Mexico a priority market for Alberta plant-protein producers

Mexico a priority market for Alberta plant-protein producers

Despite pandemic, agrifood exports expected to remain strong

By Kathy Kerr

Mexico is a big market, Alberta’s fourth largest export partner, and a country embarking on aggressive measures to promote healthy eating.

That’s why the Alberta Agriculture and Forestry department considers it a priority market for development. The time is ripe for players in the plant-protein sector to look south for opportunities.

Exporters and trade experts concede there are challenges: the U.S. is a formidable competitor in Mexico; the Mexican market is very price-sensitive; and the plant-protein market isn’t as hot as it is in Europe yet. But the potential is there, given a population of close to 128 million and a growing interest in novel food products.

Established market

Meghan Horosko, Latin America trade and relations officer for Alberta Agriculture and Forestry, reports that Alberta sells lentils, dried peas, chickpeas and black beans into the Mexican market.

Meghan Horosko

“Global trade data we use here projects increased demand for legume and pea-based meat substitutes over the next five years in Mexico,” says Horosko. “They see the market for plant-based protein expected to grow at 5.18 per cent over the next five years. Soybean-based products will lead at 5.14 and pea-based at 4.94 per cent over the next five years.”

A recent trade mission to Monterrey, in northeastern Mexico, included some value-added agrifood entrepreneurs from Alberta. The mission yielded several meetings with prospective customers, including grocery and convenience store chains.

“When I was in Mexico in October and speaking to suppliers, the positive reputation Canada has is obvious,” says Horosko.

There was a lot of interest in emerging products, she adds. Purchasers for Mexican retailers showed up at the trade mission looking for new, innovative products.

The Covid pandemic

The current pandemic crisis has, of course, injected uncertainty into the entire area of global trade. Data on how exactly Alberta exporters have been affected hasn’t come in yet.

“At this point, it’s too soon to say how COVID-19 will affect our agrifood exports to Mexico,” says Horosko. “We are monitoring developments and assessing the situation on a daily basis.”

Peter Hall

Peter Hall, chief economist for Export Development Canada, says he also doesn’t have specific numbers yet for Mexico but in the area of food exports, the situation is actually pretty good.

“All the analysis and anecdotal information we’ve been able to put together says to us the food sector is performing very, very solidly right now.”

With security of the food supply now top of mind, and the U.S. and Mexican borders open for food exports and imports, plant protein entrepreneurs could still launch relationships in Mexico, suggests Hall.

“Somebody who’s ready to sell something; they’ve got ample supplies of it; they can work out the logistics; I think (importers will) pick the telephone up, or the email will get answered, because diversification of supplies is one way of covering yourself off in an environment like this.

He says the Mexican market also has long-term prospects for plant protein exporters, given the growing interest in the sector in most emerging markets.

“Why sell to Mexico in the long term? Simply because they’re getting wealthier and that’s putting pressure on their own food system, which doesn’t work that well at the best of times,” says Hall. “They do need to import a lot. There’s an immediate and long-term reason to be dealing with the Mexican market.”

Mexico’s fight against obesity

Recently established rules requiring stringent health labelling work in favour of plant-based and plant-protein products. In January, the Mexican government announced that foods high in fat, sodium and sugar would need to carry prominent warning labels on packaging.

Rhonda Goldberg

With 75 per cent of the adult population overweight or obese, the promotion of healthy eating is an official policy.

For Rhonda Goldberg, president of Calgary-based Oh! Naturals, that policy was a selling point when she attended the Canadian trade mission in Monterrey.

Oh! Naturals makes all plant-based banana chips and sweet potato fries.

“Mexico is definitely a place I’ll be focusing on given what the (Mexican) government is doing,” says Goldberg.

After the trade mission, her company made a deal with GNC, a vitamin and health-food chain, and is following up with at least two other potential customers. The first Oh! Naturals shipment arrived in Mexico in mid-March, says Goldberg.

“I think, in general, they’re going to be educated, from school system to consumer, about a better-for-you choice.”

The big competitor

For Alberta firms and producers, the major competition is the U.S., with its closer proximity and multiple transportation routes directly into the Mexican market.

Carlo Dade

Carlo Dade

Carlo Dade, director of the Trade and Investment Centre at the Canada West Foundation, says Albertans have more than an uphill battle going head to head with the U.S.

“You’re not going to get a home run out of this. You’re lucky to get hit by the ball so you can get on base.”

But there are ways Alberta exporters can distinguish themselves and work our interlocking trade agreements to their advantage, Dade says.

Using science, Canadian suppliers can tweak products to more exactly meet the needs of the market, he suggests.

And while the U.S. joined Canada and Mexico in the new United States-Mexico-Canada Agreement (USMCA), the Americans are not a signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP), to which both Canada and Mexico belong.

Plant-protein businesses should study the TPP input rules to see if their ingredients will get preferential treatment from a Mexican company making a finished product with a plan to export that product to another TPP signatory.

Export Development Canada advises on its website that “Canadian investors and exporters can gain immediate access to more than 45 markets across the world given the many trade agreements Mexico has signed.”

Horosko stresses that the Mexican market is very price-sensitive, so Alberta firms wanting to sell there must meet competitors’ prices. That’s why she sees promise in the higher niche end of the specialty food market.

“On the value-added side, the innovative, niche gourmet products seem to make sense for exporters.”

Goldberg said she also found that the antipathy in Mexico toward U.S. President Donald Trump and his policies proved a selling point for her in Monterrey.

Missions, trade shows and resources

Canada has trade office personnel in Mexico City, Monterrey and Guadalajara, and Alberta has people in Mexico City and Guadalajara.

Mexico City Grocery Store

Dade recommends that businesses interested in partnering in Mexico tap into the Alberta representatives on the ground there.

He also suggests small firms trying to crack the market might want to get distribution help.

Given the size of the country, a distributor will know where the best prospects are in different markets, such as Juárez or Guadalajara.

Hall, of Export Development Canada, says Mexico’s large conglomerates in the convenience store and supermarket chain business, such as Soriana, are very sophisticated with significant distribution reach.

“Getting in with distributors like that is potentially quite lucrative,” he says.

Horosko says Alberta Agriculture and Forestry works closely with the Canadian trade office, Agriculture Canada and Export Development Canada to help Alberta firms seeking partnerships.

The province is looking at expanding its involvement in trade shows in Mexico. Alberta is considering participating for the first time in a FoodTech Summit and Expo in Mexico City, currently scheduled for September. It focuses on ingredients, additives and packaging for the food and beverage industry.

The feedback has been very good from companies that participated in the October Monterrey mission, she adds.

Goldberg said she was happy with her Monterrey experience, which included speakers from the area talking about the market; buyers, brokers and influencers who reviewed sample products; tours of retailers; and short networking sessions with a variety of potential customers.

Oh Naturals! exports its snack products to Japan and had a brush with exporting to South Korea, where labelling issues created a hitch in the process, so Goldberg has experience with the process of entering international markets.

Trade culture tips

Horosko advises prospective exporters to go to Mexico to form direct relationships with their partners.

“Personal relationships and interactions are extremely important when conducting business,” she says. “Generally, Mexico business is conducted at a slower pace so this may mean companies need to exercise more patience in terms of conversations, response times.”

Horosko says Canadians are perceived in Mexico as being more cautious than Americans and not as persistent. Canadian companies may reach out, then fail to follow up when there is no immediate reply.

Goldberg says she was surprised that the GNC chain was the first of her contacts to agree to a deal, since other potential customers she met during the Monterrey mission seemed more enthusiastic. She will continue pursuing those other retailers and certainly plans to keep Mexico on her radar.

This story is part of a series exploring the relationships and opportunities with trading partners. Previously:

Denmark
Japan
The Netherlands


Mexico data

  • Mexico has a population of close to 128 million.
  • The government is a federal republic.
  • Canada and Mexico are both members, along with the U.S., of USMCA, the successor to the North American Free Trade Agreement.
  • Canada and Mexico, but not the U.S., are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
  • Mexico’s 2018 GDP was $2.6 trillion.
  • Mexico’s pulse imports increased from $163.6 million to $307.1 million between 2013 and 2018. Of that, Canadian pulses accounted for almost 40 per cent.

Mexico and Alberta

  • Mexico is Alberta’s fourth largest agrifood export market. Canola seed, beef and wheat are dominant exports to Mexico.
  • Alberta exported $552.91 million worth of agrifood products to Mexico in 2018.
  • In 2018, Alberta exported $957,000 worth of pulses to Mexico, including lentils, dry peas, chickpeas and black beans.
  • In the 2016 census, 22,470 Albertans described themselves as having Mexican heritage.
  • Alberta’s sister state is Jalisco.

(Sources: Canadian census, Alberta Agriculture and Forestry, Government of Alberta, World Population Review)

 Kathy Kerr, a former deputy and business editor at the Edmonton Journal, is a freelance writer.

 Posted April 15, 2020

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