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The key objectives of this study were to obtain in-depth information regarding the Mexican food industry in the supermarkets of Guadalajara, Mexico, and to acquire information regarding the distribution of products throughout the country. This report presents the findings in seven major categories: products, packaging, pricing and facings, sourcing of products, distribution, opportunities and recommendations.
Information was also gathered regarding the best ways to introduce new food products to the Mexican marketplace. This was obtained through interviews with managers and distributors, and conversations with shoppers. On the whole, Canada has a very good reputation in Mexico and this can be used to Alberta producers' advantage during the introduction of new products.
The supermarket chains visited during June and July 1999 were Aurrera, Gigante, WalMart, and Soriana. All of these were in the Guadalajara area and featured common products and display techniques. Aurrera is owned by Cifra, S.A. de C.V. which is a diversified retailing company based in Mexico City. Soriana is a family-run business that is based in Monterrey. Both Aurrera and Soriana are comparable to Superstore here in Canada in that they all offer both food, clothing and household products under one roof. WalMart is the same as it is here in Canada; however, in Mexico, the stores have supermarkets included in the same space. Gigante is a smaller chain that is located in more residential neighbourhoods. The stores contain only food products and a pharmacy section which is comparable to Safeway stores here.
The majority of the products in the supermarkets in Guadalajara are of national origin (i.e., typical Mexican foods and ingredients). Of the four supermarket chains visited in the area, WalMart offers the most variety of imported products and non-traditional foods. Imported products found in WalMart are Brunswick sardines from Canada, assorted pastas from Italy and the United States, frozen desserts from the United States, ice cream from the United States, frozen vegetables from the United States, dairy products from the United States and France, bread from the United States, meat (mostly beef) from the United States, and bottled water from several different countries. The other three supermarket chains carried some but not all of those products with the smaller, Mexican-owned chain having a stronger tendency to carry the national food products. The non-traditional food products were generally produced by American companies operating in Mexico City.
Product lines vary by region and by taking into account local tastes and trends. The supermarket managers order the products from the distributors or through the head office. Once the products arrive in the supermarket they are then placed on the shelves and given facings based on sales figures. Therefore, the products that have excellent sales figures get the prime positioning regardless of whether they are national or imported.
A growing trend in the Mexican supermarkets is the private label. This was evident in all four supermarket chains visited. These products are advertised as equal quality for lower price and they are given the same number of facings as brand name products with similar sales figures. This move has had some effect on consumption of the brand name products, but this effect has been minimal.
Boxed items are becoming more popular for products that have become established in the market. It is common to find that a product has a plastic wrapper inside the box which is used to protect the product from the humidity in the area. Product packaging for value-added products is generally colourful and has a nationalistic tendency to it. Colour schemes for many packages include a combination of red, green and white, which are the colours of Mexico's flag.
Products that require refrigeration or freezing are increasing in popularity in the Guadalajara market. To accommodate the limited freezer and/or refrigeration space that exists in most households, companies have developed smaller package sizes than what is common in Canada. For example, frozen french fries are sold in bags as large as 500 g rather than the 1 kg bags found in Canada. Other products which require changes in packaging size because they are being introduced into the market are pasta, snack foods, and some cereals. These smaller sizes encourage trial and repeat purchases.
Meats are available in prepackaged, sealed packages as well as individual cuts. The individual cuts can be purchased at the butcher counter where the customer chooses which piece of meat they want. In some locations, there is beef from the United States that is prominently displayed as imported.
Overall, products in the Guadalajara market are priced lower than comparable products in Canada. This reflects the lower average wage, earning power and standard of living in Mexico as well as the class structure. Lower pricing of the products is possible because most of the products are produced nationally and are, therefore, less expensive to transport than the imported products which face higher costs of transportation as well as tariffs. Because of the uncertainty of immediate success in the Guadalajara market, most imported products are test marketed prior to launching of the product and, therefore, perform well once placed on the shelves. This product testing is also responsible for slight increases in the price of the product.
When imported products are competitive with nationally produced products, they are given facings equal to the national products and are placed on the shelves right next to the national products. To reach this point, however, the imported product has received a great deal of paid publicity through advertisements, trade shows, and trial testing, and has been widely accepted in the market.
The trial testing process is twofold. The first part consists of taking the prospective product into the supermarkets and encouraging customers to taste the product as they are passing. This first part is used to obtain feedback from the customers regarding taste of the product. As trial testing continues, and the product is introduced to the market, the process moves into the second step which is promotion of the product.
Products are brought into Guadalajara from all over Mexico, although most value-added products are produced in Mexico City. As well, there are some imported products from Europe, the United States, South America, and Canada. Products that are imported into the Mexican market from abroad must comply with the standards set by the Mexican government on Spanish labelling.
A large number of American companies have begun producing their products in Mexico. These large companies have found that this solves the problem of finding freight forwarders or customs agents for the process of clearing customs and eliminating tariffs. It also provides the company with a high level of market presence that is essential for all new products in the Mexican market.
Mexico is divided into regions that are covered by the three major cities. The north is covered through Monterrey, the west/southwest is covered through Guadalajara, and the central/south/east is covered through Mexico City. Most goods can be imported into Guadalajara, Mexico City or Monterrey depending on the region. Freight forwarders will arrange a customs broker to take the goods through Mexican customs and the goods will then be forwarded to the client.
Guadalajara is typically the most difficult trial market in Mexico for food products because the customer base is more traditional in regards to product selection. Therefore, once a product is proven to be popular in Guadalajara it will then be placed throughout the country. Supermarkets generally use their own importer and most imported products are imported into Mexico City and then transported from there depending on the region. This is done because the large supermarket chains have head offices in Mexico City.
Mexicans only believe that a company is dedicated to doing business if they have an employee working on promotion of the product in Mexico full-time. This local representation for the products is essential for the company to maintain continuous visibility within the marketplace.
Recent trends in the Mexican market are in the following three categories: Home Meal Replacement, frozen desserts, and cereal and crackers. The Home Meal Replacement category is generally in the typical Mexican food line, for example, flautas and enchiladas. However, there is growing acceptance of the quick snack food market as well, for example, granola bars and deli foods. The frozen dessert category is almost entirely imported and consists of frozen cakes and pies, and ice cream in flavours that have been chosen to reflect Mexican tastes. The cereal and crackers category consists of both nationally produced and imported products. Other areas that may provide opportunities for Alberta producers are powdered milk and meat (specifically beef and pork).
It is important to note that there are two categories that are already saturated. Even though there are some products that are currently imported into the bread category, the market is dominated by BIMBO. Grupo Industrial Bimbo, S.A. de C.V. produces and sells a large variety of bakery products as well as appetizers, sweets, chocolates, jams and confections. The other category that is saturated is the bottled water market which has products from Mexico and many other parts of the world.
As Mexico continues its recovery from the peso crisis in 1994/95, more disposable income is becoming available for the consumer. It is this disposable income that foreign producers are hoping to capture with their new products. Mexican people are open to the idea of new products and will generally try advertised new products at least once.
It was recommended by many of the supermarket managers and distributors that Albertans wishing to export into Mexico should create and maintain a strong market presence. This can be done by providing permanent representation in Mexico or by establishing the product with frequent and regular visits to the market. As well, Canadian products are not well known in Mexico; therefore, it is essential for the product to be displayed in trade shows like ANTAD (in March in Guadalajara) and for the product to be trial tested in the Mexican market.
Because Mexican tastes are different from those in the rest of North America, it is important to study the alterations that might have to be made to the product. For example, Mexicans are known to enjoy sweet foods and flavours that are familiar to them. As well, anything that is fruit flavoured should originally be in the flavour of a locally grown fruit such as mango or chamoy and later expanded to include other flavours.
Canada has a very favourable reputation in Mexico and it was suggested by many people that the value-added products exported to Mexico should have a maple leaf or the expression "Made in Canada" included on the packaging. This, combined with aggressive promotion strategies would be some of the first steps to creating knowledge of Canadian products in the Mexican market.
Relationship marketing is the most important aspect of establishing the product in the Mexican market. Without a good relationship with the managers and distributors, success in the market becomes increasingly difficult. The supermarkets in Guadalajara provide a challenge for those Alberta companies serious about exporting into the region; however, once the knowledge about the Guadalajara market and the way it works is gained, the same principles apply to the rest of Mexico. Overall, this is a market full of promise for those willing to make the long-term commitment.
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