Mexico's dairy sector is diverse. Regional differences in production systems and seasonality, processing technology and infrastructure, and consumer preferences and purchasing power imply a strong need for spatial disaggregation in analysis of the country's dairy industry. This bulletin summarizes the characteristics of milk production, dairy processing, consumer demand, and trade in dairy products in Mexico as of 1994. Expenditure elasticities for eight dairy products estimated from household expenditure surveys indicate the potential for future growth in dairy product demand. A dairy components balance for Mexico in 1992 indicates significant discrepancies in aggregate dairy production, consumption, and trade data. Future studies of the Mexico's dairy industry could benefit from more reliable and comprehensive data on milk production and composition, dairy product consumption, costs in the marketing chain, and the responsivness of producer and consumer decisions to prices.