It Took Tough Negotiations, but Mexico Now Sees the Lite

Cooler heads have prevailed, and it’s Miller time again in Mexico.

The Mexican government reversed a four-week ban on imports of Miller beer from the United States, officials said Thursday. Mexico also moved to solve a confusing brouhaha over labeling on Miller’s bottles and cans that led to the brief prohibition.

The dispute seemed to generate more heat than Lite, but the settlement allows Miller to resume its modest assault on Mexico’s beer market, which is already the world’s seventh-largest and is growing at double the global rate. Miller exported 1.3 million cases of beer to Mexico last year, mainly to border cities.

The ban had prompted congressmen in Miller Brewing Co.’s home state of Wisconsin to charge that Mexico was using the labeling issue to keep out U.S. products and protect its beer industry.

Asked Thursday whether this charge was true, Luis de la Calle, Mexico’s Commerce Department representative in Washington, said: “Mexican beer can stand on its own quality.”

Miller is the largest foreign player here--though it has less than 1% of a market that is dominated by Mexico’s huge producers, Femsa Holding and Grupo Modelo. Santander Investments analyst Alexander Robarts described Miller’s market share as a “serious sliver.”

The solution emerged in a series of bilateral talks over the last three weeks that went as high as U.S. Commerce Secretary Bill Daley and his Mexican counterpart, Herminio Blanco, who discussed the issue in Washington late last week, U.S. and Mexican officials said.

Miller beer actually began to flow south at that time, when the Mexican government ordered its customs officials to allow the products back in as a sign of good faith, said De la Calle.

In further talks Wednesday between David Aaron, the U.S. Commerce undersecretary for international trade, and Mexican Undersecretary Jaime Zabludovsky, Mexico tabled a package of proposals to resolve the beer labeling issue permanently, said a U.S. official, speaking on condition of anonymity.

Miller had said it believed it met the new labeling rules and couldn’t get a clear answer about how its labels fell short of the requirements. Among the issues was whether “Lite” on the label of its Miller Lite brand referred to calories or alcohol content. Under the tentative settlement, Miller for now will be required to put stickers on its bottles and cans containing certain information on health and contents, according to De la Calle. Further, he said the word “Lite” would need to be registered as a trademark in Mexico and highlighted to avoid confusion over whether it refers to lower alcohol content or calories.

Finally, Mexico is to establish a private-sector body to review and approve labels quickly for importers as well as domestic firms.

Though the spat dragged on for a month and Miller lost sales over the Cinco de Mayo weekend, officials of the two governments insisted the agreement showed that the problem-solving mechanisms of the North American Free Trade Agreement are working effectively.

Said the American official: “We think NAFTA has certainly helped in resolving this issue because NAFTA provided a mechanism under which we could raise it and deal with it.”