FEMSA quits Coca-Cola Philippines venture five years after taking 51% stake

By Gary Scattergood contact

- Last updated on GMT

Coca-Cola said it remains optimistic about the outlook in the Philippines. ©GettyImages
Coca-Cola said it remains optimistic about the outlook in the Philippines. ©GettyImages
Coca-Cola FEMSA is to sell back its 51% stake in Coca-Cola Philippines, after a tough period marked by labour unrest and the introduction of a sugar tax.

FEMSA is the world’s biggest franchise bottler of Coca-Cola trademark drinks.

It only bought the stake in 2013, but the terms of the deal included a buy back option.

Parent business the Coca-Cola Company has stated that its Bottling Investments Group (BIG) will now take over the operation, subject to regulatory approvals.

“We respect Coca-Cola FEMSA’s decision, and we appreciate the progress made during their five-year tenure in the Philippines,”​ said Coca-Cola Company president of the Asia Pacific Group John Murphy.

It has been a trying time for the company in recent months, in part due to the introduction of a the country’s sugar tax.

In February Coca-Cola FEMSA Philippines said it was laying off 600 employees, blaming the move on the "regulatory environment"​ just weeks after the country the tax.

According to grassroots labour groups and unions, which joined protests against the move, this amounted to around 7.5% of the company's 8,000-strong workforce. 

Structure assessment

"In light of recent developments within the beverage industry and in the business landscape as a whole, the Coca-Cola System is undergoing an organisational structure assessment," ​Coca-Cola FEMSA said at the time.

"This restructuring has been a very difficult decision,"​ the company added.

"It was carried out only after an exhaustive and conscientious assessment of the evolving regulatory environment, our operational efficiency, and consequent performance in the market.​”

The sugar tax came into effect at the turn of the year, adding  Ps6 (US$0.12) per litre for beverages using caloric and non-caloric sweeteners, and Ps12 per litre on those using high-fructose corn syrup.

These includes powdered juices, energy drinks and soft drinks. The rate will be increased by 4% each year thereafter.

That said, Coca-Cola said it remains optimistic about the outlook in the Philippines.

“In every market’s evolution, there will be ups and downs. We are confident both in the opportunities that we have ahead and in the plans we have in place for the Philippines. With BIG’s depth of experience and solid track record in Southeast Asia, we believe they will bring significant value to our business,”​ said Coca Cola Company Philippines president and general manager Winn Everhart on Friday.

 

 

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