Not having enough sugar to make Coca-Cola is the ultimate sign of economic disaster

Switching to water.
Switching to water.
Image: Reuters/Jorge Silva
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Venezuela just became one of the few spots on earth where Coca-Cola production has ground to a halt. Femsa, the Mexican Coca-Cola bottler that supplies Venezuela, said late Monday it stopped making its flagship product because it can’t get any sugar.

Aside from notable exceptions such as Cuba and North Korea, Coke is sold virtually everywhere around the globe, stocked in more than 24 million stores. Like other beverage companies, Coca-Cola Co., based in Atlanta, gained that reach through a network of local bottling companies adept at navigating the economic ups and downs in their turf.

During the height of the Greek debt crisis in 2012, the local bottler shut down two of its plants, but kept three others open. In 2005, Coca-Cola started plotting entry into war-torn Iraq, even as US forces struggled to contain insurgents. The company set up shop in Albania and elsewhere in Eastern Europe after the collapse of communism when local economies were in shambles.

Coca-Cola shipments indicate the beginning of economic change, author Tom Standage told the BBC in 2012, citing the start of soft drink sales in Burma after US trade sanctions were lifted. “Coca-Cola is the nearest thing to capitalism in a bottle,” said Standage, who wrote “A History of the World in Six Glasses” (including Coke).

The halt of Coke production, then, is a sure sign business conditions have taken a nosedive. The South Sudan civil war (paywall), and the dollar crunch it generated, left the local Coca-Cola bottling plant dry. The Arab Spring shut down Coca-Cola’s  operations in several countries, though they have been restored in some of them. Recently, Coca-Cola stopped making canned soft drinks in Namibia due to water shortages amid a severe drought.

In Venezuela, the sugar squeeze hitting Coke is the result of government policies gone amok. Farmers are planting fewer acres of sugarcane, and getting lower yields, due to price controls, higher production costs and a lack of inputs such as fertilizer, according to the US Department of Agriculture’s Foreign Agricultural Service.

Femsa is not ready to give up on Venezuela. It said it is paying workers “solidarity compensation” to reiterate its long-term commitment with the country while it waits for sugar supplies to be restored. In the meantime, Venezuelans can drink Coca-Cola Light, or water, which Femsa is still able to produce.