Chinese competition dampens holiday spirit for Jalisco ornament firm

Story by : David Agren

Open cardboard boxes loaded with shimmering ornaments, which are easily visible from the sidewalk, suggest happiness and joy. But the present economic reality for Sorpresas en Artes Navideñas (SeAN), a glass-ornament manufacturer in San Julian, Jalisco, brings little cheer for its manager and his dwindling number of employees. Stiff foreign competition has jeopardized the future of their industry, flooding the Mexican and export markets with poor-quality knockoffs that sell for a fraction of the price.

"The Asian factories have hit us hard," said Guillermo Gonzalez Mata, the plant manager. "We can't compete on price."

SeAN used to ship a trailer-load of ornaments to the United States each month. This year, it failed to fill a single trailer. Asian factories churn out identical merchandise for a fraction of the price. It often shows up in Mexican street markets, but also in supermarkets and department stores. SeAN manufactured 500,000 ornaments for the 2005 Christmas season. Unlike many of its competitors, its employees produced each piece by hand, giving each ornament a unique one-of-a-kind luster.

"There's a lot of conscience involved," Gonzalez said proudly.

The ornament-making process takes 25 minutes from start to finish. Each piece starts out as narrow tube of glass, which is then cut according to the size of the ornament. The pieces are blown into the appropriate shape. The shiny pieces are metalicized while the frosted items are exposed to oxygen gas. After being formed into globes, ovals and teardrops, the pieces are painted. Some pieces like the miniature Santas, bells and toy soldiers, come from moulds. Finally, a small army of detailers hand-paint most of the ornaments.

After outlining the labor-intensive process, Gonzalez observed, "The quality of the Chinese merchandise is poor."

But China has stolen market share away from San Julian's factories, leading to job losses. One factory on the outskirts of the Los Altos-region town closed last year while another produced even fewer ornaments than SeAN did. Three years ago, SeAN employed 100 people, who designed, manufactured, decorated and packaged the ornaments. This year it only hired 22. The town, famous for its dairy industry, increasingly survives on remittances sent home by migrants.

"There's not a single family in San Julian that doesn't have at least one member in the United States," Gonzalez said.

With the export market drying up, SeAN focused more on selling its goods in Mexico.

"We sold more here [this year] because we can't compete with the Chinese," he added.

The factory snagged several private-label contracts, including one from the Transportation and Communications Secretariat (SCT). SeAN decorators hand-paint the government agency's logo on three types of ornaments. The company also boxed sets of premium ornaments, which require attention to detail the Chinese factories can't match. Glass ornaments adorn fewer trees with each passing Christmas, although some Americans prefer the traditional decorations to the now-ubiquitous plastic offerings. Antiques dealers scour Mexican pueblos, looking for the classy, if less-refined, ornaments from factories like SeAN.

Andrea Hernandez, a nine-year veteran employee of the San Julian plant, which is 150 kilometers northeast of Guadalajara, said most of SeAN's retail customers come looking for something original.

"There's a lot of outside competition, but there are still people who like to keep traditions. ... There are people who value our work," she explained. "It's artesania because it's all done by hand."

Susanna Kirchberg, a Guadalajara folk art dealer, said glass ornaments are highly sought after, but in general, "It's a dying art."

Guillermo Gonzalez Mata didn't know what fate awaited his factory – or if it would even operate in the coming years – simply saying, "In our case, it all depends on the owner."

From the Guadalajara Colony Reporter

Zapopan brewery battles beer giants

Story by : David Agren

Jesus Briseño never especially liked the watery mass-market beers sold in most Guadalajara bars. During trips abroad, he discovered craft beers, freshly-made ales, stouts and lagers that were packed with subtle, but interesting flavors and usually drawn from a keg. He later started making his own beer at home before studying to become a brew master in the United States. Nowadays he brews beer for Zapopan-based Cerveceria Minerva in small batches, putting it into kegs so customers can buy it by the pint in local bars and restaurants.

Small breweries like Cerveceria Minerva flourish in Canada and the United States, where a thirst for craft beers has created a sizeable market niche and stolen sales from large conventional producers. In Mexico, however, two large breweries, Grupo Modelo, the maker of Corona, Estrella and Modelo, and Cerveceria Cuauhtemoc Moctezuma, which sells Sol, Indio and Tecate, dominate the market, forming a virtual duopoly, which the companies jealously protect. Furthermore, the country lacks a tradition of premium beer consumption; fewer than five microbreweries operate in the Republic. Most Mexican beers lack a distinctive flavor and are almost always sold in bottles.

'Our slogan is: 'Cerveza Minerva, it's not just a beer, it's culture,' ' Briseño said, adding the company hopes to gradually change the way Mexicans view beer. 'We're trying to establish a culture of drinking premium beers.'

Cerveceria Minerva jumped into the brewing fray somewhat quietly during the summer of 2003. A group of six owners, which included Briseño, opened Tierra de Malta, a brewpub on Avenida Ruben Dario, selling beer made on site.
'It used to sell a lot of beer,' Briseño recalled.

'But that's all that it sold.'

Deciding they were better brewers than restaurateurs, the group sold a stake in Tierra de Malta to Salute, a Mexico City chain, after one year in business, but kept the beer-making equipment in place. They later imported additional beer-making equipment, purchasing the assets of a distressed brewer in Philadelphia for a bargain, and set up a brewery in a Zapopan industrial park. The Salute location still produces some of Cerveceria Minerva's volume.

Although not the most successful of ventures, the restaurant proved a taste for craft beer existed in Guadalajara. Cerveceria Minerva now sells four different beers in approximately 20 Guadalajara-area restaurants and bars along with a few establishments in Mexico City and Queretaro.

It brews two beers year round: Viena, an amber lager and Colonial, a golden pale ale. It also makes a Dunkelweissen, a 'dark wheat beer,' which is exclusively sold at the Red Pub in Guadalajara, and four seasonal varieties. During the fall of 2005, it's offering Luna Llena (Full Moon), a cream stout, which Briseño described as 'like a Guinness, but not dry.'

Cerveceria Minervia uses premium ingredients, importing its hops and barley. Although Mexican malt is available, Briseño said the big two breweries have cornered the market. The Zapopan brewery also purifies its own water.

Sales growth has averaged 15 percent per month since the new brewery opened and Cerveceria Minerva recently unveiled plans for bottling its product. The first six packs should hit store shelves in February.

But convincing establishments to stock a new product isn't easy. Grupo Modelo and Cerveceria Cuauhtemoc Moctezuma forge exclusivity agreements with many bars and restaurants. According to Alejandro Orozco, Cerveceria Minerva's sales director and a co-owner, the beer giants entice establishment owners into signing exclusivity agreements by offering tables and chairs, refrigerators, easy payment terms and sometimes cash.

'Our biggest problem has been exclusivity contracts,' Orozco said.

Alejandro Perez, manager of the Red Bar, pulls pints of Cerveza Minerva at his English-style pub, which also offers a wide selection of imported brews and, of course, Grupo Modelo products. He said Group Modelo representatives offered him a kickback worth 10 percent of the bar's beer sales if he signed an agreement, but he declined, saying most of his customers come looking for imports and microbrews.

Placing Cerveceria Minerva beers in retail outlets could also be difficult. The big two breweries also tie many stores to exclusivity contracts. Some retail chains offer poor payment terms. Femsa, the parent company of Cerveceria Cuauhtemoc Moctezuma and a large Coca-Cola bottler, owns Oxxo, one of Mexico'sdominantminent convenience store chains. Oxxo doesn't generally stock competitors' products.

Further complicating matters for Cerveceria Minerva, the federal Congress – at the urging of Mexico's two big breweries – will impose a new environmental tax on all non-returnable beer containers in the new year. The law doesn't affect soft drink and water bottlers that use similar containers. It could make Grupo Modelo and Cerveceria Cuauhtemoc Moctezuma's products cheaper in comparison to the rash of inexpensive imports and craft beers flooding the Mexican market. The two large breweries already have networks for retrieving and washing bottles. If implemented, Orozco said the tax could drive up Cerveceria Minerva's retail prices by as much as 30 percent.

'It's not just a problem that affects us,' Orozco explained. 'It also affects all other foreign beers.'

Still, tax or no tax, Orozco said plans for bottling Cerveceria Minerva's products will proceed.

'You can keep growing into a new market – or just stay stuck,' he said.

And with any luck, the upstart brewer will survive the tax, the exclusivity contracts and the lack of beer appreciation and just maybe 'become a threat to the big guys.

From the Guadalajara Colony Reporter

Zacatecas ‘Tomato King’ plagued by scandal

 

Story by : David Agren

Andres Bermudez left Zacatecas state as an impoverished field hand in 1974. He and his pregnant wife sneaked across the border, hiding in the trunk of a car. After a short stint working in a suitcase factory, Bermudez began laboring in the fields of northern California. His luck changed after he invented a device for planting tomatoes. The new contraption quickly became popular among growers, earning Bermudez the nickname, "The Tomato King." It also earned him a small fortune. He returned to his hometown of Jerez, Zacatecas in 2001 as a celebrity, a migrant made good from a spot lacking opportunities — a place where much of the population survives on remittances sent home from the United States. He capitalized on his notoriety, capturing the popular vote in the 2001 mayor's race, but was subsequently denied office by election officials, who ruled that he failed to meet the state's residency requirements. After successfully lobbying for a change in the law, he won again in 2004, this time running under the banner of Zacatecas' least popular political party.

"I'm not the king of tomatoes here," Bermudez humbly said during an interview at his wood-paneled office in Jerez city hall on a chilly December morning. "I'm the king of tomatoes in the (United States); I live like a king in the (United States), but not here."

Bermudez's electoral feat and his incredible rags-to-riches story captured international headlines. Observers hailed his triumph as an example of migrants flexing their political muscles in the communities they have long propped up through remittances. The Tomato King promised to turn Jerez, a sleepy burg of 60,000 in the Central Mexican highlands, into a mini America, a well-governed place teeming with prosperity and most importantly jobs. And in a threat to the old guard, he vowed to "Get the rats out of city hall." Somewhat bizarrely, he also promised visas for young workers heading to the United States and tomato-planting devices for poor campesinos (peasant farmers), who have been abandoning the countryside in droves.

But with notoriety came controversy and enemies. Several journalists and opposition city councilors allege Bermudez has engaged in corruption, nepotism, and lewd behavior and governed in an authoritarian style — like a king — intimidating opponents and employing thugish tactics. Emotions about Bermudez —a polemic figure — run high. Many Jerez residents preferred not to make on-the-record comments about the mayor.

"He's not better or worse than any of his predecessors," said Alfredo Saldaña, owner of the Hotel Jardin in the Jerez centro. "But he has a lot more enemies."

Three members of Jerez's city council went on a hunger strike three weeks ago, demanding the state government take action against the mayor. Members of a Jerez citizens' group along with local residents opposed to Bermudez later barricaded the front doors to city hall for four days.

"A hunger strike is an extreme method," conceded Adriana Marquez Sanchez, a city councilor from the Workers' Party (PT), who went four days without food before falling ill. "It's a shout, saying, 'Enough.' It's a call for justice."

Marquez and her fellow hunger strikers allege the mayor spends municipal money recklessly on his own expenses, paying for a costly personal cellular phone, a junket to Las Vegas, flights between Zacatecas and California for his family members and a vehicle. Additionally, they accuse the mayor of turning the municipal police into "his own security force."

Bermudez supporters, accompanied by municipal police officers wearing riot gear, removed the protestors by force on December 5, later prying open the doors to city hall with a crowbar. Four protestors were detained; several suffered injuries. Public security officials stood idly by. Employees of Canal 27, a Jerez television station, identified many of the barricade busters as municipal employees. The state human rights office opted against investigating the ruckus.

"The Bermudez supporters were paid to strike and attack us," Marquez contended. "The majority of (them) are employees who work inside city hall.

A visibly shaken Bermudez reclaimed his city hall office shortly after the protestors were dislodged. Surrounded by screaming supporters and a clown posing as a television reporter, the mayor broke down in tears. He later complained, "They won't leave me in peace," pounding a fist on his desk to emphasize the point.

Jerez journalist Silvia Vanegas Reveles ironically feels much the same way, having angered the Tomato King with her intrepid reporting. She first confronted Bermudez over allegations he offered prostitutes to potential voters during his two election campaigns. She also wrote stories questioning the Tomato King's fortune, quoting people who said Bermudez owed them money.

Bermudez filed a denuncia (complaint to the local prosecutor) on Mexican press freedom day against Vanegas, who reports for Imagen, a Zacatecas daily newspaper. The complaint demanded she reveal the names of the women, who alleged the Tomato King was trading prostitutes for their husbands' votes.

"Since then, they haven't left me in peace," she said, adding she began receiving threats around the same time.

Shortly after Jerez city hall reopened, Vanegas said several men, who were brandishing knives, threatened her. After pleading for several hours with the local prosecutor's office, she was finally able to register a complaint.

Although rough around the edges — he's known to urinate in public and speaks passable English peppered with off-color words — the Tomato King at first encounter seems more uncouth than threatening. A burly and gregarious fellow with a junior-high-school education, who virtually always wears black cowboy clothing, dark glass and thick gold jewelry, Bermudez regularly welcomes foreign journalists. His celebrity, improbable story and Robin Hood-style rhetoric generate incredible curiosity. He employs a competent media relations staff — something rare in Mexican politics.

Shortly after being introduced, the Tomato King suggested this single reporter get acquainted with a young executive assistant after inquiring about my marital status. But upon being told a few minutes later of an upcoming city council meeting, Bermudez's mood changed; he slammed his water bottle lid on his desk and uttered a profanity in Spanish.

He mostly shuns local reporters, who have uncovered unseemly details from his campaigns and administration. According to opposition councilors, the mayor ignores his critics and refuses to engage in dialogue. The Tomato King says the same things about his critics. He frequently brands them as "The rich people."

As Bermudez tells it, he returned to Mexico out of a love for his hometown; a desire to give something back to his people, who the Tomato King said, "See hope in me."

Since taking office, he initiated a bus service for students pursuing university studies 50 kilometers away in Zacatecas. He also tripled the number of scholarships given to needy students. And in a well-worn political stunt common to virtually every Mexican municipality, he passed out 700 backpacks to children and roofing materials and cement to home and business owners.

"These [previous] people spending [the municipality's] money, they didn't spend the money. They took it home," Bermudez said. "All this, I give it back."

He also views himself as a sort of pioneer, a migrant returning to unseat the old corrupt guard, which has presided over the demise of Zacatecas and sent hundreds of thousands of residents fleeing the state.

"My project is unprecedented. My project opens the back door," he said. "I'm the first one, but behind me ... how many? Thirty, 50, 100? That's why the government is scared."

Percentage wise, Zacatecas loses more of its population to migration than virtually any other Mexican state. More Zacatecanos live in the Los Angeles area than the state capital. Although a drought recently ravaged the semi-arid state, local hotel owner Alfredo Saldaña figured most people rode it out by depending on the generosity of relatives living abroad. Mexican migrants sent home more than 15 billion dollars last year, according to the Bank of Mexico. More than 400 million dollars of those remittances flowed into Zacatecas, which has a population of 1.3 million.

The remittances from the United States often fund municipal projects, giving migrants an increasingly influential voice in Zacatecas politics. Through a program dubbed "Tres por Uno (Three for One)," the federal, state and municipal governments match funds sent by migrants through clubs formed in the United States.

"If you see a new church in Mexico, U.S. money makes it," Bermudez explained, adding remittances were "the only way Mexico survives."

Critics though, including Marquez, said Bermudez showed little interest in Jerez prior to 2001, when he first ran for mayor under the Democratic Revolutionary Party (PRD) banner. (He later won in 2004 as a National Action Party [PAN] candidate.) Additionally, she said fewer Tres por Uno projects have come to Jerez since he took over. According to Marquez, other than opening a cantina, Bermudez has never invested a dime in Jerez, one of the first towns where Tres por Uno was implemented.

And in the opinion of some of his critics, it's due to a lack of funds.

"Andres Bermudez is not rich," asserted Heriberto Caldeva Ruedes, a campesino and Institutional Revolutionary Party (PRI) councilor, pointing to the people who came forward during the last election, claiming the Tomato King owed them money, as proof.

Like Bermudez, Caldeva spent more than two decades in the United States before returning. Nowadays he farms beans, corn and chilies.

"The scam he pulled on the Jerezanos and the way he got their votes was by saying he was going to bring a machine for planting tomatoes all over Jerez," Caldeva explained, adding the young people voted for Bermudez expecting, "He was going to get them visas to go to the United States."

According to the Associated Press, Bermudez left debts of more than 800,000 dollars in the United States. Bermudez acknowledged owing money in California, including back taxes, but attributed his financial hardship to spending so much time seeking office in Jerez.

Bermudez insists he lives a simple life in Jerez, driving a relatively new Chevrolet pickup and living in a modest home on the outskirts of town. His three children still reside in California.

"I don't make money here," he said. "I lose money. Every day I'm here I lose money."

Contrary to some recent headlines, Bermudez has no plans to leave Jerez anytime soon. His term expires in September 2007. He used a farming metaphor to emphasize his commitment, saying, "I planted a seed in the ground and I want to see it grow."

From the Guadalajara Colony Reporter.

 

Tequila attracts academic study

BY DAVID AGREN/Special to The Herald Mexico
El Universal

During the week, Agustín Arce, 27, teaches administration to high school students in Tequila, Jalisco. On the weekends, he studies the fiery spirit that made his hometown famous.

Last month, Arce and 14 classmates began delving into topics as diverse as tequila’s origins, its role in rural development and its growing influence on art, music and popular culture through a new continuing education program a t the Un i v e r s i t y o f Guadalajara (U de G). The program takes an academic approach to the subject, which most people only learn about in a bar and truly appreciate the next day.

“We think that people should know more about tequila — not only as a drink, but its origins, the (agave) plant and the process,” said Marcela García Bátiz, publicity director for U de G Virtual.

While a diploma program in tequila perhaps looks frivolous at first glance, numerous universities have offered courses investigating other alcoholic beverages, including beer, wine and Scotch w h i s k y . A n d w i t h t e q u i l a reaching dizzying levels of popularity both at home and abroad, García Bátiz said it was a pertinent topic — especially in Jalisco, where residents take a special pride in the drink.

‘JALISCO IS MEXICO’

The state’s history in fomenting the popularity of tequila — along with mariachi music and charreria — makes Jalisco the most Mexican of the Republic’s states i n t h e ey e s o f l o c a l boosters. The state adorns its license plates with the image of an agave plant and its tourism secretariat coined the slogan “Jalisco is Mex i co . ”

The drink, which previously masqueraded under the names vino de tequila and mezcal de tequila , played an important part in Jalisco’s development. A special tequila tax funded the construction of the state legislature and the implementation of Guadalajara’s first public waterworks system. The nature of agave cultivation influenced the architecture of Jalisco’s haciendas. Since the passing of appellation of origin laws in the 1970s, only beverages made from blue agaves grown in Jalisco and designated regions of Guanajuato, M i c h o a c a n , Nay a r i t a n d Tamaulipas may use the tequila name.

“Tequila is a beverage that identifies Jalisco and Mexico in the entire world,” García Bátiz said.

A PLANT WITH MULTIPLE USES

It’s also “a very broad subject,” she said, which U de G researchers have studied for decades. Recent research has also focused on the agave plant, tequila’s principle ingredient.

Research points to some of the agave plant’s properties, which include insulin, possibly benefiting diabetics. Rural development officials are pitching miel de agave, or agave syrup, as a sweetener that is ideal for soft drinks. Increased miel de agave production could also provide another m a r k e t f o r a g ave growers, who in recent years have been receiving record low prices for their harvests.

The U de G course, officially titled “El Tequila, su cultura y su entorno,” enrolled an eclectic mix of teachers, foreign graduate students, tourism officials and journalists. All signed up for different reasons, but everyone expected to profit from the experience in some way.

“I live in Tequila, was born in Tequila, I’ve always worked in that community,” Arce explained, adding his knowledge of the beverage was previously somewhat limited. But as a teacher, he saw growing opportunities for his graduating students, equipped with an in depth knowledge of tequila, to find employment in his hometown’s burgeoning tourism industry. “I’m taking this course so I can pass on the information,” he said.

STUDYING COMMODITY CULTURE

Sarita Gaytan, a graduate student in sociology at the University of California, Santa Cruz, serendipitously found the course. She is spending several semesters in Jalisco researching her thesis, which explores tequila culture from a crossborder perspective. The course offered her the chance to gain a wealth of information, she said, as well as access experts from academia and the tequila industry.

“I’m interested in how commodity culture shapes ideas about national identity and citizenship,” she explained.

Along with teaching academic modules, the course organizers scheduled trips to a tequila distillery and a hacienda and also planned sessions with culinary experts.

The non-credit course runs until March, when García Bátiz said the university would decide whether or not to offer it again. It could eventually become part of a degree program, she added.

 

Presidential candidates hook up for first time

Illustration by : J Cortaza

 Story by : David Agren

The country's three top presidential contenders outlined their economic platforms for delegates attending the American Chamber's annual convention in Mexico City last Tuesday, but undoubtedly many in the business-minded audience came looking for information from only one of the men: Andres Manuel Lopez Obrador of the Democratic Revolutionary Party (PRD), the left-leaning frontrunner in the race for Los Pinos (the president's residence).

The American Chamber, an organization that represents more than 100 billion dollars of foreign investment in Mexico, organized the candidates' meeting to enlighten its members on the country's investment climate and future political landscape. The event marked the first time the three presidential aspirants spoke at the same event in the election campaign.

"We were excited to be the first to get all three [candidates] together," gushed Larry Rubin, CEO of the American Chamber, who is based in Mexico City. "It certainly wasn't easy."

And it certainly caught the attention of analysts. Jorge Fernandez Menendez grumbled in his Publico column that the leaders united for "Americans," instead of Mexicans, who will cast ballots next July. Rubin, however, pointed out that the American Chamber members make 85 percent of all foreign investments in Mexico. He added, "(The candidates) see foreign investment as important ... for their future governments."

With the country possibly lurching left, delegates pressed Lopez Obrador for answers. As the former Mexico City mayor led opinion polls throughout 2005, the Mexican stock market slumped and many companies, including Telmex, hedged their dollar-denominated debts.

Questions concerning energy sector reforms surfaced and staying consistent with his campaign rhetoric, Lopez Obrador ruled out the possibility of allowing private investment in both Pemex and the electricity market should he be elected.

"We're not going to ... privatize the electricity industry or the petroleum," he stated unequivocally, noting that the constitution forbids foreign involvement.

The PRD proposal calls for increased government investment in the petroleum industry and building new gasoline refineries. Pemex, though, funds much of the federal government's budget, leaving little money for exploration and maintenance. According to reports, Mexico could start importing petroleum within the next 10 years.

Felipe Calderon of the National Action Party (PAN) staked out the most liberal position, saying the country needed foreign expertise. He proposed forming "strategic alliances in the industry."

Former U.S. Ambassador to Mexico Jeffrey Davidow, the event moderator, observed in a question to Roberto Madrazo of the Institutional Revolutionary Party (PRI) that only Mexico and North Korea forbid private investment in the petroleum industry.
Madrazo, currently leading a struggling campaign, also proposed some liberalization in the energy sector. Both men advocated keeping government ownership of Pemex.

"There are so many opportunities in the energy sector," Rubin said, adding that Mexico is importing resources when much of the country's richness goes untapped.

"(Pemex) is in a vicious cycle that (it) can't correct."

On the whole, the PAN's Calderon called for the most ambitious structural reforms, which included a flat tax and a crackdown on piracy.

The PRI proposed some of the same things, but to a lesser degree.

Both parties signed business tycoon Carlos Slim's Chapultapec Pact, which advocates creating an optimal business climate and addressing health and security concerns. Lopez Obrador has balked at singing, though, saying the pact largely ignores the poor - the constituency his campaign champions.

Lopez Obrador, a political maverick whose exact policies were largely shrouded in mystery prior to the event, called for better tax collection, and opting out of some parts of NAFTA that dealt with agriculture.

But he acknowledged the need for continued foreign investment in Mexico, saying, "It can be a factor for the development of the country in other fields [other than petroleum and electricity]."

Other sectors needing reform include security, finance and labor, according to Rubin.

Most reform proposals have faltered during the first five years of President Vicente Fox's tenure; the president and congressional leaders have bickered frequently.

The American Chamber, a non-partisan organization, never endorses political candidates. Rubin said, "We can work with any candidate that is elected democratically."

The 88-year-old chamber represents approximately 2,000 companies in Mexico. Rubin estimated its Guadalajara branch, which turned 40 this year, serves 30 percent of the chamber's members.

From the Guadalajara Colony Reporter.