Mexico’s overall demand for packaging machinery and materials is at record highs. The strongest demand is for packaging and processing machinery, which increased 25 percent in 2022 to reach a market value of USD 906 million. The growth of the market comes after three continuous years of stagnation. Contributing to this trend are changes to consumption habits in both local and international markets, Mexico’s increase in remittances from abroad (USD 58.5 billion in 2022), and government social programs worth USD 32.8 billion that increased consumption of beverages, processed foods, medical products, and personal care products.
Overview
The Mexican packaging machinery market showed dynamism in 2022, increasing from a total market value of USD 710 million in 2021 to USD 906 million. Drivers include eCommerce (23 percent growth in 2022), the double digit increase of retail sales (18 percent annual increase in 2022), and exports of agriculture-related products from Mexico (12 percent in 2022).
In 2022, the packaging material production industry represented 1.8 percent of Mexico’s overall Gross Domestic Product (GDP), 5.5 percent of industrial sector GDP, and 8.6 percent of manufacturing GDP. The packaging machinery industry provides good opportunities for U.S. exporters given their reputation for innovative technology and geographic proximity. According to the Packaging Machinery Manufacturers Institute (PMMI), Mexico is the second-largest buyer of U.S. packaging equipment, with Germany and Italy as other important suppliers.
After three continuous years of unremarkable growth, Mexico saw a dramatic increase in packaging and processing machinery demand in 2022, mostly driven by improved political stability following COVID-19 and the need to increase installed capacity to satisfy growing demand for packaged products. The industry expects growth of 5.5 percent for 2023. According to PMMI, in 2023 Mexico is projected to increase machinery and equipment purchases by seven to 12 percent. This growth will be driven in large part by investments in agribusiness (packaging for animal proteins, fruits, and fresh produce), eCommerce, animal and plant health applications, pharmaceutical, personal care products, sanitary applications, and growing demand for vitamin supplements and minerals. Demand will also come from health-conscious products, beverages, and a trend to switch to environmentally friendly packaging solutions (which the Mexican federal government is trying to make mandatory). In 2022, Mexico produced 14.6 million tons of packaging containers and packaging materials worth a total estimated value of USD 22 billion. The table below shows Mexico’s packaging machinery imports.
Table 1: Mexico Packaging Machinery Market Size*
(Figures in USD Millions)
|
|
2018 |
2019 |
2020 |
2021 |
2022 |
|
Total Imports |
662,053.65 |
524,474.38 |
556,931.37 |
567,220.14 |
570,494.64 |
|
Imports from the U.S. |
125,192.16 |
85,881.39 |
83,658.84 |
81,992.06 |
102,257.1 |
|
Exchange Rate** |
N/A |
N/A |
N/A |
N/A |
N/A |
*This table covers Mexican packaging machinery imports
**Data originally reported in USD
Source: Association for Packaging and Processing Technologies (PMMI) with Mercado Integrado Latinoamericano (MILA), Mexican Customs, and Secretariat of Economy
Market Entry
The best way for U.S. suppliers of packaging machinery to enter the Mexican market is by securing a local or regional representative who can offer after-sales service, maintenance, and spare parts on-site and in Spanish. Although price continues to play an important role in the decision to purchase a U.S. company’s products, reliability, trust, and relationships are becoming more relevant to Mexican buyers.
Barriers
United States packaging machinery exporters face stiff competition vis-à-vis European equipment (though cost is often secondary to other purchasing decisions). Mexican companies regularly choose European solutions due to stronger after-sales service from European service centers in Mexico. Moreover, European and Asian companies are increasingly offering customization and payment terms to compete and gain market share in this sector. Consequently, this leads some Mexican customers to adapt European equipment to local needs rather than choosing what may be a better priced and better designed U.S. solution. Offering financing options to Mexican buyers greatly enhances the competitiveness of U.S. packaging machinery products and equipment manufacturers.
Mexican small and medium-sized companies tend to perceive U.S.-made equipment as designed only for large-scale production. Additionally, many believe that U.S. companies have rigid sales policies which do not allow for customization. Finally, Mexican buyers believe that U.S. industrial equipment generally has higher than average energy consumption. These perceptions create specific hurdles for sellers of U.S. equipment.
Leading Sub-Sectors
According to Mundo del Envase (https://www.elmundodelenvase.com/), plastic is the most dynamic material used by all industries that utilize packaging products, having experienced constant growth in market share in recent years.
Table 2: Mexico Packaging Material Demand by Type
|
Packaging Material |
Market Share |
|
Paper and Cardboard |
32.7% |
|
Plastic |
29.3% |
|
Glass |
19.5% |
|
Metal |
18.1% |
|
Wood |
0.4% |
Source: El Mundo de Envase https://www.elmundodelenvase.com/
Regarding end use segments for packaging equipment, the food and beverage industry accounts for 50 percent of Mexican packaging machinery imports by value. This is followed by machinery for use in personal care (15%), house products and appliances (15%), pharmaceuticals (10%), and general packaging industries (10%).
Opportunities
Major opportunities for U.S. companies exist in processing equipment and materials for the food and beverage industry, for plastic container manufacturers geared towards the personal care industry, and for cleaning and sanitizing products. The U.S. Commercial Service in Mexico is ready to assist you in exploring opportunities in this sector.
Mexican packaging machinery users are demanding higher quality materials and compliance with more advanced standards of production in the packaging sector. For instance, 63 percent of food products utilize flexible packaging, which is recording growth rates of over 10 percent per year. Companies involved in food processing and agribusiness (Tyson, Bachoco, Driscolls, Sunny Ridge, etc.) are demanding better and greener packaging materials. In most cases, flexible packaging is designed to help extend the shelf life of food products or to comply with other marketing trends, such as higher quality graphics. In addition, major retailers such as Walmart often demand that packages take up less space on the shelf. Many companies are more seriously exploring glass packaging options given their competitive prices compared to plastic containers, as well as its more environmentally friendly manufacturing process. This includes demand for custom glass bottles driven by global growth in consumption of tequila and mezcal. Innovation and flexibility are key to acquiring a competitive edge in packaging machinery sales in Mexico.
Several major investments have been announced in Mexico that are indicative of projects likely to drive near-term demand for processing and packaging equipment:
- Constellation Brands will remain among the top packaging investors in Mexico in 2023. The company announced a USD 1 billion investment in Mexico for its fiscal year (March 2023 to March 2024), destined for the construction of brewery in the state of Veracruz and capacity expansion in existing plants (USD 4.5 billion investment in its Mexican beer operations between 2023-2026).
- ARCA Continental (Coca Cola’s biggest bottler) announced an investment plan of USD 14,500 million pesos, and half of this would be destined to its Mexico Operations.
- Grupo Bimbo announced a USD 50 million investment as part of its 50th anniversary to modernize facilities in its Mexico City bakery and packaging lines.
- Diageo announced investments of USD 500 million in the state of Jalisco to expand its bottling and tequila production.
- Brown Forman announced a USD 200 million investment which will allow the company to meet global demand for its premium tequilas. Construction is expected to begin in July 2023.
Events
- Pack Expo Las Vegas, September 11-13, 2023. Las Vegas, NV
- Expo Pack Mexico, June 4-7, 2024. Mexico City
Contacts
For more information on the packaging machinery sector in Mexico, please contact:
Juan Herrera
Commercial Specialist
U.S. Commercial Service —Guadalajara
Tel.: +52 (33) 3615-1140 ext. 103