Coke Shortage Hits Zimbabwe

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Well, that could soon be a reality in Zimbabwe.

By Tinashe Kairiza

The popular drink, which is already in short supply, is likely to disappear from the shelves in the next few weeks, thanks to the foreign currency shortage which has hamstrung the operations of several Zimbabwean companies.

Delta Corporation anticipates a dwindling supply of its Coke product on the domestic market “in the coming weeks” due to a crippling shortage of foreign currency required to import key manufacturing ingredients, a senior company official said.

Already, the impact of the Coke shortage on the local market is being felt, with the product not readily available in some retail outlets.

Delta company secretary Alex Makamure told the Zimbabwe Independent the shortage, experienced from late “January into February 2018”, has been caused by a breakdown of the canning line.

The brewer however forecasts a shortage of a range of other canned products, due to forex shortages.

“We note that we had some challenges in supplying the market with canned product (Coke) from late January into February 2018 when the canning line was undergoing some repairs. There would be shortages of some brands in that package at the moment,” Makamure said.

“Other than that, we are supplying the full range of brands in polyethylene terephthalate (PET) and returnable glass. We, however, anticipate some challenge in supplying product in the coming weeks as we have encountered constraints in accessing foreign currency to cover imported raw materials.”

A range of key raw materials used to manufacture soft drinks are in short supply, including carbon dioxide, preservatives and probiotic bacteria.

“We will be updating the market at the appropriate time if the ongoing engagements with value chain partners do not yield positive results,” Makamure said.

“We have accumulated a backlog in paying foreign suppliers.

“…This gives rise to a supply and demand mismatch of brands and packs.”

He said the “entire portfolio of beverages in the last few months” had surged.

Delta—now a subsidiary of the world’s largest brewer Anheusur-Busch InBev SA/NV and a rival of Coca-Cola—
in November 2016 announced that it was struggling to pay international creditors and shareholders an estimated US$30 million as the southern African country grappled with an acute foreign currency shortage.

Makamure said the brewer, which has grown exponentially over the past decade after injecting an estimated US$43 million towards setting up new bottling lines, was struggling to pay suppliers due to the acute foreign currency shortage.

In the long term, the availability of Coke on the local market hinges on the ultimate decision by The Coca Cola Company (TCCC), which announced two years ago that it was considering terminating its bottling franchise with Delta after Anheusur-Busch InBev SA/NV snapped a major stake held by SAB Miller Plc in the local brewer.

Anheusur-Busch InBev SA/NV is the major bottling firm of Pepsi soda drink, a direct rival of Coke.

Coke, which has also has a footprint in Zimbabwe, was concocted in 1826 by John Pemberton in Atlanta, United States. A century later, Coke continues to spin billions of dollars.

The product’s wide global appeal, distinct taste and popular contour bottle packaging has endured for over a century now, with many people in Zimbabwe erroneously identifying any other soda drink as synonymous with Coke.

Between 1826 and now, the ownership and shareholding of Coca-Cola has changed hands from Pemberton, Asa Griggs Candler to Warren Buffet’s Berkshire Hathaway investment vehicle, now the biggest shareholder in the conglomerate.

Over the years, Coke has extended its presence to every country in the world but two.

It is only in Cuba and North Korea where Coca-Cola is not established as a business, due to long-standing economic sanctions slapped on those countries by the US.

In Zimbabwe, Coca-Cola’s flagship products, including Coke, are widely packaged and distributed by Delta Corporation.
Mutare Bottling Company, owned by Econet Wireless, is the only other bottler of Coca-Cola products, although its capacity is not as vast as that of Delta.

Sources say Anheusur-Busch InBev SA/NV, which does not bottle soda drinks in Europe and Africa, intends to only focus on the beer business unit in Delta while it may dispose of its soft drink assets.

AB InBev is a key Pepsi Beverages bottler in Latin America while SABMiller dominated Coke’s bottling in Africa.

Apart from Coca-Cola and PepsiCo being global rivals, investment analysts project that one of the key goals of the ever-acquisitive Anheusur-Busch InBev SA/NV is to eventually take over Coke. Whether it ever happens or not, one thing is certain: Coke remains a formidable product.