Food Processing Ingredients Mexico

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY

Required Report - public distribution Date: 3/16/2011 GAIN Report Number: MX0323

Mexico Food Processing Ingredients Food Processing Sector Report 2010

Approved By: Erik W. Hansen Prepared By: Alice Gibbons Report Highlights: 2010 showed majorsigns of recovery for Mexico across all sectors of the economy with the country‟s annual GDP growing by 5.1 percent. Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends such as health and wellness. Full recovery of sales in processed foods may not happen for several months though retail sales of most processed foodcategories increased by approximately 7 percent in 2010. Some of the categories with the fastest recovery rates are canned foods, ready-to-eat meals, and frozen processed foods. Processed food categories that remain stable in Mexico, despite economic downturns, include products used for food preparation in the home known as “meal solutions” such as canned food, rice, noodles, sauces, dressings, andcondiments.

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Executive Summary: Despite recent setbacks, the processed foods industry in Mexico remains a strong and growing market and, like other industries, is now recovering from the recent economic crisis. Recent and current challenges to the industry include: 1) the economic crisis; 2) the influenza A H1N1 (swine flu) outbreak; 3) the Government‟s fightagainst obesity; and 4) higher prices in the sector. The economic downturn in 2009 forced a change in consumer habits as a result of many people being out of work and forced to ration their food expenses. Products affected most included “impulse and indulgent” snacks such as ice-cream and packaged desserts,, healthier processed food options, convenience “on-the-go” goods, frozen desserts, premiumcanned/preserved foods and gourmet food preparation goods including sauces, dressings, and condiments. Aside from the economy‟s impact on the processed foods industry in Mexico, the swine flu oubreak in the spring of 2009 also affected sales, with foodservice closing down for weeks in various major cities, including Mexico City. On the other hand, the peak of the outbreak provoked panic purchases,especially in larger cities, resulting in large increases in sales of many processed foods categories, namely canned and preserved foods, sauces, dressings, and condiments. Another obstacle facing the industry is the obesity crisis, with the Mexican government taking measures to address the issue. Many food categories face the risk of reduced sales as a result of Mexican consumers changing theirhabits to eating healthier, which means less consumption of processed snack foods and traditional products known to be high in calories, fat, and sodium. However, certain processed foods remain in high demand, such as canned products, since they maintain a reputation as a convenient and cost-efficient means for preparing quick and nutritious meals. In recent times, the processed foods sector inMexico, like many other sectors, has also been faced with higher unit prices resulting from a mixture of newly approved taxes, increasing raw material prices, and energy and value-added innovations required to stay competitive. These factors have directly affected processed food sales, more so in the foodservice sector than at the retail point-of-sale, with a reduction in consumers‟ frequency to dineoutside of the home. On a positive note, 2010 showed major signs of recovery for Mexico across all sectors of the economy with the country‟s annual GDP growing by 5.1 percent. In addition, consumer confidence went up from 77.0 points in 2009 to 89.0 points in 2010. Mexican society is returning to its pre-economic crisis lifestyles and buying non-basic goods again and returning to major trends...