Coca Cola hits the brake affected by foreign currency shortage

14 March, 2009

Reporter - East African Bottling Share Company (EABSC) has as of Thursday, “temporarily stopped” its production in Ethiopia, affecting the livelihood of some 150,000 people, mostly involved in the supply chain of the company.
Employees have also been forced to take cumulative leave with pay until the problem is sorted out, according the EABSC.

“EABSC has been trying to substitute imported raw materials by locally produced raw materials. However, we are not yet able to substitute all our requirements. We still import raw materials like crown cork, concentrate, spare parts, etc,” the company said in a statement it sent to The Reporter.

This shortage, the company says, led to the plummeting of its operation to below 25 percent of production capacity in the past one month or so. And shortage of foreign currency has prevented the Coca Cola producer from adequately importing raw materials.

“Due to the current shortage of foreign currency, we are now faced with quite a shortage of such raw materials like crown cork. The shortage is forcing us to temporarily stop the production of Coca Cola products."

Formerly known as Coca Cola, and for the past 10 years as East African Bottling Share Company, it would be the first soft drink company in Africa to close down due to financial problems related to foreign currency shortage.

East Africa Bottling Share Company is a subsidiary of Coca-Cola Sabco, which runs bottling plants in Ethiopia, Kenya, Namibia, South Africa, Tanzania, and Uganda.

EABSC produces Coca Cola, Fanta and Sprite. It also produces carbonated water under the brand name Crystal.

Coca Cola regional office here has also been putting on hold its promotion activities and telling its promotion agents to suspend previously planned work worth half a million birr, according reliable sources.

The board of directors will hold a meeting next week to discuss what measures would be taken.

Coca-Cola, as a bottler in Ethiopia, was started in 1959 and was known as the Ethiopian Bottling Share Company. It opened a branch in Dire Dawa in 1965.

The two plants were nationalized in 1975, and operated as a public company until 1996. With the introduction of the privatization program, Ethiopian entrepreneurs bought the two plants.

Coca-Cola Sabco (CCS) and Ethiopian Bottling Share Company signed a joint venture agreement on 19 May 1999. Last year, Abinet Gebremeskel, a close aide of tycoon Sheik Mohammed Al-Amoudi, bought 18 per cent of EABSC’s shares worth over 32 million birr. Al-Amoudi owns Moha Industries, which produces Pepsi and other beverages.