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Production of Coke halted in Venezuela for lack of sugar
May 24, 2016 / 12:13 AM / a year ago

Production of Coke halted in Venezuela for lack of sugar

Empty Coca-Cola cases are seen at a food stall on the street in Caracas, Venezuela May 24, 2016. REUTERS/Carlos Garcia Rawlins

(Reuters) - The Venezuelan bottler of Coca-Cola has halted production of the sugar-sweetened beverage due to a lack of sugar, a Coca-Cola Co (KO.N) spokeswoman said on Monday.

Venezuela is in the midst of a deep recession, and spontaneous demonstrations and looting have become more common amid worsening food shortages, frequent power cuts and the world’s highest inflation.

Production of sugar-sweetened drinks has stopped, but output of diet drinks such as Coca-Cola light and other zero-sugar beverages continued, spokeswoman Kerry Tressler wrote by email.

“Sugar suppliers in Venezuela have informed us that they will temporarily cease operations due to a lack of raw materials,” Tressler added.

A worker pushes a dolly loaded with cases of empty Coca-Cola bottles in Caracas, Venezuela May 24, 2016. REUTERS/Carlos Garcia Rawlins

Coca-Cola Femsa SAB (KOFL.MX), Latin America’s biggest coke bottler and operator of four plants in Venezuela, added that it was hoping the nation’s sugar inventories would recover “in the short term.”

The bottler, which gets some 7 percent of its income in Venezuela, is a joint venture between Coca-Cola and Mexico’s Femsa (FMSAUBD.MX).

Slideshow (3 Images)

Over the past several years, the combination of price controls, rising production costs, lack of foreign exchange, restrictive labour laws, and a lack of basic inputs such as fertilizer, have resulted in a drop in Venezuela’s sugar cane production with fewer planted hectares (acres) and lower yields.

Many smaller farmers have turned to other crops that are not price controlled and thus provide greater income.

The country is expected to produce 430,000 tonnes in 2016/17, down from 450,000 tonnes the previous year, and import 850,000 tonnes of raw and refined sugar, according to the USDA.

Reporting by Peter Henderson in San Francisco; Additional reporting by Josephine Mason in New York and Gabriela Lopez en Monterrey; Editing by Sandra Maler and Michael Perry

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