Mexican Coca-Cola is Finding Sweet Success in the U.S.

 By Bruce Kennedy, Daily Finance
Sept. 20, 2010

 

For better or worse, Americans are major consumers of carbonated soft drinks, a market that experts predict will reach $195 billion in global sales by 2014, an increase of more than 11% since 2009.

While Atlanta-based Coca Cola (KO) remains the world's largest soft drink company, American consumers are eclipsed by their Mexican counterparts when it comes to per capita consumption of The Real Thing. In fact, the Mexican version of Coca-Cola -- made with cane sugar instead of high-fructose corn syrup (HFCS) and served in glass bottles rather than plastic -- is making great inroads in the U.S. market. Part of that market is, of course, people who grew up drinking Mexican Coke.

"When purchasing Coca-Cola from Mexico, Hispanics are purchasing a bit of nostalgia -- it's like getting a piece of home," says Greg Galvez, vice president and general manager of Importation and Commercialization of Coca-Cola North America, in an email. "Some of that feeling may have to do with the packaging and the fact that it is imported."

A Facebook Site of Its Own

The Mexican version of Coca-Cola is also being sought out by people avoiding HFCS -- but there's a growing legion of U.S. fans who insist it simply tastes better. Mexican Coke has received recent mentions in a wide spectrum of media, from a San Francisco lifestyle website to a magazine from New York's affluent Westchester County suburbs, numerous food-and-drink blogs and even an agriculture industry website.

And of course, in this age of social networking, Mexican Coke aficionados sing the drink's praises on their own Facebook site.

In fact, the iconic glass bottles of Coca-Cola from Mexico can be found in many major supermarkets and big-box retail stores across the country. It usually costs more than the U.S. version -- from about $1 a bottle in stores to more than twice that price at some restaurants.

Coca-Cola was reportedly unhappy with the Mexican imports in the U.S., at first concerned about controlling the product's distribution. But starting in September 2005, the company's largest U.S. bottler began a pilot program to import Mexican Coke into Texas. "This pilot was expanded into California in February 2006, and in 2009 it was expanded to Florida, Georgia and other states in the Southeast, Northeast and Midwest," says Galvez. "The success of the program resulted in additional Coca-Cola bottlers distributing the product and being introduced to some of the larger grocery chains."

A Decade to Spread Through the Country?

And unlike most trends, Mexican Coke will probably be stocked on American shelves for a while. "Anytime you mention the words 'carbonated soft drinks,' you're talking about one of the most popular drinks in America," says Harry Balzer, chief industry analyst with NPD, the Chicago-based market research firm. "One of the spices of life in this country is trying new foods, and [soft drinks are part of that] category."

Balzer says one of Mexican Coca-Cola's strengths is the size of the U.S. market. "Its advantage is it has a lot of people to go through before everybody has tried it," he says. "It may take 10 years to get everybody to try it."

The American food-and-drink market is always open to new tastes and flavors, Balzer says -- but the challenge is getting people to try something more than once. "Will they do it again when it's no longer just new?" he asks. And beyond the taste, "does it make my life easier, and does it make my food costs cheaper?" he asks. "If it doesn't do one of those two things and certainly doesn't succeed on the first one, then forget it -- it's a one-time buy. For it to thrive, to capture more people, it has to be more than just providing the novelty of new."

If early indications are any clue, Mexican Coke could become a popular favorite in parts of the U.S. where Spanish accents are hardly the most commonly heard.