The Bottled Water Market in Mexico

October 2003
Prepared by the Market Research Centre and the Canadian Trade Commissioner Service Department of Foreign Affairs and International Trade (FaxLink no. 0800008)

The Market Research Centre produces a wide range of market reports by region and sector for Canadian exporters. For further information, please contact: Market Support Division (TCM) Department of Foreign Affairs and International Trade (DFAIT) E-mail: mrc@dfait-maeci.gc.ca Internet: http://www.dfait-maeci.gc.ca Trade Evaluation and Analysis Division (TEAD) Agriculture and Agri-Food Canada Contact: Andy Archibald Tel.: (613) 759-7665 Fax: (613) 759-7505 E-mail: archibalda@agr.gc.ca Internet: http://ats.agr.ca The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter.

EXECUTIVE SUMMARY
The bottled water market in Mexico was valued at more than $3.1 billion(1) in 2002, an 11.5% increase over the previous year. Growth in this mature market is forecast to remain steady over the next several years. Between 1999 and 2002, the market consolidated dramatically, with global beverage giants (Pepsico, Coca Cola, Nestl/Perrier and Danone/Evian/Bonafont) expanding their product portfolios and battling each other for market share. In the next five years, the fragmented share of the market will continue to fall. Moreover, the trend toward creative brand development, sophisticated marketing campaigns and product innovation are transforming water from a commodity into a lifestyle, sports and health product. Canadian exports of bottled water to Mexico are minimal. At their peak in 1998, they reached a value of $1.14 million. Declining steadily, Canadian exports barely exceeded $200 000 in 2002. In contrast, U.S. exports of bottled water have experienced robust growth. In 2002, U.S. exports to Mexico of bottled water exceeded $5 million. This represents a growth rate of over 100% from the previous year. In addition, U.S. exports of bottled water containing some form of sweetener are estimated to have grown by more than 50% in 2002. While the market for imported bottled water in Mexico is small (only 1.6% of all bottled water is actually imported), opportunities do exist in specialized markets. There is an increased focus on healthy alternatives in Mexico and consumers, especially in urban centres, are choosing speciality and flavoured waters as an alternative to soft drinks.

In addition, the business environment in Mexico is expected to improve steadily over the next five years. This will lead to better distribution networks and infrastructure, making it possible for a well-prepared company with a well-researched plan and tight market focus to succeed in this extremely competitive industry.

TABLE OF CONTENTS
EXECUTIVE SUMMARY MARKET OVERVIEW Key Factors Shaping Market Growth Opportunities
Actual and Planned Projects

COMPETITIVE ENVIRONMENT Local Capabilities International Competition Canadian Position Competitive Advantage Through Canadian Government Policies and Initiatives PRIVATE-SECTOR CUSTOMERS Hotel and Restaurant Sector Institutions MARKET LOGISTICS Channels of Distribution
Direct Sales Distributors and Wholesalers Agents and Sales Representatives

Market-entry Considerations
Suggested Business Practices Import Regulations

Border Clearance Representative (BCR)

Labelling Local Standards, Certificates or Registrations Export Credit Risks, Restrictions on Letters of Credit, Currency Controls

PROMOTIONAL EVENTS KEY CONTACTS AND SUPPORT SERVICES BIBLIOGRAPHY OTHER REFERENCE MATERIAL

MARKET OVERVIEW
Mexico is Canada's largest trading partner in Latin America. In 2002, Canadian exports to Mexico exceeded $10 billion. The Canadian-Mexican trade relationship is defined largely by their joint membership in the North American Free Trade Agreement (NAFTA). Canadian access to the Mexican market continues to improve under the terms of this trade agreement. In 2003, all remaining tariffs on soft drinks and bottled water have been eliminated. In 2002, Mexican real gross domestic product grew by only 1%. Since the signing of the NAFTA, Mexico has become increasingly tied to the United States. Economic recovery in Mexico will hinge on U.S. demand for Mexican exports. If the U.S. economy stages a modest recovery, the Mexican economy will strengthen. In 2003 and 2004, annual growth rates of 2.6% are forecast. The business environment is also expected to improve steadily over the next five years, with market liberalization, economic reforms and infrastructure improvements. Mexico, with a population exceeding 100 million people, is one of the largest markets for bottled water in the world. Health concerns relating to the safety of Mexican tap water have broadened bottled water consumption. Consumers also see bottled water as

a healthy alternative to sweetened soft drinks. In 2002, the value of the bottled water market was more than $3.1 billion. The market experienced spectacular growth from 1996 to 1998. This was due to rapid economic growth, improved distribution networks and the entry of sophisticated global beverage giants (Pepsico, Coca Cola, Nestl and Danone) into the market. Since 1998, the market has consolidated and matured. The bottled water market can be broken down into three major segments: still water, with a 75% market share; sparkling water, with a 24.3% market share; and flavoured water, 0.7%. Still, sparkling and flavoured water are sold in small-bottle formats, ranging between 250 mL and 5 L, in polyethylene terephthalate (PET) bottles. Still water is also sold in larger, 19 L containers. In the fall of 2002, there was speculation that Mexico would impose a 20% tax on all PET bottled water in containers smaller than 10 L. This proposal was not enacted.(2) While still and sparkling water sales have driven market expansion, growth in these segments has matured. In contrast, the flavoured water segment continues to grow steadily. While flavoured water has yet to make any significant impact on the bottled water market as a whole, profit margins are high and there are opportunities for market entry. The bottled water market in Mexico is still fragmented with a large portion of the market open to companies with less than 1% market share. Yet, the market has undergone significant consolidation. As the trend toward consolidation continues, smaller companies will either be bought out or forced out of business. Consolidation has been driven by the establishment in Mexico of the global beverage giants (Coca Cola, Pepsico, Nestl/Perrier and Danone/Evian-Bonafont). These multinational beverage companies have been able to purchase or partner with existing Mexican bottlers/distributers and take advantage of high profit margins, as well as more extensive soft drink distribution networks. Leading brands of bottled water are now distributed to the most remote areas of country. These products are also supported by heavy advertising.

Key Factors Shaping Market Growth In the beverage industry, innovation drives growth. Moreover, creative branding and product development have transformed water from being a commodity into reflecting a lifestyle and becoming a choice sports and health product. Mexico has a very young, highly urban and growing population. The consumer trend is toward healthier choices and natural flavours and away from carbonated soft drinks.

Opportunities Canadian producers attempting to enter the Mexican still and sparkling water markets will find it very difficult. The market is saturated with domestic producers and the industry is rapidly consolidating. At present, global beverage giants with their domestic partners are battling each other for market share. They have created extensive distribution networks and spend large amounts of money advertising their products. While representing only a small fraction of the bottled water market, flavoured water presents a better opportunity for Canadian exporters. This market segment has experienced robust growth in the last two years, outpacing sales of still and sparkling water. Mexican consumers are receptive to new flavours and formulations. Beverages that are marketed by an established brand would have an advantage. Other opportunities for Canadian exporters exist in the private-label market. Privatelabel brands are relatively new to the Mexican consumer and the popularity of discount supermarkets is growing rapidly. Wal-Mart de Mexico, a newer entrant in the Mexican retail industry, leads the domestic retail market. Mexican consumers have quickly embraced the low prices and multipack presentation of discount retailers and private label products.

Canadian exporters may also be able to take advantage of the backlash resulting from Mexico's growing dependence on U.S. products. Since the three national markets became integrated under the NAFTA in 1994, Mexico has become increasingly tied to the United States. In 2003, the relationship is strained. Mexico has been forced to lift trade barriers that protect its agricultural sector. Mexican farmers are having difficulty competing with inexpensive imports. Canada, while enjoying the same market access under the NAFTA, has not been subject to the same public criticism. In the short term, distinguishing a product as Canadian may prove an advantage over its U.S. competitor.
Actual and Planned Projects

In July 2001, Cott Beverages announced it had taken a 90% stake in a bottling venture with Embotelladora de Puebla. Cott Embotelladores de Mexico will make store brand drinks, including private-label bottled water for retailers including Wal-Mart (U.S.), Comercial Mexicana and Chedraui.

COMPETITIVE ENVIRONMENT
Local Capabilities Domestic Mexican producers control close to 98% of the bottled water market. In 2001, the market was still fragmented, with over half of the market open to companies with less than 1% market share. The market is consolidating rapidly since the entry of the global beverage companies. In 2001, Pepsico/Gemex's Electropura held the largest individual market share. The second-largest share was Purexa, manufactured by Aga de Mexico Grupo Danone, followed by Bonafont (Danone) and Ciel (Coca Cola/FEMSA).

International Competition The United States is the major exporter of bottled water to Mexico, representing over half of all exports. U.S. bottled water exports have concentrated on flavoured waters with very tight market focus. A recent example of this strategy would be the Danone's division of bottled water Bonafont, introducing fruit-flavoured waters targeted to children.

Canadian Position While total Canadian bottled water exports were valued at over $200 million in 2001, very little of this water found its way into Mexico. Canadian companies have put considerable resources into advertising and marketing bottled water to the United States. The strategy has been to focus on water as a primary commodity. This strategy is reinforced by Canada's pristine image and high environmental standards. The exchange rate of the Canadian dollar has also favoured export development. In Mexico, the market for imported bottled water is very small. Canadian companies can not expect to compete with domestic producers on the basis of price. Canadian producers need to develop alternative strategies (i.e. offering private-label brands and premium brands). Cott Beverages' entry into the Mexican market in July 2002 may increase Canada's profile in the region. It may also lead to more strategic partnering between Mexican- or U.S.-based companies.

Competitive Advantage Through Canadian Government Policies and Initiatives

Canadian Commercial Corporation

The Canadian Commercial Corporation (CCC)(3) gives Canadian companies access to financing and better payment terms under the Progress Payment Program (PPP). The PPP concept was developed as a partnership between major Canadian financial institutions and the CCC. It enables the exporter's bank to open a project line of credit for the exporter's benefit, based on CCC approval of the project and the exporter's ability to perform. The CCC will also act as a prime contractor on behalf of Canadian small and medium-sized enterprises, giving those businesses increased credibility and competitive advantage.
Export Development Canada

Export Development Canada (EDC) offers export financing and insurance to Canadian exporters. Additionally, insurance can be provided for larger transactions that are subject to the terms and conditions established by the buyer. EDC prefers to work through letters of credit, bank credits or bank guarantees. Approval for financing is considered on a case-by-case basis. Further information is available from EDC's Internet site at http://www.edc.ca or by calling, toll-free, 1-866-283-2957 (for companies with annual export sales up to $1 million) or 1-866-278-2300 (for companies with annual export sales over $1 million).
North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is a comprehensive free trade agreement among Canada, the United States and Mexico, which came into effect January 1, 1994. Designed to foster increased trade and investment among the partners, the NAFTA contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area. The NAFTA continues to provide benefits to consumers and businesses in Canada, the United States and Mexico. Under the NAFTA, Canadian producers are better able to realize their full potential by operating in a larger, more integrated and efficient North American economy. Canadian manufacturers are able to access tariff-free, high-quality intermediate goods from across North America in the production of final goods for export. Consumers benefit from this heightened competition and integrated marketplace with better prices, a greater choice of products and higher-quality goods and services. Since January 1, 2003, all Canadian beverages have had duty-free access to the Mexican market under the NAFTA. Efforts have also been made to address export issues of direct concern to small and medium-sized enterprises (SMEs) in terms of trade facilitation, such as infrastructure improvements for the transport of commercial goods. In recognition of the important role that SMEs play in the national economies of the NAFTA countries, a number of customs-related trade facilitation initiatives have been undertaken to simplify customs procedures and reduce bureaucratic impediments to cross-border trading. SMEs can now also benefit from a standard procedure for moving commercial samples, professional equipment, tools of trade and exhibition material across borders on a temporary basis, and from the dissemination of accurate, consistent and easy-tounderstand information relating to customs laws and procedures. For further information, contact the Canada Customs and Revenue Agency, Trade Agreements Information Line at 1-800-661-6121 or (613) 941-0965, or the NAFTA Customs Web site at http://www.nafta-customs.org.
Program for Export Market Development

The Program for Export Market Development (PEMD) helps Canadian companies enter new markets by sharing the costs of activities that companies normally could not or would not undertake alone, thereby reducing risks involved in entering a foreign

market. Eligible costs and activities include market visits, trade fair participation abroad, incoming buyers, product testing for market certification, legal fees for international marketing agreements, air transportation costs of offshore company trainees, product demonstration costs and other costs necessary to execute a market development plan. Activity costs are shared on a pre-approved, 50/50 basis. The PEMD refundable contribution ranges from $5000 to a maximum of $50 000. Preference is given to companies with fewer than 100 employees for a firm in the manufacturing sector and 50 in the service industry, or with annual sales between $250 000 and $10 million. Other components of the program include international bid preparation (Capital Projects Bidding) and, for trade associations, developing international marketing activities for their membership. For additional information, visit http://www.dfait-maeci.gc.ca/pemd or call 1-888-811-1119.
Virtual Trade Commissioner

The Virtual Trade Commissioner (vTC) is an on-line service offered by Canada's Trade Commissioner Service of the Department of Foreign Affairs and International Trade. Through a personalized and password-protected Web page, vTC-registered Canadian exporters will receive timely and relevant information on contacts and business opportunities in targeted foreign markets. The vTC offers registered users direct on-line access to market information, including market reports, business news, events and business leads related to the companies' industry sectors and markets of interest. Users can request services on line from a trade commissioner responsible for the industry sector in their target markets. They will also automatically receive new information as it becomes available. Canadian exporters can register for a Virtual Trade Commissioner at http://www.infoexport.gc.ca.

PRIVATE-SECTOR CUSTOMERS
Mexico's population exceeds 100 million people and is growing at an annual rate of 1.8%. It is a very young population, with 54% under the age of 24. The population is very urban and consumers are purchasing a larger proportion of their food requirements at large retail markets and convenience stores. Bottled water is a staple due to the poor quality of tap water. While all Mexicans drink some form of boiled, treated or purified water, only consumers with higher incomes tend to purchase sparkling, mineral or flavoured water.

Hotel and Restaurant Sector Mexico is one the world's most popular tourist destinations. The Mexican Association of Hotels and Motels is the principal trade association of the sector. In 2001, there were 10 979 registered lodging establishments, including most leading international hotel chains. The Mexican restaurant industry comprises over 221 000 establishments and reported over $22 billion in sales in 2001. The industry has been growing steadily at 7% per year.

Institutions The institutional food service market in Mexico is considered to have tremendous growth potential. It is concentrated in Mexico City and its metropolitan area, as well as the other industrial cities of Juarez, Tijuana, Monterrey and Mexicali. The market is composed of two types of companies: those that provide meal services under contract

and those that prepare their own meal needs for their staff. Approximately 10 companies control over 65% of the latter contract/concession sector.

MARKET LOGISTICS
Channels of Distribution
Direct Sales

Bottled water is still primarily distributed through traditional "mom and pop" grocers. In 2000 and in 2001, traditional grocers actually increased their share of the total volume. This trend runs counter to the soft drink industry, where the majority of sales are increasingly through discount grocers. However, "mom and pop" stores are not generally good venues for imported products. These stores are too numerous, the sales volume is generally low and their business arrangements tend to be more informal. Standard grocers are the second-largest channel of distribution, but their market share is falling. In 2001, convenience stores, discount grocers, kiosks and gas stations increased their shares of sales volume. Discount supermarkets have the fastest-growing share of the overall retail market. Of the discount supermarkets, Wal-Mart and Soriana do most of their purchasing directly. Casa Ley, Comercial Mexicana and Gigante purchase directly and also work with local distributors. Convenience stores are also a growing sub-sector of the retail industry. These stores are in major and medium-sized cities, primarily in middle-class neighborhoods and business districts. They are known for their wide variety of products and good customer service. The largest convenience store retailer, Cadena Comercial 0XX0, purchases through importers and wholesalers. 7-Eleven, the second-largest chain, purchases directly from manufacturers. Comextra, the smallest of the chains, works with importers.
Distributors and Wholesalers

While more and more retail chains are purchasing directly from suppliers, a locally based distributer/representative can be an important ally for successful market entry. A good distributor may prove invaluable in establishing successful business relationships with domestic buyers, as well as handling customs and importing issues. Choosing a qualified and competitive distributor has been one of the most important ways to successfully export to the Mexican market. Finding a good distributor can be a challenge. Canadian exporters are advised to enlist the services of an objective third party to thoroughly research potential candidates. For a complete list of distributors, contact the Canadian Embassy in Mexico or the Association of Importers and Representatives of Food Products and Beverages (Asociacion de Importadores y Representantes de Alimentos y Bebidas, A.C.).
Agents and Sales Representatives

It is recommended that Canadian exporters obtain the services of an import agent. An agent will remain in regular contact with government authorities (e.g. regarding customs or required certificates) and buyers in order to avoid problems in the import process and maintain high-quality, after-sales service. As travel within Mexico can be difficult, it is recommended to have an agent representing products at a national level. However, it is not advisable to give the agent national exclusivity; rather, hire regional distributors as well. Finally, it is very important to specify contract cancellation clauses clearly. An agent must be listed in the National Register of Importers and Exporters (Sistema de Informacin Empresarial Mexicano [SIEM] and, therefore, must be a Mexican citizen or represent a local corporation. SIEM has a Web directory of over 600 000 industrial,

commercial and service businesses. Searches can be done by name or Mexican industry code. The procedure to follow is available on request from SIEM or on the Internet at http://www.siem.gob.mx .(4) More information on Mexican agents is available from the Canadian Embassy and from the Association of Importers and Exporters of the Republic of Mexico (Asociacin Nacional de Importadores y Exportadores de la Repblica Mexicana [ANIERM]).

Market-entry Considerations
Suggested Business Practices

Several factors should be taken into consideration with respect to business etiquette in Mexico. For example, personal relationships are often the foundation of business relationships. While Mexican businesses are very conscious of the bottom line, courtesy and diplomacy are extremely important. Notions like "time is money" and immediately "getting down to business" will not be helpful in this business climate. It is important to begin conversations with questions about a person's well-being and that of their family before launching into the details of a business proposal. Personal visits are important. Some Mexican importers may not respond to phone calls, faxes or e-mails, preferring face-to-face meetings to discuss business. If clients visit you in Canada, you will be expected to take time to "wine and dine" them; you will receive the same treatment when you visit Mexico. The conduct of business in Mexico tends to be more formal than in other parts of North America. Business meetings should be scheduled at least two weeks in advance. Canadians should carry plenty of business cards printed in both English and Spanish. Punctual and quick meetings are not the norm. Business discussions over lengthy lunch meetings are common. Since meetings can be frequently cancelled, it is advisable for individuals to confirm all appointments close to the meeting time. Spanish is the official language in Mexico. Even though most international managers have a strong base in English, it is advisable to have Spanish translation assistance during business meetings. This will ensure effective communication and prevent misunderstandings. In addition, product literature should be available in Spanish. Sales to Mexican companies involve contracts and conditions similar to those in Canada. Nevertheless, before hiring a representative or agent, it is important for companies to investigate the legal implications of working with a local partner. Contracts may be written in English, but they should be reviewed by Canadian and Mexican lawyers. Canadian exporters are encouraged to increase the awareness of their brands in the Mexican market through focused marketing efforts. Collaborating with provincial and industry associations and participating in trade shows and missions are excellent ways to make contacts, understand import procedures and develop effective entry strategies. Promotional activities in co-operation with Mexican retailers are another way to gain exposure and better understand this extremely competitive market.
Import Regulations

Exporters should be aware of various import regulations for their products. Mexico's Secretariat of the Economy regulates all general policies for international trade negotiations, including import and export requirements. Since signing the NAFTA, Mexico has been lowering and eliminating its tariff barriers to match those of Canada and the United States. The NAFTA covers tariff elimination and the reduction of nontariff barriers among Canada, Mexico and the United States. It also contains comprehensive provisions on business conduct in the North America free trade zone, including regulation of investment, services, intellectual property, competition and the temporary entry of business persons. In 2003, all remaining tariffs on soft drinks and bottled water have been eliminated. The Mexican Ministry of Health (SSA) is responsible for setting sanitary regulations regarding the importation of processed food and beverages. Importers of these types of

products must be registered in this Ministry. Canadian exporters should make sure that their importers have this registration. In the case of bottled water, SSA requires a sanitary import notice that has to be presented by the importer. This Sanitary notice has to be accompanied by either of the following documents that have to be provided by the Canadian exporter: 1. A sanitary certificate from the Canadian Food Inspection Agency; Or 2. A Certificate of Free Sale; Or 3. A Physical/Chemical Analysis of the products It is very important that the Canadian exporter maintain a close communication with the importer to ensure that all these types of requirements are fulfilled. Canadian exporters also should make sure that their products comply with NOM-201SSA1-2002, which is the Mexican official standard that establishes the Sanitary specifications for water and ice for human consumption(5).
Duties

Bottled water is not subject to an import duty. Bottled water, whether imported or produced locally is subject to a 15% value added tax (VAT) in presentations under 10 litres. Mexican law states that bottled water in presentations of 10 liters or more does not have to pay the 15% VAT. Thus, the volume of the container is not a consideration, as a multipack presentation of 15 1 litre bottles would not be subject to VAT.
Documentation

The export documents required can vary with the method of shipment: boat, train, truck or mail. For statistical purposes, Canada requires exporters to complete an Export Declaration (Form B13A), which can be filed electronically at http://www.ccraadrc.gc.ca/E/pbg/cf/b13abp/README.html. The basic documents required by Mexican customs authorities include:

import declaration (pedimento de importacin), a basic requirement of Mexican authorities, this form is filled out by the customs broker; commercial invoice. The exporter must sign, by hand, several copies of the commercial invoice. The invoice must be written in Spanish and include the address of the exporter and import agent, a description of the goods, the total and unit freight-on-board value in Canadian dollars, an indication of the location and date of issue, the shipper's invoice number and the customer's order number. All costs must be indicated, including insurance and transhipment. Mexican customs officials must receive goods within 90 days of the date of the original invoice or a new invoice will be required; bill of lading, confirming that the goods have been delivered. The exporter must keep a copy and send one to the importer and one to the customs broker; packing list, which is a detailed list of the products in each group as well as their number, weight and volume and must be included in the packing list. At a minimum, the list should be provided in triplicate; certificate of origin, which is required to qualify for preferential customs rates under the NAFTA. This form and instructions are available at http://www.ccra-adrc.gc.ca/E/pbg/cf/b232ep/README.html; and sanitary import notice accompanied by a sanitary certificate from CFIA or a certificate of free sale or a physical/chemical analysis of the products.

Border Clearance Representative (BCR) Mexican customs law is extremely strict. Errors in the proper submission and preparation of customs documentation can result in fines and even confiscation of merchandise as contraband. Exporters are encouraged to contact Canada's Border

Clearance Representative (BCR) for assistance and are advised to employ competent Mexican importers or custom brokers to prepare documents. The BCR is a service for Canadian exporters -- provided on a pilot project basis jointly by the federal government and the governments of Quebec, Ontario, Manitoba, Saskatchewan and Alberta. The BCR provides a full-time resource person at the border to help ensure Canadian companies are well prepared to meet Mexican requirements. The BCR is stationed full time at Nuevo Laredo, Mexico, the second busiest international border crossing in the Americas. The BCR is available to consult with companies prior to shipping to ensure all paperwork is in order and will be on-site to troubleshoot if a shipment is held up at the border. BORDER CLEARANCE REPRESENTATIVE Luis A. Prez, Tel: (011-52) (867) 719-00-03 Mobile: 1 (956) 206-8771 Fax: (011-52) (867) 719-07-64 E-mail: luispere@nlaredo.globalpc.net
Labelling

The labelling of products in Mexico is governed by a series of official standards, the Normas Oficiales Mexicanas (NOM).(6) Bottled water is covered under the section of labeling of NOM - 201 - SSAI - 2002. All label information must be in Spanish. If other languages are also used, Spanish must be as obvious, with at least the same size font and typographic proportions. A comma must be used as a decimal pont in quantity declaration on packages, as required by NOM - 008 - SCFI - 1993. Imported products using a period as a decimal point are likely to be rejected by Mexican officials. Under certain conditions, prepackaged products may be allowed entry into Mexico without the required labelling. Exporters should consult with their importer to determine the conditions for such exports. Exporters requesting export certification of prepackaged products without the required labelling are responsible for assuring correct labelling of the product in Mexico. In order to ensure that labels comply with Mexican regulations, Canadian exporters can send sample labels to an authorized verification unit(7). Most verification units provide comprehensive services including the verification, revision and printing of approved labels. At the end of the process, the verification unit will also issue a compliance certificate which should be presented when the product arrives at the Mexican border.
Local Standards, Certificates or Registrations

Reputable importers should be aware of standards that apply to bottled water and should be in a good position to inform exporters of regulatory developments. Although special provisions do exist to allow products to be exported without labelling, it is much simpler for Canadian exporters to label their products in compliance with Mexican law before the goods arrive at Mexico's border. Accredited verification units exist in Mexico where companies can obtain evaluation of their labels prior to export, for a small fee (usually less than $100).(8)
Export Credit Risks, Restrictions on Letters of Credit, Currency Controls

Four main methods of financing exist in Mexico: advance payment, letter/line of credit, bill of exchange, and open account trading. Letters of credit, which carry the lowest risk, are typically used when dealing with foreign suppliers; however, some Mexican distributors prefer to work with suppliers that provide extended credit of 90 days rather than paying through the usual letter of credit. Imports are usually financed through 6090 day lines of credit, but also through cash-in-advance for smaller and less frequent importers. It is advisable that lines of credit from Mexican financial institutions should not exceed the limits allowed by those institutions.

PROMOTIONAL EVENTS
Americas Food & Beverage Show December 3-4, 2003 (Annual) World Trade Center Miami Miami, Florida Mexico/Latin America trade opportunities Organizer: World Trade Center Miami 777 NW 72nd Ave., Suite 3BB65 Miami, FL 33126 Tel.: (305) 871-7910 Fax: (305) 871-7904 E-mail: afb@worldtrade.org Internet: http://www.worldtrade.org/food ANTAD 2004 March 12-14, 2004 Expo Guadalajara Convention Center, Guadalajara, Mexico Mexico's largest retail and supermarket show Organizer: National Retailers Association of Mexico Horacio 1855, Piso 6 Colonia Chapultepec Morales CP 11570 Mxico, DF, Mexico Tel.: (52-55) 5580-1772 Fax: (52-55) 5395-2610 Internet: http://www.antad.org.mx EXPHOTEL 2004 June 9-11, 2004 (Annual) Convention Center Cancun, Mexico Mexico's largest hotel, restaurant and hospitality industry show for the Caribbean region Organizer: Tradeshow Co. LLP P.O. Box 3282 McAllen, TX 78502. Tel.: (956)683-1994 Fax: (956)683-1826 E-mail: tradeshowco@aol.com Internet: http://www.ts.com.mx/indexengl.htm InterBev September 26-28, 2004 (Biannual) Orange County Convention Center Orlando, Florida Organizer: Reed Exhibitions 383 Main Ave. Norwalk, CT 06851 Tel.: (203) 840-5384 Fax: (203) 840-9384 E-mail: atinquiry@interbev.com Internet: http://www.interbev.com

KEY CONTACTS AND SUPPORT SERVICES

Canadian Government Contacts Canadian Embassy in Mexico Calle Schiller No. 529 Colonia Polanco (Rincn del Bosque) 11560 Mxico, DF Mexico Contact: Kim O'Neil, Trade Commissioner Tel.: (52-55) 5724-7900 ext. 3357

Fax: (52-55) 5724-7982 E-mail: kim.oneil@dfait-maeci.gc.ca Internet: http://www.canada.org.mx Consulate of Canada in Guadalajara Colonia Vallarta Poniente Hotel Fiesta Americana Aurelio Aceves No. 225, Local 31 Guadalajara, JL Mexico Contact: Juan-Carlos Muoz, Commercial Officer Tel.: (52-33) 3615-6215, -6266 or -6270 Fax: (52-33) 3615-8665 E-mail: juan-carlos.munoz@dfait-maeci.gc.ca Internet: http://www.canada.org.mx Consulate of Canada in Monterrey Piso C-1, Despacho 108-A Zaragoza 1300 Sur y Constitucin Edificio Kalos Monterrey, NL Mexico Contact: David Valle, Commercial Officer Tel.: (52-81) 344-3200 or -2753 Fax: (52-81) 344-3048 E-mail: valled@dfait-maeci.gc.ca Internet: http://www.canada.org.mx Agriculture and Agri-Food Canada Sir John Carling Building 930 Carling Ave. Ottawa, ON K1A 0C5 Contact: Richard Clegg, International Market Development Officer Tel.: (613) 759-7743 Fax: (613) 759-7505 E-mail: cleggr@agr.gc.ca Internet: http://ats.agr.ca Market Research Centre (TMR - Formerly TCM) Contact: Sean McLean Tel.: (613) 996-0688 Fax: (613) 943-1103 E-mail: sean.mclean@dfait-maeci.gc.ca Market Support Division (TMM -- Formerly TCM) Contact: Rick Winter, Trade Commissioner Tel.: (613) 995-1773 Fax: (613) 943-1103 E-mail: rick.winter@dfait-maeci.gc.ca Mexico Division (MNX) Contact: Marcello DiFranco, Trade Commissioner Tel.: (613) 996-8625 Fax: (613) 996-6142 E-mail: marcello.difranco@dfait-maeci.gc.ca Border Clearance Representative Contact: Luis Perez Tel.: (52-867) 719-0003 or (956) 206-8771 Fax: (52-867)-719-0764 E-mail: luispere@nlaredo.globalpc.net Canadian Commercial Corporation 1100-50 O'Connor St. Ottawa, ON K1A 0S6 Tel.: 1-800-748-8191 or (613) 996-0034 Fax: (613) 995-2121 Internet: http://www.ccc.ca Canadian Customs and Revenue Agency International Tax Services Office 2204 Walkley Rd.

Ottawa, ON K1A 1A8 Tel.: 1-800-267-5177 or (613) 952-3741 Fax: (613) 941-2505 Internet: http://www.ccra-adrc.gc.ca Canadian Food Inspection Agency (CFIA) 59 Camelot Dr. Nepean, ON K1A 0Y9 Tel.: (613) 225-2342 Fax: (613) 228-6653 E-mail: gervaism@agr.gc.ca Internet: http://www.cfia-acia.agr.ca Department of Foreign Affairs and International Trade (DFAIT) 125 Sussex Dr. Ottawa, ON K1A 0G2 Internet: http://www.dfait-maeci.gc.ca Authentication and Service of Documents (JLAC) Tel.: (613) 992-6602 Fax: (613) 992-2467 Export Development Canada (EDC) 151 O'Connor St. Ottawa, ON K2P 2L8 Tel.: 1-888-332-4593 or (613) 598-2500 Fax: (613) 598-6697 E-mail: export@edc4.edc.ca Internet: http://www.edc.ca EDC in Mexico Calle Schiller 529 Rincon del Bosque, Colonia Polanco 11560 Mxico, DF Mexico Contact: Marvin Hough, Regional Director: Mexico and Central America Tel.: (52-55) 5387-9316 Fax: (52-55) 5387-9317 E-mail: mhough@edc.ca

Agriculture and Agri-Food Canada--Regional Trade Contacts Al McIsaac St. John's, Nfld. Tel.: (709) 772-0330 E-mail: mcisaaca@agr.gc.ca Rollin Andrew Charlottetown, P.E.I. Tel.: (902) 566-7315 E-mail: andrewr@agr.gc.ca Fay Abizadeh Winnipeg, Man. Tel.: (204) 983-8622 E-mail: abizadehf@agr.gc.ca Margaret Bancroft New Westminster, B.C. Tel.: (604) 666-3054 E-mail: bancroftm@agr.gc.ca Janet Steele Halifax, N.S. Tel.: (902) 426-7171 E-mail: steelej@agr.gc.ca Sandra Gagn Montreal, Que. Tel.: (514) 283-3815 ext. 501 E-mail: gagnes@agr.gc.ca

Jim Atcheson Regina, Sask. Tel.: (306) 780-5545 E-mail: atchesonj@agr.gc.ca Bernard Mallet Moncton, N.B. Tel.: (506) 452-3706 E-mail: malletb@agr.gc.ca Wayne Parlee Guelph, Ont. Tel.: (519) 837-5824 E-mail: parleew@agr.gc.ca Lorrie McFadden Edmonton, Alta. Tel.: (780) 495-2119 E-mail: mcfaddenl@agr.gc.ca

Mexican Government Contacts Embassy of Mexico 45 O'Connor St., Suite 1500 Ottawa, ON K1P 1A4 Tel.: (613) 233-8988 Fax: (613) 235-9123 E-mail: info@embamexcan.com Internet: http://www.embamexcan.com Consulate General of Mexico-Montreal 2055 Peel St., Suite 1000 Montreal, PQ H3A 1V4 Tel.: (514) 288-2502 or -2707 Fax: (514) 288-8287 Internet: http://www.consulmex.qc.ca Consulate General of Mexico-Vancouver 810, 1130 W Pender St. Vancouver, BC V6E 4A4 Tel.: (604) 684-3547, -1859 or 683-0674 Fax: (604) 684-2485 E-mail: mexico@consulmexvan.com Internet: http://www.sre.gob.mx/vancouver Directorate General of Customs (Direccion General de Aduanas) Av. Hidalgo No. 77 Modulo 04, 1-3 Piso Colonia Guerrero CP 06300 Mexico Tel.: (52-55) 5228-3436 Fax: (52-55) 5228-3440 Directorate General of Foreign Trade Services (Direcion General de Servicios del Comercio Exterior) Insurgentes Sur No. 1940 P.H. Colonia Florida CP 01030 Mexico Tel.: (52-55) 5226-6188 Fax: (52-55) 5229-6529 Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (Secretara de Agricultura, Ganadera y Desarrollo Rural, Pesca y Alimentacion [SAGARPA]) Insurgentes Sur No. 476 Piso 13, Colonia Roma

CP 06760 Mexico Tel.: (52-55) 9183-1000 E-mail: contacto@sagarpa.gob.mx Internet: http://www.sagarpa.gob.mx (In Spanish) Ministry of Foreign Affairs (Secretara de Relaciones Exteriores [SRE]) 2 Ricardo Flores Magon Ave. Colonia Tlaltelolco CP 06995 Mexico Tel.: (52-55) 5782-4144 Fax: (52-55) 5327-3025 Internet: http://www.sre.gob.mx (In Spanish) Ministry of Health (Secretara de Salud) Unidad de Atencin al Pblico Donceles No. 39, P.B. Colonia Centro, CP 06010 Mxico, DF, Mexico Tel.: (52-55) 5510-1075 Internet: http://www.salud.gob.mx Note: Open Monday to Friday, 9:00-13:00 National Register of Importers and Exporters (Sistema de Informacin Empresarial Mexicano) Tel.: (01-800) 410-2000 Fax: (52-55) 5229-6134 Internet: http://www.siem.gob.mx/portalsiem (In Spanish)

Canadian Industry Associations Canadian Bottled Water Association (CBWA) 155 East Beaver Creek Unit 24, Suite 328 Richmond Hill, ON L4B 2N1 Tel.: (905) 886-6928 Fax: (905) 886-9531 E-mail: info@cbwa-bottledwater.org Internet: http://www.cbwa-bottledwater.org Canadian Restaurant and Foodservices Association 316 Bloor St. W Toronto, ON M5S 1W5 Tel.: (416) 923-8416 Fax: (416) 923-1450 E-mail: info@crfa.ca Internet: http://www.crfa.ca

Mexican Industry Associations and Contacts Association of Importers and Exporters of the Republic of Mexico (Asociacin Nacional de Importadores y Exportadores de la Repblica Mexicana [ANIERM]) Av. Monterrey, No. 130 Colonia Roma 06700 Mxico, DF Mexico Tel.: (52-55) 5584-9522 Fax: (52-55) 5584-5317 Internet: http://www.anierm.org.mx (In Spanish) Association of Importers and Representatives of Food Products and Beverages (Asociacin de Importadores y Representantes de Alimentos y Bebidas, A.C.)

Tuxpan 41-202 06760 Mxico, DF Mexico Tel.: (52-55) 5584-2609 or 5564-2770 Fax: (52-55) 5564-5341 or 5606-9724 National Chamber of Manufacturing Industries (Cmara Nacional de la Industria de la Transformacin [Canacintra]) San Antonio 256; Colonia Ampliacin Npoles 03849 Mxico, DF Mexico Tel.: (52-55) 5563-3400 Fax: (52-55) 5598-9467 Internet: http://www.canacintra.org.mx Note: This umbrella chamber represents all types of manufacturing industries, including alcoholic beverages. National Restaurant Association (Camara Nacional de la Industria de Restaurantes [CANIRAC]) Contact: Aniceto Ortega No. 1009, Colonia Del Valle 03100, Mxico, DF Mexico Tel.: (52-55) 5604-3546 or 688-9378 Fax: (52-55) 5604-4086 National Retailers Association of Mexico (Asociacin Nacional de Tiendas de Autoservicio y Departamentales [ANTAD]) Horacio 1855, Piso 6 Colonia Chapultepec Morales CP 11570 Mxico, DF Mexico Tel.: (52-55) 5580-1772 Fax: (52-55) 5395-2610 Internet: http://www.antad.org.mx (In Spanish)

Direct Importing Retailers Soriana Alejandro de Rodas #3102-A Colonia Cumbres 8 sector, CP 64610 Monterrey, NL Mexico Contact: Jos Manuel Snchez Moreno, Purchase Director Tel.: (52-8) 329-9000 or -9265 Fax: (52-8) 329-9341 E-mail: jmsanchez@soriana.com.mx Internet: http://www.soriana.com.mx (In Spanish) Walmart Supercenter Aurrera, Superama Av. Universidad # 936 A Colonia Santa Cruz Atoyac CP 03310 Mxico, DF, Mexico Contact: Mariano Acebal, Purchase Manager Tel.: (52-55) 5420-0200 ext. 5630 or 5660 Fax: (52-55) 5420-0202

BIBLIOGRAPHY
Print Beverage World. "H2O in Latin America: Bottled Water Growth is Outpacing Global Trends," June 15, 2003. Dun & Bradstreet. Exporters' Encyclopedia. "Mexico, 2001," 2001. Datamonitor. Profiles. "Mexico: Bottled Water," January 2003. Euromonitor. Global Strategy. "Soft Drinks - FEMSA," August 2002.

El Economista. "Deputies Reject 20% Tax," December 11, 2002. El Fianciero. "Taxes on water and PET bottles a threat to the industry," December 6, 2002. Reuters News. "Bottled water hit in revised Mexican drinks tax," November 8, 2002. United States Commercial Service. Mexico Country Commercial Guide FY 2002. United States. Department of Agriculture. Mexico: Annual Exporter Guide 2002. ------. Mexico: Food and Agricultural Import Regulations and Standards Country Report 2002. Global Trade Information Services Inc. World Trade Atlas, October 2002. "U.S. Exports to Mexico (Jan.-Oct. 2002) HS product codes 220190, 220210."

Electronic Canada. Agriculture and Agri-Food Trade Service. "The Fruit Juice, Soft Drink and Bottled Water Market in Mexico," May 1998. Downloaded from http://ats.agr.ca/info/latin/e2209.htm on January 18, 2003. ------. "Agri-Food Export Business Guide," March 2001. Downloaded from http://ats.agr.ca/info/latin/e3187.htm on January 12, 2003. ------. "Mexico: Agri-Food Country Profile," May 2002. Downloaded from http://ats.agr.ca/info/latin/3112.htm on January 5, 2003. ------. "The Beer, Spirits and Wine Market in Mexico," October 2002. Downloaded from http://ats.agr.ca/info/latin/e.htm on December 15, 2003. EIU Executive Briefing. "Mexico: Food, beverages and tobacco forecast," September 18, 2002. Downloaded from http://eb.eiu.com on January 7, 2003. ------. "Mexico," January 7, 2003. Downloaded from http://eb.eiu.com on January 18, 2003.

Useful Internet Sites ExportSource: http://exportsource.gc.ca How to Partner in Mexico: http://www.infoexport.gc.ca/ieen/DisplayDocument.jsp?did=5423 InfoExport: http://www.infoexport.gc.ca LatinTrade.com: http://www.latintrade.com Mexican Commercial Controller: http://www.comerci.com.mx (In Spanish) Mexican Intelligence Report: http://www.mex-i-co.com Mexican trade and business links: http://www.lanic.utexas.edu/la/mexico Mexico Data Online: http://www.mexicodataonline.com NAFTA Office of Mexico in Canada: http://www.nafta-mexico.org
1. All monetary amounts are expressed in Canadian dollars, unless otherwise indicated. The conversion rate to Canadian dollars is based on IDD Information Services, Tradeline, March 2003. 2. At the time of publication, a controversial 20% point-of-sale tax on soft drinks containing sweeteners other than cane sugar continues to be in effect. There was some speculation that the PET bottle tax was proposed as a face-saving alternative to the soft drink/corn syrup tax, which has been in effect since January 1, 2002. 3. For contact information regarding key organizations mentioned in this report, see Key Contacts. 4. The USDA publishes complementary information at http://www.fas.usda.gov/scriptsw/attacherep/default.asp (see "Guide to Service Providers in Mexico 2002, GAIN Report MX2121 9/3/2002"). 5. Additional information on official regulations or NOMS can be obtained from http://www.economia.gob.mx (in Spanish). From the home page find Normatividad Empresaria and click on Normas link. On the left hand menu click on Catalogo de normas. 6. Additional information regarding NOMS can be obtained from http://www.economia.gob.mx (in Spanish). From the home page, find Normatividad Empresaria and click on Normas. On the left-hand menu, click on Catlogo de normas.

7. A list of authorized verification unites can be obtained at the following web site: http://www.economia.gob.mx/work/normas/Aprobacion/ Unidades_de_verificacion/SECOFI/nom-051-scfi-1994.doc 8. The list of accredited firms is available from Unidades de verificacin, Direccin General de Normas on Mexican government's Web site at http://www.economia.gob.mx (in Spanish). From the home page find Normatividad Empresaria and click on Normas. On the left-hand menu find Acreditacin and click on Unidades de verificacin. A list of establishments will appear.