Title: Mexican Retail Market Distribution System
1The Mexican Food Market -NAFTA -Domestic
-Distribution Channels
2NAFTA
- 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
3NAFTA
- 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
4Other Mexicos 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)
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7U.S. Agricultural Export Trends Highlights
- Mexico is the second largest market for U.S.
agriculture. - In 2007 U.S. agricultural forest and fish
exports totaled 13.3 billion.
8Top U.S. Bulk Product Markets
9Top Markets Total Agricultural Forestry and
Fishery Products
10Top U.S. Bulk Product Markets
11Top U.S. Intermediate Product Markets
12Top U.S. Consumer Product Markets
13Why 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
14Food Distribution in Mexico
15Domestic Food Distribution
Producers
National Product
16Domestic Food Distribution
17Domestic Food Distribution
Producers
National Product
Wholesale
Central Market
18Central Market Mexico City
- 30 of total produce is marketed through this
channel - 1881 warehouses for fruits and vegetables
- 338 warehouses for groceries
- Warehousing 122000 MT
- The average monthly trade
- 700000 MT of fruits
- 500000 MT of vegetables
- 170000 MT of groceries
- 8000 MT of fresh flowers
19Central Market in Mexico City
- Area of 300 hectares
- 8 billion dollars yearly turnover
- On a daily basis
- 6000 trucks
- 70000 direct employees
- 300000 visitants
- 50000 vehicles
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22Food Distribution Flow Chart
Producers
National Product
Distributors
Wholesale
Food Service
Central Market
Supermarkets
Food Manufacturing
Fixed Markets
23Fixed Markets (Mercados)
- Popular markets located in older
- neighborhoods
- Housewives would purchase produce
- fruits groceries deli dairy non food
- groceries etc.
24Food Distribution flow Chart
Producers
National Product
Distributors
Wholesale
Food Service
Central Market
Supermarets
Food Manufacturing
Fixed Markets
Moving Markets
25Moving Markets (Mercados Sobre Ruedas or Tianguis)
- Over 2000 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
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27Food Distribution flow Chart
Producers
National Product
Distributors
Wholesale
Food Service
Central Market
Supermarkets
Food Manufacturing
Fixed Markets
Moving Markets
Moms Pops
28Moms and Pops (Tiendas)
- Around 400000 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
29Food Distribution flow Chart
Producers
National Product
Distributors
Wholesale
Food Service
Central Market
Supermarets
Food Manufacturing
Fixed Markets
Moving Markets
Moms Pops
CONSUMER
30Food Distribution flow Chart
Producers
National Product
Distributors
Wholesale
Food Service
Central Market
Supermarets
Food Manufacturing
Fixed Markets
Moving Markets
Moms Pops
Convenience Stores
CONSUMER
31Convenience 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
32Distribution Channels for Imported Foods
33Imported Food Distribution Flow
Food Exporters
Forwarder
Custom Broker
34Food Distribution Imported
Transport to Border
Production Plant
Warehouse or DC
U.S. Agent (Forwarder)
Inspection and Paperwork compliance at customs
Product will go across the border to Mexico
Mexican Agent (Custom Broker)
35Imported Food Distribution Flow
Food Exporters
Forwarder
Custom Broker
Transported by air sea ground trailer or train
36Transportation of Goods
37Internationa 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 Delivere
d 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.c
fm
38Documents 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
39Imported Food Distribution Flow
Food Exporters
Forwarder
Custom Broker
Transported by air sea ground trailer or train
Importers / Distributors
40Imported 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
41Imported Food Distribution Flow
Food Exporters
Forwarder
Custom Broker
Transported by air sea ground trailer or train
Importers / Distributors
Importer
Warehousing Distribution
Retailers
42Importers 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
43Imported Food Distribution Flow
Food Exporters
Forwarder
Custom Broker
Transported by air sea ground trailer or train
Importers / Distributors
Importer
Warehousing Distribution
Retailers
Distribution Centers
CONSUMER
44Review of Supermarket Segment
45Top 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
46Quickview of the Retail Segment
- 12695 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
47Retail Segment
48WALMART Mexico
- 1033 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
- 158000
- Suppliers 12000
- Sales floor capacity
- 22499860 sq ft.
- Seating Capacity 59437
49WALMART Mexico
Club Store Business-Family 84 STORES 27 SALES
Discount -Basic Low Income CD 324 STORES 33
SALES
Supercenters ABCD Classes 141 STORES 28 SALES
High End Targets AB 44 STORES 6 SALES
Dept. Store Targets BCD 52 STORES 5 SALES
Family Restaurant TargetsABC 268 Restaur. 4
SALES
http//www.walmartmexico.com.mx
50- Membership wholesale outlets targeting businesses
and consumers buying large volumes. - 84 Sams Club Stores.
- Highlights
- Sales (millions) US 6000
- Average sales area per store (sq. ft.) 94600
- Customers served (millions) 64
- SKUs 4100 (without perishables)
- Food ( of sales) 48
- No Slotting fees
51- 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.) 53500
- Customers served (millions) 183
- SKUs 49000
- Food ( of sales) 48
- Slotting fees
52- 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.) 97000
- Customers served (millions) 153
- SKUs 90000
- Food ( of sales) 45
53- 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.) 17300
- Customers served (millions) 54
- SKUs 25000
- Food ( of sales) 70
54- 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.jsp
id1
55includes administrative employees 100
except sales
56Comercial 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
57- 2007 numbers
- Sales US65191 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 63500
- Clients 345.5 million
58In 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.
59- 2007 figures
- Hypermarkets 29
- Supermarkets 70
- Super Che (discount stores) 16
- El Super (in California USA) 8
- Employees 25000
- Sales 1000 US Million
- Region Nationwide since 2006
60- 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.
61H-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
62THANK YOU
Marketing Solutions Firm Rep. Food Export Midwest
and Northeast Raul Caballero CEO
President Violeta Picazzo VicePresident Tel.
(5255) 5362-7407 Fax. 5362-6724 raul_at_marketingsol
utionsfirm.com violeta_at_marketingsolutionsfirm.com
www.marketingsolutionsfirm.com