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.
• The processing sector which imports the majority of U.S. pork considers transportation, in addition to price, to be a leading consideration when choosing between U.S. and domestic raw materials. 
• Mexican processors are beginning to produce more convenient and healthy products in response to women entering the workforce and a growing nutrition consciousness among consumers.
• Mexico showed a dramatic 65% increase in U.S. pork imports in 2004 in response to reduced beef consumption following the BSE outbreak. These levels will not be sustained over the short term and growth is expected to moderate.
• As the lower income population move into the middle class, they will seek inexpensive meat proteins, such as pork. Nevertheless, this demographic of consumers will remain price sensitive and will switch to alternative products when prices increase.
• 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. pork industry.

• Despite a decrease in pork self-sufficiency, the large producers of Mexico’s pork sector are consolidating, modernizing and becoming more vertically integrated.
• As the trend towards vertical integration continues, local product quality and consistency is expected to improve resulting in stiffer competition from domestic product.

Market Penetration

• Mexican meat processors use U.S. pork to manufacture hams, hotdogs, sausages and other meat products that are sold primarily through supermarkets and food service outlets.
• The largest processors in Mexico using U.S. pork also export products to nearby markets.
• There are medium size, but fast growing processors, as well as regional supermarket chains that are not aware of the attributes of U.S. pork—representing new export opportunities.
• Many hotel and restaurant operations are not yet convinced of the profitability of serving pork.

Product/Industry Image

• Consumers most associate U.S. pork with being convenient and easy to prepare.
• Many consumers perceive pork, independent of origin, as not being clean or safe to eat—this mitigates greater consumption growth rates.
• Mexican pork is more likely to be associated with positive attributes (safe to eat, delicious, natural, healthy, nutritious and fresh) than pork imported from other countries, including the U.S.

Operating/Marketing Environment and Trade/Distribution Issues

• A large percentage of pork (mostly domestic) is marketed through traditional wet markets and small butcher shops, which are characterized by poor sanitary and health conditions. This poses challenges to marketing U.S. pork given the poor sanitary and health environments.
• Low skilled and poorly trained personnel (butchers, salesmen and waiters) working in Mexico’s meat industry constrain the market development of U.S. pork products.

Access Conditions

• Mexico has excellent market access, but local producers are applying significant political pressure on their government to impose trade restrictions.
• Thus far, efforts to impose a safeguard or anti-dumping duties have failed, but periodically the government has more strictly enforced its import requirements at the border.
• 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:

• Protect the excellent market access that the U.S. pork industry enjoys in Mexico by strengthening relationships with key stakeholders; developing and sharing position papers with decision makers, and obtaining intelligence on developments potentially detrimental to the interests of the U.S. pork industry in Mexico.
• Identify aggressive, middle sized processors to demonstrate the availability and profitability of U.S pork in the production of their processed meat products in order to further penetrate the market.
• Focus more marketing attention at the point of sale so that U.S. pork is properly presented, labeled, origin identified and merchandized.
• Develop direct-to-customer messages to counter negative consumer perceptions that pork, independent of origin, is not clean or safe to eat, and to position U.S. pork as being fresh due to how it is handled, processed and shipped to the market.

USMEF Export Forecasts: