October 19, 2022
Ahead of his speech at the Americas Pulses Congress, Matthew Tripodi of market analytics giant Euromonitor talks with Luke Wilkinson about the shifting landscape of the Mexican pulse industry.
Matthew Tripodi is a keynote speaker at the GPC’s Americas Pulses Congress in Cancun on December 3-5, 2022. Not registered yet? Sign up for the event here.
Euromonitor is the world's leading independent strategic consumer insights company. We track 28 major categories of fast-moving consumable goods and hundreds and hundreds of product categories and millions of products around the world.
We offer data systems and consulting services, and have on-the-ground research teams in 100 countries. We support roughly 90% of the Fortune 500, major academic institutions, governmental and international trade agencies, as well as trade associations in developing markets all around the world. It is a very deep research function that meets consumer and business dynamics along the way to define the greatest market opportunities out there and how to capture them.
I'm the senior global territory director inside the government and trade division. That means I support our 16 offices for government and trade business but I'm deeply focused on developing research methodologies to answer complex questions on how agencies and organizations should develop business around the world and what information serves them best in that process. ??
Well, you can expect an overview that's a little different and more comprehensive than what you imagine the market is. I'm going to approach it from multiple perspectives, then show you how those perspectives intersect and what that means for the pulse industry in Mexico and pulse traders dealing with Mexico. I think that I'm going to dispel some myths along the way.
I’m also going to put some numbers to the market dynamics and show them what the future holds and why that future exists. It won't just be numbers, I’ll be explaining that the numbers are a result of particular elements. I'm going to piece the puzzle together.
I like to say that I think everybody has the puzzle pieces but maybe they're not always putting them together in the right spot. If you have a 500 piece puzzle, you can spend a long time with it and never get the full picture. But if you know how the puzzle pieces go together, then it reveals something. ? ?
I know producers have felt a lot of pressure, sensing decline and degradation of the market in terms of domestic pulse consumption. The reality of that is that domestic pulse consumption did have a dip and then leveled off. We did see an uptick in the numbers in 2021 in volume terms, but there's a really broader picture of what's happening here.
The broader picture goes way back - it’s a bit of a history lesson. In the 1960s, the market in Mexico began onboarding animal proteins and significantly shifting their dietary patterns. This would have been aligned with what you might see as a movement toward the ‘westernized’ diet which partly emulated what was happening in the United States.
During that period we also had the food service sector starting to further expand. Then, over time there's been a massive dedication of land and resources to the production of bovine to poultry, so there was an encroachment on how much land was available for pulse production. This all had an effect on what the population was consuming.
Right. Choices were being made to move away from a more traditional dietary pattern into a more experimental one - one that many in the United States would have seen, and do see, as perfectly normal. Since that time there has been a substantial uptick in beef consumption, and a substantial uptick in poultry consumption, and that has had some knock-on effects.
Some people say it’s food service taking away from the pulse sector but that doesn't really appear to be the case. It appears to be consumers actually shifting their diet. That's really tough because Mexico has seen shifts in pulse demand that are largely not reflected at the global level - at the global level the demand is going up. In Mexico, we've seen flat to declining demand, then a very slightly increasing demand in volume terms. Pulses, especially beans, have served as a base for daily meals since the times of the Aztecs and Mayas. To some degree, Mexico recognized the greatness of pulses ahead of many other nations.
Now, other countries are increasingly realizing the magic of pulses and are helping to drive their further growth and global demand. This means that substantial opportunities exist in external markets, while internal markets are really about evolving the way consumers embrace pulses, such as pulse ingredients and through new formats, such as sweet and savory snacks, beverages, and ready-to-eat products.
There is something interesting happening; we're seeing a transition to packaged products, ready-to-consume, packaged products that will save consumers time. What you're starting to see is that pulses are no longer as convenient as they once were. People know the tradition - I don't want to say that it's being buried because it isn't, but it's being slowed for sure. It's being competed against, and the way that pulses are getting delivered to consumers is changing to more convenient formats like canned foods, all with less home preparation.
During the COVID period, we did start seeing some benefits to that; consumer food service greatly dipped, there was a return home for the bean sector from 2020 to 2021. We witnessed roughly about a 2 to 3% volume increase internally. Now, that may not have been widely recognized inside the market because numbers had been much higher in previous years, but, as you go back in time, what you saw was a trend line gradually pushing down, but now I think it's flattening.??
I think that production data is really important to the overall ecosystem, but tracking international trade at a more granular level becomes important in key future areas like increasing global demand. That begins to drive the need for focusing on the promotion and uptake of a diversified set of pulse derivatives such as protein isolates, concentrate, starches, etc.
I do want the industry to start thinking about that in terms of actual demand dynamics that exist out there at the global level.
As an example of how you can understand the overall trends of a market, let’s take sales numbers for bags of pulses in Mexico. What we've seen is that in 2016, there was about 1.05 million metric tons that was utilized at the consumer level. By 2021, that had only gone up to 1.07. That was about a 20,000 metric ton gain, which was fairly small. The industry reacted by saying, “Hey, we just keep seeing the same thing!”, and also, at the same time, grocery retailing grew from around $85 billion to $110 billion. We had plenty of grocery stores with a lot of business, so why were the pulses just being consumed at the same rate they always were?
At a global level, in 2016, 41.2 million metric tons of pulses were sold, and by 2021 it was nearly 53 million metric tons. This shows you that at the global level it was far outperforming the demand uptick that we were seeing in Mexico. When you look at future forecasts globally, we're expected to add about another 6.4 million metric tons or so between 2021 and 2026 to world demand. That’s an increase of about 12.1% and it will be growing at about 2.3% per year roughly. Within Mexico, the forecast growth number is actually for a decline of about 2% in volume terms through 2026..
We can see from this data that demand in Mexico simply isn’t as vigorous in terms of growth as many other markets.
Very little money has been invested in innovation inside the pulse sector when you compare it to cereals and other agricultural products. The investment in pulses has really been rather paltry. The upside to this is we have an opportunity for innovation.
There is an opportunity for actual product innovation because of the genetic diversity of pulses. We have the ability to create pulses that are going to be able to be produced in greater levels on a given area of land that can ultimately be produced at a lower price point. Mexico is a very good exporter, but their challenge is making pulses into something new. Everything from bean chips to smoothies to pulse protein sports drinks - all sorts of things can become opportunity areas.?
As we start looking at the real value of pulses and they become recognised by consumers at both the national and global level for their health and sustainability benefits, we're going to start seeing a transition that, I think, will end up driving pulse demand upward on a more consistent basis.
We have the ability to make beans better and we have the ability to make lentils better, so we need investment. When you start bringing in investment, you start bringing in the ingredient space and product innovation along with market information you strengthen the opportunity to identify and capture new business – you grab hold of real business insights with real key levers that you can pull and watch the success - the transformation - of the industry take place.
I still think we are at the tip of the iceberg for pulses! Pulses and pulse ingredients offer tremendous opportunities to sustainably nurture and improve food systems and reduce impacts to the environment over many other commodities; they can help form the new shape of the global food system, nourish production areas and people, all the while limiting the impact of agricultural production that can damage the environment.
The future of food and food systems is based on changing old habits and building new ones that offer greater focus on consumer health and nutrition, sustainable production, economic profitability, and environmental protection, and social equity and economic inclusion. Fortunately, in agriculture, change is part of what we do and pulses offer excellent opportunities to address the demands of consumers and the challenges being faced. The pulse industry is rising to these challenges and, I expect, will see greater results because of it.
Disclaimer: The opinions or views expressed in this publication are those of the authors or quoted persons. They do not purport to reflect the opinions or views of the Global Pulse Confederation or its members.
