Venezuela: Empresas Polar resisting government attacks

When Lorenzo Mendoza attends baseball games, crowds treat him like a star player. Baseball is Venezuela’s national sport and Mendoza, head of the Caracas-based food and drink producer Empresas Polar and once an avid amateur player, remains a big follower. His company sponsors several of the country’s leading teams, the Financial Times reported on March 17.

Venezuela is wrestling with its worst social, political, and economic crisis in living memory, however, and his sporting passion is not the main reason why the fans have greeted him with cheers and chants of support. Not only does his company stand out as a rare case of Venezuelan business resilience at a desperate time, but Mendoza himself has become a symbol of resistance.

Many would like to see him swap Empresas Polar’s presidential seat for that at the head of Venezuela’s government, replacing the unpopular President Nicolás Maduro. “I don’t go so often to stadiums any more,” states Mendoza with a hint of caution. Everything has become too politicised in Venezuela, he adds, “and I have to take care. I have lots of families depending on me.”

Polar employs 30,000 people and is the most successful brand in Venezuela. Its eponymous brewery, founded in 1941, has had much to do with that, its name suggestive of the cooling effects of beer in the generally superb Venezuelan climate. Polar is also Venezuela’s largest privately owned company and, arguably, second in importance only to the state-run oil monopoly Petróleos de Venezuela, in a country holding larger oil reserves than Saudi Arabia.

Its success is hard to swallow for the government, which continues to have Polar in its inquisitorial grip. Police intelligence agents are sometimes stationed outside its offices for no apparent reason. Company employees report that the agents eagerly accept Polar drinks or snacks offered to them as a break from the tedium.

The official stance has its roots in the “Oligarchs, tremble” mantra of the late President Hugo Chávez, who launched his revolution in Venezuela vowing to strip power from the wealthy. His apparent dislike of Mendoza reached the level of calling him pelucón — a bigwig conservative — and saying he was guaranteed a place in hell.

The company’s contribution to the food sector is such that neither Chávez (who died four years ago) nor his benighted successor have felt it prudent to carry out threats of expropriation. The reason? Venezuelans are barely able to let a day go by without getting their hands on Polar products.

These range from margarine and cooking oil to mayonnaise and ice cream. Polar also sells US brands such as Pepsi and Quaker Oats. The company dominates the beer market in what is one of Latin America’s most beer-gulping countries.

Possibly the chief factor that would make Polar hard to take over is that since 1960 it has been making and packing Harina PAN, a pre-cooked flour that is the key ingredient for the national staple dish, the arepa. Flat, round maize patties, arepas are as central to the Venezuelan people’s diet as tacos are to Mexicans and sandwiches to the English.

Maduro is still apt to accuse Mendoza of being a price-gouging coup-monger who stockpiles food in order to wage “economic war” against the Chavista revolution. More damaging, the government retains control of legal sales of hard currency to pay for imports in a country that produces little of its own other than oil.

The currency controls first imposed by Chávez have left producers increasingly unable to obtain dollars, as a result of which their factories often sit idle for lack of raw materials. Polar itself notes it has been forced to cut back production of certain goods for want of foreign currency to import supplies. After running out of barley last year, it halted beer production at two of its four plants.

The problems at Polar — a company that enjoys a 90 per cent approval rating, according to local pollster Datanalisis, compared with less than 12 per cent for Maduro — appear to be symptomatic of Venezuela’s broader woes. Long queues of shoppers hoping to find scarce basic goods at bare-shelved supermarkets are a regular sight across the country. Last year, reports of looting became commonplace.

As oil prices have slipped, the government now owes some $30 bln to private suppliers and importers, according to the Caracas-based consultancy Ecoanalítica. A sobering survey by food producers notes that in 2012 the average Venezuelan ate 30 kg of food a month but by last year that had dropped to 12 kg. Polar is a, possibly the, central entity in Venezuela keeping people fed against the national backdrop of food shortages.

Last year, Mendoza urged the government to stop strangling the private sector. The embattled Maduro roared back at him on television: “If you cannot handle your companies, hand them over to the people who can.” The president rounded off by labelling the Polar chief a “bandit, thief, oligarch, traitor”.

Informed sources in Caracas suggest that what the government cannot bring itself to shout about is that the food shortages — increasingly a source of widespread discontent — might have something to do with official policy shortcomings. Venezuelans’ reaction, therefore, should some of their favourite food and drink brands fall into state hands, could spark unrest, which would be one of the last things the Maduro administration needs.

“Mendoza was more frightened of Chávez,” says one respected businessperson who knows Mendoza. “Maduro does not have enough strength to take over Polar, so attacking Mendoza personally is the only thing he has.”

Then again, as the businessperson adds, and the nation’s president knows: “But Mendoza represents the arepa, and attacking him is attacking the arepa. Here in Venezuela that is risky.”

Committed Chavistas, too, can be Polar fans. “I feel sorry for Maduro,” says Yulimar Pinto, in charge of enlisting help for a subsidised government food-distribution programme in a slum area of Caracas. “But I have to admit that Polar’s pre-cooked maize flour is the best.”

She may soon be unable to find her preferred option in the shops if today’s dire circumstances continue, however. Polar holds 49 per cent of Venezuela’s capacity for producing maize flour, while most of the rest is state-controlled. The company has traditionally produced 50 mln kg of the food staple a month; lately it has been lucky to make half that.

The unloading bay of Polar’s largest maize flour processing plant, in Turmero in the north of the country, offers a desolate glimpse into the crisis. “We used to get 60 trucks a day containing almost 30 tonnes of maize each,” says a plant manager. “At present there are zero. The government strangles you if you try to produce. It fines you if you do not produce. State controls are absolute now”. At the same time, Venezuela is afflicted by triple-digit inflation, a deep recession and accusations of rampant corruption in the allocation of dollars for food imports.

On the road back to Caracas, a banner on a bridge reads: “President Maduro, the people clamour for help.” On entering the city, snaking queues are to be seen outside bakeries. Meanwhile, increasing numbers of Venezuelans look for food in rubbish dumps. “The suffering Venezuelans are experiencing pains me,” says Mendoza. “The fact that they are making such a sacrifice makes it even more necessary to be a responsible food producer.”

He adds that it is a matter of national pride for Venezuelans to have a company grappling with the harsh situation and competing with big multinational suppliers. Despite this troubled climate, Polar is a leading Latin American player in processed foods, along with the likes of Mexico’s Bimbo group and the Nutresa group in Colombia.

Mendoza’s involvement in the family business dates back well over 50 years to when his father made him work in his school holidays “pushing a wheelbarrow and driving a truck — he wanted me to do something because life had given me a lot”.

After graduating from Fordham and MIT universities in the US, he went to London to work in banking. His rise to the upper echelons of Polar coincided with the rise of Chávez in domestic politics in the 1990s. “When Chávez broke on to the scene, I foresaw a difficult horizon for Venezuela,” he says.

In 1998, when Chávez was first elected president, Mendoza, aged 32, became Polar’s chief executive. “We have been Venezuela’s biggest private company for some two decades now,” he notes. The Chavista revolution has gone on for almost as long, accusing Polar in the process of financing its enemies. Mendoza denies the claim.

“He is a Venezuelan committed to Venezuela,” says Henrique Capriles, who has twice run unsuccessfully for the presidency, first against Chávez then losing narrowly to Maduro in 2013. Mendoza, he says, is a tipazo (a super guy). “I wish there were hundreds of Polars in Venezuela.”

“Ordinary people say that even if the government wants to trounce Polar, they will stand up and defend it,” affirms a Polar executive. “The more the government punches us, the more the people love us.”

16 March, 2017