Coca-Cola in Mexico: A State and a Multinational

Globalisation made the world shrink as the distance (both geographic and cultural) between people is decreasing due to the development of technology. Multinationals serve as one of the instruments of globalisation as they often shape the economic, social, and political landscape of countries to a certain or significant extent (Cohen 238). For instance, multinational companies invest in the development of the infrastructure to improve their supply chains (Cohen 238). Countries benefit from this kind of investment, especially when the government has a strong position on the matter and focuses on the needs of the community rather than the multinational’s profit. Large corporations operating in different regions bring numerous standards related to product quality, corporate culture, and technology, which has a positive impact on countries and their economies. Adverse effects on states are also apparent because some companies try to lobby initiatives and policies depending on their business interests (Gómez 524). The case of Coca-Cola’s operations in Mexico can be an illustration of these multiple influences of a multinational on a country.

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The role multinationals play in forming or shaping states’ economic or political vectors has been in researchers’ lenses for decades. Many researchers emphasise that these organisations deprive governments of their authority over markets in order to achieve larger market shares and increased profits (Cohen 235). Companies bring in standards and principles that are accepted in certain countries or internationally to new territories that have to adjust their political landscape to the novelties. These are positive changes that can result in the development of communities and the entire country.

Other voices concerning the relationships between states and multinational corporations are also heard in academia and become rather widespread. It is argued that the neoliberal approach to the economy makes governments adopt (at least, a part of the) rules of a free market. In this situation, countries give away their role as an exclusive regulator and become one of the forces affecting economic development (Cohen 236). This process is seen as an evolution of views regarding business and regulation. The market is the central force, while governments try to minimise the negative consequences of different business processes on people’s well-being by introducing policies aimed at assisting diverse groups. Therefore, the participation of multinationals remains controlled by the government if major principles or national interests are violated.

Prior to the analysing the relationship between the country and the multinational company, it is necessary to consider a historical background behind the popularity of the brand. The beverage entered the Mexican market in the twentieth century, but its popularity increased considerably in the 1970s (Tyler). In the early 1970s, the company started a wide-scale promotional campaign and sponsored the Olympics, as well as the World Cup, that took place in Mexico (Tyler). It began gaining popularity since then and winning the largest share in the Mexican market. Coca-Cola became a part of the Mexican culture, which could be manifested in quite unexpected forms. One of the examples to illustrate this trend is the so-called “Coca-Cola Church” where this beverage is provided instead of traditional alcohol (Tyler). For some communities, Coca-Cola is the most affordable drink that addresses their nutritional needs.

The role of politicians in the brand’s empowerment has been acknowledged. Gómez notes that Vicente Fox, who was the CEO of Coca-Cola in Mexico in the 1970s, also contributed substantially to the establishment of the brand in the country (523). Such political decisions as the country’s joining the North American Free Trade Agreement in 1994 was favourable for the empowerment of the brand as its costs decreased considerably (Tyler). The beverage became iconic in the country, and it has been estimated that Mexicans drink 700 Coca-Cola bottles per year, which is more than in the USA (Tyler). Thus, the second part of the twentieth century was the period of unprecedented growth that resulted in the company’s leading position in the modern Mexican market.

The favourable impact of the multinational in the country has been analysed. Coca-Cola pays specific attention to corporate social responsibility and has been involved in various projects aimed at addressing environmental and social issues. One of the accomplishments of the organisation in this terrain is water efficiency that was improved by over 20% in the 2010s (Banks 456). Water replenishment is another project that contributes to the development of sustainable practices that are later adopted by other organisations (Banks 456). Apart from Coca-Cola’s compliance with such high standards, its partners meet the same norms as well. Moreover, the company’s competitors try to keep up with the leader and develop similar incentives and technologies. Clearly, the financial input of multinationals, such as Coca-Cola in the economy of counties where it operates is significant. The company and its partners (mainly bottlers) employ thousands of people, which is critical for economies.

However, multinationals often have direct and indirect effects on the political agenda of states. Coca-Cola is notorious for its impact on Mexican policymaking. As mentioned above, Vicente Fox managed to make the company the leader in the market when he was the head of the Mexican subsidiary. At the same time, his presidency also affected the empowerment of the brand due to the politician’s support and the creation of relationships between the company’s top management and influential political figures (Gómez 524). One of the manifestations of these links, as well as the multinational’s influence on the political life of Mexico, was the rejection of the idea of imposing a tax on the companies producing and distributing sugar-containing beverages in 2003 (Gómez 525). The pressure from the public and different stakeholders did not make the Mexican government introduce the tax that could lead to additional funding for the budget and positive shifts in the sphere of public health.

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In addition, the government failed to improve business and healthcare domains due to the influence of the company. Numerous institutions and individuals developed initiatives and proposed them to the Secretariat of Health (SoH) to launch marketing restrictions, soda taxes, appropriate food diagrams (Gómez 523). Nevertheless, no incentives were properly considered or adopted leading to the growth of the country that received a privileged position. Notably, SoH developed the recommendations regarding the consumption of drinks in 2008, but this program aimed at improving people’s dietary habits was not implemented due to Coca-Cola’s lobby. The regulations concerning the sales of soda drinks in schools suggested by the Secretariat of Education and Health were not adopted (Gómez 523). It becomes apparent that although different institutions and governmental bodies make effort to impose various regulations, the company’s lobby and influence remains rather strong.

At this point, it is necessary to note that Mexican scientists and healthcare professionals advocated for the introduction of policies aimed at addressing one of the most burning public health issues. It is found that the top non-communicable diseases that contribute to disability-adjusted life include diabetes, chronic kidney disease, and ischaemic heart (Gómez 521). These disorders are closely linked to inappropriate diets and the consumption of soda drinks. The rate of obese people in Mexico increased from 23% in 2005 to 28% in 2015, which is an alarming trend (Gómez 521). Various groups of people started advocating for imposing certain restrictions on the production and distribution of sugar-containing beverages in the country. The tax mentioned above was seen as one of the possible measures to decrease the intake of sweetened drinks.

Importantly, the effect of multinationals can take diverse forms, which is clear when considering the case of Coca-Cola. Apart from quite a direct influence on politicians who make decisions and shape the economic agenda of the country, the company affected different institutions that contribute to the development of public opinion and policymaking. The company provides funds to scientific and research centres that publish studies proving no or minimal correlation between soda drinks and public health (Gómez 524). These institutions and individuals provide the ground for the rejection of various incentives that could decrease Coca-Cola’s market share and profit.

Although the influence of multinationals on countries is apparent, researchers and business practitioners, as well as politicians, note that states do not lose their sovereignty. Even the countries with weak government or those facing serious social or political and economic issues still maintain their sovereignty in the major contexts (Cohen 240). States make corporations adhere to the current regulations and norms and pay the agreed amount of taxes. Of course, multinationals may try to gain some privileges but states always manage to retain complete or a larger part of sovereignty even if it was partially lost. For example, the Mexican government introduced the so-called soda tax in 2013 (Gómez 524). At that, it is noteworthy that the primary reason for introducing this tax was the government’s attempt to improve the country’s economic situation.

Nevertheless, the role Coca-Cola plays in Mexican political life shows that multinationals can shape countries’ agendas. Coca-Cola is still influential and becomes a part of the political initiatives of the Mexican government. One of the recent illustrations of this involvement is the participation of the company under consideration in an anti-hunger programme launched by Felip Calderón (Mexican president from 2006 till 2012) (Gómez 525). Although Fox resigned years ago, the company’s lobby is strong, and the use of soda drinks in such initiatives shows that health concerns are less influential than some personal interests and economic aspects.

On balance, Coca-Cola is a multinational organisation whose role in the political life of Mexico has been considerable. Since the company’s empowerment in the 1970s, its top management has influenced the decisions made in the political arena. Irrespective of public health concerns and an unfair business environment where Coca-Cola has a privileged position, no restrictions are imposed. It is noteworthy that some bodies of the Mexican government try to introduce the incentives that would be beneficial for the country and minimise the effect of Coca-Cola. However, the majority of these attempts still fail due to a strong lobby.

Works Cited

Banks, Hamish. “The Business of Peace: Coca-Cola’s Contribution to Stability, Growth, and Optimism.” Business Horizons, vol. 59, no. 5, 2016, pp. 455-461.

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Cohen, Stephen D. Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity. Oxford University Press, 2007.

Gómez, Eduardo J. “Coca-Cola’s Political and Policy Influence In Mexico: Understanding the Role of Institutions, Interests and Divided Society.” Health Policy and Planning, vol 34, no. 7, 2019, pp. 520-528.

Tyler, Jessica. “The Surprising Story of How the Former President of Mexico Helped Make Coca-Cola Such a Huge Part of Mexican Life That It’s Used in Religious Ceremonies and as Medicine.” Business Insider. 2018, Web.

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