By Santander’s Mauricio Munguia, and Stephen Cartwright and Angus Murray from the Department for International Trade
There has never been a better time to consider Mexico as a business destination. With a population of 122.3 million, an expanding middle class and strong macroeconomic fundamentals, the country is predicted to become one of the world’s top ten economies within the next 20 years.
Mexico has an impressive free trade network, and its geographic location between the US and Latin America means that it is strategically placed to act as a springboard into the region. With its economic forecast to grow by 3% in 2016, there has never been a better time for exporters to branch out – and those within the food and drink sector might benefit especially.
An appetite for foreign goods
Over the past 15 years, Mexico’s middle class has drastically expanded – now making up 47% of total households, according to Euromonitor International. And it is set to increase by a further 4 million households by 2030.
A powerful consumer force, Mexico’s middle class are educated, urban and increasingly brand conscious. Certainly, Mexicans are willing to pay for imported premium products, which can confirm status and sophistication.
Nowhere is this more apparent than in Mexico’s food and drink sector, particularly with respect to alcohol and soft drinks – driven by the perceived health benefits of soft drinks and a greater emphasis on the sophistication of alcohol. Scottish whisky, for instance, is the fourth biggest export from the UK to Mexico.
The market for beer and cider is also starting to do well and, therefore, offers exporters a competitive landscape for expansion. In particular, the imported craft beer market – focused mainly on artisanal beers – is currently witnessing dramatic growth. And with more of the population reaching drinking age, the number of potential consumers is estimated to reach over 90 million in 2020.
The opportunities for food exporters are also plenty, as grocery retailers look to offer a wider product assortment, catering to consumers on different income levels and opening new stores in strategic locations. For instance, Superama, one of the leading supermarket chains, has set sights on affluent consumers, targeting them through higher quality products. The chain offers its own private label, Extra Special, selling a variety of imported products such as Swiss cheese and Spanish chorizo.
Ensuring success
Yet, while it is clear that Mexico is an attractive destination for enterprising exporters looking to expand their business, the country has its own unique characteristics and challenges.
The size of Mexico, for instance, may present some logistical challenges with respect to distribution or the supply chain. Furthermore, certain products and goods coming into the country must comply with the regulations of Mexico’s standards agency, Norma Oficial Mexicana (NOM), before they are able to go on sale. NOM requirements stipulate that products must be labelled according to the NOM-50 standard – the relevant commercial information which all foreign companies must provide. Not only does this include a description of the goods but also information such as both the importer and exporter’s tax identification number, product expiry dates as well as a Spanish declaration of where the goods have been produced.
There are, of course, ways to overcome such obstacles. While it is important that businesses conduct the necessary research and planning beforehand, they should also take advantage of the services offered to them by DIT and banks, such as Santander, who are able to help businesses trade overseas both securely and cost effectively. Partners such as Santander have sector expertise, global networks of contacts, and detailed insight into the challenges that markets such as Mexico might present – information that is crucial for exporting success.
Mexico is a booming market for trade as Mexican appetites grow, quite literally, for the international food and drink sector. Teaming up with an experienced provider is vital in helping companies tap into the potential.
© FoodBev Media Ltd 2024