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Mexico Food and Drink Report Q1 2012
Business Monitor International, Dec 2011, Pages: 129
Mexico Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's food and drink industry.
Over the longer term Mexico is expected to remain as an emerging market underperformer with our growth projections beyond 2011 significantly below consensus. Also, the monopolistic nature of many parts of the consumer economy keeps prices high and dampens competition, putting further downward pressure on growth.
The figures reported by Mexico's retail association, ANTAD, continue to bear out this view, with comparable store sales at the nation's supermarkets struggling to register growth above the low single digits. However, on the basis of a growing population and a large number of young people, we still expect Mexican food and drink consumption to continue to deliver steady – but unspectacular – growth over the five year forecast period.
Headline Industry Data (local currency)
- 2011 per capita food consumption = +4.7%; forecast to 2016 = +11.7%
- 2011 alcoholic drink sales = +3.5%; forecast to 2016 = +14.5%
- 2011 soft drink sales = +5.3%; forecast to 2016 = +23.5%
- 2011 mass grocery retail sales = +7.6%; forecast to 2016 = +32.3%
Key Company Trends
US Producers Keen to Capitalise on Growing Mexican Wine Market: US-based trade association, The Wine Institute, which seeks to promote Californian wines, has said that it hopes that exports to Mexico can rebound following the elimination of import tariffs introduced during a 2009 trucking dispute. A 20% import tariff had been in place but following negotiations it was halved in July 2011 and has now been eliminated. Consumption of wine in Mexico is currently low, standing at just 0.70 litres per capita in 2011 (under one bottle of wine per person). However, sales are expected to grow over the next five years, with the majority of the growth accounted for by increased imports PepsiCo Focuses on Healthier Snacks in Mexico: US giant PepsiCo has recently announced plans to launch healthier snacks in Mexico and then use that base to export those lines further afield. The company is developing new functional products and building a new ‘baking innovation centre' with the aim of developing snacks for sale in Mexico and then exporting those lines to Latin America and Asia. Due to open at the end of 2011, the centre will develop healthier snacks under the Quaker and Gamesa brands.
Key Risks To Outlook
Impact From The US: The US consumer sector continues to exert a strong impact on the Mexican economy since headline growth is still heavily linked to the fortunes of the re-export, or maquila, sector.
Our growth projections are partly predicated on gradually improving demand from north of the border; should US consumers continue shoring up damaged balance sheets rather than boosting purchases of manufactured goods, this would spell bad news for Mexican growth. On the other hand, if US demand proves to be more robust than we currently expect, GDP growth could be stronger than our current projections, putting upside pressure on our forecasts.
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