Mexico’s food and beverage multinationals continue to expand

 Updates to Geo-Mexico  Comments Off on Mexico’s food and beverage multinationals continue to expand
Sep 032015
 

Mexico’s seven leading food and beverage multinationals have invested a total of 7.42 billion dollars overseas in the past five years. The investments include acquisitions of other firms, building new plants and enlarging or remodeling existing plants.

The seven firms are:

  • Coca-Cola Femsa
  • Grupo Bimbo
  • Arca Continental
  • Gruma
  • Sigma Alimentos
  • Grupo Lala
  • Grupo Herdez

In terms of the number of countries where they have a presence, the two most globalized food and beverage firms in Mexico are Grupo Bimbo and Gruma, which are in 22 and 18 countries respectively (see map). Both firms are now quite dependent on foreign earnings. About 61% of Bimbo’s revenues, and almost 70% of Gruma’s revenues, originate from outside Mexico. Both firms have the longest reach of any of the food and beverage multinationals: Bimbo as far as China, and Gruma in Australia.

Mexican food-related multinationals

Mexican food-related multinationals are present in all the countries colored blue

In this post, we take a quick look at each of these seven firms and their recent activity abroad:

Femsa, based in Monterrey, is the world’s largest bottler of Coca-Cola products, with 45 plants in Latin America, including Colombia, Brazil and Venezuela, as well as 19 plants in the Philippines. It spent 1.855 billion dollars to buy Brazilian firm Spaipa, and a further 258 million dollars on building a new plant there (its tenth plant in Brazil), as well as 688.5 million dollars for 51% of the Coca-Cola Company in the Philippines. Femas also operates the OXXO chain of convenience stores, the largest such chain in Latin America.

Grupo Bimbo is the world’s largest bread maker and the biggest bread seller in the USA. It is the world’s 4th largest food company behind only Nestle, Kraft, and Unilever. Bimbo has 85 plants in the USA and Canada, 39 in Mexico, 32 elsewhere in Latin America, 10 in Europa and one in Asia. It has expanded primarily via acquisitions. It bought Canada Bread in 2014 for 1.66 billion dollars. In 2011, U.S. agencies authorized its purchase of Sara Lee for 709 million dollars. It also bought Bimbo Iberia (Spain) for 160 million dollars in 2011. It is now awaiting approval from Spanish regulatory authorities to complete its purchase of Panrico for 210 million dollars.

Gruma (main brands Maseca and Mission) is the world’s largest producer of corn flour and tortillas. It has 79 production plants worldwide and operates in North America, Europe, Asia and Oceanía. Gruma recently bought Azteca Foods Europe (Spain) for 48 million dollars. In 2014, it bought Mexifoods (Spain) for 15 million dollars. It also owns Albuquerque Tortilla Company. Gruma has also invested in new factories, including a 50-million-dollar plant in California, opened in 2010, as well as a new factory in Russia costing a similar amount.

Arca Continental, the second largest Coca-Cola bottler in Latin America, has 35 plants in the region. It purchased a milk products firm, Holding Tonicorp (Ecuador), in 2014 for 400 million dollars, and spent around 330 million dollars in 2012 to acquire two snack food firms: Wise Foods (USA) and Inalecsa (Ecuador).

Sigma Alimentos (cold cuts, cheese, yoghurts and other milk products) has 67 production facilities in total, including (in addition to Mexico) the U.S., Costa Rica, El Salvador, Spain, France, Italy, Netherlands, Belgium and Portugal. It recently bought Spanish firm Campofrío for 345 million dollars.

Grupo Lala (milk products) has 18 production plants in Mexico and Central America. It recently bought Nicaraguan firm Eskimo (ice-cream and other milk products) for around 53.2 million dollars.

Grupo Herdez has 13 plants in Mexico, one in the USA and one in Chile. It recently bought Helados Nestlé in Mexico.

What these firms have in common is that they specialize in making products that are relatively easy to adapt to local tastes (glocalization). They have also started their expansions outside Mexico by focusing initially on markets with familiar languages and culture before venturing further afield.

As interesting as where the companies ARE is where the companies are NOT. Astonishingly, the map suggests that no Mexican food-related multinational yet has a toe-hold in any country in Africa, for example.

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The Trans-Isthmus mega-project

 Mexico's geography in the Press  Comments Off on The Trans-Isthmus mega-project
Jul 272015
 

A huge industrial development plan looks set to get underway shortly in the narrow Isthmus of Tehuantepec in southern Mexico. The low-lying Isthmus of Tehuantepec separates the Chiapas Highlands and the low Yucatán Peninsula from the rest of Mexico. The Isthmus was once considered as an alternative location to Panama for a trans-continental canal.

During Mexico’s internal Reform War (1858‑60), between the liberals, led by Benito Juárez, and the conservatives, both sides encountered serious financial problems. At one point in this war, the liberals accepted an offer from the USA to receive four million pesos in exchange for the USA having the “right of traffic” across the Isthmus of Tehuantepec “in perpetuity”. Fortunately, this treaty was never ratified by the US Senate.

Proyecto-Transistmico

In recent years, the Tehuantepec area has received massive investments in wind power, with several major wind farms already operational and more on the drawing board. The latest plans will build on those investments to provide upgraded infrastructure meeting the preconditions for industrial development.

The 300 million dollars allocated to the first phase of the Trans-Isthmus Project will improve railroads, highways, airports, and the ports of Coatzacoalcos on the Gulf Coast and Salina Cruz on the Pacific Coast (see map).

During the second phase, private sector financing will add industrial development areas, which should boost the area’s contribution to national GDP from 2% to 4.5%, and raise the regional GDP/person to $10,000 a year, close to the national average.

The federal government has designated this region as a special economic zone, offering several fiscal incentives to new enterprises. Chinese investors have already expressed interest in building a 200-million-dollar steel manufacturing plant in the isthmus, utilizing nearby iron ore reserves to produce 3 million tons of steel a year.

Posts related to the same general area of Mexico:

Good news: tax on sugary drinks in Mexico is decreasing consumption

 Mexico's geography in the Press  Comments Off on Good news: tax on sugary drinks in Mexico is decreasing consumption
Jun 252015
 

On 1 January 2014, the Mexican government implemented a 10% tax on refrescos (aka sodas, pop, carbonated drinks) and other sugar sweetened drinks, raising the price by 1 peso (about 7 cents US) per liter, in an attempt to help curb the nation’s obesity problem. The tax became law despite heavy lobbying against it by the beverage industry. An 8% tax was also added to unhealthy snacks like potato chips and cookies.

Now preliminary results of a study (not yet peer reviewed) by the Mexican National Institute of Public Health and the Carolina Population Center at the University of North Carolina, show purchases of sugary beverages dropped 6% on average across 2014, and by as much as 12% in the last part of the year. The study analyzed consumption in 53 Mexican cities, and adjusted for other factors like the small downward trend in consumption of carbonated drinks in recent years. The effect was greatest in lower income households where purchases were cut by 9% over the year and by 17% in the later months. Moreover, the researchers claim that Mexicans drank more water after the refresco tax came into effect.

soft-drinks-2014Mexicans’ consumption of carbonated drinks per capita is the fourth highest in the world (behind Argentina, USA and Chile), with the average Mexican drinking the equivalent of 136 liters of Coca-Cola a year. Government revenues from the new tax totaled 18 billion pesos (US$1.3 billion) in 2014. The National Health Alliance, a Mexican public interest coalition, is now calling for the tax to increase to 20%, and for the abolition of tax on bottled water sold in containers of under 10 liters, to make it cheaper than sugary drinks. The Alliance is also pressuring the government to follow through on its promise to use the tax revenues raised to fund programs to prevent obesity and its associated diseases – for example, making free, clean drinking water available in schools that don’t currently have it.

In its March 2015 report on Carbonates in Mexico, Euromonitor International, reporting from an industry perspective, concludes:

(The tax) is one of the many new strategies that the Mexican government is implementing to fight the rising obesity and diabetes II rates after becoming the leading country for obese or overweight citizens globally in 2013…The most affected carbonated products are those sold in big sizes where consumers are more aware of the increased cost. Some leading brands have their stronger position among the biggest sizes of the market, and these brands have seen a greater impact in their volume sales. Amongst carbonates, Coca-Cola (de México SA de CV) holds a 68% total volume share, followed by its closest competitor Pepsi-Cola (Mexicana SA de CV), at 16% .

Carbonates is expected to keep on struggling with volume growth in Mexico due to consumers wanting healthier options, the increasing trend of having RTD teas and increasing trend of fruit-flavoured beverages instead of carbonates. Additionally, government actions have strongly impacted carbonates’ consumption.”

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The River Santiago and the Juanacatlan Falls: from the “Niagara of Mexico” to the “Silent River”

 Books and resources, Mexico's geography in the Press  Comments Off on The River Santiago and the Juanacatlan Falls: from the “Niagara of Mexico” to the “Silent River”
Jun 112015
 

In summer 1987, while living in Guadalajara, I entertained a fellow UK geographer, who arrived with a long list of places he wanted to visit. Over the next few weeks, we ticked them off one by one. Near the end of his visit, he asked why I hadn’t yet taken him to see the famous Juanacatlán Falls, the “Niagara of Mexico”, despite them being in his “top ten” places to see. “OK”, I said, “let’s go!”

Traffic was heavy and as we drove across Guadalajara, I could see his impatience building. Finally, he asked me, “Where are they? How close are we?” I replied that we were “fairly close” but that I was absolutely certain that he would recognize them before they came into sight. A few minutes later and he screwed up his nose and said, “Ughh. What’s that smell?” “See?”, I said triumphantly, “I knew you’d recognize them before you saw them!”

Juanacatlán Falls in 1989. Photo: Tony Burton. All rights reserved.

Juanacatlán Falls in 1989. Photo: Tony Burton. All rights reserved.

Even thirty years ago, long before NAFTA, the Juanacatlán Falls were a sorry sight (and source of a worse smell). Since then, and since NAFTA, they have only become worse. These once-majestic falls, the first Mexican landscape on a postage stamp back in 1899, have been reduced to a trickle of foul-smelling effluent. At the start of the twentieth century, the falls provided hydro-electric power for Guadalajara and turned the wheels of a cotton and woolen mill, the ruins of which now stand to one side.

A recent piece of investigative journalism about the River Santiago, the river which created these waterfalls, makes for disturbing reading. It provides plenty of evidence that the rapid increase in factories along the river, mainly post-NAFTA, may have provided 50,000 new jobs, but has also led to worsening water quality to the point where exposure to the river presents a serious public health risk.

In “River of Death“, Steve Fisher lays bare the terrible reality faced by those living and working close to the river. This is a harrowing tale, with heart-rending testimony from several local residents. On a positive note, the related video, Fusion Investigates: Silent River (below) describes how Sofía Enciso and her family have defied death threats and are determined to confront the factories responsible, while demanding that the relevant authorities take action to enforce federal water quality regulations, and start to clean up the river.

Perhaps the most telling single statistic is that precisely zero companies were fined for failing to comply with water discharge regulations between 2005 and 2011.

In the video, the mayor of El Salto, the main town near the Juanacatlán Falls, claims that the river has become polluted in the past thirty years. I guess he must be too young to remember that they were seriously polluted long before that.

Is it too much to hope that the government, corporations and society in the El Salto area can all come together to remedy this appalling tale of willful mismanagement? Local residents are right to insist on the enforcement of existing water quality regulations and on the implementation of remedial measures to reverse the decline of this major river and its once-famous waterfalls. Even more importantly, urgent measures are needed to reverse the deteriorating public health situation faced by all those living or working nearby.

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Mar 052015
 

The Nava brewery, which started operations in May 2010, was built by Grupo Modelo but subsequently sold in 2013 to Constellation Brands, the U.S. company that holds the rights to import Modelo products into the U.S.

Nava brewery

Nava brewery. Credit: Constellation Brands

Constellation Brands (founded in 1945 and based in Victor, New York) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy.

The Nava brewery is the world’s largest brewery of its kind (see this video overview from company webpage), with about 2000 employees and a brewing capacity of 20 million hectoliters of beer a year. A planned expansion (see 26-second video) will increase capacity to 30 million hectoliters.The plant produces Grupo Modelo brands such as Corona, Corona Light, Negra Modelo and Modelo Especial, under license for export to the U.S.

Where is it?

The beer brewery and bottling plant is located in the Nava municipality in the northern state of Coahuila, about 21 km (13 mi) from the border town of Piedras Negras. It is built alongside highway 57 and spreads over 334 hectares (825 acres) of a greenfield site.

Why is it located in Nava?

The major advantages of this location include:

  • the availability of good quality water
  • proximity to the U.S. border and the U.S. beer market
  • presence of good road, rail and power infrastructure

How does the brewery work?

The brewery is a three-story brewhouse with large metal silos, about 1.6 km (1 mi) of conveyors and four pasteurizers. The facility consists of two brewhouses with malt intake, vacuum evaporation and energy recovery systems, 70 cylindro-conical fermentation and storage tanks, seven clean-in-place (CIP) stations, a yeast cellar with 16 tanks and continuous microfiltration (CMF), 30 pressure tanks and three filtration lines with 1,200 hectoliters/hour capacity each, and a Siemens automated process control system.

The brewery uses rice, barley malt, corn grits and water to produce beer. The feedstock is transported by trains to the plant and stored in silos. A 60 km (37 mi) pipeline connects the brewery to a mountain aquifer supplying about 20 million cubic meters of water a year. The site includes its own wastewater treatment plant.

A raw materials supply system handles the raw materials in bulk and conveys them to the brewhouse, where they first enter a collection bin, and then a mash tun, where water is added. The mixture is then pumped along a pipeline to the cereal cooker of the brewhouse.

Two brew systems consisting of mash tuns and cereal cookers are designed to efficiently use the internal heat. These heaters can also clean them automatically by CIP (clean-in-place) technology. Fermentation takes place in unitanks configured with automated clarification, purging systems and turbidity monitoring. The brewery consumes less than 3 liters of water for each liter of beer. The carbon dioxide reclamation capacity of the brewhouse is about 4,000 kg/hour.

The three bottling lines have the capacity to handle 144,000 bottles/hour, while a canning line outputs up to 66,000 cans/hour.

Filling, pasteurizing and cap feeding is handled by 37 robotic machines. Output is linked to the warehouse by automated trolleys. The automated warehouse is equipped with digisat satellite, a state-of-the-art warehouse management system, and can store about 63,000 pallets.

The high level of automation means that this beer manufacturing and bottling plant has operational costs about 40% lower than the seven older breweries that still belong to Grupo Modelo.

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Feb 122015
 

The largest salt-making facility on the planet is near Guerrero Negro on the west coast of Mexico’s Baja California Peninsula. It produces about 9 million metric tons of salt each year. The salt here is not mined, but extracted from ocean water by evaporation. The salt fields cover 33,000 hectares (acres), including 28,000 ha of collection ponds and 3,000 ha of crystallization ponds.

Satellite image of part of Guerrero Negro saltworks

Satellite image of part of Guerrero Negro saltworks

The major locational advantages are:

  • the large flat area close to the coast, a former marine floor
  • the dry climate; this is a desert region with very low precipitation
  • the high solar radiation (direct solar powered evaporation!)
  • regular strong winds blowing from the Pacific Ocean
  • the net result of the climate is a high evaporation index

Disadvantage? Since the salt working got underway around the saline Ojo de Liebre coastal lagoon, the entire area has been designated part of the El Vizcaino Biosphere Reserve on account of its importance as a habitat for endangered species and breeding ground for gray whales. The salt lagoons are also located on major flight paths for migratory birds.

Brief history of salt-making in Guerrero Negro

Prior to the 1950s, salt extraction in this area was small-scale and methods were rudimentary. In the 1950s, San Francisco ceased supplying salt to the US west coast paper industry and an alternative source of salt was needed. Daniel Ludwig (who would later build the famed Acapulco Princess Hotel) set up a company at the saline Ojo de Liebre coastal lagoon near Guerrero Negro in 1954; three years later, salt was exported to the USA for the first time. Ludwig sold the company in 1973. Exportadora de Sal (Salt Exporter) is now jointly owned by the Mexican government (51%) and the Japanese Mitsubishi corporation (49%).

Plans to expand the company by building another evaporation plant for salt further south along the Baja California Sur coast were thwarted by officials after a lengthy and acrimonious campaign by environmentalists angered at the probably environmental consequences. (For discussion of some of the issues, see “Mitsubishi and Laguna San Ignacio“, “Mexico’s Friendly Whales” and “The Laguna San Ignacio Conservation Alliance conservation plan“).

What does the landscape look like?

This short, 3-minute Postandfly video shows what the landscape and salt working operations look like from the air:

The salt-making process

The salt-making process is fairly simple. Seawater is pumped into a series of collection ponds. About 700 million tons of seawater enters the system each year. As the water in the ponds evaporates, the salt concentration increases. The collection ponds are controlled by dikes and gates. At a critical level of salt concentration, the water is pumped into the next point, and so on.

Salt trucksEventually, more than a year later, the water becomes saturated with salt, and the mineral salt (almost entirely sodium chloride) begins to crystallize out. The pond is then drained and the salt collected. The harvesting of the salt is done by giant graders which scrape off only the uppermost layer, leaving a hard saltpan below as the future floor of the pond. Giant gondola trucks collect the mounds of salt and carry it to a cleaning plant. The salt is then washed with a salt water solution to purify it still further, before being shipped.

Initial shipping is from the Chaparrito Port (where the washing plant is located) near Guerrero Negro. This port can load barges carrying up to 10,500 metric tons, which take the salt to the much larger port of Morro Redondo, on the southern tip of Cedros Island, a short distance to the west and just inside the state of Baja California. The Morro Redondo facility has additional inspection, storage and packing facilities and handles ocean-going vessels.

Salt bargeIn 2014, Mexico exported slightly over 9 million tons of salt, worth 164 million dollars, making it the world’s fifth largest salt exporter, after the Netherlands, Canada, Germany and Chile.

Each year, Exportadora de Sal produces about 9 million metric tons of salt of various grades, and is reported to be expanding its operations to boost annual production to 9.5 million tons by 2020.

It sold 8.98 million tons of salt in 2014, 87.4% of the national total. 60% of the output of industrial salt (for use in pulp and paper, and chemical industries) is exported to Japan. The company also exports salt to many other countries including USA, Canada, Korea, Taiwan and New Zealand. Almost all the 100,000 metric tons of table salt produced each year is sold on the domestic Mexican market or elsewhere in Latin America.

Note: This is an updated version of a post first published here in February 2012.

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The geography of Mexico’s beer industry

 Maps, Other  Comments Off on The geography of Mexico’s beer industry
Jan 292015
 

In a previous post – The emergence of two major beer-makers in Mexico – we looked at how Mexico’s beer industry came to be dominated by two large players: Femsa and Modelo, both now owned by foreign corporations.

The map below shows the location and date of inauguration of all major breweries in Mexico.

The location and inauguration dates of Femsa and Modelo breweries in Mexico

The location and inauguration dates of Femsa and Modelo breweries in Mexico

How large is Mexico’s market for beer?

A 2010 report from the national beer industry claims that the average annual consumption of beer in Mexico is 60 liters per adult, a figure that has not changed significantly in the last 20 years. The equivalent figure in Germany is 120 liters a person, so there is still considerable potential for growth. Mexico’s breweries provide about 80,000 jobs directly and a further 800,000 indirectly.

Total beer sales each year are worth as much as 20 billion dollars. The value of sales has risen sharply, at about 5% a year, due mainly to higher exports. Mexico has become the world’s second largest beer exporter, after the Netherlands, and is the world’s sixth largest producer and consumer of beer, brewing over 8.6 billion liters a year.

The USA is the main export market. Five of the 25 most popular brands in the USA are Grupo Modelo beers: Corona, Modelo Especial, Corona Light, Pacífico and Negra Modelo. This has helped Grupo Modelo, Mexico’s leading brewer, become the world’s sixth largest brewer. Modelo’s Corona beer has been the #1 imported beer in the USA since 1997. It is one of the world’s top five beers in terms of sales, even though it is not especially popular in Mexico!

One of Modelo’s fastest growing export markets is China, where it has rapidly become the second most popular imported beer. In Mexico’s domestic beer market, Modelo and Femsa face increased competition from imported beers such as Budweiser, Miller and Heineken.

There are several other smaller breweries in addition to those owned by Femsa and Modelo. One significant trend, echoing other regions in North America, has been a marked upswing in the number of small, specialist, boutique breweries, such as Cervecería San Angel and the Santa Fe Beer Company in Mexico City and Minerva Brewery in Guadalajara. Other popular brands of craft beer include Perro Negro from Guadalajara, Insurgente from Tijuana, Libertadores from Michoacán and the varied products of the Baja Brewing Company from Los Cabos.

These smaller “craft” breweries produced 10.5 million liters of beer in 2014, according to the Mexican Beer Makers Association (Asociación de Cerveceros de la República Mexicana, Acermex), and account for only 0.16% of the total market, but their share of the market is growing at more than 40% a year. The association hopes that smaller breweries can enjoy as much as 1% of the market by 2016.

The rise of craft beers has seen a corresponding proliferation of specialist pubs that stock pale ales, pilsners, porters, stouts and wheat beers in the trendier districts of all the major cities, including Mexico City, Guadalajara, Monterrey and Querétaro.

In Guadalajara, in 2008, two local craft breweries – Cerveceria Minerva and  Cerveceria Revolución – co-founded the Guadalajara Beer Festival to showcase Mexican their products and introduce previously unavailable European import brands. The festival is now a three day event that attracts as many as 30,000 visitors a year; it claims to be Latin America’s largest beer festival.

Mexico’s economic geography is analyzed in chapters 14–20 of Geo-Mexico: the geography and dynamics of modern Mexico. Buy your copy of this invaluable reference guide today!

Mexico’s vehicle industry

 Teaching ideas, Updates to Geo-Mexico  Comments Off on Mexico’s vehicle industry
Dec 272014
 

Mexico is one of the world’s “Top Ten” countries for vehicle production and for vehicle exports. In 2014, it has overtaken Brazil to become the world’s 7th largest vehicle producer and fourth largest exporter. 80% of Mexico’s production of around 3.3 million vehicles in 2014 were made for export. The trade surplus generated by the automotive sector exceeded 47 billion dollars in 2014.

auto-exports-forbes

Mexico’s vehicle exports in 2014. Credit: Forbes, México.

The industry attracts large amounts of Foreign Direct Investment (FDI). Vehicle assembly plants provide around 65,000 jobs, with a further 85,000 employed in distributorships nationwide and a whopping 450,000 employed in the autoparts sector.

The autoparts sector along produces items worth $80 billion/year, but Mexico also has to import components made elsewhere worth a further $35 billion. Clearly, this offers some opportunities for additional investment aimed at import substitution. Most of the opportunities are likely to be for Tier 2 companies. It is customary to divide the autoparts sector into three distinct parts: OEM, Tier 1 and Tier 2. OEM (Original equipment manufacturer) refers to companies that make a final product for the consumer marketplace (eg Volkswagen). Tier 1 companies are direct suppliers of components to OEMs, and Tier 2 companies are the key suppliers of parts or raw materials to Tier 1 suppliers.

Total production in 2014 topped the 3 million barrier, and the Mexican Automotive Industry Association (AMIA) believes production could reach 4 million units by 2015 and 5 million by 2020.According to  AMIA, the best selling models on the domestic market are the Aveo (GM), Jetta (VW), Versa and Tsuru (both Nissan).

There are about 30 vehicle assembly plants in Mexico, manufacturing many brands of cars and trucks (see map). In addition, there are 1200 firms specializing in making parts for vehicles.

Vehicle manufacturing firms that have announced or confirmed major new investments during 2014 include:

  • Chrysler – 1.25 billion dollars to expand its assembly plant in Saltillo and manufacture a new line of Tigershark engines.
  • Nissan – to open its second plant in Aguascalientes.
  • Mazda – an additional 120 million dollars for its plant in Salamanca (Guanajuato), where it will manufacture several Mazda models as well as one Toyota model.
  • GM – investments worth 690 million dollars, divided  between its plants in Silao (Guanajuato), San Luis Potosí and Toluca (State of México).
  • Audi – about to open a 1.3-billion-dollar plant in San Jose Chiapa, near Puebla.
  • VW – 700 million dollars investment to adapt production lines in Puebla to produce its redesigned Golf hatchback.
  • Kia – plans to build a $1 billion vehicle assembly plant at Pesquería in the state of Nuevo Leon (scheduled to open in 2016) to produce up to 300,000 vehicles a year. The new plant is expected to generate a further 1.5 billion dollars in investment from firms seeking to join Kia’s supply chain.

This map is an updated version of the map we included in Where are Mexico’s vehicle assembly plants located? (2011).

Vehicle assembly plants in Mexico, 2014

Vehicle assembly plants in Mexico, 2014. Credit: Tony Burton/Geo-Mexico; all rights reserved.

As the map shows, certain areas of Mexico have attracted more investment in vehicle assembly plants than other areas. The two largest existing concentrations are focused on Toluca in the State of México, and on Saltillo-Ramos Arizpe in northern Mexico. However, the fastest growing cluster is in the central state of Guanajuato.

Virtual visit to the Chrysler plant in Saltillo (video, no commentary):

For a series of discussion questions related to this map and the vehicle assembly industry, see our earlier post – Where are Mexico’s vehicle assembly plants located?

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Mexico is the world’s leading exporter of beer

 Mexico's geography in the Press, Updates to Geo-Mexico  Comments Off on Mexico is the world’s leading exporter of beer
Nov 262014
 

For the fourth year running, Mexico was the world’s leading beer exporter in 2013, with beer exports reaching a record 2.2 billion dollars, a rise of 4.2% compared to 2012, and well ahead of both the Netherlands ($2.0 billion) and Belgium ($1.6 billion).

cerveza-victoria-bicentenaryMexico has become the leading supplier of beer to the USA and now accounts for almost 50% of that country’s beer imports. It is also the leading supplier to Australia, Chile, Guatemala, Argentina and New Zealand, as well as the third leading supplier to Canada and the fourth largest to China and Japan.

The two major beer producers in Mexico are Grupo Modelo and Cervecería Cuauhtémoc Moctezuma.

The leading export brand is Corona which reaches 180 countries around the world. Over the past decade, Mexico’s beer industry has grown at 2.5%/year and analysts expect this rate to quicken, predicting output will rise from 71 million hectoliters this year to 82 million in 2020.

In the USA, quite a few Mexican beers will be consumed this Thanksgiving Day… Happy Thanksgiving to all!

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Aug 042014
 

Mabe is one of Mexico’s largest multinational companies (2013 sales: $3.3 billion) with a total workforce of 21,000. The company designs, produces, and distributes domestic appliances (stoves, refrigerators, etc) to more than 70 countries.

mabe-plantThe company was founded in 1946, in Mexico City, by two Spanish immigrants: Egon Mabardi and Francisco Berrondo. It started by making kitchen furniture but quickly added gas ranges and refrigerators. By 1960, Mabe had already become Mexico’s single largest exporter of home appliances.

It continued to expand via an aggressive series of acquisitions, including the purchase of companies in Venezuela, Ecuador, Colombia, Brazil, Peru, Argentina and Canada.

To boost its presence in the USA and Canada, in 1986 Mabe created a joint venture with General Electric to produce appliances for the US market.

mabe-sales

Mabe sales, by region

GE held a 48% minority stake in the new venture and hoped to gain access to Mexico’s low cost labor pool, while Mabe was able to use GE’s existing distribution network to gain wider access to markets throughout the USA. Within a decade, two out of every three gas ranges and refrigerators imported into the USA were designed and manufactured by Mabe in Mexico. Almost all (95%) of the ranges and refrigerators sold as General Electric brands were designed in Mabe’s San Luis Potosi plant, the biggest kitchens plant in the world.

The implementation of NAFTA in 1994 led to further opportunities for Mabe. Since NAFTA, Mexico has become the leading supplier of household appliances, such as stoves, refrigerators, dryers and washing machines to the USA and Canada. In 2005, Mabe continued its expansion by acquiring Canadian firm Camco.

NAFTA also led to the firms competitors, including Whirlpool, Electrolux, Samsung and LG all establishing factories in Mexico.

The company, which is still headquartered in Mexico City, is a major purchaser of steel on the North American market, consuming steel worth around $500,000 each year. Its products include microwaves, washing machines and dryers, wine storage systems, air conditioning, motor-compressors, plastic injection and die-casting machinery.

It has about 15 manufacturing facilities in Latin America. The company’s factories in Mexico –located in Mexico City, Coahuila, Guanajuato, Nuevo León, Querétaro and San Luis Potosí– account for half its total output. In addition, refrigerators and ranges are manufactured in Colombia; freezers, refrigerators and ranges in Ecuador, and refrigerators, washing machines and ranges in Argentina and Brazil.

Mabe’s business practices incorporate a degree of “glocalization” in which the company’s designs are modified to be specific to particular regions, based on the consumer preferences and tastes in each country or region.

In 2014, Mabe announced that it was spending $80 million to repatriate its only Canadian plant from Montreal to Ramos Arizpe, Coahuila. The plant makes washing machines, driers and dishwashers. Together with Mabe’s existing plant in Ramos Arizpe, the two plants have the capacity to turn out about one million washing machines annually.

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