OVERVIEW-Substantial halal opportunities in Mexico’s $141 billion processed food market

Mexico has a small Muslim population, estimated at just over 100,000, but it has a developed infrastructure and significant potential to expand halal exports to Organisation of Islamic Cooperation (OIC) markets.

MARKET OVERVIEW

The size of Mexico’s processed food market was estimated at $141 billion (pdf) in 2015, and is projected to grow by 4.5 percent CAGR to reach $179 billion in 2020, according to U.S.-based research company IHS. The food processing industry accounted for 3.9 percent of the country’s GDP.

Mexico’s increasing consumer income levels and the expansion of its middle class is expected to drive sales of premium brands and encourage the development of the food and beverage sector.

However, compared to downstream industries, the agriculture sector in Mexico is underdeveloped, yet the climate and its proximity to the United States make it ideal for agriculture production and exports.

SIGNIFICANT HALAL MARKET OPPORTUNITY

An estimated 110,000 Muslims in Mexico spent $220 million on F&B in 2015, up from $210 million in 2014. This is expected to reach $280 million in 2020, based on 4.9 percent CAGR (according to national estimates) and accounting for the Muslim share of the population, adjusted for relative income levels.

To address the broader needs of the local Muslim population, two halal certification bodies have emerged in Mexico: the Islamic Cultural Center of Mexico (CCIM), founded in 1994, and Viva AC Halal that was set up in 2008. Viva AC Halal attends Mexican trade shows to showcase the potential for certified products in the global halal market.

These are the sole halal certification authorities in Mexico, and between them they have certified dozens of Mexican companies and more than one hundred products of Mexican origin. Certified halal product segments include personal care, pharmaceuticals, and food and beverage.

The CCIM has also sought proper recognition from the Indonesian Council of Ulama (MUI).

Mexico is a net exporter of meat and live animals to Organisation of Islamic Cooperation (OIC) member countries, but there is substantial scope for growth. Total meat and live animal exports to OIC member countries from Mexico were valued at $1.3 million in 2015, and total food and beverage exports to OIC countries were valued at $352.5 million in the same year. The largest OIC importers of meat from Mexico include Egypt, Benin, and Ivory Coast. In 2015, Egypt imported $854,000 in meat and live animals, followed by Benin at $153,000 and Ivory Coast at $147,000.

 “At this moment there is only one Mexican certified company producing halal meat: SuKarne. It is exporting halal beef to Egypt and the U.S. Other Mexican beef companies such as Grupo Gusi, Praderas Huastecas, and Intergan are in the process of obtaining halal certification,” said Tomas Guerrero of Spain’s Instituto Halal.

GROWTH OPPORTUNITIES AND CONSIDERATIONS

While halal operations in Mexico are comparatively low, there are substantial growth opportunities for local companies. The government has established the National Strategy for the Advancement of Mexican Exports to the Global Halal Market 2016–2018 to promote Mexican food for Muslim consumers.

To support the export opportunity, Mexico plans to substantially develop its agriculture sector.

The Secretariat of Agriculture published the Development Program for Mexico’s agricultural sector for the period 2012–2018 with the stated objective of productivity and sustainability for the country. The Mexican government has also introduced additional incentives and conditions for the sector, including the Food Cluster Jalisco, which is an industrial park specifically for the food industry.

There is further scope for OIC countries to directly invest in developing Mexico’s halal food infrastructure. Foreign investment in Mexico’s processed food industry is led by the Netherlands, followed by Switzerland, the United States, France, and Canada.

Between 2004 and 2014, the Mexican Ministry of Economy reported FDI inflow to the processed food industry in excess of $16 billion from leading companies, including Nestlé. According to the Mexican Ministry of Economy, companies like Coca-Cola, PepsiCo, Nestlé, Mars, Mondelez, and Unilever have announced investments for the construction of new processing plants in Mexico and the expansion of existing infrastructure.

Why not halal food as well?

Mexico is the sixth largest producer of beef in the world and has global players in the F&B sector like Bimbo, Gruma, and Sigma. These three are also among the largest companies in Latin America.

“The country has an enormous potential—its products have quality and price, something hard to find—but needs more Mexican F&B companies to obtain halal certification. Fortunately, the Mexican government, through SAGARPA (Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food), is working on it,” said Guerrero.

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