “lifestyle categories” as determined by their level of income, education, and life opportunities. The characteristics attributed to each of these categories are illustrated in the following table.

Table 2. Urban Consumers in Peru and Lifestyle Categories

Lifestyle Categories

Profile of Consumer %

Adaptables Men and women living in medium and large urban centres for whom family and friends play an important role in their decision-making processes. In general, their level of income is low, and they occupy low to medium-low positions in the private sector.

8.2

Conservatives Housewives whose main focus is to care for their families. They are conservative, and support the patriarchal values in the household. They have low to medium levels of income, and have completed their education up to the high school level.

20.5

Entrepreneurs Middle-aged men who live in medium to large cities. They constitute the typical middle class in Peru, and use work as a means for progress and prosperity. They are self-employed, or work in the private sector in middle level positions. They also do a great deal of business travel. This group has the lowest level of unemploy-ment as compared to the others.

2.8

Fortunates Young men and women with high levels of education, as well as high levels of individual and family incomes. Concentrated in Lima and in other large urban centres, the majority of fortunates occupy executive positions. They are modern in the way they behave and consume; are well-travelled and cosmopolitan; and con-sume luxury and non-essential items.

4.2

Progressives Relatively young men and women who migrate from rural areas or small cities to large urban centres. They seek progress through any type of work and through education. Although they earn low to medium levels of income, they constitute a prosperous group, with high consumption levels.

17.6

Sensorials Men and women who are strongly oriented toward social inter-relations. They are centered in the present moment and value brands and indulgence. They may be either young or mature in age, but are highly concerned about their appearances. They are concentrated in Lima and in other urban centres. They occupy different types of jobs, and earn an average income.

2.1

Survivors Men and women, mostly over 60 years old, who live under the poverty line, or in extreme poverty. They have fatalistic and traditional attitudes toward life and, in general, have job insecurity. Their consumption of non-essential products is lim-ited.

16.0

Traditionals Mostly men who live in cities located in the mountains, or Lima and other coastal cities, and preserve their traditions strongly. They believe in the dominant role of males over females, and they are very conservative in the way they think or con-sume. They earn low to medium-low incomes, and possess the national average level of education.

18.1

Workers Middle-aged women, mostly concentrated in the east part of the country. Their lives are focused on personal progress and family matters. The majority are self-employed or hold jobs in educational institutions or in the retail sector. In general, they have finished high-school, with some having completed college. They are op-timists, and relate brands and products to personal image and status.

10.5

Source: Adapted from Nuñez, 2006

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Economy Peru experiences a high level of disparity in terms of income distribution, and has a relatively small market due to limited purchasing power. Nevertheless, Peru‟s economy has proven resilient, and has been performing well for a while. Despite slowdowns in response to recessionary times, household consumption has maintained a high pace of growth, reflecting consumers‟ overall confidence and optimism in the economy. Low-income consumers represent 76% of the population, and almost half of the total population lives below

the poverty line (Central Intelligence Agency, 2009; Gutierrez, 2006). In 2008, the minimum wage in Peru was established at approximately CAD$202 per month, or S/550 nuevos

soles (Perú Ministerio de Trabajo y Promoción del Empleo, 2009). Lima is responsible for over 50% of the country‟s Gross Domestic Product (GDP) (Àguila, 2002). The high

concentration of wealth in Lima does not allow for much to be distributed in rural areas, leading to high poverty levels in areas beyond Lima‟s limits, and a large influx of people into the main cities.

The average monthly household income in Lima was around CAD$590 in 2005. In 2006, nearly 20% of Lima

households were in the middle and upper classes, with a monthly income of CAD$1,186 (Gutierrez, 2006; Senauer & Goetz, 2003; Euromonitor International).

While the last two decades witnessed a significant increase in the share of women in the workforce, there is

still a salary gap between women and men in Peru—women receive lower salaries than men when performing the same duties. Peruvian women still have the label of „homemaker‟ attached to them (Euromonitor International).

The labour force is concentrated in the service sector (75.5%), notably in metropolitan Lima (Central

Intelligence Agency, 2009). Peruvians may work up to 48 hours per week, not exceeding eight hours a day. They are entitled to 30 days

of paid vacation annually, and 24 hours of rest per week.

Political Environment The Peruvian government is proactive in developing policies to address the prevention of health problems, as well as the promotion of healthy lifestyles, through multi-sectoral action. The country has achieved the necessary political, social, and economic stability to develop medium to long-term social and health policies. These policies aim to reduce dramatically the number of people affected by extreme poverty. In addition, Peru is also concerned about the rise in the incidence of chronic diseases, as well as the unhealthy lifestyle of its population. In an effort to increase awareness and promote the sales and consumption of locally made and produced

goods, in 2009, the Peruvian government launched a campaign called „Comprále al Perú‟ (Buy Peruvian). The campaign aims to create a national brand, „Hecho en Perú‟ (Made in Peru), with a commitment to excellence, quality, and continuous improvement. This initiative, along with the relatively low level of Canada brand awareness among Peruvian consumers, may pose challenges to Canadian exporters. Efforts will have to be made to educate these consumers about the advantages of Canadian products. Success will also depend on the ability of Canadian firms to offer low prices that can compete with the growing number of new local brands.

The Ministry of Health in Peru has launched a national program with the slogan „‟Por tu salud, muévete

Perú” (For your health, move Peru) for the promotion of physical activity and a better lifestyle, and the prevention of obesity and other non-communicable diseases.

CONSUMPTION AND EXPENDITURES

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Expenditures Overview Food expenditures vary widely within Peru due to the country‟s income distribution. A noticeable difference exists in expenditure patterns between urban and rural areas. Depite the patriarchal structure of most families, Peruvian women are the primary decision makers in the household when it comes to food purchases. In 2009, total consumption expenditures were allocated as follows: 29.0% food and non-alcoholic

beverages, 9.8% housing, 9.1% transportation, 8.9% hotels and catering, 7.4% education, 6.1% health care, 5.7% clothing and footware, 3.5% household goods and services, 3.1% communications, 2.4% leisure and recreation, 1.9% alcoholic beverages and tobacco, 13.1% miscellaneous other (Figure 2) (Euromonitor International).

Figure 2. Peruvian Household Expenditures, 2009

Expenditure on food and non-alcoholic beverages grew 26% between 2000 and 2005 (Euromonitor International). In 2005, total food sales in Peru were estimated at over CAD$5 billion. Urban households are significantly wealthier than rural households, spending nearly 2.5 times more on food than rural households (Maltsoglou, 2007).

Peruvians spend approximately 40% of their family income on fruits and vegetables, followed by 25% on

meat and dairy products, and 19% on cereals, grains and by-products (Foreign Affairs and International Trade Canada, 2006). The price of fruits and vegetables is relatively low compared to processed foods, which serves as an incentive for their consumption (Euromonitor International). The demand for imported pulses and dairy products has been growing, which offers key opportunities for Canadian processors.

In Peru, expenditure on food products is directly related to income, particularly for high value-added food

categories. For instance, in 2003 monthly spending on food and beverages away from home was around CAD$19 for middle and upper class families in metropolitan Lima, compared to CAD$4.20 for other households (Senauer & Goetz, 2003). For Canadian exporters, this means that the greatest market growth and opportunities for value-added food products in Peru will be generated by the rapidly growing middle class.

Urban households spend more on meat products than rural households (Maltsoglou, 2007). Production and

consumption of beef in Peru is still small by Latin American standards, although there is a steady growth in this sector due to economic growth and the emergence of a middle class in the country. Still, nearly 90% of consumers living in Lima and Callao eat little beef or none at all (Grupo de Opinión Pública de la Universidad de Lima, April 2009; Business Monitor International, 2009).

food and non-alcoholic beverages

housing

transportation

hotels and catering

education

health care

clothing and footware

Source: Euromonitor International

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Expenditures Overview (cont’d) Both production and consumption of chicken have seen rapid growth in the past decade.

Chicken is the most affordable meat in the country and represents 10% of Peru‟s total food expenditure (Business Monitor International, 2009). In fact, nearly 70% of Lima and Callao‟s population eat chicken on a regular basis (Grupo de Opinión Pública de la Universidad de Lima, April 2009).

Households tend to spend less on fish, and smaller quantities of fish are being consumed per capita each

year, compared to other types of meat (Maltsoglou, 2007). This may be explained by the high price of fish and its lack of freshness when purchased outside the coastal region.

Women are primarily responsible for purchasing decisions related to nutrition, the household, and personal care. According to Euromonitor International, three types of women may be identified in the Peruvian household:

Women who try to balance work outside the house with household work—convenience and ease of preparation are strongly associated with their food purchase decisions.

Women who stay at home most of the time—they purchase groceries on a daily basis and watch for low prices, although quality still plays a fundamental role in their decisions.

Women who have high incomes—they have a busy work life and are willing to pay a premium for quality food products.

Consumption Tastes and Preferences The Peruvian cuisine is one of the most varied and richest in the world. Due to the amalgamation of races and cultures, this cuisine has an abundance of aromas and flavours, produced by unique ingredients originating from four different continents. Peruvians enjoy fresh ingredients, meals cooked from scratch, and like to shop at small grocery stores. However, the food industry is offering new shopping experiences and food choices to consumers, which has led to a spread of supermarkets in main urban centres. The country is also well served by restaurants and the food service sector is seeing progressive growth. Dietary habits in Peru have developed from a fusion of the traditions of the Spanish colonizers and the

Indigenous people of Peru, blended with Italian, Chinese, and Japanese traditions. The staples of the Peruvian diet are potatoes, rice, yucca, corn, and chili peppers. Seafood is included in

coastal areas. These foods have been part of the Peruvian diet since the Inca Empire. Rice, potatoes, and sugar are the main sources of energy in the Peruvian diet (Rose et al., 2009). Rice consumption is higher in the north and central coast and in the Peruvian jungle, whereas potatoes are common in the diets of central and south coast, north, and central highlands‟ consumers (Foreign Affairs and International Trade Canada, 2006). Potatoes are more expensive than rice and wheat flour for urban consumers, but may be more affordable for rural consumers who grow their own crops (Rose et al., 2009). The colonizers who arrived in Peru in the 16th century introduced other foods such as chicken, beef, and citrus fruits—these foods are now part of the diet of most Peruvians.

Peruvians are particular about their seafood. Their Pacific Ocean coast has one of the best fishing grounds

in the world and a long tradition of providing seafood for consumption (Black, 2009). One of the most popular national dishes is Ceviche, a lime-marinated dish consisting of fish, scallops, and shrimp. Corn-on-the-cob or sweet potatoes commonly accompany it. Besides Ceviche, Peru has an impressive number of typical dishes, which differ from region to region. In the coastal area alone, there are more than 2,000 types of soups (Gastronomia Peru, 2009). In addition, canned fish, such as tuna and sardines, have a strong presence in most households (Euromonitor International).

Highland cuisine, which predominates in the mountains, remains similar to the traditional Incan diet. The

mountainous regions provide a fertile ground for the growth of potatoes, selected grains and livestock (llamas, sheep, goats, and cattle). Deep-fried pork and chicken dishes (chicharrones), meat-filled corn dumplings (tamales) and corn-on-the-cob with cheese (choclo con queso) are some of the typical dishes of

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Consumption Tastes and Preferences (cont’d) the region. Highland inhabitants also appreciate soups made with eggs, spices, and

onions as well as fish dishes (Food by Country, 2009).

The tropical diet has plenty of rice, bananas, plantains, yucca, fish, and wild game. Peruvians like their dishes to be flavourful and spicy. According to Euromonitor International, 85% of urban

households use spices regularly in their meals. Typical herbs and spices used in their cuisine include chili pepper, mint, oregano, basil, parsley, and cilantro (Food by Country, 2009).

Peruvians are passionate about their cuisine and perceive food as a means to express their cheer,

hospitality, and enjoyment for eating meals with company. When invited for dinner by a Peruvian family, guests dress well and bring a small gift to the host, such as flowers, chocolate, or wine (Food by Country, 2009, Peru Gourmet, 2009).

Peruvian families have three main meals a day, including breakfast (desayuno), lunch (almuerzo), and dinner

(cena). In some households, there is a tradition of having a small meal around „tea time‟ called lonche. In Peru, about 91% of households regularly have breakfast, 81% have lunch, and 78% have dinner (Euromonitor International).

In villages, women are solely responsible for cooking at home. They

start the day boiling water for the preparation of mate, an herbal tea, next they prepare a variety of foods such as triangular-shaped rolls, roasted wheat kernels, boiled dried corn, and bread (Food by Country, 2009). Breakfast also usually includes margarine, milk, fruits, oats, granola, and eggs. Peruvian families consume fresh bread purchased daily from bakery stores called panaderias. The price of packaged bread is still restrictive; affluent families in Lima, conversely, purchase packaged bread on a regular basis (Euromonitor International).

Typically, women begin the preparation of lunch while the family is

still eating breakfast. Lunch is the main meal of the day, and may consist of a broth of potatoes, corn, and barley, as well as avocado chili sauce with vegetables (Food by Country, 2009).

Dinner is a filling meal in the Peruvian tradition, and may consist of

different types of dishes made with potatoes and corn, meat, or seafood (Food by Country, 2009).

Peruvians enjoy drinking cool beverages with their meals. A beer

made of fermented maize is a favourite among adults. Children like drinking carbonated drinks, juices, and chocolate beverages. In addition, a popular soft drink made of maize (chicha morada) is a refreshing beverage that accompanies most meals (Food by Country, 2009).

Although locally produced beverages are highly consumed, the demand for imported beverages, especially

non-alcoholic drinks, has been increasing. This could represent an opportunity for Canadian exporters. Carbonates are particularly popular among Peruvians—in 2006, 57% of the population over 12 years of age drank soft drinks daily or several times per week (Euromonitor International).

A granola product launched by Pure Inka claims to be an all-natural source of nutrit ion and energy. Made of kiwicha, wheat, oat, quinoa, milk, raisins, coconut, sesame seed, maca, and honey, it is targeted to the young population as a healthy option for breakfast (Source: Datamonitor)

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Consumption Tastes and Preferences (cont’d)

The consumption of bottled water is increasing due to the perception that it is clean and safe. In Lima, people drink bottled water mainly at home (74%), but also during physical activities (32%), at work (31%) and during meals (17%) (Euromonitor International).

The consumption of coffee is relatively low in Peru, but higher than the consumption of tea. Consumers are

sensitive to price and show a certain level of loyalty to brands. Medium to high-income consumers purchase coffee at supermarkets while low-income shoppers prefer small stores and market kiosks (Euromonitor International).

People in Peru buy foods primarily from small retailers and traditional outlets. Produce, meat, spices, and rice are often purchased at „puestos de mercado‟, which are small market kiosks selling fresh products. „Bodegas‟, family-run grocery stores that offer processed foods, dairy, teas, coffee, and others, are also popular (Euromonitor International). Price is usually a factor in attracting consumers; however, „bodegas‟ also offer flexible payment options such as allowing patrons to pick up their groceries and pay later in the month.

As consumers increase their demand for a good selection of products, as well as clean and conveniently located stores, „anchor stores‟ such as supermarkets, department stores and fast-food restaurants are spreading in the country. (Gutierrez, 2003; Foreign Affairs and International Trade Canada, 2006).

The supermarket industry is aggressive and proactive, but

still represents only 24% of total retail food sales in Lima, and about 20% nationwide (Gutierrez, 2006). As supermarkets expand to peripheral areas around large urban centres, the demand for imported value-added food products will increase, bringing additional opportunities for Canadian firms. The niche market for value-added, high-quality products is clearly high and middle-income Peruvian families; however, low-income families constitute a growing and important market for price-sensitive products (Gutierrez, 2006).

Eating out is a common practice of Peruvian families during the weekends. Fifty percent of restaurants are

concentrated in Lima, and high-end restaurants now promote local, traditional cuisine in their menus. This has prompted a new wave of talented gourmets and chefs, making Peruvian cuisine famous worldwide (Journal do Brasil, 2009, Euromonitor International). In 2005, the average per capita expenditure on eating outside of the home was around CAD$84.00—78% was spent on full-service restaurants and 8.6% was spent on home delivery/takeaway. It is important to highlight that the fast-food sector in Peru is also expanding, due to the contemporary lifestyles of Peruvians (Euromonitor International).

Organics Peru has approximately 21,073 hectares of organic and transitioning land being cultivated by 5,936

producers (Pymagros, 2002). There are currently six certifying firms in the country, IMO Control Latinoamericana, OCIA, Bio Latina S.A.C.,

SGS del Peru S.A.C., KRAV Kontroll, and SKAL Control Union Peru (Pymagros, 2002).

EMERGING TRENDS

Source: Planet Retail

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Organics (cont’d)

Ninety agri-food products are certified in the country, including coffee, cacao, asparagus, quinoa, fruits, herbs, vegetables, chicken, eggs, goat milk, and pulses (Pymagros, 2002).

The domestic demand for organics is still small and 88% of the domestic production is for export (Pymagros, 2002). Peruvians still have difficulty finding organic points of sale and a good variety of organic products for consumption. However, the demand keeps increasing as more consumers become aware of the perceived benefits of organic products.

The Green Market Peruvian consumers are becoming increasingly aware of environmental issues and a large majority of young

consumers in Peru (60%) would embrace stores and products that claim to be environmentally friendly (Consumidor Verde, 2009).

The majority of Lima consumers believe that companies are not

transparent enough about their environmental policies and 95% of consumers would like to be more informed. Information related to environment is sought through television channels and the Internet. The Internet is mostly used by consumers in higher income brackets (Consumidor Verde, 2009).

Peruvians also believe that companies should make efforts to

design products that have a lower impact on the environment; this is called Ecodiseño (Eco-design). This particular demand implies a profound change in the vision and strategy of local food manufacturers and retailers. As a starting point, many grocery stores across Peru have launched eco-campaigns to express their concern for the environment. Similar to Canada, supermarkets in Peru are also providing consumers with the option of recycled grocery bags to reduce the use of plastic (Consumidor Verde,

2009).

The eco-awareness of Peruvians opens the door for Canadian

companies that produce food products with a sustainability claim.

Healthy Foods One emerging trend in Peru is the awareness of nutrition and health. Consumers in Peru are increasingly

seeking foods that provide high nutritional and health value (Foreign Affairs and International Trade Canada, 2006).

Low-fat and sugar-free products have experienced growth in consumption, particularly by medium and high-

income segments.

Peru is a country with a young population, still fighting high levels of poverty and malnutrition. Nevertheless, the quality of life for Peruvians has been improving, as the government puts more attention into the health and social infrastructures of the country. The economy is relatively stable, supported by optimistic and confident consumers. Household consumption continues to grow; a middle class is emerging, increasing the demand for

CONCLUSION

Inka Gourmet brought into the Peruvian market an instant Quinua Dessert con Leche product that claims to be 100% natural and a good source of protein. (Source: Datamonitor)

PAGE 15

high quality food products, convenience, and luxury. Opportunities for Canadian firms will increase, especially in light of the Canada-Peru free trade agreement that was signed in 2009. This bilateral relationship will allow Peruvians to become more familiar with the Canada Brand, and all the benefits Canadian products have to offer in terms of quality and safety. As identified in this report, there are potential market opportunities for low-priced staple foods, pulses, and non-alcoholic beverages. Additional opportunities will appear as consumers start paying more attention to health-oriented, organic, and eco-friendly food products.

Águila, Carlos Bardález del. (2002). La salud en el Perú. Proyecto Observatorio de la Salud, Consorcio de Investigación Económica y Social. Business Monitor International. (2009). Peru Agribusiness Report Q3 2009. Abstract. Retrieved August, 2009 from [http://www.companiesandmarkets.com]. Bustamante, Alcibíades V, et al. (2007). “Efectos de la actividad física y del nivel socioeconómico en el sobrepeso y obesidad de escolares, Lima este 2005.” Revista Peruana de Medicina de Experimental y Salud Pública, 24, 2. pg. 121-128. Central Intelligence Agency. (2009). “South America: Peru.” The World Factbook. Retrieved July 8, 2009 from [http://www.cia.gov/library/publications/the-world-factbook/geos/pe.html]. Consumidor Verde. (2009, May). Consumo y Medio Ambiente: Una nueva generación de consumidores universitarios y su percepción del compromiso de las empresas con el medio ambiente. Lima, Perú. Datamonitor. (2009). Dictionary.com (2010). “Metrosexual.” Retrieved from [http://dictionary.reference.com/browse/metrosexual]. Euromonitor International. (2009). Consumer Lyfestyles: Peru. Fernández, Alicia; Troncoso, Luzmila; Nolberto, Violeta. (2007). “Estado de nutrición en hierro en una población de 4 a 14 años, urbano marginal, de Lima.” Anales de la Facultad de Medicina, 68, 2. pg. 136-142. Food by Country. (2009). Food in Peru. Retrieved December 9, 2009 from [http://www.foodbycountry.com]. Foreign Affairs and International Trade Canada. (2009). Foreign Affairs and International Trade Canada. (2006, March). “Food and Beverages Market in Peru.” Agri-Food Trade Service. Francke, Pedro. (2005). “Propuestas de reforma de programas nutricionales infantiles en el Perú.” Perspectivas de Crescimiento 1995-2025, Instituto Nacional de Estadística e Informática. Global Trade Atlas Database. (2008). Grupo de Opinión Pública de la Universidad de Lima. (2009, November). Barómetro Social: V Encuesta Anual sobre el Perú y el Mundo. Paper 475, Lima and Callao. Grupo de Opinión Pública de la Universidad de Lima. (2009, April) Barómetro Social: III Encuesta Anual sobre Situación de la Salud en el Perú. Paper 454, Lima and Callao.

KEY RESOURCES

CONCLUSION (cont’d)

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Gutierrez, Violeta. (2006). Peru: Exporter Guide Annual 2006. United States Department of Agriculture, Foreign Agricultural Service, Global Agriculture Information Network. Gutierrez, Violeta. (2003). Peru: Get in on the ground floor. AgExporter, United States Department of Agriculture, Foreign Agricultural Services. Instituto Nacional de Estadística e Informática. (2008). Perfil sociodemográfico del Perú. Censos Nacionales 2007: XI de Población y VI de Vivienda. 2nd Edición. Lima, Perú. Instituto Nacional de Estadística e Informática. (1995, March). Estimaciones de la Población del Perú 1950-1995 y Proyecciones 1995-2025. Peru. International Trade Canada. (2009). Trade Agreement with Peru Opens Doors to Latin America. News release, No. 167. Retrieved November 2009 from [http://www.international.gc.ca/media_commerce/comm/news -communiques/2009/387280.aspx?lang=eng]. Hudson, Rex A., ed. (1992) Peru: A Country Study. Washington: The United States Printing Office for the Library of Congress. Retrieved November 13, 2009 from [http://countrystudies.us/peru/43.htm]. Journal do Brasil. (2009). O Peru que você não conhece. Revista Domingo. Pg. 50-56. Maltsoglou, Irini. (August, 2007). Household expenditure on food of animal origin: A comparison of Uganda, Vietnam and Peru. PPLPI. A Living from Livestock, Pro-Poor Livestock Policy Initiative, Working Paper No. 43, Food and Agriculture Organization Retrieved October 2009 from [http://www.fao.org/ag/againfo/projects/en/pplpi/docarc/wp43.pdf]. Nuñez, Ricardo Canchanya. (2006). “Características del consumidor peruano en la actualidad.” Retrieved November 2, 2009 from [http://www.monografias.com]. Pérez, Fernando L. (2006). “Antecedentes que justifican la implementación de „5 al Día Perú‟ para promover el consumo de verduras y frutas en Perú.” Revista Chilena de Nutrición, 33, 1. Peru Gourmet. (2009). Peruvian cuisine. Retrieved September 9, 2009 from [http://perugourmet.net]. Perú Ministerio de Trabajo y Promoción del Empleo. (2009). Planet Retail. (2009). Ramos, Jiménez and Faviola Susana. (2006, June). “Alimentación saludable: Una utopía en Perú?” Red Peruana de Alimentación y Nutrición , Retrieved December 12, 2009 from [http://www.rpan.org/publicaciones.asp]. Rose, Donald, et al. (2009). “Understanding the role of potatoes in the Peruvian diet: An approach that combines food composition with household expenditure data.” Journal of Food Composition and Analysis, 22. Pg. 525-532. Senauer, Benjamin and Goetz, Linda. (2003 February). The growing middle class in developing countries and the market for high-value food products. Workshop on Global Markets for High-Value Food, Economic Research Services, USDA, Washington, D.C. Statistics Canada Database. (2008). UNESCO. (2009). “Education in Peru.” Institute for Statistics. Retrieved April 15, 2010 from: [http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=6040].

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The Peruvian Consumer — Behaviour, Attitudes and Perceptions Towards Food Products

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