By the Blouin News Business staff

Coca-Cola suspends operations in troubled Mexican state

by in Americas.

Parents and relatives clash with police during a protest demanding justice and clarification for the disappearance of 43 students from Ayotzinapa, February 18, 2015 in Chilpancingo, Guerrero State, Mexico. JESUS GUERRERO/AFP/Getty Images

Protesters clash with police in Chilpancingo, Guerrero State, Mexico, February 18, 2015. JESUS GUERRERO/AFP/Getty Images

Coca-Cola will tentatively decide on Wednesday whether or not to continue the suspension of operations at Mexico’s largest bottling plant and distribution center. The company announced the suspension on Saturday, due to escalating security concerns. The complex is located in Chilpancingo, the capital of Guerrero state, and is 108km away from Iguala, where 43 students were kidnapped and killed last September. Their abduction — subsequently exposed to have been perpetrated by local police who handed them off to drug gang executioners — sparked national outrage and a protest movement in the state that has turned anarchic. On Sunday, the Guerrero Industrial Trust implored Coca-Cola to stay, citing the economic damage its suspension would do to the region, which is already suffering in the chaotic aftermath of Iguala.

Mexico has the world’s highest per-capita consumption of Coca-Cola, so the ripple effects of an extended suspension will hurt customers, store owners, and possibly Coca-Cola workers (if lay-offs become financially necessary down the line). Coca-Cola has 55 delivery routes in the area, and the Yucatan Times reported that the owner of a grocery store on one such route in Chilpancingo’s center is concerned because 70% of his income comes from Coca-Cola products. Coca-Cola’s distribution also reaches into remote rural communities that lack roads and electricity, being one of precious few sources of outside trade and income. Now that is frozen as well.

The anti-government protesters that emerged after the Iguala massacre regularly block roads and seize trucks to finance their cause, disrupting daily life and business in Guerrero. Since the students disappeared, Coca-Cola has lost 250 trucks to robberies or attacks, in addition to suffering constant vandalism on its facilities. On February 18, protesters took two Coca-Cola employees hostage for several hours before their negotiated release through a prisoner-swap with the police. In a separate incident on the same day, ten people were injured when demonstrators tried to attack the company’s offices with gasoline bombs. Coca-Cola said its first priority is to guarantee the safety of its personnel, and is therefore suspending operations.

Fox News Latino reported that “protesters have also attacked other big companies, such as Comercial Mexicana department stores, Oxxo convenience stores and trucks for Bimbo, one of the largest food conglomerates in the world.” Particular targets for looting are trucks belonging to transnational companies, since they are seen as being corrupt partners of the Mexican government. The protesters accuse President Enrique Peña Nieto’s administration of focusing on pro-business reforms instead of bringing the students’ killers to justice and battling widespread corruption in the police and local governments.

The director general of the Guerrero Industrial Trust acknowledged the difficulties businesses are currently facing in Guerrero, but also mentioned upbeat announcements from other companies that show their confidence in continuing to work in the region. Specifically, he mentioned this week’s debut of hundreds of vehicles made in Hyundai’s factory in Guerrero. However, according the president of the American University of Acapulco, “if Coca-Cola pulls out of Chilpancingo it could send a message to other companies to do the same.” Not only would that reduce the availability of products in Guerrero, it would be extremely dangerous for the economy and the stability of the entire state.