Purpose – Starting from a territorial development project in Western Honduras (Copán and Ocotepeque), farmers aimed to increase and add value to agricultural production by producing and commercializing granulated brown sugar (panela). The Western Honduras sugar market was studied, from the supply and demand side, in order to particularly understand consumer preference which is considered a key to increase smallholder farmers’ income in rural areas. Design/methodology/approach – The research included a qualitative study by means of six visits for observation and data compilation to stores, four face-to-face open semi-structured interviews with store owners and a focus group with local producers to acquire a global picture of the main regional sugar market characteristics from the supply side. Moreover a quantitative analysis applying a Choice Experiment to study consumer preferences was performed acquiring higher knowledge from the demand side. Findings – First, it was found that Honduras sugar market could be experiencing monopolistic practices and white sugar to 9 lempiras per pound was the most popular product according to the qualitative study. Second, for consumers who knew dulce de panela, granulated brown sugar was preferred over refined white sugar. Consumers who had a high level of education, came from rural areas, considered brown sugar to be healthier and read nutritional information were more prone to consume granulated brown sugar. On the other hand, the estimated selling price was around 16 lempiras/pound, but consumers were willing to pay at the most 11.59 lempiras/pound. Nevertheless, market share simulation showed a market niche to commercialize granulated brown sugar – panela. Originality/value – This research is of academics, farmers and policy makers value. There are no studies analyzing consumer behaviour regarding granulated brown sugar in Honduras. The results provide information about the previous steps which need to be given for smallholders in order to commercialize this novelty product; and it stressed the necessity of highlighting health claims on panela which would involve political actions.