VZCZCXYZ0004
PP RUEHWEB

DE RUEHME #4907 2422103
ZNR UUUUU ZZH
P 302103Z AUG 06
FM AMEMBASSY MEXICO
TO SECSTATE WASHDC PRIORITY 2947

UNCLAS MEXICO 004907 
 
SIPDIS 
 
SIPDIS 
 
FOR EB/CBA SMITH-NISSLEY AND WHA/EPSC SALAZAR 
 
E.O. 12958: N/A 
TAGS: AMGT BEXP ECON ELAB ETRD KSEP MX SENV
SUBJECT: COCA COLA MEXICO: DUE DILLIGENCE FOR 2006 AWARD 
FOR CORPORATE EXCELLENCE 
 
REF: STATE 133146 AND PREVIOUS 
 
¶1.  (U) Answers given below pertain to Coca Cola de Mexico's 
candidacy for the Secretary of State's 2006 Award for 
Corporate excellence.  They are keyed to the questions in 
reftel. 
 
(A) The Embassy sees little downside or embarrassment caused 
by the selection of Coca Cola de Mexico for the award. 
Nonetheless, it is well known in Mexico that  President 
Vicente Fox began working for the company as a route 
supervisor in 1964, rising to be Mexican company president 
before leaving the firm in the mid-eighties.  While President 
Fox remains popular among Mexicans, his detractors still 
point to his formative experience with the firm as evidence 
he is too close to big business in general and the United 
States in particular. 
 
(B) According to company officials, Mexico represents 12 
percent of Coca Cola's worldwide sales.  This is larger than 
any of the Company's markets outside of the U.S. and Canada. 
While the Company imports concentrate (syrup) for its drinks 
from its plants all over the world, Coke believes that its 
Mexican operations do account for a significant percentage of 
overhead at the company's Atlanta headquarters. 
 
(C)  Neither Coca Cola's Mexico headquarters, its Mexico City 
concentrate plant, nor any of its bottlers' facilities 
throughout the country are unionized, though Company 
executives underscore that employees are free to bargain 
collectively should they wish.  Coca Cola officials report no 
history of any labor problems at the company or at its 
bottlers.  A press search confirms this. 
 
(D)  The Company and its Mexican bottlers currently have two 
cases pending before Mexico's Federal Competition Commission 
regarding its competitive position in the industry.  Pepsico 
and Pepsi's Mexican bottlers contend that Coca Cola is 
dominant in the soft-drink market (carbonated beverages) and 
abuses its position, while the Company contends that their 
position should be taken relative to the beverage market as a 
whole which includes fruit drinks, waters, milk, and soft 
drinks where it does not hold a dominant position.  The case 
has received relatively little publicity, adverse or 
otherwise.  In November 2005, in a similar case, Coca Cola 
bottlers was accused of using their dominant position to the 
detriment of the Peruvian producers of "Big Cola," as well as 
several small Mexican shopkeepers.  In this case, Coca Cola 
paid a USD 15 million fine.  This case received some press 
play at the time. 
 
(E)  Neither the Chief of Mission, his immediate family, nor 
any others in the mission involved in the nominating process 
holds shares of Coca Cola stock or has any business dealings 
with Coca Cola. 
 
¶2.  (U) Please contact Jonathan Kessler at Embassy Mexico 
with any additional questions: phone 52-55-5080-2810. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
GARZA