Boston, MA -- (SBWIRE) -- 07/18/2012 -- Despite Mexico's continued vulnerability to external shocks, we forecast that the country's economic growth will be bolstered by solid private consumption and robust investment. As such, we maintain our above-consensus real GDP growth forecast of 3.5% for 2012, and are upgrading our 2013 forecast from 3.0% to 3.9%.
On the basis of a growing population and a large number of young people (almost 55% of the population are 24 years-old or younger - one of the highest percentages for an upper-middle-income economy globally), we expect Mexican food and drink consumption to continue to deliver steady - but unspectacular - growth to 2016.
Headline Industry Data (local currency)
- 2012 per capita food consumption = +3.4%; forecast to 2016 = +11.5%
- 2012 alcoholic drink sales = +7.5%; forecast to 2016 = +27.1%
- 2012 soft drink sales = +5.2%; forecast to 2016 = +20.6%
- 2012 mass grocery retail sales = +6.8%; forecast to 2016 = +26.4%
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Key Company Trends
Mexican Confectionery Sector Attracts Interest - In early 2012, Italian confectionery giant Ferrero announced that it plans to spend US$190mn on building a new plant in Mexico. The facility will be located in the city of San Jose Iturbide in the state of Guanajuato and will produce the firm's Kinder and Nutella brands for both the domestic market and export to the US. Ferrero has been in Mexico since 1992 and this investment can be attributed to favourable growth rates within the confectionery sector, as well as the country's beneficial access to the large US market.
Walmex Bribery Allegations Could Hamper Sales - Mexico-based retailer Walmart de Mexico is facing an investigation by Mexico's attorney general, following allegations that employees of the Walmart subsidiary bribed local officials to ease expansion within the country. The allegations were first made in a New York Times article and threaten to disrupt the firm's rapid rate of growth. The US Department of Justice might investigate whether the firm violated the Foreign Corrupt Practices Act, and Walmart's shareholders could potentially take legal action if there are indications the company failed in its fiduciary duty and made material omissions in reporting the operations of the unit.
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