Thursday, June 02, 2016
Over the past 18 months, communications between the US and Cuba have improved significantly. The two countries now enjoy diplomatic relations, and President Obama’s recent trip to Havana was the first visit to Cuba by a US head of state in nearly 90 years. Restrictions on trade and travel are easing. Cuba has taken steps toward opening its market and loosening the rules governing private businesses, and it has made overtures toward reestablishing international trade. Both Pope Francis and the Rolling Stones traveled to Cuba during the past year, highlighting the scope of global interest in the country.
All of these changes have created interest and excitement, and many of Cuba’s government ministries are backed up with requests from outside organizations looking to forge ties to the country.
US consumer goods companies see a clear opportunity: Cuba’s economy is growing, yet its people still have very little exposure to consumer products and brands, so it remains one of the last true white-space markets on the planet. At the same time, most US executives know little about Cuban consumers. Economic data about the island’s economy is incomplete, and its retail and distribution networks are opaque. Management teams lack the data they need to properly assess the opportunity.
Recently, BCG has been studying Cuba’s economic evolution, the emerging profile of Cuban consumers, and the potential opportunity for US companies. This article is the second in a series. The first looked at Cuba’s overall macroeconomic development. A third will analyze the country’s travel and tourism industry.
In our analysis, we examined Cuba’s retail infrastructure and the behavior of its consumers, including their spending trends, brand awareness and purchasing habits, and sources of product information.
The results of our research suggest that the opportunity for consumer goods companies in Cuba will likely expand over the next five to ten years, primarily because of a small but growing group of urban, increasingly affluent consumers who have access to private income that supplements their government salaries. Some local factors—such as stiff regulations and a lack of infrastructure—present sizable challenges to foreign companies trying to get their products into the hands of Cuban shoppers, even compared with the challenges of other developing markets. Yet over the long term, and with continued development of the economy, Cuba represents a promising opportunity.