Food Processing Sector Report 2010

An Expert's View about Sales in Mexico

Last updated: 14 Apr 2011

Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends such as health and wellness.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/16/2011 GAIN Report Number: MX0323 Mexico Food Processing Ingredients Food Processing Sector Report 2010 Approved By: Erik W. Hansen Prepared By: Alice Gibbons Report Highlights: 2010 showed major signs of recovery for Mexico across all sectors of the economy with the country?s annual GDP growing by 5.1 percent. Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends such as health and wellness. Full recovery of sales in processed foods may not happen for several months though retail sales of most processed food categories increased by approximately 7 percent in 2010. Some of the categories with the fastest recovery rates are canned foods, ready-to-eat meals, and frozen processed foods. Processed food categories that remain stable in Mexico, despite economic downturns, include products used for food preparation in the home known as ?meal solutions? such as canned food, rice, noodles, sauces, dressings, and condiments. Post: Commodities: Mexico ATO Executive Summary: Despite recent setbacks, the processed foods industry in Mexico remains a strong and growing market and, like other industries, is now recovering from the recent economic crisis. Recent and current challenges to the industry include: 1) the economic crisis; 2) the influenza A H1N1 (swine flu) outbreak; 3) the Government?s fight against obesity; and 4) higher prices in the sector. The economic downturn in 2009 forced a change in consumer habits as a result of many people being out of work and forced to ration their food expenses. Products affected most included ?impulse and indulgent? snacks such as ice-cream and packaged desserts,, healthier processed food options, convenience ?on-the-go? goods, frozen desserts, premium canned/preserved foods and gourmet food preparation goods including sauces, dressings, and condiments. Aside from the economy?s impact on the processed foods industry in Mexico, the swine flu oubreak in the spring of 2009 also affected sales, with foodservice closing down for weeks in various major cities, including Mexico City. On the other hand, the peak of the outbreak provoked panic purchases, especially in larger cities, resulting in large increases in sales of many processed foods categories, namely canned and preserved foods, sauces, dressings, and condiments. Another obstacle facing the industry is the obesity crisis, with the Mexican government taking measures to address the issue. Many food categories face the risk of reduced sales as a result of Mexican consumers changing their habits to eating healthier, which means less consumption of processed snack foods and traditional products known to be high in calories, fat, and sodium. However, certain processed foods remain in high demand, such as canned products, since they maintain a reputation as a convenient and cost-efficient means for preparing quick and nutritious meals. In recent times, the processed foods sector in Mexico, like many other sectors, has also been faced with higher unit prices resulting from a mixture of newly approved taxes, increasing raw material prices, and energy and value-added innovations required to stay competitive. These factors have directly affected processed food sales, more so in the foodservice sector than at the retail point-of-sale, with a reduction in consumers? frequency to dine outside of the home. On a positive note, 2010 showed major signs of recovery for Mexico across all sectors of the economy with the country?s annual GDP growing by 5.1 percent. In addition, consumer confidence went up from 77.0 points in 2009 to 89.0 points in 2010. Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends such as health and wellness. Full recovery of sales in processed foods may not happen for several months though retail sales of most processed food categories increased by approximately 7 percent in 2010. Some of the categories with the fastest recovery rates are canned foods, ready-to-eat meals, and frozen processed foods. Mexico?s consumer makeup remains as a majority lower-middle class, minority upper-class society, with the concentration of wealth residing in urban areas. Nonetheless, a gradual upward increase in buying power across all economic classes is allowing for more variation in food choices, including meat and seafood, which used to be limited to the upper income class. Given that the processed foods sector in Mexico is extremely competitive, prices remain attractive. Processed food categories that remain stable in Mexico, despite economic downturns, include products used for food preparation in the home known as ?meal solutions? such as canned food, rice, noodles, sauces, dressings, and condiments. Author Defined: SECTION I. MARKET SUMMARY Introduction Despite recent setbacks, the processed foods industry in Mexico remains a strong and growing market and, like other industries, is now recovering from the recent economic crisis. Recent and current challenges to the industry include: 1) the economic crisis; 2) the influenza A H1N1 (swine flu) outbreak; 3) the Government?s fight against obesity; and 4) higher prices in the sector. The economic downturn in 2009 forced a change in consumer habits as a result of many people being out of work and forced to ration their food expenses. Products affected most included ?impulse and indulgent? snacks such as ice-cream and packaged desserts,, healthier processed food options, convenience ?on-the-go? goods, frozen desserts, premium canned/preserved foods and gourmet food preparation goods including sauces, dressings, and condiments. Aside from the economy?s impact on the processed foods industry in Mexico, the swine flu oubreak in the spring of 2009 also affected sales, with foodservice closing down for weeks in various major cities, including Mexico City. On the other hand, the peak of the outbreak provoked panic purchases, especially in larger cities, resulting in large increases in sales of many processed foods categories, namely canned and preserved foods, sauces, dressings, and condiments. Another obstacle facing the industry is the obesity crisis, with the Mexican government taking measures to address the issue. Many food categories face the risk of reduced sales as a result of Mexican consumers changing their habits to eating healthier, which means less consumption of processed snack foods and traditional products known to be high in calories, fat, and sodium. However, certain processed foods remain in high demand, such as canned products, since they maintain a reputation as a convenient and cost-efficient means for preparing quick and nutritious meals. In recent times, the processed foods sector in Mexico, like many other sectors, has also been faced with higher unit prices resulting from a mixture of newly approved taxes, increasing raw material prices, and energy and value-added innovations required to stay competitive. These factors have directly affected processed food sales, more so in the foodservice sector than at the retail point-of-sale, with a reduction in consumers? frequency to dine outside of the home. On a positive note, 2010 showed major signs of recovery for Mexico across all sectors of the economy with the country?s annual GDP growing by 5.1 percent. In addition, consumer confidence went up from 77.0 points in 2009 to 89.0 points in 2010. Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends such as health and wellness. Full recovery of sales in processed foods may not happen for several months though retail sales of most processed food categories increased by approximately 7 percent in 2010. Some of the categories with the fastest recovery rates are canned foods, ready-to-eat meals, and frozen processed foods. Mexico?s consumer makeup remains as a majority lower-middle class, minority upper-class society, with the concentration of wealth residing in urban areas. Nonetheless, a gradual upward increase in buying power across all economic classes is allowing for more variation in food choices, including meat and seafood, which used to be limited to the upper income class. Given that the processed foods sector in Mexico is extremely competitive, prices remain attractive. Processed food categories that remain stable in Mexico, despite economic downturns, include products used for food preparation in the home known as ?meal solutions? such as canned food, rice, noodles, sauces, dressings, and condiments. Major Trends To understand the market for processed foods in Mexico better, below is a summary of major trends currently evident in the sector: Private label brands Non-name brand products are popular among the masses, especially during economic crisis since they offer unit prices which are significantly lower than those of the leading brands maintaining good quality. Private label brands are most popular in the following product categories: cookies and crackers, canned or preserved vegetables/fish/fruit/beans, frozen vegetables, meat, and desserts. Convenient Products Products which are convenient to use are increasingly popular in Mexico as the culture has more women working full-time. The Mexican tradition of returning home for lunch is no longer prominent in the major urban areas. With a growing portion of the working population now eating outside the home during working hours comes growing opportunities for increased sales of ready-to-eat meals at the workplace. There has been an increase in the demand and consumption of snack bars, drinkable yogurts and packaged breads, ready-to-eat- meals, canned and frozen processed meals and desserts. Vending machines offering convenience-packaged snacks are now found in office buildings and many public locations, forming part of the changing culture. Snack bars have become increasingly popular in Mexico, for breakfast on-the-go as well as throughout the day between meals. Packaging Trends A few major trends in packing have emerged in Mexico, especially with products such as canned and preserved vegetables. The major leader in canned and preserved vegetables in Mexico, ?Del Fuerte?, migrated from metal cans to brick liquid cartons, setting a new standard in the industry that others are following. Many major sauce, dressing, and condiments producers are now using safer packaging, with less steel and more glass or aluminum. Many major sauce, dressing, and condiments producers are now using safer packaging, with less steel and more glass or aluminum. Distribution trends In general, supermarkets, hypermarkets, and discounters are the main channels for processed foods products in Mexico. There is growing distribution in convenience store outlets, especially for ?on-the-go? food products, indulgence, and impulse goods. Some products including rice and frozen processed food (namely frozen potato products) are heavily distributed through foodservice. Flavor Trends Traditional Mexican flavors have remained popular over the years and many companies incorporate these flavors into a variety of processed foods such as savory and sweet snacks, ready meals, sauces, and condiments. Popular savory Mexican flavors include: salsa verde, salsa chipotle, salsa taquera, salsa pico de gallo, enchilada flavor (using chile piquin). Popular sweet flavors include: chamoy (sweet-sour chili made from apricot fruit), tamarindo, and other tangy fruity flavors with different levels of chili heat. Healthier Food Trends Mexico currently has the highest rate of child obesity in the world and the second highest rate of adult obesity creating a need for healthier food offerings to all levels of consumers. A variety of ?light? processed food products with low fat and low sodium content have been introduced in categories such as yoghurt, cream, mayonnaise, chilled processed meat, dessert mixes, and others. The trend for using artificial sweeteners in packaged food products, which is still new in the market, is growing significantly with more ?light? products in stores. A trend towards more natural foods and organic ingredients has arisen among many products. A rise in use of grain mixes like oats, linseed, bran, wheat, sesame and amaranth is seen in packaged bread and breakfast bars. The consumption of healthier snack foods remains concentrated in the middle and upper income classes, given the higher prices relative to conventional products. Many Mexican consumers are willing to consume healthier packaged foods as long as the prices are reasonable. Otherwise, fresh foods are the less expensive healthy alternative. Manufacturers are convincing consumers that a reduction on the caloric content of food items will not have a negative impact on flavor and texture. Product resizing has been seen as a major trend with sweet and savory snacks and confectionary goods, including smaller packages containing no more than 100 calories. The trend for more transparent labeling and detailed nutritional information has become the basis for a recent change in labeling requirements by the Government. Popular chain restaurants have launched low-calorie, low-fat, nutritious menus, including the ?VIPs en Balance? menu at VIPs outlets (a Wal-Mart brand), ?Menu Ligero y Saludable? at Sanborns restaurants, and new light dishes containing only 550 calories added to the light menu at Applebee?s Neighborhood Grill & Bar outlets. Major fast food operators throughout Mexico, such as McDonald's and Burger King, have replaced the use of trans-fatty oils with healthier options. General Information The Mexican government is increasing legislative actions to fight obesity. The Government?s initiatives include requiring schools to include mandatory health and nutrition classes. The Government?s proposed legislation for school nutrition programs include healthier food menus in schools, factories, and office buildings; banning traditional Mexican dishes such as tacos, quesadilla and picadas; and banning ?junk food? (comida chatarra) which is low in nutritional value and high in sugar, fat and sodium. Additional government proposals include implementing additional taxes to carbonated beverages to curb the annual per capita volume consumption of 160 liters per year ? the highest in the world. The Government is also promoting more exercise, weight management consultations with nutritionists, and drinking at least two liters of still water daily. In mid-2009, Mexico?s Ministry of Education (SEP) issued a list of processed food products considered to be junk food that would be prohibited for sale inside schools. A large number of the products were brands manufactured by the most powerful companies in the Mexican industry including Grupo Bimbo, Sabritas, Coca-Cola, and PepsiCo. Consequently, the implementation of the list was put on hold as a result of strong pressure from the snack food industry which argues that such a ban would mean less taxes being collected and the loss of thousands of jobs. The industry convinced the Government to extend the deadline for manufacturers to develop new technologies for the production of healthier foods. Sales by Category To have a better idea of the overall sales of processed foods by category, the following table shows sales data in 2010: Table 1. Mexico: Sales Volume of Processed Food Categories, in 1000 MT. Processed Food Category: Quantity in 1000 MT Bakery 14,927.48 Canned/Preserved Food 522.69 Chilled Processed Food 142.41 Confectionery 373.27 Dried Processed Food 946.53 Frozen Processed Food 136.25 Ice Cream (Million liters) 100.27 Meal Replacement 7.38 Noodles 119.11 Oils and Fats 877.99 Pasta 297.30 Ready Meals 32.93 Sauces, Dressings and Condiments 948.30 Snack Bars 33.35 Soup 34.35 Spreads 120.15 Sweet and Savory Snacks 373.54 Meal Solutions 1,870.35 Source: Euromonitor Advantages/Disadvantages Facing U.S. Processed Food Products Advantages Challenges Growing emphasis on healthier eating is increasing the The sector is extremely price sensitive demand for high-quality healthier foods with lower fat, and the majority of the population calories, and sodium, which are already widely produced cannot afford healthier processed foods in the United States. products because of the higher prices. As a result of more women working outside of the home, The economic situation still limits many an increasing number of people are eating outside of the consumers to purchase only lower- home during working hours. This adds increased priced versions, such as private labels, demand for convenience packaged goods and meal with the concentration of these being in solutions, which are already produced in the United local retails leaders. States. U.S. ingredients and processed products have a The exchange rate and on-going reputation of being high quality. inflation make U.S. products more expensive than locally sources products Many U.S. ingredients are well known around the world Brand loyalty to many longstanding and are recognized by many, especially those who travel Mexican brands and flavors makes it regularly to the United States. challenging for U.S. products to gain market share. Local manufacturers are always searching for Mexico has the most free trade innovations to meet new trends and consumer demands. agreements in Latin America leading to increased competition between U.S. and other exporting countries. Food Categories Following is a more specific analysis of the market for different processed food categories in Mexico including competition, channels of distribution, consumer perception, trends, and market shares within each major category. Canned Preserved Food Trends Canned products are perceived by consumers as products ready for immediate consumption, easy to store for large periods of time, and ideal for emergency use. Frozen and chilled products are not so ready for consumption since they require heating and space in the refrigerator for storage. Canned beans and canned/preserved fish (predominantly tuna with 80% volume share) are high- demand products in this market since they are low-priced and seen as a cost-efficient protein replacement for more expensive protein sources such as beef, turkey, or poultry. Canned beans and fish products are commonly combined with vegetables, seasonings, salads, and sauces to prepare a quick meal. Almost a quarter of all canned seafood and fish products sold each year in Mexico are sold during Easter as many consumers abstain from the consumption of meat. Canned meat (namely pâté and sausages) is a small market niche that comprises less than 1% of the total volume in the canned food industry. Specialty canned products, including olives, cactus, and cuitlacoche (a domestically grown mushroom), account for a very small portion of the market in this category. Canned vegetables and fruits maintain a solid share of the market, approximately 14% and 12%, respectively. While fresh vegetables and fruit are preferred, many consumers opt for canned products for convenience. Canned fruit is commonly used as a ready-to-eat dessert since in Mexico most is processed with sugared water (almibar). Soups directly compete with less-expensive alternatives like pasta and rice. Soups with the most success in this market are often tailored to traditional Mexican flavors: bean (frijol), tortilla, lentil (lentejas), squash flower (flor de calabaza) and Mexican noodle soup (sopa de fideo). As a result of healthier eating habits, many are turning to canned tuna in water to replace canned tuna in oil. Packing trends for canned/preserved fish/seafood are changing to more plastic pouches in place of metal cans for canned fruit and vegetables. Competition and Market Share Domestic manufacturers, which are comprised of the top six largest manufacturers in the industry, dominate canned/preserved food. International manufacturers mainly import specialty products such as canned/preserved fish and seafood products including clams, mussels, squid or salmon (often from Spain and Italy). International companies dominate in sales of canned/preserved tomatoes. This product is not as popular as canned chunky tomatoes which are produced mostly by domestic manufacturers. Multinational processers such as Del Monte have a good presence in canned/preserved vegetables sales in Mexico but still do not match the sales of domestic manufacturers. Canned/preserved food is a highly fragmented industry in Mexico. Not one company?s retail value share reaches even 15%. Grupo Herdez S.A. de C.V. is the industry leader with high consumer loyalty; Pescados Industrializados ranks second in the overall category with an 11% market share. Table 2. Mexico: Canned/Preserved Food Products tity in 1000 Value in Million Mexican Type of Canned/Preserved Foo Quands MT Pesos Canned/Preserved Beans 148 2,653 Canned/Preserved Fish/Seafood 209 9,970 Canned/Preserved Fruit 66 1,604 Canned/Preserved Meat and Meat 4 490 Products Canned/Preserved Tomatoes 0 3 Canned/Preserved Vegetables 74 3,305 Other Canned/Preserved Food 3 Canned/Preserved Ready Meals 6 464 Canned/Preserved Soup 16 817 Total Canned/Preserved Food 523 19,309 Source: Euromonitor Table 3. Mexico: Top Mexican Canned/Preserved Food Companies Company Name % of Retail Value Herdez SA de CV, Grupo 13.24 Pescados Industrializados SA de CV 11.25 Conservas La Costeña SA de CV 9.68 Marindustrias SA de CV 7.58 Sabormex SA de CV 6.50 Wal-Mart de México SA de CV 4.54 Campbell de México SA de CV 4.08 Pando Grupo SA de CV 3.71 Nair Industrias SA de CV 2.47 Grupo Calvo SA 2.36 Productos del Monte SA de CV 2.29 Source: Euromonitor Soup Trends Soup sales remained strong during the economic crisis particularly since there was less eating outside of the home. In order to be successful in this market, soup producers and importers in Mexico tailor their products to meet consumers? tastes by offering local flavors. Innovations in this sector focus on wellness products such as all-natural and with no preservatives added. General Information Campbell de Mexico S.A. de C.V. and Cocina Productos de Maiz S.A. de C.V., part of Unilever Group, have signed public agreements with the federal government to keep their prices unchanged, and thus ensure that consumers can afford various indispensable food products such as soup. Origin of Ingredients Most of the major players in the soup category process and manufacture all their products in Mexico. Campbell?s has a small specialty segment of imported canned soup from the United States. Competition and Market Shares Unilever Group and Campbell Soup Co. are the two major leaders locally holding approximately 85% of the market. They have a long presence in the market, and have invested a significant amount in innovation and advertising campaigns. Knorr (Unilever Group) is the market leader in instant soup, ultra high-temperature processing (UHT) soup, and dehydrated soup. Campbell de Mexico S.A. de C.V. leads the canned/preserved soup category. Table 4. Mexico: Soup, Sales Volume and Value in 2010 Type of Soups Quantity in MT Value in Million Mexican Pesos Canned/Preserved Soup 15,993 817 Dehydrated Soup 17,148 1,373 Instant Soup 122.87 20 Ultra High Temperature Processing Soup 1083 31 Total Soup 34,347 2,241 Source: Euromonitor Table 5. Mexico: Soup Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Cocina Productos de Maíz SA de CV 42.47 Campbell de México SA de CV 42.39 Sabormex SA de CV 3.16 Lucchetti SA 2.01 Fábrica de Pastas Alimenticias La Moderna SA de CV 1.88 Grupo Agroindustrial San Miguel S de RL 0.77 Conservas La Costeña SA de CV 0.76 Private Label 0.22 Others 6.34 Total 100.00 Source: Euromonitor Noodles (Instant) Trends Instant noodles are a category that is facing recent challenges as a result of the country?s concerns over obesity. New flavors are being introduced into the market as a means for differentiation with the longstanding, popular brands. Market Shares The major players in this category are: Japanese - Toyo Suisan Kaisha Ltd (with the Maruchan brand); Multinational - Nissin Foods USA Co Inc.; Chilean - Industrias Productos Alimenticios SA (with the Ottogi brand); Mexican - La Moderna (with the Disney brand). Maruchan from Toyo Suisan Kaisha Ltd. leads cups/bowl instant noodles. Ottogi brand leads with pouch instant noodles Table 6. Mexico: Instant Noodles Sales Volume and Value in 2010 Type of Instant Noodles Quantity in 1,000 MT Value in Million Mexican Pesos Cups/Bowls Instant Noodles 118.81 9,270.41 Pouch Instant Noodles .30 12 Total Instant Noodles 119.11 9,282.82 Source: Euromonitor Table 7. Mexico: Instant Noodles Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Toyo Suisan Kaisha Ltd. 74.55 Nissin Foods USA Company Inc. 7.52 Fabrica de Pastas Alimenticias La Moderna SA de CV 6.34 Industrias Productos Alimenticias SA (IPAL) 4.77 Source: Euromonitor Pasta Trends Producers in this category have addressed the health trends by offering pasta products that are low in sodium, made from whole-grains, and have no added trans fatty acids. General Information Wal-Mart imports various U.S. products into its private label brand offerings in the market . Origin of Ingredients Used Predominantly domestic ingredients are used, as a result of La Moderna?s influence on the industry (see below). Competition and Market Share La Moderna dominates the segment of wet soup pasta and the pasta category overall in Mexico. Grupo Herdez S.A. de C.V. is a prominent player with its Barilla brand. La Moderna plays a major role in establishing overall pasta prices in Mexico through its signing of agreements with local wheat and grains producers for all of its supply. International pasta producers can only operate in Mexico if they can maintain competitive prices compared with La Moderna. Table 8. Mexico: Pasta Sales Volume and Value in 2010 Type of Pasta Quantity in 1,000 MT Value in Million Mexican Pesos Chilled/Fresh Pasta .04 52.99 Dried Pasta 296.88 8,381.52 Total Pasta 297.30 8,434.51 Source: Euromonitor Table 9. Mexico: Pasta Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Fabrica de Pastas Alimenticias ?LA Moderna? SA de CV 60.10 Herdez SA de CV, Grupo 17.79 La Italiana SA de CV 5.16 Panzani SA 1.77 Source: Euromonitor Chilled Processed Food Trends Chilled fish/seafood products such as smoked salmon are considered premium, expensive products. Chilled processed meats like hot dogs and prepared sandwiches are unique products in this category, with little competition within the segment. Hot dogs are the most popular chilled meat product due to their low price. Ham is also in very high demand since it is used to make sandwiches and the very popular Mexican sandwiches called tortas. Bacon, chorizo (a Mexican-style sausage), and mortadella (Italian style cold cut) are other leading products. Chilled meat substitutes such as soy-based meats, target health-conscious consumers since they are often lower in sodium and fat, although they are perceived as not being very tasty. Chilled, fresh cut fruits are not popular in this market, since they are higher in price. Larger retail outlets cut and prepare fruits for sale competing with a wide variety of fresh fruit available in Mexico year-round. Competition and Market Shares Domestic manufacturers dominate the industry holding 75% of total retail sales by multi- branding mix of premium and economy brands; controlling vast distribution networks in the country; managing of several processing facilities within Mexico. Importers hold less than 25% of the market with concentration on the niche market of chilled fish/seafood products. The top market shares in this product category are held by domestic processors: Sigma, the leader (with 45% of total retail value sales), followed by Grupo Bafar. Table 10. Mexico: Chilled Processed Food Sales Value and Volume in 2010 Type of Chilled Processed Food Quantity in 1,000 MT Value in Million Mexican Pesos Chilled Fish/Seafood 0.93 311.30 Chilled Processed Meat 123.13 9,472.21 Chilled/Fresh Pasta 0.42 52.99 Chilled Pizza 1.80 186.00 Chilled Ready Meals 12.78 999.43 Prepared Salads 3.35 242.76 Total Chilled Processed Food 142.41 11,264.69 Source: Euromonitor Table 11. Mexico: Chilled Process Food Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Sigma Alimentos SA de CV 44.66 Grupo Bafar 13.79 Qualtia Alimentos SA de CV 11.72 Saljamex SA de CV 4.67 Empacadora Campo Frío SA de CV 4.22 Grupo Capistrano SA de CV 4.02 Bimbo SA de CV, Grupo 2.50 Ahumados Noruegos SA de CV 2.04 Eurodeli SA de CV 1.72 El Trébol SA de CV 1.37 Proyectos Agrícolas SA de CV 1.12 Source: Euromonitor Frozen Processed Food Trends Frozen processed foods are a niche market in Mexico, although these products are gradually growing in popularity. There is growing demand for processed frozen foods in northern Mexico due to the influence of American cuisine. Mexicans prefer chilled or canned products over frozen as a result of consumer perceptions about nutrition, quality, convenience and price. Consumers regard chilled meats and poultry products as more nutritious and better preserved than frozen products. For fish and vegetables, canned products are seen as more convenient, better preserved and less expensive than frozen products. Another challenge facing frozen products is the large investment required in freezers to store and exhibits these products. Hamburger meat is the most popular frozen processed red meat product in the market. Frozen processed poultry, fish/seafood, and vegetables are small markets since they compete directly with the year-round fresh domestic supply and the preference for fresh over frozen products. Chicken nuggets are the dominant frozen process poultry product. Fish fillets are the most popular frozen processed seafood product, followed by frozen shrimp. Frozen processed potatoes is an exception in the category, comprising 60% of total frozen food sales, with very high demand, namely in the foodservice industry (79%). Frozen potatoes are preferred in restaurants over fresh ones because of the convenience of having potatoes already cut in the right portions, ready to be fried or cooked. Innovations within frozen processed potatoes include new flavors, shapes, and varieties. Competition and Market Share Frozen processed food is highly fragmented, where no single company holds more than 11% total market share. International companies hold over 40% of total sales in the frozen processed food industry. U.S. companies dominate volume of imported products in this category as a result of their experience in the industry given the large demand for frozen products in the United States. The majority of frozen processed fish/seafood (over 80% retail value) is processed by domestic companies given Mexico?s extensive coastlines and bountiful fishing industry. The largest player in the frozen processed meat category is American Beef S.A. de C.V., with 60% of retail value sales, producing mainly hamburger meat for Wal-Mart and Sam?s Clubs. McCain México S.A. de C.V. is the leader in frozen processed food sales with 38% of retail sales, resulting from its dominance in frozen processed potatoes. Sigma Alimentos is the second largest processor with presence in several frozen products including bakery, fish/seafood, and poultry. Table 12. Mexico: Frozen Processed Food Sales Value and Volume in 2010 Type of Frozen Processed Food Quantity in 1,000 MT Value in Million Mexican Pesos Frozen Bakery 3.19 217.17 Frozen Desserts 3.92 426.88 Frozen Processed Fish/Seafood 18.21 2,049.88 Frozen Processed Potatoes 59.81 1,986.29 Non-Oven Frozen Potatoes 59.81 1,986.29 Frozen Processed Poultry 4.52 452.70 Frozen Processed Red Meat 22.89 1,052.01 Frozen Processed Vegetables 10.49 388.51 Other Frozen Processed Food 11.96 675.31 Frozen Pizza 1.17 115.61 Frozen Ready Meals 0.09 11.90 Total Frozen Processed Food 136.25 7,376.26 Source: Euromonitor Table 13. Mexico: Frozen Process Food Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Toyo Suisan Kaisha Ltd 21.18 Fábrica de Pastas Alimenticias La Moderna SA de CV 17.98 Cía Arrocera Covadonga SA de CV 9.23 Herdez SA de CV, Grupo 4.57 Kraft Foods de México SA de CV 3.40 Productos Verde Valle SA de CV 3.13 Cocina Productos de Maiz SA de CV 3.11 Unilever de México SA de CV 2.86 Digrans SA de CV 2.70 Nissin Foods USA Co Inc 2.14 Arroz SOS de Mexico SA de CV 1.90 Wal-Mart de México SA de CV 1.45 D'Gari SA de CV 1.45 Industrias Productos Alimenticios SA (IPAL) 1.35 La Italiana SA de CV 1.33 General Mills Inc 1.15 Empacadora La Merced SA de CV 1.06 Pinacle Foods Corp 1.04 Source: Euromonitor Dried Processed Food Trends Rice is the dominant product in this category followed by pasta and instant noodles. In the past two years, rice has suffered significant price volatility around the world resulting in higher retail prices for consumers. Rice processing companies are introducing more convenient products in the form of instant and pre-cooked products. In dessert mixes new flavors as well as more sugarless options targeting diabetics are entering the market. Origin of Ingredients Used 80 % of rice consumed in Mexico is imported from the United States, and then processed and packaged by local companies. Competition and Market Share This food category is a highly-segmented industry with only two companies holding more than 10% of the total retail value - one foreign and one domestic. International manufacturers are the leaders in the dessert mix category as a result of a strong longstanding presence with brands such as Jell-O (Kraft Foods), Pronto (Unilever), and Betty Crocker (General Mills) (among others). The Japanese company, Toyo Suisan Kaisha Ltd, is the overall leader in this category followed by the Mexican processor Fábrica de Pastas Alimenticias La Moderna S.A. Table 14. Mexico: Dried Processed Food Sales Value and Volume in 2010 Type of Dried Processed Food Quantity in 1,000 MT Value in Million Mexican Pesos Dessert Mixes 86.34 5,519.59 Rice 419.24 7,768.22 Dehydrated Soup 17.15 1,372.60 Dried Pasta 296.88 8,381.52 Dried Ready Meals 7.69 456.83 Instant Noodles 119.11 9,282.82 - Pouch Instant Noodles 0.30 12.41 - Cups/Bowl Instant Noodles 118.81 9,270.41 Instant Soup 0.12 19.97 Total Dried Processed Food 946.53 32,801.55 Source: Euromonitor Table 15. Mexico: Dried Process Food Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Toyo Suisan Kaisha Ltd 21.18 Fábrica de Pastas Alimenticias La Moderna SA de CV 17.98 Cía Arrocera Covadonga SA de CV 9.23 Herdez SA de CV, Grupo 4.57 Kraft Foods de México SA de CV 3.40 Productos Verde Valle SA de CV 3.13 Cocina Productos de Maiz SA de CV 3.11 Unilever de México SA de CV 2.86 Digrans SA de CV 2.70 Nissin Foods USA Co Inc 2.14 Arroz SOS de Mexico SA de CV 1.90 Wal-Mart de México SA de CV 1.45 D'Gari SA de CV 1.45 Source: Euromonitor Dairy Products Trends Milk consumption is expected to increase slightly in 2011 (1.4 percent). Milk is perceived as a healthier, stronger, and cheaper product compared to other dairy processed products. Cheese consumption increased by 2.6 percent in 2010 (from 2009), much attributed to the economic recovery and consumer buying power. Butter and butterfat consumption is expected to increase in 2011 by 2.5 percent after a decline in 2010 of 8.9 percent. Non-fat dry milk consumption is expected to be at 447,000 MT, approximately 4.4 percent higher than in 2010, attributed to: a recovery of consumer income, a higher demand for industrial uses, and a stable peso exchange rate. Sixty-three percent of non-fat dry milk in Mexico is consumed by LICONSA, a state-owned company under the Mexican Secretariat of Social Development which distributes milk to the poor; around 35 percent by processors for reconstituted milk, cheese, and other dairy products; a small portion is sold by supermarkets and small retailers; and the remainder is used by the HRI sector. Ice cream is not considered a basic product in Mexico, but rather an indulgence product consumed mainly as dessert. Ice cream prices increased by 14% in 2010 as a result of more expensive raw materials, distribution, and energy costs. The most popular flavors in dairy ice cream are chocolate, strawberry, and vanilla, followed by Neapolitan (a combination of chocolate, vanilla and strawberry). Reduced-fat and reduced or ?no sugar? ice cream versions are entering the market. Competition and Market Share Since Mexico is a deficit milk producer, the dairy sector relies on imports to supplement its supply, especially with milk powder, due to its price and easy transport. The United States is the primary supplier of fluid milk to Mexico with 92.5 percent of total imports in 2009 followed by Uruguay and Argentina. Cheese supply in Mexico in 2010 only relied on an estimated 25 percentage of imports as a result of sufficient supply by domestic producers and consumer preferences for domestically- produced cheeses such as panela, oaxaca, and fresh. New Zealand was the principal supplier of butterfat to Mexico in 2009 with 69 percent of total imports, followed by the United States with 14 percent, and Australia with 10 percent. The United States is the largest supplier of non-fat dry milk powder followed by New Zealand and Uruguay. Ice cream faces strong competition from snack products. Ice cream is a very fragmented and regional market with few nationwide players such as Nutrisa SA de CV and Santa Clara Productos Lacteos SA de CV. Multinational ice cream companies (such as Unilever and Nestlé) account for almost 70% of total ice cream value sales. Numerous independent ice cream parlors throughout the country that produce artisanal ice cream together, as a whole, make up a significant portion of the ice cream sector. Nestlé México and Helados Holanda from Unilever (along with its Ben & Jerry?s brand) have been dominant in ice cream in Mexico for decades in all areas - except frozen yogurt and artisanal ice cream. Nutrisa S.A. leads frozen yogurt with sales through its stores and now packaged versions sold in supermarkets/hypermarkets and discounters. Brands that have recently entered the market include: private label, Häagen-Dazs, Manhattan Popsicles, Blue Bell Ice Cream, Prairie Farms, Neve Gelato, and Santa Clara. General Information The Mexican government imposed duties on U.S. imports of certain cheeses as a result of the trucking issue. For further information, please see the relevant Gain report listed in Section IV of this report. Table 16. Mexico: Ice Cream Sales Value and Volume in 2010 Type of Dried Processed Food Quantity in Million Liters Value in Million Mexican Pesos Frozen Yogurt 2.96 281.20 Impulse Ice Cream 58.37 4,373.21 - Multi-Pack Dairy Ice Cream 1.34 157.23 - Multi-Pack Water Ice Cream 0.26 17.53 - Single Portion Dairy Ice Cream 45.38 3,657.97 - Single Portion Water Ice Cream 11.39 540.48 Take-Home Ice Cream 38.94 1585.27 - Bulk Ice Cream 30.51 1,026.78 - Ice Cream Desserts 8.43 558.49 Total Ice Cream 100.27 8,600.72 Source: Euromonitor Table 17. Mexico: Ice Cream Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Helados Holanda SA de CV 35.34 Nestlé México SA de CV 20.36 Unilever de México SA de CV 10.04 Nutrisa SA 6.65 General Mills de México SA de CV 2.89 Helados y Donas de México SA de CV 2.81 Franquiciadora Hawaiian Paradise SA de CV 1.82 Santa Clara Productos Lacteos SA de CV 1.58 Qualamex SA de CV 1.38 Source: Euromonitor Sauces, Dressings, and Condiments Trends Many sauce varieties introduced provide flavors used in foodservice such as salsas taquera, ranchera, and Mexicana. Popular condiments incorporate traditional Mexican flavors such as barbacoa and cochinita pibil. Packaging trends: less steel and more glass and aluminum. A popular trend is the use of fewer additives and preservatives and the use of fresher, healthier ingredients. Spices and powders are offered by national producers, especially for traditional local flavors such as hibiscus, tamarind, and mango, as well as by importers who target the demand for traditional spices. Low-fat mayonnaise has becoming popular among consumers looking for healthier options. The use of organic ingredients in this category is becoming increasingly popular. Competition and Market Share The category of sauces, dressings, and condiments is very fragmented and competitive with a mix of specialized products from regional and national producers, as well as a variety of imported products. The products that dominate this category are produced by domestic companies using locally- produced spices, sauces, and powders. The success of many products in this category continues to be in preserving local flavors. The leading manufacturers include large companies that offer a wide variety of products including the domestic producers, La Costeña, Del Fuerte, and Salsa Tamazula, the maker of the well-known spicy sauce, Valentina, as well as the U.S. company McCormick with operations in Mexico. Table 18. Mexico: Sauces, Dressings and Condiments Sales Value and Volume in 2010 Ty Quantity in 1,000 Value in Million Mexican pe of Sauce, Dressing, Condiment MT Pesos Bouillon/Stock Cubes 35.78 3,855.07 - Liquid Stocks and Foods 3.47 466.80 - Stock Cubes and Powders 32.31 3,388.26 Dips 1.27 176.69 Herbs and Spices 1.86 324.71 Ketchup 63.52 1,856.52 Mayonnaise 156.15 8,242.74 - Low Fat Mayonnaise 18.77 1,040.47 - Regular Mayonnaise 137.38 7,202.28 Mustard 5.74 252.48 Pasta Sauces 8.86 652.47 Pickled Products 339.87 14,227.20 Salad Dressings 27.92 2,959.79 - Low Fat Salad Dressings 0.84 75.53 - Regular Salad Dressings 27.08 2,884.26 Soy Based Sauces 0.74 68.01 Table Sauces 159.77 7,661.69 - Casera 83.25 2,599.57 - Chili Sauces 63.98 3,996.84 - Other Table Sauces 12.53 1,065.28 Tomato Pastes and Purées 123.00 2,001.34 Vinaigrettes 0.02 2.11 Wet/Cooking Sauces 23.81 1,409.51 Total Sauces, Dressings and Cond 948.30 43,690.34 iments Source: Euromonitor Table 19. Mexico: Sauces, Dressings, and Condiments Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Herdez SA de CV, Grupo 16.87 Conservas La Costeña SA de CV 13.07 CorFuerte SA de CV (Del Fuerte) 10.35 Cocina Productos de Maiz SA de CV 7.20 Salsa Tamazula SA de CV 5.77 Productos del Monte SA de CV 3.93 Sabormex SA de CV 3.52 Empacadora San Marcos SA de CV 3.32 Kraft Foods de México SA de CV 2.37 Source: Euromonitor Oils and Fats Trends In the context of the health and wellness trend, many oil/fat producers are adding antioxidants such as omega-3 and -6 to oils, DHA, as well as introducing cholesterol-free products. Nearly 60% of all cooking oils in Mexico are a combination of different oils. Vegetable and seed oils have the most variety in terms of brands. Spray options are usually more expensive (ex. Pam) Cooking fats are considered the less-expensive option. All olive oil brands (except for private labels) are considered premium products in this category. Nutrioli launched the first functional oil in Mexico called DHA which claims to improve the brain?s performance. Origin of Ingredients Used The most demanded seeds for oil manufacturing are sunflower, soy (primarily imported from the United States), and canola, which is primarily imported from Canada. Competition and Market Shares The international company, ACH Foods, is the leader in this category with its popular brands Capullo, Dorela, and Mazola vegetable and seed oils. The domestic company, Inca, leads the market in cooking fats famous for its shortening (Manteca Inca) used in many traditional Mexican dishes. The domestic company, Fábrica de Jabón la Corona S.A. de C.V., follows ACH Foods with its popular brands of vegetable and seed oils targeting the low income sector (ex. 123, Coral, Corona, Monarca and Pirámide). Ragasa Industrias S.A. de C.V. is also a noteworthy player as it is the maker of the well-known Nutrioli brand, which is perceived by many as the healthiest option in vegetable and seed oils. Table 20. Mexico: Oils and Fats Sales Value and Volume in 2010 Type of Oils and/or Fats Quantity in 1,000 MT Value in Million Mexican Pesos Butter 7.47 525.54 Cooking Fats 127.24 2,256.66 Margarine 8.53 580.17 Olive Oil 8.97 1,044.00 Vegetable and Seed Oils 709.79 13,470.29 Spreadable Oils and Fats 15.99 787.85 Total Oils and Fats 877.99 18,664.51 Source: Euromonitor Table 21. Mexico: Oils and Fats Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share ACH Foods 23.22 Fábrica de Jabón La Corona SA de CV 19.08 CorFuerte SA de CV (Del Fuerte) 8.21 Aceites Industriales El Zapote SA de CV 7.56 Aceites Grasas y Derivados SA de CV 5.54 Industrial Aceitera SA de CV 4.49 Coral Internacional SA de CV 3.50 Ragasa Industrias SA de CV 3.32 Anderson Clayton & Co SA de CV 3.17 Source: Euromonitor Ready-To-Eat Meals Trends Convenience plays an important role in the growing acceptance of ready meals in the market and with frozen ready meals in particular. More women are entering the workforce and fewer meals are being prepared and eaten at home. Chilled ready meals are the most preferred for their convenience and the perception that they are fresher than frozen ready meals. Consumer demand for chilled and frozen pizzas and for frozen ready meals is still low. The Lonchibon brand offers a number of products individually sized (sandwiches, burritos, and ham and cheese croissants) for quick consumption since they do not require heating or opening a can as do other ready-to-eat products. Many chilled ready meals, like Lonchibon, are reasonably priced at 12-18 pesos compared to the average costs of canned or frozen products. Mexican frozen dishes such as carnitas and barbacoa are vastly preferred in the country over international cuisines. Traditional Mexican dishes dominate both the chilled and frozen ready meal categories; Italian dishes with a pasta focus follow in demand in the frozen category. Vegetarian products remain a small niche within ready meals claiming less than 10% of the total. The majority of U.S. exported products in this category are frozen ready meal products. General Information The two dominant brands in chilled pizza are San Rafael and Fudd launched in 2009, both of which belong to Sigma Alimentos. Most of the premium products in this overall category are imported from Spain or the United States. Competition and Market Share Domestic companies dominate in ready meals holding over 90% of total retail sales. Large international manufacturers, such as Kraft and Nestlé, have a presence but together account for less than 10% of total sales. This category is highly segmented with no individual company holding more than 15% of total market share. Mexican companies Sigma Alimentos S.A. de C.V. and Grupo Bimbo S.A. de C.V. hold the largest market shares at 16% and 12% of total retail value, respectively, by holding their Chepina and Lonchibon brands. Table 22. Mexico: Ready-To-Eat Meals Sales Value and Volume in 2010 Type of Ready-To-Eat Meals Quantity Metric Tons Value in Million Mexican Pesos Canned/Preserved Ready Meals 6,050.00 464.23 Chilled Pizza 1,800.00 186.00 Chilled Ready Meals 12,780.00 999.43 Dried Ready Meals 7,691.11 456.83 Frozen Pizza 1,173.50 115.61 Frozen Ready Meals 90.00 11.90 Prepared Salads 3,349.10 242.76 Total Ready-To-Eat Meals 32,933.71 2,476.76 Source: Euromonitor Table 23. Mexico: Ready-To-Eat Meals Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Sigma Alimentos SA de CV 15.46 Bimbo SA de CV, Grupo 11.52 El Trébol SA de CV 6.29 Alimenmex S de RL de CV 5.47 Proyectos Agrícolas SA de CV 5.16 Marindustrias SA de CV 4.44 Productos Chata SA de CV 4.34 Cía Arrocera Covadonga SA de CV 3.97 Herdez SA de CV, Grupo 3.85 Source: Euromonitor Snack Bars Trends Snack bars are being positioned as healthy options in the snacks category. New innovations include products with functional benefits and products that target children and men. Most standard snack bars in the market are very similar in price, ranging from 4 to 7 pesos each. Reduced-sugar brands, such as Plusvita from Bimbo, are up to 100% more expensive than regular brands. General Information Independent grocery retailers and convenience stores are important snack bar distributors since many of the purchases are impulse buys. Energy bars are not particularly popular in this market so distribution is limited to specialty stores such as GNC. Competition and Market Share Bimbo is the leader in this category offering a wide range of products targeting different audiences. Kellogg de México is the second largest producer in this category with 24% of value sales. As a result of Bimbo?s powerful distribution network in Mexico competition in this category is very tight. Multinational manufacturers account for a significant percentage of sales following Bimbo. However, altogether, Kellogg, Quaker and Nestlé have the same share as Grupo Bimbo on its own. Table 24. Mexico: Snack Bars Sales Value and Volume in 2010 Type of Snack Bars Quantity Metric Tons Value in Million Mexican Pesos Breakfast Bars 27,620.00 3,738.02 Energy and Nutrition Bars 116.28 54.34 Fruit Bars 1,270.00 50.21 Granola/Muesli Bars 4,340.00 617.45 Total Snack Bars 33,346.28 4,460.02 Source: Euromonitor Table 25. Mexico: Snack Bars Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Bimbo SA de CV, Grupo 42.91 Kellogg de México SA de CV 23.74 Productos Quaker de México SA de CV 16.02 General Mills de México SA de CV 3.14 Avena de Chihuahua SA de CV 1.80 Alimentos Integrales Roal SA de CV 1.35 Nestlé México SA de CV 1.07 Source: Euromonitor Canned and Bottled Drinks Trends Soft drinks are in high demand among the lower class groups due, in part, to their high caloric content. Lower priced products and brands are emerging in the market targeting low-income consumers. Bottled water and fruit/vegetable juices, as well as ready-to-drink (RTD) teas, are becoming increasingly popular in sync with the health and wellness trend. Soft drink manufacturers are starting to introduce ?natural? flavors and ingredients. General Information The economic crisis did not affect sales of soft drinks in Mexico. Impulse sales of soft drinks remain significant, with more and more sales at independent small grocery and convenience stores rather than at supermarkets and hypermarkets. OXXO convenience stores have become the top point of distribution for Coca-Cola drinks. Competition and Market Share Multinationals account for the majority of total soft drink sales, led by Coca-Cola, then Danone, PepsiCo, AJEGROUP, Dr Pepper Snapple Group, and Nestlé. Local producer Jugos del Valle leads the fruit/vegetable juice sector, although it is now jointly owned by Coca-Cola and FEMSA. Other leaders in the juice sector include local companies Jumex and Lala. Table 26. Mexico: Soft Drinks Sales Value and Volume in 2010 Type of Soft Drinks Quantity in Million Liters Value in Billion Mexican Pesos Carbonates 14,743.5 184.5 Fruit/Vegetable Juice 4,445.2 45.7 Bottled Water 26,612.8 139.6 Functional Drinks 281.3 8.9 Concentrates 219.6 21.2 RTD Tea 130.9 2.5 RTD Coffee 27.5 1.4 Total Soft Drinks 46,460.7 403.7 Source: Euromonitor Table 27. Mexico: Soft Drink Companies, Percentage of Market Share in 2009 C % of Retail Market ompany Name Share Coca-Cola Export Corp (Coca-Cola de Mexico) 23.5 Danone de México SA de CV 8.2 Pepsi Bottling Group Mexico SRL, The 6.3 Pepsi-Cola Mexicana SA de CV 5.6 Kraft Foods de México SA de CV 4.5 Ajemex SA de CV 4.1 Envasadora de Aguas en México S de RL de CV (Agua Purificada Pureza Ag 2.9 ua) Spreads Trends The most popular flavor of jam in Mexico is strawberry followed by apricot, pineapple and orange. Due to increasing concerns about obesity, many producers of jams and preserves are offering more reduced-sugar versions. Domestic spreads such as cajeta, which are traditionally heavy in sugars, are also being sold in low sugar varieties. General Information Standard products are widely sold in retail as well as through the HRI industry. Varieties that include exotic flavors and ingredients, such as lime and fig, are commonly distributed through upscale retailers and specialty stores. Origin of Ingredients Local ingredients are mostly used capitalizing on Mexico?s year-round production of many fruits including strawberries, pineapples, and oranges. Imported ingredients such as cherries, raspberries, blackberries, plums and currant from the United States or other countries are used in many premium brands. Competition and Market Share Domestic players are stronger in the spreads market, due to well-established traditional brands recognition. Approximately 25% of spread sales are by large multinational brands, led by Smucker?s and Ferrero de México. Nearly 100% of honey manufacturers are domestic. Grupo Herdez leads spreads with almost 30% of value sales much attributed to its McCormick brand of jams and Carlota brand of honey which have been in the market for decades and have earned consumer loyalty. The second leader in spreads in Mexico is Smucker de México with its Smucker?s brand jams and Goober brand nut-based spreads. Table 28. Mexico: Spreads Sales Value and Volume in 2010 Type of Spreads Quantity in 1,000 MT Value in Million Mexican Pesos Chocolate Spreads 3.01 314.38 Honey 7.23 503.38 Jams and Preserves 100.63 7,211.47 Nut-based Spreads 9.28 747.79 Total Spreads 120.15 8,777.28 Source: Euromonitor Table 29. Mexico: Spreads Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Herdez SA de CV, Grupo 29.83 Smucker de México SA de CV, JM 21.04 Conservas La Costeña SA de CV 9.60 Sabormex SA de CV 7.86 Barcel México SA de CV 4.92 Ferrero de México SA de CV 2.74 Source: Euromonitor Sweet and Savory Snacks Trends Many companies in this category are working to make snacks healthier by reducing the amount of salt used and baking instead of frying chips/crisps to reduce the fat content. Consumers are switching to popcorn due to the perception that it is a healthy alternative to other snacks. Popcorn is being marketed as rich in fiber and being offered in many fat-free and reduced-fat formats. Pork rinds and nut/snack mixes are very popular and mostly produced locally. General Information This category is currently facing challenges related to the Mexican government?s efforts to address the childhood obesity issue. A law is being considered to ban sweet and savory snacks of which many are considered ?junk food? (comida chatarra) in schools nationwide. Competition and Market Share The leaders in this category are companies with longstanding and well-developed distribution networks as well as product mixes that include leading products in different processed foods categories. The smaller players are often either specialized in terms of a regional presence or in terms of niche products with well established low-end products for wholesalers and street vendors such as the Totis brand. Sabritas S.A.de C.V., which is owned by Pepsico, produces the top five selling brands of snacks including Sabritas chips, Ruffles chips, Cheetos, and Doritos tortilla corn chips. The second largest producer is Barcel México S.A. de C.V., featuring several Barcel branded products as well as the Takis brand. Table 30. Mexico: Sweets and Savory Snacks Sales Value and Volume in 2010 Type of Sweets & Savory Snacks Quantity in 1,000 MT Value in Million Mexican Pesos Chips/Crisps 76.84 9,209.42 Extruded Snacks 71.22 8,892.76 Fruit Snacks 2.05 307.18 Nuts 43.88 4,124.40 Popcorn 52.03 3,465.73 Tortilla/Corn Chips 112.40 9,739.77 Other Sweet and Savory Snacks 15.12 2,305.96 Sweet and Savory Snacks 373.54 38,045.21 Source: Euromonitor Table 31. Mexico: Sweet & Savory Snacks Companies, Percentage of Market Share in 2009 Company Name % of Retail Market Share Sabritas SRL de CV 60.32 Barcel México SA de CV 13.97 Productos del Monte SA de CV 3.46 Nacional de Alimentos y Helados SA 2.65 Botanas y Derivados SA de CV 1.61 Productos Nipon SA de CV 0.90 Nishikawa SA de CV 0.89 Procter & Gamble de México SA de CV 0.73 Cazares SA de CV 0.65 Source: Euromonitor Meat and Poultry Trends Sales of processed meats, especially pork and turkey, are growing in the Mexican market as a result of lower prices and the healthier perception of these products compared to other processed meat products. The price of meat cold cuts can be up to 20% lower than other meat products. Turkey consumption in 2010 was 1.78 kg per capita and chicken per capita was at approximately 25.88 kg. Sales of many processed chicken and turkey products are returning to pre-economic crisis levels, especially with products such as patties, nuggets, cold cuts, and hot dogs. As a result of the economic recovery, consumer incomes are rising leading to higher consumption of red meats. This trend is expected to continue in 2011 with market specialists estimating an increase in consumption of 1.4 percent, following the 1.8 percent increase in 2012. Meat products with seasonings and marinades are growing in popularity. Pork consumption is expected to increase in 2011. Beef consumption is expected to remain stagnant. Pork is perceived by consumers as an unhealthy meat product and is often substituted for poultry, which is seen as the cheaper and ?healthier? protein option. Competition and Market Share Mexican chicken and turkey production does not meet domestic demand. As a result, Mexico imported an estimated 526,000 MT of chicken and 190,000 MT of turkey in 2010 of which 95% of the chicken imports and 98% of turkey imports were from the United States. Chile and Canada provide the remainder of chicken and turkey imports to Mexico. The top imported products for processing in this category are: 1) fresh or chilled mechanically deboned chicken meat for use in sausage and cold cut processing; and 2) chilled or frozen chicken leg quarters. Three processors dominate the market in poultry processing: the leader Bachoco, followed by Pilgrim?s Pride, and Tyson. The United States is the largest supplier of beef with more than 95 percent of the estimated 340,000 MT of total meat, beef, and veal imports. The rest is primarily imported from Canada. General Information On February 9, 2011, the Mexican government initiated an antidumping investigation on chicken leg quarters from the United States which could mean tariffs placed on U.S. imports if a positive finding is determined. The following beef products from the United States remain prohibited from entering Mexico due to a bovine spongiform encephalitis (BSE) finding in a U.S. cow in December 2003: live cattle for slaughter, boneless and bone-in meat from cattle 30 months of age or older, bovine offal and viscera other than those currently authorized, products derived from non-protein- free tallow, gelatin and collagen prepared from bone, ruminant meal, and ground beef. Mexican import duties remain in effect on U.S. imports of pork as a result of the trucking retaliation. For further information on this section, please see the relevant Gain reports listed in Section IV. Table 32. Mexico: Meat and Poultry Sales Volume in 2009 Type of Meat and Poultry Quantity in 1,000 MT Beef and Veal 1,614.1 Lamb, Mutton and Goat 117.2 Pork 1,223.2 Poultry 2,302.2 Other Meat 84.1 Total Meat 5,340.8 Source: Euromonitor Fish and Seafood Trends Fresh fish and seafood consumption was estimated at 680,500 MT in 2009. Fish accounted for 62% of volume, while crustaceans, mollusks, and cephalopods each accounted for 19%. Almost two thirds of production is further processed. Fish is considered healthy and low in fat. Nevertheless, it is not a staple part of Mexicans? diet. Consumption increases significantly during Easter/Holy Week given that many Catholics only eat fish during that time. Among crustaceans, shrimp is very popular, and is served in many ways including in tacos, cocktails with garlic or chipotle chili, and as part of seafood meals. Because of the high price of lobster, consumption is highly limited to upper economic classes. Table 33. Mexico: Fish and Seafood Sales Volume in 2009 Type of Fish and Seafood Quantity in 1,000 MT Crustaceans 131.6 Fish 421.1 Molluscs and Cephalopods 127.8 Total Fish and Seafood 680.5 Source: Euromonitor SECTION II. ROAD MAP FOR MARKET ENTRY A. ENTRY STRATEGY Locally-produced food products continue to have certain competitive advantages over foreign, imported products. First, given their location, domestic processors are often more aware of the current and evolving market trends and tendencies and are therefore often quicker to make modifications and meet the demands. Also, domestic processors tend to have a better understanding of the local foodservice industry, including the resources and contacts to gain prominence in this key channel of distribution for the industry. Imported products face direct competition with local, specialty companies that cater to particular niche markets relative to regional demands in the country. Smaller, domestic companies also tend to have a well established supply channel with major warehouse food clubs in Mexico, including Costco and Sam?s Club, which in turn serve a large portion of the foodservice sector. Domestic producers of several prominent processed foods groups, including canned/preserved food, chilled processed food, sauces, salad dressings, and condiments, maintain the leading edge in the market over similar imported products because they cater to local flavors. Artisanal processed foods in Mexico, such as tortillas and bolillos, and other traditional local breads, remain basic food staples in the Mexican diet and as a result, domestically-produced versions of these goods are more favorable to imported brands. A great deal of competition exists in the category of snacks foods and ?impulse/indulgence? food products. Large players, such
Posted: 14 April 2011, last updated 14 April 2011

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