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Unfair Competition? The Peñafiel Case

An investigation prepared by Consumer Reports, which analyzed 130 brands of bottled water marketed in the United States, revealed that at least six brands were above the arsenic limit recommended for human consumption. One of the brands on this list was the company of Mexican origin Peñafiel.

The research pointed out that Peñafiel mineral water contains an average of 18.1ppb of arsenic when the recommended limit is 10 ppb. It is known that prolonged exposure to arsenic is directly associated with conditions such as high blood pressure, skin disorders, diabetes and cancer risks.

Keurig Dr. Pepper, the company that owns the brand, sent a statement announcing the temporary suspension of production at its plants in Tehuacán, Puebla, and Tlajomulco, Jalisco, which is where the production that goes to the US market comes from. In addition, he informed that the installation of new filtering systems was being completed to reduce the amount of arsenic in the drink.

Faced with this situation, the Federal Consumer Protection Agency (Profeco) and the Federal Commission for Protection against Sanitary Risks (Cofepris) carried out visits to Peñafiel plants with the intention of determining if the product in Mexico is healthy for consumers. The results were favorable for Peñafiel. The Profeco indicated that, after making the corresponding tests, they concluded that the Peñafiel mineral water meets the standards stipulated in NOM-201-SSA1-2015 for commercialization.

Thus, on May 1, the Peñafiel factory in Puebla returned to normal operations. The company trusts that what happened will be overcome soon. Currently, on its website you can read the following: ” In Grupo Peñafiel we want to reiterate that our main priority is to provide products of the highest quality to each of our consumers. Therefore, we refer to the subject that has been commented in the media about the levels of arsenic contained in mineral water “ followed by the results of the studies carried out in their production plants.

On the other hand, the federal attorney of the consumer, Ricardo Sheffield, commented that it is probable that this situation has originated due to the particular interests of some of the sponsors of Consumer Reports since the arsenic exists of natural form in the water and in other products. In this sense, the Food and Drug Administration (FDA) of the United States did not issue any opinion regarding the product of the Peñafiel brand, so, the prosecutor concludes, it is likely that it was derived from a commercial ploy by the party. of the American competitors.

No figures have been revealed regarding the effects that Peñafiel suffered with these incidents, but it must be recognized that the effective and fast management by the directors helped to prevent this crisis from spreading.

CRISIS IN THE TOURISTIC SECTOR?

The tourism sector has been an important source of income and jobs in Mexico. Tourism contributes more than 8% of GDP, thus being the third sector that contributes the most money to the country. The growth of this sector during the last decade had been increasing, despite several economic crises that have occurred, for example, the 2008 financial crisis. However, according to the National Institute of Statistics and Geography (INEGI), during In 2018 the hotel sector suffered a sustained fall in jobs and also recorded an increase in the number of layoffs, due to a lower hotel occupancy.
Most of the 70 main tourist destinations of the country suffered a fall in hotel occupancy in 2018 with respect to 2017, even during the month of December, in “high season”. The fall in tourism activity can be attributed to several factors; Among the most important are the increase in the perception of insecurity and the consequences attributed to climate change.
Thus, 2018 was the most violent year for Mexico in terms of homicides. Only in Cancún 550 murders were registered and the direct consequence was that the US State Department. UU issue travel alerts where citizens are advised not to visit certain cities in Mexico due to violence. These alerts mention important destinations for the tourism sector such as Quintana Roo, Baja California, Baja California Sur, Chiapas, and Guerrero. On the other hand, since 2015, the coasts of the Mexican Caribbean began to suffer some of the consequences of climate change. An atypical amount of brown marine macroalgae from the Bahamas began arriving at Mexican beaches, preventing tourists from entering the sea. The presence of these algae, known as sargassum, has increased by 40%, with 2018 being the year of greatest accumulation and negative effects for tourism.
The foregoing can cause various economic losses. According to Pablo Azcárraga, president of the National Tourism Business Council (CNET), if this trend continues, in 2019 there could be a 1.6% drop in tourist GDP with respect to 2018.

Are you interested in knowing the prospects of the tourism sector for the current administration? Is your company prepared for a fall in tourism due to the elimination of federal government investment in tourism promotion? Write to info@riesgospoliticos.com.mx to provide you with the advice you require.

 

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BOEING AIRCRAFT ACCIDENTS , CAN MEXICO BE AFFECTED?

Boeing is in the international spotlight due to the accidents of B737 Max type aircraft in Indonesia and Ethiopia. What has caused commotion among users, regulators and the aviation industry in general.
The international press has begun to speculate if Boeing hastened to bring this plane to market, pressured by competition in the sector. The company decided to take an existing aircraft, the B737, and update all its engineering, instead of designing a new airplane, which would take at least ten years, instead of the six years it took them to get the model renewed. This is part of a new and aggressive strategy to take control of the aeronautical market in the United States.
The B737 Max software has been blamed for the accidents; however, it could be an easy way out. In this sense, investigations have been initiated regarding the consequences that the pressure to deliver orders in very short periods of time has brought to the industry due to the temptations to take “shortcuts”, and the lack of care so that aeronautical programs do not have failures
While the investigations continue, the Indonesia Garuda company has been the first to cancel an order of 49 aircraft of this type to Boeing, transaction valued at 6,000 million dollars and, although this cancellation is not definitive, the signals point to an uncertain future for the company. In addition to this, China has announced to international markets the arrival of COMCAC 919, a medium-range passenger plane that competes directly with the 737 Max, although it has yet to improve its efficiency in the use of fuels.
It is important to bear in mind that, in recent years, Mexico has captured important investments in the aeronautical industry. Thus, any impact on international markets will impact the sector in our country. The Boeing crisis will generate pressure on the production chains and all the companies that supply components for the manufacture of their aircraft. Especially the Boeing 737 Max, which can be said to be an emblem of the advance of aeronautics in Querétaro, which has been developing for 20 years.
In short, the loss of confidence of the users in the 737 Max, the suspension of flights of these aircraft, the possible cancellation of orders, the arrival of new Chinese competitors to the market and the economic slowdown in Europe, China and the United States are some of the factors that the Mexican aviation industry should take into consideration when making decisions in their business plans. The massive cancellation of orders of the 737 Max could generate big losses for the industry and for the economy of Mexico, especially for the aeronautical sector of Querétaro.

Do you know if your company is in danger? Are you a Boeing provider and do not know how this crisis can affect you? Write to info@riesgospoliticos.com.mx to provide you with the advice you require.

 

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CRISIS BY SUPERFICIALITY IN MAGAZINES, THE COSMOPOLITAN CASE

Cosmopolitan magazine is one of the most widely distributed magazines in the world and is one of the 20 most popular magazines in the world and the favorite of the market in terms of physical activity and diet. But in April 2017, the magazine published an article about Simone Harbinson, a famous fitness blogger. The name of the article was “How this woman lost 44 pounds without doing * any * exercise”, where they talked mainly about the diet that Harbinson followed to achieve an ideal body weight.
However, Harbinson had been diagnosed with cancer, he had a tumor that was found in the appendix, so he underwent various surgeries and this diet was the one he had to follow after the operations because he suffered -in addition- a series of medical complications. But being a fitness enthusiast, she talked about her post-illness recovery process in the Cosmopolitan magazine and the article highlighted the fact that she had achieved her ideal weight without doing any kind of exercise.
The article had immediate reactions on Twitter, especially the Huffington Post, and Cosmopolitan was asked to withdraw the article for attributing their weight reduction only to their illness (ie, extolling the disease as a way to lose weight), without taking Consider the eating habits that Simone had to acquire from the operations he underwent to beat cancer. Cosmopolitan was criticized in social networks for using flashy and deceptive titles in order to generate more followers. The reaction of Cosmopolitan was to remove the article from its website. Necessary action to avoid that the number of retweets that criticized the title of the article will increase, but it was not enough, since the magazine continued to have negative reactions. Simone Harbinson at no time expressed discomfort with the magazine, even uploaded a photo to Instagram thanking “the honor” of presenting his case. However, because of the disgust that it caused to the readers, she was also forced to remove the gratitude
In Political Risks, we recommend that companies implement strategies to reverse reputational damage, not only to stop it. Each day that passed was an opportunity for Cosmopolitan to tell his side of the story. But by simply eliminating the article, social networks became a forum for people to share their own experiences with cancer, further exacerbating the negative perception of this type of journals that are often criticized for their ” superficiality”. A few days later, Cosmopolitan returned to publish the article, now under the title “A serious medical problem helped me to love my body more than ever”.
This situation could be classified as an “almost” crisis; that is to say, the event did not transcend to generate damages to the magazine, but it was limited to the activism in social networks. As Dolce & Gabbana experienced it, there are events that, due to luck, do not end in crisis, until luck ends. Companies should not trust that luck will always be on their side. Instead, they must establish mechanisms to contain damages and reputational crises before they can generate losses to companies.

Do you think that your company is exposed to a crisis due to activism in social networks and you do not know how you could handle it? We support you, write to info@riesgospoliticos.com.mx.

 

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GASOLINE OUTDOOR, OPPORTUNITY THAT KCSM USED

During the month of January there was a crisis of shortage of gasoline. More than 10 states were affected by the Mexican government’s plan to combat huachicoleo, a strategy that sought to reduce the theft of hydrocarbons. A strategic part of the plan was to close the valves of the pipelines that transport gas, crude oil and gasoline, which generated problems with the supply of fuel. In Mexico City, 85 of the 400 gas stations registered a problem. Mexico has 17,000 kilometers of pipelines belonging to Petróleos Mexicanos (PEMEX) and it is in these networks that the theft of hydrocarbons mainly occurs. In 2018, these robberies cost the Mexican state 60 billion pesos.
Thanks to the energy reform of 2013, the Mexican oil sector was opened to private investment, allowing various companies to sublease Mexican pipelines, which generates considerable savings in transportation costs, that is, it was possible to generate competitive conditions. But with the closure of these, they had to find another alternative to transport gasoline. PEMEX, where appropriate, reorganized its supply chain by transferring thousands of liters of gasoline in pipes. This shortage represented the first crisis of the government, however, a company took advantage of this crisis and managed to use it in their favor, increasing their sales.
Kansas City Southern de Mexico (KCSM) is a railway company dedicated to the transport of cargo and was used as one of the safest and least expensive options -including the pipes- to deal with the shortage of gasoline. This company is one of the most attractive options for the market – given the lack of private infrastructure to store gasoline and transport it via pipelines – and is investing to have a storage center in San Luis Potosí that will have a capacity of 300 thousand barrels . In such a way that the savings in the transportation of gasoline can reach up to 25% in relation to the use of pipes, besides that this option represents a safer option compared to the use of pipelines.
KCSM has a strategic alliance with ExxonMobil, a Texan oil company, with which it imported a total of 2.6 million barrels between 2017 and 2018. In February, in response to the crisis, KCSM had an increase of 135% in the volume of imported gasoline through their trains. And, according to the president of KCSM, José Guillermo Zozaya, it is expected that imports will continue to rise as companies -mainly international- do not want to have a shortage problem again; for what he has already added to Total S.A. as a new customer.
One of the advantages that KCSM presents is that its network is international, which places it as a leader in rail transportation of gasoline in Mexico. In addition, it has an adequate infrastructure for the use of advanced technology and is part of the Asset Health Strategic Initiative, which seeks to reduce mechanical service interruptions, improve the quality of wagon inspection and increase the efficiency of railway workshops. They also use 400 drones to monitor the most conflictive routes and monitor all trains through multiple security filters. These security measures have allowed the company to only have 0.02% vandalism.
In this way KCSM was able to take advantage of the crisis of the huachicol and was placed as the safest and most economical option for the transportation of gasoline. All thanks to an advanced security strategy, the use of technologies and the correct implementation of international protocols in the field.

Do you need help to see find opportunities in the midst of crisis? Write to info@riesgospoliticos.com.mx to provide you with the advice that your company requires.

 

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