As the world’s largest soft drinks manufacturer faces a consumer boycott in its largest global market, Mexico, its marketers just came up with a cunning plan. But will it work?
For a company whose sales depend so heavily on brand perception, Coca Cola has a serious image problem. In the Middle East, for example, its close ties to and support of Israel appear to be putting a drag on sales in many Arab countries. According to Palestinian activists in Gaza and many BDS activists in the wider Arab world and in some European countries as well, Coke is finally becoming one of its priority targets:
“[T]he BDS movement has always considered Coca-Cola boycottable but has not prioritized it as a target based on its careful and strategic target-selection criteria. This has changed now the local alternatives to Coca-Cola have been gaining market share across the world, including in Palestine, China, Bangladesh, Sweden, Egypt, India, South Africa, Turkey, Lebanon and elsewhere.”
What began as a Palestinian-led boycott movement against companies perceived as supportive of Israel has apparently gained momentum across the region. In the West Bank, the local manufacturers of rival brand of Chat Cola have seen sales soar as shopkeepers “relegate Coke cans to the bottom shelf — or pull them altogether”, reports ABC:
“When people started to boycott, they became aware that Chat existed,” Fahed Arar, general manager of Chat Cola, told The Associated Press from the giant red-painted factory, nestled in the hilly West Bank town of Salfit. “I’m proud to have created a product that matches that of a global company.”
With the “buy local” movement burgeoning during the war, Chat Cola said its sales in the West Bank surged more than 40% last year, compared to 2023.
While the companies said they had no available statistics on their command of the local market due to the difficulties of data collection in wartime, anecdotal evidence suggests Chat Cola is clawing at some of Coca-Cola’s market share.
“Chat used to be a specialty product, but from what we’ve seen, it dominates the market,” said Abdulqader Azeez Hassan, 25, the owner of a supermarket in Salfit that boasts fridges full of the fizzy drinks…
The Coca-Cola Company did not respond to a request for comment.
Whether or not the movement brings lasting consequences, it does reflect an upsurge of political consciousness, said Salah Hussein, head of the Ramallah Chamber of Commerce.
“It’s the first time we’ve ever seen a boycott to this extent,” Hussein said, noting how institutions like the prominent Birzeit University near Ramallah canceled their Coke orders. “After Oct. 7, everything changed. And after Trump, everything will continue to change.”
To meet the rising demand for non-Coke Cola, Chat Cola is looking to expand its operations to other parts of the Middle East, beginning in Jordan. Meanwhile, it was just announced in Scotland that Coca-Cola will no longer be served at the Glasgow Film Theatre after workers at the cinema said they would no longer handle any goods connected to the BDS (Boycott, Divestment and Sanctions) movement, including Coca Cola brands. A statement said:
Following discussions between Unite the Union and the Glasgow Film Theatre, we have come to an agreement to remove Coca-Cola products from the cinema bar, for the duration of the Glasgow Film Festival.
After the festival, the remaining Coca-Cola stock will be used up – as this has already been purchased – before permanently switching to an ethically-sourced alternative. This ensures that no more money will be spent on Coca-Cola.
“Made in Mexico”
The Coca Cola company is also facing a gathering consumer backlash on the other side of the Atlantic, albeit for wildly different reasons, including in one of its most important global markets, Mexico. According to a 2022 study from the University of Yale, Mexico is the leading consumer of soft drinks in the world with an average consumption of 163 litres per person per year — 40% more than the US in second place, with 118 litres. But that market could be at risk.
In early February, rumours began circulating that Coca Cola had fired Latino workers in Texas and reported them to US Immigration and Customs Enforcement (ICE). The allegations, which the company has denied, spread rapidly on TikTok, spawning a movement called the “Latino Freeze” that, among other things, urges consumers to stop purchasing Coca-Cola products and support Latino-owned businesses instead.
The Latin Freeze movement is a US nationwide spending boycott, specifically targeting companies that have rolled back their policies on diversity, equity and inclusion (DEI) as the Trump administration has ramped up its deportations. When Trump began threatening Canada, Mexico and Europe with tariffs on US imports of their products, consumer boycotts of US products began spreading far beyond US borders.
These boycotts are already having a notable effect on some US products. For example, sales of Teslas are down sharply in some European countries including France and Sweden. In a recent poll, 78% of Swedes said they were willing to boycott US products.
In mid-February, as Trump’s threats of 25% tariffs hung over Mexico’s economy like a sword of Damocles, Mexico’s Ministry of Economy decided to relaunch the famous “Made in Mexico” label, with the aim of promoting and giving greater recognition to the products that are made in the country. The “Hecho en México” seal, in addition to shining a light on national manufacturers, seeks to raise public awareness about the importance of strengthening the local value chain and supporting companies that generate jobs and development opportunities in each region.
However, it’s not just local companies that are blazoning the above stamp on their products. So, too, are US multinationals, including Coca Cola and Walmart, which is by far the largest retail chain in Mexico after spending decades buying up most of the local competition. The grocery giant was recently fined by Mexico’s competition authorities a risible $4.3 million for “alleged” alleged anti-competitive practices involving suppliers. The agency that issued the fine, known as the Federal Competition Commission, cited concerns about “a relative monopolistic practice.”
Like Walmart, Coca Cola may not be Mexican by origin but its suite of products that are consumed in Mexico are certainly made there — using, of course, huge volumes of Mexico’s scarce fresh water supplies at bargain basement prices, as Kurt Hackbarth reported in his article, Multinational Corporations Are Sucking Mexico Dry. Any product that is manufactured or assembled in Mexico, and has quality and excellence standards that enhance the identity and reputation of the origin of its raw materials, can use the “Hecho en México” seal
The Mexican Coca-Cola Industry (IMCC), consisting of 11 companies including FEMSA, which operates the largest independent Coca-Cola bottling group in the world and the largest convenience store chain in Mexico, has 73 bottling plants, 350 distribution centres and more than 13,000 delivery routes, with which it serves its millions of highly addicted customers. It directly employs more than 100,000 people and claims to generate more than 1.6 million jobs indirectly. FEMSA alone directly and indirectly employs 300,000 people.
So large is Coca Cola’s economic footprint in Mexico that some legacy media articles have even begun warning about the potential economic blowback of the boycotts. On social media, the company reaffirmed its commitment to the Latino and Mexican community:
- “Since we were born in Mexico with our first bottling plant in 1926, we have been and are part of every Mexican family.”
- “Our products are produced locally by local hands and hearts. Buying a Coca-Cola product in Mexico directly supports local economies and jobs.”
- “We are proud to support hundreds of thousands of Mexicans, shopkeepers, farmers and retailers.”
What Coca Cola doesn’t mention is that its bottling subsidiary FEMSA, like Walmart’s Mexico unit, essentially refused to pay any of the corporate taxes it owed in Mexico for more than 30 years. They were apparently able to get away with this because the governments prior to that of Andrés Manel López Obrador (2018-24) had essentially no desire to collect taxes from certain companies, as Raquel Buenrostro, who headed the SAT tax authority under AMLO, told El País:
“Some businessmen were surprised to be summoned [to the tax office] because they had never had to pay the taxes. They told me that every three years they would simply waive the unpaid taxes.”
That all changed when Buenrostro took over as the head of Mexico’s SAT tax authority in 2019 and began pro-actively pressuring multinational companies to finally settle their tax bill.
“When we spoke to Walmart the first time, they said, ‘look, as we’re nice guys (buena onda) we’re going to give you $30 million,” Buenrostro recently recalled in an interview. “I told them it’s not a question of what you give us, it’s what you owe us. There was a serious battle with Walmart, which at one point said: I prefer to litigate for 30 years than pay taxes.”
It was only when Buenrostro threatened to hold the companies and their executives criminally responsible for their tax avoidance policies that they finally agreed to cough up. Years-long and in some cases decades-long legal claims were resolved in a matter of days. But not everybody was happy with the new set-up. The American Bar Association lambasted the Mexican government for using heavy handed tactics. Four ambassadors, from the US, Canada, Japan and France, paid Buenrostro a visit, all in the hoping of convincing her to back off a little, to no avail.
Now, with its strategy of joining the “made in Mexico” bandwagon, the Mexican Coca-Cola Industry (IMCC) seeks to reinforce the brand’s identity in the country and strengthen the bond with its consumers. However, its success will depend on the public perception of the political and social context facing the Coca-Cola Company globally.
As we’ve seen in recent months, that will not be entirely in the hands of Coca Cola’s execs and marketing specialists. Nor will it solely depend on how much anti-US fervour and economic nationalism Trump is able to whip up through his tariff tantrums and other threats, including in the case of Mexico the overhanging threat of military attacks. It will also depend on how public perception and government regulations evolve as the number of people dying from diabetes and other diseases caused by over-consumption of sugary drinks inevitably increases.
As we are already seeing in the US, the costs of this mushrooming health crisis are becoming almost unbearable — hence, the broad public support behind the overarching goals, if not perhaps the execution, of Robert F Kennedy’s Make America Healthy Again (MAHA) program.
Mexico, if anything, faces an even worse crisis down the road, since its government has a fraction of the financial resources at its disposal. The country already boasts the highest levels of new cases of diabetes in the world — hardly a surprise given it boasts the highest levels of soft drink consumption. According to recent research published in Nature Medicine, nearly one third of all new diabetes cases in Mexico were linked to sugary drinks. In the case of Colombia, they are responsible for almost half of all new cases.
The Epicentre of the Soft Drink Epidemic
In Mexico, obesity reached epidemic proportions after it joined NAFTA with the United States and Canada in the early 1990s, making processed food more easily available. As the New York Times reported in a 2017 investigation, the commercial opening of North America turbocharged the growth of convenience stores and US-owned fast food restaurants on Mexican soil. In addition, trade liberalisation allowed “cheap corn, meat, high-fructose corn syrup, and processed foods” from the United States to flood into Mexico.
Incredibly, there is one state in Mexico that consumes Coca Cola in per-capita volumes five times higher than the national average and 32 times higher than the global average: Chiapas, Mexico’s poorest state. In many places, lack of access to drinking water and the relative cheapness of sugary drinks has left many people with few options.
“It is the epicentre of the epidemic of soft drink consumption,” Dr. Marcos Arana, a researcher at the Salvador Zubirán National Institute of Medical Sciences and Nutrition, told BBC Mundo:
Soft drinks are already an essential part of daily life in this state, especially in the Los Altos region of Chiapas, where the majority of its population is indigenous and rural…
“The availability and advertising of something so cheap is so great and omnipresent in Chiapas in the face of vulnerable populations that they have created an addiction that is seen as a necessity,” Arana says.
“Residents told me that before the road to Tenejapa arrived, there was no diabetes or cardiovascular problems there. That all began when the road arrived in town and the soft drinks, the chips…”, says Jaime Page Pliego, anthropologist and co-author of the study.
Local organizations such as the Centre for Training in Ecology and Health for Peasants (CCESC), which Arana directs, point to the “aggressive” commercial practices of soft drink companies and the easy accessibility of their products in the area as the main drivers of this excessive consumption.
“Coca-Cola is the most available product in Los Altos, you have to walk the farther to buy tortillas or anything else. The number of points of sale is excessive, without any control, and with prices reduced by up to 30%,” says Arana.
Meanwhile, the price of bottled water, of which Mexico is the world’s largest consumer*, is generally much higher. These kinds of conditions are replicated throughout the so-called Global South. Dariush Mozaffarian, one of the authors of the paper recently published in Nature Medicine and director of Tuft’s Food is Medicine Institute, said:
“Sugar-sweetened beverages are heavily marketed and sold in low- and middle-income nations. Not only are these communities consuming harmful products, but they are also often less well equipped to deal with the long-term health consequences.”
To try to mitigate the impact Mexico’s government recently launched the “Vida Saludable” (Healthy Life) program to try to improve the nutrition and overall health of Mexican school children. The program has four main pillars: prevent the sale of ultra-processed food and sugary drinks in school settings; promote the consumption of natural drinking water through the provision of water fountains; train educators in healthy nutrition; and promote sports and physical activity.
However, as we noted at the time of its launch, implementing the program, which will become mandatory for all state schools at all levels of the national education system on March 29, is likely to be very difficult:
At most of Mexico’s 255,000 public schools, free drinking water is not available to students. Since 2020, only 4% of them have managed to install drinking fountains. There are also doubts about how the government will enforce the ban on the pavements outside schools, where vendors set up stalls of goods to sell to kids at breaktime. This being Mexico, one can expect a lively black market in comida chattara to spring up in many schools. Enterprising students will no doubt get rich.
“Vida Saludable” is not the first step Mexico’s government has taken to try to improve Mexicans’ food habits. In October 2020, at the height of the COVID-19 pandemic, the AMLO government passed one of the strictest food labelling laws on the planet. From that date, all soft drinks cans and bottles, bags of chips and other processed food packages must bear black octagonal labels warning of “EXCESS SUGAR”, “EXCESS CALORIES”, “EXCESS SODIUM” or “EXCESS TRANS FATS” — all in big bold letters that are impossible to miss.
Today, more than half of Mexican food and beverage products have a nutritional warning label — more than any other country in Latin America. The government also banned cartoon food packaging aimed at children. Big Food lobbies tried to block both of these measures, of course.
The Interamerican Association for the Protection of Intellectual Property and the Mexican Association for the Protection of Intellectual Property complained that food labelling was unconstitutional and violated the provisions that Mexico had signed at the international level such as the North American Free Trade Agreement — a tactic that has apparently been used in other jurisdictions where food labelling laws have been passed.
For almost four years the lawsuits dragged on. Of the more than 100 injunctions filed by companies like Coca-Cola Femsa, PepsiCo, Group Bimbo, Hershey’s, Santa Clara, Herdez, Alimentos del Fuerte, Nutrisa and McCormick, three reached the second chamber of the Supreme Court of Justice of the Nation (SCJN), which, to its credit, ruled – by unanimous vote – that front-of-pack labelling for food and non-alcoholic beverages is a valid measure that protects people’s health and consumers’ right to information.
Local communities could also begin taking independent action. Last month, for example, the local government of a village called Cantinela, in the state of Hidalgo, imposed a ban on the sale and purchase of Coca-Cola and Corona beer brand products. As reported by the community delegation, those who failed to comply with this provision would face economic sanctions that could reach as high as five thousand pesos (around $250). According to the announcement, posted on notices around the village, both merchants and consumers who participate in the marketing or acquisition of these beverages will be subject to fines.
The motives behind the ban are unclear though some commenters have linked it to the consumer boycott against US products. It’s also quite possible that the community delegate has struck a commercial agreement with another soft drink brand, which in exchange for the exclusion of Coca-Cola and Grupo Modelo products, would offer support to the community through social or economic programs. According to Infobae, some residents have expressed support for the decision, citing the harmful health effects of soft drinks such as Coca-Cola.
Whatever the reason for the ban, one thing is clear: the prospect of a consumer boycott taking root in Mexico and other parts of Latin America will be prompting lots of, if you’ll excuse the pun, teeth gnashing at Coca Cola headquarters. As Newsweek reported last month, “Latinos make up a significant portion of Coca-Cola’s consumer base, particularly in the US and Latin America, where the company has over 530 million customers. If the boycott continues gaining traction, it could lead to a notable financial impact.”
