Jonás Murillo
Director General
View from the Top

A United Voice for Food Preserves

Thu, 03/21/2019 - 11:14

Q: What is CANAINCA’s role in the Mexican food and beverages sector?
A: We group 95 percent of all companies in the food preserves business, except for milk. We have 40 members. These companies are the main players in the fishery, beverages and general food sectors. Although the number might seem low, CANAINCA’s members represent almost the entire national production from this sector, which accounted for MX$270 billion (US$14.1 billion) in annual sales in 2017. Once the government presents its final figures for 2018, we expect this number to grow by 7 percent, which is the average growth we have enjoyed in the past years. Although growth varies depending on the subsector, the most significant development has been in the beverages sector, especially juices and nectars, along with tuna, beans and peppers.
The 40 companies affiliated with CANAINCA generate 40,000-45,000 direct jobs and the multiplying effect of the industry in terms of employment is above average. For every direct job in the industry, around seven indirect positions are generated, while the average of indirect employment creation is three indirect jobs per every direct job. Out of these seven jobs, five are in the farming sector, which puts us among the largest employers in the agricultural sector. In terms of agricultural products, CANAINCA companies move around 8 million tons of food throughout the year, both in sea products as well as fruits and vegetables.
Q: How does CANAINCA work alongside its associates to increase the sector’s competitiveness?
A: As a chamber, our job is to represent and defend the sector’s interests, preventing attacks against our associates and positioning them in national and international markets. We have several commissions that touch upon different areas, such as human resources, marketing, sustainability, technical, legal and environmental issues. Each of these works hand in hand with the directors of each of our members.
When CANAINCA presents a proposal, the entire sector backs it up. The goal of all our proposals is to boost the sector or find ways to reformulate initiatives that otherwise would impact negatively on the sector or consumers.
Q: What challenges and opportunities does CANAINCA expect from USMCA, the FTA with the EU and the TPP11?
A: The negotiation or renegotiation of free-trade agreements has not had a major impact on our day-to-day activities. Overall, we face the same issues and benefits as other sectors, although the improvement or maintenance of free-trade conditions are always beneficial.
Particularly with USMCA, the impact has been almost null. We are a sector that commercializes products that cannot be substituted and there is high demand in the US for our products. Unlike the automotive industry where companies can manufacture their components anywhere in the world, even in the US, beans and peppers cannot be managed in the same way. The US does not produce habanero pepper sauce but its population consumes it in large quantities. We can proudly say that in the US, the industry no longer lives off the 30 million Mexicans who live there and consume these products. Today, there are several US population segments that actively look for Mexican products. It is a market that has significant opportunities.
Of our associates, at least 70 percent sell products to the US. In fact, of our entire exports, practically 90 percent goes to the US and the other 10 percent is destined for the rest of the world, mostly to European markets and a smaller percentage to South American and Asia. Although the Asian market is large and offers interesting commercialization opportunities, our products still do not have the push that they need. However, in Europe they have received a significant boost, which is reflected in sales and popularity. Our associates selling nopales (cactus) in Sweden say the product is being well-received, for example.
The FTA with the EU has favored us significantly. After lengthy negotiations, we achieved a Geographic Indication recognition for the chipotle pepper and the Mexican jalapeño pepper. This is a major victory for us. With the chipotle pepper, there were not many problems since this is a 100 percent Mexican product that results from a transformation process of the serrano pepper. However, the jalapeño peppers had some issues because Turkey, Peru and some Asian countries also produce these, although they are of different and lesser quality. Producers from these countries were also using the image of Mexico to sell their jalapeño peppers, which represented a problem for Mexican companies.
The Geographic Indication gives us the same protections as a Denomination of Origin, with one main difference. Instead of being restricted by territorial continuity, the Geographic Indication offers protection to the entire country for production of peppers, whether they come from Sinaloa, Chihuahua or Veracruz. This was fundamental because the country has intermediate areas where there is no production of peppers. Now we need the Mexican government to mirror what we have achieved in Europe; the country is still in the process of recognizing Geographic Indications, which means that today we have more protection in Europe than in Mexico.
Q: What efforts have CANAINCA and its members made to position their products among international consumers?
A: Product promotion is done more through the brand itself. The budget they have is by far larger than what we as a chamber could muster. We do help them with the legal conditions they must meet to commercialize their products but the companies themselves oversee all their promotion. For instance, during the 2018 football World Cup, all big companies were promoting their products in Russia. The target was not Mexicans living there but other global consumers.
Q: What investment and innovation efforts is the industry making to ensure its packaging solutions comply with security standards while being sustainable and cost-effective?
A: In this regard, we rely on strategic partners. The Association for Packaging and Processing Technologies (PMMI) is our primary partner. Our relationship is based on sharing information and offering feedback to one another to communicate what we need and what companies can offer us in terms of new technologies, not only in the packaging stage but also in the production process.
Q: What is CANAINCA’s relationship with the Mexican government in promoting the food and beverages’ preserves sector?
A: It has been difficult to establish a common agenda with the new federal administration. There have been many internal changes and we need to see how the Ministry of Agriculture and Rural Development will be structured in the end. However, we have received a good reception from those we have been able to approach. They are aware of the importance of the companies we represent and our role in helping eradicate poverty. It is a sector that is priority for the government.
There is also an opportunity in terms of legal certainty. As an industry, we need to provide security to investors and reject corruption. We want to support the government in its effort to terminate corruption.
We believe the sector will continue growing but we must be mindful of how businesses expand and how beneficial certain proposals are for the overall population. We also need to improve both the products we sell and our international efforts to position Mexican products throughout the world.