Beverage industry executives/analysts say Mexican Coke bottlers start move away from 100% cane sugar sweetened soft drinks (BD 5/13/94); begin limited use of blend combining sugar with high fructose corn sweetener (HFCS). Executives/analysts say Pepsi bottlers probably follow eventually, but note Enrique Molina -- chairman Pepsi Mexican anchor bottler Gemex -- holds "huge Mexican sugar interests." Cost savings from HFCS use drive change. Sugar cane "major Mexican crop," but Mexican analyst says sugar now "even more expensive in Mexico than on world market." US analyst notes use of blend would save Mexican bottlers "tens of millions of dollars a year." Anchor bottlers Coke Femsa and Coke Panamco handle most Coke Mexican volume. 17 other Mexican bottlers also hold Coke franchises.

Details. Mexican industry executives/analysts report recent tests of soft drinks sweetened with sugar/HFCS blend; mostly with flavor brands. Analyst: "Some bottlers here say you can more easily use fructose in flavors without affecting the taste." Reports: 1) "Coke (bottlers are) testing (sweetener blend). It's more related to flavors." 2) "It's already started. In 1997, it will be more widely used." 3) "Some Coke bottlers are experimenting with a blend of 30% fructose, 70% cane sugar." 4) "Femsa's been testing (blend) in flavors. I think Panamco is too." 5) "Mexican bottlers will switch to a 30/70 blend and perhaps move to 50/50. It won't exceed that." 6) "Pepsi bottlers aren't using a blend yet, but probably will." 7) "Pepsi won't start soon, Mr. Molina controls 50% of (Mexican) sugar refining capacity." Labeling. Executive notes Mexican law allows identification of nutritive sweetener blend as "sugars" or "natural sweeteners."

Producers. ADM and Staley operate joint venture Mexican HFCS plant; CPC/Arancia also produce HFCS in Mexico; Cargill operates plant in TX near Mexican border. HFCS executives: 1) "There is going to be (movement to fructose) in the 1st part of 1997." 2) "Coke and Pepsi are moving in that direction." 3) "Right now most Mexican HFCS is used for food and candy. If demand calls for it (producers) can bring in US-made HFCS." 4) "Interest level has been getting higher, (bottlers) get offered fructose every day of the week at a price that's significantly less than sugar." Analyst: "Both ADM/Staley and CPC operate state-of- the-art HFCS plants in Mexico producing US-quality sweetener."

Politics. Mexican executives: 1) "It's a very sensitive issue (in Mexico). You have the (sugar) mill owners, the growers and the cutters. There are strong unions involved." 2) "When NAFTA was debated, the Mexican government promised the sugar lobby that sugar only would be used. The US government told the (US) grain lobby they would have a great market (for corn products) in Mexico."

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