Coca-Cola has been forced to stop producing soft drinks in Venezuela amid an escalating food and energy shortage.
The company said that sugar suppliers in Venezuela will “temporarily cease operations due to a lack of raw materials”.
The announcement comes after Venezuela’s biggest brewer, Empresas Polar, closed plants due to a barley shortage.
Venezuela’s economy has contracted sharply as oil prices plunge.
A Coca-Cola spokeswoman said the company would continue producing sugarless drinks such as Coca-Cola Light (Diet Coke).
She said: “We are engaging with suppliers, government authorities and our associates to take the necessary actions for a prompt solution.”
Sugarcane production has been falling due to price controls and rising production costs, as well as problems in obtaining fertilizer.
As a result, many smaller farmers have turned to other crops that are not price controlled and thus generate higher income.
Venezuela is expected to produce 430,000 tonnes of sugarcane in 2016/17, down from 450,000 tonnes for the previous 12 months, and import 850,000 tonnes of raw and refined sugar, according to USDA figures.
The country’s economic problems have forced many consumers to queue for hours to buy basic foodstuffs.
Venezuela’s economy is expected to shrink by 8% in 2016 after it contracted by 5.8% in 2015.
Its reliance on oil to generate foreign currency and investment has made it a victim of regular recessions.
President Nicolas Maduro has declared a state of emergency in an effort to combat the economic crisis. Critics argue it is an attempt to strengthen his grip on power.
Meanwhile, Bridgestone said on May 23 it was selling its Venezuelan business after six decades in the country.
Bridgestone’s Venezuelan assets will be sold to Grupo Corimon.
Other multinational companies such as Procter & Gamble, Ford and Halliburton have either slowed or abandoned their investments in Venezuela.
Coca Cola. We all know the brand. That’s probably part of the reason they’re so successful. The thing is about Coca Cola is that it’s gone from strength to strength even in the last decade. It’s hard to believe that it was once just a small company. Of course, they’ve had over a hundred years to build their business and their brand. Part of their ability to do that is through their strength as a stock market giant.
Coca Cola’s advertising is mostly part of the reason they are as successful as they are. They are working on almost every level of advertising possible. Physical or digital, they are everywhere. Part of the reason their advertising is so successful is the amount you see it. That kind of exposure causes brand recognition from a young age.
When you know a brand, you will default to picking that one over any others. Say you’re looking to buy a cola drink. You’re set with two options, a can of Coca Cola and an unknown brand. The other cola could be incredible, but you’ll reach for the Coca Cola. Part of the brand recognition is knowing what you get. Why trust an unknown when you can have a known quantity? That’s part of why Coca Cola has the sales numbers to keep their stocks strong.
Another reason Coca Cola stocks are so very hot would be their partnerships with sports events around the world. Be it soccer, baseball, or even the Olympics. These kinds of partnerships are just another way to advertise.
Primarily, it increases the exposure of the branding. While everybody in developed countries may know what Coca Cola is, there’s a good chance the developing world does not. There are over one billion people in Africa alone, and not all African countries are developed.
Sports events like the World Cup and the Olympics do their best to bring in these developing nations, and, as a result, there is exposure of the events in these countries. The exposure will include video and press materials featuring the Coca Cola branding. That is Coca Cola’s foot in the door to all these people who haven’t bought their products.
Another reason for Coca Cola’s continued growth would be just how available it is. Now this might be a result of demand and not directly associated with how it reached its growth levels. What it does do is perpetuate the growth instead, simply by just making it so widely available. If a store sells drinks, it sells Coca Cola. It is incredibly rare if that is not the case. Effectively, it keeps the growth ticking over and maintaining itself.
If you are an investor, Coca Cola stocks are rock solid. They are immovable and unshakable. They are the bedrock of the stock market. They’re a bullet train, with no signs of slowing down. It seems the only threat to Coca Cola’s success will be when they’ve advertised to everybody on the planet. Maybe then they’ll start trying to advertise in space.
McDonald’s and Coca-Cola have posted sharply lower profits for Q3 2014.
McDonald’s saw earnings fall 30%, while Coca-Cola’s fell 14%, with both citing lower US sales as key reasons.
The fast-food chain’s profits of $1.07 billion were also hit by a food scandal in China, contributing to a 4.6% fall in revenues to $6.99 billion.
Meanwhile, the world’s largest drinks group made a $2.1 billion profit on revenues that were broadly flat at $11.9 billion.
McDonald’s US sales have been under pressure as consumers switch to other chains, notably the fast-growing Chipotle Mexican Grill.
McDonald’s and Coca-Cola have posted sharply lower profits for Q3 2014
Sales also fell in Russia, Germany and especially in China, where McDonald’s was hurt by a scandal over meat supplies.
McDonald’s CEO Don Thompson admitted that the trading performance was not good enough: “McDonald’s third-quarter results reflect a significant decline versus a year ago.
“By all measures, our performance fell short of our expectations.”
Meanwhile, Coca Cola said that its US sales were down 1% during the quarter. Consumers are increasingly turning to alternatives to sweet, fizzy drinks. The company’s profits also suffered because of currency fluctuations and strengthening of the dollar.
In August, Coca-Cola spent $2.15 billion for a 16.7% stake in Monster Beverage energy drinks business.
As part of the deal, Coca-Cola transferred ownership of its own, less successful energy drinks, including brands NOS, Full Throttle and Burn, to Monster.
Coca-Cola has bought a 16.7% stake in Monster Beverage in a cash deal, as it looks for growth away from fizzy drinks.
In the $2.15 billion deal, Coca-Cola will transfer its worldwide energy business to Monster.
In exchange, Monster will transfer its non-energy business, which includes Peace Tea and Hansen’s Natural Sodas, to Coca-Cola.
The deal gives Monster access to Coca-Cola’s global distribution system.
For Coca-Cola, the partnership will give it the opportunity to increase its market share in the fast-growing energy drinks market.
Coca-Cola has bought a 16.7 percent stake in Monster Beverage in a cash deal
Muhtar Kent, chairman at Coca-Cola, said in a statement: “The Coca-Cola Company continues to identify innovative approaches to partnerships that enable us to stay at the forefront of consumer trends in the beverage industry.”
He added that “investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category”.
Also in the same statement, Monster chairman Rodney C. Sacks said the deal gives the company “enhanced access to the Coca-Cola Company’s distribution system, the most powerful and extensive system in the world. At the same time, we become The Coca-Cola Company’s exclusive energy play”.
The deal is subject to regulatory approvals, and both companies hope the transaction will close by early next year.
Monster shares surged 22% in after-hours trading on the news, while Coca-Cola shares rose 1.2%.
Coca-Cola is the world’s largest beverage company, with more than 500 brands to its name, including Diet Coke, Fanta and Minute Maid.
The deal comes as consumers in developed economies and more mature markets are turning health-conscious.
One effect of that is they are staying away from fizzy drinks and soda which have high sugar content and are widely known to cause weight gain and in some cases, lead to obesity.
Coca-Cola has been grappling with falling sales from products that used to be its core revenue driver.
Coca-Cola plans to remove controversial ingredient BVO from some of its drinks brands by the end of this year, following an online petition.
Brominated vegetable oil, or BVO, is found in Coca-Cola fruit and sports drinks such as Fanta and Powerade.
BVO will be replaced after concerns that an element of the additive is also found in flame retardants.
Rival Pepsi removed the chemical from its Gatorade sports drink last year.
A Pepsi spokesman said it also had wider plans to stop using BVO and had “been actively working to remove it from the rest of our product portfolio”.
BVO is found in Coca-Cola fruit and sports drinks such as Fanta and Powerade (photo Flickr)
Pepsi uses the ingredient in its Mountain Dew and Amp Energy drinks.
Coca-Cola spokesman Josh Gold stressed the move to remove BVO was not an issue of safety.
“All of our beverages, including those with BVO, are safe and always have been – and comply with all regulations in the countries where they are sold,” he said in a statement.
“The safety and quality of our products is our highest priority.”
BVO has been used as a stabilizer in fruit-flavored drinks as it helps to prevent ingredients from separating.
The health concerns stem from the fact BVO contains bromide, which is found in brominated flame retardants.
According to medical researchers at the Mayo Clinic, excessive consumption of soft drinks containing BVO has been linked to negative health effects, including reports of memory loss and skin and nerve problems.
BVO was dropped from the FDA’s “Generally Recognized as Safe” list of food ingredients in 1970.
However, drinks companies are allowed to use BVO at up to 15 parts per million (ppm).
In Japan and the EU, the use of BVO as a food additive is not allowed.
Coca-Cola said it would switch to using sucrose acetate isobutyrate or glycerol ester of rosin, which is commonly found in chewing gum.
The Atlanta-based company said two flavors of its Powerade sports drink – fruit punch and strawberry lemonade – have already replaced BVO with glycerol ester of rosin.
Coca-Cola’s decision to remove BVO from its drink reflects a growing move among companies to reconsider certain practices due to public pressure.
The campaign against the use of BVO was begun by Sarah Kavanagh, a teenager from Mississippi, who questioned why the ingredient was being used in drinks targeted at health-conscious athletes.
Thousands of people have since signed Sarah Kavanagh’s online petition on Change.org to have BVO removed from drinks.
Following Monday’s announcement by Coca-Cola and Pepsi, Sarah Kavanagh was quoted as saying: “It’s really good to know that companies, especially big companies, are listening to consumers.”
Drinking large quantities of Coca-Cola was a “substantial factor” in the death of 30-year-old Natasha Harris in New Zealand, a coroner has said.
Natasha Harris, who died three years ago after a cardiac arrest, drank up to 10 litres of the fizzy drink each day.
This is twice the recommended safe limit of caffeine and more than 11 times the recommended sugar intake.
Coca-Cola had argued that it could not be proved its product had contributed to Natasha Harris’ death.
The mother of eight, from the southern city of Invercargill, had suffered for years from ill health.
Her family said she had developed an addiction to Coca-Cola and would get withdrawal symptoms, including “the shakes”, if she went without her favorite drink.
Natasha Harris drank Coke throughout her waking hours and her teeth had been removed because of decay.
Coroner David Crerar said her Coca-Cola consumption had given rise to cardiac arrhythmia, a condition when the heart beats too fast or too slow.
“I find that when all the available evidence is considered, were it not for the consumption of very large quantities of Coke by Natasha Harris, it is unlikely that she would have died when she died and how she died,” David Crerar’s finding said.
Drinking large quantities of Coca-Cola was a “substantial factor” in the death of 30-year-old Natasha Harris in New Zealand
The coroner calculated that drinking 10 litres (17.5 pints) of Coke amounted to more than 1 kg (2.2 lb) of sugar and 970 mg of caffeine, Television New Zealand (TVNZ) reports.
David Crerar said that Coca-Cola could not be held responsible for the health of consumers who drank excessive quantities of its product.
But he called on soft drinks companies to display clearer warnings on their beverages about the risks of too much sugar and caffeine.
Natasha Harris and her family should have heeded the warning signs about her ill health, the coroner added.
“The fact she had her teeth extracted several years before her death because of what her family believed was Coke induced tooth decay, and the fact that one or more of her children were born without enamel on their teeth, should have been treated by her, and by her family, as a warning,” TVNZ quotes his statement as saying.
After almost 60 years, Coca-Cola is on sale again in Burma.
Coca-Cola is one of the world’s most recognized brands, so are there any countries where the drinks giant still remains unsold?
The company says it sells 1.8 billion servings of the drink every day. But for the last six decades, none has been in Burma.
That’s because of US trade sanctions on the military junta which ruled the country from 1962 to 2011.
Those sanctions were suspended a few months ago, as the country began to move towards democratic reforms.
But the company said on Monday its first delivery had arrived and local production would begin soon.
Coca-Cola’s entry into any country is a powerful symbol, says Tom Standage, author of A History of the World in Six Glasses.
“The moment Coca-Cola starts shipping is the moment you can say there might be real change going on here,” he says.
“Coca-Cola is the nearest thing to capitalism in a bottle.”
After almost 60 years, Coca-Cola is on sale again in Burma
Coca-Cola’s rival PepsiCo has also announced plans to resume sales in Burma.
There are now just two countries in the world where Coca-Cola cannot be bought or sold – Cuba and North Korea, both of which are under long-term US trade embargoes (Cuba since 1962 and North Korea since 1950).
Cuba was actually one of the first three countries outside the US to bottle Coke, in 1906.
But the company moved out as Fidel Castro’s government began seizing private assets in the 1960s, and has never returned.
In North Korea – the other Coca-Cola free zone – recent media reports suggested it was being sold in a restaurant in Pyongyang. But Coca-Cola says if any drinks are being sold there, they are being smuggled in on the black market, not via official channels.
The dark fizzy soda was created in 1886 in Atlanta, Georgia. From the early days the Coca-Cola company looked to expand worldwide, and by the early 1900s it was bottling the drink in Asia and Europe.
But the big boost came as a result of World War II when Coca-Cola was provided to US troops overseas.
There were more than 60 military bottling plants for Coca-Cola around the world during the war, and locals got a taste for the drink too.
It became powerfully associated with American patriotism, says Tom Standage, and was seen as so crucial to the war effort that it was exempted from sugar rationing.
Dwight Eisenhower, at the time the supreme commander of Allied forces in Europe, was said to be a particular fan and he ensured its availability in North Africa.
He also introduced the drink to top Soviet general, Georgy Zhukov, who asked if a special, colorless version – one that looked like vodka – could be made, and Coca-Cola duly obliged for a while, says Tom Standage.
These days Coca-Cola is regularly ranked as one of the top, if not the top, global brands.
“It has always been about the American dream,” says Bruce Webster, an independent branding consultant who has done work for the Coca-Cola company in the past.
But not all countries have embraced the American-ness that seems to be embodied by Coca-Cola.
It was the French who first coined the pejorative term “coca-colonisation” in the 1950s. Trucks were overturned and bottles smashed, says Tom Standage, as protesters saw the drink as a threat to French society.
During the Cold War, Coca-Cola became a symbol of capitalism and a faultline between capitalism and communism, says Bruce Webster.
It was not marketed in the former Soviet Union due to the fear that profits would go straight into communist government coffers, says Tom Standage.
Pepsi filled the gap and was widely sold.
When the Berlin Wall fell in 1989, many East Germans bought Coca-Cola by the crate-load, says Tom Standage.
“Drinking Coca-Cola became a symbol of freedom.”
Other than the former Soviet Union, the main region that Coca-Cola has struggled in historically is the Middle East, largely due to a boycott implemented by the Arab League from 1968-1991, as a punishment for it selling in Israel.
Pepsi picked up a lot of the sales in the Middle East – and many local versions of the drink thrived.
Coca-Cola is not trying to get involved in politics, says Bruce Webster, but as a huge brand so closely associated with the US, it sometimes finds itself tangled up in politics, or singled out for criticism.
“The whole strength of the brand is plugging into a way of life that so many people wanted. As an ideology, it polarizes. And sometimes those associations become unattractive,” he says.
“America itself as brand is more tarnished now. People are more ambiguous towards it.”
In 2003, protesters in Thailand poured Coca-Cola onto the streets as a demonstration against the US-led invasion of Iraq, and sales were temporarily suspended, says Tom Standage.
Iran’s president Mahmoud Ahmadinejad has threatened to ban Coca-Cola and Venezuela’s Hugo Chavez recently urged people to drink locally-made fruit juice rather than drink Coca-Cola or Pepsi.
But 126 years after its birth, Coca-Cola is still pushing forward in terms of sales, with strong growth – especially, it says, in the emerging markets of India, China and Brazil.
Coca-Cola global expansion
• The first Coca-Cola was served in 1886 at a pharmacy in Atlanta, Georgia
• Canada, Cuba and Panama became the first countries outside the US to bottle it in 1906
• Coca-Cola expanded to Asia, opened a bottling plant in the Philippines in 1912, and then in Paris and Bordeaux in 1919
• By 1930 Coca-Cola was bottled in 27 countries around the world.
Each day, 1.6 billion cans and bottles of Coca-Cola are gulped down, making it the globe’s most recognized brand.
But ever since it was first concocted as a brain tonic in 1886 (designed to treat “sick headaches, neuralgia, hysteria and melancholy”), the makers of Coca-Cola have been secretive about what goes into their drink.
American pharmacist and Coke founder Asa Chandler was so concerned that the recipe could fall into the wrong hands he reportedly never wrote it down.
That secrecy lives on today. Coca-Cola insists only two people alive know the formula, that they never travel on the same plane in case it crashes and that the list of ingredients is locked in a bank vault.
But while the recipe for Coke is surrounded by the kind of mystique that marketing men dream of, the company found its formula under less welcome scrutiny this week.
For it has emerged that Coca-Cola in the U.S. has reduced levels of one of its ingredients following fears that it could cause cancer.
The chemical – 4-methylimidazole (4-MI) – helps to give the drink its color, but is listed by Californian health officials as a potential carcinogen.
While European regulators do not believe it poses any health risks, the company has also pledged to reduce its levels in Coke sold worldwide, although it hasn’t given a timescale.
Pepsi, meanwhile, has reduced the chemical in its American formula, but refused to change it anywhere else – meaning if the Californian health officials are right, the Pepsi sold worldwide is potentially more carcinogenic than the stuff swigged in America.
Coca-Cola and Pepsi this week insisted that all of their beverages are completely safe, with Coca-Cola claiming it made the change in the U.S. only in response to a “scientifically unfounded” food law in California.
In a statement on Wednesday, Coca-Cola UK said: “Coca-Cola has an uncompromising commitment to product safety and quality. All of the ingredients in our products are safe.”
But the changes to the recipes have raised the inevitable question: just how safe are the ingredients that go into every can of cola? And what does that brown stuff really do to our insides?
And just because you drink sugar-free, diet cola, don’t think you’re off the hook. For there is a growing body of research which suggests that low-calorie and sugar-free drinks are bad for us, too.
Studies have shown that people who have at least one low-calorie fizzy drink a day are at greater risk of obesity and type 2 diabetes.
And some experts also believe that sugar-free drinks confuse the brain, leaving it unable to distinguish between sweeteners, such as aspartame and saccharine, and regular sugar.
In that case, a person may be tricked into overeating, as the brain can no longer calculate the body’s calorific intake.
So while diet colas may make you feel virtuous, they could be doing you more harm than good.
Coca-Cola in the US has reduced level of 4-MI following fears that it could cause cancer
Coloring linked to cancer
Cola’s color comes in part from 4-methylimidazole (4-MI), a chemical that forms in the production of caramel food coloring.
Coca-Cola, Pepsi and other manufacturers insist it is safe at the low doses found in drinks.
But in California they disagree. After studies showed that long-term exposure to the chemical causes lung cancer in rats, health officials ruled that products with more than 29 mcg must carry a health warning.
And when research by the Centre for Science in the Public Interest, a campaign group, found cans contained nearly 140 mcg, all cola companies across the U.S. were forced to cut levels.
Food campaigners say daily consumption of 4-MI at 30 mcg would cause cancer in one in 100,000 people over their lifetimes.
The U.S. Food and Drug Administration says that someone would need to drink more than 1,000 cans of cola every day to reach the levels that caused cancer in lab rats.
A can of cola contains 40 mg of caffeine – half the caffeine in a mug of tea and a third of the amount in a mug of filter coffee.
Caffeine is a stimulant that works on the central nervous system. It can trigger a dramatic, short-lived increase in blood pressure and increases the heart rate.
But there is little evidence that it causes long-term high blood pressure, or that it is bad for healthy hearts. Many regular coffee or cola drinkers simply develop a tolerance to the stimulant.
Caffeine can also stop the body from absorbing iron from food – so people with a big cola habit may be at greater risk of iron deficiency.
Doctors are in no doubt – the biggest danger from cola doesn’t come from the hidden additives, flavorings or colorings, but from sugar.
Too much sugar leads to obesity, the major cause of cancer in the western world.
It also increases the risk of type 2 diabetes, causes heart disease and increases the risk of stroke.
The over-consumption of sugar has been linked to depression, poor memory formation and learning disorders in animal experiments. And it rots teeth.
Each regular can of cola contains eight teaspoons of sugar. When you drink that much sugar so quickly, the body experiences an intense sugar rush.
The cane and beet sugar used in Coca-Cola is used up quickly by the body, which soon experiences a rapid drop in energy, leading to cravings for more sugar.
Phosphoric acid is a clear, odorless chemical that gives cola its tangy flavor and helps cut through the sickly sweetness of all that sugar.
It is also an effective rust remover – the reason that a glass of Coke can restore the lustre to coins and old metal.
But it can also disrupt our bodies.
Research at the U.S. National Institutes of Health in Maryland found that drinking two or more colas a day doubled the risk of kidney stones – and the phosphoric acid in it was blamed.
Another U.S. study found that women who regularly drink cola – three or more times a day – had a 4% lower bone mineral density in their hips than women who didn’t drink cola.
Again, phosphoric acid is thought to be the cause. No one is entirely sure why it leads to weaker bones, although some researchers argue it prevents calcium from food being used to renew bones.
The “gender bending” chemical BPA, or bisphenol A, has been linked to heart disease, cancer and birth defects.
It is found in baby bottles, plastic forks, CD cases and in the lining of aluminium fizzy drinks cans, including those of Coca-Cola.
Because it mimics the female sex hormone oestrogen, and thus disrupts the natural balance of the body, some believe it could be dangerous – particularly to foetuses.
Some animal studies have indicated it is safe. Others have linked BPA to breast cancer, liver damage, obesity, diabetes and fertility problems.
Despite the uncertainty, it has been banned in baby bottles across the European Union and in Canada in case it leaches from plastic into formula milk or juice drinks.
Citric acid gives lemons, oranges and grapefruit their kick and cola its bite, helping to make the drink nearly as corrosive as battery acid when it comes to teeth.
Prolonged exposure to cola and other fizzy drinks strips tooth enamel causing pain, ugly smiles and – in extreme cases – turning teeth to stumps.
A study in the journal General Dentistry found that cola is ten times as corrosive as fruit juices in the first three minutes of drinking.
The researchers took slices of freshly extracted teeth and immersed them in 20 soft drinks. Teeth dunked for 48 hours in cola and lemonade lost more than five per cent of their weight.
A study in the British Dental Journal found that just one can of fizzy drink a day increased the risk of tooth erosion. While four cans increased the erosion risk by 252%.