NAFTA Exports Distribution

8/8/2019 NAFTA Exports Distribution

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The Mexican Food Market:

-NAFTA

-Domestic

-DistributionChannels


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2

NAFTA

Mexico, Canada and USA signed a Free

Trade Agreement that went in effect in 1994Some agricultural products became dutyfree immediately and others under a 5, 10and 15 year phase out under a quota

administration.

Both US and Mexico Agricultural Exportsincreased as a result of NAFTA


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3

NAFTA

Each country has increased its export

trading in different segmentsSome industries have gain growth andothers have been hurt by NAFTA

In the three countries, there has beenmixed opinions of NAFTA. The numbers

have shown results to each of the countriesin different segments


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Other Mexicos FTAsOther Mexicos FTAs

Mexico is currently the country with most freeMexico is currently the country with most free--trade agreements in the world. Thetrade agreements in the world. Thefreefree--trade agreements in force are (ordered by date):trade agreements in force are (ordered by date):

North American Free Trade AgreementNorth American Free Trade Agreement (NAFTA)) (1994):(NAFTA)) (1994): CanadaCanada and theand the UnitedUnitedStatesStates..

ColombiaColombia andand VenezuelaVenezuela, also called, also called GG--3 Free3 Free--Trade AgreementTrade Agreement (1995)(1995)

Costa RicaCosta Rica FreeFree--Trade Agreement (1995)Trade Agreement (1995) BoliviaBolivia FreeFree--Trade Agreement (1995)Trade Agreement (1995)

NicaraguaNicaragua FreeFree--Trade Agreement (1998)Trade Agreement (1998)

ChileChile FreeFree--Trade Agreement (1999)Trade Agreement (1999)

EU (EU (European UnionEuropean Union) Free) Free--Trade Agreement (2000)Trade Agreement (2000)

IsraelIsrael FreeFree--Trade Agreement (2000)Trade Agreement (2000)

MexicoMexico,, GuatemalaGuatemala,, El SalvadorEl Salvadorandand HondurasHonduras, also called TN Free Trade, also called TN Free Trade

Agreement (2001)Agreement (2001) IcelandIceland,, NorwayNorway,, LiechtensteinLiechtenstein, and, and SwitzerlandSwitzerland, also called AELC (, also called AELC (AsociacinAsociacin

EuropeaEuropea dede LibreLibre ComercioComercio) Free) Free--Trade Agreement (2001)Trade Agreement (2001)

UruguayUruguay FreeFree--Trade Agreement (2004)Trade Agreement (2004)

JapanJapan FreeFree--Trade Agreement (2005)Trade Agreement (2005)

MercosurMercosurFreeFree--Trade Agreement (ratification pending)Trade Agreement (ratification pending)


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5


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U.S. Agricultural Export

Trends & Highlights

jMexico is the secondlargest market for U.S.agriculture.

jIn 2007 U.S. agricultural,forest and fish exports

totaled $13.3 billion.

US Ag. Exports to Mexico

10 0 10

3 9 7 4 59 5136 0 0 56 0

75 70 6 8 6 1 59

13322

9 0 3 8

1154 1

8 3 6 3

3 6 3 62 9 8 631483 0 4 5

4575

2 2 4 41680

19582 3 8 1

3 0 9 0

4 8 6 4 5 0 3 8

3 4 0 33165

4 2 0 0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2003 2004 2005 2006 2007

Total Bulk

Inte rm ediate Cons um er-Re ady

Forest Products Fishery


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Top U.S. Bulk Product MarketsTop U.S. Bulk Product Markets

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2002 2003 2004 2005 2006 2007

MEXICO

CHINA

JAPAN

TAIWAN

KOREA

EGYPT


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$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

2002 2003 2004 2005 2006 2007

Mexico

Canada

Japan

China

Korea

Taiwan

Egypt

Germany

United King dom

Top Markets: Total Agricultural, Forestryan

d Fish

ery Products


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Top U.S. Bulk Product MarketsTop U.S. Bulk Product Markets

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2002 2003 2004 2005 2006 2007

MEXICO

CHINA

JAPAN

TAIWAN

KOREA

EGYPT


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Top U.S. Intermediate Product MarketsTop U.S. Intermediate Product Markets

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2002 2003 2004 2005 2006 2007

Mexico

Canada

China

Japan


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12

Top U.S. Consumer Product MarketsTop U.S. Consumer Product Markets

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2002 200 2004 200 2006 200

p

Russ


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Whythe U.S. Market In MexicoWill Continue to Grow

j Economic Growth higher percapitaincomes

j(middle class growing and poverty being reduced)j

Demogra

ph

ics - growth

in

middle cla

ssj Growing urbancenters = increase buyersj Improvements intransportation= distributionj Changing eating habits = convenientorientedj Growthin supermarkets = increase points of sale

j Growthtourismandrestaurants = + consumersj Growthin processedfoodindustry = more

intermediate productneedsj NAFTA = more efficiencyin production


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Food Distribution in MexicoFood Distribution in Mexico


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DomesticDomestic FoodFoodDistributionDistribution

National Product

Producers


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Domestic FoodDistributionDomestic FoodDistribution


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Domestic FoodDistributionDomestic FoodDistribution

National Product

Producers

Wholesale

CentralMarket


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Central Market Mexico CityCentral Market Mexico City

30% of total produce, is30% of total produce, ismarketed through thismarketed through thischannelchannel

1,881 warehouses for1,881 warehouses forfruits andvegetablesfruits andvegetables

338 wareh

ouses for338 wareh

ouses forgroceriesgroceries Warehousing: 122,000 MTWarehousing: 122,000 MT

The average monthly trade:The average monthly trade:

700,000 MT offruits700,000 MT offruits500,000 MT ofvegetables500,000 MT ofvegetables170,000 MT of groceries170,000 MT of groceries

8,000 MT offreshflowers8,000 MT offreshflowers


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Central Market in Mexico CityCentral Market in Mexico City

Area of 300 hectaresArea of 300 hectares

8 billiondollars yearly8 billiondollars yearlyturnoverturnover

On a daily basisOn a daily basis

6,000 trucks6,000 trucks

70,000 direct employees70,000 direct employees

300,000 visitants300,000 visitants

50,000 veh

icles50,000 ve

hic

les


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20


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21


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FoodFoodDistributionDistribution FlowFlow ChartChart

NationalProduct

Producers

WholesaleDistributors

FoodServiceSupermarkets

CentralMarket

FoodManufacturing

FixedMarkets


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Fixed Markets (Mercados)Fixed Markets (Mercados)

Popularmarkets located in olderPopularmarkets located in older

neighborhoodsneighborhoodsHousewives would purchase produce,Housewives would purchase produce,fruits, groceries, deli, dairynonfoodfruits, groceries, deli, dairynonfoodgroceries etc.groceries etc.


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FoodDistribution flow ChartFoodDistribution flow Chart

NationalProduct

Producers


FoodServiceSupermarets

CentralMarket

FoodManufacturing

FixedMarkets

MovingMarkets


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Moving Markets (Mercados SobreMoving Markets (Mercados SobreRuedas or Tianguis)Ruedas or Tianguis)

Over 2,000 moving markets around the countryOver 2,000 moving markets around the country

Housewivesfrom all income levelslike to shop there forHousewivesfrom all income levelslike to shop there forthe freshest produce, importedfruitsand other groceriesthe freshest produce, importedfruitsand other groceriesYou are able to findfish, meats, deliYou are able to findfish, meats, deli--meats, dairymeats, dairyTheyserve Mexicanfastfood aswellTheyserve Mexicanfastfood aswellThey appear inspecificstreetscertain day of the weekThey appear inspecificstreetscertain day of the weekin a periodic basisin a periodic basis


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NationalProduct

Producers


FoodServiceSupermarkets

CentralMarket

FoodManufacturing

FixedMarkets

MovingMarkets

Moms&Pops


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Momsand Pops(Tiendas)Momsand Pops(Tiendas)

Around 400,000 inMexicoAround 400,000 inMexico The oldconvenience store inthe distributionThe oldconvenience store inthe distribution

chainchain

All income classes have a store aroundtheAll income classes have a store aroundthecornerandtheywill purchase manythingscornerandtheywill purchase manythings

fromth

ese st

ores wh

en

th

eya

re runn

in

g outfrom

these s

tores w

he

nth

eya

re runn

in

g outof suppliesof supplies


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NationalProduct

Producers



CentralMarket

FoodManufacturing

FixedMarkets

MovingMarkets

Moms&Pops

CONSUMER


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National Product

Producers



CentralMarket

FoodManufacturing

FixedMarkets

MovingMarkets

Moms &Pops

CO

NSUM

ER

Convenience

Stores

Food Distributionflow ChartFood Distributionflow Chart


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Convenience StoresConvenience Stores

Fastest GrowingFastest Growingretail segmentretail segment

OXXO, Extra,OXXO, Extra,Soriana, 7Soriana, 7

ElevenEleven DistributionstillDistributionstill

a problemfora problemforsupplierssuppliers

Little importedLittle imported

food productsfood products Only the onesOnly the ones

distributed bydistributed byan importeran importer


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DistributionChannelsforDistributionChanne

lsforImported FoodsImported Foods


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Imported FoodDistribution FlowImported FoodDistribution Flow

Forwarder

Food Exporters

Custom Broker


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FoodDistributionFoodDistribution ImportedImported


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Forwarder

Food Exporters

Custom Broker

Transported, byair, sea, ground: trailer or train


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Transportation of GoodsTransportation of Goods


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InternationaInternationa CommerceCommerce TermsTerms ((IncotermsIncoterms))

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 andFreight FreightCostsincluded

ARRIVAL PORT DES Deliver ExShip Delivered onShip

COUNTRYIMPORTS CIF CostInsurance Freight Self-explained

DAF Delivered atFrontier Self explained

DEQ Deliver Ex Quay (Duty Paid)

CPT Carriage Paid To Vendor paystransp.

CIP Carriage andInsurance Paid To

http://www.foreign-trade.com/reference/incoterms.cfm


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Documentsto importproductsDocumentsto importproductsBASIC PAPERWORK ANDCOMPLIANCE FORFOODEXPORTS

COMMERCIAL INVOICE

CERTIFICATE OFORIGIN (NAFTA IF IT APPLIES)

CERTIFICATE OFFREE SALE

RETAIL, NOM-51 PRODUCTLABELING REGULATION

PAPERWORKFOR PERISHABLES

ANIMAL USDA INSPECTION CERTIFICATE

VEGETABLE USDA PHITOSANITARY

PAPERWORKFORSPECIFIC PRODUCTS (i.e.dairy, fish)

PHYSICAL AND CHEMICAL ANALYSIS

MICROBIOLOGICAL

MEXICAN OFFICIAL NORM ( NOMS)

EACH SPECIFIC PRODUCTWILLVARY AND YOUWILL BE ABLE TOFIND

OUT

WHAT PAPE

RWORKIS NEEDED

WHEN THE CUST

OMB

ROKE

RSCLASSIFIESTHE PRODUCTTHROUGH THE TARIFF


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Forwarder

Food Exporters

Custom Broker

Importers/ Distributors



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Importers/ DistributorsImport Warehouse DistributeTake ownership of the productHave their own trucksto distributeDirect relationship with retailersPromote inpartnership with exportersOwnSales& Merchandising force


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Forwarder

Food Exporters

Custom Broker



ImporterWarehousing& Distribution

RetailersRetailers


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Importerswith small infrastructureImporterswith small infrastructure

Importers/ No infrastructureImport Negotiate with retailersTake ownership of the productHave smallsalesforceWillcontractpublic warehousing

WillcontractproductdistributionPromote inpartnership with exporters


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Forwarder

Food Exporters

Custom Broker

RetailersRetailers



ImporterWarehousing& Distribution

Distribution Centers

CONSUMER


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44

ReviewofSupermarketSegmentReviewofSupermarketSegment


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Top 10 Retail Chains inMexicoTop 10 Retail Chains inMexico

No.St

oresNo.St

ores *Sa

les 2007*Sa

les 2007

11 WalmartWalmart MexicoMexico 223.4223.4 659659

22 SorianaSoriana 67.167.1 357357

3 OXXO /3 OXXO / FemsaFemsa 40.140.1 54415441

44 ComercialComercial Mexicana 38.9Mexicana 38.9 184184

5 Liverpool5 Liverpool 38.938.9 6464

66 SanbornsSanborns 33.833.8 354354

77 GiganteGigante 23.923.9 287287

88 Ch

edra

uiCh

edra

ui 21.021.0 1341349 Home Depot9 Home Depot 20.620.6 6464

10 COSTCO10 COSTCO 20.320.3 3030*Billion pesos*Billion pesos

Source: MVI Economic ConsultantsSource: MVI Economic Consultants


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QuickviewQuickview ofof thethe RetailRetail SegmentSegment

12,69512,695 RetailRetail OutletsOutlets inin

MexicoMexico (ANTAD 2008)(ANTAD 2008)

JanJan--AprilApril2008, 8.5% sales2008, 8.5% salesincreaseincrease vs. 2007vs. 2007 samesamenumbernumber ofof storesstores

MarketMarket Share:Share:

WalWal--Mart, OXXO, Soriana,Mart, OXXO, Soriana,ComercialMexicana andComercialMexicana andLiverpool control19.6% inLiverpool control19.6% in20072007


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Retail SegmentRetail Segment


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WAL*MART MexicoWAL*MART Mexico

1,033 units in 176 cities including all1,033 units in 176 cities including all

formats: hypermarkets, supermarkets,formats: hypermarkets, supermarkets,apparel stores and restaurantsapparel stores and restaurants

Market Capitalization ValueMarket Capitalization Value

20.2 billion dollars20.2 billion dollars

Sales 2007Sales 2007

22.8 billion dollars22.8 billion dollars

Employees:Employees:

158,000158,000

Suppliers: 12,000Suppliers: 12,000

Sales floor capacitySales floor capacity

22,499,860 sq ft.22,499,860 sq ft.

Seating Capacity: 59,437Seating Capacity: 59,437


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High End

Targets AB44 STORES6% SALES

Dept.StoreTargets B,C,D52 STORES5% SALES

FamilyRestaurant

Targets:ABC268 Restaur.4% SALES

WAL*MART MexicoWAL*MART Mexico

http://www.walmartmexico.com.mxhttp://www.walmartmexico.com.mx

Club StoreBusiness-Family

84 STORES

27% SALES

Discount -BasicLow Income C,D

324 STORES

33% SALES

SupercentersABCD Classes141 STORES

28% SALES


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Membership wholesale outlets targeting businessesMembership wholesale outlets targeting businessesan

dcon

sumers buyin

g la

rge volumes.an

dcon

sumers buyin

g la

rge volumes. 84 Sam's Club Stores.84 Sam's Club Stores.

HighlightsHighlights SalesSales (millions):(millions): US $ 6,000US $ 6,000

Average sales area per storeAverage sales area per store (sq.ft.):(sq.ft.): 94,60094,600 Customers served (millions):Customers served (millions): 6464 SKUs:SKUs: 4,1004,100 (without perishables)(without perishables) Food (% of sales):Food (% of sales): 48%48% NoSlotting feesNoSlotting fees


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Semiwholesale andaustere discount storesSemiwholesale andaustere discount stores

offerin

ga

limited

assor

tme

ntof b

asicmerc

handise,offeri

ng

alimi

ted

assor

tme

ntof b

asicmerc

handise,mainlyfoodandmainlyfoodandhousewareshousewares..

ThereThere areare 324 Bodega stores.324 Bodega stores.

Highlights

Sales (millions):US $ 7.3

Average sales area per store (sq.ft.): 53,500

Customers served (millions): 183 SKUs: 49,000

Food (% of sales): 48%

Slotting fees


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Supercenters providing the widestmerchandiseassortment, from groceries andfreshtoapparel andgeneral merchandise.

141 Wal-MartSupercenters

Highlights

Sales (millions): US $ 6.2

Average sales area per stores (sq.ft.): 97,000 Customers served (millions): 153

SKUs: 90,000

Food (% of sales): 45%


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Supermarketslocated in residential areasof MexicoSupermarketslocated in residential areasof MexicoCity and itssurroundingswith a focuson quality andCity and itssurroundingswith a focuson quality andconvenience.convenience.

6464 SuperamaSuperama supermarkets.supermarkets.

HighlightsHighlights

Sales(millions):Sales(millions ): US $11.5US $11.5

Average salesarea perstoreAverage salesarea perstore (sq. ft.):(sq. ft.): 17,30017,300

Customersserved(millions) :Customersserved(millions) : 5454

SKUs:SKUs: 25,00025,000

Food(%Food(% ofsales) :ofsales) : 70%70%


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Holding Companyfor Comercial Mexicana

4thRetailerin sales inthe Mexicanmarket

Partners at 50% forthe COSTCOclubs inMexico

64.9% of sales are food products

285 Stores indifferentformats, nationwide

presence Formore information:

http://www.comerci.com.mx/comerci/jsp/Comerci.jsp?id=1


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**includes administrative employees***100%

except sales

General Information CCM

Sales(thousands

of Ps.)

UnitsSales Area

(m2)

Sales Area

(sq.ft

.)

Emplo

yees

Customers

(th

ousan

ds)

Numberof

products

ComercialMexicana

12,526,754 53 322,305 3,469,254 8,112 82,055 55,000

BodegaC.M.

6,519,998 39 207,185 1,969,621 4,290 45,204 30,000

Mega 18,289,526 69 627,115 6,750,200 12,868 89,337 60,000

Sumesa 861,070 14 11,931 128,424 963 12,928 8,000

Costco***

10,918,141 30 329,277 3,544,305 9,179 37,989 3,500

CaliforniaRestaurants

798,675 71 16,001* 3,484 10,062

Others +Al Precio &CityMarket

495,002 9 13,997 150,663 1828 1,716 14,400

Total 50,409,166 285 1,123,924 12,097,80632,993

**223,628

*seats


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ComercialComercial MexicanaFormatsMexicanaFormats

Mega: 69 hypermarkets, ABCD clients. 36.3% of salesMega: 69 hypermarkets, ABCD clients. 36.3% of sales Comercial Mexicana: 53 stores, AB clients, 23.8% ofComercial Mexicana: 53 stores, AB clients, 23.8% of

salessales

Bodega: 39 discount stores, CD clients, 12.9% of salesBodega: 39 discount stores, CD clients, 12.9% of sales

Costco: 30 club stores, AB clients, 21.7 of their salesCostco: 30 club stores, AB clients, 21.7 of their sales Sumesa: supermarkets in residential areas, AB clients,Sumesa: supermarkets in residential areas, AB clients,

14 stores, 1.7% of their sales14 stores, 1.7% of their sales

California Restaurants: family restaurant chain, 71California Restaurants: family restaurant chain, 71

stores, 1.6% of their salesstores, 1.6% of their sales Al Precio: 8 small discount outlets, located in low incomeAl Precio: 8 small discount outlets, located in low income

areasareas

City Market: 1 high end gourmet supermarket, organicCity Market: 1 high end gourmet supermarket, organic

section, fine foods type of storesection, fine foods type of store


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2007 numbers:

Sales :US$65,191 million

Stores: 257 (+198 Gigantestores for 2008)

Formats:

163 Hypermarkets

71 SorianaMercado (discount)

23 City Club (club stores)

130+ Super Cit

y (con

ven

ien

cestores franchised)

Sales Space: 1.8 millionm2

Employees: 63,500

Clients: 345.5 million


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In 2007, Gigante soldIn 2007, Gigante sold

rentedatotal of 200rentedatotal of 200

stores to GrupoSoriana.stores to GrupoSoriana.

Afterthis transaction,Afterthis transaction,

Soriana became theSoriana became the

second largestretailersecond largestretailer

afterWalafterWal--mart.mart.

Gigante keptcontrol ofGigante keptcontrol of

theirothercompanies:theirothercompanies:

Toks Restaurants, OfficeToks Restaurants, Office

DepotandRadioShackDepotandRadioShack

Gigante owners continue toownthe real estateGigante owners continue toownthe real estate

andtheyare renting the stores toSoriana.andtheyare renting the stores toSoriana.


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2007 figures:

Hypermarkets : 29 Supermarkets : 70

Super Che (discountstores): 16

El Super (in California

USA): 8

Employees: 25,000

Sales : 1,000 US$Million

Region: Nationwide

since 2006


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CarrefourretiredfromCarrefourretiredfromthe Mexicanmarketinthe Mexicanmarketin

2005. Its 29 stores2005. Its 29 storeswere soldto Grupowere soldto GrupoChedraui. ChedrauiChedraui. Chedrauibecame thenthe 8thbecame thenthe 8thretailerinMexicoandretailerinMexicoand

gainednationwidegainednationwidepresence withthispresence withthispurchase.purchase.


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HH--EE--BB

HEBHEB representsrepresents 300300storesstores inTexas andinTexas andMexicoMexico

StoresStores ininMexicoMexico

Hyperma

rketsHyperm

arke

ts : 8: 8

SupermarketsSupermarkets : 11: 11

RecognizedRecognized inin NorthernNorthernMexicoMexico asas anan upscaledupscaledSupermarketSupermarket..

Corporat

eCorporat

e officesoffices locat

edlocat

edinMonterreyinMonterreyMexicoMexico


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Marketing Solutions Firm

Rep. Food Export Midwest and Northeast

Raul Caballero, CEO PresidentVioleta Picazzo, VicePresident

Tel. (52+55) 5362-7407

Fax. 5362-6724

[email protected]

[email protected]

www.marketingsolutionsfirm.com

THANK YOTHANK YO