Nathaniel Parish Flannery

The world’s largest beverage company is scaling back its operations in one of Mexico's most murderous states.

Citing concerns for the safety of its employees, Coca-Cola has decided to permanently shutter a storage facility in Arcelia, Guerrero, laying off 120 workers and eliminating one of the few sources of formal-sector jobs in the area.

The soda company's move comes a few months after the kidnapping and negotiated release of two of the company’s employees in Mexico’s second-poorest state, where analysts say transnational companies are being increasingly targeted by organized criminal bands and student activists sympathetic to the Ayotzinapa student movement.

A deteriorated Coca-Cola advertisement outside of the Arcelia bottling plant.

“It’s the constant threat of organized crime and insecurity that led to Coca-Cola’s exit,” explained Miguel Berber, a Mexico City-based security analyst. Mexican daily El Sur reports that criminal thugs were extorting Coca-Cola to the tune of $640,000. The company did not respond to Fusion’s request for comment

Advertisement

Coca-Cola isn't the only company to get hit up for money. Last week, a PepsiCo executive was dragged from his vehicle and kidnapped by heavily armed men.

The problems in Guerrero underscore Mexican President Enrique Peña Nieto’s challenge in luring foreign investment in a country hampered by security concerns. Mexico last year attracted $22.8 billion in foreign-direct investment, slightly exceeding the investment in Chile, a country with a smaller population than Mexico City.

The Arcelia bottling plant.

Advertisement

The situation has forced companies such as Coca-Cola to reassess its operations in Guerrero. In February, three student protesters were arrested after they hijacked a coke delivery truck. In retaliation for their arrest, a group of students attacked Coca-Cola’s offices with Molotov cocktails and kidnapped two employees in the city of Chilpancingo.

Security analysts say criminal groups represent the greatest security threat in Guerrero, but certainly not the only one. Students groups, which have been protesting the disappearance of 43 students from a teachers college in Ayotzinapa since last September, have long used tactics that are indistinguishable from those of criminal groups.

Students often stop delivery trucks in hopes of obtaining “cooperation” payments of cash or gasoline or even food, said Dwight Dyer, a political analyst in Mexico City with the consultancy Control Risks.

Advertisement

“They’ll take a Coca-Cola truck, an Herdez truck, a Bimbo truck,” he said. The students, in their defense, say they don’t use force against the truck drivers.

Read: Mexican students on why they burn down, not sit-in.

But it's all contributing to the growing insecurity and lawlessness in the state. Jaime Nava, head of a business chamber in Guerrero, told El Financiero that soda company executives have warned they may close additional facilities in the months to come.

Advertisement

A PepsiCo truck in Guerrero with an armed policeman via Nathaniel Parish Flannery

Coca-Cola first closed its distribution facility in Arcelia last year, after criminals with machine guns hijacked and burned several of its delivery trucks. Despite the deployment of additional soldiers and police in Guerrero in recent months, the situation hasn't improved, leading to the decision to pull-out altogether.

Other businesses are also boarding up their operations. A car dealership that once sold Volkswagens has also closed its doors, although a Volkswagen spokesperson said it was due to problems with sales performance. But slumping sales are probably not unrelated to the worsening security problems.

Advertisement

Despite Coke's pullout from Arcelia, Mexicans will most likely still find ways to get their soda fix.

“Mexicans love Coca-Cola,” says Dyer.

Advertisement

Photographs by Ernesto Alvarez