Francisco Redruello, senior foods analyst at Euromonitor International, said that chocolatiers could benefit from economic growth in the market, but would need to cater to a population that is putting on weight.
Growth compared to BRIC markets
Although growth prospects in Mexico are not as prominent as they are in BRIC markets, the outlook is still bright.
Euromonitor forecasts around 4% year-on-year growth in retail value sales for chocolate over next two years in Mexico, as compared to around 9% in China, 8% and Russia and 10 and 20% in Brazil and India respectively.
Retail value sales in Mexican chocolate confectionery are projected to rise to $1.15bn this year, which will represent a 19% increase since 2008 according to Euromonitor figures
The market is forecast to grow a further 9% by 2014.
Ferrero has spotted the potential and is looking to increase its 13% share in the market by building its first in-country production site. The $190m plant will host 500 additional employees and should be up and running by May 2013.
“The move might be followed by other chocolate manufacturers seeking to geographically diversify and reduce their reliance on mature developed markets,” said Redruello.
Nestle is the market leader in the country with a 19% share, followed by Hershey on 14% with Effem, a Mars subsidiary, and Ferrero sharing third spot.
Redruello said that one factor manufacturers should ignore at their peril was the growing rate of obesity in Mexico that was leading to increased concerns about health and interest in food alternatives such as snack bars.
According to Euromonitor, around a third of Mexicans over 15 are obese and this figure is forecast to rise to a staggering 46% by 2016.
“The introduction of maltitol [sugar substitute] would help to overcome current health concerns regarding chocolate-based products. However, existing sugar free lines have not managed to make an impact in developed markets, let alone a still developing market like Mexico,” said Redruello.
Plain chocolate is by far the most popular confectionery variety in Mexico at the expense of darker options.
However, Euromonitor notes that Nestle and Lindt have upped efforts to promote the benefits of dark chocolate, which could encourage a sales boost.
“Food manufacturers addressing the health issue in Mexico will be rewarded with sustained demand from more knowledgeable and cash-endowed consumers. Those ignoring it will face stagnation, or even oblivion,” concluded Redruello.