The geography of tequila: where is tequila made?

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Nov 142016
 

The production of (genuine) tequila is tightly regulated because tequila has denomination of origin status. This status (sometimes called appellation of origin) sets specific standards for producers in terms of how a product is grown or produced, processed and presented. Equally importantly, it defines the geographic indication, the specific places or regions where the product has to be made. Other items having denomination of origin status include champagne, asiago cheese and Melton Mowbray pork pies.

Geographic indications are “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin.” (World Trade Organization)

Mexico’s denomination of origin area for genuine tequila includes includes 180 municipalities in five states, a total area of about 11 million hectares (27 million acres).

Tequila producing areas of Jalisco and neighboring states.

Tequila producing areas of Jalisco and neighboring states. Credit: Tony Burton; all rights reserved. Click to enlarge

The main area (see map above) is the state of Jalisco (all 124 municipalities), with extensions into three neighboring states:

  • Nayarit (8 municipalities): Ahuacatlán, Amatlán de Cañas, Ixtlán del Río, Jala, Xalisco, San Pedro Lagunillas, Santa María del Oro and Tepic.
  • Guanajuato (7 municipalities): Abasolo, Cd. Manuel Doblado, Cuerámaro, Huanimaro, Pénjamo, Purísima del Rincón and Romita.
  • Michoacán (30 municipalities): Briseñas de Matamoros, Chavinda, Chilchota, Churintzio, Cotija, Ecuandureo, Jacona, Jiquilpan, Maravatío, Marcos Castellanos, Nuevo Parangaricutiro, Numarán, Pajacuarán, Peribán, La Piedad, Régules, Los Reyes, Sahuayo, Tancítaro, Tangamandapio, Tangancicuaro, Tanhuato, Tinguindín, Tocumbo, Venustiano Carranza, Villa Mar, Vista Hermosa, Yurécuaro, Zamora, and Zináparo.
Tequila growing area in Tamaulipas.

Tequila growing area in Tamaulipas. Credit: Tony Burton; all rights reserved. Click to enlarge.

About 80% of all blue agave is grown in Jalisco, and almost all tequila distilleries are located in the state.

The municipality of Maravatío in the eastern section of Michoacán is a tequila outlier, some distance away from the main producing area centered on Jalisco.

The other major outlier is a group of 11 municipalities in the northern border state of Tamaulipas (see second map) where 11 municipalities (Aldama, Altamira, Antiguo Morelos, Gómez Farías, González, Llera, Mante, Nuevo Morelos, Ocampo, Tula and Xicotencatl) are included in the denomination of origin for tequila.

The first denomination of origin for tequila was registered with the World Intellectual Property Organization in 1978. Since that time every trade agreement signed by Mexico has contained a clause to ensure that tequila’s special status is fully protected by the other signatories. Mexico has signed free trade agreements with more countries than any other country in the world.

For example, the relevant NAFTA clause states that:

“Canada and the United States shall recognize Tequila and Mezcal as distinctive products of Mexico. Accordingly, Canada and the United States shall not permit the sale of any product as Tequila or Mezcal, unless it has been manufactured in Mexico in accordance with the laws and regulations of Mexico governing the manufacture of Tequila and Mezcal.”

In 1996, Mexico succeeded in getting the World Trade Organization to recognize tequila, and also mezcal, as denomination of origin products.

The following year, Mexico signed an agreement with the European Union whereby Mexico recognized 175 European spirits, including champagne, cognac, grappa and scotch, as having denomination of origin protection, in exchange for E.U. protection for tequila and mezcal. At that time, Mexico’s Tequila Regulatory Council (CRT) estimated that some 3.5 million liters of “pseudo-tequilas” were sold annually in Europe under such names as “Blue Tarantula” in Italy and “Hot Tequila” in Finland (In search of the blue agave: Tequla’s denomination of origin).

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Chinese look to invest in southern Mexico

 Mexico's geography in the Press  2 Responses »
Jun 232016
 

At the Mexico-China Forum for Cooperation in Mexico City in May 2016, authorities from China’s Guangdong Province met with Mexican officials and discussed plans to invest in Mexico’s recently-established Special Economic Zones.

special-economic-zones

These zones offer tax benefits and support services to investors in order to generate new sources of employment in southern Mexico (Guerrero, Oaxaca, Chiapas, Michoacán, Veracruz and Tabasco).

Trade between Guangdong Province and Mexico was worth $10.4 billion last year, 25% of the two countries’ total trade. Chinese firms are considering projects related to aerospace, vehicles, electronics and energy, which could add $480 million in foreign direct investment. In support of closer ties between Mexico and China, China Southern Airlines plans direct flights between Guangdong and Mexico starting next year, which would serve business travelers and also boost tourism.

The geography of silver mining in Mexico

 Excerpts from Geo-Mexico, Updates to Geo-Mexico  3 Responses »
Jun 202016
 

Mexico is the world’s leading producer of silver and has occupied top spot for several years. Mexico’s output of silver rose 2.0% in 2015 to 5,372 metric tons (189.5 million ounces). Mexico is responsible for 21% of global production, followed by Peru (15%), China (12%) and Australia and Russia (each 6%). About 70% of silver produced in Mexico is exported, the remainder is sold on the domestic market.

Global silver production fell slightly in 2015 due to decreased output from Canada, Australia and China. World demand for silver in 2015 reached a record 33,170 tons (1,170 million ounces), due to surges in three manufacturing sectors: jewelry, ingots and coins, and photo-voltaic solar panels.

The increased output in Mexico came from expansions in the Saucito and Saucito II mines, operated by Fresnillo, and the El Cubo mine, managed by Canadian firm, Endeavour Silver. A similar increase in production is predicted this year, given the on-going expansion of the San José mine, owned by Canada-based Fortuna Silver Mines.

Zacatecas is Mexico’s leading silver producing state (46.5% of total; see map), well ahead of Chihuahua (16.6%), Durango (11.3%) and Sonora (6.9%).

Silver production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

Silver production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

In Zacatecas, silver mining is especially important in the municipalities of Fresnillo (24% of total national silver production) and Mazapil (15%) as well as Chalchihuites and Sombrerete (3% each). The main silver mining municipality in Chihuahua is Santa Bárbara (3% of national total). In Durango, San Dimas and Guanaceví are each responsible for about 3% of national production, while the leading municipality for silver in Sonora is Nacozari de García (1%).

The legacy of silver

The importance of silver mining in colonial New Spain can not be over-emphasized. For instance, during colonial times nearly one third of all the silver mined in the world came from the Guanajuato region!

Even today, the cities and landscapes of many parts of central and northern Mexico reveal the historical significance of silver mining. The legacies of silver mining include not only the opulent colonial buildings in numerous major cities such as Zacatecas and Guanajuato, as well as innumerable smaller towns, but also the deforestation of huge swathes of countryside.

The landscape of states like San Luis Potosí, Zacatecas and Guanajuato was forever changed by the frenzied exploitation of their woodlands. Silver mines needed wooden ladders and pit props. The smelting of silver ore required vast quantities of firewood. Barren tracts of upland testify to the success of those early silver mines. Mining played a crucial role in the pattern of settlement and communications of most of northern Mexico. The need to transfer valuable silver bullion safely from mine to mint required the construction of faster and shorter routes (see, for example, El Camino Real or Royal Road, the spine of the colonial road system in New Spain), helping to focus the pattern of road and rail communications on a limited number of major cities.

Once workable ores ran out, smaller mining communities fell into obscurity and many became ghost towns. Some of these settlements, such as Real de Catorce and Angangueo, have enjoyed a new lease of life in recent years due to tourism.

The main town associated with silver and tourism is Taxco, the center of silversmiths and silver working in Mexico.

Mining towns described briefly previously on Geo-Mexico.com include:

Note: This is a 2016 update of a post first published in 2013.

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Mexico’s main power stations

 Excerpts from Geo-Mexico  1 Response »
Jun 132016
 

Mexico’s national electrical system serves about 97% of all Mexicans. In recent years electrical generation has not been able to keep pace with demand for electricity, which is increasing at about 6% to 7% per year. Attempts to increase private sector investment in energy as a means to keep up with surging demand have met opposition in the Mexican Congress. Under current law, private investors may generate electricity but transmission and distribution are restricted to the Federal Electricity Commission.

Mexico's major power stations. Fig 16-2 of Geo-Mexico; all rights reserved.

Mexico’s major power stations. Fig 16-2 of Geo-Mexico; all rights reserved.

About 30% of Mexico’s total installed electricity generating capacity of 60,000 MW comes from conventional power plants burning oil. Natural gas-fueled power plants account for about 35%, while coal plants contribute about 9%. Altogether, fossil fuel burning facilities account for almost three-quarters of Mexico’s generating capacity.

Many of Mexico’s newer power plants are highly efficient, gas-fired, combined cycle plants which integrate gas and steam turbines. On a per megawatt basis, they are relatively economical to build. Their major disadvantage (equally true for conventional thermo-electric power stations) is that their emissions contribute to air pollution (particularly sulfur dioxide) and global warming. About 25% of Mexico’s annual emissions of carbon dioxide are due to electricity generation.

Hydroelectric power has been important since the early part of the twentieth century. Currently about 22% of the electricity generating capacity is from hydroelectric plants. The largest hydroelectric plants are on the Grijalva River in Chiapas. Other rivers providing significant hydropower are the Balsas, Santiago, Fuerte, Papaloapan and Moctezuma.

Mexico has one nuclear power plant at Laguna Verde in Veracruz, which provides about 2.6% of the nation’s generating capacity. No additional nuclear plants are planned.

Mexico has the world’s second largest geothermal electrical potential, after Indonesia. This resource might be more important in the future but at present it accounts for less than 2.4% of Mexico’s electricity capacity.

The region of Mexico with most potential for wind power is the low-lying and flat Isthmus of Tehuantepec in southern Mexico where annual wind speeds, at a height of 30m (100 ft) above the ground (the height of modern windmills), average more than 30 kph (19 mph). Despite the success of the windfarms already operating in La Venta (Oaxaca) and Guerrero Negro (Baja California Sur), wind power is responsible for less than 0.05% of all electricity. The government hopes to boost wind power capacity significantly within the next five to ten years.

Most solar power interest is focused not on large scale plants but on small-scale photovoltaic (PV) systems providing electricity in remote rural areas. About 3 million people (3% of the population) live in small or remote settlements not yet connected to the national electricity grid. More than 60,000 PV systems have been installed nationwide, benefiting 250,000 rural inhabitants.

This is an excerpt from chapter 16 of Geo-Mexico: the geography and dynamics of modern Mexico. Buy your copy (Print or ebook) today!

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The race is on to expand 4G-LTE services in Mexico

 Mexico's geography in the Press  Comments Off on The race is on to expand 4G-LTE services in Mexico
May 092016
 

AT&T and Telcel are competing for the concession of 80 megahertz (MHz) of spectrum for the provision of 4G-LTE mobile broadband service in Mexico. The winner is expected to have to pay somewhere in the region of 700 million dollars to the government in order to acquire the rights.

Movistar coverage, 2G, 3G, 4G - 2016

Movistar coverage, 2G, 3G, 4G – 2016

The three major competitors currently in the 4G-LTE market in Mexico are Movistar (Telefonica), Telcel (America Movil), and AT&T.

Telcel is the dominant player and reaches 65 million users nationwide. Movistar serves about 50 cities (see map). AT&T’s 4G-LTE network currently reaches 40 million people in 36 cities, but the firm is investing aggressively, with plans to reach 75 million people by the end of 2016 and 100 million by 2018. Under construction is AT&T’s new 300-million-dollar operations center in Guadalajara, which will benefit from that city’s well-qualified workforce and enhance its importance as Mexico’s tech sector hub.

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Mexico is the world leader for PET recycling

 Mexico's geography in the Press  3 Responses »
Apr 112016
 

According to ECOCE, a non-profit environmental grouping of 24 food and beverage firms, representing more than 80 brands such as Peñafiel, Bonafont, Herdez, Jumex and Coca-Cola, Mexico is the world’s leading recycler of hard plastic PET (polyethylene terephthalate) bottles and containers.

Mexico has 14 PET recycling plants, the construction of which represents total investments of around US$314 million.

Ever wondered what thousands and thousands of crushed plastic bottles look like? Try this short video showing the processes involved in a PetStar PET-recycling plant:

In 2015, Mexico produced 722,000 metric tons of PET, of which 364,000 tons (50.4%) were recovered for recycling. This rate of recycling is well ahead of Canada (40%), Brazil (42%), the U.S. (31%) and the European Union (21%). Recycled PET, worth about $250 a ton, is reused to make bottles, containers, and various textile products.

60% of Mexico’s recycled PET is destined for the national market, the remaining 40% is exported to China, the U.S. and elsewhere.

Source:

  • Press release of ECOCE, 16 March 2016

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Drug cartels taking over the tortilla industry in Guerrero

 Mexico's geography in the Press  1 Response »
Mar 282016
 

In 2014 there were 285 tortillerias in Chilpancingo, the capital of the state of Guerrero, when the troubles with the drug cartels really started. Now only 185 remain open as a result of drug gangs attacking the tortilla shops and workers, kidnapping owners and forcing others out of business out of fear of the violence.

Chilpancingo, with a population of over 280,000, is situated in the mountains 105 km north-east of Acapulco. As elsewhere, the tortilla shops are concentrated in the poorer barrios where local criminal gangs also tend to be located. Tortillas are sold from small shops with a view to the street, or are delivered door-to-door by young men on motor cycles.

The drug cartels in Chilpancingo, such as Los Rojos and Guerreros Unidos, realized that by controlling the business owners and the employees of tortillerias, they would have a wide-spread and well-placed network of drug distribution points, lookouts and street dealers, operating under the guise of these many small legitimate businesses.

tortilleria

The take-over began in 2014 with the kidnapping of shop owners and workers, often involving a week’s captivity in a secure house, and demands for ransom ranging from 30,000 pesos (US$2100), up to 2 million pesos (US$140,000 for owners of multiple tortillerias.) After release, the victims were forced to co-operate with the cartel’s drug distribution and look-out system, under threat of business closure. The leader of the Chilpancingo tortilla sellers, Abdon Abel Hernandez has been threatened numerous times, kidnapped once, and his family had to borrow a million pesos to secure his release. He says about 35% of the local tortilla industry has shut down since 2014 out of fear.

The regional president of Corpamex (Mexican Confederation of Business Owners) Adrian Alarcon says he also lives with the fear of death for trying to defend his threatened union membership. “Today the tortilla industry is kidnapped by them (criminal groups) just like what happened with public transport when they forced taxi drivers and bus drivers to become the hands and eyes of the narco. The industry is completely infiltrated. The money that comes from the tortillas is used to buy weapons. We are financing them”.

January 2016 march by owners of tortillerias asking for state government help

January 2016 march by owners of tortillerias asking for state government help

He also stated that 36 businessmen were kidnapped and tortured in the central region of Guerrero in the first two months of 2016, with most of the victims being associated with the tortilla industry. “It wasn’t a coincidence”, he said, “that a national survey named Chilpancingo as the country’s worst city to live in. Crime has put an end to everything: investments, jobs, and the desire to make a family here. But if you think the situation here is in a critical state, you should go to Acapulco. Here, the tortilleros are kidnapped, but there they are being killed.” According to Arcadio Castro, leader of the Tortilla Association of Guerrero, 20 tortilla workers lost their lives in 2015 in clashes with organized crime.

The previous chief of police of Acapulco was dismissed after he failed to pass control examinations, known as trust tests, designed to identify those with possible links to organized crime. His replacement expects some 700 of his current force of 1901 municipal police will also fail their next control exams. Given his current budget, he has no hope of renovating his police force with younger, healthier, law-abiding officers. The assault on the tortilla industry is generally not felt in the tourist areas of the city.

In 2010 UNESCO included the traditional Mexican cuisine of Michoacán in its list of the Intangible Cultural Heritage of Humanity, in large part based on the multiple uses and cultural centrality of corn in Mexican traditional cooking. This decision was very publicly celebrated by the tortilla industry. Unhappily, today, the tortillerias of Guerrero are struggling to survive the extortion rackets of the local drug cartels.

Main source:

Oscar Balderas. Drug Cartels Are Taking Over the Tortilla Business in Mexico. VICE News, , 16 March 2016; article re-published in Business Insider.

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Mexico continues to be the world’s leading exporter of beer

 Mexico's geography in the Press  Comments Off on Mexico continues to be the world’s leading exporter of beer
Jan 012016
 

For the fifth year in a row, Mexico was the world’s leading exporter of beer in 2014. The final tally shows that Mexico exported 1,700 million liters of beer in 2014, worth 1.6 billion dollars. (Export figures for 2015 are not yet available but will show that Mexico remains well in the lead over Belgium and the Netherlands)

Cuauhtemoc Moctezuma brewery in Monterrey

Cuauhtemoc Moctezuma brewery in Monterrey. Photo: Tony Burton.

Mexico is the world’s sixth largest producer of beer and is predicted to leapfrog Germany and Russia this year (2016) into fourth place, behind only China, the U.S. and Brazil. Significant investments during 2015 have raised national production capacity 39% to 125 million hectoliters.

The two largest beer producers are Grupo Modelo and Cuauhtémoc Moctezuma (formerly Femsa). Grupo Modelo is building a new 310-milion-dollar brewery in the state of Yucatán and also expanding its breweries in Zacatecas and Coahuila. Cuauhtémoc Moctezuma is building a new 450-million-dollar facility in Chihuahua. A third brewer, Constellation Brands, is undertaking a 500-million-dollar expansion to its Piedras Negras plant in Coahuila, which will triple its annual production to 30 million hectoliters by 2017.

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Chinese imports threaten bicycle manufacturing in Mexico

 Mexico's geography in the Press  2 Responses »
Oct 152015
 

Since we first reported on Bicycle manufacturing in Mexico in 2010, a number of things have changed.

At that time, the website of the National Association of Bicycle Manufacturers claimed that its 14 member companies produced about 3 million bikes a year and employed, between them, 4,000 workers. Today, the group has fewer members – 12 – who make “over 2 million” bikes a year and provide 3,000 jobs.

Stamp of Bike exports

The Mexican bicycle manufacturing industry looks like it has to overcome a tough problem. Recent press reports suggest that the total number of bicycles produced nationally fell to around 1.8 million in 2014. Manufacturers are blaming the uncontrolled imports of less expensive bikes made in China. Gunter Maerker, a representative of the National Association of Bicycle Manufacturers, argues that manufacturers need greater protection from Chinese imports, which have an average cost of about 7 dollars a unit, compared to a unit cost of production that is closer to 20 dollars to make a bicycle in Mexico.

Domestic manufacturers sold 1.5 million bikes in the national market in 2014. Mexican manufacturers believe that sales of imported bikes equaled or exceeded that number. The fall in national bicycle manufacturing has already had impacts on suppliers of components since national bikes are made largely of domestically-manufactured parts (along with some items sourced in China or Taiwan).

Mexican bicycle manufacturers are also worried about the implementation of the Trans-Pacific Partnership (TPP), agreed in principle earlier this month, but still needing formal approval in all signatory countries. The 12 countries involved are Mexico, the U.S., Canada, Chile, Peru, Australia, Japan, Brunei, Malaysia, New Zealand, Singapore and Vietnam.

China has had no part in TPP discussions, but it is feared that Chinese manufacturers may triangulate their products into Mexico via signatory countries such as Malaysia or Vietnam.

In 2015, the National Association of Bicycle Manufacturers lists 12 bike manufacturers:

  • Bicicletas Cinelli – Santa Catarina, Nuevo León
  • Nahel – Durango, Durango
  • Goray – Torreón, Coahuila
  • Grupo Veloci – Zapopan, Jalisco
  • Rebimo de Guadalajara – Zapopan, Jalisco
  • Bicicletas Mercurio, Mérida and San Luis Potosí (they acquired the famous Acer-Mex Windsor brand in 2001)
  • Bimex – Mexico City
  • Magistroni – Mexico City
  • Benotto (primarily a distributor) – Mexico City
  • Grupo Oriental – Mexico City
  • Corporativo La Bici – Mexico City
  • Bicileyca – Yauhquemehcan, Tlaxcala

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Mexico’s multinationals: Mexichem, a world leader for PVC pipes and other products

 Other, Updates to Geo-Mexico  Comments Off on Mexico’s multinationals: Mexichem, a world leader for PVC pipes and other products
Sep 202015
 

Mexichem is a Mexican chemical and petrochemicals company (2014 total revenues: US$ 5.6 billion), with headquarters in Tlalnepantla, in Greater Mexico City. Mexichem is a world leader in making and marketing plastic pipes and other products required in the infrastructure, housing, telecommunications, drinking and potable water sectors.

It employs 19,200 workers and has 120 manufacturing operations in more than 30 countries, with a sales presence in 90 countries.

Mexichem operations, 2015

Mexichem operations, 2015 (Source: mexichem.com)

The company’s origins date back to 1953 when a group of Mexican and English investors founded Cables Mexicanos S.A. to make high carbon steel wire ropes. Several changes of name and owners later, it emerged in 2005 as Mexichem. Mexichem has grown rapidly since then, largely due to an aggressive series of acquisitions.

In 2006, Mexichem bought Bayshore Group (PVC compounding). In 2007, it bought Amanco (PVC pipe systems and fittings), Petroquímica Colombiana (maker of PVC resins) and DVG, Industria e Comércio de Plásticos (producer of rigid PVC water and sewage pipes).

In 2008 Mexichem acquired Fluorita de Río Verde (fluorspar production plants and two fluorite mining concessions), Quimir (sodium phosphates), Geotextiles del Perú (geotextiles), Fiberweb Bidim Industria e Comércio de Não-Tecidos (Brazilian geotextile producer) and Colpozos (Colombia’s leading supplier of irrigation and well drilling systems).

The list goes on in succeeding years, with a succession of acquisitions of companies making PVC pipes, connections, polymers, resins, and fluorochemical competitors to become a world leader in the fluorine chemical segment, particularly in the production of refrigerant and medical gases.

mexichem-fluor

To consolidate its fluorite business, in 2012, Mexichem bought Fluorita de México, ensuring access to the highest pure fluorspar available worldwide.

Mexichem has four main business divisions:

  • Pipe systems, fittings, conduits and plastic accessories for the delivery of data, video, communications, electricity, water and gas. The pipe systems are made from polyethylene, PVC, polypropylene and specialty flame and smoke resistant compounds.
  • PVC resin and valuable industrial compounds based on chlorine and caustic soda. PVC has uses from pipes that carry drinking water, wastewater or water for irrigation to construction materials and products, as well as  auto parts, household appliances, clothing, footwear, packaging and medical devices. Caustic soda is used to make soap, shampoo, lotions and detergents and to treat water.
  • Fluorine-based products, technologies and services. Mexichem’s “Mine to Market” structure ensures a secure supply chain of flourine-based products for the steel, cement, aluminum, automotive, refrigeration and pharmaceutical sectors.
  • Energy. This division was created in 2014 in order to capitalize on opportunities arising from Mexico’s new energy policies.

A note on Mexico’s importance for fluorite

Exports of fluorite from Mexico were worth $180.7 million in 2014 (29% of the world total), making Mexico the world’s leading exporter of that mineral, ahead of China ($120.2 m). In 2014, Mexico mined 1.1 million metric tons of fluorite, and was the world’s second largest producer after China (4.4 million tons).

Mexichem sits on the world’s largest high-grade fluorite deposits, in its mine in San Luis Potosí. It produced 529,464 metric tons of fluorite from this mine in the first six months of 2015, 96% of the national total.

The world’s largest total reserves of fluorite are in South Africa (41 million tons), followed by Mexico (32 million), China (24 million) and Mongolia (22 million), according to U.S. government figures.

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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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Nava brewery in Coahuila: the largest brewery of its kind in the world

 Other  1 Response »
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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Why is the world’s largest salt-works in Baja California Sur?

 Other  5 Responses »
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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Mexico’s multinationals: Mabe, domestic appliance manufacturer

 Updates to Geo-Mexico  3 Responses »
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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Medical tourism and the medical equipment industry in Mexico

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Jun 212014
 

Mexico is both a growing market for medical tourism and a world leader for the manufacture of medical equipment.

Growing market for medical tourism

The global market for medical tourism in 2013 was estimated to be worth about $2.847 billion, with some 7 million patients seeking medical treatment outside their home country each year. According to Patients without Borders, a U.S. business that specializes in the field, Mexico is currently the second most popular destination for medical tourists, after Thailand. Nationwide, Mexico has more than 71,000 doctors working in hospitals and private clinics. Almost two-thirds of all doctors in Mexico are specialists, compared to an average of 57.7% for all OECD member nations.

Mexico’s Economy Secretariat estimates that, combined, the one million medical tourists in 2013 and the numerous affiliated services such as spas, massages and non-conventional therapies, contributed $4.2 billion to the national economy. This figure is growing at about 7% a year.

Patients without Borders claims that patients from the USA and Canada pay between 36 and 80% less for operations and medical treatments in Mexico than the cost in their home country. The most important states for medical tourism are Nuevo León, Baja California, Baja California Sur, Sonora, Tamaulipas, Chihuahua, Jalisco, Quintana Roo and Yucatán.

A plan to build a new “medical city” has been announced by health officials in Quintana Roo. It would be called “Jardines de la Sabiduría” (Gardens of Wisdom) and located on a 550-hectare lot between Cancún and Puerto Morelos. The new city would have four zones: residential, hospitals, recreation and cultural/educational, and would include at least four hospitals: for children, cancer care, dental work and orthopedic surgeries respectively. It remains to be seen if sufficient foreign investment can be found to bring this project to fruition.

World leader for medical equipment

Mexico is a major manufacturer of medical devices. Sales of Mexican-made medical equipment exceed $10.6 billion a year and are predicted to reach $14.9 billion by 2020. Manufacturing costs for medical devices in Mexico average 25% below those in the USA, the world’s largest market for such products.

Major medical device manufacturing areas in Mexico

Major medical device manufacturing areas in Mexico. Credit: Economy Secretariat.

Mexico’s exports of medical equipment and supplies were worth $6.2 billion in 2011, making Mexico by far the largest exporter of medical devices in Latin America, and the 11th largest in the world. 92 % of medical devices manufactured in Mexico are exported to the USA, accounting for two-thirds of all U.S. imports of those products.

According to Pro-Mexico, Mexico is the world’s largest exporter of bore needles; the 4th largest exporter of medical, surgical, dental and veterinary furniture; the 5th largest exporter worldwide of medical,surgical, dental and veterinary instruments and apparatus; and the 7th largest exporter worldwide of ozone therapy, oxygen therapy, aerosol therapy apparatus, breathing apparatus and other respiratory therapy apparatus.

More than 2,000 separate businesses, and about 135,000 workers help invent, design and manufacture medical devices in Mexico. Medical device manufacturing is concentrated mainly in northern border states, especially Baja California, where the cluster of more than 60 specialist firms includes Smiths, Tyco Healthcare, Cardinal Health, Medtronic, Gambro, ICU Medical, CLP, Sunrise Medical and North Safety Products.

Data:

  • The Medical Device Industry, 2012 (Pro-Mexico; pdf file)

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State and city of Querétaro growing rapidly

 Mexico's geography in the Press  1 Response »
May 192014
 

Both the state and the city of Querétaro are growing rapidly in importance. The state has grown faster than any other over the past decade and has attracted significant foreign direct investments, especially in the aeronautical sector, but also other technology firms attracted by the state’s central location, proximity to Mexico City, easy access to other major cities, such as Guadalajara and Monterrey, excellent transport links to the northern border and both coasts, its highly educated workforce and enviable living standards.

The state’s success has not gone unrecognized. For example, Joseph Parilla and Alan Berube of the Brookings Institution’s Metropolitan Studies Program in “Finding the ‘New’ Mexico in Querétaro” describe the state as “ground zero for the country’s economic revolution, achieving average annual GDP growth of 5.5% over the last decade, highest among Mexico’s 31 states. It is home to major multinational corporations like GE and Samsung, a burgeoning middle class, new golf courses, and what will soon be Latin America’s second-largest shopping mall, all within a stone’s throw of an immaculately preserved colonial center (a UNESCO World Heritage site).”

This recent PBS video segment looks at how economic reforms have enabled boomtowns such as Querétaro to spur economic growth in Mexico.

Two proposed projects in Querétaro deserve further comment.

The first is the announcement earlier this year that Arkansas State University was joining with private investors in Querétaro to break ground on the first U.S. university residential branch campus in Mexico. The campus is slated to be built in the municipality of Colón, some distance from the state capital. Just how significant this project is remains to be seen.

The second project, which holds much greater significance, is the renewed interest in constructing a high speed rail link capable of moving as many as 20,000 passengers/day connecting Querétaro City with Mexico City. This idea has been around for at least 20 years, but may finally be approaching lift off.

At a later stage, this line could easily be extended into the Bajío Region, to the industrial cities of León and Guanajuato, and also possibly westwards to Guadalajara. Tapatíos (the residents of Guadalajara) have dreamed of a high speed rail link to Mexico City for the past 30 years, following the demise at that time of the convenient and popular overnight train service linking the two cities.

The line’s proposed route is from the Buenavista station in Mexico City to Huehuetoca, and then mainly following the route of highway 57, the main Mexico City-Querétaro highway, to Querétaro.

The project would generate up to 9,000 direct jobs during construction and take about four years to complete at an estimated cost of $3.3 billion.

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Industrial development in the state of Hidalgo

 Mexico's geography in the Press  Comments Off on Industrial development in the state of Hidalgo
Apr 262014
 

A 200-million-dollar industrial development project known as Plataforma Logística de Hidalgo (PLATAH) in the central Mexican state of Hidalgo is being promoted as the nation’s latest industrial growth pole. The site’s major advantages are its proximity to Mexico City (30-40 minutes away by road) and its location alongside railways and the Arco Norte highway, which link the region to ports on both the Gulf Coast and the Pacific (see map).

platah-locationPLATAH is being developed by the Hidalgo state government in association with Artha Capital. In its initial stages, a 340-hectare site in Villa de Tezontepec, near Tizayuca, includes industrial sites and multimodal transport interchanges, supported by commercial areas and facilities for education, healthcare and business tourism.

PLATAH is projected to generate up to 10,000 new direct jobs. It is claimed that by providing employment in the region, the industrial park will reduce the need for workers to migrate or commute elsewhere for jobs, saving an estimated 8 million man-hours a year. The first factories in PLATAH are expected to be operational by early next year.

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León hosts Latin America’s largest trade fair for footwear

 Updates to Geo-Mexico  Comments Off on León hosts Latin America’s largest trade fair for footwear
Mar 262014
 

Mexico’s footwear industry is heavily concentrated in three main cities: León, Guadalajara and Mexico City. Factories and workshops in the city of León in the state of Guanajuato account for about 68% of all shoes made in Mexico. The two other important manufacturing areas for footwear are Guadalajara (Jalisco) where about 18% of the national production originates, and Mexico City (together with surrounding parts of the State of Mexico), responsible for 12%.

Footwear industry in Mexico

Concentration of shoe industry in Mexico.

According to the 2009 Economic Census, there were close to 7500 “productive units” related to shoe manufacturing in Mexico, with about half of them located in the state of Guanajuato. In 2012, national producers turned out 244 million pairs of footwear, of which 171 million pairs (70%) were made in Guanajuato.

Shoes are also an important international trade item. In 2013, shoe exports reached 26 million pairs, worth almost $600 million (an increase of 14% compared to 2012). The main export markets were the USA, Canada, Colombia, Guatemala, Panama and Japan.

Mexico’s shoe industry hosts several major trade fairs each year. The single biggest event, SAPICA (Salón de la Piel y el Calzado), is Latin America’s largest international footwear trade fair and is held in León twice a year. The next SAPICA trade fair opens today and runs 26-29 March 2014 in León, Guanajuato. This show has 45,000 square meters of exhibition space, more than 2000 stands and 850 presentations. SAPICA has gained international recognition and attracts 11,000 buyers (from the USA, Canada, Europe, Japan, and Central and South America) and 35,000 visitors each year.

The flexibility of León’s shoe manufacturing industry has enabled firms such as Poppy Barley (based in Edmonton, Canada) to be able to market custom-made boots via their website and without the overheads of any conventional footwear stores . Individual purchasers take their own foot measurements, and then the boots are made to order and shipped to their homes. This “made to measure digital retail” approach flies in the face of the mass production that has become the norm in the footwear industry. The Poppy Barley website includes a section devoted to its manufacturing partner in León.

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Mexico’s 2014 Economic Census is underway

 Mexico's geography in the Press  Comments Off on Mexico’s 2014 Economic Census is underway
Mar 222014
 

Mexico’s National Statistics Institute (INEGI) has begun collecting data for the 2014 Economic Census. The census, held every 5 years, surveys the estimated 5.7 million business places throughout the country, excluding only those used for agricultural, forestry and fishing operations, or exclusively for informal business activities.

Economic census 201425,000 trained census takers are now systematically covering all urban areas, together with a representative sample of rural areas, gathering data such as type and sector of operation, number of workers, educational levels, fixed assets and use of information technology.For the first time, companies can opt to enter data directly via a webpage.

Preliminary census results will be released in December this year, with more detailed tables released in stages between July and December 2015.

The Economic Census is held every five years. The results of previous economic censuses (2009, 2004, 1999, 1994, etc) can be accessed via the INEGI website.

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Trends in Mexico’s commercial and industrial property markets

 Other  1 Response »
Mar 062014
 

In The market for commercial and industrial real estate in Mexico, we looked at a recent snapshot of the industrial real estate market in the last quarter of 2013, and saw how cities in the Bajío Region were outpacing cities in Central Mexico or Northern Mexico. (The snapshot came from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm.)

In this post, we take a look at the “Industrial Property Clock” for the same period, from the same report.

Industrial property clock (Jones Lang LaSalle)

Industrial property clock (Jones Lang LaSalle)

In general, cities in Central Mexico and in the Bajío are well “ahead” of cities in northern Mexico on this clock. The analysis by Jones Lang LaSalle suggests that the commercial and industrial property markets in Mexico City, Guanajuato, Guadalajara, San Luis Potosí, Puebla and Toluca are “peaking”. The two remaining cities in the Bahío (Querétaro and Aguascalientes) are joined by several cities in northern Mexico in the “rising market” portion of the graph, while Reynosa, Matamoros, Nuevo Laredo and Chihuahua are anchored in the “bottoming market” portion.

The following quotes are taken from the report:

• Mexico City’s industrial market grows its footprint annually; rents have grown to pre-crisis levels

• Puebla market is very tight; land is scarce and vacancy is at a low

• Toluca market has been growing as an alternative to Mexico City, it is also attracting local businesses

• Guanajuato is growing in several submarkets like Silao and Celaya thanks to car manufacturing and food related businesses

• Guadalajara keeps occupying space and growing at El Salto and South Periférico

• San Luis Potosí keeps attracting new industries related to consumer goods. The car manufacturing industry is taking advantage of the city’s communications and infrastructure

•Querétaro has been active inaugurating new developments near the airport both for the aerospace business and for car manufacturing. These industries have taken advantage of the local educated labor force

• Aguascalientes seems to be the new frontier for developers: at least three major national developers have inaugurated parks in this market, one of them is Nissan’s supplier park

• Tijuana continues its path towards quickly becoming a speculative development marketplace once again. It is the first border city to regain this business climate

• Nogales, the smallest of the Northwest Border region cities, is also enjoying the expansion of Kimberly Clark (KCI) leasing vacant space within the Nuevo Nogales Industrial Park

• Ciudad Juárez keeps lowering the existing vacancy rate

• Monterrey submarkets have been improving, especially Apodaca and Santa Catarina, where land prices and rents are growing

• Nuevo Laredo, Reynosa and Matamoros have seen a slow down in their activities, however, tenants have stayed at their buildings; there are no new developments on the horizon and vacancy rates are around 10%

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The market for commercial and industrial real estate in Mexico

 Mexico's geography in the Press, Other  Comments Off on The market for commercial and industrial real estate in Mexico
Mar 012014
 

A recent snapshot of the industrial real estate market in the last quarter of 2013 compares progress in three industrial regions in Mexico: Northern Mexico, Central Mexico and the Bajío Region. The snapshot comes from the report ‘Industrial Markets in México (Q4 2013)‘ by Jones Lang LaSalle, a global real estate services firm specializing in commercial property management, leasing, and investment management.

Cities included in industrial real estate study

Cities included in industrial real estate study (Jones Lang LaSalle)

The pattern of commercial and industrial real estate in Mexico

The five main cities of the Bajío Region (Aguascalientes, Guadalajara, Guanajuato, Querétaro and San Luis Potosí) are booming in terms of commercial and industrial real estate. In the final quarter of 2013, the region added about 550,000 m2 of commercial and industrial space. This was more than double the additional space added in Central Mexico (Mexico City, Toluca and Puebla) and close to the total amount (614,000 m2) spread between 10 cities in northern Mexico (see map).

In the North Region, “Tijuana has been occupying vacant space… and Ciudad Juárez is on its way to recovering from low rents and high vacancy”, while the automotive sector is driving growth in Saltillo-Ramos Arizpe.

The Central Region is helped “by third party logistics companies that grow their business and footprint in Mexico City’s surroundings”, while “Toluca and Puebla grew mainly because of the car manufacturing demand for space.” Commercial rents rose in Mexico City and in Toluca. “Big Box requirements keep driving this market. Development has been very active at the Tepotzotlán toll booth surroundings.”

The Bajío Region has consolidated “with new industrial parks related not only to the new car manufacturing plants, but also for new investments related to aerospace, food and personal consumer” products.

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How innovative is Mexico compared to other countries?

 Other  1 Response »
Nov 022013
 

Innovation is an important ingredient of economic growth, especially growth in the decades ahead. While most people know what innovation is, it is not an easy concept to measure. Fortunately three different groups have attempted to measure it and compare countries on their “innovativeness”. All three rely on such measures as research and development, number of patents, number of researchers per person, manufacturing, and the percentage of college graduates with science and engineering degrees. However, the number and character of the specific individual variables they use are quite different. As a result their international rankings can be very different. The three approaches are briefly discussed below.

1. Bloomberg’s “Global Innovation Quotient” is based on R&D intensity (20%); manufacturing capability (10%); researcher concentration (20%); productivity (20%); High-tech density (20%); patent activity (5%) and tertiary (education) efficiency (5%).  [For more details, see Global Innovation Index (pdf)]

Bloomberg’s “Global Innovation Quotient”, for 96 countries, ranked Mexico ranked in 2012 as 46th, just behind Chile (41st) and Argentina (43rd), but ahead of Brazil (57th) and Venezuela (62nd). Other notable countries ranked as follows: Finland (1st), Singapore (2nd), USA (7th), Switzerland (8th), Canada (19th), Russia (22nd), Israel (29th) and China (32nd) and Indonesia (64th).

2. In 2009, a “Global Innovation Index” was produced by The Boston Consulting Group (BCG), the National Association of Manufacturers (NAM), and The Manufacturing Institute (MI). In March 2009, the Global Innovation Index ranked Mexico 57th. For comparison, it had Chile at 37th, Argentina at 92nd, Brazil at 72nd, and Venezuela at 108th.

These rankings are significantly higher than the Bloomberg rankings above because this index included more countries which pushed the Latin American countries lower down on the ranking list. But there are other important differences in how innovativeness was measured in the two studies. Compare the following rankings with the ones in paragraph above: Finland (7th), Singapore (1st), Switzerland (3rd), USA (8th), Canada (14th), Russia (49th), (Israel 16th), China (27th) and Indonesia (71st).

3. The third index, confusingly also called the “Global Innovation Index”, is published jointly by Cornell University, INSEAD (The Business School of the World) and the World Intellectual Property Organization (WIPO).

global-innovation-index-2013This very complicated index is based on six pillars (Institutions, human and capital research, infrastructure, market sophistication, business sophistication, knowledge and technological outputs and creative outputs.), each with sub-pillars, and a total of 84 indicators. Of the 134 countries analyzed in 2012, Mexico ranked 79th, way behind Chile (39th) also lagging behind Brazil (58th) and Argentina (70th), but way ahead of Venezuela (118th). This complex index’s rankings are different from but generally align with the two other indices: Finland (4th), Singapore (3rd), USA (10th), Switzerland (1st), Canada (12th), Russia (51st), Israel (17th) China (34th) and Indonesia (100th).

Conclusion

These three indices appear to tell us that Mexico is relatively weak when it comes to innovativeness. Mexico, along with Brazil and India, appears to lag behind other major emerging economies such as China, Russia, South Africa and Thailand. This is a bit surprising considering that Mexico is a world leader in the export of smart phones, flat panel TVs, automobiles and appliances. Apparently these exports are manufactured in Mexico but the innovations that go into their designs mostly come from elsewhere.

Though Mexico is graduating thousands of engineers and science majors, these are either not yet innovating or are finding employment in other countries. If Mexico is to compete in future world trade, it would do well to take steps now to improve its innovativeness.

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The geography of gold mining in Mexico

 Updates to Geo-Mexico  Comments Off on The geography of gold mining in Mexico
Sep 122013
 

Production of gold has more than tripled from the 23.5 metric tons recorded in 2000 to 88.6 metric tons in 2012, 3.2% of world production, 5.3% more than the previous year, and the ninth consecutive year-on-year increase. Analysts believe that gold production will double again between now and 2020.

Mexico is the world’s 11th largest producer of gold, well behind China (13% of world total), Australia (10%)  the USA (9%) and Russia (7%). Mexico exports gold, mainly to the USA and Switzerland.

The vast majority of gold and silver production in Mexico comes from a handful of major corporations, led by Canadian mining firm Goldcorp, whose main mines are at Los Filos (Guerrero) and Peñasquito (Zacatecas).

Gold production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

Gold production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

The map shows the six main gold mining states in Mexico. Production in Sonora has grown rapidly in the past decade and that state is now responsible for 32% of national production, ahead of Zacatecas (20%), Chihuahua (15%), Guerrero (13%), Durango (9%) and San Luis Potosí (7%).

The main gold-mining municipalities in each of these six states are:

  • Sonora: Caborca, Sahuaripa, Santa Ana, Álamos, Altar and Trincheras
  • Zacatecas: Mazapil, Luis Moya, Ojocaliente, Fresnillo and Concepción del Oro
  • Chihuahua: Urique, Chinipas, Ocampo, Madera
  • Guerrero: Eduardo Neri and Coyuca de Catalán
  • Durango: Santiago Papasquiaro and San Dimas
  • San Luis Potosí: Villa de la Paz

We will explore the controversy surrounding Goldcorp’s Los Filos opencast mine in Guerrero, billed as Latin America’s largest gold mine development, and some other mining controversies in Mexico, in a future post.

Mining towns described briefly previously on Geo-Mexico.com include:

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The geography of cement production in Mexico

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Nov 102012
 

In a recent post we saw how Mexico is one of the world’s leading cement manufacturing countries:

The map shows the location of the 34 cement plants currently operating in Mexico. They include 15 belonging to Cemex, 7 to Holcim Apasco, 4 to Cruz Azul, 3 to Cementos Chihuahua, 3 to Cementos Moctezuma and 2 to Lafarge. A new company, Cementos Fortaleza (part-owned by Carlos Slim, the world’s richest man), is due to open in the state of Hidalgo early next year.

Cement plants in Mexico, 2011

Cement plants in Mexico, 2011. Credit: Tony Burton / Geo-Mexico; all rights reserved. Click to enlarge.

According to the Center for Clean Air Policy’s “Sector-based Approaches Case Study: Mexico”,

“The northern region of the country has traditionally been the largest consumer of cement, accounting for 48% of sales mainly for use in infrastructure construction projects, housing and office complexes, and other construction activities. Central Mexico is also a relatively strong market for domestic producers. However, the primary use differs somewhat in that the main source of demand is from construction of new buildings such as hotels and office complexes. The relatively slower pace of economic growth in southern Mexico accounts for the lower share (17%) of domestic cement sales in the south.”

The paucity of cement plants in southern Mexico is particularly well reflected by the map.

The main raw material for cement is limestone. The distribution of cement plants in Mexico tends to follow the distribution of “limestones and clastic rocks” (rocks made of particles of other rocks) on the map of Mexico’s surface geology.

Mexico's surface geology

Mexico’s surface geology. Click map to enlarge.

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