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Mexico: A Land of Opportunity for U.S. Sunflower

Monday, April 1, 2013
filed under: Utilization/Trade

Editor’s Note: The National Sunflower Association (NSA) continues to work with the USDA Foreign Agricultural Service (FAS) as a matching-dollar cooperator for purposes of foreign market development. NSA currently operates in five countries with an annual FAS allocation of about $1.5 million. Activities in Mexico, Spain, Turkey and Germany focus on confection sunflower in-shell seeds and kernel. The program in Canada is directed toward sunflower oil.

The following article, the final installment in a series, discusses NSA foreign market development efforts in Mexico. With a budget of just under $500,000 in Mexico, the NSA undertakes trade servicing, advertising, exhibits at trade shows, and conducts training seminars to educate the key snack processors and the bakery industry on product quality, value and consumer acceptance of U.S. confection sunflower products.

NSA also has consumer activities for confection sunflower products that include in-store sampling, trial samples of products, and a school education program. Over the course of the last seven years, more than 5,000 schools have been visited, and NSA promotional materials have reached more than 500,000 students and their families. The consumer promotions focus on the health attributes and cost value of confection sunflower products for snacks relative to other snacks. Long-term market trends point toward future growth in U.S. confection sunflower product exports to Mexico.

This article was written by Raul Caballero of Mercalimentos Consulting Agency in Mexico City and director of the NSA promotions program in Mexico.

Mexico is home to approximately 114 million people. The urban population continues to grow as many rural inhabitants move to larger cities for better living opportunities. While Mexico is a large producer and exporter of produce to the United States and other countries, it also needs to import various foods — mainly from the United States.

Agricultural production in Mexico continues to be unpredictable, as many of the grains depend on in-season rains, and drought conditions are common.

Mexico points at the right direction in its economy and policies. NAFTA has helped Mexico’s economic growth and its democratic growth as a country that still needs to mature within its political system. Felipe Calderon the former president, did a fair job performing important fiscal, union, tax, oil and judicial reforms, as well as a hard and difficult fight against the drug cartels in Mexico. His presidential term ended December of 2012, while President Enrique Peña Nieto was elected in July of 2012. Peña Nieto, from the old PRI party, appears to be a modern president — which was demanded by modern Mexicans who want and need a more-modern Mexico with the need for better living opportunities to emerge.

Despite the problems that the drug cartels have generated in Mexico and the downturn of the economy since 2008 in the U.S., Europe and rest of the world, Mexico’s economy has been growing and has a strong base due to the well-managed macroeconomic factors, including having a reserve of $165 billion.

With the downturn of the worldwide economy, the only sector that has been able to show strong growth every year is the food industry. Mexico is the third largest importer of processed foods and the number-one importer of food ingredients from the U.S. One of the categories with continual growth for the U.S. in the Mexican market is the snack segment.

Sales for salted snacks from January through May 2012 totaled 184,000 metric tons (MT), improving from the 171,000 MT exported in 2011. After a contraction period during the economic crisis between 2009 and 2010 and during a moderate improvement in 2011, the snack industry recuperated in the first five months of 2012, reaching a growth of 7%, attracting new companies to the segment. In terms of sales, the snack industry had a 10.5% increase during the mentioned period. The total sales in the snack segment added 17,486 million pesos in the first five months of the year, vs. 17,120 million pesos during the same period in 2011. According to the National Statistics Institute in Mexico (INEGI), the snack segment market in Mexico has a value of 39,000 million pesos, or

$39 billion.

Where do sunflower products fit in this market? Well, this is the job that the National Sunflower Association is working to advance in Mexico. With an aggressive program that in 2011 met five years of visits to elementary schools in Mexico City, Monterrey and Guadalajara, a total of almost half a million kids were visited by nutritionists for a talk in healthy eating and an invitation to try U.S. sunflower snacks. This marketing exercise yielded interest from kids and parents to consume more sunflower products, due to its association to health benefits.

The program has been very successful because the NSA has brought to schools a resource that had been left behind by the Education’s Secretariat in Mexico. The government nutritional programs were very basic and poorly implemented and the appearance of the NSA school program has helped to reinforce nutritional education to kids, while teaching and promoting the benefits of consuming U.S. sunflower products.

During these talks that nutritionists present to kids in the schools, a sunflower snack sample is provided as well as U.S. sunflower educational and promotional giveaways that promote the qualities of sunflower and direct kids to the Spanish website and the social networks. In addition, parents are invited to the talks, and those who attend receive a recipe booklet that provides them with bakery and snack recipes with sunflower.

The introduction to the flavor of sunflower snacks has resulted in 95% approval from the kids; and the presence of the parents reinforces the idea that U.S. sunflower products are healthy. These efforts carry through to the selling point later on.

Prior to the NSA’s promotion of U.S. sunflower products in Mexico, there were only about a half-dozen sunflower-containing items in the country, including one or two snack products, one or two granolas and one or two cereals. Now, the inventory of snack brands that carry sunflower as an ingredient numbers more than 25 products. The consumer is now able to find more variety and at more shopping locations. Among other lines, in-shell and kernel snacks, cereals, granolas, breads, energy bars, nutritional cookies, toppings and others can be found at selling points such as supermarkets, the central market (farmers market), vegetarian and natural food outlet stores, etc. So the availability of the product has been increasing paired with the increased consumption of sunflower.

As a complement to the educational program that the NSA has been conducting through the marketing firm Mercalimentos Consulting, a promotional program is being coordinated with new partners every year to ensure that new products and projects are included. The promotional program includes supermarket chains, department stores and the Farmers Market (Central de Abasto) in Mexico City, as well as natural food stores. Chains like Wal-Mart, Superama, Liverpool, Waldos and brands like Bimbo, Kelloggs and other brands and private labels are part of this program.

In-store demos have been the key element to connect the consumer directly with U.S. sunflower products at the point of sale. Demonstrators have offered thousands of product trials to consumers, and the acceptance level has been above 90%, according to surveys that have been done by the same demonstrators.

To support the in-store promotion, educational materials have been developed to promote the natural and healthy image of U.S. sunflower products. Posters, handouts, tent cards, aprons and shelf talkers have been placed in retail stores at the demo cart in order to promote the U.S. products. With an increasing trend to consume natural and healthy food products, the future of sunflower in Mexico is promising.

New Regulations & School Food Guidelines

In 2010, the Mexican government, driven by concerns about the obesity levels of adults and children in Mexico, implemented an aggressive program to educate and encourage the Mexican population to eat healthier. Junk food has been banned from elementary and middle schools, giving a hard hit to some of the largest snack manufacturers. However, the implementation of these new rules and regulations wasn’t done in a strict manner, so many of the snack processors found ways to get around the new program guidelines by reducing the portions to half. In some other cases, sodium and fats were reduced in the content of the potato chips or extruded snacks; however, no major changes were made.

For the nutritional benefits that sunflower products represent to consumers, the opportunities are big — and the NSA has the chance to conquer a new consumer that is looking for healthier snacks. Sunflower products are one of the snacks accepted in the school program in Mexico due to their health benefits.

Consumers in Mexico continue to explore healthier diet options. More and more sunflower products can be found at more selling points. The opportunities are magnificent, and the NSA’s promotional efforts need to be continued to work towards educating more consumers who are unaware of sunflower or haven’t tried it yet. For sure, sunflower products in Mexico will continue to grow at a good pace, and more sunflower products will continue to be exported into Mexico. Now is the time to secure a piece of this market.
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