And if you are watching television while you sip and chew, well, no doubt you are tuned into one of two broadcasters. Mexico, despite its enthusiastic embrace of the free market in the past decade, is riddled by duopolies and virtual monopolies in key economic sectors, leaving customer choice high and dry and frustrating the fight against inflation. "Economic policy in the last years has been clearly aimed at allowing more competition. Nevertheless, in many key sectors, there has been an increase in market concentration," said economist Leon Bendesky of Mexico City's ERI consultants.

The list of markets dominated by one or two firms is a long one. Between them, brewers Modelo and Femsa lord over 99 per cent of the beer market. Miller Maseca controls 70 per cent of corn flour production, one of the basicingredients for the unleavened tortillas which make up Mexico's main food staple. In the entertainment industry, Televisa boasts 80 per cent of audience share while fledgling TV Azteca makes do with the rest. The country's two main airlines, Aeromexico and Mexicana de Aviacion, are both run by the same holding company, Cintra. And Coca-Cola Co dominates the soft drinks market with something like a 67 per cent market share.

"We just forgot about competition"

The lack of competition is an historical and cultural problem, said Fernando Sanchez Ugarte, head of the country's five-year-old Federal Competition Commission (CFC). "Unfortunately, there is a lot of inertia. This inertia exists in all countries, but in Mexico, as there was no conviction that competition was good, we just forgot about it," Sanchez Ugarte recently told a small group of foreign correspondents. "Since the law and the commission were established (five years ago), I think we have taken a very important stance and have actedintensively. But we still have a lot of work to do."

Economists agree that competition cuts prices. "In Mexico, the formation of prices is very distorted and clearly, the high inflation we constantly face must come from that (market concentration)," Bendesky said. Other ills also arise from having too few companies control too many markets. "There are economic and political ramifications," said economist Walter Molano of BCP Securities in Greenwich, Conn. "Excessive concentration of market share leads to declines in innovation, a decline in productivity, and the creation of excessive macroeconomic rents. These groups also become very powerful political players," Molano said.

Tide turning

The tide may be turning against the duopolies. From the beer market to telecommunications, competitors are cropping up, either by finding untapped niches or because reforms have opened up sectors to foreign investment. The Competition Commission is also flexing its muscles, although it cannot break up duopoliesthat were formed before the anti-trust laws came into effect, such as the beer market. The Commission is likely to reject the $1.85 billion buy-out by Coca-Cola of Cadbury Schweppes Plc brands because it would hike Coke's Mexican market share to 73 per cent.

Sanchez Ugarte said he also probably would oppose a much-discussed mega-merger of Mexico's top two banks, Bancomer and Banamex, because that would place more than 40 per cent of deposits under a single roof. In telecommunications, privatised monopoly Telefonos de Mexico (Telmex) still has a stranglehold on local calls nine years after the government sold it off. But it has faced aggressive competition in the long-distance market since 1997, when new laws allowed other operators, including foreigners, to offer services. Jorge Escribano, director of communications for Alestra, which is partly owned by US giant AT&T, said outsiders had managed to grab some 25 per cent of long-distance customers from Telmex in just over two years. But, obviously, competingagainst the clout of one of the biggest private companies in Latin America was no easy task. "No operator in Mexico expected their entry to be without problems," Escribano said. "That would have been infantile."

In the beer market, Senator Mauricio Fernandez Garza and partner Manuel Zambrano Villareal have found a backdoor in by producing specialist, up-market ales, which the sector's two dominant companies have never bothered with. "We're not competition," said Fernandez Garza, who invested $5.0 million with his partners in Especialidades Cerveceras.

Upstarts threatened by boom & bust

The survival of upstarts like Fernandez Garza's company may also depend on whether they can ride out the boom-and-bust economic cycles that have plagued Latin America most of this century. Every few years, enthusiasm over reforms or privatisations leads to an influx of competitors. But then Latin American economies go belly-up, and the new-born operators are forced to come together in order to withstand theshortage of funds caused by capital fleeing to the safety in Wall Street or US Treasuries.

"The volatile variable is the flow of foreign capital," said Molano. Only an increase in dismally low domestic savings rates would create stable funds for investment needed to break the pattern from competition to consolidation, he said. So, as far as they remain dependent on fickle foreign cash flows, Latin America and Mexico face a vicious cycle on the competition front? "Yes, basically," said Molano.