Mexico

A rich brand environment, but concentrated in a very few hands

By Fernando Alvarez Kuri
Director, Millward Brown Optimor Mexico

With the country’s openness to international markets, its geographical location, and the plethora of local options available, Mexican consumers have historically been in touch with a wide array of brands. Furthermore, this pool keeps growing as big international players realize consumers in the country are brand oriented, savvy and willing to spend if the right buttons are pushed.

From beer to bakery, passing through financial institutions and cement, Mexico's BrandZTM Top 15 ranking illustrates the brand richness in the country, showing also another crucial characteristic of the Mexican market, which is that power is concentrated in a very few hands. Tycoon Carlos Slim's empire owns at least four brands on the ranking (Telcel, Telmex, Inbursa and Sanborns); Walmart's Mexican branch, the largest Walmart operation of the world after that of the US, owns two brands, including the most valuable retailer in the country (Bodega Aurrerá and Superama); and Grupo Modelo, the largest brewer in Mexico, appears in the ranking with two, including the one occupying the spot as the most valuable brand (Corona).

Of all the categories included, one of the most dynamic has been retailing. Historically, Mexico has developed a strong retail culture yet it has been dominated by just a handful of local powerhouses such as Bodega Aurrerá, Liverpool and Sanborns, and complemented by international retailers (namely Inditex and its whole brand portfolio). But things have changed lately. China's entry into the World Trade Organization in 2001 has forced Mexico to lower its tariffs for imports of said country, meaning that international players whose production depends heavily on China and Southeast Asia are now considering Mexico as an attractive market to enter. Some of these players include heavyweights such as Gap, H&M and Forever 21 and their entry is forecasted to have an important impact on the country's retailing outlook, since local brands have grown isolated, protected by the government's past international trade policies.

But apparel is far from being the only category that is suffering the effects of past protectionist practices. Take for instance the Mexican furniture industry which, by the end of the nineties, occupied third place by sales volume in the world after the US and Italy, and which has been facing a hard scenario when confronting imports from Brazil and China. Competitiveness in the country is still an issue but, more and more, Mexican brands have started searching for ways to overcome an increasingly attractive and thus challenging market, taking advantage of their brand heritage as well as their position as locals.

The times they are a-changin'

Mexico may be traditional, but it is also open to the new: the country is one of the region's largest Internet markets and it is set to grow. Mexican consumers spend more time online and doing more activities than they did in the past (internauts in the country spending over four hours a day doing more than three simultaneous activities). Nine out of ten Internet users in the country use social media, thinking of it as the second most relevant media to obtain information from (the first place being search engines); in fact, between internauts, Internet is the most used and trusted media, surpassing public and paid television, radio and print. In this scenario, mobile is key. 70% of the 46,600,000 users in the country navigate through mobile devices. Alongside Mexico's competition laws on telecoms, this has pushed the importance of a few brands in the sector, namely gigantic Telcel, the second most valuable brand in the country.

But telecoms are not the only category in Mexico in which competition is an issue. Media is also an industry concentrated on a very few: only two broadcasters, Televisa (third most valuable brand in Mexico) and TV Azteca, hold most power in the market. Yet, competition laws in the country are set to change. Aiming to increase Mexico's competitiveness, the government is progressively planning to open more and more sectors and industries. In the case of media, the renewal of legislation is set to change the panorama swiftly, opening up possibilities for new competitors — foreign satellite and cable operators and maybe even one new broadcaster led by Carlos Slim — to try and shape Mexican opinion.

With high penetration, TV is still seen as the key media to start marketing activities with, but more and more, brands are changing their approach towards it. The perceived 'safety' offered by this media has led to an important stage of saturation: in 2012, there were 595 ads a month aired in primetime, a huge change compared to 2005's 462. Saturation has impacted ad effectiveness, lowering scores on communication and increasing a sense of glut and passiveness towards the message, according to Millward Brown's DynamicTrackingTM Database.

In this new context, to boost their marketing communication efforts, brands in the country must take into consideration the consumer's new relationship with media, which goes far beyond just saturation. Mixed media consumption, the search for more active participation as well as interesting shifts in preferences will not only be the most basic challenges advertisers will have to face in Mexico; they will have to create new ways of seeing, narrating and generating experiences in an increasingly competitive market.

BrandZ LATAM Top 50 2013

BrandZ LATAM 2013 Report Top 50 Report

Top 50 Chart


2013 BrandZ LATAM Top 50 Infographic

BrandZ 2013 Infographic


Methodology and valuation by Kantar Millward Brown


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