Coke’s sales tactics have paid off in Mexico, however, raking in profits for its Mexican anchor bottler, Coca-Cola FEMSA, and its parent company, FEMSA. The latter company is a member of the Forbes International 500 list, with a value of nearly $6 billion. The company’s profits tripled in the past decade following the acquisition of several smaller bottlers, including Venezuela-based Panamerican Beverages (Panamco). Between 2002 and 2007, FEMSA’s stock price tripled, from $35 to more than $115 a share. Much of that wealth found its way to Atlanta—since in addition to making money on syrup sales, the Coca-Cola Company owns more than a 30 percent stake in Coca-Cola FEMSA.
The increase in Coke sales was felt directly in Chiapas, where the first crates of Coca-Cola were brought up to Chamula by horse in the early 1960s. At first, the growth of Coke in the region coincided with a welcome decrease in the consumption of homemade alcoholic beverages. Years ago, says City University of New York anthropologist June Nash, the men and boys of the highland villages drank copious amounts of pox—the homemade sugarcane rum seen in the Chamula church. In part, the drinking was pushed by the village elders, called caciques—local political bosses who tightly controlled pox production and profited from its sale.
When Nash lived in the nearby village of Amatenango in the 1960s, boys and men drank pox daily in both religious and civil ceremonies, holding competitions to see who could drink the most. Not surprisingly, the practice led to rampant alcoholism with serious health and social problems. “There are problems with Coca-Cola, but nothing compared with the alcoholism, which was debilitating in every way,” says Nash. Some peasants even converted to Protestantism to exempt themselves from having to drink so much. Fearing they were losing control, the caciques turned to a new drink that was just then beginning to penetrate the market: Coca-Cola.
In many communities, the same caciques who monopolized production of pox retained the concessions to Coke and later Pepsi. In some, such as Amatenango, concessions were granted politically, with officials of the Institutional Revolutionary Party (PRI) controlling Coke and the Party of the Democratic Revolution (PRD) controlling Pepsi. It was easy enough to substitute the new drinks for many of the same rituals that previously used pox (though in some cases, such as the church in Chamula, pox is still maintained in limited quantities). Those owning the concessions of the soft drinks became rich, reaping huge profits in villages with little other commerce or industry, and passing the concessions along to family members to create dynasties. Before long, however, the increasing consumption of soft drinks brought its own problems—tooth decay, diabetes, and obesity. “Ugh, they drink a lot of soft drinks, they really push it,” says Nash. “They never used to have decayed teeth before, and you can really see it now.”
In an interview with American anthropologist Laura Jordan, the current owner of the concession to distribute Coca-Cola in Chamula and the surrounding area, Carlos López Gómez, enthused about the popularity of soft drinks for the local people. “[It is] part of daily life,” he said. “Like drinking water—every day. Instead of water, they learn to want soda. They want Coca-Cola.”5 A Chamula city councillor for the minority party, the PRD, elaborates further. “Indigenous people, the number-one thing they consume is Coca-Cola, and the number two thing is Pepsi,” says Cristóbal López Pérez. So nervous was he about speaking about the beverage, he insisted on arranging the interview in the back room of a local human rights organization. Sitting at a cramped table wearing a cowboy hat and zip-up cardigan over a collared shirt, he paints a picture of cradle-to-grave consumption of which U.S. marketers could only dream.
“When a child is born, they give soda. When a woman is married, they give soda. When someone dies, they give soda,” he says. The amount is directly related to the wealth of the family, ranging from three or four boxes up to one hundred depending on the occasion. No event, however, matches election time, when all candidates buy astounding amounts of Coke for their supporters. For López’s council election, he bought five trailers, each with 180 boxes, totaling more than 20,000 bottles for just one candidate. On election day, he says, people bring straps to the polling booth to cart home the expected case of soda. “Whoever gives Coca-Cola has more of a possibility of winning,” he says. “If you give another kind of soda, it’s not as good.”
No one is obligated to buy soda, says López, but not buying it is the easiest way to acquire social stigma in the village. Families who serve the locally made corn beverage pozol at parties are looked down upon. “People say, ‘They shouldn’t have invited me. I can make that at home.’” López is one of the few people in the village who is critical of all of the soda consumption, which he blames for the poor health of the community. “There are many headaches, people have gastritis, they have sugar in the blood [diabetes],” he says. “We are just beginning to realize that this is not nourishing for our bodies, that it is making us sick.” Asked if he’s tried to broach the subject with his neighbors, he sighs. “It is not possible to change people today or tomorrow. I don’t know when this is going to end. To change the mentality of people is very difficult.”
Health problems in the villages of Chiapas have been exacerbated by recent changes in patterns of physical activities by the peasant population. As mining and oil interests have taken up arable land, men from the villages have increasingly gone to the United States to find work, leaving behind women and children to live a more sedentary lifestyle—using their money transfers from America to buy more junk food. Local indigenous health coalition COMPITCH has done surveys of communities in the highlands and jungles of Chiapas, finding that problems with obesity and diabetes are greater in communities closer to the roadways plied by delivery trucks for Coca-Cola and other processed foods. “We can’t blame Coca-Cola,” says the group’s Juan Ignacio Dominguez, “but we can situate Coca-Cola as a detonating component. When we put together all these social factors, Coca-Cola is the last drip that makes the cup overflow.” He shakes his head. “There is something that makes Coca-Cola really formidable for us. Maybe it has to do with the sugar,” he says, laughing. “We are a very sweet culture.”
In fact, he may not be far off. Research by the Chiapas-based medical NGO Defensoría del Derecho a la Salud (Health Rights Defense) has found the taste for sugar is established at a very early age, with most women in indigenous villages serving their children soft drinks even below the age of three. “These three years in many ways define the future of the child, and it is when malnutrition and diabetes can be prevented,” says the group’s director, Dr. Marcos Arana. “If babies are exposed to a high intake of sugar, they will be conditioned to depend on sugar for the rest of their lives.” While breast-feeding is still the norm for younger children, says Arana, there are still instances of mothers putting Coca-Cola into baby bottles.
Anecdotally, Arana says he has seen a steady increase in obesity and diabetes in the communities he serves. Official evidence, however, is hard to come by. While government statistics show Chiapas has the highest rates of obesity in the country, for example, it has one of the lowest rates of diabetes, which Arana says is due to an underdiagnosis of the disease. Compounding the problem is the lack of safe drinking water at homes and schools in highland communities. “The teachers know this and sometimes they are convinced by Coca-Cola to promote the consumption of soda in schools among the children,” says Arana. As in the United States, many schools still have exclusivity contracts with Coke or Pepsi—and despite phasing out sugary beverages in schools in the United States, they are still frequently sold here. “They do in other countries what they would not do in the United States,” sighs Arana, a statement that represents a lot about Coke’s strategy around the world. Because the company’s franchise bottlers aren’t directly owned by the company, they don’t have to live up to the same standards.
In addition to contracts in schools, Coke also drives up soda sales by selling beverages for a cheaper price in indigenous communities. In the city of San Cristóbal de Las Casas, for instan
ce, a liter of Coke sells for 10 pesos (about 90 cents), while just up the mountain in Chamula it is sold for half that. In the same shops, a 1.5-liter bottle of Coke’s water brand Ciel costs 10 pesos, making Coke actually cheaper than its main ingredient. The most logical explanation for the difference is that the company is hoping that the taste for sugar will result in more sales over time.
Arana is part of a group of doctors who pushed for a soda tax to curb consumption nationwide. In 2002, in fact, the country imposed a 20 cent tax on all soft drinks made with high-fructose corn syrup, affecting Coke and Pepsi but not local sodas made with sugar from sugarcane. (The rumor persists that Coke in Mexico is made completely with natural cane sugar, which the Coca-Cola Company does nothing to dispel. However, that hasn’t been the case for a decade, since the North American Free Trade Agreement flooded the market with cheap corn, and Mexican bottlers began using cheaper HFCS. In past years, Coca-Cola FEMSA has used up to 60 percent HFCS in Mexican Coke. By 2009, that ratio was down to 30 percent, but with plans to raise it because of an increase in sugar prices.)
When the tax was passed, however, the United States promptly filed a dispute on Coke’s behalf in the World Trade Organization (WTO), arguing it was discriminatory against American products. The WTO ruled in the favor of the United States in 2005 and again in 2007, after which Mexico repealed the tax. An effort by Mexican president Felipe Calderón to impose a 5 cent tax on all soft drinks failed in the legislature, amid heavy lobbying from soft drink companies. Arana is hopeful that in the future another tax might succeed—or if not, then at least the government might be able to pass a law outlawing the selling of soft drinks at different prices, or prohibiting exclusive school beverage contracts.
The health issues surrounding soft drinks, however, are not the only issues here that have led to a backlash against the company. Down the mountain from Chamula and the highland villages, residents of the city of San Cristóbal have raised questions about how the company produces the drinks themselves.
Geckos scamper underfoot during the steep climb up Huitepec, a dormant volcano on the outskirts of San Cristóbal de Las Casas. The path weaves its way through a forest of ancient-seeming oak trees, all twisted trunks and gnarly burrs with moss and vines clinging to their sides. It’s easy to see why the mountain holds a special place in the folklore of the indigenous Maya, many of whom still believe the spirit of the place watches over them. Unlike the dry, piney hills around, Huitepec is lush and green, supporting not only white oaks but also a fragmentary cloud forest with an array of wildlife, including more than one hundred species of birds, squirrels, deer, and coyote.
The largest mountain in the hills encircling San Cris (as the municipality is known), Huitepec collects water from the rains that blow through the valley, then percolates the water through the volcanic soil and limestone into a huge underground aquifer that serves as the major municipal water source. The apparent abundance, however, is an illusion—hiding a chronic shortage of water that plagues the surrounding communities. “During the dry season there is huge water scarcity here,” says Erin Araujo, an American graduate student who has studied the water table, pausing for breath in a clearing near the top of the mountain. “Most people get their water only from the municipal water supply, and during the dry season all of the rain that replenishes the aquifer has dried up.” At those times, residents of San Cristóbal are rationed—some limited to only a few hours of water a day in outlying communities, even as residents in the city center are allowed twenty-four-hour, seven-day access.
Even more egregious to some residents is the presence of a Coca-Cola bottling plant on the other side of the mountain, which always seems to have enough water for its beverages. Coke’s presence at the foot of Huitepec dates back to the late 1980s, when it first established a bodega here. Soon Coca-Cola FEMSA moved its bottling operations to San Cristóbal from the state capital, Tuxtla Gutiérrez, to take advantage of the more abundant water supply there. By 1994, the plant was churning out five thousand cases a day, ramping up production year after year. By 2004, it had doubled that to ten thousand cases a day, serving not only the entire state of Chiapas, but also part of the neighboring state of Tabasco. By 2008, it was serving part of Oaxaca as well.
According to government statistics, the company has the right to extract up to 500 million liters a year from the aquifer—an amount translating to 1.37 million liters a day. Coca-Cola FEMSA denied a request for an interview, asking that questions be transmitted through the Coca-Cola Company, which in turn directed them back to Coca-Cola FEMSA. A company spokesperson, however, defended the company’s water usage to Laura Jordan, an American anthropologist who wrote her thesis on Coke and corporate social responsibility in the Highlands in 2008. The plant’s human resources director, Graciela Flores, told Jordan the company takes no more than 2 percent of the total water consumed by “all of San Cristóbal”—at the same time providing a number of well-paying jobs to the community.
Those who live in the vicinity of the plant, however, see things differently. On the other side of the mountain, the Coke plant squats in a massive gray installation beneath Huitepec’s bulk. On the rutted dirt road behind it, an elderly woman named María de la Asunción Gómez Carpio sells fried snacks to school kids. “The water here used to be very abundant, but all of the springs here dried up since the plant came here twenty years ago,” she says. Now she says residents in her neighborhood, which sits on one of the richest aquifers in Mexico, get water brought in by tanker trucks called pipas—pipes—at the cost of $240 pesos ($22) a month.
Asked about employment the company provides to locals, she laughs. “No, they don’t give employment to people with low education; you have to be educated to work there.” Meanwhile, she says, the company has refused requests for assistance in repairing the road behind the plant. “They provide no benefit. On the contrary, they take from us.” The story is repeated by several other residents in the vicinity of the plant, including Rosa María Reazola Estevané, who lives in a nice house at the top of the hill. “There used to be a lot of water,” she says. “Now there is a scarcity. They are not paying anything, and they are just taking our water away. I am really pissed off about it. I want them to leave.”
From the looks of things, the company isn’t just taking—it’s also leaving a foul-smelling stream that flows from one side of the plant. In the central Mexican state of Tlaxcala, the outspoken mayor of the town of Apizaco, Reyes Rúiz, accused Coke of polluting the land with a milky effluent that killed trees in a river a short way from the plant. In addition, as in San Cristóbal, he has accused Coke of decreasing the local aquifer and drying up farmland. FEMSA has denied the charges, pointing out that it stays within the 450 million gallons allowed by the National Water Commission, and that the plant accounts for less than 1 percent of the total water usage in the region. “We comply with the law,” Marco Antonio Dehesa, project engineer with Coca-Cola FEMSA, repeatedly told researchers with the American nonprofit Grassroots International.
For all of the water that it takes from communities such as Apizaco and San Cristóbal, however, Coca-Cola FEMSA pays them nothing for the privilege. That’s because the company has negotiated contracts for the water extraction directly with the federal government in Mexico City, thanks to a law passed with the help of a former Coke executive who happened to be Mexico’s president. Whatever influence Coke has had with U.S. presidents from Eisenhower to Carter, Coke FEMSA surpassed it in the unprecedented access to the halls of power it had through former Mexican president Vicente Fox. Back in the 1970s, Fox was director general of Coca-Cola Mexico, a division of the Coca-Cola Export Corporation that is fully owned by the Coca-Cola Company; during his tenure, he boosted Coke’s sales to topple Pepsi as the nation’s best-selling soft drink.
“Working at Coca-Cola was my second university education,” Fox told The New York Times in 1999. “I learned strategy, marketing, financial management, optimization of resources. I learned not to accept anyt
hing but winning.” Nicknamed “The Coca-Cola Kid” during his campaign, Fox used focus groups and heavy television advertising he learned from his Coke days to win. He also drew heavily upon his former Coke connections, including hiring a former Coke executive as his finance director who raised millions from Coke bottlers and other businesses to put him on top. After he became president in 2000, Fox had no compunction about helping out his former employer. He appointed another former Coke director general, Cristóbal Jaime Jáquez, national water commissioner; together, they pushed privatization of much of the country’s water network and sold extraction rights directly to big agribusiness and other corporations.
Coca-Cola FEMSA, the anchor bottler in Mexico and the owner of the Chiapas plant, was one of the big winners of the new policy, according to an investigative news report in 2003. In all, FEMSA negotiated twenty-seven concessions to extract water from aquifers and rivers, along with another eight concessions to dump waste in public waters. For all of these, it paid a reported $29,000 in U.S. dollars—a pittance compared with its $650 million in annual profits. According to San Cristóbal’s former right-wing mayor, Victoria Olvera, the company has continued to pay next to nothing for the community’s water, with an outlay of only 1.75 million pesos ($150,000) annually—or as little as three-hundredths of a cent per liter—to the federal government. “Nothing for the municipality. Nothing,” Olvera told anthropologist Jordan. “They say, ‘We generate employment. ’ But there is not as much employment as the damage they cause us, and they could be doing us so much good if they could pay that tax.”
Even more than its effect on health of the local community, resentment over water use has turned many in the environs of San Cristóbal against the company, making it a symbol of greed in an environment already hostile to American capitalism. Like France in the 1950s, Chiapas has become deeply distrustful of the motives of American corporations. After all, it’s the home of the most famous revolution in the last twenty years.
The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink Page 18