60 Business The EconomistOctober 26th 2019
T
he thick, humid air of Cancún caused
many attending this year’s Mexico
Business Summit, which began on October
20th, to swap their suits for guayaberas, the
fancy shirts often adopted by populist poli-
ticians. The country’s business climate has
them sweating nonetheless. The president,
who usually shows up, didn’t make it this
year. Andrés Manuel López Obrador
(known as amlo) was busy touring villages
in Oaxaca, an impoverished southern state.
His absence is symbolic of the uncertainty
of the private sector under his tenure.
Entrepreneurs have struggled to under-
stand amlosince he became president a
year ago. He lost no sleep cancelling con-
struction of a $13bn airport in Mexico City
beloved by the private sector. Because busi-
ness has been cosy with past governments,
he blames it for his country’s failings. His
remedy is statist medicine.
Critical rhetoric and sudden decision-
making has sown mistrust. In July the pres-
ident asked to renegotiate a gas-pipeline
contract signed with a Canadian firm by his
predecessor, Enrique Peña Nieto. The oil
sector has again been cordoned off from
private investment, undoing Mr Peña’s re-
forms. That has made businesses wary.
Gross fixed investment dropped by 8% in
the year after amlo’s election last July, the
steepest fall in several years (see chart).
The president has also failed to improve
Mexico’s faltering economy, which barely
escaped recession this year. Firms depend-
ing on the domestic market have been
hardest hit. The share price of Cemex, a ce-
ment company, has fallen by a fifth this
year amid a wobble in construction. Tou-
rism chiefs and exporters to America are
less vulnerable. And the odd winner
emerges. During a panel at the summit,
one woman whispers that sales at her cos-
metics firm are growing faster due to “more
liquid money in the lower classes”, thanks
to amlo’s spending on the poor.
Amid the bad news, bigwigs are queu-
ing up to declare common cause with the
president. Carlos Slim, Mexico’s richest
man, says he “100%” shares amlo’s goals of
eradicating poverty, crime and corruption.
“We lost our vision for many years,” says
Carlos Salazar Lomelín, boss of the Busi-
nessmen’s Co-ordinating Council (cce), a
lobby group. “Our well-being was very good
and we stopped looking at society.” This
cooing is a strategy to crack the president’s
sphere of influence.MrSalazarandamlotalkweekly. The
ccehas helped resolve the pipeline dis-
pute, organises regular energy talks be-
tween the government and business (rais-
ing hopes that private investment will
again be allowed), and is working with the
government on an infrastructure bill.
These charm offensives keep bad laws
from becoming worse ones, insiders say.
Bosses fear not that Mexico will turn into
Venezuela, says Alberto Bello, the editor of
Expansion, a business magazine. Rather,
they worry it may become like Argentina,
where the relationship is so toxic that the
government often does not speak to the
private sector when making policy.
Adapting to a new regime is far from the
only problem. At the summit everyone
complains that security is worsening fast,
swapping tales of warehouse robberies and
kidnappings. One foreign financier la-
ments the glacial pace of activity in Mexi-
co’s courts and government buildings.
Some of these are long-standing gripes. But
many doubt they will be resolved while
bosses strut around in populist clothing. 7CANCÚN
A new leftist regime makes executives
and entrepreneurs sweatBusiness in MexicoFeeling the heat
AMLO’s lowSource: INEGIMexico, gross fixed investment
% change on a year earlier**Three-month moving average2015 16 17 18 19-10-50510AMLO electedAMLO takes officeAMLO attends to other businessG
in and tonicoriginated in India as
a more palatable way for Victorian
colonialists to down the bitter quinine
that protected them against malaria.
The recent spurt in popularity of gin
around the world has produced a long
list of popular brands that tout Indian
inspiration yet Bombay Sapphire,
Sikkim, Jodhpur, Opihr and Gin Wala
are distilled in Britain. Despite India’s
role in popularising gin it has taken
many years for home-grown firms to
join the party.
Stranger & Sons, set up in Goa a year
ago, is one of a few domestic upmarket
brands that are appearing in Indian
bars. Not only can they trade on history
but the local availability of “botanicals”,
plants and spices that impart flavour, is
another boon. Demand for Stranger &
Sons’ products in India seems to match
a worldwide thirst. Global sales of
premium bottles are growing at around
20% annually, says iwsrDrinks Market
Analysis, a research firm, two-and-a-
half times the rate of overall spirit sales.
Initial production at Stranger & Sons of
1,800 bottles a month will grow to
21,000 by the end of the year.
The firm is battling against the odds.
Selling a high-cost product where
poverty abounds is one difficulty. So is
setting up an alcohol business in a
country where four states are entirely
dry and taxes are high. Overall gin sales
in India are forecast to decline 5%
annually over the next five years. But
most of that is of the rot-gut variety,
costing under $2.50 a bottle. Yet even at
the end of the market occupied by
Stranger & Sons, which charges around
$40 a bottle, India is in 55th place of the
global-sales ranking, below even Ma-
laysia, a mainly Islamic country with
tight controls on alcohol.
All of this meant that when the three
young Mumbai-based entrepreneurs
behind the new product began raising
money they had to search for unusually
adventurous backers. Perhaps the
experience of studying abroad of two of
the founders, who saw at first hand the
growing popularity of premium gin,
made for a convincing pitch. Other
fancy domestic gin brands, such as
Greater Than, are also battling for space
behind Indian bars. Born in India, the
g&tis capturing the imagination and
so filling the glasses of ever more of the
country’s drinkers.Measuring up
Booze in IndiaMUMBAI
India-inspired ginmaking comes home