A study by Kantar Worldpanel has found that the value of FMCG spend in Mexico rose by 5% last year, ahead of inflation rates, despite concerns over the strength of the peso and US President Trump’s proposed border wall.
The research company found that the hypermarket, supermarket and convenience market in Mexico are all growing, with Mexican operator Oxxo, the leader in convenience set to invest in new stores and ‘take space from traditional trade’ in the coming year.
Private label investment is also on the increase in the country, as the modern trade sector continues to grow, and Kantar Worldpanel warns that ‘if brands want to avoid losing consumers, then innovation will be the key to retaining and gaining penetration’.
This optimism is far removed from macroeconomic expectations for Mexico in 2017, according to the research firm. It said that despite news reports about a ‘Mexican crisis’, driven by ‘the Trump effect, the uncertainty about future relations with the US and the rocketing peso’, the country’s economy has continued to grow.
Just 4% of Mexicans are currently unemployed, which is 0.4 percentage points lower than last year, and a lot lower than the unemployment rate in another ‘troubled’ Latin American nation: Brazil (12%).
‘The actual economic environment is not as was expected: too many Mexicans imagined a different beginning for 2017,’ said Kantar Worldpanel.
‘However, despite the lack of optimism, Mexico is not experiencing a crisis: the lack of critical unemployment rates, the integrity of purchase patterns and the recovery of Mexican peso vs. US dollar are all indicators that FMCG in Mexico is set for another 3-5% growth by December.’
In terms of currency performance, while the Mexican peso fell 55% against the US dollar over the past five years, in the months between November and January it has regained 20% of its value, which Kantar Worldpanel suggests could have been ‘triggered by on expectations and subjective factors following the Trump election’.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.