Jun 6, 2013

Coca-Cola Says Myanmar’s Opening Is Like Fall of Berlin Wall

Chief Executive Officer Muhtar Kent marked the return of the world’s largest soda maker to Myanmar after 60 years by opening a bottling plant and pledging more investment in the newly opened economy.

The company will invest $200 million in the next five years and a second plant will open in a month’s time, Kent said in an interview with Haslinda Amin on Bloomberg Television.

An employee monitors operations at the Coca-Cola Co. bottling plant in Hmawbi, Myanmar. Photographer: Dario Pignatelli/Bloomberg
Enlarge image Coca-Cola Opens Myanmar Bottling Plant to Stave Off PepsiCo

Bottles of Coca-Cola moving along the packaging line at the company's plant in Hmawbi, Myanmar. Photographer: Dario Pignatelli/Bloomberg

“It’s a great moment in history, just like it used to be when we opened up our business in east and central Europe in the former Soviet Union right after the fall of the Berlin wall,” Kent said. “We can retain and grow our leadership that we already have in this market today.”

Coca-Cola’s new plant begins in earnest a race with PepsiCo Inc. (PEP) to control beverage markets in the Southeast Asia nation, which reopened its borders last year to foreign investment. Myanmar President Thein Sein has allowed more political freedom and loosened economic controls since coming to power two years ago, attracting companies such as Ford Motor Co., MasterCard Inc. (MA) and Unilever NV. (UNA)

The country is boosting economic, military and political ties with Western nations after years of isolation that left its 64 million people among Asia’s poorest. Its transition to democracy last year after about five decades of military rule prompted the U.S. to ease sanctions last May.
Boosting Ties

Coca-Cola will need to focus on distribution to win over the nation’s consumers, Kent said. PepsiCo has been building drinks distribution in the country, will soon distribute snacks there and is pursuing plans for a factory.

“As important as price, it is availability, it is serving the product in the right conditions, making it available, making it at an arms reach of desire,” Kent said. “We have plans to ensure that we have the best, most modern 21st century consumer distribution system in the country.”

While Coca-Cola left Myanmar about 60 years ago, PepsiCo has more recent experience in the nation. The world’s largest snack maker pulled out of Myanmar in 1997 after activists urged the company to sever ties with the military dictatorship because of human-rights violations.

Unilever has said it will focus on opportunities in new markets in Southeast Asia, such as Myanmar, which could be “another Vietnam” in 20 years, according to Peter Ter-Kulve, the London- and Rotterdam-based company’s chief executive officer for Southeast Asia. The company is already selling its products through 100,000 outlets in the country, he said in an interview last month.

Source: Bloomberg