The new USMCA trade agreement is encouraging Champion Petfoods and 1st Choice Nutrition to enter Mexico.
With the United States-Mexico-Canada Agreement (USMCA) going into effect July 1, some pet food companies are envisioning their expansion to partnering countries like Mexico. That is the case for two Canadian manufacturers, 1st Choice Nutrition and Champion Petfoods, with the brands 1st Choice and Orijen, respectively.
Before the arrival of these businesses, the participation of Canadian labels in the Mexican pet food market was negligible. Other than some cross-trade imports with the US, there was no direct commercial relationship between the two countries.
With the assurance of the new USMCA, despite the physical distance, it seems that pet food commerce will finally take off, at least from the Canadian side.
Pandemic’s effects limit pet food launches to e-commerce
Such expansion plans were abruptly interrupted with the unexpected COVID-19 pandemic in early 2020. As lockdowns and social distancing policies took over, retail sales in Mexico overall dropped severely. According to official information, retail sales fell 24% in April 2020 in annualized terms, meaning that the pandemic had a large impact on consumption. It is unlikely that pet food sales were spared during the period.
Despite the expected pandemic’s impact on the local pet food market, the two Canadian manufacturers are proceeding with their expansions into Mexico; yet both cautiously decided to operate only on local online stores, such as Amazon Mexico.
Is it right to rely only on e-commerce?
Given the current circumstances, e-commerce seems to be the only feasible alternative for new pet food brands coming into Mexico from outside the country. However, in a normal scenario, foreign brands need plenty of shelf presence in brick-and-mortar stores to be successful in the local pet food market. Because the current market share of e-commerce in the total pet food market is rather small, pet food brands still need traditional “offline” sales strategies to raise awareness among consumers.
Hopefully, the introductions of the Canadian companies are just two of several that will eventually enrich the current array of both domestic and foreign brands of premium pet food products in Mexico.
Iván Franco is the founder of Triplethree International and has collaborated on hundreds of research projects for several consumer goods industries. He was granted the Global Consultant of the Year award by Euromonitor International and authored the book 17 Market Strategies for Growth (in Spanish).
