Mexican companies investing abroad with gusto

Foreign adventures
Foreign adventures

In past posts, particularly comparing Mexico to Brazil, we have noted how Mexico historically has shied away from seeking a high profile role in the international community. As a top-20 economy and major exporter, Mexico could be forgiven for raising its aspirations, as Brazil seemed to do during its recent run in the economic limelight. Particularly with President Peña’s major push to attract foreign investment over the past two years, now might be the time for some calculated moves to increase Mexico’s international role. If the current administration harbored any notions of this type, however, they are likely stalled for the moment, what with recent news coverage dominated by tales of corruption and violence. Nonetheless, as Mexican political leaders continue to treat foreign adventures with trepidation, Mexican businesses appear to be finding ever more sure footing abroad.

We have addressed this topic before, pointing out with satisfaction in 2012 how Mexican companies were showing signs of feeling their oats in international markets. To our ongoing satisfaction, we find that in 2014 this trend continued in healthy fashion. As we mentioned in the prior post, international expansion is nothing new to several Mexico-based multinationals. Companies such as Cementos Mexicanos (Cemex), Grupo Alfa and Gruma are well established as worldwide players, and global powerhouses Grupo Bimbo and América Móvil have made headlines in recent years with acquisitions abroad. Cemex, Bimbo and Gruma were all active again over the past year (See table below).

Judging from our unscientific survey of media reports throughout 2014, the food and beverage industries were among the top targets for Mexican takeovers or expansion in other countries. In addition to Bimbo and Gruma, dairy products maker Lala, beverage bottler and snack producer Arca Continental, pasta maker La Moderna and preserved foods manufacturer La Costeña made inroads outside of Mexico over the past year. Mexican food and beverage brands have long been mainstays in Latin America, but it appears that new players are increasingly targeting the U.S. market as well.

On the industrial side, the United States also received investment not only from longtime hemispheric construction powerhouse ICA, but from emerging players such as Rotoplas (water tanks) and Solartec (solar energy) as well. Well established Mexican industrial multinationals Cemex (cement) and Mexichem (chemicals) expanded their presence in Europe.

Perhaps most interesting to us in our informal findings is the growing expansion of Mexican entertainment and retail service companies. Cinema operator Cinépolis, reportedly now the world’s fourth largest in its category, continued its takeover binge with acquisitions in India, Brazil and Chile. Mexico’s second largest cinema operator, Cinemex, announced it will begin operations in the United States via a luxury complex in Miami. Innovative “edu-tainment” theme park operator KidZania, a perennial overseas investor, opened a new park in Turkey and claimed plans to add new countries soon to its growing list of locations. Finally, retail food service operator Alsea, which manages franchises under license in Mexico for brands such as Starbucks, Domino’s, Burger King and many others, jumped the pond to take a majority stake in a Spanish restaurant group. If this trend continues in the future, it will be interesting to see how well established some industrial and consumer brands become without global consumers realizing they are Mexican in origin.

The following table was compiled from media reports and company press releases throughout 2014. It is neither scientific nor comprehensive and is intended only to provide examples of investment in other countries by Mexican companies.

Mexican company Industry/Product Estimated Value (USD) Location Deal
Cementos Mexicanos (Cemex) Cement $54 million Czech Republic, Spain Acquired production and processing plants from Holcim
Cementos Mexicanos (Cemex) Cement $340 million Colombia Establish cement production plant
Grupo Bimbo Baking $103 million Canada Acquired Saputo Bakery
Grupo Bimbo Baking $1.5 billion Canada Acquired Canada Bread
Grupo Bimbo Baking n/a Ecuador Acquired baker Supan
Grupo Lala Dairyproducts $90 million Central America Acquired production plants in Nicaragua, Honduras, El Salvador and Costa Rica from Nicaragua-based Eskimo
ICA Construction $60 million USA Acquired Facchina construction company
Gruma Tortillas $50 million Russia Establish a plant to produce tortillas and related products
Gruma Processed foods $15 million Spain Acquired food processor Mexifoods
Mexichem Chemicals $260 million Germany Acquired PVC manufacturer Vestolit
Rotoplas Water tanks $10 million USA Established rotational molding plant in Merced, California.
Solartec Solar energy $31 million USA Establish a solar cell manufacturing plant
Arca Continental Beverage $80 million Ecuador Establish a Coca Cola bottling plant
Arca Continental Processed foods $40 million Ecuador Acquired dairy products producer Tonicorp
La Moderna Processed foods $30 million USA Establish a pasta processing plant in Cleburne, Texas
La Costeña Processed foods n/a USA Acquired vegetable canner Faribault Foods in Minneapolis, Minnesota
KidZania Theme parks $21 million Turkey Opened edu-tainment theme park in Istanbul
Alsea Restaurant franchising $128 million Spain Acquired controlling stake in Zena restaurant group
Cinépolis Cinema $77 million India Acquired multiplex chain Fun Cinemas
Cinépolis Cinema n/a Chile Acquired multiplex chain Cine Hoyts
Cinépolis Cinema n/a Brasil Acquired multiplex chain Cinemais
Cinemex Cinema n/a USA Open a multiplex in Miami

Source: Combined media reports.  

Please do not use this table without attribution to Mexico Business Blog

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