A boom in US dairy exports to Mexico still has room to grow, according to US Dairy Export Council (USDEC), with companies such as Nestlé using the central American country as a base for the wider area.
Suppliers shipped $1.4bn in dairy products to Mexico in 2013, around a fifth of the total US dairy exports by value.
US dairy exports to the country have climbed ‘steadily’ over the last few years, and a similar rate of growth is expected in 2014. Growth could be even greater if world prices decline, the council said.
Nestlé's $1bn investment
Rodrigo Fernandez, Mexico office representative, USDEC, said the domestic food and beverage industry is evolving into a regional supplier, particularly for central and South America, because of its geographical location.
“Domestic and multinational food and beverage companies are increasingly looking to use Mexico as a base to serve a broader area,” he said.
In January, Nestlé announced plans to build a $350m infant formula factory in Ocotlán, in the west of the country. 40% of its products will be exported to Latin America and the Caribbean.
The factory is part of wider $1bn investment from Nestlé in the country over the next five years. This includes a pet food factory and expansion of its cereal operations.
According to customs, the US held a 76% share of the Mexican dairy import market last year, and USDEC said suppliers face little competition.
Growth of middle class
Mexico has traditionally had relatively low dairy consumption, with many citizens living below the poverty line. However, dairy demand has increased over the past decade and the country relies on imports to meet demand.
An increase in the middle class, government initiatives, the awareness of nutritional benefits of dairy, and foodservice expansion are reasons for growth.
“As a mass of people move up the economic ladder, we can expect a whole new audience for US dairy,” Fernadez said.
Cheese, milk and dairy-based blends are particularly strong categories. The US share of Mexico’s cheese import market grew from 72% in 2012 to 77% in 2013, according to customs.
The US Dairy Export Council is a non-profit, independent membership organization that represents producers, co-operatives and traders.