PepsiCo, Nestlé and Coca-Cola double down on Mexico as food players chase growth and stability

Key takeaways:

• Mexico is attracting sustained investment from global food and beverage companies due to its scale, frequent consumer purchasing and growing role as a manufacturing hub.
• Rising input costs, regulatory pressure and cautious business sentiment are pushing companies to prioritise efficiency, local sourcing and supply chain resilience.
• Strong domestic players like Grupo Bimbo and FEMSA are intensifying competition, making Mexico a more complex market to navigate.

When PepsiCo opened its $467m Sabritas plant in Celaya, it marked another step in a $2bn investment programme in Mexico running until 2028.

The scale of that commitment reflects how central the country has become to its global operations, both as a sales market and as a production base. Mexico has been climbing up internal priority lists for years, and in PepsiCo’s case, it now sits among its largest markets globally.

Other multinationals are taking a similar approach. Nestlé continues to expand manufacturing capacity, particularly in coffee and dairy. The Coca-Cola Company remains deeply tied into the market through its bottling system. Mondelez International and Kellogg Company have also added capacity and broadened their local portfolios.

This is less a sudden surge than a steady repositioning. Mexico is moving closer to the centre of global food and beverage strategy, and companies are doing so in a market that already has strong domestic competition.

Demand isn’t the issue

Mexico is a large market by any measure. Around 130 million people; a food culture that supports frequent consumption; and packaged food sales already above $150bn, according to Euromonitor International.

What tends to shape commercial outcomes, though, is how that demand behaves. Kantar data shows Mexican households shop frequently, often making five or more trips a week across different channels. Average basket sizes are relatively small – typically under MXN 100 per trip – which translates to roughly MXN 500-800 ($30-$45) in weekly FMCG spend. That pattern keeps volumes moving even when overall spending tightens.

Retail remains mixed. Modern trade continues to expand, led by players such as Walmart de México, Soriana and Chedraui, alongside convenience formats operated by Oxxo. At the same time, traditional channels – independent ‘tiendas’ and small neighbourhood stores – still account for a significant share of everyday purchases, keeping distribution fragmented and highly competitive.

On the production side, Mexico has become harder to ignore in recent years. It offers access to agricultural inputs, with established processing infrastructure and proximity to the US. For companies looking to shorten supply chains without rebuilding everything from scratch, that combination has taken on greater weight.

Strong local competition

Mexico isn’t a blank canvas for multinationals, having produced companies that already operate at global scale.

Grupo Bimbo is the obvious example. The group is the largest bakery business in the world, with operations spanning North America, Europe and Asia. Its expansion has been driven by acquisitions, but also by a distribution model that travels well.

In beverages, large bottling groups linked to The Coca-Cola Company have followed a similar trajectory. FEMSA – the largest bottler of Coca-Cola products in the world; also owner of LATAM’s biggest convenience store chain Oxxo – for example, has built a significant international footprint spanning Latin America and beyond.

This shifts the dynamic for incoming multinationals. Distribution is already controlled, shelf space is competitive, and local players understand the consumer better than most outsiders.

Costs remain elevated

The operating environment is less straightforward than the growth figures suggest.

Energy continues to fluctuate, affecting transport, manufacturing and cold chain; packaging has come down from its peak, but not back to pre-2020 levels.

Agricultural inputs are still exposed to global markets. Mexico produces a large share of what it needs, but fertilizers and certain commodities are tied to international pricing. The war in Ukraine continues to affect grains and oils, and energy markets have reacted again to tensions in the Middle East.

For manufacturers, that translates into persistent margin pressure rather than supply disruption.

At the same time, investment decisions have become more measured. The World Bank expects Latin America to grow at just over 2% in 2026, with private consumption doing most of the work while investment remains subdued.

Mexico fits that pattern. Consumer demand has held up, but business confidence indicators have stayed below neutral for several months. Companies are still investing, but the focus has shifted towards efficiency, local sourcing and supply chain resilience.

Like elsewhere, there’s an adjustment in how people buy. Food inflation has eased, although it still affects purchasing decisions, particularly for lower- and middle-income households. Price sensitivity is visible across categories with promotions, value positioning and pack sizes doing more of the work.

What hasn’t happened is a wholesale move away from branded products. In many cases, consumers are adjusting within brands rather than switching out of them completely.

Category performance reflects that. Beverages remain one of the largest segments by value, with soft drinks alone estimated at over $35bn, while dairy is worth more than $20bn and continues to expand, particularly in higher-value formats such as yogurt and functional products. Bakery remains a core category, valued at around $15-$20bn, supported by its role as a staple in the Mexican diet.

Regulation continues to shape the market. Mexico’s front-of-pack labelling rules have triggered reformulation across categories, particularly in snacks, beverages and dairy, as companies work to stay below thresholds tied to warning labels. Marketing restrictions have also tightened, limiting how products can be promoted, especially to children. In practice, this has gone beyond reformulation, pushing manufacturers to rethink portfolios, prioritise ‘label-friendly’ products and shift innovation towards healthier positioning.

Mexico’s role within LATAM

Across Latin America, demand for packaged food and beverages continues to grow, supported by urbanisation and changing consumption patterns. Brazil remains the largest market, while Colombia and Chile are also growing.

Mexico stands apart because of its integration with the US and its manufacturing base. It functions as both a large domestic market and part of a broader production network.

That dual role makes it particularly relevant for multinational companies. It can support local demand while also serving regional and export strategies.

It also means that broader pressures – cost volatility, regulation and shifting consumer behaviour – tend to appear here early and often simultaneously.

PepsiCo’s investment in Celaya sits within that context. The scale of the project reflects confidence in long-term demand. The structure – focused on domestic sourcing, production capacity and distribution – reflects a more practical response to a complex operating environment.

For the wider food and beverage industry, Mexico remains one of the most compelling markets globally. The opportunities are clear, but so are the constraints. Growth is still there: it’s just being pursued with greater discipline.