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In Mexico, Food Products Bounce Back
By Chad Russell
Mexico, with its large and growing population, rebounding economy, liberalized import policy and nearby location, is a dynamic, expanding market for exports of U.S. consumer-ready food products.
Furthermore, nearly half of
Mexico’s 96.2 million people are under 25 years of
age–a major consumer group with a big appetite for U.S. food
and agricultural products.
From 1995 to 1997, the total value of U.S. exports of food and agricultural products to Mexico swelled 45 percent, from $3.8 billion to $5.5 billion. Growth in the sales of consumer-ready products accounted for 32 percent of that impressive increase, surging from $952 million to $1.58 billion, according to the U.S. Census.
Among the U.S. consumer-ready products exported to Mexico in 1997, fresh meats (beef and poultry), dairy products, fresh and processed fruits and vegetables, pet food and snack foods were all big winners.
Robust growth continued in 1998. Exports of consumer-ready products are expected to smash the old record of $1.7 billion attained in 1994. Consumer-ready products headed for new records in 1998: fruit and vegetable juices, eggs and egg products, pet food, processed fruit and vegetables, fresh vegetables, red meats, and snack foods.
Trends Affecting Future Growth
The increasing openness of the Mexican market, in large part
due to the North American Free Trade Agreement (NAFTA), the
growing affluence and changing tastes of consumers and the
modernization of the food distribution network are driving the
increase in imports from the United States. Also, the number of
women working outside the home has significantly increased demand
for frozen, easy-to-prepare and microwaveable foods. 
Mexico’s consumer-ready food market is still an urban phenomenon, highly concentrated in Mexico City, Guadalajara and Monterrey. Expansion has also taken place in other cities such as Puebla and Leon, each with metropolitan populations greater than1 million.
The growth is worth watching in other cities too, especially those that have a large influx of tourists throughout the year–Veracruz, Acapulco and Cancun.
Supermarket chains are also expanding in the fast-growing towns that have sprung up near major urban centers, and most of Mexico’s major chains have entered into alliances with U.S. retailing giants.
Moreover, discount warehouse outlets are making supermarket shopping accessible to an even wider segment of consumers. A few of the more prominent chains now boast national coverage and centralized purchasing, which combine to reduce sales costs for the U.S. food producer. For all these reasons, close to 80 percent of imported food products are distributed through modern retailers.
In general, U.S. products are well regarded in this market because of the perception that the quality is high and that good value is received for the money spent. However, competition is keen. Today’s conscientious Mexican consumers demand high quality and reasonable prices.
Aggressive and focused promotion is key to this market. During the coming year, high-end food service trade, as well as certain "niche" markets, will be the most favorable for consumer-ready products.
Tasty Trends in Convenience Foods
Snack foods, baked products, pre-washed and cut vegetables, individual serving-size packs and ready-to-eat products or meals such as prepared cheeses, or poultry and beef meals (especially Mexican-style foods) are becoming more popular in the domestic market.
While the country’s young population is driving the demand for snack foods, carbonated beverages and processed cereal products and other breakfast products, the growing number of women in the work force is generating the increased consumption of food products that can be prepared quickly.
It’s also noteworthy that the number of Mexican households owning modern kitchen appliances–toaster ovens, microwave ovens, standard refrigerators and freezers--has increased, fueling the demand for convenience foods.
Trends in Frozen Foods
As with convenience foods, the Mexican demand for frozen foods has increased dramatically over the past few years, reflecting increased purchasing power, the squeeze on traditional meal-preparation time, and the increased use of freezers and microwaves.
All the major supermarkets, and particularly the club stores, have good freezer space. Even some of the convenience stores have small freezers to accommodate frozen desserts and microwaveable meals.
While the United States is the undisputed leader in the frozen food market, Mexican processors are beginning to manufacture popular items such as pizza, chicken products, vegetables, Mexican specialties (i.e., beef and chicken taquitos, enchiladas, burritos and tamales), frozen vegetables and frozen bakery products and desserts.
Although most vegetables are purchased
fresh at local markets, frozen vegetable sales at retail stores
and food service outlets have become more popular, especially
among the middle and upper economic classes. The top U.S. frozen
vegetable exports are potatoes, french fries, corn, green beans,
spinach and mixed vegetables.
Similarly, the demand for frozen bakery and dessert products has grown rapidly over the past three years and is expected to continue climbing as consumers become more familiar with the wide variety of pies, coffee cakes, croissants, waffles and rolls available from the freezer section.
U.S. exporters of bakery and dessert products also have an advantage in that domestic production of these products is quite limited. With the exception of ice cream, which is produced throughout the country by both major commercial processors and small local firms, most other frozen desserts are imported.
Trends in Tourism and the Restaurant and Hotel Industry
The hotel and restaurant industry is a largely untapped goldmine of opportunities for U.S. exporters of value-added, consumer-ready and frozen food products. Since 1993, the number of foreign visitors to Mexico has increased an average of three percent per year.
Not surprisingly, foreign tourism skyrocketed immediately following the devaluation because of the comparative strength of the dollar. What is interesting, however, is that even now that the economy has more or less stabilized, tourism is still going strong. In 1997, foreign visitors spent over $7.6 billion in Mexico–reflecting a 12-percent increase, per year, over expenditures in 1995, according to Mexico’s Secretaria de Turismo.
As tourism has flourished, so has the number and variety of hotels and restaurants catering to the tourist trade. Between 1992 and 1996, five-, four- and three-star hotels have increased their numbers annually by an average 23.6, 13.2 and 10.1 percent, respectively.
The number of restaurants serving Mexico’s tourist sector has also grown, although its growth has been in just the past two years. From 1996 to 1997, the total number of restaurants catering to Mexico’s tourists increased by 10.4 percent, from 13,953 establishments to 15,399. Restaurants specializing in seafood, regional cuisine and Italian dishes are the most popular.
Another indicator of the potential of this sector is the proliferation in the last few years of food and service trade shows in Mexico City and key tourist destinations (Acapulco, Cancun) specifically targeting the hotel and restaurant industry.
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The author is the Director of the Agricultural Trade Office in
Mexico City. Tel.: (52-5) 209-9100, ext. 4750; Fax (52-5)
208-2115; E-mail: ato@supernet.com.mx.
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Interested in exploring the Mexican market? The U.S. Agricultural Trade Office (ATO) in Mexico is organizing three trade events over the next year.
If you would like more information or are considering participating in any of these trade shows, please contact the ATO at (52-5) 209-9100, ext. 4750.
ANTAD ‘99
March 12-15, 1999
Guadalajara, Jalisco
U.S. Pavilion of 50 booths
Largest retail and supermarket show in Mexico.
EXPHOTEL
June 9-11, 1999
Cancun, Quintana Roo
U.S. Pavilion of 40 booths
Leading hotel, restaurant and institutional food show in the
rapidly growing tourist area of Cancun.
U.S. Food & Beverage Show
February 2000 (tentative)
Mexico City, Mexico
Food and beverage show organized by the ATO. Solely for U.S.
exhibitors.
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