Identifier
Created
Classification
Origin
09GUADALAJARA238
2009-06-24 22:23:00
UNCLASSIFIED
Consulate Guadalajara
Cable title:  

NO SMALL BEER: MICROBREWERY'S MARKETING CAMPAIGN RAISES

Tags:  SCUL SNAR ETRD EIND MX 
pdf how-to read a cable
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ZNR UUUUU ZZH
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FM AMCONSUL GUADALAJARA
TO RUEHC/SECSTATE WASHDC 1446
INFO RUEHME/AMEMBASSY MEXICO 2626
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHGD/AMCONSUL GUADALAJARA 5513
UNCLAS SECTION 01 OF 02 GUADALAJARA 000238 

SIPDIS

E.O. 12958: N/A
TAGS: SCUL SNAR ETRD EIND MX
SUBJECT: NO SMALL BEER: MICROBREWERY'S MARKETING CAMPAIGN RAISES
ETHICAL DILEMMAS

REF: 08 CIUDAD JUAREZ 0642

GUADALAJAR 00000238 001.2 OF 002


UNCLAS SECTION 01 OF 02 GUADALAJARA 000238

SIPDIS

E.O. 12958: N/A
TAGS: SCUL SNAR ETRD EIND MX
SUBJECT: NO SMALL BEER: MICROBREWERY'S MARKETING CAMPAIGN RAISES
ETHICAL DILEMMAS

REF: 08 CIUDAD JUAREZ 0642

GUADALAJAR 00000238 001.2 OF 002



1. Summary: Cerveceria Minerva, a microbrewery in Guadalajara,
used a notorious narco-saint as a successful marketing tool,
garnering some high profile press. The strategy increased sales,
and the new-found success placed the business at odds with an
entrenched Mexican beer business. Narco-culture and oligopolies
are woven tightly into Mexican society and they often benefit
from loose legal controls and intrinsic corruption. End Summary.

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A Culture, a Brand, and an Obstacle
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2. Narco-culture generates fear and fascination among Mexicans,
and its influence on Mexican life has increased during the
ongoing drug-war. As a result, the gap between those who deplore
it and those who admire it has widened. In December 2007,
Cerveceria Minerva, a micro-brewery in Guadalajara, unveiled a
new brand of lager beer in the Northwestern Mexican city of
Culiacan, Sinaloa. In doing so, they offered an ironic
commentary on this peculiar aspect of Mexican culture. They
named the brand "Malverde" after a legendary Sinaloan "Robin
Hood" figure, Jesus Malverde, who is commonly known as the
patron saint of narcos. The objective was to ironically employ
narco-culture to reach a specific audience. Despite press
reports to the contrary, the director and principal investor in
Minerva, Jesus Briseno, stated the intended audience was neither
the narcos nor those who idolize them; but rather, those willing
to laugh at this curious narco subculture.


3. Veneration of legendary figures like Jesus Malverde, worship
of saints like Santa Muerte or the "Death Saint," the popularity
of narco bling jewelry, cell phone adornments, ostrich skin
boots, or gangster SUVs, and the success of narco-corrido music
(reftel) are all evidence of the influence of narco-culture in
Mexico. Employing the ironic narco moniker, Cerveceria Minerva
has had great success selling their product. In the process they
crossed a beer-making giant. Their continued success is in
jeopardy, not due to narcos angered by the cultural critique,
but because they now confront a business oligopoly.

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Building a Business
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4. Cerveceria Minerva began in 2004 with a specific objective:
to offer a new variety of specialized, high quality beers,
brewed in Mexico, to the Mexican beer consumer. It was an idea
born abroad. After studying beer-making in Chicago, the
principal owner returned to Guadalajara and, with his friends
and partners, opened a restaurant and an attached brewery. They
named the company after Guadalajara's famous icon of freedom,
the goddess Minerva. The five owners/investors are young and
they come from wealthy Guadalajara families. They have started
other businesses, and of the five, most treat the beer business
as a pastime. They are from a segment of Mexican society that is
well educated, well traveled, and well versed in contemporary
culture. They, and others like them, question and criticize
certain aspects of Mexican life, especially corruption and
narco-culture. The owners of Minerva are idealistic and proud of
their nationality, and their pride is manifested in the mission
of their company. After nearly five years in operation,
Cerveceria Minerva is a member of a consortium of nearly twenty
micro-breweries whose objective is to break open the beer market
in Mexico and to provide a made-in-Mexico, top-shelf, microbrew
product that is currently unavailable.

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Skyrocketing Production
--------------


5. Although the brewery began as a small producer with only five
partners and a few employees, its profits skyrocketed. By 2007
the company increased production and sales by seventy percent.
Due to the economic downturn, they experienced a slightly
smaller increase in 2008; fifty percent. Although the economic
crisis in Mexico continues, Minerva expects to increase profits
in 2009 by a similar percentage. In March 2009, they contracted
with an important retailer, Seven Eleven, to sell their
products. They already have contracts with Wal-Mart and the
Mexican grocery store chain Superama, selling everything except
the Malverde brand. They have discovered that many prominent
retail businesses do not want to be associated with Malverde due
to press reports describing it as the "narco" or "blood" beer. A
contract initiated in May 2009 with Crown Envases Mexico,
Mexico's largest producer of aluminum cans, will further expand
Minerva's business. When the Malverde brand is in cans Minerva
will expand into the most profitable, low-cost, high-volume
portion of the beer market. In addition, the company plans to
begin exporting to a distributor in Los Angeles.


GUADALAJAR 00000238 002.2 OF 002


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Pressure from a Powerful Rival
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6. Despite their successes, in May 2009, Minerva received their
last shipment of malt and hops from their normal provider,
Extractos y Maltas. The provider has a monopoly on malt and hops
production and distribution in Mexico, and it is owned by
Mexico's largest brewery, Grupo Modelo. According to Minerva's
owner, Grupo Modelo refuses to provide Minerva with shipments in
the future. The microbrewery has supplies sufficient for one
month of production, and they are searching for a new malt and
hops provider, possibly from the US. They requested USG
assistance to identify new providers, and the Foreign Commercial
Service will provide them a list of US malt and hops companies.
Shipments from the US will be more expensive, but the owners
claim it will be better quality and more reliable. Grupo Modelo
presents an additional hurdle for the brewery; according to
Briseno, it controls most of the distribution market in Mexico.
Retailers who carry contracts with Grupo Modelo agree to not
sell competitor's brands, and for that reason they are unwilling
to work with Minerva.

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Comment: A Fine Line
--------------


7. Minerva is not the first company to trade on the narco
subculture in Mexico as a means of generating attention and
sales, but they are among the most prominent. The hostility of
their entrenched competitors is generated not by moral
indignation, but rather by pure commercial self interest. The
fact that an innovative young company felt that it had to take
such a dramatic step in order to break into the market
illustrates the continuing power of oligopolies in the Mexican
economy; the fact that it appears to have succeeded demonstrates
the pervasive presence of narco culture in many aspects of
Mexican society. Consumers may be fascinated or repelled by this
presence but they cannot ignore it, and they must wrestle with
the ethical dilemmas involved. Is Minerva to be praised for
tackling deeply entrenched interests or condemned for exploiting
an image that costs thousands of lives annually? Time, and
future sales, will tell.
RAMOTOWSKI