Exporters entering the Mexican coffee market are in for a surprise

An image of the Mexican flag represented as a jigsawy puzzle
  • 35% of Mexico’s coffee production is reportedly “high-quality”
  • As such, some exporters are moving into Mexico from origins such as Colombia
  • However, there are plenty of infrastructure challenges to consider

“IN THE last five years many companies from different origins have arrived with the intention of exporting coffee from Mexico to other latitudes,” says Pablo Salazar Velasco, Director of Corporate Affairs at Cafeologia

This strategic shift stems from Mexico’s growing reputation as a coffee-producing nation with untapped potential, diverse flavour profiles, and unique terroirs. 

Mexico’s total production for 2023/2024 is forecast unchanged from the previous year, at 4.1million 60/kg bags. And approximately 35% of Mexico’s production is reportedly high-quality.

Exporters are drawn to Mexico’s rich coffee heritage, favourable climate conditions, and the opportunity to explore new sourcing regions outside their traditional origins.

“There could be for a number of reasons,” says Pablo. “Climate change is affecting supplies and volumes, the market is saturated with ‘traditional’ coffees from Colombia, Ethiopia, and Brazil for example, and geographical proximity to the U.S. could also be a factor.”

Establishing a presence in Mexico allows exporters to diversify their sourcing strategies, access distinct coffee varieties, and leverage the country’s emerging coffee market for growth opportunities. 

By tapping into the country’s coffee sector, exporters aim to broaden their product offerings, enhance their supply chain resilience, and establish partnerships with local producers.

“They do it because through its name alone, Mexico sells,” says Angel Barrera, Coffee Director and Partner at Belco. “It’s easier to sell Mexican coffee than Honduran, Nicaraguan, or Salvadorian, for example.”

“Plus for me, there are 3-4 regions in Latin America producing some of the world’s top qualities through the nature of its terroir, and Mexico is one of them.”

Navigating Mexico’s coffee supply chain requires preparedness

It’s plain to see then why Mexico might seem like a golden opportunity for coffee exporters. However, when delving into Mexico’s coffee supply chain, new foreign exporters can come up against a range of bottlenecks. 

Exporters must navigate challenges like fluctuating market prices, logistical complexities, limited infrastructure in certain regions, varying producer payment terms, and quality control measures to ensure a seamless sourcing process.

“Mexico is a complex country for various reasons,” says Pablo. “It’s large and diverse, and many coffee producing regions don’t speak Spanish and have their own laws. The geography of coffee-growing regions is complicated, and infrastructure in communication, roads, and processing is very poor.”

“There is no adequate tax and banking system for the purchase of coffee, which makes payment and verification difficult. Poverty and violence rates are high. Meanwhile, real incentives to keep up the coffee trade are low – it’s not considered an important agricultural product for the country.”

Government support and producer organisation play crucial roles in shaping the dynamics of any coffee sector, impacting how exporters interact with local stakeholders and navigate the complexities of the supply chain. But in Mexico, it seems the government has given up on coffee.

“Unfortunately, there isn’t much government support in Mexico. Most of the producers don’t belong to a cooperative,” says Thomas Pingen from Red Beetle Coffee Lab. 

“Production in the local areas is also small and fragmented. The average production per hectare in the state of Oaxaca, for example, is somewhere around 3 to 4 bags of parchment, whereas in Colombia, for example, it is, as far as I’m aware, about 10 times as high.”

This can make quality control and achieving quality consistency a challenge for exporters.

Establishing transparent communication channels, fostering long-term relationships with producers, and investing in quality assurance mechanisms are essential for foreign exporters to navigate the nuances of Mexico’s coffee industry successfully.

Is moving between origins to maximise opportunities a good exporter strategy?

For exporters shifting from one origin to another, such as transitioning from Colombia to Mexico, there are both pros and cons to consider in this strategic move. 

While exploring new sourcing regions offers opportunities for diversification, access to new flavour profiles, and market expansion, it also presents challenges related to adapting to new supply chain dynamics, understanding local regulations, and building relationships with unfamiliar producers.

“Developing as an exporter can be complicated at the beginning, when you begin to generate relationships,” says Pablo. “Once you have loyal coffee producers, it can be easier.”

The benefits of transitioning between origins include gaining exposure to diverse coffee varieties, mitigating risks associated with single-origin dependence, and capitalising on emerging market trends. 

By expanding their sourcing footprint and embracing the complexities of different coffee origins, exporters can enhance their product offerings, foster innovation, and strengthen their competitive position in the global coffee market.

“If you wish to move from one origin to another, you could use your own expertise to adapt it to a local business, but make sure to adapt yourself to the local context and realities,” says Angel. 

“It can be very beneficial, in my opinion, if you manage to apply your strategy for the sustainable development of the local supply besides, of course, your business.”

By embracing the complexities of sourcing from diverse origins like Mexico, exporters can leverage the unique attributes of each region and forge partnerships with local producers.

But before joining the gold rush to the next “best” origin, or hopping from country to country, exporters need to do their homework on more than just the coffee, and carefully weigh the return on investment of both time and money before taking the leap.

Coffee Intelligence

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