With just over one in five beers exported around the world originating in Mexico, the country remains one of the top global producers of the brewed beverage. While the domestic beer industry points to consumer-friendly lager as the reason for its success, additional behind-the-scenes factors have also propelled Mexico’s rise among major worldwide brands. These include multinational mergers with large-scale distribution networks, extensive branding in key markets such as the US, economic integration and growth in the core Mexican market, as well as investment in technological advances in certain sectors.
The two major beer producers are Grupo Modelo, a subsidiary of Belgian-Brazilian brewing company Anheuser-Busch InBev, and Dutch brewing company Heineken International. Together they produce 97.5% of the beer in the local market, according to a 2017 report by Euromonitor International. Beer is also big business, representing around 23% of Mexico’s total industrial exports, according to figures from the Mexican Beer Chamber (Cerveceros de México, CDM). Between 2005 and the first quarter of 2018 the beer industry captured $28.4bn of foreign direct investment, representing 15% of the total inflows in the manufacturing sector.
It is not just export markets where beer is a booming industry. From 2010 to 2017 domestic beer consumption grew at a steady rate of between 2% and 2.3%, according to figures from the CDM. The popularity of the brewed beverage can also be seen in rising consumption rates, increasing by 14% from 57 litres per capita in 2010 to 65 litres in 2017.
This steady increase is partly due to the push by big brewers to create a stronger beer drinking culture in Mexico, according to Maribel Quiroga, director-general of the CDM. “A greater appreciation of beer has been key to increasing per capita consumption. Creating a more informed and complex consumer has been a major growth driver. Beer also has a moderate alcohol by volume and is created with natural ingredients, setting it apart from distilled drinks,” Quiroga told OBG.
The local beer industry has long prided itself on its extensive value chain that requires the participation of multiple local industries. These segments include the agriculture sector in regards to barley production; the glass and aluminium industries for bottling; the industrial sector for production and distribution; and retailers including restaurants, and entertainment and sports venues.
“Regional economic sustainability is the core part of our business because we depend on the products that come from local suppliers,” Andrés Gutiérrez, the director of corporate affairs at Grupo Modelo, told OBG. “Whenever you put a brewery in a community, a whole cluster of industries is supported. The entire beer industry has this idea of regional economic sustainability as a core,” he added.
The beer industry generates significant levels of employment and brings value-added elements to the Mexican economy. According to the CDM, four out of every 10 Mexican pesos earned from beer is new value-added income for the economy, with around 50% of all the value added to GDP from the beverage industry coming from beer.
The industry also provides a number of employment opportunities. The average employment rate at beer production sites is around 215 people per location nationwide, well above the national average. “The beer industry also invests in opening malt distribution centres closer to production areas, thereby reducing transport costs for local brewers,” Gutiérrez told OBG.
The beer production industry is setting ambitious sustainability goals, not only in regards to economic models, but also in regards to future and current use of natural resources. In early 2018, for example, Grupo Modelo launched its sustainability goals for the next 100 years, which focused on agriculture, water, circular packaging and renewable energy. “Without exception, we have been at the forefront of sustainability in beer production for quite some time,” Mauricio Leyva Arboleda, CEO of Grupo Modelo, told OBG. “By 2019 we’re expecting 100% of the power used at our plants – including the new plant being opened in Hidalgo – to be provided by wind and solar energy.” With its new plant opening in February 2018 in Meoqui, Chihuahua, Cuauhtémoc Moctezuma, a subsidiary of Heineken, is not far behind in its sustainability efforts in Mexico. “The latest technology employed at the new plant in Chihuahua uses circular economy to a great extent, as well as renewable energy. We also made a concerted effort to reduce water usage in the production process,” Quiroga told OBG.
Investment in barley production has been a key driver of growth for the agricultural industry, with most beer producers looking into the most efficient methods for increasing yields. Such innovations in irrigation technology, planting techniques and seed development have seen local barley production increase, encouraging some major producers to implement goals of using 100% Mexican barley within the next few years. According to statistics from the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación, SAGARPA), barley yields grew around 50% from 2007 to 2017, from 653,075 to 982,074 tonnes per year. Investments in barley production also encourage efficiency thereby reducing the land required for farming. In 2007 Mexico produced 2.3 tonnes of barley per hectare; by 2017 this figure had risen to 28 tonnes per hectare, according to SAGARPA.
“Agriculture innovations from the beer industry have helped maximise productivity, efficiency, as well as local profits. With such innovations, we are promoting the sustainability of the community by supporting their economic development,” Amaya Aranzabal, beer category coordinator at Grupo Modelo, told OBG.
Such improvements in agricultural techniques also fall in line with industry sustainability goals. “While barley is one of the key ingredients to beer, local governments view its production as water intensive. However, with new farming methods, we have been able to significantly reduce water usage,” Aranzabal added.
Microbrew & Premixed
While the microbrew market remains small, representing only 0.5% of sector sales, the craft segment has posted double-digit growth over the past several years, according to the CDM. “In the last 10 years there has been an interesting growth in the microbrewery and craft brewing markets, which is lending itself to a completely new experience for local consumers. The effort and progress they are making is exceptional regardless of the small market share,” Manuel Cedillo, manager of economics and public policy development at the CDM, told OBG.
The low alcohol content and ready-to-drink beverages segments of the brewing industry are also becoming more popular, posting double- and triple-digit growth over the past few years, according to the CDM.
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