USMEF Strategic Market Profile

Mexico

Market Trends and Growth Potential

• Mexico shows solid economic and demographic fundamentals: 3-4% economic and 1% population growth over short to medium term. However, the ratio of beef imports as a percent of total beef consumption peaked at 22% in 2002 compared to an estimated 14.8% in 2006.
• There is growing interest by some supermarket chains to merchandise case-ready products to appeal to time-starved consumer preferences for convenience products.
• Continued consolidation within and investment in Mexico’s supermarket sector will result in a greater percentage of customers purchasing meats through modern retail outlets rather than at wet markets and local butcher shops, which will be advantageous for the U.S. beef industry.
• All major retailers in Mexico have introduced private labels which are generally sold at a discounted price relative to other branded products.
• In addition to their consumer base, club stores such as Costco and Sam’s sell to hotels and restaurants as well. In the case of Costco, 100% of their beef is from the United States.

• Mexico cannot meet its future demand for beef and beef products as average annual production has increased only 1.8%. Moreover, there has been limited investment in the cattle and beef sectors due to rising imports, tight credit and low profitability.
• Uruguay was recently approved to export beef to Mexico, although USMEF does not expect it to be a major competitor in the next 1-3 years. Nevertheless, Uruguay exports both grass and grain fed beef which is less expensive and comparable in quality.
• Increasing the U.S. beef industry’s current market share may prove difficult if U.S. beef prices increase due to U.S. energy policies and if potential new suppliers from South America are approved to ship to Mexico.

Market Penetration

• The penetration of Mexico’s supermarket sector, through which 70% of U.S. beef is sold, is only partial because the majority of outlets are in the principle cities of Monterrey, Guadalajara and Mexico City. This represents significant untapped regional market opportunities.
• There may be significant new market opportunities in Mexico’s large industrial catering sector, which has been largely untapped.

Product/Industry Image

• U.S. beef is appreciated for its tenderness, color and ease of preparation.
• Mexican consumer perceptions about the fat content of beef represents the greatest constraint contributing to a lack of purchase.
• Many Mexican consumers perceive U.S. beef as not fresh, which limits product purchases.

Operating/Marketing Environment and Trade/Distribution Issues

• The majority of beef (mostly domestic) is marketed through traditional wet markets and small butcher shops, but they are characterized by poor sanitary and health conditions. These are not channels through which U.S. beef can be promoted.
• Low skilled and poorly trained personnel (butchers, salesmen and waiters) working in Mexico’s meat industry constrain the market development of U.S. beef products.

Access Conditions

• Mexico has very good market access compared to other foreign markets.
• Six products, including the small intestine, remain prohibited due to BSE concerns.
• Anti-dumping duties on some products from some U.S. companies remain in effect.
• Periodically more stringent enforcement of import requirements surface, which has delayed the crossing of products into Mexico.
• Review of Mexico’s main regulation pertaining to the commercialization of meats, and recent passage of Mexico’s new National Livestock Law, could harm the U.S. beef industry depending on what revisions and provisions are adopted and how they may be implemented.

Import and market share data is based on import data of Mexico (from GTA), and U.S. export data is from the U.S. Department of Commerce, Trade Census Bureau.

Long Term Strategy:

• Maintain and improve market access through strengthening relationships with key stakeholders, both in and outside government; developing and sharing information related to policy positions to key decision makers; and maintaining good intelligence about developments with the potential to impact the interests of the U.S. beef industry in Mexico.
• Focus more marketing attention at the point of sale, both at retail and HRI, so that U.S. beef is properly presented, labeled, origin identified and merchandised.
• Identify and begin working with untapped, promising sectors, such as regional supermarket chains, meat boutiques/butcher shops and catering companies to further penetrate Mexico’s beef market.
• Develop direct-to-consumer messages that position U.S. beef as the tastiest, cleanest, and safest beef product in the market, and counter consumers’ concerns about the fat content and lack of freshness of U.S. beef.

USMEF Export Forecasts: