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Cerveceria

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Introduction
In 1975 the nine most important companies, in terms of sells, in Mexico were own by the state or were 100% foreign companies. Is the tenth company were private companies with national participation started to appear, as Cerveceria Cuahutemoc which at that time occupied the twelfth place at a national level.
In 1995 as we all know it occurred the “onda salinista” were many companies were affected between them were PEMEX and Altos Hornos de Mexico which are companies that are extremely important for the Mexican economy, but at that bad moment of the country, Fomento Economico Meixano (FEMSA), which is the controller of Cerveceria Cuauhtemoc-Moctezuma and grupo Modelo were achieving an important position between the first 20 places of the best companies.
In this last years both companies continue growing and not only their competition is at a national level, now their competition is also in the foreign market. For this, FEMSA join with the foreign beer company Heineken in order to distribute in the United States the products Tecate, Dos Equis, Sol, Carta Blanca y Bohemia. With this both companies will have the 26% of presence of the exported beers in the United States market. Also this will help the company from Monterrey to strength his competition with Grupo Modelo.
The main reason for Cerveceria to look forward this types of joints with other companies is to expand their market to other countries and with this over pass their competition.

* The beginning of the beer industry in Mexico
The beginning of this industry took place during 1880 – 1910 together with the beginning of the modern industry “porfiriana”. It was a period of time were big companies started to establish and as they needed a good amount of money for investment they were established as anonymous societies for legal terms. At this period the main companies of cigarettes, beer, steel, soup, etc., were starting to establish in good positions within the best companies.
This investments as we know require of a considerable amount of money and the first banks were also starting to establish so they didn’t have the capacity of lending the required amount of money to the owners of the companies, so they needed to invert their own or their family’s capital.
At that time in Mexico the beer production was totally different as nowadays. The beer fabrication in our country is full of tradition, it was not until the end of the XIX century that the “modern” beer industry started to establish in a more solid way.
In Mexico there existed two main beer companies one in D.F and the other in Toluca, but this companies started to face certain problems because the Mexicans didn’t leave aside their traditional tequila and pulque, for them the beer was another drink that sometimes they can drink but the product was not as traditional as in the United Stated or Germany. The companies started to notice that the main cities were most of the beer was consumed were in the north cities that are boundaries with the United States.
We need to see that at the time there didn’t exist all the process of logistics that exists nowadays, so the Mexicans at the north states of Mexico started to consume beers from companies of the United States. This caused an increased of 580% in those companies in the years 1884 – 1888.
In Matamoros, Tamaulipas it was imported 1,400 containers of bottled beer annually; 1,200 came from Milwaukee and 200 from San Luis. The type of beer that was consumed at that time was Pilsner. In this city it was only importing beer from North American companies and the price for container was of $16.50. In other hand, in the frontier city Piedras Negras, beer was imported from Germany and the United States.
Actually, the national companies that exist occupied the first place in the consuming of their beer here in the country and also an important part of the foreign market.
Cerveceria Cuauhtemos was one of the companies that started to grow in a very rapidly way achieving a 55% increase of their exportations. * The beginning of Cerveceria Cuauhtemoc
The background to the Cerveceria Cuauhtemoc back to the factory of Jose Calderon beer that was established together to the ice maker in 1886. In addition to them, Calderon owned one of Monterrey's major commerce industry of those years, “La Casa Calderon y Compañía”. Among the many businesses that had the company in the early of the eighties was imported beer to the United States, so those who worked in the company knew the business sale and distribution of beverage of foreign origin in the city of Monterrey.
Such was the case of Isaac Garza, employee of La Casa Calderon for a time of 15 years prior to the establishment of Cerveceria Cuauhtemoc, of such a way that when death came from Jose Calderon in 1889, his widow - Muguerza Francisca Calderon was in charge of that company with the help of his brother Joseph A. Muguerza his attorney consultant -Francisco Sada-and Isaac Garza.
On November 8, 1890 Mr. Francisco Sada, Isaac Garza, José A. and Joseph Schnaider Muguerza decided to partner and establish Cerveceria Cuauhtemoc, S.A. Joseph Schnaider who owned most of the actions was an experienced brewer who had worked in the Anheuser-Busch Brewery in the city of St. Louis in Missouri and Monterrey probably had known in his business import beer for Calderon House. Furthermore, he would be responsible for the construction of the factory and of supervision in the manufacture of beer. The other partners, as Garza, were aware of the sale and distribution of beer in Mexico and had links ties with U.S. suppliers that enabled them to access technology later used in Cerveceria Cuauhtemoc. Regarding the distribution of the drink in the region, was given the exclusive right to sell to Calderon House granted the 5% commission on the total value of the sales.
It seems that Schnaider and Enrique Sada Muguerza performed together a trip to the United States to buy the right equipment and to hire engineers and architects who design and build the brewery. From the beginning, entrepreneurs were interested in acquiring technology to its plant. Thus, the brewery which was established in Monterrey employees initially hired people that were born in Germany and beverage processing machinery bought from abroad in the better quality. Proof of this is that the brand refrigeration machinery of the brand Vergne that Cerveceria already used in the nineties was described as one of the best in the U.S. market. * The beginnings of import substitution
It can be seen that the creation of Cerveceria Cuauhtemoc took as the result of a union between Monterrey savvy entrepreneurs of sales and distribution channels and a German businessman with experience in the manufacture of beer. Should be noted that this type of associations also occurred in most major brewers the late nineteenth century. One hundred years later this type of collaboration would occurred in other Mexican brewer since 1993, the brewery Anheuser Busch invest U.S. $ 447 million to acquire the 18%-with an option to increase its stake to 35% of the Cerveceria Modelo.
However, the shareholders of the Cuauhtémoc Brewery they had clear that it should gradually reduce dependence on employees well as foreign supplies. In this sense, the first step taken turn of the century was the sending children overseas owners to learn the process of beer production. Such was the case of Luis Sada (son of Francisco G. Sada, one of the founders) who was sent to Chicago to study brewing and manufacturing techniques who return in 1906 and his job was overseeing production operations of the plant. Years later, Roberto Garza Sada (son of Isaac Garza, also founder) studied engineering at the Massachusetts Institute of Technology (MIT) in the United States and had in his hands the management of the brewery for a long period. In addition, Garza Sada was in the decades of the thirties and forties of the twentieth century part behind the creation of major companies in the group as they were: Vidriera, Empaques de Carton Titan, Hojalata y Lamina, la Comapañia General de Aceptaciones and Valores Industriales, among others.
Regarding inputs, Cuauhtémoc shareholders as well as brewers sought other ways to purchase the Mexican territory or produce it themselves. Regarding the raw material must noted that the malt, barley, hops and rice were essential products in the manufacture of beer. In addition, their quality was paramount to produce an excellent product so brewers sought provided good inputs. For 1897, the largest state producing barley was the state of Hidalgo, followed by the states of Puebla, State of Mexico, Tlaxcala and Guanajuato. However, barley produced was forage and attempts to generate an appropriate species for beer production had not been successful on a large scale. Still, barley Mexican mixed with rice came to be used in the production of malt to a scale. Although there had been minor attempts to produce barley for beer production in Mexico, the major breweries in the late XIX still importing barley, malt and hops while rice of good quality and was acquired in the country. Based on existing information early twentieth century shows that most malt 90% was imported from the United States and Germany, whilst hops came from various countries including the United States (60%), Germany (25% -30%) and the rest came from Austria, Czechoslovakia and Spain.
It should be noted that in the United States were stopped breweries produce their own malt and rather began to acquire this raw material of companies specializing in the production of malt in order to get a better quality product. It seems that U.S. companies obtained more profit and better quality control to purchase such malt from other producers. Following this example, Mexico also began to consider establishing a factory devoted exclusively to the production of malt. Proof of this is that in 1904, a malt producer in a Queretaro state paid to the federal government a tax based on the new Factories Act 1893.
The bottling and packaging were aspects that influenced the quality and distribution of beer so they have always looked for bottles, boxes and barrels of the best kind. The beer companies manufacturing on the late nineteenth century used glass bottles and barrels and wooden boxes to distribute the beer, in such a way that when these companies started operations had to import most of these inputs. As a result, Cerveceria Cuauhtemoc tried from the beginning to reduce foreign dependence on packaging materials had so within a few years of starting operations, the factory employed and glassblowers from Germany, to manufacture bottles glass and already produced their own barrels and wooden boxes. Similarly Toluca and Mexico Brewery imported from Germany into malt brewers at Blown (glass) and cooling.
However, the importation and foreign workers maintenance was costly for companies. Furthermore, in the manufacture of bottles, blowing quality was very uneven and usually bottles did not resist manual manufacturing processes which must undergo pasteurization of beer for better conservation. Thus both, Toluca as Cuauhtémoc, decided to manufacture their own bottles and therefore invested heavily in machinery to produce them. In 1897, the Toluca Company began the process to establish a glass factory and bottles and for 1901 the Governor of the State of Mexico inaugurated the establishment.
In the case of Cerveceria Cuauhtemoc, the first step was taken in 1899 when the company organized a new glass factory and called it Vidrios y Cristales de Monterrey, S.A. with an investment of $ 600,000 pesos which began operating in 1903. However, because the manufacture of bottles blown depended on individual workers from Germany, demanding higher wages and the strained relations that occurred between them and the patterns, the factory closed its doors nine months after starting operations.
However technological problems in Vidrios y Cristales, employers continued to seek for solutions in Monterrey to manufacture good quality bottles. However, Monterrey businessmen were not the only ones looking for a solution to this problem as the Brewery Chihuahua whose shareholders included Juan Terrazas, John Brittingham and Enrique Creel beer market competitors in the Northern region of the country with Cuauhtémoc, were investigating how to produce bottles regardless of the hand blown bottles.
Thus, in 1904 both the Chihuahua group like Cerveceria Cuauhtémoc went in search of machines that produce glass bottles automatically. However, internationally it was not until 1903 that the new technology was patented by Mr. Owens in America. This invention was not marketed by Owens but by the Toledo Glass Company who in turn established agreements with the Owens Bottle Machine Company and Kent Machine Company for the manufacture of machinery, these companies were responsible for establishing a licensing system both nationally and internationally.
Both, John Brittingham and Isaac Garza, visited the Toledo Glass Company to acquire the patent Owens. However, Brittingham had best information as Technical Director Glycerine Factory Lagoon which was a major shareholder and Brittingham Arthur E. Fowle was a cousin of one of the senior managers of the Toledo Glass Company. So for 1905 Brittingham in partnership with John Terrazas, Arthur E. Fowle and Francisco Belden had acquired the contract for exploitation of the patent Owens to Mexico for 20 years. The Monterrey businessman who had arrived days later to Toledo in the U.S. and had been temporarily relegated to the play.
In that same year, Brittingham decided to commercialize the patent Owens in Mexico for which the group engaged in discussions with Cerveceria Cuauhtémoc, which were not fruitful. So, Brittingham sought other buyers as the Brewery Toluca and Mexico to no avail. It took four years to finally groups Chihuahua and Cuauhtemoc reach agreement: group of Brittingham gave the patent valued at $ 400,000 pesos and the group of Isaac Garza contributed the assets of the now dissolved Fabrica de Vidrios y Cristales, S.A., giving rise on December 9, 1909 to Vidriera Monterrey, S.A., which would come into operation until 1912. Thus, the Monterrey group, along with the group of Chihuahua began the company that is now known as Vitro and in 1980 and in 1999 was positioned in terms of sales in 16th place nationally in Mexico.
In addition to the manufacture of bottles Monterrey group was also interested in making other inputs from an early age as the boxes, bottle caps and packaging of various shapes and sizes began to occur since 1900.
The distribution of the beer was an important factor to consider given the perishability of the product. At first, the absence of refrigerated trucks, breweries were limited to distribute its products in close vicinity to their factories. However, once appeared cooling technology, the various breweries especially large began to dabble in more distant markets. To accomplish this, these companies began to acquire their own means of transportation and distribution that was the case of the brewery Toluca and Mexico and Cuauhtémoc, who by 1897 already owned their own cars dealers, while small breweries located in Aguascalientes, Puebla and Queretaro had to rent the other delivery service companies.
For example, for 1910 the brewery Toluca and Mexico had deposits and sale of their products in the cities of San Luis Potosi, Mazatlan, Guadalajara, Ciudad Victoria, Pachuca, Aguascalientes, Celaya, Merida, Cananea, Pachuca and in the state of Morelos. This indicates that the organization in the transport and distribution of drinking was beginning to be well articulated in much of the country. Similarly, the Cuauhtémoc Brewery in 1902 opened a sales office in Mexico City to distribute their beer in the center of the country. Notice that it is very likely since we have no information that the brewery Cerveceria Cuauhtemoc Moctezuma for these years have had an organization similar distribution to that of its competitor in the State of Mexico. This indicates that the pace of competition for regional markets for each national market began to occur in the early twentieth century.

Conclusion
By 1910 the great Mexican brewers such as Cuauhtémoc Moctezuma and the Toluca were in total consolidation after starting the long process of installation in various cities. In a period of 20 years the Mexican beer industry had already achieving important things, like beer imports that was declining and with the domestic production gradually started to increase. Moreover, this industry had already convinced the federal government to protect it with a tariff, since for 1891 the tax for imported beer was 10 cents, while for 1906 and 1912 it had risen to 12.5 and 20 cents respectively. Thus the market domestic beer, which at that time was still small compared to the market for mezcal and pulque it began to position itself as a Mexican alternative drink. Proof of this is that since time very early the various breweries began to use advertising to publicize their products and to compete for markets. For example, Cerveceria Cuauhtemoc used as advertising the fact that its beer "Carta Blanca" had won the first prize at the Exposition Chicago World (1893), first prize at the Paris Exposition (1900) and first prize at the Exposition of St. Louis Missouri. (1904).
So in the late nineteenth century, brewers begin the process of import substitution. Additionally, both the state and federal governments provided a boost in that direction by implementing various programs of tax exemptions for various industries. As previously mentioned there were certain states like Nuevo Leon and Puebla tax exempted employers who can demonstrate that they were establishing factories were "new". Also, the federal government imposed a tariff on imports of beer increased by 100% over a period of 20 years.

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