McKinsey Direct
The state of grocery
retail in Mexico
Our latest report with Kantar finds consumers prioritizing value,
shifting toward hard discount over traditional trade outlets, and
embracing e-commerce growth.
This article is a collaborative effort by Agustín Gutiérrez, Bruno Furtado, José Ricardo Cota,
and Julio Rodríguez, with Aaron Braiman and Andrea Biancardi, representing views from
McKinsey’s Retail Practice.
January 2025
Mexico’s grocery sector is entering a sustained pressure on purchasing power. And while economic
period of growth. After years of economic confidence has improved relative to the height of the
turbulence—buffeted by everything from the pandemic, about 55 percent of Mexicans still express
COVID-19 pandemic to high inflation—the market uncertainty or pessimism about the near future.
has expanded for four consecutive years, with Consequently, Mexican consumers are trading down
moderate growth forecast. Yet challenges continue by seeking cheaper brands, especially in categories
as consumers remain cautious, prioritizing value such as personal care (Exhibit 1). Additionally, about
amid lingering pressure on purchasing power. 60 percent of consumers report consistently looking
for value pack sizes.
Our latest report identifies four trends reshaping
Mexico’s grocery landscape: a persistent consumer Despite the focus on value, the positive
focus on value, a shift toward modern retail formats, consumption trend is reinforced by a strong
strong growth in private-label products, and further rebound in out-of-home food and beverage sales,
integration of e-commerce in shopping habits. which grew by 14.3 percent in second quarter
Many retailers and manufacturers have already 2024 compared with second quarter 2023. This
begun adapting to these shifts by renovating their shift highlights a renewed consumer willingness to
customer value propositions in three ways: evolving spend on experiences and suggests an opportunity
their strategic positioning, transforming their “core” for brands to capture demand in both value and
businesses through digitalization and technology, premium segments as behavior continues to evolve.
and expanding into adjacent businesses. Being close
to customers, leveraging emerging technologies 2. Value and convenience drive
such as gen AI, and rapidly adapting their operating channel transformation
models will be essential for retailers to remain Consumer demand for value and variety continues
competitive in this new era. to transform Mexico’s grocery retail landscape,
mirroring broader trends across Latin America.
Modern trade channels—including hypermarkets,
Four trends driving grocery supermarkets, discounters, and convenience
retail in Mexico stores—have continued gaining share in the
The grocery retail market in Mexico has expanded market, outpacing traditional channels. These
consistently since 2020, with volume growth formats are used by approximately 96 percent of
accelerating in 2024. Consumers in Mexico shop households across various segments, driven by their
across more than six channels, leading the region in competitive pricing and diverse product offerings.
multichannel engagement. Modern trade dominates,
with 42 percent of sales in 2023, driven by the From 2021 to 2023, modern trade channels grew
expansion of discounters and convenience stores. at an average CAGR of about 15 percent, compared
While online sales still represents only 1 percent of with 7 percent for traditional trade channels;
Mexico’s grocery market, the channel continues to discounters and convenience stores led the way
become more ingrained in consumers’ shopping with CAGRs of about 29 percent and 23 percent,
habits, with adoption having an average CAGR of 50 respectively, since 2021 (Exhibit 2). Discounters’
percent since 2021. All of these shifts are underpinned growth was fueled by sales of nonalcoholic
by four key trends shaping consumer behavior. beverages (a CAGR of 42 percent for the period),
nonperishable foods (25 percent), and dairy
1. The search for value persists products (24 percent). Modern trade’s share of total
Consumers globally are trading down, and Mexico grocery sales was about 42 percent in 2023 (up
is particularly affected by this trend. Despite the from 40 percent two years earlier), underscoring
country’s slowing inflation, research from McKinsey’s how Mexican consumers increasingly favor these
2024 Global Sentiment Survey shows 44 percent channels for both value and convenience.
of Mexican consumers still identify “rising inflation”
as one of their top three concerns. This sentiment is Value and convenience continue to be the main
consistent across all income levels in Mexico, putting drivers of the shift toward modern trade channels in
The state of grocery retail in Mexico 2
Web <2025>
<MCK241108 State of Grocery Mexico>
Exhibit
Exhibit <1>1 of <4>
Consumers look for cheaper brands in all purchase categories, especially sports
and outdoor equipment and supplies, footwear, and personal-care products.
Brand change in different categories in past 3 months,1 % of respondents
Brand with lower prices Brand with higher prices
Sports and outdoor 30 3 Series 1
equipment and supplies
Footwear 27 0
Personal-care products 24 2
Baby supplies 22 1
Apparel 22 2
Center store and 21 0
shelf-stable groceries
Household supplies 20 1
Vitamins 19 1
Decorations and 18 4
products for home
Alcoholic beverages 15 2
Jewelry 15 1
Home improvement and 15 2
gardening supplies
Toys 14 6
Skin care and makeup 11 1
Accessories 10 0
1
Question: You said you bought a different brand than you would normally buy. Which of the following best describes the type of brand you changed to? Answer
options: a) Purchased a brand with lower prices (different from the brand you normally buy); b) Purchased a brand with a higher price (different from the brand
you normally buy). The chart shows 15 main categories out of 20 with a higher trade-down percentage, excluding those categories with an average trade-down
rate of about 8%: pet and food supplies, meat and dairy, electronics for home, fresh produce, and furniture.
Source: McKinsey 2024 Global Sentiment Survey, Mexico (n = 1,014)
McKinsey & Company
The state of grocery retail in Mexico 3
Mexico, resulting in increased consumer spending. amid rising costs. Discounters have been the
From 2022 to 2023, purchase frequency jumped primary engine of this expansion, with private-label
across most modern formats: discounters led products reaching a 15 percent share of the sales
the way with a 13.2 percent increase, followed by mix in Mexico in 2023 and posting a robust 42
convenience stores at 14.7 percent and hyper- percent CAGR since 2021. The rise of private brands
and supermarkets at 6.0 percent. By contrast, in discounters is notable for its broad appeal across
wholesalers showed no change in purchase various product categories, particularly in home-
frequency. This trend highlights the growing use items and nonalcoholic beverages, with fresh
consumer preference for modern trade channels— products less affected (Exhibit 3). Improvements in
particularly discounters, which have become a key quality perception and availability continue to drive
subchannel in grocery retail in Mexico. penetration. Wholesalers are the second-most
relevant channel for private-label brands, but hyper-
3. Private-label brands continue to gain share and supermarkets will need to accelerate their
Private-label brands enjoyed strong growth, driven private-brand development to catch up.
by consumers seeking affordable alternatives
Web <2025>
<MCK241108 State of Grocery Mexico>
Exhibit 2of <4>
Exhibit <2>
Modern trade has grown considerably and has become the main sales
channel for grocery, accounting for about 42 percent of the sales mix.
Grocery market in Mexico, 2019–23, % of total value, total in $ trillion
CAGR, % Channel mix, %
2019–21 2021–23 2021 2023
CAGR Pharma-
11% 1,147.75 cosmetic 17 11 2 2
Series 1 2 Pharma-cosmetic
1,054.22 2
Others1
Others¹ 23 12 19 19
CAGR 19
16% 927.12 Modern trade 2
2 19
Traditional trade3
814.43
2 19
690.67
2 18
Modern
42 15 15 40 42
17 trade²
41
40
40
40
38 37 Traditional
40 13 7 40 37
42
40 trade³
2019 2020 2021 2022 2023
Total 16 11 100 100
Note: Figures may not sum to 100%, because of rounding.
1
Includes door-to-door, specialized stores, pet care, department stores, and all others.
2
Includes hypermarket, supermarket, neighborhood, convenience, discounts, cash and carry, and wholesalers.
3
Includes minimarket, independent supermarkets, traditional stores, bakery, fairs, and markets.
Source: Kantar
McKinsey & Company
The state of grocery retail in Mexico 4
Web <2025>
<MCK241108 State of Grocery Mexico>
Exhibit 3 of <4>
Exhibit <3>
Private-label brands are gaining relevance in sales mix across baskets
and channels.
Private-brand sales in Mexico, % of total value
Nonperishable food Home care Dairy Drinks (nonalcoholic) Personal care
15 25
20
10
15
Discounters
10
5
5
0 0
19
2019 20
2020 21
2021 22
2022 23
2023 19
2019 20
2020 21
2021 22
2022 23
2023
15 25
20
10
15
Wholesalers
10
5
5
0 0
19
2019 20
2020 21
2021 22
2022 23
2023 2019
19 2020
20 2021
21 2022
22 2023
23
15 10
10
Hyper- and
5
supermarkets
5
0 0
2019
19 2020
20 2021
21 2022
22 2023
23 2019
19 2020
20 2021
21 2022
22 2023
23
15 5
10
Convenience
0 0
19
2019 20
2020 21
2021 22
2022 23
2023 19
2019 20
2020 21
2021 22
2022 23
2023
Source: Kantar
McKinsey & Company
The state of grocery retail in Mexico 5
4. The digital channel becomes further shopping. Mexican consumers shop through an
integrated into shopping habits average of more than six channels, with increasing
While physical stores remain the dominant shopping consumer demand for convenience and better deals
channel in Mexico, the rise of online and omnichannel making e-commerce an attractive option for fast-
experiences is transforming consumer behavior, moving consumer goods purchases.
particularly in the grocery sector. Although e-commerce
accounted for only about 1 percent of the total market
in 2023, this figure understates its rapid underlying Next steps for Mexico’s grocery
growth: online sales in Mexico surged by approximately retailers and CPG companies
56 percent from 2022 to 2023, with a sustained CAGR Top-performing grocery retailers and consumer
of 50 percent from 2021 to 2023 (Exhibit 4). Growth is packaged goods (CPG) companies in Mexico are
particularly evident in nonperishable foods, dairy, and already adapting to changing consumer behavior
personal-care products. by focusing on three strategic dimensions: evolving
their strategic positioning, transforming their “core”
One major contributor to digital sales growth businesses through digitalization and technology,
has been the country’s embrace of multichannel and expanding into adjacent businesses.
Web <2025>
<MCK241108 State of Grocery Mexico>
Exhibit 4of <4>
Exhibit <4>
The digital channel represents only about 1 percent of the total grocery
market value in Mexico, but it is the fastest-growing channel.
Market penetration of the digital channel, Value growth,
% of potential customers reached million Mexican pesos ($1 = 20 Mexican pesos)
35 9,692
34.5 Mexico
30 4.7×
27.3 +56%
25 Latin
23.6 America
23.9 24.6 6,193
20 19.2
20.4
4,416
16.2
15
10
2,058
5
3.2
2.8 356
0
2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
Source: Kantar
McKinsey & Company
The state of grocery retail in Mexico 6
The rise of online and omnichannel
experiences is transforming
consumer behavior, particularly
in the grocery sector.
1. Evolving strategic positioning and operational efficiencies. They are prioritizing
Grocery retailers. Retailers are adjusting their omnichannel strategies that bridge the gap
format strategies by clearly separating premium between online and offline sales, incorporating
and economical value propositions to better meet concepts such as online-to-online and online-
diverse consumer needs and preferences. This to-offline commerce, as well as conversational
includes the growth of hard discounters, which sales methods. In addition, retailers are optimizing
focus on selling a limited selection of primarily supply chains end to end, from suppliers all the way
private-label products at very low prices in a to in-store operations, to increase efficiency and
no-frills environment; soft discounters, which offer reduce costs.
a wider product range and more-recognizable
brands at low prices; and proximity stores. They CPG companies. Leading CPG companies are
are ensuring a consistent value proposition across scaling commercial excellence by enhancing
all sales channels while also integrating private- capabilities such as advanced pricing strategies,
label products and fresh offerings to differentiate outlet-level segmentation, and specialized
themselves in a competitive market dominated by pricing teams, driving significant growth in EBIT
discounters. and superior shareholder returns. They are
leveraging gen AI as a key differentiator to enhance
CPG companies. CPG companies in Mexico are organizational performance, boost productivity, and
aligning organizational priorities and culture drive healthier business outcomes. A true marketing
around consumer needs, revisiting their price- transformation is underway, with CPG companies
pack architecture, and implementing data- using AI-driven insights to become more agile
driven decision making to boost effectiveness, and adapt their strategies for hyper-personalized
employee engagement, and brand loyalty. They are consumer engagement.
diversifying beyond traditional consumer packaged
goods, exploring new ecosystems and services 3. Expanding into adjacent businesses
related to core categories. Additionally, embedding Grocery retailers. Retailers are diversifying their
sustainability practices into their operations is business models by developing ecosystem plays
becoming crucial in meeting evolving consumer that generate additional revenue streams. These
expectations and regulatory requirements. include doubling down on online marketplaces,
establishing retail media networks, and exploring
2. Transforming the ‘core’ business new services such as financial offerings. These
through digitalization and technology three approaches have gained relevance, with
Grocery retailers. Retailers are leveraging data, AI, multiple players rapidly building capabilities to win
and gen AI across the value chain to enhance sales, over consumers.
optimize operations, and personalize customer
experiences, driving substantial revenue growth
The state of grocery retail in Mexico 7
CPG companies. CPG companies are diversifying
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their portfolios by expanding into new product
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categories through both internal R&D as well
as M&A. They are leveraging core capabilities
such as brand trust, development expertise, and
supply chain strength to drive substantial revenue
growth and solidify market presence. They are
establishing partnerships with global, regional,
and local stakeholders to accelerate decision-
making processes and enhance the impact of their
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local brands. Furthermore, they are streamlining
organizational structures, embracing automation
to foster greater efficiency, and focusing on radical
demand-reduction strategies.
With Mexico’s grocery sector experiencing steady
growth, grocery retailers and CPG companies have
a window of opportunity in which to regroup and
refine their strategies. However, the rapid shifts in
consumer behavior and market dynamics demand
swift and decisive action. By leveraging data-driven
insights and embracing digital transformation,
businesses can navigate these changes effectively,
ensuring not only survival but also sustained growth
and a stronger market position in this evolving
landscape.
Agustín Gutiérrez and José Ricardo Cota are partners in McKinsey’s Mexico City office, where Julio Rodríguez is a senior
partner, Aaron Braiman is an associate partner, and Andrea Biancardi is a consultant. Bruno Furtado is a senior partner in the
São Paulo office.
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The state of grocery retail in Mexico 8
