Country Profile

Mexico Country Profile

Discover more about the Mexican market including overviews about the retail, food service, and food processing sectors. Events, resources, and more are linked throughout the profile.

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Mexico Food Trends Update

Market Overview

Euromonitor reports that Mexico’s economy contracted steeply in 2020.  The Coronavirus (COVID-19) pandemic has pushed the economy into a severe recession, owing to the country’s highly open economy with large exposures to trade, tourism, global supply chains, oil prices and remittances.  Exports will decline owing to less favorable global conditions, especially in the U.S. Mexico’s real gross domestic product (GDP) should bounce back to record growth of 4.7% in 2021 and will average about 2.3% per year in 2024-2027.

 

  • Real GDP fell by 8.2% in 2020 after a fall of 0.05% in 2019.
  • The real value of private final consumption rose by 0.4% in 2019 and a fall of 9.7% was forecast for 2020.  Consumer spending is obstructed by the lockdown and social distancing measures.
  • The U.S., Mexico and Canada (USMCA) trade agreement came into force in July 2020.  The European Union (EU) and Mexico have brokered a deal to upgrade their own trade agreement.
  • Export growth will continue to support the economy, albeit at lower rates than before the crisis, consistent with a gradual slowdown in growth in the U.S.

The outlook for industries such as electricity, oil and gas, financial services and telecoms is promising.  Mexico’s energy reforms, alone, could add about 1.5% to annual growth of GDP.  The success of on-going structural reforms should eventually encourage additional investment.  Oil prices are expected to rise gradually while the effects of current fiscal reforms will wane.  Both these developments will provide a measure of support for the economy.

 

Mexico’s population has been growing at a steady pace.  In 2019, it totaled 126 million, up from 101 million in 2000.  Population growth, however, is decelerating over time. Meanwhile, Mexican society – although still young – is undergoing an ageing process. The median age stood at 28.7 years in 2019 – 5.7 years greater than the figure for 2000. The number of those over 65 years jumped from 5.2 million in 2000 to 9.4 million in 2019 and it will reach 13.9 million by 2030.

 

Emigration is an important determinant of demographic structure.  The country has a long history of emigration.  According to the U.S. Census Bureau, Mexicans account for around one-third of the foreign-born population in the USA.

 

International trade will be fundamental in the aftermath of the COVID-19 pandemic, and will be substantial to reactivate the economy.  Since joining NAFTA in 1994, Mexico has negotiated 13 trade agreements with 50 countries including the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) that came into force in December 2018.  The renegotiated USMCA came into force in July 2020, this update to the North American Free Trade Agreement will bring a more inclusive and responsible trade, strengthen the competitiveness of Mexico and the region, and maintain certainty for trade and investment.  Mexico is also in the process of updating their FTA with the European Union, expected to be ready in 2021, and has recently started conversations (December 2020) to have a free trade agreement with the U.K.

 

USDA’s Foreign Agricultural Service (FAS) Agricultural Trade Office (ATO) in Mexico City hereinafter referred to as “Post” reports that Mexico continues to be a strong and consistent market, representing one of the largest consumer markets in the world for U.S. agriculture products.  Overall, Mexico’s top trading partner is by far the U.S., which imports 79% of all Mexican exports and provides Mexico with 91% of its total imports.  Since NAFTA was implemented in 1994, total bilateral trade has increased from $88.3 billion to $522.2 billion.

 

In 2020 U.S. exports of consumer-ready food products to Mexico added up to US$8.2 billion, a decrease of 8% from that of 2019.  Mexico remains the 2nd largest export market for consumer ready products.  Mexico also imports a considerable amount of U.S. processed foods as well.  In 2020 it added up to US$5.7 billion, ranking 2nd in the world but a decrease of 6%.  The top processed food exports to Mexico in 2020 included:

 

  • Processed/Prepared Dairy Products
  • Food Preparations & Ingredients
  • Syrups & Sweeteners
  • Prepared/Preserved Meats
  • Snack Foods
  • Fats & Oils
  • Processed Vegetables & Pulses
  • Condiments, Sauces, Jams & Jellies  

Advantages:

  • The U.S. and Mexico are highly integrated economies and Mexicans are familiar with U.S. business practices.
  • The proximity of Mexico to the United States, cross-cultural awareness and strong bilateral relationships throughout the public and private sectors facilitate trade.
  • The new USMCA Trade Agreement will provide better market access as several terms were updated in terms of customs operations, intellectual property, and anti-corruption measures.
  • Import procedures are becoming more standardized. Extensive presence of U.S. industry representatives facilitates the identification of trade opportunities.
  • Mexican consumers recognize U.S. brands and labels and associate them with high consistent quality and value.
  • Population in urban centers is growing and the rate of employment among women is continuing to grow which creates opportunities for pre-cut vegetables, ready to cook products, and ready to eat products.

Challenges

  • Mexican consumers are price sensitive; imported products in general are higher in price.  Exchange rate fluctuations have generally made U.S. products more expensive.
  • Transportation and distribution methods inside Mexico are undeveloped in many regions.
  • Technical barriers and labeling requirements can cause border crossings problems and delays as Mexican import regulations can change rapidly and without notice.
  • Mexico is the country with the most free trade agreements in Latin America, opening the door to many third-country competitors. Mexican retailers are demanding more locally delivered products, with local servicing and attention.
  • Lower end, smaller supermarkets, and convenience stores are the fastest growing segments in retail, which are not primary locations for imported U.S. products.
  • U.S. businesses sometimes are not familiar with Mexican business culture.

“All of Food Export’s programs were a tremendous help getting us export ready, understanding the challenges that come with international business, and learning how to navigate them.”

Katz Gluten Free

Food Export-Northeast Participant since 2018     

Interested in importing from U.S. suppliers?
Contact us to learn more.

Retail Sector

According to Euromonitor, the packaged food market in Mexico was estimated to reach US$54.8 billion in 2020, which makes it the 10th largest international market in the world.  That represents a growth rate of 32% or US$13.3 billion since 2016.  The forecast for growth in this market is also promising.  By the year 2025, the retail sales in the packaged food market in Mexico is expected to reach US$75 billion, a growth rate of 28.5%, or US$16.2 billion. High growth products in the forecast include:

 

  • Cheese
  • Pet Food
  • Ready Meals
  • Savory Snacks
  • Processed Fruit & Vegetables
  • Processed Meat & Seafood
  • Sauces, Dressings & Condiments
  • Ice Cream & Frozen Desserts

 

Post reports that according to the Mexican Association of Nationwide Retailers (ANTAD), there are more than 30 supermarket chains, with 3,316 stores.  Additionally, there are 2,467 department stores, and 60,593 specialized stores throughout the country. Still, 59.1% of the retail market is covered by informal establishments, such as mobile street vendors and open public markets, which traditionally distribute local, domestic products.  ANTAD also reported that retail sales keep a steady growth pace of approximately 7.7% per year.  Retail is adopting an omnichannel strategy to maximize the consumer experience and improve their services at different points of sales.

 

Traditional retail sales are changing rapidly due to expansion, consolidation, mergers, and acquisitions.  Mexican consumers are aware of what is happening globally thanks to social media and look for same products at their local stores.  Women in the labor force spend their incomes mainly to support the household.  They seek products that ease their domestic chores and frequent stores in convenient locations near to their work or home.

Mexicans are loyal to brands and buy them even if the price is slightly higher.  This is mainly for products that are part of their daily life, such as sodas.  Even if taxes on sweetened beverages are high, Mexican consumer still buy them.  Retail expansion in rural and small communities is creating new markets for consumer products.  Restaurants and entertainment services are also opening smaller formats in small communities.  Urban areas are increasingly adopting e-commerce.  Grocery and food delivery apps are gaining popularity.

 

Mexico’s main retail chains are Walmart, Soriana, Chedraui and Grupo La Comer. Regional supermarket chains play an important role as well, such as Casa Ley (Pacific Coast), Merza (Central), Calimax (Baja), Alsuper (Northeast), and HEB (Northeast and Central), among other smaller chains.

 

Best Prospects:

 

Post advises that as mentioned above, retailers are expanding their high-end formats, where imported products are a major draw for consumers. Given the rapid expansion of stores in this niche, in order to maintain customers and expand the market, retailers need to offer products in the following categories:

 

Healthy/environment friendly processed foods (low sodium, low-fat, reduced sugar, “green” packing)

  • Gourmet Food – sauces, condiments, artisanal cheeses.
  • Ethnic Foods such as Asian type items, Mediterranean food, European food.
  • Dairy products- distinctive formulation of yogurts (Greek, etc.), segmentation of milk products.
  • Plant-based beverages and products – soy, almond, coconut, rice, oat beverages/yogurt/other products.
  • Convenience Foods such as ready-to-eat, meal helpers, frozen foods.
  • Craft Beer – there is a growing demand for differentiated premium beers.

Food Service Sector

Post reports that the key players in the hotel, restaurant and institutional (HRI) sector in Mexico are Alsea (18 casual eating brands), FEMSA – OXXO (19,558 convenience stores), CMR (12 brands), IHG (12 brands), Marriott International (14 brands), Hyatt Group (7 brands) and Hilton Hotels (7 brands).  Nevertheless, independent restaurants and hotels (as well as non-traditional formats like Airbnb) are worth mentioning as visitors tend to like having a “local” experience when they travel for pleasure.

 

In the pre Covid 19 period of 2019, major hospitality multinationals as well as local companies will continue to expand throughout Mexico, launching more sustainable and practical formats to capture new visitors (international and locals).  During 2019 the number of international visitors increased to 44.7 million with an average expenditure of US$496.26.

 

Post reports that a more educated population, expansion of urban lifestyle in small cities, credit availability, and the booming number of Double Income No Kids (DINK) couples in urban areas, all open several possibilities for imported products of high quality and value.  Foodservice trends in Mexico include consumer experiences linked with limited-time menus/products as well as seasonal products.  Differentiation in drinks like sophisticated cocktails and super drinks including super foods are becoming popular. Convenience stores are becoming important outlets for fast food as consumer can find easily fresh brew coffee, grab & go food at low prices.

 

Food service trends in Mexico are on par with what is happening globally.  Mexican consumers are aware of popular diets such as Keto or Paleo, they want to be informed of were products come from, the caloric content, or if they are free of allergens.  Consumer experience is important in restaurants, and food needs to be appealing to be captured in photos and shared in social media, whether it comes from a street stall or fine dining.

 

Best Prospects

 

Post reports that the hospitality industry is expanding on the high-end/sustainable formats, where imported products are a major draw for consumers.  Given the rapid expansion of hotels and restaurants in this niche, the HRI industry needs to offer products in the following categories: Health and wellness products (power foods, vegan and gluten free products); Gourmet products; Organic and non-GMO foods; Ethnic foods (spices, food bases, cereals and condiments); Wines/Spirits/Craft Beer and Specialized dairy products (gourmet cheeses, non-fat sugarless yogurts, lactose free, etc.)

 

Food-Processing Sector

Post reports that the food processing industry in Mexico is the world´s 11th largest, and it is the 3rd largest in the Americas after the U.S. and Brazil.  The food industry in Mexico is one of the most dynamic, with an average annual growth of 4.3%.

According to the National Institute of Geography and Statistics (INEGI), there are 217,245 economic units including offices, manufacturing plants and distribution centers under and industry classification of “food and beverage manufacturing and processing.” According to the Ministry of Agriculture (SADER) 9.3 million people in Mexico work in the generation and transformation of agricultural and fish products (SIAP).    The food processing industry employs more than 800,000 workers

In 2020 Mexico represented US$18.3 billion in agricultural exports for the United States. In 2020, processed food exports alone totaled U.S. US$5.7 billion.  Despite the COVID-19 pandemic, the food processing industry in Mexico remained one of the most dynamic and it is now on its way to recovery.  With USMCA now in place, Mexico continues to be a growth market for U.S. agricultural products and for food processing ingredients in particular.

The Mexican processed food industry receives about 90% of its supplies locally.  These supplies include fruits, vegetables, cartons, glass, plastic and tinplate.  Domestically produced products have certain competitive advantages, such as a better understanding of the local industry and its needs, and logistical advantages due to their closeness; but small players may face issues of quality, traceability or lack of ability to meet larger quantity orders.  The remaining 10% is imported from the United States, Canada, Ireland, Brazil and, Chile.  Imported supplies include additives, gums, food preservatives, artificial colors, artificial flavors, and stabilizers.  

The United States remains the main supplier of processing ingredients to Mexico. The U.S. industry has a good reputation in the Mexican market for its consistent quality, stable supply, and proximity.  While third-party countries (such as Brazil, Chile, Uruguay, the European Union, etc.) continue to make inroads in various processing ingredient sectors such as poultry, dairy and rice, the U.S. maintains distinct advantages: commercial, geographical and logistical.  For example, a U.S. exporter may be able to ship one truckload or train car per urgent order, while such a small shipment would not be economically/time-wise viable via a third-party country (who would seek to ship multiple containers or a complete shipload).

Best Product Prospects:

The COVID-19 pandemic brought with it new habits and a new normal. In this so called “new normal,” most Mexicans are focused on maintaining a healthy lifestyle through a balanced diet.  Niches of opportunity continue to appear as the processing sector diversifies and consumers demand various convenient, health, and high-quality foods. Combining ingredients that can help reduce stress while helping increase the immune system, has the potential to appeal to consumers seeking to be well and healthy in a post-Covid world.

Based on Post assessments, some of the products with high sales potential in the food-processing sector are:

  • Healthy/environment friendly processed foods (i.e. low sodium, low-fat, reduced sugar, clean labeling, zero waste packaging, organic products, etc.). The consumer wants to feel that what they consume is helping to protect them against illnesses.
  • Premium products – claiming better quality, food safety, and product innovation.
  • Dairy products – functional yogurts, added with probiotics, lactose free, proven benefits supported by science.
  • Plant-based beverages and products – soy, almond, coconut, rice, oat.
  • Convenience Foods such as ready-to-eat, meal helpers, frozen foods.
  • Craft Beer – there is a growing demand for differentiated premium beers.
  • Wine
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