Cross-border Coke

If you read my post on Coke you might be interested in this San Diego Union-Tribune story on
Is Mexican Coke the real thing?

Carvallo says his store goes through 10 to 15 cases of Mexican Coke a week – his entire stock – while he's barely able to push five cases of the domestic version.

"Sometimes I have it left over," he said of the domestic Coke he orders. "Sometimes a case, case and a half. So it's a lot of difference."

Taste is the main reason why his discriminating shoppers buy Mexican Coke – they say the cane sugar sweetener used in Mexican Coke has a sweeter, cleaner flavor than the high-fructose corn syrup in the American version. Many are willing to pay $1.10 per 12-ounce bottle for the imports, even with cans of American Coke sitting nearby for 49 cents each.

...

With a niche market for Mexican Coke taking root in the United States, The Coca-Cola Co. and its bottlers are quietly looking to block its passage across the border.

update:Here's a post by Grant McCracken on Mexican COke

Sweet South American Coke

"The Coke tastes better here," said my stepson, while he was visiting us in Uruguay. Was this just a side-effect of being on vacation? Maybe... but I doubt it. The Coke he was drinking really was different from the Coke he usually drinks in the U.S. I'm not referring to the infamous "New Coke,"or the original Coca Cola patent medicine formula with cocaine, but in South America, Coke is still made with real sugar. The Coke in the US tastes different because it's made with corn sweeteners. Why can't the world's richest country buy the world's best-tasting Coke?

The answer, it turns out, has to do with a series of unintended consequences. Sugar policy in the US was designed to increase income for farmers by increasing the price of sugar. The US government set quotas on the amount of sugar that could be imported from other countries. Restricting the supply of imported sugar boosted its price, and achieved the goal of higher incomes for US sugar producers, at least temporarily.

Sugar cane is a tropical plant and by blocking imports from the Caribbean, Central America, and South America, this policy gave most of the U.S. market to cane plantations in Florida, Louisiana, and Hawaii. But other US farmers saw an opportunity. The high price of sugar made it profitable to produce sugar from beets. States like Montana, North Dakota, Minnesota, and Michigan became major sugar producers. Beets have surpassed cane; 54% of US production now comes from sugar beets [USDA].

Even with expanded domestic production, sugar prices in the US are still much higher than the free-market price. U.S. consumers pay over twice the world price. In total, sugar policy costs the American public over $1 billion annually. And it's not just households. Companies are also major purchasers of sugar and while high prices may help farmers, they hurt business buyers. Lifesaver candies used to be made in Holland, Michigan (about an hour from Kalamazoo) but because of the high price of sugar in the US, the factory closed and moved to Canada.

This brings us back to Coca Cola. For generations, Coke was sweetened with cane sugar, but eventually high US sugar prices forced the company to consider substitutes. Since sugar-- either from cane or from beets-- was so expensive, Coke, and other soft drink manufacturers, switched to a cheaper sweetener, corn syrup, in the 1980s. US production of high fructose corn syrup has grown by over 400% since that time [USDA].

In the new millennium, some consumers have doubts about drinking high fructose corn syrup in their soft drinks. Jones Soda, and other small bottlers, are switching their recipes to use only sugar.

Is Coke with sugar better? You can find out for yourself. Each year, Coca-Cola produces a limited amount of Coke that is kosher for Passover that doesn't use corn sweetener. Look for Coke bottle with yellow caps and marked "KP" in early Spring

Welcome

This blog sits at the intersection of food and economics.