Outline of opportunities in Mexico
An overview of Mexico's economy
Mexico, with a population of 125.9 million in 2019, is the 11th most populous country in the world. The country had a gross domestic product (GDP) of Can$1.6 trillion in 2018, at an annual percent change growth rate of 2%. Mexico is Canada's 5th largest merchandise trading partner worldwide (Can$8.2 billion in 2018) and Canada's 2nd largest partner in Northern and Latin America, after the United States (US).
Mexico is a net exporter of agri-food and seafood products from the world. In 2018, the Mexican agri-food and seafood trade surplus was Can$8.9 billion with exports valued at Can$45.5 billion, and Can$36.6 billion in imports. This is an increase of 18.5% over 2014 at which point Mexico was a net importer with an agri-food and seafood trade deficit of Can$2.3 billion. The top three supplying countries are United States, Canada, and China. Top commodities included corn, soya beans, wheat, fresh pork, and fresh beef.
Canada continues to be one of the main agri-food and seafood supplier (2nd largest after the United States, representing Can$2.5 billion in 2018) to Mexico, which has grown by a compound annual growth rate (CAGR) of 4.1% over 3.4% growth rate in the US, for the past five years (2014-2018). Canada accounted for 6.8% market share of the global supply to Mexico in agri-food and seafood commodities. Mexico imported Can$1.1 billion in processed agri-food and beverage products from Canada including fresh pork, fresh beef, canola oil, malt, and frozen French fries.
Major sector opportunities in Mexico
Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood by reading our Agriculture and food market intelligence - United States and Mexico reports.
How do we select priority sectors?
Priority sectors were selected through a quantitative analysis of the statistical data available in the Global Trade Tracker database for 2018. The first phase was to identify the top 100 products, amongst all agri-food and seafood products, ruling out the products which Canada does not have a capacity to produce. Each product was evaluated based on a series of quantitative criteria (i.e. size of market, market growth, Canada's trade intensity), all of which were ranked over five years of historical trade data. The top 100 agri-food and seafood products identified through this method, represented 65% of Mexico's total imports from the world, and 95% of Mexico's imports from Canada in 2018.
Our analysis focused on assessing opportunities from a strengths and challenges perspective:
- Strengths were defined by high performance and high growth indicators in large Mexican import sectors. Other sectors of interest were those involving free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with 10 countries and the yet to be ratified, Canada-US-Mexico agreement (CUSMA). Canadian exporters to Mexico will be able to choose the free trade agreement (FTA) that provides them with the best preferential treatment that applies to their products, including relevant tariff outcomes and rules of origin. However, in general, NAFTA already provides duty-free access to Mexico for most Canadian agri-food products except for a few products such as poultry, eggs, dairy and sugar (whereby these conditions are expected to remain under CUSMA). Under the CPTPP, Mexico established some tariff rate quotas (TRQs) that allow limited duty-free imports of certain dairy products from CPTPP members (including Canada).
- Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities like competitive pricing options, while providing innovative, high-quality and gourmet products.
In phase two, the products were further categorized into super sectors and were often assessed in consultation with international market engagement teams (IMETS), Trade Commissioners, and in association with the provincial export market access consortium (EMAC) experts throughout Agriculture and Agri-Food Canada (AAFC). The experts often assessed the opportunities and identified the challenges that may remain.
All priority agri-food and seafood products imported by Mexico were commodities that are within Canada's capacity to produce and supply internationally.
Growth through processed food products
Mexico is an attractive market for the Canadian food and beverage processing industry. The Mexican food import market is large and easily accessible, and most Canadian food products can exter Mexico duty-free. The demand for Canadian food products has grown rapidly over the past 25 years, since the introduction of supermarket food distribution systems in Mexico. With the removal of customs tariff barriers, processed food products are exported to Mexico from every region of Canada on a regular basis.Footnote 1
Mexico is one of Canada's top trading partners. Exports of processed food, seafood and beverages continues to expand quickly. In 2018, Canada supplied Can$1.1 billion in processed food and beverages to Mexico, at a compound annual growth rate (CAGR) of 7.4% since 2014. Higher growth products from the world, with CAGRs greater than 11% during the 5-year period include malt (HS:110710), preparations of animal feeding excluding dog or cat food put up for retail sale (HS:230990), beer made from malt (HS:220300), grated or powdered cheese (HS:040620) and frozen fillets of tilapia (HS:030461).
5.0% of globally traded Canadian processed agri-food and beverages (including seafood) was shipped to Mexico in 2018
In 2018, Canada's top processed food and beverage exports to Mexico represented 48.5% and these included fresh hams, shoulders and cuts (Can$197.3 million), fresh boneless beef (Can$100.8 million), canola oil (Can$78.7 million), malt (Can$75.8 million), and frozen French fries (Can$69.8 million).
Mexico has a desire to diversify its import supply sources, creating opportunities for Canadian exporters to positively position their Canadian food and beverage brands. In the retail sector, there are opportunities in health and wellness (H&W) products, ready-to-eat or ready-to-cook conveniently packaged food, private labels and differentiated healthy superfoods and high quality gourmet ready-to-bake products. In the hotel/restaurant/institution (HRI) foodservice sector, there are also opportunities for quality gourmet products, in higher-end restaurants and 'European-plan' boutiques and high-end hotels in major Mexican cities and tourist regions.
Mexico is a competitive and price sensitive market. To be successful, Canadian exporters should identify market niches, as well as, focus on competitive pricing and on the key competitive attributes of their products. This could include nutritional benefits, unique flavors, innovative attributes, the consistency of supply and delivery, etc. When developing their market entry strategy, Canadian exporters may also wish to consider appointing an agent, representative, or authorized distributor for their products and services in Mexico. This could assist Canadian exporters in increasing their market presence, enhancing customer service, and obtaining on the ground market intelligence, while receiving direct feedback on their products.Footnote 2
In 2018, Mexico imported Can$21.6 billion of processed food and beverages from the world and Canada's share represented 5.0% of this total (Can$1.1 billion). Other top competitors include the US, China, Chile, Spain, and Brazil. Mexico is highly dependent on importing grains, oilseeds, and meat. Canada has a significant advantage in the production of many high-quality commodities in the grains and oilseed sectors. There is, however, strong competition in pork, beef, fish and seafood, beer, wine and spirits and various other food preparations such as refined sugar/confectionery, and preserved soups and broth preparations.
|Country||Share of Mexico's imports from the world (%)||Top three processed food and beverage products imported by Mexico (commodity share %)|
|United States||66.9||Fresh hams, shoulders and cuts (7.8), skimmed milk powder (6.0), soybean oil (6.0)|
|China||3.1||Frozen fillets of tilapia (35.2), dried fruits of genus capsicum/pimenta (11.6), preserved tunas, skipjack and Atlantic bonito (10.0)|
|Chile||2.6||Frozen fillets of Pacific salmon (20.4), preserved peaches incl. nectarines (13.0), wine of fresh grapes (10.0)|
|Spain||2.5||Wine of fresh grapes (17.0), virgin olive oil (13.1), distilled grape wine spirits (11.2)|
|Brazil||1.6||Frozen cuts and edible offal of fowls (69.6), frozen cuts and edible offal of turkeys (8.4), cane or beet sugar and pure sucrose (5.3)|
|Source: Global Trade Tracker, 2019|
Canada's main trading competitors in the Mexican import market are the United States, China and Chile. Although Canada is Mexico's number one trading partner for commodities such as canola products, maple sugar and syrup, oat and lobster products, active yeast, and mustard and canary seed. Canada also has opportunity to compete with top suppliers within the beef, wheat, pulses, and bakery product sectors.
Particularly within the beef and veal sector, Mexico imported 84.3% of beef products from the US in 2018, while Canada's supply of beef and veal to Mexico was only 9%. However, Canada has the capacity to produce enough beef to meet both domestic consumer demand and export further stock, as the country does not import further supply. Meanwhile, the US cannot produce enough to meet domestic demand (as often is the case) and imported an additional 11.4% of beef products in 2018. Furthermore, Mexican consumers are said to highly value the quality of Canadian agri-food products. Canadian-made products have an excellent reputation internationally that could give many companies the edge to begin exporting or to take their trade efforts with Mexico to the next level. Noting that Canadian meat establishments wanting to export to Mexico, are required for their company to be included in Mexico's list of eligible establishments. Canadian exporters need to approach their regional Canadian Food Inspection Agency (CFIA) office to complete this process.
Canada, also could have the capacity to increase exports to Mexico of commodities such as pet food (mostly from within the niche market for premium products) with a current market share of 13.2% in 2018, along with cane or beet sugar (15.5%), a limited supply of beer, spirits and wine (0.5%), and possibly fresh apples (0.2%). In the case of pet food, the products would require a previous registration with the Mexican animal health authorities (SENASICA), before they can be imported into Mexico.
Also, it is important to note that given some concerns about certain pests, apple growers from Eastern Canada (including Ontario, Québec, Nova Scotia and New Brunswick) need to comply with phytosanitary work plan that is in place between SENASICA and CFIA, in order to be allowed to export apple products to Mexico. This workplan includes the requirement of having the apples subject to a cold treatment and a pre-clearance audit by a SENASICA inspector, to verify such a treatment has been applied accordingly. The expenses of the audit have to be covered by the Canadian exporters, and the results are valid for a 2 year period. Alternatively, apples from British Columbia are not required to comply with this 'pre-clearance audit/workplan to be allowed into Mexico.Footnote 3
With regard to beer, spirits and wine, opportunities could be limited since Canadian alcoholic beverages are not as well known in Mexico, and face well-established and price competitive national and international producers. To succeed in this sector, Canadian exporters would need to be willing to invest significant resources in promotion, to develop the demand for their products.Footnote 4
Opportunities for Canada: NAFTA, CPTPP and CUSMA
On March 8, 2018, Canada signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with 10 countries: Mexico, Australia, Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam. On December 30, 2018 the CPTPP entered into force. Among the first six countries to ratify the agreement were Canada, Australia, Mexico, New Zealand, and Singapore, whereby Vietnam entered into force on January 14, 2019.
The CPTPP represents another step toward closer trade and investment between Canada and Mexico. Under the CPTPP, some Canadian products with no preferential access under NAFTA can be exported to Mexico duty free or with preferential duty under country-specific permanent tariff rate quotas (TRQs) established by Mexico. These include products such as milk powder, evaporated and condensed milk, butter, cheese, and dairy-based preparations. To obtain more information on specific tariff reductions in Mexico under this agreement see Tariff schedule of Mexico (HS2012) (in Spanish only). For more information on what the CPTPP will mean for Canada's agriculture and agri-food sector visit the CPTPP for Agri-Food Exporters page.
On November 20, 2018, although not ratified, Canada, the United States and Mexico signed the new CUSMA. If CUSMA comes into force, the NAFTA/CUSMA and the CPTPP are free trade agreements that will co-exist. Therefore, Canadian exporters will be able to choose the free trade agreement (FTA) that provides them with the best preferential treatment that applies to their products, including relevant tariff outcomes and rules of origin. CUSMA will help to preserve existing agriculture commitments between the countries, however, the new agreement will have impacts on Canada's dairy, poultry and egg sectors. For more information on what the CUSMA will mean for Canada's agriculture and agri-food sector visit the Doing business in the United States and Mexico and the CUSMA: Summary of outcomes pages.
The CPTPP Agreement, along with the CUSMA and free trade agreements with the European Union (CETA) and South Korea (CKFTA), will make Canada the only G7 nation with free trade access to the Americas, Europe and the Asia-Pacific region. All Canadian provinces and territories are expected to benefit from these FTAs.
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Mexico has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Mexican importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is available to assist by providing export-related information and support. MAS can also assist in those cases where there is no sanitary protocol in place, allowing access for a particular Canadian product to Mexico. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.
If you have questions about exporting your agriculture or food products, or are looking for support please contact the Market Access Secretariat at email@example.com
To find trade events, in-market Trade Commissioners, marketing tools and more to help you achieve your international business goals, see the Agri-Food Trade Services for Exporters page.
- Agriculture and Agri-Food Canada. CPTPP for Agri-Food Exporters
- Agriculture and Agri-Food Canada.Doing business in the United States and Mexico
- Cléroux, Pierre. Canada: a powerful brand . Accessed on August 19, 2019.
- Global Trade Tracker, 2019
- Government of Canada. Canada-United States-Mexico Agreement (CUSMA): Summary of outcomes
- Rodrigue, J and De la Huerta, D. and Ruiz, A. Trade Commissioner services, Global Affairs Canada: Pre-event webinar for Expo ANTAD-Alimentaria - Mexico, February 2019.
- Rodrigue, J and Ruiz, A. Trade Commissioners (Agri-food) Embassy of Canada in Mexico. Pre-SIAL webinar : Doing Business with Mexico, Global Affairs Canada, April 2019.
- Rodrigue, J. Trade Commissioner services. Feedback: Beer, spirits & wine sub-sectors, 2019
- Rodrigue, J. Trade Commissioner services. Feedback: Considerations for Canadian exporters, 2019
- Rodrigue, J. Trade Commissioner services. Feedback: The Mexican market, 2019.
- Ruiz, A. Trade Commissioner services. Feedback: SENASICA requirements, 2019
- Trade negotiations and agreements: Canada-United States-Mexico Agreement (CUSMA)
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