Selected information about the

Beverage Industry in Mexico

July 2015

Beverage Industry in Mexico

Executive Summary
The beverage industry consists of different types of drinks available in the market, such as soft drinks, beer,
ciders, other alcoholic beverages and more. Among all these types, the soft drink segment, which includes
bottled water, carbonates, juice, concentrates, functional drinks and RTD Tea & Coffee, holds the largest
value in the market, with 34% in 2013. This is followed by beer, cider and flavored alcoholic beverages
(FABs), with 32%, spirits, with 18%, and wine, with 16%. Total worldwide revenues in 2013 amounted to
1,836.1 billion USD, growing an average of 3.3% since 2009. Regionally, Europe dominated the market,
holding 39.2% of the market in 2013. It was closely followed by the Americas, with 31.1% and the Asia-
Pacific, with 28.1%. The Middle East & Africa region holds the smallest share of 1.7%. Current global
consumers are moving towards healthier beverages, such as milk, juice and tea, and starting to move way
carbonated soft drinks.

In Mexico, the beverage market has been fairly strong in recent years. In 2013, total revenues reached 67.8
billion USD, with a CAGR of 5% between 2009 and 2013. Comparably, the US and Canadian market only
grew at an average rate of 2.2% to 341.5 billion USD and 1.9% to 34.9 billion USD, in the same time period.
Total beverage consumption in Mexico in the same year increased to 64.6 billion liters. The soft drink
segment also holds the largest value in the Mexican market, with over 40 billion USD of sales or 59.6% of
the total market in 2013.

Both the global and Mexican beverage industry is expected to grow in value and volume until 2018.
Globally, total revenues will reach 2,245.6 billion USD until the end of the forecast region, growing
averagely at the rate of 4.1%. Additionally, the Europe and Asia-Pacific will grow with CAGRs of 2.4% to
808.4 billion USD and 6.6% to 710.2 billion USD, in the same time period. In Mexico, a CAGR of 5.1% for
the forecast period of 2013 to 2018 is expected in its market value to reach 87.1 billion USD by the end of
2018.

In addition, the paper discusses the underlying trends in the beverage industry in Mexico. Topics included
have a significant impact on many aspects of Mexico, including politics, economics, society, etc. It is
divided into four main topics: Demographic and Social Change, Shift in Global Economic Power, Rapid
Urbanization and Climate Change and Resource Scarcity. Trends, such as a high consumption of beverages,
Mexican beers and spirits, Mexican coffees and coffee shops, water shortage and waste management and
food and beverages in social media, are further examined.

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Index
Executive Summary ............................................................................................................................................... 1
Global Beverage ..................................................................................................................................................... 4
Market Overview ............................................................................................................................................... 4
Market Value ................................................................................................................................................. 4
Market Volume .............................................................................................................................................. 4
Market Segmentation .................................................................................................................................... 5
Consumer Preferences .................................................................................................................................. 5
Beverage Packaging ........................................................................................................................................... 6
Market Value ................................................................................................................................................. 6
Market Segmentation .................................................................................................................................... 6
Competitive Landscape ..................................................................................................................................... 7
Buyer Power................................................................................................................................................... 8
Supplier Power .............................................................................................................................................. 8
New Entrants ................................................................................................................................................. 9
Threat of Substitutes ................................................................................................................................... 10
Degree of rivalry .......................................................................................................................................... 10
Requirements and Regulators ......................................................................................................................... 11
International Food and Beverage Agencies ................................................................................................ 11
International Food Standards ..................................................................................................................... 11
Market Overview ............................................................................................................................................. 12
Market Value ............................................................................................................................................... 12
Market Volume ............................................................................................................................................ 12
Market Segmentation .................................................................................................................................. 13
Trade Balance .............................................................................................................................................. 13
Value Added in Beverage Manufacturing .................................................................................................. 14
Employment ................................................................................................................................................ 14
Consumer Preferences ................................................................................................................................ 15
Beverage Packaging ......................................................................................................................................... 16
Market Volume ............................................................................................................................................ 16
Market Segmentation .................................................................................................................................. 16
Requirements and Regulators ........................................................................................................................ 17
Mexican Food and Agriculture Government Regulatory Agencies .......................................................... 17

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 Labeling Requirements ............................................................................................................................... 17
Alcohol Regulations .................................................................................................................................... 17
Demographic and Social Change .................................................................................................................... 19
Underlying Trend ........................................................................................................................................ 19
Industrial Impact ........................................................................................................................................ 19
Response ...................................................................................................................................................... 19
Shift in Global Economic Power ..................................................................................................................... 21
Underlying Trend ........................................................................................................................................ 21
Industrial Impact ........................................................................................................................................ 21
Response ...................................................................................................................................................... 21
Rapid Urbanization ......................................................................................................................................... 22
Underlying Trend ........................................................................................................................................ 22
Industrial Impact ........................................................................................................................................ 22
Response ...................................................................................................................................................... 22
Climate Change and Resource Scarcity .......................................................................................................... 23
Underlying Trend ........................................................................................................................................ 23
Industrial Impact ........................................................................................................................................ 23
Response ...................................................................................................................................................... 23
Technological Breakthroughs ......................................................................................................................... 24
Underlying Trend ........................................................................................................................................ 24
Industrial Impact ........................................................................................................................................ 24
Response ...................................................................................................................................................... 25
About KC .............................................................................................................................................................. 26
Reach us: .............................................................................................................................................................. 27

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Global Beverage
Market Overview
The global beverage industry is divided into: soft drinks, beer, ciders, flavored alcoholic beverages (FABs),
spirits and wine. From all these product types, the soft drinks segment was the most lucrative in 2013,
followed by beer, cider & FABs. The market has been growing moderately for the past few years. Since
2009, it has been growing averagely at 3.4%, and is expected to remain strong and continuously accelerate
towards 2018.

Market Value
Total Value of the Global Beverage Industry
(billion USD and % growth), 2009-2018
2,500 5
2,000 4 CAGR in 2009
Billion USD

Percentage
1,500 3 to 2013 was

1,000 2
3.4%
1,721.4
1,612.2

1,663.3

1,776.3

1,836.1

1,904.6

1,979.7

2,062.7

2,151.7

2,245.6
500 1
0 0
2009 2010 2011 2012 2013 2014* 2015* 2016* 2017* 2018*
% Growth *forecast
Source: Marketline
In 2013, the global beverage industry was valued at 1,836.1 billion USD. The global market is anticipated to
accelerate with a CAGR of 4.1% between the years 2013-2018 to reach 2,245 billion USD, a 22.3% increase
from the current value.

Regionally, Europe reached total revenues of 719 billion USD, growing at an average rate of 1.7% since
2009. In 2013, the Asia-Pacific region grew to 515.9 billion USD, with an average growth rate of 5.7% since
2009. Europe and Asia-Pacific are forecasted to grow averagely at the rates of 2.4% and 6.6%, respectively
to reach their respective values of 808.4 billion USD and 710.2 billion USD.

Market Volume
Total Volume of the Global Beverage Industry, 2009-2018 (billion
liters and % growth)
1,200 6
1,000 5
CAGR in 2009
Billion liters

Percentage

800 4 to 2013 was

600
400
3
2
3.3%
794.6
696.1

716.8

742.7

767.8

828.4

865.5

906.1

948.7

994.1

200 1
0 0
2009 2010 2011 2012 2013 2014* 2015* 2016* 2017* 2018*
% Growth *forecast
Source: Marketline
The global industry’s total consumption volume increased 3.5% from 767.8 billion liters in 2012 to 794.6
billion liters in 2013. By 2018, it will have an increment of 25.1% to 994.1 billion liters. 1

1
Marketline (2014), Global Beverages
Page | 4
Market Segmentation

Global Share of Beverages by type (billion USD),

2013 Soft drinks, with a value of 631.6
or a share of 34.4%, were the
291.1 largest segment of the global
631.6 beverage industry in 2013. This
Soft Drinks
Beer, Cider & FABs was followed by Beer, Cider &
333.5
Spirits
FABs, spirits and wine, with
579.9, 333.5 and 291.1 billion
Wine
USD, respectively.
579.9 Source: Marketline

Global Share of Beverages by region (billion USD), Regionally, Europe, with 719
2013 billion USD, had the biggest
market share in the world in
31 2013. Next to it was the Americas
Europe
with 570.2 billion USD and the
719 Americas Asia-Pacific with 515.9 billion
Asia Pacific USD. Middle East & Africa has
Middle East & Africa the smallest value, with only 31
515.9
billion USD or 1.7% share of the
570.2 total value.2
Source: Marketline

Consumer Preferences
Health is the key trend for beverages in 2013, and emerging strength of healthier beverages reflect new
global purchasing patterns. Liquid milk led in household penetration, with a reach of over 87%.

Global Consumer Reach of Beverage Categories (%), 2013

87.4

80.7

76.5

63.5

59.7
70

69

56.9

55.7

5.3
11.6 45.9
-0.2 1.6 -3.7 0.9 1.5 0.6 0.8 1.8

Growth from Previous Year Source: Kantar WorldPanel

This was followed by ready-to-drink (RTD) juice, bottled water and powdered juice, reaching 80.7 %, 76.5%
and 70% of global households. Consumers in developed markets are starting to move away from
carbonated soft drinks, being fourth in the ranking with 69% of reach. RTD tea was the fastest growing
beverage segment, as this natural, low-sugar and antioxidant rich drink has reached 15 million new
households, an 11.6% increase from the previous year.3

2
Marketline (2014), Global Beverages
3
Kantar WorldPanel, 2014 Brand Footprint Report
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Beverage Packaging
Packaging is important in the industry as it provides support, protection and resistance for beverage
products against external environment and tampering. It is also a vital factor for reliable distribution in the
value chain as it reduces product damage. The different types of materials commonly used globally are
glass, plastic, and metal.

Market Value
Global beverage packaging market had a value of 106.13 billion USD at the end of 2014. It is expected to
reach 129.78 billion USD by 2019, growing at a CAGR of 4.11%. In 2014, glass packaging held the largest
share with 34.91 billion USD; however, it will be overpowered by plastic in 2019. Plastic packaging is
rapidly increasing as the consumers prefer its lightweight and low cost characteristics than the outdated
glass. However, alcoholic beverages continue to maintain the growth of usage of glass packaging globally.
Metal comes third in shares and is often used in food and beverage packaging as it keeps products fresh for
a longer period. Other packaging materials include paper and boards and flexible packaging materials.
Market Value of the Global Beverage Packaging Industry, by type,
2014-2019 (billion USD)
129.8
118.5 123.8
109.8 114.0
106.1 20.5
19.0 19.7 Others
17.8 18.4
17.3 24.4 25.3
22.9 23.6 Metal
21.6 22.3
38.3 39.1
35.8 36.6 37.5 Glass
34.9

36.0 38.4 41.3 45.0 Plastic

32.3 34.0

2014 2015* 2016* 2017* 2018* 2019*

*forecast
Source: TechNavio Analysis

Urbanization and changes in lifestyles of consumers have positively affected the market. Demand for
lightweight and visually appealing packaging solutions are driving the rise of consumption, along with the
increase of the consumers’ disposable incomes. Additionally, consumers are also shifting their preferences
from rigid packaging to more flexible alternatives.

Market Segmentation
Global Share of Beverage Packaging Market by
product (% of total), 2014
Most of beverage packaging is
allotted to hot drinks (30%), water
Hot Drinks
Water
(18%), milk & dairy products
Milk & Dairy (15%), carbonated soft drinks
30%
Carbonated Soft Drinks (12%) and beer cider (11%). The
4% Beer Cider rest is divided among juice, iced
2% 18%
3% Juice tea & coffee, spirits, wine and
Iced Tea & Coffee
5% sports drinks. 4
Spirits
11% 15%
12% Others

Source: TechNavio Analysis

4
TechNavio Analysis, 2015-2019 Global Beverage Packaging Market
Page | 6
 Global Share of Beverage Packaging Market by
region (% of total), 2014
The Asia-Pacific leads the global
beverage packaging market with
31% Asia Pacific 31.22% share. This is followed
by Europe (27.64%), Americas
Europe (26.83%) and the rest of the
14% world (26.83%).5
28%
Americas
27% Rest of the World

Source: TechNavio Analysis

Competitive Landscape
In the beverage market, beverage manufactures take the role as players, retailers and on-trade companies
are key buyers and raw material producers and packaging providers are key suppliers.

Competition-driving forces in the global beverages

industry, 2013

Buyer Power
5
4
The global beverage market is highly
3 fragmented but rivalry is intensified
2 within certain countries due to the
Degree of rivalry Supplier Power
1 large players
0

New Entrants Substitutes

Source: Marketline

Their power is enhanced by the larger number of buyers such as supermarket chains. Supplier power is
adequate as suppliers are able to provide the different raw materials needed within the industry. Since
brand loyalty is very high, entering the market would be very difficult. Established companies possess
economies of scale and higher brand recognition and have big advantages. There are no substitutes for
beverages as a whole but there are some to its segments, as tap water is seen as a possible cheap substitute
to soft drinks. Rivalry is increased entirely by all these factors.

5
TechNavio Analysis, 2015-2019 Global Beverage Packaging Market
Page | 7
Buyer Power

Drivers of buyer power in global beverages industry, 2013

Backwards integration
5
Buyer Independence 4 Undifferentiated product
3 Buyer power
Buyer Size
2
Tendency to switch is moderate
1
0

Financial muscle Product dispensability

Low-cost switching Price sensitivity

Oligopsony threat
Source: Marketline

Typical buyers inside the market are large retailers possessing great financial capacities, allowing them to
make large purchases and to enter into long term contracts with market players. The disappearance of one
large retailers significantly impact the manufacturer’s revenue. Switching costs are mostly low and can
boost buyer power, however, overall consumer demands forces them to stick to popular products , which
reduces their buyer power. If the large companies continue to have products that the consumers like,
retailers will have no choice but to put their products in stock. Additionally, beverage manufacturers reduce
their revenue reliance from a single product by occupying different areas of the market with different
products.

Supplier Power

Drivers of supplier power in the global beverages industry, 2013

Differentiated input
5
Forward integration 4 Switching costs
3
2
Supplier power
1
Importance of quality/cost Supplier size is moderate
0

No substitute inputs Player independence

Oligopoly threat Player dispensability

Source: Marketline

Depending on the type of beverage, its production requires various raw materials and processes. Distilling
wines and spirits require cereal grains and grapes, brewing beer requires malted grain and hops and
manufacturing soft drinks requires sweeteners, thus, requiring a range of suppliers in the market. The
required raw materials are highly specific and so the market is reliant on specific suppliers. However, these
materials are much undifferentiated and can choose alternatives if necessary. Some producers are
producing their own raw materials, disposing their need for suppliers. Alternatively, suppliers can also sell

Page | 8
their products to the market, for example, barley as animal feed. Furthermore, suppliers can produce their
own beverages though established companies will significantly reduce the chance of success.

New Entrants
Factors influencing the likelihood of new entrants in the global
beverages industry, 2013

Distribution accessible
5
Incumbents acquiescent Weak brands There is moderate
4
threat for new entrants
3
Little IP involved Undifferentiated product in the market
2
1
0
Little regulation Suppliers accessible

Low fixed costs Scale unimportant

Low-cost switching Market growth

Source: Marketline

There is an increasing opportunity to enter the market on a small scale. Demand for organic products, as
well as artisanal craft beers, has been increasing. Usually, these specialty products are sold at a higher
price. To seriously compete with the leading companies, new entrants should operate on a large scale and
this is often a problem for it requires a significant amount of capital and is a barrier to entry as many
consumers are not immediately guaranteed. Additionally, leading players have established branding
already present in the market. Brand loyalty is very significant in the beverages market and can increase
competition. New entrants target areas where big players tend to have little interests in.

These new players need access to distribution channels. This is a big problem as retailers are more likely
stock popular brands that consumers are familiar with. Since the economic downturn, producers needed to
find cost-effective packaging that will help in differentiating products. This resulted to the expanded usage
of alternative packaging materials, such as barrier films and pouches. Innovative packaging of additional
features aims to attract more customers. On the other hand, alcohol beverage production has a lot of rules
which hinders new entrants in most countries.

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Threat of Substitutes

Factors influencing the threat of substitutes in the global

beverages industry, 2013
Beneficial alternative
5
4
3 There is moderate
2 threat from substitutes
1
0

Cheap alternative Low cost switching

Source: Marketline

Other beverages, such as tea, coffee, milk, and tap water, are the main substitute for soft drinks and
alcoholic beverages. The switching costs for retailers are low for they can stock their stores with other
popular products. Tap water is a cheaper substitute for bottled water. Most of the leading players in the
market have diversified products by producing different types of beverages from soft drinks to coffee,
which reduces the threat of substitutes. It is very hard to define the benefits of alternatives as it highly
depends on user preferences.

Degree of rivalry
Factors influencing the degree of rivalry in the global beverages
industry, 2013
Competitor size
5
Easy to expand Zero sum game
4
3
Hard to exit 2 Undifferentiated product
1 There is moderate
0 degree of rivalry
Lack of diversity Storage costs in the market

Low cost switching Similarity of players

Low fixed costs Number of players

Source: Marketline

Four companies compose the global beverage market and account for 35.7% of the total market value.
There are some concentrations within segments, for example, Coca-Cola and PepsiCo are notably dominant
with soft drinks. The great number of market players aims to increase competition. Products are easily
identified as brand loyalty is a big factor. Furthermore, leading players operate in different other sectors to
be less reliant on beverages for revenue. 6

6
Marketline (2014), Global Beverages
Page | 10
Requirements and Regulators
International Food and Beverage Agencies
Name of Agency Acronym Responsibilities

Acts as neutral forum where all nations meet to

negotiate agreements and debate policy; provides
Food and Agriculture Organization of
FAO information and knowledge to help countries improve
the United Nations
agriculture, forestry and fishery practices and ensures
good nutrition and food security.

World Health Organization WHO Deals with international public health.

Supports accreditation schemes & initiatives for the

World Food Safety Organization WFSO
implementation of food safety management system.

International Food Information Communicates science-based information on food

IFIC
Council safety and nutrition to health and nutrition experts.

Consists of food and beverage, agricultural, chemical

International Life Sciences Institute ILSI
and pharmaceutical companies.

International Food Standards

In 1963, FAO and WHO established the Codex Alimentarius to form harmonized international food
standards and codes of health practices to protect the health of consumers and ensure fair trade of food.
Since its establishment, it has evolved into an open and inclusive way to meet international food
production and trade standards. International food trade reached 200 billion dollars a year, with billions of
tonnes of food produced, marked and transported. In 2014, the Codex members covered 99% of the world’s
population.

Page | 11
Mexican Beverages
Market Overview
The Mexican beverage industry has been recently growing fairly strong and is expected to remain its
growth towards 2018. In 2013, Mexico, accounting for 11.9% of the beverage industry in the Americas, was
the 3rd largest beverage industry in the Americas, next to the United States and Brazil (59.9% and 16.1%
respectively).

The industry reached total revenues of 67.8 billion USD in 2013, with a CAGR of 5% between 2009 and
2013. In comparison, the US and Canadian markets only grew with CAGRs of 2.2% and 1.9% respectively,
over the same periods. The market is predicted to continue to grow at an average rate of 5.1% until 2018 to
87.1 billion USD. The soft drink segment proved to be the strongest type of beverage in the country in 2013,
with total revenues reaching 40.5 billion USD, equivalent to 59.6% of the market’s overall value.

Market Value
Total Value of the Mexican Beverage Industry
(billion USD and % growth), 2009-2018
100 8
80 6 CAGR in 2009
Billion USD

Percentage
60 to 2013 was
4
40
2 5.0%
58.6
55.6

61.6

65.1

67.8

71.3

78.8

82.9

87.1
20
75

0 0
2009 2010 2011 2012 2013 2014* 2015* 2016* 2017* 2018*
% Growth *forecast
Source: Marketline

In 2013, the Mexican beverages market grew by 4.0% to 67.8 billion USD from the previous year (65.1
billion USD). Between 2013 and 2018, the market is forecasted to have a CAGR of 5.1% to reach the value of
87.1 billion USD in 2018.

Market Volume
Total Volume of the Mexican Beverage Industry
(billion liters and % growth), 2009-2018
100 5
80
CAGR in 2009
Billion liters

Percentage

4.5
60 to 2013 was
40
4 4.6%
53.9

56.4

59.2

62.1

64.6

67.6

70.7

73.9

77.2

80.6

20
0 3.5
2009 2010 2011 2012 2013 2014* 2015* 2016* 2017* 2018*
% Growth *forecast
Source: Marketline

Since 2009, the market has been growing at a standard rate of 4.6%. In 2013, the consumption volume of
the country’s industry grew 4.1% from 62.1 billion liters in 2012 to 64.6 billion liters. By 2018, it is expected
to grow at a standard rate of 4.5% to reach 80.6 billion liters, 24.7% bigger than the current volume. 7

7
Marketline, Mexican Beverages
Page | 12
Market Segmentation

Share of Beverages in Mexico by type, 2013 In 2013, the soft drinks segment, with its
(billion USD) total revenues amounting to 40.4 billion
USD, remained as the most lucrative type of
Soft Drinks beverage in Mexico. Beer, cider & FABs
follows with 21.5 billion USD or 31.7% of the
40.4 Beer, Cider & FABs market. Spirits and wine holds the 3rd and
Spirits 4th positions with 5 billion USD and 0.9
Wine billion USD, respectively.8
21.5
5.0
0.9
Source: Marketline

Trade Balance
Trade Balance of the Mexican Beverage Industry, 2007-2013
(million USD)
4,000
3,426
3,500
2,919
2,793
3,000
Million USD

2,500

2,000 2,462 Export

2,293
1,976 Import
1,500
964 Trade Balance
817
1,000 626

500

0
2007 2008 2009 2010 2011 2012 sep-13
Source: SE

The North American Free Trade Agreement (NAFTA), along with other macroeconomic policies in the late
1990s and early 20s helped Mexico increase its GDP through trade 9. Secretaria de Economía reported that
the trade balance in September 2013 was 1,976 million USD, with 2,919 million USD worth of exports and
817 million USD worth of imports. This is higher than the trade balance in 2012, which was 1,972 million
USD - with exports of 2,649 million USD and imports of 677 million USD.

8
Marketline (2014), Mexican Beverages
9
Agriculture and Agri-Food Canada (AAFC), Mexico The Foodservice Industry May 2010
Page | 13
Value Added in Beverage Manufacturing

Value Added by the Beverage Sectors in the Mexican GDP (million MXN), 2011-2014

188,278
187,945

182,130
181,917

179,072

177,244
175,875

171,851
169,711
169,172

168,776
165,238

163,184
155,682
150,860

144,803
142,428
133,376

131,130

129,113
128,277

125,827

124,927
119,548

119,471
115,978

115,733

112,360
109,272
100,875

Beverage Manufacturing Food and Beverage Preparation Services Source: INEGI

Beverages contribute to the overall GDP of the country through two main activities: beverage
manufacturing and food and beverage (F&B) preparation services. Beverage manufacturing mainly deals
with production and retailing of drinks while food and beverage preparation services deals with the
preparation and delivery of products to customers. Both of the activities contribute around 1-5% to the total
GDP of the country. In the 3rd quarter of 2014, beverage manufacturing added 144,802.72 million MXN to
the overall Mexican GDP, while F&B services added 188,278.2 million MXN. Both of the segments
increased their value from the same period of the previous year.

Employment
Total Employees in the Beverage Manufacturing Industry in Mexico, 2009 - 2014

135,431
124,493 124,918 122,079
116,818 117,587 other distilled beverages
8.8%
9.1% 9.6% 9.4% rum and distilled beverages
8.6% 9.1%
from cane
39.5% beverages from grapes
39.1% 40.6% 39.6% 41.7%
41.4% distilled beverages from
agave
beer

45.8% bottled water

45.5% 43.3% 44.4% 43.3% 44.4%
soft drinks and non-alcoholic
drinks
2009 2010 2011 2012 2013 oct-14 Source: INEGI

Since 2009, the total number of employees in the beverage manufacturing industry in Mexico has been
decreasing. In 2013, the number of employees totaled to 116,818, a 4.3% decrease from the previous year
and 13.7% decrease from 2009. The food and beverage manufacturing industry greatly invests in
technology to improve production while relying on less manpower. This results in the decline of workforce
in the industry without compromising the amount of output 10. Additionally, industrial robot sales in

10
US department of commerce
Page | 14
Mexico increased to a new peak of 30% of 2,739 units, however, by October 2014, total number of
employees already increased to 117,58711.

The biggest segment of the industry belongs to the soft drinks and non-alcoholic drinks manufacturing,
which had a share of 43% (50,614 employees) in 2013. This is closely followed by the water bottling and
purifying manufacturers with 41% (48,347 employees). Ranking third is the beer manufacturing with
10,064 employees or 8.6% share in the same year.

Consumer Preferences
With the economic advancement of Mexico, the middle class gains stronger purchasing power in improving
quality of life. Consumption preferences, especially in the food and beverage sector, are shifting from
Mexican traditions to the western style due to convenience, quality, value and variety. However, a strong
downside to this is the decrease of the country’s overall health. With Mexico having the highest rate of
obesity in the world, particularly in diseases related to weight, such as diabetes, the rate is rapidly
increasing.12

Since Mexicans still prefer homemade meals as it is less expensive and more traditional, fresh food
continuous to be a fundamental part of the country’s diet. Mexicans typically purchase fresh products in
local retailers and open wholesale markets. Beverages are very popular in the Mexican market as the
country is one of the world’s largest markets for carbonated soft drinks.

Annual Per Capita Expediture of Mexico on Beverages (USD), 2010 - 2020

465.1
416.1
10% Wine
371.2 6%
10%
329.1 6%
9% Coffee, Tea, Cocoa
292.7 6% 27%
9%
252.2 7% 27%
8% Spirits
7% 7% 27%
8% 28%
29%
31% Beer

56% 55%
56% 56% Waters, Soft drinks,
53% 55%
Fruit/Vegetable Juices

2010 2012 2014* 2016* 2018* 2020* *forecast

Source: Euromonitor
According to Euromonitor, Mexico consumes 174 liters of bottled water per person per year in 2013,
making the country the highest consumer of bottled water in the world. It is very common to purchase
large water bottles for household consumption. Coffee drinks are very popular for both adults and teens
and more coffee shops are opening because of the rising trend of socializing in cafes. Beer, tequila and rum
remain as everyone’s favorites while wine is growing in popularity.

Mexicans tend to be loyal with familiar brands and would rather cut back than substituting for other
brands. The most important attributes preferred by Mexicans in grocery shopping included quality,
promotions, brands, price, nutrition and availability while the least important were online shopping access,
ease of parking, loyalty programs and self-checkouts13.

11
The International Federation of Robotics
12
Agriculture and Agri-Food Canada (AAFC), Mexico Consumer Profile June 2014
13
Agriculture and Agri-Food Canada (AAFC), Mexico Consumer Profile June 2014
Page | 15
 Beverage Packaging
Trends in the retail packaging market in Mexico have led manufacturers to address the varying degrees of
preferences. It all ranges from high-end sophisticated to cheap and simple packaging. This is mainly due to
the high disparities between income distributions in the country.

Market Volume
Market Volume of the Mexican Beverage
Market Volume of the Mexican Packaging Industry by type, 2014
Beverage Packaging Industry, (% of total)
2010-2018 (billion packs)
0.1%
1.0% Beer & Cider
17.8%

60.44
56.15

Soft Drinks
50.17

Spirits
81.1%
Wines
2010 2014 2018*
*forecast Source: Canadean
Source: Canadean
Total market volume of the Mexican beverage industry reached 56.15 billion packs in 2014, an increase
from the 50.17 billion packs in 2010. Most of these packaging are used for beer & cider (81.09%), followed
by soft drinks (17.81%). Total volume is expected to increase to by around 7% to 60.44 billion packs in
2018.
Market Segmentation
Share of Type Packaging for Soft Share of Type Packaging for Beers &
Drinks in Mexico, 2014 (million packs) Ciders in Mexico, 2014 (million
packs)
Rigid Plastic
1 Glass
20,597 Paper & Board
3,795 Glass Rigid Metal
8,181
Rigid Metal 1,818
5,297 8,300
Flexible Rigid Plastic
7,544
Source: Canadean Source: Canadean

Mexican soft drinks were mostly packed in rigid
plastics, reaching 20,597 million packs in 2014. This
is followed by paper & board (18%), glass (17%), rigid
metal (12%) and flexible materials (8%).
Share of Type Packaging for Spirits in
Mexico, 2014 (million packs)
Mexican beer and ciders are mostly in glass
containers. Some can also be bought in rigid
metal cans and a small percentage is in plastics.
Share of Type Packaging for Wines
in Mexico, 2014 (million packs)

11 Glass 1
Glass
37 Rigid Metal
504 Paper & Board
65
Rigid Plastic

Source: Canadean Source: Canadean

In 2014, 504 million packs of Mexican spirits were
packed in glass containers. This is significantly
greater than those packed in rigid metal (37 million
packs) and rigid plastic (11 million packs).
Almost all Mexican wines are bottled, with 65
million packs in 2014, and only 1 million packs
were in paper & board packaging.
Page | 16
Requirements and Regulators
Mexican Food and Agriculture Government Regulatory Agencies

Name of Agency Acronym Responsibilities

Formulates industry policy and regulates foreign and

Secretaría de Economía SE
domestic trade, supply and prices in the country.

Coordinates the system of standardization, based on

Dirección General de Normas DGN
regulations.

Cares for the health of Mexicans through health

Secretaría de Salud SSA
campaigns, programs, establishment and consumption.

Comisión Federal para la Protección Contra Ensures the identity, purity and safety of products and
COFEPRIS
Riesgos Sanitarios processes.

Administers federal fund for rural development, promotes

Secretaría de Agricultura, Ganadería,
SAGARPA research for rural purposes and regulates related
Desarrollo Rural, Pesca y Alimentación
activities.
Carries out sanitary actions aimed to protect agriculture
Servicio Nacional de Sanidad, Inocuidad y
SENASICA and livestock resources from diseases to regulate and
Calidad Agroalimentaria
reduce contamination.

Comisión Intersecretarial para el Control del

Develops regulations to control toxic activities that can
Proceso y Uso de Plaguicidas, Fertilizantes CICOPLAFEST
harm the environment or the health of the population.
y Sustancias Tóxicas

Secretaria del Medio Ambiente y Recursos Administers the protection, restoration and conservation
SEMARNAT
Naturales of the environment and natural resources.

Dirección General de Vida Silvestre Directs the country's financial policies to ensure quality
SHCP
Secretaria de Hacienda y Crédito Público and sustain economic growth.

Protects consumers against abuse and fraud by

Procuraduría Federal del Consumidor PROFECO
companies operating in Mexico.
Instituto Mexicano de la Propiedad
IMPI Administers the industrial properties in Mexico.
Industrial

Comisión Federal de Mejora Regulatoria COFEMER Promotes regulatory reform policies in Mexico.

Comisión Intersecretarial de Bioseguridad

Coordinates the national policies of GMO biosafety and
de los Organismos Genéticamente CIBIOGEM
relevant units.
Modificados

Labeling Requirements
The General Health Law (Ley General de Salud) lists the labeling requirements for alcoholic beverages
(with alcohol content between 2% and 55% by volume).

Alcohol Regulations
Mexico’s official legal drinking age is 18, but IDs are rarely checked when purchasing or ordering drinks.
Though public drinking is strictly not allowed, purchasing alcoholic beverages are possible at any time and
grocery and convenient stores usually have all types of liquor, along with beer, wine and wine coolers.
However, special restrictions are made on some events, such as holidays and elections, where alcohol are
not permitted to be sold at certain time.
Page | 17
Megatrends
PwC selected five megatrends (demographic shifts, shift in global economic power, rapid urbanization,
climate change and resource scarcity, and technological breakthroughs) that will impact the future of both
PwC and its clients over the next decade and reshape the global marketplace.

By 2025, world will have added another billion people to reach about 8 billion, with the over-65s the
fastest-growing group. Searching for better jobs and living, people would move from countryside to cities.
By 2025, there could be nearly 40 cities each with a population of over 10 million people. As a result,
natural resources will be under pressure of meeting the needs of the expanding population, for example, it
is said that only 50 years of supply is left in proven oil reserves. Much of the expected growth will take place
in the currently developing countries. China will replace the US as the world’s largest economy by 2015 (for
more details, please refer to PwC publications here).

In this paper, we explore the effect the above mentioned megatrends have on the beverage industry.

Trend Underlying Trend Industrial Impact Response

Demographic Sugar tax

and Social
Change
Consumer preferences Increased production
Advertising ban

Shift in Global
Economic
Power
Mexican beers in the High exports of Mexican
Anti-monopoly regulations
global market beer

Rapid
Urbanization
Disadvantaged local
Coffee shop Boom Diversification
farmers

Climate Change
and Resource
Scarcity
Higher burdens due to
Coffee rust disease National coffee program
diseased crops

Technological
Breakthroughs Social media usage as a part
Increasing importance of of digital strategy
Smartphones and mobile
technology for consumer
internet usage
goods industry
Apps development

Page | 18
Demographic and Social Change

Underlying Trend
Consumer preferences. Mexico is the largest consumer of soft drinks, drinking an average of 163 liter
or 46 gallons per year in 2013. This is 40% higher than the consumption of an average American (118 liters
or 31 gallons) in the same year.14

Market Share of the Soft drinks Segment in

the Mexican Beverage Industry (%), 2013
The Soft Drinks segment is further divided
Bottled Water into different types: bottled water,
47.6% carbonates, concentrates, functional
Carbonates drinks, juice, RTD tea and coffee and
Juices others. The biggest market share of the
Concentrates soft drinks belonged to the bottled water
0.3% 34.3% Functional Drinks
(47.6%), followed by carbonates (34.3%).
Juice segment was just a little bigger than
0.6% RTD Tea & Coffee concentrates but both have a market share
8%
8% Others of around 8%.
1.3%
Source: Marketline

Industrial Impact
Increased production. The Mexican soft drinks market is currently strong and has been growing
consistently for the past few years, and is still expected to expand. Sales of both all carbonated soft drinks
and bottled water will continue to increase until 2018, where the growth of carbonated drinks will be
mainly led by low-calorie carbonates.

Forecasted Sales of Carbonated Soft

Forecasted Sales of Bottled Water in
Drinks in Mexico (million litres),
Mexico (million litres), 2011-2018
2011-2018
16,350

16,809

17,140

17,507

17,895

351

352

354

355

356

2014* 2015* 2016* 2017* 2018* 2014* 2015* 2016* 2017* 2018*
*forecast
Source: BMI and United Nations
Response
Sugar tax. On January 1, 2014, Mexico took into effect its new law that imposes one peso per liter tax on
sugary soft drinks to reduce the country’s soft drink consumption by as much as 5%, according to experts.

14
UN World Health Organization (WHO), La Representación en México de la OPS/OMS Acompaña Iniciativa para
Detener la Epidemia de Obesidad en México
Page | 19
This new law is the government’s response to battle the rising obesity in the country. The tax, which was
proposed by President Enrique Peña Nieto is a part of the fiscal reform package of the administration. The
money to be raised (15 billion MXN) is intended to be used in providing safe drinking water to schools and
communities and funding health education programs. For the beverage companies, it would mean a
decrease in revenues.

Advertising ban. Recently, the Mexican government published new regulations on labeling food and
non-alcoholic drinks. The new regulation aims to reduce television and cinema advertising of junk food
aimed at children and to tackle the obesity and diabetes problem of the country. Additionally, such
products should have labels that show the amount of calories and as well as a seal of nutritional quality.
Advertisements of carbonated drinks, chocolate, sweets, juice, and other high-calorie snacks are not
allowed to be advertised between 14:30-19:30 on Mondays to Fridays and 07:00 – 19:30 in the weekends,
which are the prime viewing times of children 15. Though junk food advertisements can still continue in
other times of the day, companies in the industry are already moving their advertising efforts towards
internet promotions.16

15
Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS)
16
Confederación de la Industria de la Comunicación (CICOM)
Page | 20
Shift in Global Economic Power

Underlying Trend
Total Beer Exports of Countries
(billion USD), 2013
Mexican beers in the global market. In June
Mexico 2.2 2014, Mexico is the 6th top beer producer in the
Netherlands 2.0 world17. In 2013, Mexico remained to be the top
beer exporter for the fourth consecutive year. In
Belgium 1.6
that year, total beer exports reached 2.21 billion
Germany 1.4 USD, representing a 4.2% year-on-year rise and
United Kingdom 1.0 having 16.5% of the global beer market. This is
United States 0.52 followed by the Netherlands, with 2 billion USD
France 0.45 worth of exports and Belgium, with 1.6 billion
USD. Mexico is the top beer supplier to the United
Denmark 0.32
States, Guatemala, Chile, Argentina, Australia and
Ireland 0.32 New Zealand, third in Canada and fourth in Japan
Portugal 0.27 Source: Economista and China. 18

Industrial Impact

Mexican Beer Exports (million USD),

2009-2014
High exports of Mexican beer. Beer exports have
been showing an increasing trend, from 1,790 million
USD in 2009 to 2,211 million USD in 2013. Latest data
shows that by October 2014, beer exports totaled to
2,062.57 million USD, which is bigger than total beer
1,790.5

1,876.4

2,022.1

2,121.9

2,211.2

2,062.6

exports in the same period in 2013 (1,872.72 million

USD).

2009 2010 2011 2012 2013 oct-14

Source: Banco de Mexico

Response
Anti-monopoly regulations. Asociación Cervecera de la República Mexicana (ACERMEX) confirmed
in 2013 that the government is putting a ban in exclusive sales contracts, which will be beneficial to the
craft beer segment. Around 97% of the national beer market is dominated by large firms. The Comision
Federal de Competencia will set a limit in exclusive agreements between the powerful companies and
distributors, opening up the market to microbreweries. With the new regulations, the local microbrewers
are expecting to expand their reach in restaurants, groceries and cantinas and in about ten years, the craft
beer segment can reach a national market share of 2-3%.

17
South American Business Information (SABI), Mexico: Coca-Cola Raising Recycling (July 2014)
18
Economista
Page | 21
Rapid Urbanization

Underlying Trend
Coffee shop boom. Mexicans are embracing coffee drinking to the next level, with specialty coffee shops
to be found almost everywhere, from urban centers to provincial capitals and small towns. The trend of
visiting coffee shops have given rise to new players in the market, as the number of coffee establishments in
the major cities increased by almost 15% in 2013.

Industrial Impact
Disadvantaged local farmers. Mexican coffee farmers are not benefitting from the current coffee shop
boom in the country. It is reported that for each cup of coffee, averaging at 17 MXN, producers are only
receiving around 0.40 MXN. Coffee farmers receive 5 MXN for every kilo of product, while retail prices
range from 150 MXN to 350 MXN per kilo, generating over 135 million MXN of daily revenues for coffee
shops.

Response
Diversification. The Mexican government encourages local farmers to grow alternative crops or diversify
into livestock to decreases their over-dependency on coffee. The example of the program is Procampo, a
government program that guarantees farmers a fixed price per unit produced of certain staple crops such
as corn, beans, and coffee.

Page | 22
Climate Change and Resource Scarcity
Underlying Trend
Coffee rust disease. Between 2011 and 2013, coffee production in Central America was affected by the
coffee rust diseases, falling 10% in 2012 and 15.4% in 2013. It is reported that the region lost nearly 41% of
its export capacity and 3.5 million sacks (96.2% of all coffee). Since around 83% of the coffee in the region
is exported, the disease significantly affected the economy of the countries in the region.

In April 2014, Edgar Flores Miguel, the president of Sistema Producto Café de Chiapas stated that Chiapas
already lost an average of 300 million USD due to the coffee rust on the plantation and warned that many
firms in Chiapas can disappear due to bankruptcy. Additionally, other coffee producing states such as
Oaxaca and Veracruz also lost 20% and 15% of their plantation, respectively.

Some experts claim that Mexico will need at least four years to fully recover. Experts argue that the poor
government policies of downplaying the problem and insufficient provision of treatments contributed in
the degree of devastation, which was affirmed by Belisario Dominguez Mendez of SAGARPA. Farmers
estimated that 30% of the 2014 production was affected.

Industrial Impact
Higher burdens due to diseases crops. With the increasing necessity for additional crop cultivation
due to the coffee rust disease that affected most of central America, prices of raw materials are expected to
rise and can have a negative impact on the Mexican coffee market. Higher cost burdens could reduce the
companies’ capacity to perform better and will lead to a decline in production. The coffee rust disease is a
major threat to the market as it makes the plant incapable of producing fruits, leading to plant defoliation.

Response
National Coffee Program. In 2014, Chiapas coffee farmers organized a Unión Nacional de Productores
de Café de Chiapas19. This was to collectively demand for the implementation of renovations of the 49,897
hectares of their 259,315 hectares of coffee fields that were affected by the rust, which decreased total
production by 19%.

Big companies are also very active in protecting national coffee farmers around the world. In 2014, El
Financiero reported that certain companies will spend money to save approximately 5,300 tonnes of coffee
to be produced by over 2,000 coffee farmers in Veracruz, as it is one of the largest suppliers of Arabica
coffee. The funds provided will be used to treat the 6,600 hectares of coffee plantation that has been
seriously affected by the rust disease. Additionally, a program named, “Todos Sembramos Café”, intends to
help the coffee farmers in Chiapas who were affected by the disease and help raise productivity in the state.

19
El Economista
Page | 23
Technological Breakthroughs
Underlying Trend

Smartphones and mobile internet usage. In 2013, it was

reported that smartphone users in Mexico increased from 24.5
million to 41 million20. In the same time, 4 out of every 100
people already have a tablet21. Smartphone penetration is also
expected to reach 61.9% of the total Mexican population at the
end of 2020, an increase from 17.9% in the 3rd quarter of
2014.22

Source: GSMA
Intelligence

Along with this rise of technological devices in the country is the increase of mobile internet. In June 2013,
total mobile broadband subscribers in Mexico amounted to more than 14.4 million, 51.4% of the total
internet subscribers in the country23. Mobile broadband has come a long way since 2010, where mobile
subscription only accounted for less than 11% of the total internet subscription.

Industrial Impact
Increasing importance of technology for consumer goods industry. The growing number of
mobile devices has revolutionized customers’ ability to obtain information – which has, in turn,
transformed how they perceive value and the type of relationships they want to have with companies. For
this reason, 81% of CEOs in the global consumer goods industry see mobile technologies for customer
engagement as one of the most strategically important for their organization.
Q: How strategically important are the following digital technologies for
Consumer goods CEOs' organizations?

cybersecurity 10% 26% 41%

the internet of things 9% 33% 28%

cloud computing 14% 33% 24%

data mining and analysis 5% 29% 46%

mobile technologies for customer engagement 7% 29% 52%

socially enabled business processes 15% 34% 25%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Not important at all Not very important Somewhat important Very important

Source: 18th CEO Survey, PwC

20
El Universal
21
Competitive Intelligence Unit
22
GSMA Intelligence
23
Sistema de Información Estadística de Mercados de Telecomunicaciones (SIEMT)
Page | 24
Response
Social media usage as a part of digital strategy. The usage of internet as a marketing strategy has
increased in the past year. According to Asociación Mexicana de Internet (AMPICI) in 2014, 79 companies
of the Top 100 companies of “Expansion top 500 companies “ in Mexico were present on Facebook
compared to 80 companies on Twitter.

The Beverage and beer Industry was on the lead with 17,771,042 fans on Facebook followed by Consumer
Products with 5, 149, 215 fans and the Assembling Industry with 2,495,911 fans.

Top 5 sectors in Mexico, by number of Facebook fans, 2014

17,771,042

5,149,215
2,495,911 1,245,136 1,120,898

Departmental
Consumer
Beverages

Assembling

Convinience
and beer

product

Industry

business

Stores
Source: AMPICI
The top three Mexican industries that have the most presence on Twitter are the Airline/Airport Services
310,479, Telecommunication 221,100 and Logistics and Transportation 171,799.

Apps development. Most beer companies have adapted to the mobile internet life by creating mobile
applications which enable consumers to perform different actions, such as keep updated with products,
order beer for delivery, even track the shipment on their mobile phone, etc. Apps are also being used for
promoting the brand during sport events such as FIFA WORLD CUP and the Olympics among others.

Also external individuals have created apps to support the consumption of beer such as Untappd, which is
a social beer finding app that lets a person connect with friends as well as find popular beer around him.

Page | 25
About KC
The main function of KC Mexico is to provide PwC practitioners with knowledge and relevant experience
that could help them to identify potential services, run projects, and share knowledge with clients. The
Knowledge Center delivers knowledge and experience through:

Provide consulting and training in the use of various knowledge management tools.

Research and information searches, based on the information needs of PwC staff & partners.

Participating in the strategy design, related to global Knowledge Management

& Innovation Management.

Page | 26
Reach us:
José Antonio Quesada
Partner Clients & Markets
jose.antonio.quesada@mx.pwc.com

Manuel Flores De Orta

Sr. Specialist Manager Knowledge Management
and Knowledge Center Clients & Markets
manuel.flores.de.orta@mx.pwc.com
+52 (55) 5263-8543

Alexandra Mendes
Senior Consultant
alexandra.mendes@mx.pwc.com
+52 55 5263 6000 ext. 7536

Ekaterina Ponkratova
Senior Consultant
ekaterina.ponkratova@mx.pwc.com
+52 55 5263 6000 ext. 7586

Itzel Andrade
Consultant
itzel.andrade@mx.pwc.com
+52 55 5263 6000 ext. 5574

© 2015 PwC Mexico. All rights reserved. PwC (www.pwc.com) provides industry-focussed assurance, tax and advisory services to
build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our
network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

“PwC” refers to PwC Mexico which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of
which is a separate legal entity and does not act as agent of PwCIL or any other member firm. No member firm is responsible or liable
for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgement or
bind another member firm or PwCIL in any way.

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