Javier Armengol Termes
Commercial Director - Bodegas Torres
Bodegas Torres began exporting into Mexico in 1978, a decision that has paid considerable dividends for the company, as Mexico is now our largest export market for spirits and one of the most important for wine. From the outset, we have focused on the premium end of the market and from our perspective, both the off-trade and on-trade have witnessed growth, particularly over the past five years. For instance, the number of retail outlets in urban areas has grown in recent times, especially in the affordable luxury segment.
The Mexican on-trade is no less dynamic; leisure time is a major priority for Mexicans, and the country boasts a rich and diverse food culture. Indeed, Mexico’s love affair with dining out and the country’s highly developed restaurant sector is the golden goose of opportunity for wineries like Torres, for whom the on-trade is a key segment. Encouragingly, the number of trade accounts that want to offer a more high-end wine list is growing. We also continue to notice an improvement in the level of expertise from the trade, valuing quality over quantity.
Yet it’s important to remember that Mexico is still relatively new to imported wine – there is a growing patriotic fever encouraging sommeliers to showcase domestic wines on lists and by tradition many Mexicans will shun wine in favour of spirits. Of course, it does very much depend on the area in question – the markets outside of Mexico City are more ‘traditional’ as you’d expect, but the capital is a dynamic and promising emerging market that boasts a growing number of professional consumers who drink wine regularly. Like their counterparts all over the world, this emerging generation of young urban professionals want to experiment, and that includes learning about and enjoying premium wines. However, categories like organic wines, which are popular with niche consumers in the West, have yet to generate any interest in the Mexican market.
My advice to brands considering jumping headfirst into Mexico is this: Don’t make the mistake of channeling all your resources into Mexico City. Yes, it’s the most dynamic and populous city but, equally, second-tier cities like Guadalajara, Puebla and Veracruz are also important and growing at a very healthy rate. And don’t forget tourist hotspots such as Cancun.
Sonia Montanares
Export Manager Latin America and Caribbean – Montes
Montes first launched its Casa Cuervo brand in the Mexican market in 1996 and despite the fluctuations in the exchange rate, growth has been strong and steady. One of the primary factors driving wine consumption in this emerging market is that Mexicans are eager to learn more about wine culture and experience new varietals, blends, etc. Yet conversely there is a growing danger of oversupply and market saturation, driven by wholesalers who import own brands and their domination of the retail sector. Overall, though, it has been mostly positive, with continued investment into this market creating new opportunities for brands willing to stay the course.
Today, the Mexican imported wine market is heavily dominated by wholesale channels or specialised stores, which account for up to 70% of total sales for some brands. The Mexican market is quite traditional in terms of consumption, yet the market is open to brands from across the world. As you’d expect, Mexico City is obviously the biggest market, but there are major tourist areas such as Baja California and Cancun that are very important to the sales mix.
However, as with most markets, Mexico presents risks to brands. Beware growing market consolidation and make sure you find a good importer/distributor. The target audience in the market for imported wine is still quite small. Yet as a wine producer and consumer, Mexico is open to the idea of regular wine consumption, particularly in the emerging generation. But patience is key; expect a long-term return on your investment. There are already a lot of brands in the market: Positioning a new one takes time.
James Sichel
Export Director, Maison Sichel
Sichel has been trading in Mexico for over 35 years and the market has changed drastically since we started in 1981. As in all markets, there has been much consolidation: Mexico used to have a sea of distributors. Now there are very big players or very small ones. Today, over 98% of our portfolio is sold through retail channels, mainly to supermarkets. However, I must concede that the pace of growth has been frustrating – this is due in large part to NAFTA trade agreements between the US, South America and Central America. Goods from these countries are taxed at zero, which means European wines are at a big disadvantage in comparison to, say, wines from Chile and Argentina. A wine from Sichel will cost two to three times that of one of our South American competitors.
Of course, imported wine is seen as quality wine. This is good, but it means that the price is high, so don’t expect to sell much volume. Brands must also remember that Mexico is a developing country where the pace of development is slow. Wine consumption is not, at least in my experience, part of most people’s daily life. Consumption of imported wine is being driven by a small minority of wealthy urban classes – predominately in the capital – but the majority of Mexicans are on low incomes.
That said, the Mexican middle class is growing; doing business in Mexico is no riskier than doing business anywhere else today. You have to choose your partners carefully. Make sure they are on the same wavelength as you and are financially stable.
Overall though, I consider Mexico an immature market that has yet to develop a wine-drinking culture on a significant scale. Apart from a small minority, Mexicans remain loyal aficionados of beer, tequila and so on. Moreover, unlike Asian markets, there is no culture of wine gifting in Mexico so don’t expect results overnight. This is a slow market and will be so for the foreseeable future, in my opinion.
Joan Pujol
International Sales Director – CVNE
CVNE has considerable experience of doing business in Mexico – we sold our first bottles in the early 1900s. Today, Spain, Chile, France and Argentina continue to dominate supermarket aisles, fighting for space with domestic brands, although even today the majority of the wine is imported (around 70%). The on-trade is important in this regard, accounting for one-third of total sales.
Mexico is quite a young market for wine and the actual consumption is still very low (0.75 L per capita compared, for example, with Spain at almost 20 L). Wine is still an inspirational product, which is very much linked to the economy of the country – the exchange rate is quite important here. But the potential for growth is definitely there: Mexico is a nation with 122m people and a sizeable demographic of younger, open-minded consumers. Every year we observe how wine is growing in popularity with the younger generation, particularly women, in addition to the traditional, older wealthy male consumer. The number of wine specialists, sommeliers and private organisations is also growing, helping to spread the word.
From CVNE’s perspective, Mexico City accounts for around 40% of our total sales, followed in importance by Guadalajara, Monterrey, Puebla and Veracruz. So this is not a one-city market and brands should not underestimate the potential for sales via Mexico’s tourist industry, Cancun and Baja California, for example.
Just make sure to keep a watchful eye on the following: The capricious Mexican economy, the exchange rate, taxes on European imports and competition from aggressively priced domestic brands. And, of course, do your research and work with a good partner or distributor. In addition, remember that this is an immature market. Consumption keeps increasing little by little from a very low base and the majority of Mexicans are not in the market for imported wine. At least, not yet.
