Mexico’s economic growth in 2019 was disappointing; fortunately, the local pet food industry seems immune to economic downturns and volatility.
The latest economic forecasts for year-end 2019 show the Mexican economy will register a flat growth rate of 0%. Only one year ago, several forecasting agencies, including the International Monetary Fund, estimated the Mexican economy would attain around 2% real growth in the period. However, economic uncertainty arising from the new administration and a tightened monetary policy led to an economic slump in 2019.
No alternatives to commercial pet foods
The Mexican pet food industry is isolated from macroeconomic trends. One reason that likely explains this phenomenon is that pet food products are irreplaceable. There are no substitutes other than home-made preparations.
On the other hand, a great portion of the local pet food product array is inexpensive. Thus, even in the event of an economic downturn, pet owners have several alternatives to choose from, rather than cutting down on consumption. Consumers may downgrade to inexpensive brands instead of reducing the amount bought. Moreover, as local producers are aware of such consumer adaptability, they try to keep prices at low levels.
According to the monthly industrial survey from the National Statistics Institute in Mexico, the national production of dog food increased by 4.5% in from January-October 2019. However, in the same period, value production only rose 0.7% in nominal terms, suggesting a negative growth net of inflation.
The sound volume production figures, combined with low growth in values, are likely suggesting two events: first, a shift in the mix of products toward inexpensive brands that reduced the overall market value; and second, pet food producers deciding to maintain and control their prices to avoid any shortage of consumption.
Flexibility and a wide product array are essential
Either way, the local pet food industry is quite flexible and adaptable to economic downturns. This is key for attaining vigorous growth amidst uncertainty.
In addition, a strong competitive environment with dozens of brands allows consumers to make price-based choices. Such market flexibility,, along with producers’ adaptability provide the perfect scenario for continued growth into the future.