The food service industry in Mexico consists primarily of numerous small independent companies with fewer than 31 employees. According to the Ministry of Economy, there are 30,000 Mexican companies specializing in food product manufacturing. Of these, only 8% are large or medium-sized companies. The fragmented nature of the food service market creates significant revenue opportunities for large consolidators such as Nascent Wine Company Inc.
Rising living standards, demographic changes, and the increasing presence of US-style supermarkets in the major cities have caused structural changes of the Mexico’s food and drink industries. The supply of food products in the Mexican market, which grew annually by 7-8% during the last five years, is a combination of local production and imports. The food industry experienced the highest import growth during that period enhanced by the growing number of imported food products into Mexico. By the end of 2007, the total food, beverage and tobacco imports to Mexico grew by 22% when compared to 2006. Over the last five years, the country’s food imports have increased by 16% which is quite significant taking into consideration an average GDP growth rate of nearly 4% annually. Traditionally, the US represented the largest proportion of Mexican food imports, accounting for 75% of total.
Nascent Wine Company, Inc. (OTCBB: NCTW) has become an important industry figure in a relatively short period of time. During 2007, Nascent acquired three large distributors of food and beverage products and announced other pending acquisitions. The Company holds exclusive distribution agreements with major food and beverage industry leaders such as Atlantic International Products, Miller Beer Company, Avasoft Ice cream, Reed Beverages and others. Along with the recent acquisitions and the growing Mexican food and beverage market, NCTW increased its revenues and market share. The last reporting quarter of 2007 showed a 50% sequential increase in revenues and gave the Company a strong platform to reach its pro-forma revenue target of $96 million.
In addition to the optimistic market outlook and the successfully integration of acquired companies, Nascent is also taking steps to optimize its internal processes and operating costs. Recently, NCTW unveiled its proprietary software that aims to provide a complete field management system that will optimize the processes and the workload within the Company. The development of this software opened up the opportunity to establish a partnership with 20th Century Fox by which Nascent will assist the latter in Mexico by providing route management technology and promotional services.
By opening distribution centers and acquiring Mexican leading food distributors, Nascent has become the only nationwide distribution system of food and beverage products in Mexico. The future acquisitions along with the growth of the Mexican food service industry will help NCTW to increase its market share and revenue potential.
About Nascent Wine Company, INC. (OTCBB: NCTW)
Nascent Wine Co, Inc. (DBA Nascent Foodservice) is the only nationwide distributor of imported products in Mexico, marketing and distributing over 2,000 national and proprietary brand food and non-food products. Nascent Foodservice also has the exclusive right to distribute Miller Beer in Baja California, Mexico. In addition, Nascent sells select products from Nestle, Haagen-Dazs, General Mills, Ferrarelle Water, Cora Italian Food Products, Bonafont Water, Avasoft Ice Cream, Mitsuki Asian products, Bonet European products, Kabbalah Energy Drink, and Jolly Rancher Soda. Nascent is focused on acquiring the most profitable and well positioned distributors in Mexico with the best food and beverage portfolios in the country. Nascent is currently servicing over 240,000 sales points including supermarkets, convenience stores and foodservice accounts like Wal-Mart, Costco, Soriana, Comercial Mexicana, AM/PM, 7-ELEVEN, OXXO and many more.
Disclosure: Beacon Equity Research has been compensated a total of ten thousand five hundred dollars directly from Nascent Wine Company for enrollment of NCTW in its research program.