Coca-Cola has become the latest company to face a setback in Venezuela as the protracted slump in crude prices has weighed on the Latin American economy.
The fizzy drink maker will stop production of sugar-sweetened beverages in Venezuela as local sugar suppliers are temporarily ceasing operations due to a lack of raw materials, a spokesperson for Coca-Cola said. The situation will not impact zero-sugar beverages like bottled water and Coca-Cola Light, writes Mamta Badkar in New York.
Coca-Cola is the latest multinational to face disruptions in Venezuela. The country’s economic recession, triple-digit inflation, rolling blackouts, punishing price controls and shifting foreign currency policy have pressured operations of multinationals.
General Mills, the company behind Cheerios and Häagen-Dazs ice cream, incurred a $35m charge when it sold its subsidiary in the country earlier this year. Meanwhile, Clorox, incurred a $60m to $65m charge to shutter its operations last year, blaming the surge in inflation and the price freeze instituted by the government.
And Venezuela’s largest privately owned company, Empresas Polar, said in April that it would stop producing beer until it can get access to foreign currency to procure necessary materials.
And it isn’t just consumer companies: Oilfield services provider Schlumberger said last month that it would cut back on its activity in the beleaguered country, citing insufficient payments. And companies like Goodyear, AT&T, General Motors have all had to take write-offs in recent years.
As the list of privations in Venezuela continues to grow, the IMF projects that the nation’s economy will shrink 8 per cent this year, following a 5 per cent contraction in 2015.
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