Coca-Cola Moves into Mezcal

Agro-Industry Absorbs Oaxaca Land and Water for Private Profit, Stainless Steel Vats Replace Artisanship

By Nancy Davies, with research assistance by Earl Fish
Commentary from Oaxaca

February 15, 2010

I. Coca-Cola and Mezcal

Little Earl, who maintains a certain interest in our local drink, took a twenty-peso tour of the new mezcal distillery located on the road to Tlacolula de Matamoros, on the Cristobal Colón highway, about half an hour from Oaxaca City. Tlacolula lures tourists to its huge weekly market where you can buy live turkeys, oxen yokes, seasonal vegetables, rice drinks, enamel pots, and artisan work ranging from carved fantastic animals to embroidered blouses. Occasional musicians entertain while shoppers stroll areas dedicated to fresh produce, shoes, socks, and plastic buckets. Along the main street, small shops sell mezcal. It’s artisan mezcal: an artisan liquor cooked in clay containers, from home-grown agave.

Zignum Mezcal label D.R. 2010 Zignum Mezcal

When Little Earl entered the Casa Armando Guillermo Prieto (Casa AGP) distillery, whose security little Earl describes as “tough as any airport”, they waived their metal detecting wand over him and discovered his digital camera. “No sir,” the security guard said. “It is the policy of Coca-Cola to not allow photographs.” Coca- Cola? Who knew? His cell phone in the other pocket suffered the same temporary confiscation.

S.A. de C.V. stands for “Sociedad Anónima de Capital Variable”. It describes a company whose capital partners are anonymous and of variable investment. Most foreign investments in Mexico are designated S.A. de C.V. CIMSA S.A. de C.V.-Coca Cola, a consortium of businesses “100% Mexican” produces Casa AGP mezcal. I also saw it written in inverse order, as Coca-Cola-CIMSA.

CIMSA was founded in 1925 and currently operates through three self-described “Strategic Business Units”: Soft drinks; BEDLA (Bebidas de los Angeles) which sells purified water; and Casa AGP, the newest unit, oriented toward commercialization of mezcal, to sell inside Mexico about 20% of product, with 80% destined for foreign consumption. To put the enterprise in perspective, the same Group that bottles Coke in Cuernavaca built the mezcal plant in Oaxaca. It also built the international airport in Cuernavaca.

Casa AGP inaugurated its Oaxaca distillery in August, 2008 in a village named Lanacci. Governor Ulises Ruiz Ortiz, Senator Adolfo Toledo Infanzón, Secretary of Tourism Beatriz Rodríguez Casasnovas, and Secretary of Economy Enrique Sada Fernández among other officials, all carefully pre-selected, attended. Head honcho Colombo Álvarez asserted then, that in five years Oaxaca mezcal would be positioned in the international European and Asian markets. In the first year the product would arrive in Spain, the USA, China, Korea and Thailand. Subsequently, they would sell in Germany, Russia and Italy. He was right on.

Ulises Ruiz inaugurates mezcal plant “Casa Armando Guillermo Prieto” D.R. Photo 2008 El Piñero

Director General José Luis Magaña stated that more than US$ 48,000,000 was invested in plant construction. Purita Guillermo Prieto Rivera, an owner of CIMSA-Coca Cola in sites such as Toluca, Cuernavaca and Ciudad Altamirano, (her surnames “Guillermo Prieto” indicate her Casa AGP connection) and Antonio Gómezlince, also of Grupo CIMSA, stated Casa AGP’s goal: immediate production of 15,000 liters daily, at one-third of full capacity. Casa AGP presently (February, 2010) bottles about 20,000 liters daily.

CIMSA is sister to GEMSA, another corporation listed along with Coca-Cola; the precise relationships of the players remains hidden. CIMSA Group, according to their own advertising, is expansionary, bringing into production new products and brands. The fancy gold label on its mezcal bottles displays its brand-name: Zignum, Made in Mexico. “Casa Armando Guillermo Prieto,” it reads, “brings to your palate a mystic drink made with art, quality, technology and the warmth of its people.” Umm.

And an output of 45,000 liters daily for the global market? That’s not art, it’s agro-industry. Casa AGP, in partnership with Coca-Cola and with an investment minimum of 60 million dollars, manufactures mezcal inside an industrial complex. AGP Wine & Spirits Group, the international trade name, distills its product with technical standards, very different from artisan mezcal; the average artisan palenque bottles 2– 3,000 liters per month, cooking agave plants over wood burning fires. Each bottle off the AGP line, in contrast, precisely mirrors the others; following a chemical test for each vat, slight artificial adjustments are added as necessary, to produce consistent “flavor, pain, color, and aroma.” By vat, I mean stainless steel drums. Despite the photo prohibition, Coca-Cola doesn’t keep the gleaming, vast manufacturing process a secret: on the Zignum website flash the bright stainless-steel drums, the rows of assembly-line bottles. Intermixed in Zignum’s on-site film runs the art and warmth part: scenes from other mezcal localities. You can also check YouTube.

II.

Reading newspapers in 2010 wrenches the stomach: evil prophecies come true. Under the headline Oaxaca countryside is a disaster runs the byline place: San Juan Guelavía, Tlacolula.. The story focuses on drought. Sadly, the soil sucks up any sprinkle of water and stays dry. The Noticias article does not mention the fallen water table below the soil. Agriculturalists know: one cannot continuously deplete water without restoring it; drought is not a simple case of rainfall. Interactions spiral into the lack of trees and plants to retain soil and moisture. “The land has become a sadness for the campesinos, confidence is gone that it will rain enough to sow and harvest some corn or beans for self-consumption.”

In San Juan Guelavía, water has been scarce for many years. Global warming adds to the distress, say Center for Interdisciplinary Investigation for Integral Regional Development’s chief Jaime Ruiz Vega; Agricultural Development of the Secretary for Rural Development’s Leoncio Zambrano García; and regional director of the National Commission for Water-South Pacific, Álvaro Demetrio Jarquín Rojas. That slate of government experts suggests the solution: abandon traditional irrigation techniques and move to high-tech methods which reduce water consumption. Perhaps 50% of the water used in traditional methods is “inefficient”, they explain. Presently Oaxaca imports 25% of required corn, 100,000 tons annually. The federal government uses constant pressure to privatize land.

Nobody says a word about enormous consumption by international bottlers. Coca-Cola Company controls more wealth than many nations in Latin America, the Caribbean or Africa. In Mexico it has bought up almost all the soft drink brands sold in the country, and holds the greatest number of concessions for extraction of water. Coca-Cola Femsa owns twelve plants in nine states, including Oaxaca. Twenty-nine million liters of soda are sold daily to more than 169 million consumers in Latin America, which equals the normal water consumption of 14,500,000 persons, figuring two liters of water daily per person. Coca-Cola, one supposes, elected Mexico’s last president, its former executive Vicente Fox.

Stainless steel vats in plant interior D.R. 2010 Zignum Mezcal

A distillery producing thousands of liters of liquor uses water not only for cooking and distilling the product, but also for necessary wash-up and cleaning in a large industrial plant. Casa AGP claims it uses high-tech treatment of residual waste water. More than one contractor was contemplated, and the ultimate winner was IGR Ambiental. Their wastewater treatment facility for the distillery, finally certified as environmentally sound by the UN in 2010 (not in 2008 when the plant went into production), supposedly will handle 90,000 liters of waste-water per week, and recover methane gas to produce steam, cooking the mezcal in something like a double boiler process. Selling back carbon credits offers Casa AGP a financial bonus; another international environmental fraud. Little Earl saw a very large wastewater storage tank on the property; there are photos, but thus far no indication that the water is being processed.

Wastewater treatment does not explain where the clean water comes from in the first place, or how much must be consumed for a mezcal production of 45,000 liters. According to the website oaxacalibre.com on September 11, 2007, Governor Ulises Ruiz made an agreement with Coca-Cola to exploit water in exchange for money for political PRI campaigns. Allegedly, Coke was given permission to drill wells in the Central Valley. Interviewing APPO activist Florentino Lopez, the site reported:

Interviewer: “On the internet you circulate statements in which you indicate an unhealthy relationship between the governor Ulises Ruiz and the soft drink business Coca-Cola. Are such assertions true?”

Lopez: – “It seems to us that Ulises has, in the first place, sought the backing of businesses and primarily the transnationals, …because that has a basis in development of Plan Puebla Panama in Oaxaca, with … development of diverse projects such as the urban megaproject, the tourist corridor, the trans-isthmus corridor, and the Dominican [tourist] route. Then, after that comes commercialization of all the state resources, including the cultural ones.

We have denounced the case of Coca Cola… which established a series of agreements…to exploit the hydraulic resources and which received several objections, for example the case of the neighbors of Viguera, when they were blocking the well located near the Juarez Monument. They informed us that the State Institute for Water and the National Water Commission had contracted with the Coca Cola company to drill wells in this zone of Viguera and in other places like Huitzo, Telixtlahuaca, and Etla, which have below-ground aquifers. And while the neighborhoods and districts have solicited drilling for the benefit of the communities they have not been given permission; Coca Cola has several wells drilled in this zone that have been granted by agreement with the government of Ulises Ruiz Ortiz.”

Interviewer: “Does the sale of these permissions to Coca Cola relate to the resources that will be in the electoral process this year?”

Lopez: “It has to do exactly with this situation, or it could be said the political accommodation being developed here in Oaxaca has to do directly with the relationship Ulises Ruiz Ortiz has with transnational corporations, not only Coca Cola, but a series of corporations…which directly helps the Ulises Ruiz team to stay in power…”

Interviewer: “Have you considered actions against this corporation?”

Lopez: “Up to now we have called for a boycott of Coca Cola products …because they are doing damage and commercializing the natural resources of the people of Oaxaca…transnationals are taking over the extraction and administration of water in Mexico…

Apparently, one or more wells were drilled inside the Casa AGP complex. Purified water for distilling the fermented juices gets trucked in. Most likely the company trucking in purified water is the partner BEDLA, with water coming from parts unknown—but how far can one profitably truck water?“

III.

Oaxaca mezcal maguey, or agave, a native wild succulent, enjoys a 400 year history. Oaxaca is one of seven states allowed use of the “guarantee of origin” label (Guerrero, Guanajuato, Durango, San Luis Potosi, Zacatecas and Tamaulipas are the others). Previously, Mexico produced about 12 million liters among some 100 companies, the majority small family-run enterprises.

Agave plants of various species give each mezcal its own particular flavor. Agricultural disasters can occur when only one species is cultivated; if a plague strikes, the whole cultivation vanishes. In Oaxaca, several species grow locally for each distillery’s “secret” mixture. Seven to ten years bring an agave plant to maturity. Little Earl reports it takes 10 kilograms of agave to yield one liter of liquor. A mature agave may weigh 70 kg. That’s seven liters, and to produce 15,000 daily, you need to cut 2,142 plants. Daily.

The Casa AGP plant generated about 40 direct jobs, presumably in benefit to 200 families, but the entire notion of “benefit” rings false. First, small mezcal producers number in the hundreds; they made a modest living before mezcal was promoted as a fashionable drink for sophisticated bars. Growers of the preferred Espadín agave cannot at present supply the quantities Coca-Cola/ Casa AGP requires. Logically, the distillery will contract for one-crop planting with concomitant risks and exclusive rights to buy. Zignum, by sharing the advertising agency used by Coca-Cola, (Percepción e Imagen en Medios de México S.A. de C.V. contacto@percepcion.org) along with a shared bottler (CEMSA) and a shared transportation system, has achieved global play at modest cost within two years. “We are very interested in positioning Zignum mezcal as a successful drink to be consumed world-wide. Not only as drunk traditionally, but also taking advantage of its flavor with different mixes of juices and soft drinks”, commented Gabriel Colombo Alvarez, formerly of Bacardi and now Director General of Casa AGP. A new mixed drink cocktail is born.

Little Earl took a trip up into Sola de Vega ( population 1,817) in the Oaxaca mountains to visit a traditional mezcal maker, a cooperative of about 100 growers and workers, who still mash the agave with big wooden mallets. The wood-smoke taste, he reports, comes from wood fires.

Artisan artifacts are displayed in Casa Guillermo Prieto’s museum.

• Additional source: CASA ARMANDO GUILLERMO PRIETO via YouTube

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