Costco in Caracas: how Florida goods flood Venezuelan stores

By Shaylim Valderrama and Sarah Kinosian

CARACAS/MIAMI (Reuters) – While U.S. President Donald Trump wants to drive Venezuela’s socialist ruler out of power with economic sanctions, there has in fact been a burgeoning influx of American-bought goods from Nutella spread to Oreo cookies.

Many toiletries, food items and other imports became impossible to find during Venezuela’s economic implosion under President Nicolas Maduro. Yet now they line the shelves in scores of new U.S. dollar-only shops known as “bodegones”, providing an unlikely safety valve for Maduro.

The reason?

Venezuelan businessmen have taken advantage of his government’s quiet abandonment of price, currency and import controls to buy direct from U.S. wholesalers including Costco and Walmart.

The goods are delivered to Florida-based door-to-door services run by Venezuelans, according to 11 interviews with customs agents, operators and businessmen. The products move in bulk via shipping companies with bases in south Florida who have this year enjoyed a 100% exemption of import duties and waiver of some paperwork at the Venezuelan end, the sources added.

“Everything our customers want from the United Sates, we’ve managed to offer here!” enthused Hector Mambel, who runs a “bodegon” in Puerto Cabello port with a “Mini Walmart” sign outside using the same design as the U.S. giant he buys from.

The shift shows how Venezuela’s economy is evolving to survive sanctions that have hit oil exports.

The trade from Florida does not violate Trump’s sanctions because they target business with Maduro’s government not with private entrepreneurs. It has, however, bemused some Venezuelans used to constant “anti-imperialist” rhetoric.

“I don’t understand this government that speaks ill of the ‘gringos’ and yet we now see U.S. products abound in stores and everything is in dollars,” said teacher Ligia Martinez, 38, holding a bag with purchases of cereal, tuna and cake mix.

She bought the goods at a “bodegon” in the city of Valencia with dollar remittances sent from family abroad.

It was only last year, as the local bolivar currency depreciated precipitously amid hyperinflation, that Maduro lifted a longstanding prohibition on dollar transactions.

Though the goods in the corner-shops are out of reach for most bolivar-earning Venezuelans, a well-heeled elite with dollars makes for a viable business in indulgence products.

“I SELL EVERYTHING”

The “bodegones” are reminiscent of the dollar-only stores communist Cuba ran for foreigners in the 1990s.

Reuters found 120 new such stores in Caracas alone, primarily in middle class areas, outnumbering the 27 bolivar supermarkets in those areas. Competition has brought down the price of niche-market items such as boutique hair products.

The abundance on shelves contrasts with years of scarcity of basics from shampoo to milk borne out of socialist regulations that often forced merchants to sell below cost.

“Bodegon” owners often buy online or partner with door-to-door services who scour chains for knock-down prices.

“Our customers ask us to buy at Costco or (Walmart affiliate) Sam’s Club in the United States and we import what they ask for them,” said an operator of a shipping company that brings supplies from Miami to Caracas.

At least half of the stores Reuters visited sold products from Members Mark, which is Sam’s Club’s private brand, and Costco’s Kirkland brand. Popular items include pancake mix, Pringles, ketchup and cereal, often selling for double or more their U.S. price.

Some of the “bodegones” buy from wholesale importers, meaning they have to hike prices further for margins, so pancake mix for $6.50 or thereabouts in Costco goes for $14 to $20 in Venezuela depending on how many hands it has been through.

Some Venezuelans offer imports direct via Instagram.

“Everything I bring from Miami, I sell,” said one small online merchant, noting his compatriots’ love of foreign goods. “There’s more competition these days, but it’s still good business because Venezuelans are snobbish.”

Costco declined to comment, while Walmart did not respond to a request. Venezuela’s Information Ministry, tax authority and state port agency also did not respond to requests for comment.

Asked for its view of the trade, given the underlying aim of sanctions, the U.S. Treasury Department did not respond.

This year’s waiver of import duties and some documentation has been a boon to businessmen, used to crippling bureaucracy and regulations for years. “These imports move with ease, everything is exempted,” said one trader, who brings in products at La Guaira port outside Caracas.

The exemptions expire this month but may be extended.

Felipe Capozzolo, head of Consecomercio chamber of commerce, said the “bodegones” had become an unofficial part of “state policy” to enable Venezuela to stay supplied under sanctions and thus ease pressure on the government.

Maduro himself acknowledged the help from dollar transactions, saying last month they were an “escape valve” for the suffering economy. “I don’t view it badly … this process they call ‘dollarization’,” he said.

Though data has for years been scarce in Venezuela, local think tank Econalitica estimated that in October a remarkable 54% of transactions in main cities was in foreign currency.

Deisy Ruiz, a 47-year-old secretary is among them, buying Nutella for her 20-year-old son’s birthday at a store in the upscale Los Palos Grandes district of east Caracas.

“Just a little one – as a treat!” she said.

(Reporting by Corina Pons, Shaylim Valderram, Mayela Armas in Caracas, Sarah Kinosian in Miami, Tibisay Romero in Puerto Cabello and Valencia; Editing by Corina Pons, Brian Ellsworth and Andrew Cawthorne)

CDC warns residents in eight U.S. states of cut-fruit Salmonella outbreak

Under a very high magnification of 12000X, this colorized scanning electron micrograph shows a large grouping of Gram-negative Salmonella bacteria. REUTERS/Janice Haney Carr/CDC/Handout

By David Shepardson

WASHINGTON (Reuters) – The head of the U.S. Food and Drug Administration on Sunday urged residents of eight U.S. states to check for recalled pre-cut melon that is linked to an outbreak of Salmonella.

The FDA and U.S. Centers for Disease Control are investigating an outbreak linked to 60 illnesses and at least 31 hospitalizations in five states. No deaths have been reported and the agencies urged residents in the eight states to throw out any melon that may have been recalled.

On Friday, Caito Foods LLC, a unit of SpartanNash Co, recalled fresh-cut watermelon, honeydew melon, cantaloupe and fresh-cut mixed fruit products containing one of those melons produced at a Caito Foods facility in Indianapolis.

The recalled products were distributed to Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, and Ohio and sold in clear, plastic containers at stores including Costco Wholesale Corp, Kroger Co, Payless, Owen’s, Sprouts, Trader Joe’s, Walgreens, Walmart Inc, and Whole Foods, a unit of Amazon.com Inc.

FDA Commissioner Scott Gottlieb in a Twitter post late on Sunday urged people in the eight states to check the “fridge and freezer for recalled pre-cut melon linked to Salmonella outbreak.”

Of the 60 cases reported to date, 32 were reported in Michigan.

“Reports of illnesses linked to these products are under investigation, and Caito Foods is voluntarily recalling the products out of an abundance of caution,” the company said in a statement, adding it “has ceased producing and distributing these products as the company and FDA continue their investigation.”

Salmonella can result in serious illness and produce significant and potentially fatal infections in young children, frail or elderly people and others with weakened immune systems the company said.

The CDC said evidence suggested that melon supplied by Caito Foods “is a likely source of this multistate outbreak.”

The investigation is ongoing to determine if products went to additional stores or states, the agencies said.

(Reporting by David Shepardson; Editing by Peter Cooney)

Recalled vegetables linked to E. Coli outbreak at Costco stores

A tainted mix of celery and onions appears to be at fault for a multi-state E. Coli outbreak.

Taylor Farms Pacific recalled a list of products on Thursday after a link to the outbreak tied to Costco stores was discovered, according to a notice on the Food & Drug Administration website.

The California-based manufacturer produced a diced-vegetable mix that tested positive for E. Coli, according to the posting. It was used in a rotisserie chicken salad that was sold at Costco.

The vast majority of the 19 people infected with the bacteria reported buying or eating the salad before they got sick, according to the Centers for Disease Control and Prevention. Infections have been reported in Montana, Utah, California, Washington, Colorado, Missouri and Virginia.

The recall is being conducted “out of an abundance of caution,” according to the FDA.

Costco has stopped selling and producing the salad, the CDC noted. It encourages anyone who bought the product to throw it out, even if some has been eaten and no one has fallen ill.

The particular strain of E. Coli bacteria associated with the Costco outbreak is known to be deadly.

Reuters reported it’s the same one to blame for the 1993 outbreak at Jack in the Box restaurants. Four children died and hundreds more became sick after eating undercooked hamburgers.

No deaths have been reported this time, but the CDC says five people have been hospitalized and two people have developed a type of kidney failure called hemolytic uremic syndrome.

Costco Bible Controversy Expands

Costco released an apology yesterday for Bibles at a California store being labeled as fiction. Now, a woman in Missouri has discovered Bibles labeled as fiction in a store in Manchester, Missouri.

Not only were the Bibles labeled fiction, they were put in a display with Grimm’s Fairy Tales.

Mary-Margaret Meyers-Walker said she offered to move the Bibles to the correct section of the store. She called the regional office and was told that the store apparently never received the memo to move the Bibles.

Meyers-Walker said she visited the store because she had heard of the controversy in California.

The local management refused to talk to St. Louis area station KMOX about the incident.

Costco Apologizes For Labeling Bibles Fiction

Costco has released a statement apologizing for at least one of their stores selling Bibles with a label on them that read “fiction.”

“We deeply regret the mislabeling of the Bible and meant no offense to anyone,” read an e-mail statement. “The buyer has let us know that this was an error and the books are being pulled off the shelves to be re-marked.”

Fox News says Costco sent them a statement claiming their distributor made a mislabeling mistake on a small percentage of Bibles but that the company should have spotted and corrected the mistake before the books were placed on store shelves.

A pastor in Simi Valley, California who snapped a picture of the Bible and posted it on twitter first discovered the labeling. The photo of the Bible went viral and led to hundreds of complaints to Costco’s offices.