Required Report - public distribution

**Date:** 1/6/2005

**GAIN Report Number:** MX5301

MX5301

**Mexico**

**Food Processing Ingredients Sector**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Bruce Zanin

ATO

**Prepared by:**

Condessa Consulting and Kate Snipes

**Report Highlights:**

Mexico offers strong opportunities to the US processed food ingredient
supplier. Imports to the sector grew 23 percent from 2001 to 2003 and
the US has the largest important share in every major category of the
sector including baked goods, snack foods, meat and dairy. The Mexican
food processing industry is estimated to have produced almost \$45
billion worth of goods in 2004.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Mexico (MX)

\[MX\]

# Section I. Market Summary

Mexico offers strong opportunities for suppliers to the processed foods
sector. The demand for processed foods is increasing and the industry is
keeping pace; the sector grew by an average 9.2 percent annually from
2000 to 2003. US suppliers dominate Mexican imports of raw materials for
the sector and are well positioned to capitalize on increased demand for
high quality food ingredients. According to the Mexican Secretary of
Commerce Business Registry (SIEM), there are 8,111 food manufacturing
companies processing a wide range of products including red meat,
poultry meat and fish products, dairy products, baked goods, snack
foods, prepared fruit and vegetables, oilseed products, beverages,
specialized food ingredients and prepared meals. The industry produced
\$39.8 billion worth of goods in 2003 and the sector is expected to
produce \$44.9 billion in 2004. Trade statistics also provide a
favorable picture for US suppliers to the food-processing sector. Mexico
imports from the United States six times as much raw material[^1] for
the industry as it exports. Imports grew 23 percent while exports only
ten percent between 2001 and 2003. The figures indicate a strong and
growing dependence upon foreign suppliers to the industry.

Production Value of Mexico's Food Processing Industry (USD Millions)

  -------------------------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
  Industry                   \(1\)       \(2\) Total  \(3\) 2000   2001         2002         2003         Growth
                             Number of   Inputs                                                           2000-2003
                             Firms                                                                        

                                                      ** **        ** **        ** **        ** **        

  Meat and Poultry           468         1,647        2,440        2,555        2,571        2,454        0.6%

  Dairy                      366         3,387        3,684        4,005        3,982        5,455        48.1%

  Canned Foods               93          1,294        2,216        2,505        2,559        2,157        -2.7%

  Fish and Seafood           42          190          279          292          309          318          14.0%

  Flour and Grains           882         1,130        1,284        1,366        1,399        1,504        17.1%

  Baked Goods                3,916       1,344        1,853        2,090        2,222        2,879        55.4%

  Vegetable Oil              61          1,396        1,951        2,008        2,020        1,928        -1.2%

  Confection                 249         358          861          861          930          792          -8.0%

  Snack Foods                1,059       862          1,949        2,106        2,045        1,934        -0.8%

  Other (coffee, gelatins,   164         1,448        3,198        3,327        3,390        2,921        -8.7%
  yeast, concentrates, etc.)                                                                              

  Animal Feed                149         1,302        1,599        1,775        1,775        1,714        7.2%

  Beverage Industry          608         5,851        11,030       12,006       12,870       12,634       14.5%

  **Total**                  **8,111**   **21,742**   **34,192**   **37,264**   **38,260**   **39,834**   **16.5%**
  -------------------------- ----------- ------------ ------------ ------------ ------------ ------------ -----------

Source: (1) SIEM; (2) INEGI Encuesta Industrial Anual 2001; (3) INEGI
Encuesta Industrial Mensual 2004

The following imports of raw materials for the food processing sector
experienced the highest rates of growth from 2001 to 2003:

  ----------------------------------- -----------------------------------
  Sunflower seeds (805%)              Fresh and frozen meat (94%)

  Various seed oil (223%)             Seafood other than fish (85%)

  Olive-Residue oil & Blends (205%)   Pig, poultry fat, rendered (83%)

  Flour & Meal of oilseeds (162%)     Rye grain (81%)

  Potato flour, meal flakes (155%)    Tree nuts (70%)

  Flaxseed (155%)                     Fish, fresh or chilled (66%)
  ----------------------------------- -----------------------------------

Advantages/Challenges for US Exporters Targeting Mexico's Food
Processing Sector

  ------------------------------------- ---------------------------------
  Advantages                            Challenges

  The United States is already the      The European Union, Chile and
  leading supplier of ingredients to    other Central American and South
  Mexico's food processing industry.    American countries have free
                                        trade agreements with Mexico
                                        giving them preferential duties
                                        for some products.

  Geographical proximity gives US       As Mexico's transportation and
  exporters a competitive advantage     distribution infrastructure
  over third country suppliers.         improves, other countries will be
                                        able to deliver product more
                                        efficiently to the Mexican
                                        market.

  Because of NAFTA, US products have    Commercial barriers such as
  preferential import duties compared   labeling, phytosanitary and
  to products from many third country   sanitary regulations and NOMs
  suppliers. As of 2003, most US food   (Mexican quality standards)
  and agricultural product exports to   continue to pose obstacles for
  Mexico are duty-free.                 importing some US products.

  Rising per capital income, more women US firms must aggressively
  in the work force, and increasing     solicit new business and
  foreign investment are driving the    establish in-country sales and
  demand for processed foods.           servicing infrastructure.

  Raw materials for the industry        US exporters still must comply
  imported from the US by Mexican food  with all sanitary and
  processors are subject to less        phytosanitary requirements, which
  stringent labeling requirements.      are frequently modified.

  Mexico's domestic production of milk  Imported products are relatively
  powder, lactose and sweet whey,       more expensive and require
  poultry, red meat, cocoa, grains and  advance order time.
  flour, canned fruits, sugar, cereals  
  and pet food cannot meet domestic     
  demand. (Source: Bancomext)           

  Mexican processors view US            Strong competition from local
  ingredients such as red meat, pork,   producers and increasingly from
  dairy, poultry and other products as  Asian and European suppliers.
  having high quality.                  
  ------------------------------------- ---------------------------------

# Section II. Market Entry and Trends

**A. First steps to market entry**

Because of the personal nature of conducting business in Mexico, US
companies wishing to serve the food-processing sector must establish
strong relationships with buyers. The question is: how to build these
relationships? US suppliers have essentially two options.

*Sell through a Mexican distributor/representative.* For low-volume or
perishable products, Mexican food processors may insist on purchasing
from a local supplier. Thus, the US company should consider a Mexican
distributor of similar but non-competitive products. The representative
may act merely as a sales agent taking orders for product shipped
directly, or may also serve as importer who stocks and distributes the
product through its own sales force.

*Establish a Mexican sales subsidiary, basically sell direct.* Foreign
firms with higher sales volume frequently have their own representative
offices in Mexico, providing sales support and/or warehousing with
distribution services. Companies in the food processing sector prefer
these direct sales to working through a distributor.

A good first step for US suppliers is to visit Mexico and meet with
potential customers and distributors. The Agricultural Trade Offices in
Mexico City can help provide contacts lists, suggest specific events and
shows relevant to your product, and can set up meetings through our Ag
Aide program. See *Section V*. of this report for the contact
information.

Visiting with food processors and their buyers in Mexico yields several
advantages. First, it gives the US company a general feel for the
market. Second, it allows the US exporter to identify specific needs.
Third, it will tell the prospective exporter whether the market is worth
pursuing. Finally, the visit will help determine the best method to
distribute their product.

US suppliers can also consider attending a trade show in Mexico. Mexico
does not host an event focusing exclusively on servicing the food
processing sector in general. However, there are individual shows for
groups of products such as confectionaries (Confit Expo), meats (Expo
Carne) and others. For a list of these shows please see GAINS report
MX4316 from October 2004. Attending such a show allows US firms to
simultaneously investigate the market, meet with buyers and interview
potential distributors.

## B. Market Structure

The majority of raw materials used by food processors are purchased
directly from the producer through their local direct-hired
representative in Mexico. Grupo Herdez (canned goods and sauces),
Unilever (vegetable oil and ice cream), Grupo Modelo (beer), Jugos del
Valle (non-alcoholic beverages), and Ricolino (candy) reported that they
purchase approximately 75 to 80 percent of their raw materials from a
supplier with local representatives. Almost all the companies
interviewed prefer to deal with the local representatives of foreign raw
material suppliers located in Mexico. For those that do not have a
representative in Mexico, finding a distributor is critical to provide
the link to the buyer.

**United States**

**Mexico**

### Distribution and Transportation 

The first step towards distributing in Mexico is getting the product
across the border. The method for distribution and transportation is an
important consideration for exporters when selecting a distributor or
import process because Mexican food processors consider several factors
when deciding between domestic and imported raw materials and
transportation costs and potential delays are chief among these. Also,
because Mexico's climate is often hot and varied, storage and
refrigeration costs are also considered. Since the largest Mexican
markets for processed food products are located in the interior of the
country, ground transportation is the most logical option for delivery.
The Mexican national railway is antiquated, although recent
privatization will increase its usage for bulk shipments. Maritime
transportation of bulk commodities may be considered for delivery to
Cancun. Bimbo, for example, imports wheat from the United States, which
is shipped to Merida and then transported by truck to the company's main
processing plants.

Trucking companies cannot bring merchandise directly from the United
States to Mexico. A US trucking company drives the shipment to the
border and transfers its trailer to a Mexican rig. The best way to ship
by truck is to use an internationally bonded carrier that has
relationships with Mexican carriers. Thus, US exporters typically are
only responsible for delivering to the border where the importing
company takes care of transporting the goods to the processing plant.

**C. Sector Trends**

### Foreign Direct Investment

Between 1999 and 2004, \$3.86 billion in foreign direct investment (FDI)
flowed into 645 of Mexico's food, beverage, and tobacco firms. Of these,
the United States invests in 315 companies, or about 50 percent of the
total. The types of firms that receive investment are are food
processors, 19.4 percent; soft drink manufacturers, 16.4 percent; fruits
and vegetable processors, 7.1 percent; and 5.1 percent of the FDI went
to other types of food firms.

Examples of some of the larger companies with foreign investment
include: Grupo Modelo (35 percent Anheuser Busch); Harinera la Espiga
(affiliated with General Mills); Gamesa (100% Pepsico); Agroindustrias
del Noroeste (Smithfield Foods); Carroll\'s Foods de Mexico S.A. de C.V.
(Carroll\'s Foods, Inc); Farmland Industrias, SA (Farmland, Kansas City,
MO); Tyson de Mexico, S.A. de C.V. (Tyson USA); Delimex de Mexico S.A.
de C.V. (Heinz Corporation); Gollek Interamerica, S. de R.L. de C.V.
(Kellogg's Company); Grupo Herdez, S.A. de C.V. (McCormick Inc. / Hormel
Foods, USA); Grupo La Moderna, S.A. de C.V. (Miller Milling Co.); J.M.
Smucker de Mexico, S.A. de C.V.; and Kellogg de Mexico, S.A. de C.V.
(Kellogg Company).

### Plants Abroad

Successful Mexican processing companies have expanded beyond Mexico, and
this growth is expected to continue in the US and will expand further to
other parts of Latin America. Examples of foreign expansion from Mexico
include:

-   Grupo Bimbo (Bimbo Bakeries USA) operations in 17 plants in
    California, Texas and Ohio, as well as facilities in Latin America
    (in total, 29 plants abroad);

-   Grupo Industrial Maseca (Gruma Corporation, Irving, Texas)
    production of tortillas and tortilla flour in the US through two
    companies: Azteca Milling (five plants producing tortilla flour) and
    Mission Foods (14 plants producing tortillas, chips, and snacks);

-   Jugos del Valle production in Brazil, which represents approximately
    eleven percent of the company's sales;

-   Grupo Modelo's malting plant in the United States;

-   Ricolino, the confection line of Grupo Bimbo's plants in the United
    States and the Czech Republic.

### Consumption Trends

The food processing sector is responding to changes in consumption
trends in Mexico.

Based on national statistics more women are working, comprising
approximately 39.3 percent of the formal workforce in 2003 increasing
the demand for already prepared meals and ready to eat fruits and
vegetables. In addition, Mexican consumers are increasingly interested
in healthy products, so the food processing sector is responding with
healthier options. Certain products and product flavors are increasingly
popular and the food processing sector is adapting to those needs. For
example, lime and chile flavored snack foods, nut mixes and yougurts
have all experienced 50 percent or more growth in sales in the last five
years. The industry is becoming increasingly responsive and flexible to
product specific demand.

### General Industry Trends

Following are some of the important trends in Mexico's processed food
industry:

-   *Growth in the market in general.* Mexico's food processing sector
    has been expanding at a brisk pace of 5.2 percent per year over the
    past three years.

-   *Multi-grain/wheat bread.* Multi-grain bread production, mostly from
    small and mid-sized bakeries, increased from 78,000 tons in 1999 to
    115,000 tons in 2002, a 47 percent increase. According to national
    statistics, annual domestic production of wheat bread/wholemeal
    bread has grown by more than 35,000 tons between 1999 and 2002.

-   *Foreign investment*. Although foreign investment dropped
    significantly in 2002, the food processing industry remains one of
    the principal sectors for foreign investment receiving \$3.86
    billion from 1999 to 2004.

-   *Joint ventures*. Joint ventures are becoming more popular. For
    example, Sigma Alimentos established a subsidiary in alliance with
    ConAgra Foods for prepared meals using the brand names Banquet,
    Sugerencias del Chef, El Cazo Mexicano and Menu del Sol. Sigma also
    has distribution rights for Oscar Mayer products.

-   *Some imported goods are being replaced by growing domestic
    production*. It is not cost effective to export some locally
    available produced products, such as fresh fruit and vagetables,
    because of high freight costs.

-   *Demand for high quality ingredients.* Although Mexican food
    processors tend to be price-sensitive, they also demand high quality
    ingredients for increasingly sophisticated products.

# Section III. Competition

Domestic suppliers are the biggest competitors to US exporters of
ingredients to Mexico's food processing industry. Regarding imports, the
competition varies depending on the wide variety of products used as
food ingredients. The following list provides a summary of the main
competitors in each subsector:

*Meat*

-   Top suppliers of imports: United States (84%), Canada (9%) and
    Australia (3%)

### Dairy

-   Top suppliers of imports: United States (42%), New Zealand (25%) and
    Uruguay (5%)

### Baked Goods

-   Top suppliers of imports: United States (56%), Ireland (8%) and
    Germany (5%)

####### Snack Foods

-   Imports are still dominated by the United States with over a 95
    percent import market share

*Beverages*

-   Top suppliers of imports: United States (41%), Spain (16%), France
    (9%)

*Flour and Grains*

-   Top suppliers of flour imports: United States (91%), France (5%) and
    Spain (2%)

**Section IV. Best Product Prospects**

## A. Products Present in the Market which have Good Sales Potential

  ------------------------- -------------------- ------------------------
  \- Red meat               \- Fluid milk        \- Cheese including
                                                 cheddar

  \- Pork meat              \- Sweet whey        \- Imported Cheese

  \- Beef cuts boneless     \- Milk powder       \- Soybean and soybean
                                                 oil

  \- Turkey meat            \- Not-fat dry milk  \- Soybean meal

  \- Chicken meat           \- Butter            \- Rape and colza seeds

  \- Marinated poultry      \- Lactose           \- Fruit flavored drinks

  \- Mechanically de-boned  \- Spicy candy       \- Pizza crust
  poultry                                        

  \- Bovine, sheep and goat \- Sunflower         \- Dry soup preparations
  fat                                            

  \- Chicken and turkey     \- Wheat flour       \- Instant soups
  parts                                          

  \- Raw turkey             \- Linseed           \- Concentrates

  \- Pepperoni              \- Yogurt            \- Multi-grain baked
                                                 goods

  \- Italian sausage        \- Breakfast bars    \- Mixed and salted nuts

  \- Mixed fruit juice      \- Ice cream bars    
  ------------------------- -------------------- ------------------------

## B. Products Not Present in the Market in large quantities which have Good Sales Potential

  ------------------------- -------------------------------------- -------
  \- Malt Extracts          \- Cookie Dough and Baking mix inputs  

  \- Spices                 \- Natural and artificial spices and   
                            flavorings                             

  \- Meal flakes            \- Sunflower seeds                     

  \- Potato flakes                                                 
  ------------------------- -------------------------------------- -------

# 

# Section V: ATO Contact Information

If you would like to learn more about what services the U.S.
Agricultural Offices (ATO) in Mexico can provide, please contact us. Our
email, telephone and facsimile numbers are listed below. We look forward
to working with you to promote exports of US agricultural products to
Mexico.

**US Agricultural Trade Office, Mexico City, Mexico**

Bruce Zanin, Director

Jaime Balmes 8-201

Colonia Polanco

11510 Mexico, D.F.

Tel: (011-5255) 5280-5291; 5281-6586

Fax: (011-5255) 5281-6093

Email: atomexico@usda.gov

**US Agricultural Trade Office, Monterrey, Mexico**

Dan Martinez, Director

Oficinas en el Parque Torre II

Blvd. Diaz Ordaz No. 140, Piso 7

Col. Santa Maria, 64650

Monterrey, Nuevo Leon

Tel: (011-5281) 8333-5289

Fax: (011-5281) 8333-1248

Email: atomonterrey@usda.gov

**Appendix I. Largest Food Processors in Mexico**

+---------------+----------+------+------+-------------------+-------+
| Company       | Industry | S    | End  | Production        | Pr    |
|               |          | ales | -Use | Location          | ocure |
|               |          | US\$ | Cha  |                   | -ment |
|               |          | Mill | nnel |                   |       |
|               |          | ions |      |                   |       |
|               |          |      |      |                   |       |
|               |          | 2003 |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Agro          | P        | 1    | Ex   | Jalisco           |       |
| Industrial    | rocessed | ,280 | port |                   |       |
| Exportadora,  | fruit    | \*\* |      |                   |       |
|               | and      |      |      |                   |       |
| S.A. de C.V.  | ve       |      |      |                   |       |
|               | getables |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Alfa, S.A. de | red      | 4    | Re   | Nuevo Leon (2)    | D     |
| C.V.          | meat,    | ,177 | tail | (HQ), San Luis    | irect |
| (holding):    | poultry, | ;105 |      | Potosi,           |       |
| Sigma         | dairy,   |      |      | Chihuahua,        |       |
| Alimentos     | prepared |      |      | Jalisco (2),      |       |
| S.A. de C.V.  | and      |      |      | Hidalgo, Mexico   |       |
|               | frozen   |      |      | City; Total: 8    |       |
|               | meals    |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Bafar   | red      | 203  | Re   | Chihuahua (HQ),   | D     |
| S.A. de C.V.  | meat,    |      | tail | Cd. Obregon;      | irect |
|               | poultry, |      |      | Sonora; Total: 2  |       |
|               | and      |      |      |                   |       |
|               | dairy    |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Industrias    | tobacco, | 1,1  | Ret  | Total: 400        | D     |
| Bachoco       | poultry, | 00\* | ail, |                   | irect |
|               | red meat |      | HRI  |                   | &     |
|               | and eggs |      |      |                   | Br    |
|               |          |      |      |                   | okers |
+---------------+----------+------+------+-------------------+-------+
| Grupo Mac Ma  | prepared | 18\* | Re   | Celaya, Gto.      |       |
|               | gourmet  |      | tail |                   |       |
|               | meals,   |      |      |                   |       |
|               | cookies  |      |      |                   |       |
|               | and      |      |      |                   |       |
|               | co       |      |      |                   |       |
|               | nfection |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Qualtia       | red      | NA   | Re   | Nuevo Leon (HQ);  | D     |
| Alimentos     | meat,    |      | tail |                   | irect |
| S.A. de C.V.  | poultry  |      |      | Total: 3          |       |
|               | products |      |      |                   |       |
|               | and      |      |      |                   |       |
|               | dairy    |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Corvi   | Co       | 1    | Re   | Mexico City (HQ); | D     |
|               | nfection | ,263 | tail |                   | irect |
|               |          | \*\* |      | Total: 4          |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo         | Dairy    | NA   | Re   | Nuevo Leon,       | D     |
| Industrial    |          |      | tail | Coahuila (HQ)     | irect |
| Lala S.A. de  |          |      |      | Durango (4);      |       |
| C.V.          |          |      |      | Total: 7          |       |
+---------------+----------+------+------+-------------------+-------+
| Ragasa        | Oilseed  | NA   | Re   | Nuevo Leon (2)    | D     |
| Industrias    |          |      | tail | (HQ), Tamaulipas; | irect |
| S.A. de C.V.  |          |      | &    |                   |       |
|               |          |      | Pr   | Total: 4          |       |
|               |          |      | oces |                   |       |
|               |          |      | sors |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Minsa   | corn     | 188  | Re   | Edo de Mexico     |       |
|               | flour,   |      | tail | (HQ), Sinaloa ,   |       |
|               | t        |      | and  | Coahuila,         |       |
|               | ortillas |      | Pr   | Jalisco,          |       |
|               | and      |      | oces | Veracruz,         |       |
|               | other    |      | sors | Chiapas; Total: 6 |       |
|               | products |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Bimbo   | con      | 4    | Re   | Total: 44         | D     |
| S.A. de C.V.  | fection, | ,166 | tail |                   | irect |
|               | baked    |      |      |                   |       |
|               | goods    |      |      |                   |       |
|               | and      |      |      |                   |       |
|               | snacks   |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| PepsiCo Inc   | snack    | NA   | Re   | Gamesa: Nuevo     | D     |
| (holding):    | food     |      | tail | Leon (2) (HQ);    | irect |
| Gamesa S.A.   |          |      |      | Total: 8          |       |
| de C.V.;      |          |      |      |                   |       |
| Sabritas S.A. |          |      |      | Sabritas:Total: 7 |       |
| de C.V.       |          |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo La      | baked    | 265  | Re   |                   |       |
| Moderna S.A.  | goods    |      | tail |                   |       |
| de C.V.       | and      |      |      |                   |       |
|               | wheat    |      |      |                   |       |
|               | flour    |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Nacional de   | snack    | NA   | Re   | Nuevo Leon (HQ);  | D     |
| Alimentos y   | food     |      | tail |                   | irect |
| Helados, SA   |          |      |      | Total: 1          |       |
| de CV         |          |      |      |                   |       |
| (Botanas      |          |      |      |                   |       |
| Bokados)      |          |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Nutrisa       | Health   | 30   | Re   |                   | D     |
|               | foods    |      | tail |                   | irect |
|               | and      |      |      |                   |       |
|               | snacks   |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Jugos del     | fruit    | 367  | Re   | Edo. de Mex,      | D     |
| Valle S.A. de | juice    |      | tail | Mexico City (HQ), | irect |
| C.V.          |          |      |      | Nuevo Leon,       | &     |
|               |          |      |      | Zacatecas, Baja   | Br    |
|               |          |      |      | California,       | okers |
|               |          |      |      | Veracruz; Total:  |       |
|               |          |      |      | 8 Mexico, 1       |       |
|               |          |      |      | Brazil            |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Herdez  | 400      | 455  | Ret  | Ensenada,         |       |
|               | prod.-   |      | ail, | Yavaros, S.L..P.  |       |
|               | canned   |      | HRI  | (2), Celaya,      |       |
|               | fruit    |      |      | Mexico DF (2),    |       |
|               | and      |      |      | Cuernavaca,       |       |
|               | veg.,    |      |      | Veracruz,         |       |
|               | pasta,   |      |      | Chiapas; Total:   |       |
|               | sauces,  |      |      | 10                |       |
|               | etc.     |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo         | Refined  | 64   | Re   | Mexico City (HQ), |       |
| Azucarera de  | sugar    |      | tail | Jalisco ,         |       |
| Mexico        | and      |      |      | Michoacan,        |       |
| (holding      | honey    |      |      | Veracruz (2),     |       |
| company)      |          |      |      | Tabasco; Total: 5 |       |
+---------------+----------+------+------+-------------------+-------+
| Fomento       | a        | 7,   | Re   | Nuevo Leon (HQ);  | D     |
| Economico     | lcoholic | 248; | tail |                   | irect |
| Mexicano,     | drinks   | 1    | &    | Total: 6          | &     |
| S.A. de C.V.  |          | ,943 | Food |                   | Di    |
| (FEMSA)       |          |      | Ser  |                   | strib |
| (holding):    |          |      | vice |                   | utors |
| Cerveceria    |          |      |      |                   |       |
| Cuauhtemoc    |          |      |      |                   |       |
| Moctezuma     |          |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo Modelo  | a        | 3    | Re   | Zacatecas ,       | D     |
|               | lcoholic | ,743 | tail | Coahuila ,        | irect |
|               | drinks   |      | &    | Sonora, Sinaloa,  |       |
|               |          |      | Food | Jalisco, Oaxaca,  |       |
|               |          |      | Ser  | Mexico City (HQ); |       |
|               |          |      | vice | Total: 7          |       |
+---------------+----------+------+------+-------------------+-------+
| Grupo         | soft     | 888  | Re   | Tamaulipas (HQ);  | D     |
| Continental   | drinks   |      | tail | Total: 17         | irect |
| (holding)     |          |      | &    |                   |       |
|               |          |      | Food |                   |       |
|               |          |      | Ser  |                   |       |
|               |          |      | vice |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Pepsico       | soft     | 3    | Re   | Guadalajara,      | D     |
| (holding):    | drinks   | 29\* | tail | Morelia, Uruapan  | irect |
| Grupo de      |          |      |      | and Celaya        |       |
| E             |          |      |      |                   |       |
| mbotelladoras |          |      |      |                   |       |
| Unidas        |          |      |      |                   |       |
+---------------+----------+------+------+-------------------+-------+
| E             | soft     | 1    | Re   | Nuevo Leon (2)    | D     |
| mbotelladoras | drinks   | ,244 | tail | (HQ);             | irect |
| Arca          |          |      | &    |                   |       |
|               |          |      | Food | Total:18          |       |
|               |          |      | Ser  |                   |       |
|               |          |      | vice |                   |       |
+---------------+----------+------+------+-------------------+-------+
| Gruma S.A. de | corn &   | 2,   | Pr   | Nuevo Leon (HQ),  | D     |
| C.V.          | wheat    | 057; | oces | Total: 17;        | irect |
| (holding):    | flour,   |      | sing |                   | &     |
| GIMSA S.A. de | t        | 125, | Ind. | Total: 9; USA: 13 | Di    |
| C.V.,         | ortillas |      | &    |                   | strib |
|               |          | 51,  | Ret  |                   | utors |
| Molinera de   |          |      | ail; |                   |       |
| Mexico S.A.   |          | 87   | Ba   |                   |       |
| de C.V.,      |          |      | kery |                   |       |
| Gruma Corp.   |          |      | I    |                   |       |
|               |          |      | ndus |                   |       |
|               |          |      | try, |                   |       |
|               |          |      | Re   |                   |       |
|               |          |      | tail |                   |       |
|               |          |      | &    |                   |       |
|               |          |      | HRI  |                   |       |
+---------------+----------+------+------+-------------------+-------+

  ---------------- ------------- -------- --------- ------------------- --------------
  PepsiCo Inc      confection    NA       Retail    Total: 1            Direct
  (holding):                                                            
  Sonric's                                                              

  Grupo Sanborns   bakery        1,703;   Retail &  Total: 160          Direct &
  S.A. de C.V.     products      75       Food                          Distributors
  (holding):                              Service                       
  Controladora y                                                        
  Administradora                                                        
  de Pastelerias                                                        
  S.A. de C.V.                                                          

  Fomento          soft drinks   7,248;   Retail &  Total: 8            Direct
  Economico                      3,168    Food                          
  Mexicano, S.A.                          Service                       
  de C.V. (FEMSA)                                                       
  (holding): Coca                                                       
  Cola FEMSA                                                            

  Nestle de México Pet food,     NA       Retail    Edo. de Mexico,     Direct
                   coffee,                          Queretaro,          
                   cereals, ice                     Tlaxcala,           
                   cream,                           Cuautepec, Chiapas, 
                   powdered                         Jalisco, Puebla,    
                   milk,                            Mexico City (HQ) ,  
                   confection,                      Monterrey; Total:   
                   etc.                             16                  

  Unilever de      Ice Cream,    NA       Retail    Edo de Mex, Mexico  Mostly Direct
  México           margarine,                       City (HQ), Morelos; 
                   sauce,                           Total: 3            
                   vegetable oil                                        
  ---------------- ------------- -------- --------- ------------------- --------------

\* Figures from 2002, \*\* Figures of 000s USD, HQ = Headquarters

Source: Bolsa Mexicana de Valores.

Appendix II. Mexican Food Processing Industry Contacts

+-----------------+--------------+-----------------------+------------+
| Organization    | Contact      | Address and Web       | Telephone  |
|                 |              | Information           | and Fax    |
+-----------------+--------------+-----------------------+------------+
| Alfa S.A. de    | Daniel       | Ave. Gomez Morin 1111 | Tel +52    |
| C.V.: Sigma     | Moreno;      | Sur Carrizalejo;      | (81) 8152  |
| Alimentos S.A.  | Purchasing   | Garza Garcia, N.L.;CP | 5100 ext   |
| de C.V. (dairy  | Director     | 66200;                | 11349; Fax |
| and meat)       |              | www.sigma.com.mx      | +52 (81)   |
|                 |              |                       | 8152 5100  |
+-----------------+--------------+-----------------------+------------+
| Almidones       | Guillermo O. | Calle 26 #2756; Col.  | Tel: 52    |
| Mexicanos       | Hope; Trade  | Zona Industrial;      | (33)       |
| (starch,        | Import       | 44940 Guadalajara     | 3668-4520; |
| glucose raw     | Export       | Jal..                 | Fax 52     |
| mat.)           | Manager      |                       | (33)       |
|                 |              |                       | 3668-4521  |
+-----------------+--------------+-----------------------+------------+
| Arancia Corn    | Jesus Carlos | Bllvd Manuel Avila    | Tel +52    |
| Products (corn  | Valencia;    | Camacho 2900; Piso 9; | (55)       |
| milling and     | Trade Import | Fracc. Los Pirules;   | 536        |
| syrup)          | Export       | C. P. 54040           | 6-5600;Fax |
|                 | Manager      | Tlalnepantla Edo. de  | +52 (55)   |
|                 |              | Mex. ;                | 5366-5651  |
|                 |              | www.a                 |            |
|                 |              | racornproducts.com.mx |            |
+-----------------+--------------+-----------------------+------------+
| Cargill         | Robert       | Bosque de Ciruelos    | Tel +52    |
| Servicios       | Aspell;      | 168, Piso 3; Col      | (55) 5246  |
| (dist.grains,   | Trade Import | Bosque de las Lomas;  | 7400; Fax  |
| sugar, and      | Export       | 11700 Mexico City;    | +52 (55)   |
| animal feed)    | Manager      | www.cargill.com       | 5246-7891  |
+-----------------+--------------+-----------------------+------------+
| Cerveceria      | Emilio       | Blvd de los           | Tel: 52    |
| Cuauh           | Herrera;     | Ferrocariles 247; Col | (55)       |
| temoc-Moctezuma | Trade Import | Industrial Vallejo;   | 5333-2400; |
| (beer)          | Export       | 02300 Mexico City;    | Fax 52     |
|                 | Manager      | www.femsa.com         | (55)       |
|                 |              |                       | 5333-2419  |
+-----------------+--------------+-----------------------+------------+
| Chupa-Chups     | Emilio       | Av. Central Mza. 5 y  | Tel: 52    |
| Industrial      | Martinez     | 6; Col. Pque          | (722)      |
| Mexicana        | Garcia;      | Industrial; 50200     | 279-0110;  |
| (lolipops)      | Plant        | Toluca Edo de Mex;    | Fax 52     |
|                 | Manager      | www.chupachups.com    | (722)      |
|                 |              |                       | 279-0111   |
+-----------------+--------------+-----------------------+------------+
| Danone de       | David        | Guillermo Gonzallez   | Tel: 52    |
| Mexico          | Hernandez;   | Camarena 333; Col     | (55)       |
| (yoghurts,      | Purchasing   | Centro Cd. Santa Fe;  | 5258-7200; |
| cheese, etc)    | Director     | 01210 Mexico City;    | 52 (55)    |
|                 |              | www.danone.com        | 5292-2593  |
+-----------------+--------------+-----------------------+------------+
| Dawn Mixco      | Manuel       | Carr.                 | Tel: 52    |
| Internacional   | Fernandez    | Monterrey-Salltillo   | (81)       |
| (baking mixes   | and Miguel   | Km 3.7; 66350 Santa   | 8388-5088; |
| and raw         | Gonzalez;    | Catarina, N.L.;       | Fax: 52    |
| material dist.) | Purchasing   | www.dawnfoods.com.mx  | (81)       |
|                 | Managers     |                       | 8388-7088  |
+-----------------+--------------+-----------------------+------------+
| Embotelladoras  | Ing. Raul    | Ave. San Jeronimo     | Tel +52    |
| Arca S.A. de    | Montemayor   | #813 Pte; Col. San    | (81) 8151  |
| C.V. (bottling) |              | Jeronimo; 64640       | 1400; Fax  |
|                 | Director     | Monterrey, N.L.;      | +52 (81)   |
|                 |              | www.e-arca.com.mx     | 8151 1449  |
+-----------------+--------------+-----------------------+------------+
| Extractos y     | Felipe       | Poniente 146 #725;    | Tel: 52    |
| Maltas (malt)   | Suberbie     | Col. Industrial       | (55)       |
|                 | Cortiina;    | Vallejo; 02300 Mexico | 5567-9022; |
|                 | General      | City                  | Fax 52     |
|                 | Director     |                       | (55)       |
|                 |              |                       | 5567-8019  |
+-----------------+--------------+-----------------------+------------+
| Galdisa (grain, | Alejandro    | Pico de Verapaz       | Tel: 52    |
| seed, dried     | Hurtado      | 449-A; Col. Jardines  | (55)       |
| fruit, candy    | Figueroa;    | en la Montana; 14210  | 5630-4616; |
| and snacks)     | Trade        | Mexico City;          | Fax 52     |
|                 | Director     | www.galdisa.com.mx    | (55)       |
|                 |              |                       | 5630-4623  |
+-----------------+--------------+-----------------------+------------+
| Gastronomia     | Claudia      | Oriente 237 No. 161;  | Tel: 55    |
| Avanzada (baked | Cobian;      | Agricola Oriental     | 5716 7691; |
| goods)          | Research and | Mexico D.F.           | Fax:55     |
|                 | Development  |                       | 5716 7601  |
+-----------------+--------------+-----------------------+------------+
| General Mills   | Gustavo      | Ave. Magnocentro 11,  | Tel: 52    |
| (imports of     | Equiha;      | Piso 6; Col. Centro   | (55)       |
| food products)  | Operations   | Urbano Interlomas;    | 5089-0202; |
|                 | Director     | 52760 Huixquilucan ,  | Fax: 52    |
|                 |              | Edo de Mexico;        | (55)       |
|                 |              | www.generalmills.com  | 5089-0244  |
+-----------------+--------------+-----------------------+------------+
| Gruma S.A. de   | Ing. Jose    | Calzada del Valle Ote | Tel +52    |
| C.V.: GIMSA     | Kipper       | 407; 62220 San Pedro  | (81) 8399  |
| S.A. de C.V.    | Hinojosa     | Garza Garcia, N.L.;   | 3300; Fax  |
| (corn flour and |              | www.gruma.com         | +52 (81)   |
| products)       | Purchasing   |                       | 8399 3300  |
|                 | Director     |                       |            |
+-----------------+--------------+-----------------------+------------+
| Grupo Bafar     | Ing. Edgar   | Km. 7.5 Carretera a   | Tel +52    |
| S.A. de C.V.    | Navarro;     | Cuauhtemoc; Col. Las  | (614) 439  |
| (processed      | Purchasing   | Animas; 31450         | 0100; Fax  |
| meat)           | Director     | Chihuahua, Chihuahua; | +52 (614)  |
|                 |              | www.bafar.com         | 439 0123   |
+-----------------+--------------+-----------------------+------------+
| Grupo Bimbo:    | Ing. Jose F. | Av. Prolongacion      | Tel +52    |
| Barcel,         | Suarez de la | Paseo de la Reforma   | (55) 5268  |
| Ricolino,       | Torre;       | #1000; Col.           | 6600; Fax  |
| Marinela, Pan   | Purchasing   | Desarrollo Santa Fe ; | +52 (55)   |
| Bimbo, (baked   | Director     | 01210 Mexico City;    | 5268 6640  |
| goods,          |              | www.grupobimbo.com    |            |
| confection,     |              |                       |            |
| snacks)         |              |                       |            |
+-----------------+--------------+-----------------------+------------+
| Grupo de la     | Jorge Arturo | Calle Juarez No. 170; | Tel: (33)  |
| Rosa            | Orozco;      | Tlajomulco de Zuñiga; | 379 80850; |
| (confection)    | Production   | 45640 Jalisco         | Fax: (33)  |
|                 | Manager      |                       | 379 80126  |
+-----------------+--------------+-----------------------+------------+
| Grupo Gamesa    | Jose Carlos  | Lazaro Cardenas #2404 | Tel +52    |
| (cookies and    | Rodriguez;   | Pte Edificio Los      | (81) 8399  |
| crackers)       | I            | Soles; Col. San       | 5155/8369  |
|                 | nternational | Agustin, 66270 San    | 5555; Fax  |
|                 | Purchasing   | Pedro Garza Garcia,   | +52 (81)   |
|                 | Mana         | NL; www.gamesa.com.mx | 8399 5155  |
|                 | ger.Gilberto |                       |            |
|                 | Recio;       |                       |            |
|                 | Inputs       |                       |            |
|                 | Purchasing   |                       |            |
|                 | Manager      |                       |            |
+-----------------+--------------+-----------------------+------------+
| Grupo Herdez    | Adriana      | Monte Pelvoux #215;   | Tel: 52    |
| (sauces and     | Legoretta;   | Col. Lomas de         | (55)       |
| canned goods)   | Director of  | Chapultepec; 11850    | 5201-5602; |
|                 | Investor     | Mexico City;          | Fax: 52    |
|                 | Relations    | w                     | (55)       |
|                 |              | ww.grupoherdez.com.mx | 5201-5646  |
+-----------------+--------------+-----------------------+------------+
| Grupo Minsa     | Carmen Diaz; | Prol. Toltecas 4;     | Tel: 52    |
| (corn flour     | Agrarian     | Col. Los Reyes        | (55)       |
| products)       | Business     | Ixtacala; 54090       | 5722-1900; |
|                 | Director     | Tlalnepantla, Edo. de | 52 (55)    |
|                 |              | Mex; www.minsa.com    | 5722-1906  |
+-----------------+--------------+-----------------------+------------+
| Grupo Modelo    | Jose Pares   | Campos Eliseos #400;  | Tel: 52    |
| (beer)          | Gutierrez;   | Col. Lomas de         | (55)       |
|                 | Director of  | Chapultepec; 11000    | 5283-3600; |
|                 | Investor     | Mexico City;          | 52 (55)    |
|                 | Relations    | www.gmodelo.com.mx    | 5283-3600  |
+-----------------+--------------+-----------------------+------------+
| Grupo Taifeld   |              | Oficinas Generales y  | Tel: 55    |
|                 |              | Tienda; Martín        | 5524-5744; |
|                 |              | Mendale 1419; Colonia | Fax:       |
|                 |              | del Valle; 03100;     | 5524-0756  |
|                 |              | México City.          |            |
+-----------------+--------------+-----------------------+------------+
| Hershey Mexico  | Guadalupe    | Carr. Guadalajara-El  | Tel: 52    |
| (chocolate and  | Bracho;      | Castillo, Km. 8.05;   | (33)       |
| candy)          | Materials    | Col. Corredor         | 3678-3232; |
|                 | Manager      | Industrial; 45681 El  | Fax: 52    |
|                 |              | Salto, Jal.;          | (33)       |
|                 |              | www.hersheys.com      | 3678-3292  |
+-----------------+--------------+-----------------------+------------+
| Industrial      | Hector       | Enrique Sada Muguerza | Tel: 52    |
| Aceitera        | Garcia       | 5; Col. Centro        | (55)       |
| (vegetable oil  | Padilla;     | Comerciala Satelite;  | 5393-8500; |
| and lard)       | Purchasing   | 53100 Naucalpan de    | Fax: 52    |
|                 | Director     | Juarez Edo. de Mex.;  | (55)       |
|                 |              | www.iasa.com.mx       | 5562-8127  |
+-----------------+--------------+-----------------------+------------+
| Jugos del Valle | Lic. Miguel  | Ejercito Nacional     | Tel: 52    |
| (fruit juice,   | Vargas       | 904, Col. Palmas      | (55)       |
| nectars and     | Lopez; Trade | Polanco; 11560 Mexico | 5876-2809; |
| drinks)         | Import-      | City;                 | Fax: 52    |
|                 | Export       | www.jvalle.com.mx     | (55)       |
|                 | Director     |                       | 5876-1086  |
+-----------------+--------------+-----------------------+------------+
| Kelloggs        | Jahiro       | Km 1 Carr. Campo      | Tel: 52    |
| (cereals)       | Quiroz;      | Militar; Col. San     | (442)      |
|                 | Production-M | Antonio de la Punta;  | 211-1300;  |
|                 | anufacturing | 76200 Queretaro,      | Fax: 52    |
|                 | Director     | Qro.;                 | (442)      |
|                 |              | www.kellogg.com.mx    | 216-3861   |
+-----------------+--------------+-----------------------+------------+
| Kraft Foods de  | Guillermina  | Homero 425, Int. 201; | Tel: 52    |
| Mexico          | Reyes        | Col. Chapultepec      | (55)       |
|                 | Pichardo;    | Morales; 11570 Mexico | 5258-8774; |
|                 | Trade        | City                  | Fax: 52    |
|                 | I            |                       | (55)       |
|                 | mport-Export |                       | 5258-8868  |
|                 | Director     |                       |            |
+-----------------+--------------+-----------------------+------------+

  ------------------- -------------------------- ------------------------ ---------------
  Grupo Industrial    Ing. Juan Antonio Towns;   Lazaro Cardenas #185 y   Tel +52 (871)
  Lala (dairy)        Purchasing Director        Valle Guadiana; Parque   750 0504; Fax
                                                 Industrial Lagunero;     +52 (871) 750
                                                 35070Gomez Palacio, Dgo; 0504
                                                 www.grupolala.com        

  La Madrilena        Miguel Angel Cortina;      Arroz 89; Col. Santa     Tel: 52 (55)
  (liquor and wine)   Inventory Manager          Isabel Industrial; 09820 5445-1200; Fax:
                                                 Mexico City              52 (55)
                                                                          5445-1270

  Nacional de         Jorge Elizundia; General   San Jeronimo 880 Pte;    Tel +52 (81)
  Alimentos y Helados Manager                    Col. San Jeronimo; 64640 8122 2300; Fax
  S.A. de C.V.                                   Monterrey, NL            +52 (81) 8122
  (snacks and ice                                                         2300
  cream)                                                                  

  Nestle de Mexico    Dr. Felix Martinez; Trade  Av. Ejercito Nacl. 453;  Tel: 52 (55)
  (milk prod.,        Import-Export Director     Col. Granada; 11520      5262-5000; Fax:
  formula, cereal,                               Mexico City;             52
  coffee, drinks,                                www.nestle.com.mx        (55)5250-7965
  flour mixes, dog                                                        
  food, chocolates)                                                       

  Nutrisa (all        Sofia de Hoyos Correa;     Periferico Sur 5482;     Tel: 52 (55)
  --natural foods and Nutrition Coordinator      Col. Pedregal de         5424-6600; Fax:
  frozen yoghurts)                               Carrasco; 04700 Mexico   52 (55)
                                                 City; www.nutrisa.com.mx 5424-6600

  Productos Rich      Alberto Roca; Research and km 0.5 Carretera         Tel: 52 (55)
  (Industrial baked   Development Manager        Amomolulco-Santiago      5387 3678; Fax:
  goods)                                         Tianguistenco;           52 (55):555387
                                                 Ocoyoacac; Toluca Edo.   3678
                                                 De Mexi.                 

  Pepsi-Cola de       Hugo Gomez; Tools Trade    Av. Vasco de Quiroga     Tel: 52 (55)
  Mexico (prod of     Vice President             3000, Piso 4; Col. Santa 5261-4500; 52
  concentrates for                               Fe; 01210 Mexico City;   (55)5261-4599
  bottled soft                                   www.pepsi.com.mx         
  drinks)                                                                 

  Pilgrims Pride      David Goldstein Weitzman;  Oklahoma 112; Col        Tel: 52 (55)
  (prod. and dist of  Counsultant                Napoles; 03810 Mexico    5448-8300; 52
  poultry products)                              City                     (55) 5448-8386

  Procter and Gamble  Jose Luis Oviedo;          Loma Florida 32; Col.    Tel: 52 (55)
                      Trade-Import-Export        Lomas de Chapultepec;    5724-2000; Fax:
                      Director                   05100 Mexico City;       52 (55)
                                                 www.pg.com.mx            5724-2254

  Productos del Monte Alejandro Geis;            Av. Colonia Del Valle    Tel: 52 (55)
  (canned foods,      Production-Manufacturing   615; Piso 3; 03100       5536-3040; Fax:
  sauces, etc)        Director                   Mexico City;             52 (55)
                                                 www.delmonte.com         5687-5975

  Productos Gerber    Moises Acosta; Trade       Av. Epigmenio Gonzalez   Tel: 52 (442)
  (baby food)         Import-Export Director     59; Col . Industrial;    211-8300; Fax:
                                                 76150 Queretario, Qro.   52 (442)
                                                                          217-9384

  Qualtia Alimentos   Francisco Burgos;          Ave. Conductores #600;   Tel +52 (81)
  Procesados (meat)   Purchasing Director        Col. La Grande;San       8030 3000; Fax
                                                 Nicolas de los Garza,    +52 (81) 8030
                                                 NL; www.qualtia.com      3000

  Sabritass(snacks)   Jorge A. Meyer Franco;     Av. de las Palmas 735;   Tel: 52 (55)
                      Logistics-Warehouse        Col. Lomas de            5227-7400; Fax:
                      Director                   Chapultepec; 11000       52 (55)
                                                 Mexico City;             5227-5619
                                                 www.sabritas.com.mx      
  ------------------- -------------------------- ------------------------ ---------------

[^1]: Based on 70 categories of "food ingredients" from government
    statistics in determining the trade balance between the United
    States and Mexico.