Coke boiling over Mexican imitator - East Valley Tribune: Business

Coke boiling over Mexican imitator

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Posted: Sunday, October 3, 2004 7:55 am | Updated: 5:21 pm, Thu Oct 6, 2011.

FORT WORTH, Texas - Few products are as closely associated with the American lifestyle as Coca-Cola.

Yet there appears to be growing demand among U.S. co la connoisseurs for foreign-made Coke, which has real sugar and costs more than the everyday variety made with high-fructose corn syrup.

Unauthorized distribution networks for Mexican-made Coke have sprung up to truck the brown, fizzy soda across the Rio Grande and around the country.

The Coca- Cola Co. in Atlanta says it wants the trafficking in Mexican Coke stopped.

But it has not been able to close numerous leaks — known in the industry as ‘‘transshipments’’ — stemming from the franchised bottlers in Mexico, which are unable or unwilling to police distributors.

And lovers of Mexican Coke, ranging from immigrants to U.S.-born residents, are willing to pay a premium of 25 percent or more for the imported variety. A restaurant will typically charge $1.50 for a 12-ounce bottle, a grocery store from $1.09 to $1.30.

One enterprising retailer, Ifs Ands & Butts of Dallas, ships six-packs nationwide for $10.95 plus $11 freight. That works out to $3.66 for each 12-ounce bottle. In Mexico, the same Cokes retail for about 30 cents apiece.

Reasons vary for the cachet that Mexican Coke has earned.

Some Latinos are nostalgic for the heavy glass, curvy bottles — some containing a halfliter — that they grew up with.

Buyers insist that the Mexican bottler’s use of sugar cane syrup delivers a fuller, sweeter flavor than U.S. Cokes, nearly all made with cheaper highfructose corn syrup. (A limited amount of Kosher-for-Passover Coca-Cola is made with cane sugar for certain U.S. markets during the Jewish holiday, when corn-derived products are forbidden.)

Company spokesman Mart Martin in Atlanta says that Coke around the world varies only in choice of sweetener — high-fructose corn syrup, sugar beet sugar or cane sugar — and that there’s no discernible difference.

The soft drink industry switched from sugar to a 50-50 blend with high-fructose corn syrup in the early 1980s, then shifted gradually to just the corn sweetener, said Richard Adamson, the American Beverage Institute’s vice president of scientific and technical affairs.

Adamson, who has a doctorate degree in pharmacology, said the syrup is preferred because it doesn’t crystallize like sugar, blends easily with the acid in cola and costs one-half to one-third as much.

But buyers of Mexican Coke are convinced that sugar has a superior taste.

‘‘It’s sweeter,’’ said Julia Hoffman, 12, who along with her mother Marie preferred Mexican Coke over Yankee Coke during a blind tasting. ‘‘It has more flavor.’’

Because Mexican Coke is not a counterfeit product, the Coca-Cola Co. cannot request that U.S. Customs stop it at the border. It is a franchise territory matter, one tricky to enforce because third-party traders are not bound by contracts.

The responsibility rests with Mexican bottlers to control distribution within their designated sales area. Mexico’s dominant bottler, Coca Cola Femsa, is 39.6 percent owned by the Atlanta-based Coca Cola Co. But Atlanta won’t say if it has determined the source, or sources, of the Mexican Coke.

Despite the murky legal ground, some very big companies are involved in the graymarket Mexican Coke trade.

Kroger supermarkets in Houston, Central Market in Fort Worth and Safeway stores in Denver offer the imported cola, which they receive from a national wholesaler, Gourmet Award Foods. Gourmet is a unit of Koninklijke Wessanen, a large Dutchbased dairy and cereal maker with annual revenues of $3 billion.

‘‘We’ve been selling Mexican Coke ever since I’ve been here — 10 years,’’ said Linda Richardson, a Gourmet Award customer service representative in Dallas. ‘‘It’s quite popular. In fact, it’s hard to keep enough on hand.’’

Her company buys from an Arlington, Texas, importer, Sanco Marketing, which declined to comment for this article.

Unencumbered by licensing agreements, numerous distributors openly compete, said Raul Escobedo, sales manager of Houston-based Cyclone Enterprise, a Mexican Coke wholesaler for at least 12 years.

The Coca-Cola Co. declined to say what measures it has taken to curb the Mexican Coke underground, which, according to the Philadelphia Inquirer, has spread to New England.

Ifs Ands & Butts owner Hamilton ‘‘Ham’’ Rousseau says he has heard that several California suppliers received cease-and-desist letters from Coke attorneys to close down their Mexican cola operations. He won’t name his own wholesalers, but says he works with several.

For soft drink aficionados like himself, there’s no choice but Mexican Coke, the 59-year-old Rousseau said.

Asked to explain the Latin cola’s merits, Rousseau gets analytical.

‘‘People say Mexican Coke is much sweeter. It just tastes that way. It’s literally in the nose and mouth of the beholder.

‘‘High-fructose corn syrup is actually sweeter but it leaves a film in the mouth,’’ he contends. ‘‘That film automatically diminishes your palate, blocking the sweetness. Sugar cane sucrose is cleaner and crisper. So if you are used to Coke made with corn syrup, the difference is striking.’’

The adman-turned-soda pop retailer says the Coca Cola Co. is missing a big opportunity by not offering shoppers what they want and what they are willing to pay more for.

‘‘If they were smart, they’d get into the value-added market,’’ Rousseau said. ‘‘And it’s a huge market.’’

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