Doing Business in Mexico. Managed Strategies

Transcription

1 Doing Business in Mexico Managed Strategies

2 Cristina Hernandez International Sales Director SECTORS: -Consumer goods -Food & Beverage -Automotive -I.T. -Agriculture Managed Strategies Mission: To successfully assist SME s & International companies Export and Sell their products and services abroad in a more efficient and cost effective manner within Mexico Ms. Hernandez is a founder at Managed Strategies. She acts as a sales representative and advises international companies on how to strategically enter and expand. Specifically, she identifies distributors in multiple industries and commercial partners and links suppliers or buyers with importers, or distributors. She manages the sales cycle for clients throughout the country. Ms. Hernández brings over 9 years of professional experience in investment management, startup ventures and international business between the USA, UK and Mexico. She holds a Global M.B.A. from Thunderbird School of Management.

3 AGENDA 1. Geography 2. Demographic trends 3. Why Mexico? 4. Business Opportunities 5. The Retailers 6. Approaching the market 7. Challenges 8. Recommendations

4 Why Mexico? Tijuana Geography Size of the border: 3,145 km. Total: 112 Million Mexico City: 25 million Guadalajara: 4 million Monterrey: 4 million Middle: 45 million -+ Mcallen/ Loredo TX Monterrey Altamira Guadalajara Veracruz Mexico was the first country in LATAM to sign the first FTA. Mexico has 14 Free Trade Agreements with countries including the US and Canada, Japan and the EU Manzanillo Mexico City Privileged geographic position: -Neighbour to the largest market in the world (the US) -Bicoastal country (multiple ports in both the Pacific and the Atlantic)

5 14% of the population is over 65 years old (World Bank, 2012). Demographic Trends Total: 112 Million, 11th largest economy in the world based on PPP Vs. 65% of Mexico s population is under 25 (World Bank, 2012). Opportunities for growth due to young population. The World Bank characterizes Mexico as an uppermiddle income economy, In 2011, consumer expenditure per capita totaled US$16,731 PPP (The World Bank, 2012). Disposable income per capita has grown to US$12,732 in (OECD, 2012)

6 Why Mexico? Gourmet Market in Mexico A market driven by a large middle class (48.3% of population) Middle: 48million -+ 42% of Mexicans purchase at least 1 gourmet product for every supermarket visit (Expo alimentaria, 2010). Monthly expenditure on gourmet Food: GBP (Expo alimentaria, 2010). Market driven by -upper-middle & upper class -aspirational middle class (Prochile, 2011). 1. Confectionary 24.7% 2. Dairy 2.3% 3. Sweet & Savoury snacks 20.4% 4. Non-alcoholic beverages (juice & RTD tea) approx. 15% 5. Alcoholic beverages 40.5% 6. BFY packaged food 31.5%

7 Business Opportunities in Mexico United States Recent legislation ended or limited exclusivity contracts with retailers and restaurants (Euromonitor, 2013). Beer Non-acoholic beverages Gourmet products Sourcing opportunities Sales of soft drinks in Mexico look likely to remain among the highest in the world in volume terms. They are set to reach more tan 48 billion litres by 2016 & grow by 29% in the next 4 years. (UKTI, 2013). Mexico has the highest consumption of pastries per capita in the world! (Euromonitor, 2013). Mexican consumers are growing fond of imported cheese and butter (Euromonitor, 2013). World s largest organic coffee producer & One of the leading suppliers of organic produce in Latin America. (Avocado, exotic fruits, berrys, herbs). Consumer Goods: Manafacturing: Cosmetics, Housewares etc.

8 Who are the KEY in the market? Supermarkets: est. 3,686 (Profeco, 2013) ,000 1,300 Convenience stores: 12,720 (El Economista, 2013) 1,

9 Decide your Sales Approach Lean Exporting TM Direct Vs. Indirect A direct approach would be eliminating as many intermediaries as possible to sell directly to a major buyer or final sales channel. Alternatively, an indirect approach would be selling through an intermediary such as an importer, broker, or a distributor.

10 How do you sell into the Market? What do you value? Time/Money, Control, volume Choose your approach Direct (selling directly to the retailer) PROS Control over the buyer/supplier relationship Volume: Potential for increased volumes in the future. Price CONS Time: Long sales cycle, due to vendor account setup It takes time to understand the market and know the buyers Indirect (Importer or distributor) Time: Often the distributors are already set up in the accounting system as vendor, saves you time, Often they know the business culture and how to help guide on requirements. $ intermediaries =incremental markups increasing the $. possibly limiting the potential sales volume. there could be a conflict of interest with similar products that the intermediary is distributing Hybrid Strategy (Sales representative or a combination of both) High Investment: FDI Control over the Market & the Relationships You can have a direct approach with some retailers, and use a indirect (distributor) approach for more fragmented retailers (regional) facilitate a strong relationship with a sales representative

11 DEVIL S IN DETAILS The Challenges Difficulty sending samples, Courier companies don t work Retailers!: Payment Terms, Marketing Support Secure strong relationship: Visit the market, having a face-to-face relationship is important, OR have someone that can FACILITATE the relationship. Importing documentation & Vendor paper work: (letter of credit, labelling, contracts) Be prepared: It s a long sales cycle, 8mos.-1 year Don t forget to register your trademarks prior to importing Have to work with multiple departments (accounting, buying, importing).

12 Recommendations Use your strategic partners Decide on your strategy US Commercial Service Advisors Don t Underestimate the Mexican Buyer Net new sales = Patience Happy to have a teleconference with you. We can assist to close the gap and facilitate doing business in Mexico.

13 Questions? For More Information please contact: Cristina Hernandez International Sales Director Mexico: +52 (1) USA: E: W: USA-Mexico-UK