Dairy in Mexico

Dairy in Mexico

Prospects
Pre-packaged formats of cheese expected to gain share
Sales of pre-packaged cheese are expected to maintain dynamic growth over the forecast period as retailers favour these formats and consumers become used to the convenience they offer. Over the review period, it has been observed that major retail chains have either eliminated or significantly reduced the space they previously had for unpackaged cheese.

Product innovation to be driven by convenience
Over the forecast period, product innovation is expected to be observed mainly among pre-packaged cheese. This has been the case over the review period, with relevant innovations including improved resealable packs, and the offer of a wider range of sizes that run from 200g to 1kg.

Competitive Landscape
Sigma Alimentos leads sales of cheese in Mexico
In 2018, Sigma Alimentos led sales of cheese, closely followed by Grupo Lala. While Sigma Alimentos has a strong presence in hard cheese with brands such as Noche Buena, Fud and Franja, Grupo Lala offers the brands Lala, Los Volcanes and some of Nestlé’s cheese brands that Grupo Lala manufactures and distributes under licence.

Mexico sets import tariffs to cheese from the US
In May 2018, the US imposed tariffs on Mexican imports of steel and aluminium, under its national security strategy. In response to this measure, Mexico set tariffs on specific products from the US, including among others, pork legs and shoulders, sausages, apples, blueberries, and various cheeses.

The brand Carranco is expected to increase its presence
In the second half of 2017, the cheese manufacturer Carranco, a company located in San Luis Potosí, reached an investment agreement with Ganaderos Productores de Leche Pura (Alpura). The latter is one of largest groups of ranchers in the country and has a well-developed distribution network with national coverage.

Prospects
Shelf stable formats to increase their share
Over the forecast period, shelf-stable formats are expected to continue gaining share from fresh milk. Although in 2018, both shelf stable and fresh milk have a positive perception among consumers in terms of freshness and quality, shelf stable milk is perceived as more convenient for busy lifestyles.

Milk alternatives to sustain dynamic growth
Milk alternatives is expected to remain the fastest growing category over the forecast period. This category includes beverages explicitly positioned as milk substitutes that are not actually dairy-based, typically derived from grains or nuts, such as rice milk, oat milk or almond milk.

Competitive Landscape
Grupo Lala leads sales of drinking milk products
Sales of drinking milk products are led by Grupo Lala which offers a wide product portfolio through a well-developed distribution network. The company has national coverage and has a long tradition in the country offering well-positioned brands.

Drinking milk products to remain a priority within social programmes
Despite the uncertainty about the changes that might be observed in public policy, over the forecast period drinking milk products are expected to remain a strategic part of social programmes. The Mexican government runs a milk subsidy programme operated by Liconsa, a government-run company that reports to the Ministry of Social Development.

Prospects
Product innovation expected to continue driving category value
Sales of yoghurt are likely to observe further product innovation over the forecast period as companies develop more sophisticated products that might add value to the category. Examples of this observed over the review period include the premiumisation of products by focusing on protein content, and the inclusion of grains, honey, and healthy toppings that include nuts, seeds, chocolate and dried fruit, among other healthy ingredients.

Greek yoghurt gains share among other yoghurt alternatives
Over the review period, Greek yoghurt continued gaining share within sales of yoghurt, as it is widely perceived as healthier and tastier than other products. The good performance of Greek yoghurt, despite being higher priced than most alternatives, is explained by the noticeable increase in availability, as many companies launched their own Greek yoghurt brands.

Competitive Landscape
Grupo Lala leads sales of yoghurt
In 2018, sales of yoghurt were led by Grupo Lala SAB de CV, also the leading player in drinking milk products. The company has a well-developed distribution network with national coverage, and has a wide product portfolio that includes milk, yoghurt, cheese and cream among others.

Product differentiation is strongly determined by price
In 2018, the offer of yoghurt is clearly differentiated by price band. Premium positioning includes Greek yoghurt versions, imported brands, some fruited brands, and most yoghurts with a functional positioning.

Prospects
Health trends to drive innovation
Over the forecast period, sales of other dairy products are likely to be fuelled by product innovation mainly resulting from health trends. However, other dairy is already mature, and it is not expected to see dynamic growth resulting from minor innovations.

Product differentiation as a strategy for growth
In such mature categories, product differentiation is likely to become the main strategy of brands to stand out and increase their share. Differentiation might come from packaging, either by changing the formats, the labelling or by offering multipacks at more attractive prices.

Competitive Landscape
Nestlé Mexico leads sales of other dairy products
In 2018, sales of other dairy products were led by Nestlé México, which has a presence in several categories such as condensed milk, coffee whiteners, cream, and fromage frais and quark. The company owns well-positioned brands such as Carnation, La Lechera and Coffee-Mate, which dominate the condensed milk and coffee whiteners categories, respectively.

Companies leverage their brands and expand their product portfolios
As companies look to increase their share in mature categories, they explore the possibility of using their already positioned brands to launch new products. This was the case for several new launches observed over the review period within other dairy products.

Modern grocery retailers expected to gain share
Sales of other dairy products through modern retailers are expected to gain share over the forecast period as they continue to increase their presence in the country. Over the review period, modern retailers have observed faster development in terms of outlets, when compared to traditional grocery retailers.