The Mexican Food Market:

-NAFTA
-Domestic
-Distribution
Channels
 NAFTA
•Mexico, Canada and USA signed a Free
Trade Agreement that went in effect in 1994
Some agricultural products became duty
free immediately and others under a 5, 10
and 15 year phase out under a quota
administration.
•Both US and Mexico Agricultural Exports
increased as a result of NAFTA
2
 NAFTA
•Each country has increased its export
trading in different segments
•Some industries have gain growth and
others have been hurt by NAFTA
•In the three countries, there has been
mixed opinions of NAFTA. The numbers
have shown results to each of the countries
in different segments
3
 Other Mexico’s FTAs
 Mexico is currently the country with most free-trade agreements in the world. The
free-trade agreements in force are (ordered by date):

 North American Free Trade Agreement (NAFTA)) (1994): Canada and the United
States.
 Colombia and Venezuela, also called G-3 Free-Trade Agreement (1995)
 Costa Rica Free-Trade Agreement (1995)
 Bolivia Free-Trade Agreement (1995)
 Nicaragua Free-Trade Agreement (1998)
 Chile Free-Trade Agreement (1999)
 EU (European Union) Free-Trade Agreement (2000)
 Israel Free-Trade Agreement (2000)
 Mexico, Guatemala, El Salvador and Honduras, also called TN Free Trade
Agreement (2001)
 Iceland, Norway, Liechtenstein, and Switzerland, also called AELC (Asociación
Europea de Libre Comercio) Free-Trade Agreement (2001)
 Uruguay Free-Trade Agreement (2004)
 Japan Free-Trade Agreement (2005)
 Mercosur Free-Trade Agreement (ratification pending)
5
 U.S. Agricultural Export
Trends & Highlights
US Ag. Exports to Mexico
14,000
13 3 2 2

 Mexico is the second 12,000

1154 1

largest market for U.S. 10,000 10 0 10

agriculture.
9038
8363
8,000

 In 2007 U.S. agricultural, 6,000

forest and fish exports 4,000 4200
4864 50 3 8
4 575

totaled $13.3 billion. 3 16 5 3 0 4354 0 3 3 14 8 2986

3636
3090
2,000 19 58 2244 2381
16 8 0
4 59 513 600 56 0
397
0 75 70 68 61 59

2003 2004 2005 2006 2007

Total Bulk
Interm ediate Consum er-Ready
Forest Products Fishery
 Top U.S. Bulk Product Markets

$6,000,000

$5,000,000
MEXICO
$4,000,000 CHINA
JAPAN
$3,000,000
TAIWAN

$2,000,000 KOREA
EGYPT
$1,000,000

$0
2002 2003 2004 2005 2006 2007
Top Markets: Total Agricultural, Forestry
and Fishery Products

$18,000,000
$16,000,000 Mexico
$14,000,000 Canada

$12,000,000 Japan
China
$10,000,000
Korea
$8,000,000
Taiwan
$6,000,000 Egypt
$4,000,000 Germany
$2,000,000 United Kingdom

$0
2002 2003 2004 2005 2006 2007
 Top U.S. Bulk Product Markets

$6,000,000

$5,000,000
MEXICO
$4,000,000 CHINA
JAPAN
$3,000,000
TAIWAN

$2,000,000 KOREA
EGYPT
$1,000,000

$0
2002 2003 2004 2005 2006 2007
Top U.S. Intermediate Product Markets

$3,500,000

$3,000,000

$2,500,000
Mexico
$2,000,000 Canada

$1,500,000 China
Japan
$1,000,000

$500,000

$0
2002 2003 2004 2005 2006 2007
 Top U.S. Consumer Product Markets

$12,000,000

$10,000,000
Mexico
$8,000,000 Canada
Japan
$6,000,000
Korea

$4,000,000 Russia
China
$2,000,000

$0
2002 2003 2004 2005 2006 2007
12
 Why the U.S. Market In Mexico
Will Continue to Grow

 Economic Growth – higher per capita incomes

 (middle class growing and poverty being reduced)
 Demographics - growth in middle class
 Growing urban centers = increase buyers
 Improvements in transportation= distribution
 Changing eating habits = convenient oriented
 Growth in supermarkets = increase points of sale
 Growth tourism and restaurants = + consumers
 Growth in processed food industry = more
intermediate product needs
 NAFTA = more efficiency in production
Food Distribution in Mexico
Domestic Food Distribution
Producers

National Product
Domestic Food Distribution
Domestic Food Distribution
Producers

National Product

Wholesale

Central
Market
Central Market Mexico City

• 30% of total produce, is

marketed through this
channel
• 1,881 warehouses for
fruits and vegetables
• 338 warehouses for
groceries
• Warehousing: 122,000 MT

The average monthly trade:

700,000 MT of fruits
500,000 MT of vegetables
170,000 MT of groceries
8,000 MT of fresh flowers
 Central Market in Mexico City

 Area of 300 hectares

 8 billion dollars yearly
turnover

 On a daily basis
 6,000 trucks
 70,000 direct employees
 300,000 visitants
 50,000 vehicles
20
21
 Food Distribution Flow Chart
Producers

National Product

Distributors Wholesale

Central Food
Supermarkets Food
Market Service
Manufacturing

Fixed
Markets
Fixed Markets (Mercados)

•Popular markets located in older

neighborhoods
•Housewives would purchase produce,
fruits, groceries, deli, dairy non food
groceries etc.
 Food Distribution flow Chart
Producers

National Product

Distributors Wholesale

Central Food
Supermarets Food
Market Service
Manufacturing

Fixed Moving
Markets Markets
Moving Markets (Mercados Sobre
Ruedas or Tianguis)

•Over 2,000 moving markets around the country

•Housewives from all income levels like to shop there for
the freshest produce, imported fruits and other groceries
•You are able to find fish, meats, deli-meats, dairy
•They serve Mexican fast food as well
•They appear in specific streets certain day of the week
•in a periodic basis
 Food Distribution flow Chart
Producers

National Product

Distributors Wholesale

Central Food Food

Supermarkets Market Service Manufacturing

Fixed Moving Mom’s &

Markets Markets Pop’s
Mom’s and Pop’s (Tiendas)
 Around 400,000 in Mexico
 The “old convenience store” in the distribution
chain
 All income classes have a store around the
corner and they will purchase many things
from these stores when they are running out
of supplies

28
 Food Distribution flow Chart
Producers

National Product

Distributors Wholesale

Central Food
Supermarets Food
Market Service
Manufacturing

Fixed Moving Mom’s &

Markets Markets Pop’s

CONSUMER
 Food Distribution flow Chart
Producers

National Product

Distributors Wholesale

Central Food Food

Supermarets Market Service Manufacturing

Fixed Moving Mom’s & Convenience

Markets Markets Pop’s Stores

CONSUMER
Convenience Stores

 Fastest Growing
retail segment
 OXXO, Extra,
Soriana, 7
Eleven
 Distribution still
a problem for
suppliers
 Little imported
food products
 Only the ones
distributed by
an importer
Distribution Channels for
Imported Foods
Imported Food Distribution Flow
Food Exporters

Forwarder

Custom Broker
Food Distribution – Imported
Imported Food Distribution Flow
Food Exporters

Forwarder

Custom Broker

Transported, by air, sea, ground: trailer or train

Transportation of Goods
Internationa Commerce Terms (Incoterms)

COUNTRY EXPORTS EXW Exworks Delivery Plant

DEPARTURE PORT FCA Free Carrier Delivery to Carrier
FAS Free Along Ship Deliv. Dep. Port- Ship
BORDER FOB Free on Board Delivery on Board
CFR Cost and Freight Freight Costs included
ARRIVAL PORT DES Deliver Ex Ship Delivered on Ship
COUNTRY IMPORTS CIF Cost Insurance Freight Self-explained
DAF Delivered at Frontier Self – explained
DEQ Deliver Ex Quay (Duty Paid)
CPT Carriage Paid To Vendor pays transp.
CIP Carriage and Insurance Paid To

http://www.foreign-trade.com/reference/incoterms.cfm
 Documents to import products
BASIC PAPERWORK AND COMPLIANCE FOR FOOD EXPORTS
•COMMERCIAL INVOICE
•CERTIFICATE OF ORIGIN (NAFTA IF IT APPLIES)
•CERTIFICATE OF FREE SALE
•RETAIL, NOM-51 PRODUCT LABELING REGULATION
PAPERWORK FOR PERISHABLES
•ANIMAL USDA INSPECTION CERTIFICATE
•VEGETABLE USDA PHITOSANITARY
PAPERWORK FOR SPECIFIC PRODUCTS (i.e. dairy, fish)
•PHYSICAL AND CHEMICAL ANALYSIS
•MICROBIOLOGICAL
•MEXICAN OFFICIAL NORM ( NOMS)
EACH SPECIFIC PRODUCT WILL VARY AND YOU WILL BE ABLE TO
FIND OUT WHAT PAPERWORK IS NEEDED WHEN THE CUSTOM BROKERS
CLASSIFIES THE PRODUCT THROUGH THE TARIFF 38
 Imported Food Distribution Flow
Food Exporters

Forwarder

Custom Broker

Transported, by air, sea, ground: trailer or train

Importers / Distributors
Imported Food Distribution Flow

Importers / Distributors
•Import – Warehouse – Distribute
•Take ownership of the product
•Have their own trucks to distribute
•Direct relationship with retailers
•Promote in partnership with exporters
•Own Sales & Merchandising force
 Imported Food Distribution Flow
Food Exporters

Forwarder

Custom Broker

Transported, by air, sea, ground: trailer or train

Importers / Distributors Importer Warehousing

& Distribution

Retailers
Importers with small infrastructure

Importers / No infrastructure
•Import – Negotiate with retailers
•Take ownership of the product
•Have small sales force
•Will contract public warehousing
•Will contract product distribution
•Promote in partnership with exporters
 Imported Food Distribution Flow
Food Exporters

Forwarder

Custom Broker

Transported, by air, sea, ground: trailer or train

Importers / Distributors Importer Warehousing

& Distribution

Distribution Centers
Retailers

CONSUMER
Review of Supermarket Segment

44
Top 10 Retail Chains in Mexico
No. Stores *Sales 2007

1 Walmart Mexico 223.4 659

2 Soriana 67.1 357
3 OXXO / Femsa 40.1 5441
4 Comercial Mexicana 38.9 184
5 Liverpool 38.9 64
6 Sanborns 33.8 354
7 Gigante 23.9 287
8 Chedraui 21.0 134
9 Home Depot 20.6 64
10 COSTCO 20.3 30
*Billion pesos
Source: MVI Economic Consultants
Quickview of the Retail Segment
 12,695 Retail Outlets in
Mexico (ANTAD 2008)
 Jan-April 2008, 8.5% sales
increase vs. 2007 same
number of stores
 Market Share:
 Wal-Mart, OXXO, Soriana,
Comercial Mexicana and
Liverpool control 19.6% in
2007
Retail Segment

47
 WAL*MART Mexico
 1,033 units in 176 cities including all
formats: hypermarkets, supermarkets,
apparel stores and restaurants
 Market Capitalization Value

20.2 billion dollars

 Sales 2007

22.8 billion dollars

 Employees:

158,000
Suppliers: 12,000
 Sales floor capacity

22,499,860 sq ft.
 Seating Capacity: 59,437
48
 WAL*MART Mexico

Club Store Discount -Basic Supercenters

Business-Family Low Income C,D ABCD Classes
84 STORES 324 STORES 141 STORES
27% SALES 33% SALES 28% SALES

High End
Dept. Store Family Restaurant
Targets AB Targets:ABC
Targets B,C,D
44 STORES 268 Restaur.
52 STORES
6% SALES 4% SALES
5% SALES

http://www.walmartmexico.com.mx
 Membership wholesale outlets targeting businesses
and consumers buying large volumes.

 84 Sam's Club Stores.

 Highlights
 Sales (millions): US $ 6,000
 Average sales area per store (sq. ft.): 94,600
 Customers served (millions): 64
 SKUs: 4,100 (without perishables)
 Food (% of sales) : 48%
 No Slotting fees
 Semi wholesale and austere discount stores
offering a limited assortment of basic merchandise,
mainly food and housewares.

 There are 324 Bodega stores.

 Highlights
 Sales (millions): US $ 7.3
 Average sales area per store (sq. ft.): 53,500
 Customers served (millions): 183
 SKUs: 49,000
 Food (% of sales) : 48%
 Slotting fees
51
 Supercenters providing the widest merchandise
assortment, from groceries and fresh to apparel and
general merchandise.

 141 Wal-Mart Supercenters

 Highlights
 Sales (millions): US $ 6.2
 Average sales area per stores (sq. ft.): 97,000
 Customers served (millions): 153
 SKUs: 90,000
 Food (% of sales) : 45%
 Supermarkets located in residential areas of Mexico
City and its surroundings with a focus on quality and
convenience.

 64 Superama supermarkets.

 Highlights
 Sales (millions): US $11.5
 Average sales area per store (sq. ft.): 17,300
 Customers served (millions) : 54
 SKUs: 25,000
 Food (% of sales) : 70%
 Holding Company for Comercial Mexicana
 4th Retailer in sales in the Mexican market
 Partners at 50% for the COSTCO clubs in Mexico
 64.9% of sales are food products
 285 Stores in different formats, nationwide
presence
 For more information:
http://www.comerci.com.mx/comerci/jsp/Comerci.j
sp?id=1
54
 General Information CCM
Sales Number
Sales Area Sales Area Emplo Customers
(thousands Units of
(m2) (sq. ft.) yees (thousands)
of Ps.) products
Comercial
12,526,754 53 322,305 3,469,254 8,112 82,055 55,000
Mexicana
Bodega
6,519,998 39 207,185 1,969,621 4,290 45,204 30,000
C.M.
Mega 18,289,526 69 627,115 6,750,200 12,868 89,337 60,000

Sumesa 861,070 14 11,931 128,424 963 12,928 8,000

Costco
10,918,141 30 329,277 3,544,305 9,179 37,989 3,500
***
California
Restauran 798,675 71 16,001* 3,484 10,062
ts
Others +
Al Precio & 495,002 9 13,997 150,663 1828 1,716 14,400
City Market
32,993
Total 50,409,166 285 1,123,924 12,097,806 223,628
**
*seats
**includes administrative employees
***100% except sales 55
 Comercial Mexicana Formats

 Mega: 69 hypermarkets, ABCD clients. 36.3% of sales

 Comercial Mexicana: 53 stores, AB clients, 23.8% of
sales
 Bodega: 39 discount stores, CD clients, 12.9% of sales
 Costco: 30 club stores, AB clients, 21.7 of their sales
 Sumesa: supermarkets in residential areas, AB clients,
14 stores, 1.7% of their sales
 California Restaurants: family restaurant chain, 71
stores, 1.6% of their sales
 Al Precio: 8 small discount outlets, located in low income
areas
 City Market: 1 high end gourmet supermarket, organic
section, fine foods type of store
 2007 numbers:
 Sales : US$65,191 million
 Stores: 257 (+198 Gigante
stores for 2008)
 Formats:
 163 Hypermarkets
 71 Soriana Mercado (discount)
 23 City Club (club stores)
 130+ Super City (convenience
stores franchised)
 Sales Space: 1.8 million m2
 Employees: 63,500
 Clients: 345.5 million
57
In 2007, Gigante sold
rented a total of 200
stores to Grupo Soriana.

After this transaction,

Soriana became the
second largest retailer
after Wal-mart.

Gigante kept control of

their other companies:
Toks Restaurants, Office
Depot and Radio Shack

Gigante owners continue to own the real estate

and they are renting the stores to Soriana.
 2007 figures:
 Hypermarkets : 29
 Supermarkets : 70
 Super Che (discount
stores): 16
 El Super (in California
USA): 8
 Employees: 25,000
 Sales : 1,000 US$
Million
 Region: Nationwide
since 2006
 Carrefour retired from
the Mexican market in
2005. Its 29 stores
were sold to Grupo
Chedraui. Chedraui
became then the 8th
retailer in Mexico and
gained nationwide
presence with this
purchase.
H-E-B
 HEB represents 300
stores in Texas and
Mexico
 Stores in Mexico
 Hypermarkets : 8
 Supermarkets : 11
 Recognized in Northern
Mexico as an upscaled
Supermarket.
 Corporate offices located
in Monterrey Mexico
 THANK YOU
Marketing Solutions Firm
Rep. Food Export Midwest and Northeast
Raul Caballero, CEO President
Violeta Picazzo, VicePresident
Tel. (52+55) 5362-7407
Fax. 5362-6724
raul@marketingsolutionsfirm.com
violeta@marketingsolutionsfirm.com
www.marketingsolutionsfirm.com