Moving through Mexico's a-maze-ing food market

AgExporter, August, 1994

Get ready! Get set! Stop! Don't start exporting yet. If you want to sell food products in Mexico, export professionals advise you to take time and learn about the country's food distribution system -- which could be a confusing maze if you aren't familiar with the markets. The amount of time you spend to educate yourself about Mexico's vast markets, and how to get food products there, could be well worth the investment.

There's a lot to learn about Mexico. The biggest market for imported foods is the Mexico City area, with 20 million residents and a large concentration of supermarkets and fast food outlets. These things make it an attractive market for the sale of U.S. food products. Aside from being the seat of government, it is also the center of business with most of the major food processors being headquartered there as well.

The second largest city is Monterrey, with a population of 3.5 million. Located only 90 minutes by modern highway from the biggest inland port along the border, Laredo, Texas, Monterrey's orientation in business is more toward the United States than that of Mexico City.

Another major market is Guadalajara, in the west-central portion of Mexico, which has 3.3 million residents and is rapidly growing. Because of its proximity to the main agricultural growing areas, one can find an abundance of fresh fruits and vegetables for sale there. The availability of imported food products is smaller than that of the other major markets. However, this is changing.

The main cities that line the U.S.-Mexico border are also good markets for U.S. food products. These include Tijuana (800,000 people), Mexicali (600,000), Juarez (1.4 million) and Reynosa (400,000). Since these cities are close to the United States, their inhabitants have a greater U.S. orientation.

The border cities are a distance from major Mexican food production regions and must get most of their food from the United States. It is believed that a high percentage of some U.S. food exports to Mexico, especially perishable items which cannot travel a great distance, end up there. Moreover, some selected products, such as fresh potatoes, are permitted to be sold only there for phytosanitary reasons.

Resorts are also good bets for exports of U.S. food products. The main Mexican resorts are Acapulco, Puerto Vallarta and Mazatlan on the Pacific Coast, and Cancun and Cozumel on the Caribbean Coast. These collectively represent an important market for U.S. food products, especially high-value ones.

Caribbean resorts in Mexico are close to major U.S. Gulf Coast ports, like New Orleans and Houston, and the transportation from these is easier. These resorts are designated as free port zones, so food products enter free of normal restrictions as long as they are consumed within the zone. Selling in these markets can be competitive, as they have been served by U.S. suppliers for years.

Other markets lack the population, affluence or infrastructure to warrant being a direct focus of U.S. sales efforts. Most of these smaller markets are served from the principal cities mentioned above.

The Transportation Maze

Mexico's major markets, with the exception of resort and border cities, are located in the interior. Thus, overland transport is generally the best option.

Unfortunately, most of Mexico's highways -- mostly two-lane roads -- are inadequate and in poor condition. About one-third of the roads are paved. However, this is beginning to change. Mexico has given concessions to private entrepreneurs to build a network of toll roads. Where completed, this has resulted in vastly improved roads, but because of high tolls, has made ground transportation fairly expensive.

The average transit time by road between southern California and Mexico City is five days. This includes two days of traveling within the United States to one of the border crossings in Texas, such as Laredo or El Paso/Juarez, and three days (including border logistics) from those points to Mexico City, which is about 740 miles south of Laredo.

A problem with the trucking of U.S. exports is that the driver and cab must be switched at the border and a Mexican firm and driver must take over. The trailer does not need to be changed. Under NAFTA this will change and eventually U.S. and Mexican trucking companies will be allowed to cross the border -- at first only within specific regions and limited distances from the border.

The state-owned railroad system, Ferrocarriles Nacional de Mexico (FNM), plagued by a shortage of freight cars and long delays, is being reorganized and modernized. Foreign rates have been cut, delays at border crossings reduced and U.S. and Mexican lines have integrated their through service. Despite these improvements, rail transport only makes sense for non-perishable products with a long shelf life.

Air freight capacity for handling highly perishable items, such as chilled beef and fresh seafood, is expanding. Some of the major airlines providing freight services include Aero Mexico, Mexicana, American, Continental, Delta and United.