PepsiCo Bottler Halts Operations in Mexican Town on Crime

(Bloomberg) -- An exclusive bottler of PepsiCo Inc. is halting operations in a Mexican town where it has become too dangerous to operate, almost three months after rival Coca-Cola Femsa did the same.

The company, Grupo Gepp, suspended beverage-distribution operations in Ciudad Altamirano, about 170 miles (275 kilometers) southwest of Mexico City, “to guarantee the security of its people and its supply chain,” PepsiCo said in an emailed statement. “PepsiCo respects Grupo Gepp’s decision.”

In a separate statement, Grupo Gepp, which bottles and distributes beverages for PepsiCo in Mexico, said the closure was temporary.

On Monday, Mexico City daily El Financiero reported on its website that gangs are shaking businesses down in the area and the company hasn’t been able to guarantee the safety of its employees. Ciudad Altamirano, located in the southwestern state of Guerrero, which has experienced a surge of violence in recent years.

Coca-Cola Femsa, Latin America’s largest soft drink bottler, announced similar measures in March when it indefinitely closed its distribution operations there. The company cited months of harassment by criminal groups and the lack of an effective police response.

Guerrero has seen homicides soar 19 percent this year, according to data posted on the Interior Ministry’s website. Nationwide, homicides have surged this year, outpacing 2017, which saw the most deaths on record.

Although the state and federal governments have attempted to boost security in the area, impunity still prevails, El Financiero reported. Closing operations will affect distribution to six nearby municipalities, according to the newspaper.

To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Lisa Wolfson, Jonathan Roeder

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