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Another one bites the dust, hey-hey

12 October 2008

Comercial Mexicana, one of the larger Mexican owned grocery chains (Mega and Sumesa supermarkets, as well as Mexican Costco Stores) went belly-up last week.

WalMart may be in some trouble here… at least locally there is a lot of buzz about their bland, overpriced VIPs stores closing. WalMart’s Mexican operations include VIPs (which is only good for coffee… and maybe breakfast if you’re in the Zona Rosa at five in the A.M., but that’s more for the floor show — drag queens, cops, hookers, drunk juniors — than the overpriced food) and several different supermarket chains.

I haven’t heard anything about Soriana — which just took over the Gigante store where I usually buy my supermarket type food.

It’s not just supermarkets and retailers… Cemex is in some trouble,  but given that the Mexican response to the financial crisis is to build, build, build (the old “New Deal” approach), and other countries may opt for the this kind of tried and true strategy… the international company may actually do very well over the long haul.

Comercial Mexicana had been on a buying binge lately — as have the other big companies — but CM’s debt load was in U.S. dollars.  It was over-extended, and… worst of all… it had borrowed in U.S. dollars.  The peso this last week lost about 40% of its value against the dollar and — although they argued they were too large to fail — the Treasury (Sec. de Hacienda y Credito Publico, SHCP) refuses to bail out companies with dollar-denominated debts.

Unlike most of the United States, there are alternatives to supermarkets here.  Mom n Pop groceries on every street corner, as well as the traditional urban mercados, have been under threat from the big-box stores, so this may actually end up not so bad.  I’ve been saying for some time that the real problem with the big box stores was that they did not create wealth except for their stockholders, where the mom-n-pop and mercado stalls created  a larger bougeois. That is, the same number of people are involved in the food distribution business, but in the corner store, these people are owners, not employees.

They may earn less, than they would as a senior associate at WalMart, but — unlike mere employees — as owners they are more likely to invest in their neighborhood (even if it only means sweeping the sidewalk every morning), take part in community affairs and instill middle-class virtues like thrift and a respect for education than workers would.  Not always, but the person who lives in their business more likely to take some interest in the local community and in the future of that community than if one is just working for a paycheck and — at the end of their shift — is done with the place.  The kid bagging your groceries at Mega is just getting your spare change (and, some argue, a “real life education” in job responsiblity).  The kid at the corner store is a potential owner… and his or her “real life education” also includes things like accounting and business management.  And ownership responsiblity.

It’s very scary that the peso dropped so far — but it may only be psychological — and, it appeared Friday that the slide had stopped (at least temporarily).  Things are not going to be good for the next few months (and I’ll probably be whining about it… if not begging for money), but other than listening to the gringo community whine about not being able to find some Canadian brand of tea, or the outrageous suggestion that they buy their Mexican coffee in Mexican brands rather than in the re-imported U.S. packaging… things may not be as bleak as they seem.

One Comment leave one →
  1. Miranda Owen permalink
    15 November 2013 4:32 am

    Hello Admin,

    Can you please get in touch. I would like to publish few relevant theme based content at your site “mexfiles”.
    Any specific guidelines you have?
    Looking forward to hear from you.


    Best Regards,
    Miranda Owen

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