Price Check On Smuggled Coke

Michael Tyler, Staff Reporter

Michael_Tyler@csumb.edu

May 1, 2008

Arguably the best-known trademark on

the planet, Coca-Cola is the most popular

and best-selling soft drink in history. The

Coca-Cola Company offers 450 products

in over 200 countries worldwide, yet in

the U.S. it does not offer classic Coca-Cola

made with sugar. This modern prohibition

has created a unique market niche as

smugglers from Mexico are smuggling

Coke with sugar into the U.S. and selling

it as “the Real Thing.”

Coke headquarters state this practice is not

illegal and maintains that “some products

are approved for import and some are not.”

Coca-Cola products bottled and distributed

in Mexico still use the 1916 “Classic”

formula sweetened with cane sugar. This

1916 recipe was used in the U.S. until 1985

when bottlers chose to use high-fructose corn

syrup (HFCS) as its sweetener. Coca-Cola

headquarters in Atlanta, GA allows each U.S.

bottler to decide whether or not to use HFCS,

cane sugar, or a combination of the two in

Coke products. Since HFCS is cheaper than

cane sugar, U.S. bottlers prefer it and only

make a cane sugar version in the visit for

Kosher consumption during Passover.

For years Mexican-American markets and

restaurants have been importing Mexican

Coca-Cola for sale in their businesses.

Recently the general public has discovered

Mexican Coke and now the demand is so

great that smugglers are driving truckloads of

unendorsed Mexican Coke across the border.

A Coca-Cola consumer affairs representative

named Stephen said that in September of

2005 a pilot program began to directly import

Mexican Coke to markets in Texas, New

Mexico, California and Nevada.

“The approved 12 ounce glass bottles of

Mexican Coke are marked ‘No Retornable,’”

said Stephen, noting that the bootlegged

products say “Retornable” since those

bottles are “return for deposit” in Mexico.

Naty Guzman, store manager at El

Rancho Market in Marina said, “The

distributor that brings our other authentic

Mexican products also brings the Coca-

Cola.” Amongst the Herdez Menudo and

Jarritos soda are dozens of Coca-Cola

bottles marked “No Retornable,” which are

approved for U.S. distribution. However,

in La Superior Mercado, shelves full of

Mexican Coke contain products marked

“Retornable.” These bootlegged sodas sell

for a $1.25 per bottle, the same as bottles

approved by Coca-Cola. Larger corporate

markets such as Wal-Mart, Albertsons, and

Costco are importing Mexican Coke, and if

the general public develops a taste for this

Mexican “Classic” then supply and demand

could increase even further. Sacha Monpere,

a representative of Coca-Cola Enterprises in

Oakland, said “we are the largest bottler

in the U.S. and we are importing Mexican

Coke for our customers.”

The bottling industry knows hot market

trends, and they know how this translates into

brand loyalty. “The beverage industry has

conducted extensive research regarding brand

preference” said CSUMB Vice President of

Finance Jim Main, who negotiated an $11

million beverage contract with Pepsi while

at the University of Nebraska.

“Research indicates if individuals drink

a particular brand for 4 or 5 years, then

75 percent of them will become loyal to

that brand for life,” said Main. “The soda

industry targets college students because

they’re at universities for 4 years and

will likely develop brand loyalty with the

product they find on campus,” Main said.

In a form of reverse globalization,

Mexican Coke may become a staple

in smaller U.S. markets. And due to

increasing health concerns over HFCS and

its connections to obesity and diabetes,

demand for Coca-Cola products made with

cane sugar may continue to increase. The

Coca-Cola company says it is “committed

to provide choices for consumer’s changing

tastes and needs.” For now refreshment

from Mexico via bootlegged Coca-Cola is

providing “the Real Thing.”