Research and Markets: Mexico's Food Industry Has Taken a Recent Hit after the Country Temporarily Suspended Meat Exports to the US. Read More inside the Q1

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Our Mexico Food Drink Report provides independent forecasts and competitive intelligence on Mexico's food and drink industry.

Mexico's mass grocery retail (MGR) market is feeling the strain of the global economic situation and has witnessed its first major casualty. The country's third-largest food retailer, Comercial Mexicana (Comerci), has sought bankruptcy protection, after the depreciation of the peso made it impossible for the company to service its dollar-denominated debt. Although the country's two largest food retailers, Wal-Mart de México (Walmex), and Soriana, could benefit from the collapse of Comerci, the situation for the sector as a whole

does not look good. The devaluation of the Mexican currency is yet to fully filter through to consumers. Inflation is likely to soar as the cost of US imports rises and the global economic downturn means that credit is likely to be much harder for consumers to obtain. Consumer confidence is sure to take a hit, and, on top of this, the retailers that have the necessary finance and scale to make a major investment in Mexico are unlikely to make a play until the current global financial crisis is closer to being resolved.

Meanwhile, Mexico's food industry has taken a recent hit after the country temporarily suspended meat exports to the US. This happened after inspectors from the US Food and Drug Administration (FDA) revoked the licences for seven pork- and beef-processing plants. The US has suffered a number of scandals involving food imports recently, with batches of baby milk from China being found to be contaminated with a toxic chemical. Meanwhile, earlier this year, US authorities linked Mexican tomatoes and chillies to a salmonella outbreak that sickened 1,300 people in the US and Canada.

Elsewhere, Mexican brewer Grupo Modelo has announced its opinion over the proposed acquisition of its parent company, US-based Anheuser-Busch (A-B), by Belgium-based ImBev. Under the move, AB's 50% stake in Grupo Modelo would transfer to ImBev. Modelo claims that this would breach the terms of its original partnership with A-B, which gives the Mexican company the option to purchase its shares before any competitor. However, the author cautions that, considering Modelo's volumes and profits were stagnant in Q308, the company may not be better off going it alone in the current climate. Indeed, rival FEMSA Cerveza has been showing healthy growth this year, driven by exports, suggesting that FEMSA is having more success establishing its brands - which include Dos Equis and Sol - abroad. Meanwhile, Mexico remains only mid-placed in our Business Environment Ratings for Latin America, owing primarily to the large low-income population, which impacts consumption growth

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