Mexico Won’t Accept Imports of Miller Beers

Mexico has suddenly closed the tap on Miller Brewing Co., provoking a trade spat that has puzzled U.S. officials and taken the fizz out of the Milwaukee-based brewer’s recent modest successes in the fast-growing but tough-to-crack Mexican market.

Miller Genuine Draft and Miller Lite beers had recently become Mexico’s top-selling imported beers. But on April 7, the company’s trucks were suddenly turned back by Mexican customs at various border crossings because its beers had been delisted as certified import goods.

Miller says it was told by the Mexican government that its bottles were improperly labeled. But Miller officials complain that the government has not specified any violation and is really protecting Mexican market leaders Femsa Holding and Grupo Modelo, which are partly owned by North American rivals Labatt and Anheuser-Busch.

“We know we were the top-selling import, we know we comply with regulations, we know we can’t get any answers about noncompliance, and we know that none of the other domestic or import beer sellers are undergoing the same kind of scrutiny,” said Mike Hennick, a Miller spokesman in Milwaukee.

Mexican officials were not available for comment.

Members of Congress and top officials at the U.S. Departments of Commerce, State and of the Trade Representative’s office have all put the pressure on their Mexican counterparts to resolve or at least clarify Miller’s situation, to no avail, said a U.S. government official in Washington.

“We have raised this with the appropriate Mexican government officials, and they say they are investigating at this point,” said William Brew, minister for consular affairs at the U.S. Embassy in Mexico City.

Sergio Ponce de Leon, an official in the Mexican Ministry of Health’s sanitary control section, said that as far as he knows, Miller is not in violation of any health regulations.

U.S. beers entering Mexico must meet labeling standards, which require that health warnings, content listings and names all be in Spanish. Miller officials say that their labels comply with Mexican law as they know it and the company’s products are labeled similarly to other domestic and international brands.

But the dispute may have arisen over “superficial text” on cans and bottles. Miller said it received conflicting directives from Mexico on whether slogans such as Miller’s “Great taste, less filling” or Budweiser’s “King of Beers” must be translated.

The Miller’s beer entering Mexico is brewed in Irwindale and in Forth Worth. Less than 1% of Irwindale’s production goes to Mexico, a Miller spokesman said.

Though Miller boasts of being Mexico’s top-selling import, foreign beers in total have captured less than 1% of that country’s market, a fact blamed largely on Mexico’s tightly controlled distribution system.

Miller says it sold 1.3 million cases of beer in Mexico last year, a 35% gain from the previous year. Sales jumped 50% over the first three months of 1998, before the suds went flat. Beer sales are rising sharply across the board in Mexico, thanks to economic recovery.

Mexico’s Grupo Modelo and Femsa hold virtually 100% of the beer market, with Modelo slightly ahead at 54%, according to a J.P. Morgan Co. analysis last November.

“It’s very important for a beer company to have local distribution channels, so there is a huge barrier to entry,” said Laura D. Meizler, vice president for Salomon Smith Barney in New York.

By contrast, Mexican beers have enjoyed great success in the U.S. market. Grupo Modelo, which is 37% owned by Anheuser-Busch, makes Corona, which recently surpassed Heineken as the largest-selling U.S. import beer at nearly 40 million cases a year. Femsa Holding, which is 22% owned by Labatt of Canada, brews popular brands such as Tecate and Dos Equis.

Letters sent by Wisconsin members of Congress to Commerce Secretary Bill Daley said Miller’s problems are the latest in a series of actions Mexico has taken to “hinder the access of Miller and other American brewers to the Mexican market.” He urged a resolution “before it becomes an issue affecting bilateral relations between Mexico and United States.”

Kraul reported from San Diego and Smith from Mexico City.