International Business Insight As paradoxical as it may seem, many businesses in Venezuela have flourished in spite of President Hugo Chávez’s best attempts to install his “21st-century socialism”. Not least among them is Polar, Venezuela’s biggest privately owned company.
A national icon that has been around for six decades, the food and drink group has benefited from a consumer boom powered by high oil prices in recent years. Indeed, in spite of the economic downturn, the fortune of the Mendoza family, which owns Polar, surged last year from $2bn to $3.5bn, according to Forbes magazine.
But after almost 12 years in power, Venezuela’s anti-capitalist leader is continuing to radicalise his “Bolivarian revolution”, one of whose defining characteristics is the nationalisation of “strategic” sectors of the economy, which include oil, cement, banking, farming, electricity and telecoms. The production and distribution of food has also been earmarked as a strategic sector, which has caused friction between Polar and the government.
Polar began in 1941 as a brewery on the outskirts of Caracas. It now employs 30,000 workers and operates 14 plants and 75 distribution centres across Venezuela, producing everything from margarine and cooking oil to mayonnaise and ice cream. It also distributes PepsiCo products in Venezuela, and is one of the few local producers of wine, after setting up a joint venture with Martell, the French cognac manufacturer.
But last year the government occupied a Polar rice plant for 90 days, and in February Mr Chávez ordered the expropriation of a Polar distribution depot in Barquisimeto, Venezuela’s fourth-largest city. Polar has also complained of harassment by the government, stating that between January 2008 and April this year its installations were inspected more than 600 times.
Venezuela’s combative president has repeatedly threatened to expropriate Polar outright. “We will see who can last longer, Mendoza, you with your millions or me with my morals,” Mr Chávez told Lorenzo Mendoza, Polar’s president, in a televised speech in June. For his part, Mr Mendoza has preferred to keep a low profile and has avoided provoking the irascible leader.
Many believe Mr Chávez has held back from taking over the company because of concerns that the government would fail to run it as efficiently. Polar is cited by Venezuelans as a paragon of corporate culture and a model for how a company should be managed. The government, in contrast, has a patchy record and is often accused of incompetence and corruption. Venezuelans already suffer sporadic shortages of basic foodstuffs; if the company faltered under state control, it could dent Mr Chávez’s popularity.
Polar controls about three-quarters of the national beer market, and its Harina PAN maize flour can be found across the country.
Nevertheless, the company’s efforts to expand abroad have been less successful. Some of Polar’s products are available in the US and Puerto Rico, but Colombia is the only significant export market in Latin America where Polar beer has managed to gain a proper foothold.
