Large and Open Market Offers Opportunity
New consumer trends emerge as economy expands
Mexico offers excellent conditions both for business and investment.
With over 113 million inhabitants, Mexico is the largest Spanish-speaking country in the world. The population is geographically concentrated. Onequarter of the nation lives in one of three cities. About 20 million live in Mexico City. Guadalajara and Monterrey each have over four million inhabitants. With a median age of 26, Mexico is relatively young.
And people are connected, with 94.6 million mobile phone numbers and 11.5 million cable and satellite TV homes. Internet users total 34.9 million. Open to international trade, Mexico ranks second in the world in number of free trade agreements. These agreements grant Mexican businesses preferential access to over one billion customers in 43 countries.
Mexico is the world's largest silver producer and ranks sixth in oil production. It's a major tourist destination, having the most UNESCO World Heritage Sites in the Americas and ranking fifth worldwide.
By 2020, Mexico will become the world's seventh largest economy, contributing 7.8 percent to global GDP, Jim O'Neill, Chairman of Goldman Sachs Asset Management, predicts. He based this prediction on the fact that, despite the recent global financial crisis, Mexico's economy has maintained its stability and in several variables has shown evident signs of recovery.
Economy evolving to innovation focus
The Mexican economy is evolving to the third and most evolved stage of economic development, a focus on innovation, according to the Global Competitiveness Report 2011-2012 of the World Economic Forum, which places countries such as Argentina, Brazil and Chile in the same category.
The report also credits Mexico for reducing government regulations and improving the conditions for doing business, although it notes that security continues to be a difficult issue. Many companies that have transferred their manufacturing processes to Mexico say that the country reduced their labor costs significantly.
They credit the country's infrastructure for helping to optimize distribution costs. That infrastructure includes 26 domestic airports, 59 international airports, 16 international seaports, 27,000 kilometers (16,800 miles) of railways, 123,000 kilometers (76,000 miles) of roads and 52 crossing points to the US.
Changes influence brand trends
These economic changes influence brand trends. "Olympic" brands such as Coca-Cola and Apple are still the most popular among the general population. However, there is a large group of brands that is migrating towards a "Niche" or "Specialist" space in which they serve a specific group of people. In a country as large as Mexico, it's hard to find brands that appeal to the entire population. Two recent brand trends reflect changing consumer living styles and focus especially on two areas: practicality and personal health.
People are busy. They hardly have enough time in a day to get things done at home or at the office, care for family and friends, and then find time for themselves. They look for time-saving products that help them better manage their busy lives. This practicality is apparent in products like ready-to-eat meals, such as granola bars and drinkable yoghurts, as well as in all-in-one shampoo and conditioners and fast-dry, long-lasting nail polish.
People also now realize that while leading busy lives they've adopted some unhealthy habits. They're looking for ways to improve personal health. This interest can be seen in products such as vitaminenhanced cereals, body lotions made with natural ingredients, low-sugar soft drinks and chocolate bars and more natural foods.
TV remains key, but Internet growing fast
Of all product categories, personal health leads in advertising spend, followed by cellphone services and banks. Genomma Lab, a pharmaceutical company, is Mexico's number one advertiser, spending more than P&G, Unilever, Colgate- Palmolive and Bimbo, the bakery brand, together.
TV remains the predominant media channel with overwhelming dominance. TV accounts for 62.5 percent of advertising media investment compared with radio, its nearest rival, at 9.1 percent market share. The other channels and their shares include: outdoor, 8.9 percent; newspapers, 7.8 percent and Internet, 6.9 percent.
Internet is growing at the fastest pace, with 17.8 percent year-on-year growth in 2011, followed by cinema at 14.9 percent growth and outdoor at 8.9 percent. TV spending grew 5.4 percent in 2011, after three consecutive years of decline.