Mexico Food and Drink Report Q1 2013

We believe that Mexico is set to begin transitioning toward a more services-oriented economy, with a stronger private consumer and favourable demographics boosting the country’s economic outlook. Although we are optimistic about Mexico’s growth story over the medium-term, we foresee a slowdown in the coming quarters as external demand moderates, feeding through to weaker consumer confidence and weighing on private consumption. We maintain our view for a slowdown in the coming quarters, forecasting 3.4% real GDP growth in 2013.

Headline Industry Data (local currency)

? 2013 per capita food consumption = +3.4%; forecast to 2017 = +13.9%

? 2013 alcoholic drink sales = +7.9%; forecast to 2017 = +40.9%

? 2013 soft drink sales = +5.2%; forecast to 2017 = +22.6%

? 2013 mass grocery retail sales = +7.0%; forecast to 2017 = +30.1%

Key Company Trends

Diageo Looking to Purchase Jose Cuervo: Paul Walsh, CEO of UK-based alcoholic drinks firm Diageo, recently said that the company is not ready to renew a global distribution deal for Mexican firm Tequila Cuervo La Rojeña’s tequila brand José Cuervo following the expiry of the current agreement in 2013. According to sources close to the matter, Diageo is aiming to take full ownership of the José Cuervo brand and the production facilities. Cuervo is already one of the company’s top-selling ‘strategic brands,’ and the deal would help Diageo increase its presence in the rapidly growing Latin American market.

Mexican Food Retail Moving Upmarket: Having long focused its attentions on the lower end of the price spectrum, Walmart de México has indicated that it is putting more focus on grabbing consumers at the upper end of the market by announcing in September 2012 that it plans to remodel 40 of its Superama outlets. Walmart de México currently operates 89 stores under this banner, which is aimed at middle-tohigh earners; the decision to invest in this part of the retail sector is part of an ongoing trend linked to an increase in confidence in the underlying economy. Walmart de México has previously focused its resources on expanding its discount chain network and has let its rivals gain ground in this lucrative part of the market.

Key Risks To Outlook

Impact From The US: Given the importance of the country’s re-export, or maquila, sector, Mexico continues to remain highly susceptible to external shocks. Mexico’s export growth remains highly dependent on US demand, such that if the US economy grows more strongly than we are currently forecasting, or conversely, starts to deteriorate, this would have a substantial impact.

Table of contents

Chapter - BMI Industry View

Chapter - SWOT Analysis

Mexico Food Industry SWOT

Mexico Drink Industry SWOT

Mexico Mass Grocery Retail Industry SWOT

Chapter - Business Environment

BMI's Core Global Industry Views

Table: Core Views

Latin America Risk/Reward Ratings

Table: Latin America Q Food & Drink Risk/Reward Sub-Factor Ratings (scores out of )

Table: Latin America Q Food & Drink Risk/Reward Ratings

Mexico's Risk/Reward Ratings

Macroeconomic Outlook

Table: GDP Contribution To Growth

Chapter - Industry Forecast

Consumer Outlook

Food

Total Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Prepared/Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, -

Table: Meat Volume Sales, Production & Trade – Historical Data & Forecasts, -

Table: Fish Volume Sales, Production & Trade – Historical Data & Forecasts, -

Table: Oils & Fats Volume Sales, Production & Trade – Historical Data & Forecasts, -

Table: Pasta Volume Sales, Production & Trade – Historical Data & Forecasts, -

Dairy

Table: Dairy Volume Sales, Production & Trade – Historical Data & Forecasts, -

Baked Products

Table: Baked Products & Jam Volume Sales, Production & Trade – Historical Data & Forecasts, -

Drinks

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts

Table: Hot Drinks Volume Sales, Production & Trade – Historical Data & Forecasts, -

Alcoholic Drinks

Table: Alcoholic Drinks Value Sales – Historical Data & Forecasts, -

Soft Drinks

Table: Soft Drinks Value Sales – Historical Data & Forecasts

Table: Soft Drinks Volume Sales, Production & Trade – Historical Data & Forecasts, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts, -

Trade

Table: Food & Drink Trade Balance – Historical Data & Forecasts

Chapter - Food

Key Industry Trends And Developments

Hershey Likely To Focus On Core Brands In Emerging Markets

Bimbo Margins Hit By Capital Spending, But Investors Still Positive

Mexican Confectionery Sector Attracts Interest

Voluntary Labelling As Government Steps Up Attack On Unhealthy Products

Kraft Opens Innovation Centre In Mexico

PepsiCo Focuses On Healthier Snacks

Bimbo Extends Geographical Presence

MegaMex Acquisition Highlights The US's Hispanic Opportunities

Market Overview

Confectionery

Organics

Prepared/Canned Food

Dairy

Meat

Seafood

Chapter - Drink

Key Industry Trends And Developments

Diageo Looking To Acquire Jose Cuervo Tequila Brand

Modelo Deal Focused On Mexican Consumer Story

Coca-Cola Femsa Shares Hitting New Highs

US Producers Keen To Capitalise On Growing Mexican Wine Market

Tequila Sector Looks to Exports

Market Overview

Hot Drinks

Alcoholic Drinks

Soft Drinks And Bottled Water

Chapter - Mass Grocery Retail

Key Industry Trends And Developments

Mexican Food Retail Moving Upmarket

Walmart de México Underperforming

Comerci To Reduce Debt

Oxxo And Walmart de México Battle For Financial Services Market

Chedraui Announces IPO As Expansion Opportunities Take Centre Stage

Femsa To Invest In Retail Following Beer Sale

Market Overview

Table: Structure Of Mass Grocery Retail Market By Estimated Numbers Of Outlets

Table: Structure Of Mass Grocery Retail Market – Sales Value By Format (US$bn)

Table: Structure Of Mass Grocery Retail Market – Sales Value By Format (MXNbn)

Chapter - Competitive Landscape

Key Players

Table: Key Players In Mexico's Food Sector

Table: Key Players In Mexico's Drink Sector

Table: Key Players in Mexico's Mass Grocery Retail Sector

Chapter - Company Profiles

Food

Industrias Bachoco

Grupo Herdez

Gruma

Grupo Bimbo

Drink

Grupo Modelo

Arca Continental

Femsa

Mass Grocery Retail

Walmart de México

Controladora Comercial Mexicana (Comerci)

Soriana

Chapter - Demographic Outlook

Table: Mexico's Population By Age Group, - (‘)

Table: Mexico's Population By Age Group, - (% of total)

Table: Mexico's Key Population Ratios, -

Table: Mexico's Rural And Urban Population, -

Chapter - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter - BMI Food & Drink Methodology

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Mexico (in North America), Mexico (in BRICM)