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Manufacturing Industry

St. Maarten/St. Martin entices U.S. exporters with duty-free status

AgExporter, May, 2002

The island of St. Maarten/St. Martin wasn't blessed with good soil and plentiful water, but its bountiful natural beauty serves as a mecca for U.S. and European tourists, and those tourists enjoy a meal prepared with the finest ingredients. The 76,000 people of St. Maarten, an island of the Netherlands Antilles, and St. Martin, a dependency of Guadeloupe, an overseas department of France, maintain distinct cultures while comfortably sharing their 37-square-mile island home.

According to Margie Bauer, director of FAS' Caribbean Basin Agricultural Trade Office, "The 1.3-million tourists a year and relatively affluent local residents make food imports a priority for the island. A dearth of local agricultural products explains an unusual duty-free status for food imports."

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This duty-free status has also encouraged the island's development into a distribution hub for Anguilla, Saba, St. Barthelemy, Sr. Kitts and Nevis and St. Eustatius. Neighboring islanders boat or fly to the island to take advantage of its duty-free prices and larger selection of goods.

"These factors and proximity to the U.S. mainland make the island a prime market for U.S. agricultural products," Bauer said. "The island imports $105 million worth of food products a year.

The food retail sector accounts for $68 million or 65 percent of the island's food imports. The remaining 35 percent, pegged at $37 million, is taken up by the food service sector.

St. Maarten Prefers U.S. Retail Products

U.S. exporters have managed to acquire 85 percent of the retail food market on the Dutch St. Maarten side of the island. However, on the French St. Martin side, exporters have found stiffer competition from France and other European countries--and so claim only a 35-percent share.

Florida Companies Max Out

Stateside, Florida companies have taken advantage of their proximity and now account for most U.S. exports to both sides of the island. St. Maarten imports 90 percent of its U.S. food products from Florida, while St. Martin imports about half its U.S. total from the state.

Also, European containers often travel via ports in Florida--a boon for Florida shipping firms--where they mostly are sent to the Dutch port of Philipsburg, which receives more than 90 percent of all ocean traffic coming to the island.

Supermarkets' Dual Role

The island has 12 supermarkets, 68 grocery stores, five gas marts and an open market. Supermarkets account for about 85 percent of the retail sector sales.

Supermarkets directly import about 60 percent of their products. For other products, they rely on three major wholesalers and the four supermarkets that also wholesale their imports.

"The island has a surprisingly diverse choice of foods," Bauer said. "The retail sector carries products that appeal to the island's 80 nationalities, besides catering to the palates of hungry tourists."

Retailers on the Dutch side report increased interest in convenience and value-added foods. On the French side, retailers find more consumer interest in low-fat and health foods. Neither side has much interest in private label products yet.

Most importers prefer receiving product catalogs with pricing and samples, though some do prefer meeting with a product representative. Importers attend trade shows to find new products.

The three wholesalers are primarily interested in major brands that do not compete with their existing lines. Supermarkets may be more receptive to small- and medium-sized U.S. companies because they like to offer wider choices to their customers.

The largest supermarkets are located in the capitals of Philipsburg, St. Maarten, and Marigot, St. Martin. Mid-sized supermarkets are located in smaller urban areas.

Smaller Retailers Growing

Typically owned and operated by individuals, gas marts and other convenience stores usually buy their products from wholesalers. Gas marts are a relatively new concept, and not everyone has bought into paying more for convenience. These outlets are usually located in high-traffic, urban areas.

Mini-marts and kiosks play a finite role in the retail sector, but are ubiquitous. These smaller stores are constantly introducing new items to be more competitive.

Traditional Markets

The mom-'n'-pop independent grocery stores usually buy 80-100 percent of their products locally, relying on the advice of a wholesaler for new products. Occasionally, they might combine their purchasing power with other stores to import directly. Since shelf space is limited, individual stores often try to distinguish themselves from competitors by selecting specialty items and ethnic foods that reflect the tastes of the neighborhood's residents.

The French capital of Marigot has a small, open market that offers fresh produce, spices and seafood.

Proximity Favors U.S. Goods

Though locals generally hold European and U.S. products in the same regard, U.S. exporters have a major advantage in the retail sector due to the strong distribution channels and shipping accessibility into St. Maarten. Goods from Europe typically take four weeks to arrive compared to one week from Miami.

Manufacturing Industry

St. Maarten/St. Martin entices U.S. exporters with duty-free status

AgExporter, May, 2002

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