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Sugar shortage forces Coca-Cola Femsa to stop production in Venezuela

DBR Staff Writer Published 24 May 2016

Coca-Cola Femsa SAB, the Venezuelan bottler of Coca-Cola, has stopped the production of the sugar-sweetened beverages due to sugar shortage in the country.

Coca-Cola Venezuela

Venezuela is currently experiencing a deep recession, with severe food shortages, frequent power cuts and high inflation resulting in looting and demonstrations.

The company's spokeswoman Kerry Tressler told The Guardian in an email that the production of sugar-sweetened drinks has been halted, however, output of diet drinks such as Coca-Cola Light and other zero-sugar beverages is continuing.

Tressler said: "Sugar suppliers in Venezuela have informed us that they will temporarily cease operations due to a lack of raw materials."

Price controls and rising production costs has been weighing on the sugarcane production in Venezuela, apart from difficulties in getting fertiliser.

The problems have compelled several small farmers to start producing other crops which are not price controlled and generate higher income, reported The BBC.

According to USDA estimates, Venezuela'sugarcane production is expected to fall by 450,000 tons to 430,000 tons in 2016-17 compared to the output in the previous 12 months.

Coca-Cola Femsa SAB, which operates four plants in Venezuela, gets around 7% of its income from the country. It is a joint venture between Coca-Cola and Mexico's Femsa, reported Reuters.

In February this year, Coca-Cola Femsa announced plans to invest around $800m to expand its operations in Philippines over the next four years. The immediate plans included purchase of two extra polyethylene terephthalate (PET) lines and two tetra pack lines for $170m in 2016.

Image: Coca-Cola halts production in Venezuela due to sugar crisis. Photo: Courtesy of The Coca-Cola Company.