Mexico: A Destination for Growth - Market opportunities for UK retailers
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Mexico: A Destination for Growth Market opportunities for UK retailers
2 Mexico:
A Destination for Growth
Foreword
Mexico is a country full of opportunities - and there has never
been a better time to consider it as a business destination.
The British perception of Mexico is often inaccurate. In fact,
Mexico is a modern country with a dynamic economy. It has
a young population of 112 million, with a growing middle class
and strong macroeconomic fundamentals. Mexico has an
impressive network of Free Trade Agreements (including with
North America and the EU), and a strategic location between
the US and Latin America. But at the same time, the Mexican
Government and local businesses have said they wish to
reduce their dependency on trade with the US. So for UK
companies, Mexico has the potential to act as a springboard
into the Americas, as well as being an attractive market in its
own right.
British products have a significant presence in the country; our
products are generally recognised for their quality, and have
performed well in the local market. Yet, while Mexico regularly
ranks in the top three emerging markets in which to do
business, the UK exports much less to Mexico than many of
our major competitors. So, while the opportunity clearly exists,
other countries are taking greater advantage of it.
For this reason, UK Trade and Investment (UKTI) has
produced this report with the help of global research agency
Millward Brown. It aims to identify opportunities for UK
retailers through a simple yet insightful document, to help
British companies make more informed decisions. The report
has various sections that outline a range of sectors and
industries in Mexico.
This report is designed as a useful reference guide for readers
to dip in and out of. It should be used in conjunction with the
UK Trade & Investment website (www.ukti.gov.uk/mexico),
and our other services. The report will guide you through
the retail sector in Mexico, while the website will give you
regularly updated market and sector information, business
opportunities, and details of relevant events.
From luxury goods and shopping centres, to food and drink,
this report intends to give the UK retailer a real picture of
what is happening in Mexico, and why Mexico is an exciting
destination for growth.
JOHN PEARSON
First Secretary, Trade & Investment
British Embassy, Mexico City
3 Contents 4 Overview - Meet Mexico 6 Understanding Consumers 8 Understanding Retailers 10 Challenges 12 Mexico’s Retail Sector 16 Apparel 17 Groceries 18 The Big Players 20 Centres of Activity 21 Key markets in Mexico 22 Healthcare 24 Drinks 28 Food 32 Luxury 35 To Keep in Mind This guide was produced for the UK Trade & Investment team in Mexico by Millward Brown Optimor Mexico. This project was developed through consulting primary sources developed by Millward Brown and its Knowledge Bank, as well as secondary sources relevant to the project.
4 Mexico:
A Destination for Growth
Overview
Meet
Mexico is the 14th largest economy in the
world, according to the International Monetary
Fund (2013):
US $1,162 billion (Real GDP)
Following a significant decline in the recent
MEXICO!
economic downturn, the Mexican economy is
already showing strong signs of recovery.
$ $ $ $ $ $ $ $ $
You’ve heard of Mexico, but have you A HUGE COUNTRY CULTURAL RICHNESS
heard it’s a country with a fast growing Mexico’s 2 million sq km are A country rich in art, music,
“ “
international presence? rich in natural resources and languages and tradition,
its 9,330km border with the Mexico blends the best of
US gives the country access European and Amerindian
to even more. cultures.
With Europe’s Retailing in Mexico
economies remains strong. A HINGE STATE FOREIGN TRADE
stagnating, China Despite the state
Mexico is a bridge between Mexico has 14 Free Trade
worrying about of the international North America and the vast Agreements with countries
sustaining growth economy, Mexico cultural area of Latin America, including the US and Canada,
and property bubbles managed to continue uniting the distinctive Japan and the EU. This makes it
and India faltering, growing in GDP terms characteristics of both. one of the countries most open
to foreign trade in the world.
Latin America and kept inflation
remains one of the rates under control.
few regions exhibiting Retailing grew at LEADING A BIG HAPPY
continued growth above GDP levels, PLAYER IN POOL OF CONSUMERS
and healthy long- outperforming in A GROWING POTENTIAL WILLING &
term prospects. categories such as REGION BUYERS ABLE TO SPEND
The Futures Company department stores Mexico is a leading A market driven Despite a complex
and specialised country in Latin by a huge middle social situation
retailing. America, with class (48.3% of
population), yet
in which criminal
sound economic undertones colour
Euromonitor International indicators that with important everyday life, Mexico’s
figures for
show a strong recent economic
higher and lower
performance. socioeconomic upturn has generated
groups. a sense of optimism in
consumers.
5
Mexico’s modern Monterrey
retail infrastructure
is concentrated in its Mexico City
three largest cities
Guadalajara
You just need to push the right buttons...
6 Mexico:
A Destination for Growth
Understanding Consumers
Mexican consumers are
spending their money across a
smaller number of categories
Average household WHAT ARE MEXICANS
wealth in Mexico: SPENDING THEIR MONEY ON?
£6,273 .89
(2012) Personal
Other
3.6%
care: 8.2%
Education and Food, beverages
entertainment: and tobacco: 32.7%
13.6%
11 %
Increase in expenditure
Transport and
communications:
18.5%
Housing
and fuel:
5.6%
Clothing
and footwear
in the beauty and 2.7%
9.3%
6.2%
personal care categories, Healthcare
from 2006 to 2011. Household items and services
FACE OF SUCCESS BEAUTY OF SUCCESS BIG BRAND TRUST
Mexican people are looking Importance is increasingly In Mexican culture, well-
to turn their aspirations being placed on the link known, established brands
of success into reality by between looks and success. are seen as reliable and
spending more on beauty trustworthy.
and personal care products.
With disposable incomes rising, Mexicans
are more willing (and able) to invest in
themselves, be it on clothing, health or
beauty products. $ $ $ $
7
Understanding Consumers
INTRODUCING...
Brands with the highest level of consumer
engagement in Mexico according to
BrandZ. Their recipe for success? Taking
into account four basic principles that
apply to the Mexican marketplace:
WELL KNOWN FOR EVERYONE
Brands that command Accessible brands for
trust and loyalty. the majority.
Consumers know exactly Brands that create pricing
what to expect from strategies to match
these brands. consumer spending power.
EMOTION LEADERS
Brands that create Brands that inspire.
a strong emotional bond.
They are highly regarded
Brands that understand as category leaders, as
Mexico´s emotional and innovators, as the brands
social landscape. that everyone else follows.
8 Mexico:
A Destination for Growth
Understanding Retailers
With a growing population, and a
positive economic outlook, Mexican
consumption (and thus retailing) is
experiencing positive growth
SOLID PERFORMANCE
12% 32,891,810 INCREASE IN THE NUMBER OF HOUSEHOLDS
BY 2018
3.9% IN MEXICO 2012 GDP GROWTH
8.7% INCREASE IN RETAIL UNITS
MORE THAN 1900 OUTLETS OPENED IN 2012
Solid economic performance has driven retail growth across
the country.
GROWTH ON BOTH FRONTS
£7.33
BILLION
£119.84 VS NON•STORE
BILLION
INSTORE
2012 RETAIL SALES £127.18 BILLION
Mexico’s retail environment is growing and evolving
due to the country’s dynamic economic and
demographic outlook.
9
Understanding Retailers
Modern retailers in the country
have focused their strategies on
expansion through smaller stores
and in smaller cities
Reflecting social 2. An increased focus on
complexity the importance of time
Mexico’s retail landscape is and price has driven two
made up of brands that serve main formats: Convenience
the country’s social reality, Stores (which have grown
where the richest and poorest by CAGR+9%), and
live side by side. Discount Stores ( which
have grown at CAGR +
Leading retailers show
21%).
that they cater for various
socioeconomic groups (Where CAGR is Compound
by offering contrasting Annual Growth Rate)
channels and store
3. S
tores aim to create
formats.
one-stop shops.
Smaller populations
Mexico’s economic 4. Complementary services
development has reached are becoming increasingly
Nagel Photography / Shutterstock.com smaller populations across important.
the country (in tier 2 and
Consumers are
3 cities).But this has also
happened in big cities: urban increasingly searching for
dwellers that were once practical options when
ignored by retailers are now buying and retailers are
demanding more attention as responding accordingly.
their disposable income rises.
Mobility on the go
Retailers’ answer? In many ways, Mexican
Expansion through the society is centralised. As
construction and opening of a result, retailers have
new, smaller stores near to historically concentrated
these populations. their efforts in large cities
and central locations. As
The new trend? To get
these locations have become
closer to customers.
saturated, they have been
Consumers change too: forced to change their
Practical consumers expansion strategies.
Retailers have altered their
approach to meet the needs As saturation has been
of increasingly practical reached, most retailers
consumers: have moved to mid-sized
destinations or developed
1. Grocery retailers are
new formats to reach
opening small discount
previously inaccessible
stores to reach new
audiences.
urban dwellers.
10 Mexico:
A Destination for Growth
Challenges
The search for practicality and more
accessible options has pushed
non-store retailing formats
£7.33
PRACTICALITY PUSHES NON-STORE OPTIONS Growth figures (% growth between 2007 and 2012)
656.4 112.5 60.7 54.2
% % % %
Internet retailing Vending Home shopping Direct selling
machines
BILLION (2012)
Traditional stores and other Sales - 2012
formats have also grown. £1.78bn £0.14 bn £0.23 bn £5.17 bn
INTERNET
User distribution by age User distribution by
socioeconomic group
46,600,000 13 - 18 31 ABC+ 51
internet users
DOMINATES
19 - 25 23 C 21
in the country 26 - 32 15 C-/D+ 22
33 - 39 11 D/E 6
40 - 46 9
47 - 53 6
54 - 70 5
Internauts are currently
concentrated in specific age groups,
but this will change in the future. MEXICO’S INTERNET CHALLENGES:
With a growing young workforce, belonging to all
social sectors, Mexico will soon have a population
that is proficient in technology and has increased • Perceived as The internet is not
disposable income. unsafe a primary channel
By 2030, this workforce - aged between 15 and 64
• Low credit card
penetration
for leading retailers.
MercadoLibre.com
e-Retailers
years old - will account for 65.7% of the population of
the country.
• A high figure of
technological
is the only retailer
to appear on
in the country
illiteracy (55%)
in adults
Mexico’s Most
Visited Websites.
still have some
work to do.11
IMPORTANCE MEANS OF COMMUNICATION
Recurring behaviour online
People are spending more time
on the internet (4 hours 3 minutes
83%
EMAIL
68%
SEARCHING
per person daily). And there is
increasing usage at home:
87% (2011) VS. 93% (2012) 90% 48% 61%
Informal retailing still plays a big part in the Mexican mindset. of internauts belong of internauts belong consider social
Consumers from every socioeconomic group are willing to to a social network to a fanpage media to affect their
opinion on brands
consider buying through the internet if it offers clear benefits.
However, when deciding how to purchase, the in-store retail The internet is a trusted media channel for Mexicans. It
experience is also an important factor. is generally seen as a good way to communicate with
similar groups.
MOBILITY IS KEY
of Mexican
70% internauts
navigate through
mobile devices.
This is understandable given that most Mexican internauts are
young and from higher social groups.
Mobile devices should be considered
as a way to boost retail strategies.
AN UNDERDEVELOPED SALES CHANNEL
57% of internauts have
bought or made a
payment online
21% 6% 15%
TICKETS BOOKS CLOTHING
Despite being an important way to stay in touch with brands,
this sales channel remains under-developed.12 Mexico:
A Destination for Growth
Mexico’s Retail Sector
Retail success in Mexico is built on
strong attractive brands across all
sectors, from groceries to luxury goods.
Retail is dominated by a number of
major players and the development
of shopping malls continues to grow.
Increasing competition has seen
retailers develop innovative ways to
differentiate the in-store experience
for consumers.13
The secret to success is building
strong attractive brands
There is no place for
MEXICANS ARE BRAND-ORIENTATED CUSTOMERS uncertainty in Mexican
culture – brands must be
BRAND
creative and assertive.
A
Consumers may consider
ASS new brands but they always need a
TIVE E compelling reason to
A make a purchase.
RT
CRE
IVE
BRAND BRAND
44.9% of Mexico’s population
C B are in lower income groups. They
may try new brands but only at the
IVE
right price.
ST
ON
CT
R
G R A
AT T The size of the lower and middle
classes makes them the natural
D
BRAND
target market for brands looking to
increase their customer base.
THE RETAIL SALES FORECAST We make
it for you
We’re
local to
+3.1% +
16.3 % you
We know
your area
6000+
2012-17 Compounded 2012-17 Total Value
Annual Growth Rate Growth Rate
RETAILERS
– KNOW YOUR
STORE-BASED RETAILING SALES £287 bn CUSTOMER!
NON-STORE RETAILING SALES £144 bn14 Mexico:
A Destination for Growth
BRAND LANDSCAPE
& CLASSIFICATION
1
ST Upscale, high fashion
with exclusive designer
merchandise and
excellent customer
service.
TIER
Saks Fifth Avenue,
El Palacio de Hierro
2
ND Reasonably priced
merchandise with less
of a focus on customer
service.
TIER Sears, Liverpool, Fábricas
de Francia, Sanborns
3
RD Value-orientated
retailers that target
price-conscious
customers.
TIER Electra, Famsa,
Woolworth15
Mexico’s Retail Sector
The general merchandise retailing outlook
mainly comprises local powerhouses
Outlets Performance Strategic focus
£577.27m
Aggressive growth –
targeting mid-sized cities
The leading department store in
93 net profit in 2012
Mexico, serving middle-high and
high-income consumers through
affordable prices in 56 cities across
the country (2012)
£842.73m
Discrete expansion
Targeting upper-middle and
12 net sales in 2012
high-income segments, this is
Mexico’s upscale department
store par excellence 8 of them in the Greater
Mexico City Area (2012)
£2.978bn
Full-on accessibility:
Increasing geographical
The leading variety store in
980 net sales in 2012
presence in mid-sized cities
across the country, while
empowering their financial
Mexico, focusing on offering department, thereby granting
low-income consumers the people access to credit options.
chance to acquire at low-prices (55 new stores
in 2012)
£1.014bn
Full-on accessibility:
Increasing geographical
A leading variety retailer and
967 net sales in 2012
presence in mid-sized cities
across the country, while
empowering their financial
financial services provider, department, to give lower
specialising in furniture and classes access to credit options.
home appliances (2012)
£1.844bn
A ‘one-stop’ department store
From a restaurant to toiletries,
165 Group profit in 2012
drugstore to jewellery, candy,
gifts, electronics and magazines,
Sanborns is a unique store
An interesting department store mixing that brings together a wide
characteristics of department and assortment of products in ‘small’
convenience formats (2011) store formats in central locations.16 Mexico:
A Destination for Growth
Mexico’s Retail Sector – Apparel
The market in Mexico
is fragmented and
complex for specialist
apparel retailers
50
MORE THAN
HIGHLY FRAGMENTED
retail chains (both
national and
international) make
up the market.
A complex market in which both chains and
independent retailers are fighting for business.
affordable Mexican consumers
PRICE HOLDS SWAY
fashion have wide access
to brands, designs
not trendy, and styles, yet price
but affordable is generally still
considered very
important in this
Brand promises category.
Price is seen as an easy way to counteract
counterfeit and pirated goods.
Increasingly, specialist apparel retailers are focusing
on creating more sophisticated store experiences.
RETAIL-TAINMENT
Visual merchandising is becoming more important, led
by more fashion-driven competitors such as Grupo
Axo, a trading company for brands such as Thomas
Pink, Benetton, Brooks Brothers and Armani.
Retailers have increased investment in store
ambience: they are increasingly investing
in-store ambience, intent on creating
‘experience’ destinations.17
Mexico’s Retail Sector – Groceries
Despite its complexity, the Walmart de México,
Soriana, Chedraui,
Mexican grocery sector is Comercial Mexicana
dominated by five main and Oxxo are
Mexico’s five key
retail brand owners retailers…
BRAND LANDSCAPE & CLASSIFICATION
HYPERMARKETS SUPERMARKETS UPSCALE/ DISCOUNTERS CONVENIENCE WAREHOUSE OTHER
• WALMART • WALMART SPECIALISED • BODEGA • OXXO CLUBS REGIONAL
• SORIANA HIPER • COMERCIAL SUPERMARKETS AURRERA • 7 ELEVEN • COSTCO PLAYERS
• CHEDRAUI MEXICANA • SUPERAMA • MERCADO • EXTRA • SAM’S CLUB • LEY
• MEGA • SUPER • CITY MARKET SORIANA • SUPER CITY • CITY CLUB • H-E-B
CHEDRAUI • FRESKO • SUPER CHE • GO MART
• SORIANA SUPER • SUMESA • BODEGA
• SELECTO COMERCIAL
CHEDRAUI MEXICANA
• MERCADO
EXPRESS18 Mexico:
A Destination for Growth
Mexico’s Retail Sector – The Big Players
cuesta menos
super
Walmart de México is the largest Having acquired one of their Chedraui, the third largest
Walmart operation in the world leading competitors, Soriana retailer in the country, has
after that of the US and is, by has become a powerhouse in followed trends set by
far, the most influential grocery the country, with its aggressive larger competitors.
retailer in Mexico. growth strategies.
Strategic focus Strategic focus Strategic focus
An aggressive expansion driven An aggressive expansion through Focus on the development of
by lower income groups. complementary formats. smaller formats.
• Aggressive pricing strategies • Mercado Express was recently created • Pushing investment in its discount
adopted by the rest of the retailers to compete directly with Walmart’s format to compete with Walmart’s
in the country. Bodega Aurrerá. Bodega Aurrerá.
NUMBER OF
OUTLETS 2,275 (2012)
+340 outlets in 2012
NUMBER OF
OUTLETS 606
The second largest retail chain
(2012)
NUMBER OF
OUTLETS 243 (2012)
mainly focused in the southwest
NET
SALES £17,458.13 NET
SALES £5,005.31 NET
SALES £2,578.33
billion billion billion
Walmart has focused on Soriana has been traded Chedraui stores are mainly
discounters since 2008. publicly on the Mexican hypermarkets, accounting for
Over three quarters of store Stock Exchange since 1987 an 8% share in this format -
openings are in this format. and employs more than only surpassed by Walmart.
Bodega Aurrerá surpassed 80,000 people.
1,200 stores in 2012.19
Having recovered from near Oxxo is the leading convenience Once one of the main grocery
bankruptcy in 2008, Comercial store in Mexico, having players in the country, Grupo
Mexicana has focused on growth responded to the consumer Gigante is a company known for
and expansion, though this has need for practicality. having no financial debts and
been modest when compared plenty of resources.
to competitors.
Strategic focus Strategic focus Historically an important
grocery retailer
Decreasing the company’s Rampant expansion, full-city
financial debt, focus on growth. focus, excellent locations
• One of its latest moves was to sell • Oxxo continues to focus aggressively
Costco (its warehouse club format) on securing the best locations across
to its American partner (Costco Mexico.
Wholesale Corp.) In the process of leaving
modern grocery retailing
NUMBER OF
OUTLETS 199 (2011)
AGGRESSIVE
EXPANSION
+
1000
NEW STORES
(2012)
Increasingly focusing
on other businesses
NET
£2,074.64 NUMBER OF +10,500
SALES OUTLETS
billion STORES (2012)
Other than grocery retailing, Parent company FEMSA Grupo Gigante’s last
the company owns two reports more than 8 million transaction was selling their
consumer foodservice brands: transactions a day, which 50% share in Radioshack’s
California and Beer Factory. represents 77% of total Mexican operations to their
retail sales. American partner.20 Mexico:
A Destination for Growth
Mexico’s Retail Sector – Centres of Activity
The development of
shopping centres in Mexico 18 New shopping
centres opened in
2012, covering more
than 10,000 sq km
continues to grow as retail
activity increases At
least
40 new
projects are
currently in
development
CONFIGURATION
OF MALLS IN POWER CENTRES FASHION MALLS OTHER MALLS
MEXICO
Mall configuration in Mexico
fits into three classification
groups. Because of a
28% Share of
shopping
malls 58% Share of
shopping
malls 14% Share of
shopping
malls
rising need for practicality, • Supermarket • Department store • Convenience
ANCHOR STORE
these configurations have • Hypermarket • ‘Big Box’ upscale • Bank
merged to some degree • ‘Big-Box’ Discounter specialist (Boutique • Pharmacy/Drugstore
(for example, malls with • ‘Big-Box’ Specialist Palacio or the like) • Small Discounter
both grocery retailers and • Price Club • Fast-Food Chains
department stores) or even • Petrol stations
promoted the existence of
stand-alone small format
• Affordable apparel • Chains • Destination stores such
grocers (especially true for
OTHER STORES
specialists • Exclusive international as dry cleaners.
discounters).
• Electronics specialists apparel specialists • Independent retailers
• Independent retailers selling diverse goods.
selling diverse goods.
Because of
the security £478 TWO IMPORTANT FIGURES
they represent
million sold annually.
AMF PNF
for investors,
franchises have 6.2%
Mexican GDP
Mexican Franchising
Association
The most important franchising
National Franchising
Program
Founded in 2007, the PNF gives
proven to be a
12%
association in the country, support to Mexican franchisers
including a number of important (loans, coaching) with figures
dynamic set-up members. In charge of the most
important trade fair for the sector.
over £330,144 GBP
in the country growth in 201221 Key Markets in Mexico The key retail markets in Mexico are healthcare, groceries, food and drink and luxury goods. Each sector is driven by a different set of consumer priorities and values. As the economy grows, the lifestyles of Mexico’s consumers are changing and they are becoming increasingly westernised in their tastes and aspirations.
22
Mexico’s Retail Sector – Healthcare
Increasing competition
has led this retail
DEVELOPING
category to try and
EXPERIENCES
differentiate based on Large chains have stopped competing on price or
portfolio expansion alone. Instead, they are increasingly
in-store experience investing in sophisticated store formats to create a refined
customer experience.
Farmacias Farmacias Farmacia Farmacias
del Ahorro Benavides San Pablo Guadalajara
Patent
MEDICINES
Generics
Own-brand generics
Doctor’s office in-store Limited
Home-delivery
SERVICES
24-hour service
Private/public services payment
(telephone, electricity, mobile bills)
Despite the increasing focus on store sophistication,
layout and experience, convenience and price are
still the main drivers in this category.
Specialist retailers have been experiencing
A BATTLE ON MULTIPLE FRONTS eroding growth because of the expansion of
other retailing formats.
Grocery retailers in the country not only have in-store
pharmacies, but they have also started to develop or plan
independent, stand-alone stores that tackle both the health
OXXO WALMART and beauty markets.
HEALTH AND Expansion of portfolios and the geographic
LIVERPOOL expansion of other ‘generalist’ retail formats
BEAUTY
SPECIALISTS pose a significant risk to specialist health
retailers in the country.23
Healthcare
2.7% 6
The specialist health
retail segment
is particularly
interesting. This + %
dynamic segment is OF HOUSEHOLD This translates VALUE GROWTH (2012)
currently enjoying EXPENDITURE IS into growth for
specialist health
REACHING A VALUE OF
SPENT ON MEDICINE £8.97 BILLION
increased consumer
retailers
expenditure.
Health represents an important part of consumer expenditure.
A FRAGMENTED MARKET EIGHT KEY POINTS IN
(YET DECREASINGLY SO) MARKET TRANSITION
Not surprisingly, • Highly fragmented and regional. With the development of retail chains in the specialist health
pharmacies are sector, the Mexican market will experience an increase in the
• Corporativo Fragua (Farmacias following phenomena:
the main channel
Guadalajara) and Farmacias
for this category.
Similares are the strongest
players overall.
1 5
Capital will be Price wars will probably
• No international players. accumulated by characterise early
just a few players market development
GENERIC MEDICINES: IT’S 2 6
argaining power
B Companies will react
ABOUT RESOURCE ALLOCATION will increasingly be more quickly to their
Mexico’s price- concentrated in a competitors
For each patent medicine few players
sensitive population
7
has created a boom
in generic medicines 3 Expenditure on
on the market. mall, independent
S marketing will
GENERIC
GENERIC
GENERIC
GENERIC
players will tend to increase
PATENT
Generics are thought
disappear 8
GENERIC
to be a viable option
that responds to two
main concerns in the
4 A dynamic of ‘leaders
population: price and 4.26 generics are sold here will be more
T and followers’ will be
resource allocation. barriers to entry established
Transition to an Retail chains are increasingly gaining importance over independent
imperfect oligopoly. stores in this sector. A market transition is taking place.24 Mexico:
A Destination for Growth
Drinks
The alcohol and soft drinks market
is one of the country’s fastest
growing categories
On-trade and A MARKET
off-trade:
On-trade value sales TO KEEP
AN EYE ON
(GBP million – 2011)
£6,874.69
ON THE RISE soft drinks
Alcohol and soft drinks
account for an important
part of Mexican expenditure.
£8,997.66
Almost 2% of it goes on alcoholic drinks
alcohol alone. Off-trade value sales
(GBP million – 2011)
Expenditure is increasing…
(year-on-year growth 2010-2011) £14,981.82
soft drinks
+28.4%
soft drinks £8,922.90
+41.5% alcoholic drinks
alcoholic drinks Sales of soft drinks in Mexico
And so is consumption… look likely to remain among
(volume litres per capita 2006-2011 growth)
the highest in the world in
+6.0% volume terms. They are set
to reach more than 48 billion
soft drinks litres by 2016, with bottled
water and carbonated soft
+16.7% drinks set to account for
alcoholic drinks more than 88% of this total.25
ALCOHOLIC For both categories, off-trade
DRINKS: consumption is the single most
important figure to understand.
Formats per share (% off-trade value)
Despite the size of Small grocers 45.1
their gigantic grocery Specialist retailers
A MARKET OF
31.1
counterparts, specialist Hypermarkets 9.0
SPECIALISTS retailers still hold an
interesting position
Discounters
Supermarkets
6.1
4.9
in the market. Non-store 3.8
Despite a fragmented The specialist landscape Example specialist
ALCOHOL
in Mexico is made up of chains:
landscape, a independent stores that sell • La Europea
series of specialist alcohol and mixers and a • Alianza
SPECIALISTS:
FRAGMENTED YET IDENTIFIABLE
retailers still remain
identifiable in
handful of chain stores. • La Castellana
• Vinoteca
• Vinos América
the market.
SOFT DRINKS:
FRAGMENTED DISTRIBUTION 68.5 % of soft drinks sales
are off-trade (value)
Bottled Water Soft Drinks Concentrates
Mainly Non-Store Retailing 70.7% Mainly Store-Based Retailing 99.5% Store-Based Retailing 100.0%
41.1
% 28.6
70.7
% 15.8 % 78.1
%
5.3 6.1 % 6.4 8.O 7.2 7.3 8.9
%%%%
0.5 0.O
%% %% %
Non- Store Supermarkets Discounters Hypermarkets Small Grocers26 Mexico:
A Destination for Growth
Drinks
BUT WHAT DO
MEXICANS DRINK?
Strong figures already exist for both the alcohol and soft
drinks markets, but the evolution is such that there
continues to be opportunities for new products to enter and
be successful.
Market share by volume off-trade (%-2011)
Company shares by total volume (%-2011)
Volume growth 2006-11
93.9 Beer 11.1% 52.7 Modelo SA de CV
3.0 Spirits 7.1% 39.1 Heineken NV
2.0 RTDs/High Strength 21.7% 1.2 Pernod Ricard Groupe
0.9 Wine 43.9% 0.9 Anheuser-Busch InBev
0.2 Cider/Perry -6.1% 0.9 Brown-Forman Corp
Market share by volume off-trade (%-2011)
Company shares by total volume (%-2011)
Volume growth 2006-11
53.7 Bottled water 28.2% 16.2 Coca-Cola
37.4 Carbonates 0.9% 10.9 Bonafont (bottled water)
6.6 Fruit/Vegetable juices 42.2% 9.8 Pernod Ricard Groupe
0.9 Sports & energy drinks 6.9% 6.2 Ciel (bottled water)
0.6 Concentrates 2.1% 3.5 Pureza Aga (bottled water)
Research shows that
consumers have their
The most popular favourites. It also shows that
beverages in Mexico they are looking for more
according to Millward sophisticated options.
Brown’s BrandZ:
1. Coca-Cola (soft drink)
2. Corona (beer) The perceived health
3. Heineken (beer) benefits of soft drinks and
4. Indio (beer) sophistication of alcohol
5.Tecate (beer) are driving growth in each
category.27
28 Mexico:
A Destination for Growth
Food
AN EXCEPTION IN LATIN AMERICA MODEST GROWTH
+
2.8 +
1.8
% increase % increase
in purchase in food
frequency bundle
& ticket volume
expenditure growth
KWP (2013) Nielsen (2013)
Mexico is one of the few markets in Latin America to
Modest growth, explained by rising prices.
be experiencing an increase in purchase frequency
A 4.4% registered price growth for the period.
and expenditure.
A MARKET BEST UNDERSTOOD
THROUGH ITS Natural phenomena, have hit the country
COMPONENTS
and disease in and affected the
poultry and livestock, prices of staple foods.
KEY
FRESH FOOD CANNED FOOD FROZEN FOOD
The staple segment in the A growing sector associated There is a negative
country when talking about with practicality. Growth of perception of frozen food;
food. It sets the standard, as 2% in volume and 4% in that it is less nutritious,
it is associated with health value (Euromonitor 2012). unnatural, not convenient
and a natural, ‘homely’ taste. Overall a fairly developed and more expensive. COMPETITORS
category, except where fresh
options are cheaper. •Herdez
•La Costeña
•Lala
PREFERRED PRACTICALITY UNDERDEVELOPED •Bimbo
•Kellogg’s
•PepsiCo
•Nestlé
•Mondelēz
(Kraft Foods)
•Sigma Alimentos29
When looking at the food
industry, the first course must
be the country’s culinary habits.
Breakfast OPTIONS TO BUY
“The most important meal of
the day”
37%
Staples such as cereal,
yogurts, fruit or flour-based
products.
(Lunch)
Seen as compensation for
a poor breakfast. The more Mexicans mix traditional and
‘filling’ the better. modern ways of cooking
and eating based on their
Foods such as fruit and associations. Freshness
yoghurt, or more indulgent is directly associated with
options such as biscuits and traditional food, while modern
cereal bars. food equals practicality.
(Afternoon lunch)
Not a formal meal, but a
31%
response to cravings.
Here there is a preference for
crisps, salty snacks and other
indulgent options.
Dinner
The focus here is on taste GROWING
and satisfaction. MODERNISATION
Anything goes, but the With the rise in small,
preference is for home convenient and specialist
cooking and convenience. stores (such as Comercial
Mexicana’s Fresko, which
is focused heavily on fresh
Supper food), modern retailing is
Enjoyed with family or friends. increasingly trying to outpace
the traditional.30 Mexico:
A Destination for Growth
Food
With a rich gastronomic 3 KEY ELEMENTS
heritage, Mexican IN FOOD CHOICE
consumers are very
particular about their
food choices HEALTH
INFORMED
NO
ENERGY TASTE
DECISIONS?
As a result of rising obesity, the Government, civil organisations and even
brands have been taking on the role of educator about ‘healthy eating’.
Consumers have found themselves bombarded by contrasting messages
and a lack of consistent, accurate health and nutrition education.
PICKY DOESN’T MEAN MORE INFORMED A FOURTH DIMENSION: PRICE
-DESIRE-
Thanks to socioeconomic conditions and a
fragmented market, Mexicans remain price sensitive
in most food categories.
BLINDFOLDED APPROACH
Most developed Decisions are based
categories 2012: upon nostalgia. Most
Feel-good: Impress: • Iced tea consumers define
Spoiling myself, taking care Looking good to impress • Chilled desserts home-cooked as the
of me and my loved ones others • Chocolate bars better tasting food.
Indulgent Great taste
categories, but is defined by
not particularly familiarity.
Energy: Risk: healthy.
Energy for optimal Minimising the risk
performance. of becoming ill These characteristics have pushed
two main trends: food practicality
and wellbeing.31
A major trend in Mexico is With a growing economy comes a
busy lifestyle. The lifestyle of Mexicans,
the shift towards a more
particularly in big cities, has changed.
People have acquired more ‘westernised’
traits - there’s less time but more things
practical approach to life
to do.
People crave opportunities that allow
them more time for themselves and their
loved ones.
WHAT IS PRACTICALITY? NEED MORE TIME
TRANSLATED
IN THE MARKET AS:
FOR ME
For older age groups more practical means
SMALL ‘less love’ but younger working consumers,
Growth in categories such as
have a different attitude. They’re open to
canned food, especially small
more options, but still see cooking as a way
portions.
to pamper loved ones.
ENRICHED
PREPARATION
Suppliers have developed ready-to-eat
Products that do more than one options designed to be combined with
thing. For example, yoghurt is fresh food. This combines the desire for
filling, rich in calcium, small and practicality and convenience with the taste
DISTRIBUTION
readily available. of home cooking that Mexicans love.
CLOSE
Convenience stores and small
discounters are the fastest
MORE
PRACTICAL
growing markets. = LESS LOVE (?)
The second trend is seeing food not just as a means to
WELLBEING get energy but as a step towards personal wellbeing
ALL ABOUT With a culture that is not keen on making sacrifices that
BALANCE
are seen as unnecessary, Mexicans prefer searching for
food or habits they considered ‘balanced’.
FOOD WAY THE EASY In the Mexican consumers’ mind a good diet is heavily
associated with social success, beauty and health.
Following global trends
OBESITY + 14% HIGHER 20 MILLION
on beauty and wellbeing,
Mexican consumers aspire
to a better, healthier, more
natural lifestyle. THE BIG ISSUE THAN THE WORLD AVERAGE OVERWEIGHT ADULTS32 Mexico:
A Destination for Growth
Luxury
Latin America, including
Mexico, is the most BILLIONAIRES
11
& UHNW*: ON THE RISE
imbalanced region in Number of
the world
billionaires in
Mexico
(Forbes, via ECLAC)
BUT IT’S NOT JUST ABOUT THE SUPER-RICH 3,240
2013
Mexico’s economic and social landscape has created a wide
spectrum of consumers with enough money to afford luxury goods.
2,900
2012
SOCIO
ECONOMIC Approx no. Approx no. Estimation of total
GROUPS of households of individuals monthly income
Mexico’s number of
billionaires may seem
A/B 1,945,315 7,586,727 + £1,997 small compared to those in
developed countries, but
its population of UHNW*
continues to rise.
C 4,062,276 15,842,871 £1,249-1,996
AND WEALTH IS SPREADING
RETAILERS
ARE FOLLOWING
THE GOLD RUSH
Mexico’s middle and upper socioeconomic groups are spreading Luxury goods retailers have
into traditionally poorer regions. These new inhabitants are been expanding to smaller
characterised by their youth, income and hunger for the products cities.
and services they had in the largest cities.
Their objective? To offer
high income consumers the
opportunity to buy luxury
goods without having to travel
Monterrey
to other cities or even abroad.
Mexico City
Cancun &
Puebla Cozumel *“For historic and cultural
reasons, in Mexico, there
has always been a small
Cabo San Lucas but powerful class of Ultra
High Net Worth individuals
Guadalajara
(UHNW).”
Acapulco33
Consumer confidence in
these segments is what
drives consumption of
luxury goods
51 %
19.9 % Increase
Of people view in
their personal consumer
financial situation credit granted
positively or by commercial
fairly positively. banks.
Strong consumer confidence and a strong performance in
the credit market have given the population the ability to
buy luxury goods.
£2,448.4 23.1%
Sales of MILLION of all luxury goods sold in
luxury goods Latin America, by value.
Euromonitor (2013)
WHAT’S LUXURY? Luxury is not only a sign of
IF YOU’VE GOT IT, social status or trendiness.
FLAUNT IT In the Mexican mindset,
luxury is related to a sense
• QUALITY of personal fulfillment, of
• DISTINCTION distinction.
• NOVELTY
• SUPERIOR SERVICE
TWO TOP TRENDS
YOUNG AND
ASPIRATIONAL PERSONALISATION
Consumption is being driven
It’s not about having an all-
by young professionals. For
luxury wardrobe but choosing
them it’s not about price, but
the right garments to
about the exclusivity and way
suggest distinction.
of life that the brand projects.34 Mexico:
A Destination for Growth
Luxury
Some luxury British
brands in Mexico
Aquascutum
Alexander McQueen
Burberry
Chivas Brothers
(Brand Owner: Pernod Ricard)
Hackett London
Jimmy Choo
(limited assortment, fragances)
Myla London
Neil Barrett
Paul Smith
Stella McCartney
Technology UK Ltd.
The Rug Company
Thomas Pink
William Grant and Sons
(through brands such as Glenfiddich, Hendrick’s and Tullamore Dew).
Limited
number = Less
corporatised
The limited number of British From Smythson’s leather
brands in the country may goods, to Holland &
be a reflection on the wildly Holland’s sporting rifles or
different development the Clothier’s trunks, British
British Luxury industry has Luxury brands have taken
followed compared to its a less corporatised and
French or Italian counterparts, much more local, traditional
who have experienced a and even familiar approach
more aggressive process to commercialisation,
of corporatisation. something which has had
a positive impact on their
international growth.35
To keep in mind…
In and out Mexican adolescence
Mexico is a culture where insert your brand into the Mexico is a developing nation and in many ways it can be
individualism is sometimes group. Sounds complex? It is. understood as an “adolescent” society. Mexicans depend
collectiveness. You can call it heavily on mother or father figures (being either the family or
‘being a tribe’: my group has Mexicans are loyal, even the Government, in many ways) or the opinion of others to
certain conditions that make fanatically so, but you’ve got take decisions. They won’t take risks. Mexicans are open to
it unique and better than the to be assertive and creative. trying new things, as long as they are are sufficiently “strong”
rest. This highlights a strong Your offering has to help the to be considered. This strength comes from references such
difference between ‘us’ and consumer to communicate as brands, price or even its position amongst a given social
‘them’: we are not them. something about his persona, clique to which they aspire.
and about individual or
To be considered “in” means in-group progress. Mexicans rarely save money and are keen to consume. They
to be close, relevant and to try to live life, to live the now and enjoy it as much as they
can. The challenge is to enter these dynamics, to create a
strong offering that helps them on both fronts: to help them
be who they want to be and who they should be in the eyes of
everyone else.
“Meet Mexico:
complex, traditional,
yet changing and
increasingly savvy;
a country willing
to spend.”To find out more, scan this Copyright
code with your smart phone.
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For more information please contact the You can download this publication
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British Embassy in Mexico
Rio Lerma 71
Mexico 06500 DF Legal disclaimer
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T: +52 55 1670 3200 document is accurate, neither UK Trade
E: uktimexico@fco.gov.uk & Investment nor its parent Departments
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