Coke Mexico In Health
Push Amid Spiraling Diabetes

Coca-Cola Co. has launched 20 new health drinks in Mexico in what analysts say is an effort to fight rivals and also fend off growing medical worries about links between soft drinks and diabetes.

Doubling the number of brands it sells, Coca-Cola de Mexico this month started to serve up the milk and fruit-based drinks -- and also drinks with soluble fiber -- in a bid to become a "total beverage company."

Coca-Cola said the launch was a multi-million dollar business strategy and had nothing to do with diabetes.

"The non-carbonated drinks segment has grown approximately 20 percent in the last three years and that is obviously a huge opportunity for us to grow in," Jorge Casimiro, the company's Latin American communications director stated.

But analysts said the marketing strategy aims to fend off growing low-priced soft drink competition and a Mexican public increasingly looking for healthy beverages rather than traditional fizzy soft drinks to quench their thirsts.

Mexico is the top per capita consumer of soft drinks in the world, ahead of the United States, and diabetes has overtaken heart disease as the No. 1 killer in Latin America's second most populous country.

"Diabetes is the main cause of death in Mexico and there is an increasing awareness about drinking healthy products," said Mauricio Brocado, an analyst with Actinver brokerage.

"What we are seeing is that they (Coca-Cola) are betting on noncarbonated products that are more healthy, more balanced," Brocado said. "The flavored water sector has been growing at double-digit rates," Brocado said.

Around 4 million Mexicans are estimated to have diabetes, according to the World Health Organization.

DIABETES-SODAS LINK

An eight-year study by the Harvard School of Public Health recently linked frequent consumption of sugar-sweetened beverages to diabetes in women.

"Those who reported drinking sugar-sweetened sodas more than once per day showed an increased risk for ... diabetes of more than 80 percent compared to women in the study who drank less than one per month," the Harvard study said.

The World Health Organization reckons the cost of diabetes in Mexico to be $12 billion per year and rising, as incidence of the disease expands. Analysts worry that rising costs associated with diabetes could prompt public health sector efforts to lower soft drink consumption.

Coca-Cola de Mexico, analysts said, is including health-oriented drinks in its portfolio, such as Ciel Dasani, Minute Maid and Spacio Leve, because of the threat of lower consumption of products including Coke.

"It is diversifying," said Manuel Jimenez, an analyst with Vector brokerage. "There is a large segment of the population that consumes these (health) products and it cannot go against the market tendency."

Coca-Cola's Casimiro said the American Diabetes Association has said foods and beverages containing sugar can be consumed by diabetics and that the U.S Department of Health and Human Services has said there is no evidence that sugar intake is linked to diabetes.

"Most of it has to do with obesity, lack of physical activity and genetic pre-disposition, so unequivocally we are not doing this because of any kind of linkage between soft drinks or sugar (and diabetes)," Casimiro said.

Coca-Cola de Mexico says consumption per capita of its products is running at 527 eight-ounce servings per person per year, higher than the average 411 servings in the United States and Canada.

Coke has 13 bottling affiliate companies in Mexico, the largest being Coca-Cola Femsa, the world's No. 2 Coke bottler and the biggest in Latin America. Known as KOF, Coca-Cola Femsa operates in nine Latin nations. Coca-Cola Co. has a 39.6 percent stake in KOF.

Reference Source 89
August 31, 2005

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