AVIKO: The quest for Mexico's potato market
Fabio Shimada – Sales Export Manager responsible for Mexico, Central America, The Caribbean, and Brasil at Aviko. Mr. Shimada has years of experience in the international food industry and has been active for Aviko for the past 8 years. Aviko was founded in 1962 in the Netherlands with the objective to get maximum value out of the potato. The company has been growing ever since. Nowadays, it is one of the four biggest potato processors globally, selling their products in over 110 countries.
What are the key factors in the Mexican Food Industry?
For the food industry it is important to be able to reach a high number of people. Mexico is the second largest market in Latin America and the third most populous country in the Americas, with approximately 130 million inhabitants. What makes Mexico especially interesting for the food industry is the fact that a large part of the population is open to try new dishes and flavors.
How do you expect trends in the Mexican food sector to develop in the next five years? How will this affect Aviko?
In Mexico, 80% of the population lives in urban areas. Considering the importance of food within Mexican culture, the food service channel is well-developed and continuously growing. This includes all restaurants, bakeries, and other businesses that prepare food and beverages for consumption on or off such premises. Since 2015 the Food Service has been growing with 3,48% per year, estimated to represent ±90 million US$ per year by 2022. The more the segment grows, the more Aviko can grow along.
Why did Aviko decide to expand to Mexico?
Aviko is originally a Dutch company but has been present in the Americas for over 20 years and has established export relations with 90% of the countries within the eastern hemisphere, ranging from the USA to Argentina. Therefore, entering the Mexican market was an essential strategic move to enhance our presence in the Americas.
What are the main challenges when exporting food products to Mexico from the EU, and how can they be overcome?
Importing food products from Europe into Mexico used to be less profitable compared to importing from the US because of the different import tariffs. For the past years, the tariffs that apply for European goods have been between 20% and 40%, whereas the tariff from the US is 0,00%. However, negotiations for a new free trade agreement between Mexico and the EU have recently been finalized. In the new agreement, the tariff for European goods will gradually decrease and eventually be 0,00%.
Nonetheless, there are several other challenges. For example, the lead time, e.g. the time between the start of the order process until delivery, can be quite long. Due to the geographical advantage of the US, the lead time from Europe to Mexico is significantly longer. From Europe to Mexico Lead Time takes 45 to 60 days and from the US it takes only 10 to 15 days. Lastly, the exchange rates should always be considered as they can cause both challenges and opportunities.
What is your advice for Dutch companies that are considering entering the Mexican food sector?
My advice for both big and small companies is to seek professional business support. When entering a new market there are many steps to be taken with regards to legal procedures, network expansion and finding an office space. Therefore, it is essential to work together with an organization that can support you with this, such as Holland House Mexico.
Holland House Mexico has supported us professionally by helping to create the first valuable connections in the Mexican market, organizing several trade fairs and by promoting gatherings to exchange experiences among Dutch companies.
