The Coca-Cola Company

Coca-Cola opens Yangon bottling plant in US$200m five-year deal

The soft-drink giant resumes production in post-sanctions Myanmar with US$200 million, five-year investment plan after 60-year absence

PUBLISHED : Wednesday, 05 June, 2013, 12:00am
UPDATED : Wednesday, 05 June, 2013, 2:31am

Coca-Cola began bottling its famous soft drink in Myanmar yesterday as part of a planned five-year, US$200 million investment after having no local production for more than 60 years.

The company announced the ceremonial inauguration of its bottling plant in Hmawbi Township, a suburb of Yangon, the country's biggest city, with local partner Pinya Manufacturing Co.

I think elevated expectations are one of the dangers facing the country

The news came as hundreds of global leaders, industry chiefs and foreign media descend on Myanmar's once-reclusive capital for the World Economic Forum (WEF) on East Asia.

Some 900 delegates from more than 50 countries will pour into Naypyidaw for the three-day event, which starts today, amid huge interest in Myanmar as it opens to the world after decades of isolation under military rule.

WEF Asia head Sushant Palakurthi Rao said the Myanmar forum was "by far the largest" meeting of the group. "I think these numbers are a clear expression of the tremendous interest from all walks of life," he said.

Myanmar economic expert Sean Turnell, a professor at Australia's Macquarie University, likened the conference to a debutante's ball. "Expectations are too high. Indeed, I think elevated expectations are one of the dangers facing the country," he said.

Hundreds of hotel rooms - some in establishments owned by cronies of the former junta - are ready to welcome the influx of visitors to the sprawling capital, built in remote central Myanmar by the paranoid former generals.

"This is our show. This is our performance to the world," Tourism Minister Htay Aung said.

The return of Coca Cola is emblematic of the opportunities US companies see in Myanmar as it builds a free-market economy after decades of military rule. The economy was socialised after a 1962 military coup, and most investment by US companies was banned after Washington applied economic sanctions against the junta that took power in 1988 due to its repressive policies.

The announcement said the investment would help create more than 22,000 related jobs in the supply chain over five years.

"The capital investment will increase production capacity, grow logistics including sales and distribution operations, and improve marketing and people capabilities," the announcement said.

The company said it began importing its soft drinks last September and was one of the first US companies to be awarded an investment permit under the new Foreign Investment Law.

The inauguration event was attended by Coca-Cola chairman and chief executive Muhtar Kent, Yangon Region Chief Minister Myint Swe, and Madeleine Albright, former US secretary of state and chair of the Albright Stonebridge Group, a diplomacy and strategic advice firm.

"As we grow as a local business in Myanmar, we are committed to creating economic value and building sustainable communities," Kent said. "For the people of Myanmar, Coca-Cola embodies the optimism of a bright future, with the promise of better days and better lives ahead. We are privileged to be a part of their journey."

Coca-Cola severed its official business connections in Myanmar in 1988, after the military brutally put down a pro-democracy uprising. Rival Pepsi lingered on despite strong pressure from US human rights activists. In 1996, PepsiCo announced it was selling its 40 per cent stake in its soft-drink bottling venture in Myanmar because of a combination of business reasons and in response to public sentiment towards the regime. The year after, it halted supplies of its soft-drink syrup to its partner there. The partner then introduced its own local cola, Star Cola.

Coke and Pepsi continued to be available in Myanmar, imported independently from other countries in the region.

Yesterday's announcement said Coca-Cola and Sprite were currently being produced in 425ml plastic bottles with labels in the local language. It said local production of the company's classic 300ml glass bottles and aluminium cans was expected in the coming weeks, while the diet drink Coca-Cola Zero would be imported in cans.

The company has targeted more than 100,000 outlets across the country for the next six months, with added production from a second existing bottling plant.

The announcement added that the Coca-Cola Foundation is working with Pact, a non-government organisation, to implement Swan-Yi, "a three-year programme to empower nearly 25,000 Myanmar women focusing on financial literacy, entrepreneurship and business management".

Associated Press, Agence France-Presse