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Mexico – Bigger than BRIC?

The Greatest SubTitle Ever Belongs Here, For Sure.

By: Greg Seminara, Export Solutions
Topics: Walmart,HEB, Costco

“BRIC” nations of Brazil, Russia, India , and China hog most of the spotlight today. This attention is warranted, but many companies forget Mexico, a giant market located just across the border from California and Texas, the two largest USA states. Export Solutions believes that visibility in Mexico represents a more important strategic imperative for most companies than that long road to BRIC success.

Success in Mexico Builds your USA business
The basic concept is that by building your brand in Mexico, you will accelerate brand development for your brand with USA based Hispanic consumers. When Mexicans migrate to the USA for “career” purposes, they will already be familiar with your brand through exposures to your brand in Mexico. The USA Census bureau confirmed that Hispanic population exceeds 55 million and could total 73 million by 2030. Hispanic population accounted for 50 % of USA population growth since 2000. Approximately 65 % of the USA Hispanic population maintains Mexican roots. These data points reflect official population statistics and do not count up to 10 million Hispanics that may be living illegally in the USA.

Mexico - 12th largest Country in the World
Mexico’s population totals 125 million, the 12th largest in the world. The GDP ranks 15th worldwide, larger than the economies of Italy,Canada, or Spain. Economic growth in Mexico is stimulated by USA investment. Many companies establish manufacturing facilities in the north of Mexico to supply the USA market. Mexico can be divided into four markets: Affluent North: Shares many common bonds with Texas. Monterey is major city. Mexico City: Second largest city in the world. The economic and political capital. Tourist Zones: Cancun, Cozumel, Puerto Vallarta Poor South: High unemployment, low spending power

Synergies with Global Retailers
Walmart is the largest retailer in Mexico, with sales of approximately 30 Billion US Dollars through almost 2,200 supermarkets and club outlets. Costco and HEB, two other top ten USA retailers also boast a measurable presence in Mexico. All three USA based retailers maintain high profile programs to facilitate the movement of USA sourced products to their Mexican outlets.

Key Issue – Currency Instability
The peso has devalued several times in the last 10 years. In 2009, the peso dived from roughly 10 pesos to $1 US dollar to approximately 16 pesos to the dollar. As a result, brands sourced from the USA and Europe command a significant premium versus their local competitors. Ultimately, most successful marketers end up producing in Mexico to reduce currency exposure and take advantage of lower labor costs in Mexico.

Key Issue – Partner Identification
Export Solutions distributor database covers more than 140 Mexican distributors. Extensive due diligence is required as most larger brands maintain direct sales forces, leaving distributors to handle imported brands and those with lower sales rotation. Financial complexities of the last several years have strained some manufacturer –distributor partnerships.

Key Issue- Investment in Brand Support
Many companies recognize the potential of Mexico, but are stingy when it comes to investment in brand support and trade incentives. Mexico is a country of 125 million people and marketing spend levels are relatively efficient compared to other countries. Winners make significant investments in Mexico consistent with a strategy of long term brand building.

Key Issue- In Store Merchandising Armies
Visit any Mexican supermarket at 800 am and you will view armies of merchandising squads permanently based in each store. These merchandisers stock shelves, facilitate orders, maintain the product “showcase” and even conduct in store sampling. Failure to partner with a distributor or retailer that offers this service will dramatically reduce your brands store level presence.

Export Solutions Can Help !
Mexican warrants your focus and investment. Success in Mexico offers a sizable new market, adjacent to the USA plus the added bonus of helping your companies efforts to penetrate the USA Hispanic community. Don’t make the mistake of treating Mexico like a small export market . A strategic focus will build a business that could be an important revenue generator for years to come. Export Solutions has completed more than 15 projects for Mexico. We speak Spanish and are familiar with the distributor community and market entry requirements.