Can Mexico's Beer Industry Be Premiumised?

Can Mexico's beer industry be premiumised? It is a question worth asking as, although premiumisation has been a major trend in global beer across much of the developed and emerging world for many years (good news for the margins of the big beer companies), it has not caught on to the same extent in Mexico and to a degree in much of Latin America. In Mexico at least, the key reason is thought to be based around the ubiquity of beer. Mexico has a proud beer drinking history and is one of the leading consumers of beer in the emerging world. Historically, beer has been very competitively priced in Mexico.

According to Heineken in an article published by the FT, only 3% of total beer consumed in Mexico could be attributed to the premium sector, which compares with more than 10% in Western Europe and North America (barring Mexico). Even Africa fares better. Heineken believes that this makes Mexico a great opportunity, with the country being one of its most important growth markets, believed to account for more than 10% of its annual operating income.

Heineken (through its ownership of Cuauhtemoc-Moctezuma, which it bought from FEMSA in 2010) and leading rival AB InBev (following its Grupo Modelo acquisition) now controls more than three quarters of the beer market. It is believed that going forward Heineken will look to focus on Mexico's centre and western regions, where it has a much smaller business compared with the dominant northern region. If it can be a front runner in the premiumisation, there is a lot to be gained.

Mexico Important Component Of Americas Business
Heineken Annual Revenue Contribution By Region - FY12

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This article is tagged to:
Sector: Food & Drink
Geography: Mexico

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