Coca-Cola FEMSA has suspended all production in Venezuela because of a sugar shortage, the Mexican beverage multinational said in a statement.
The company, the largest Coke (KO) bottler in the world, told workers sugar supplies were too low and that the problem could persist for months, according to several media reports. Coca-Cola FEMSA, which operates across Latin American, said 90% of its products require sugar. At the same time, the company said that while it was closing its central office in Venezuela, it was not exiting the country.
Last month, Polar Group, Venezuela’s largest food and beverage company and biggest private company overall, said it would suspend production of beer and other malt beverages because of a lack of barley.
The suspension comes as Venezuela’s economy appears to be teetering on the brink of collapse. Earlier this week, President Nicolas Maduro repeated his threat to seize closed factories and nationalize them. And Reuters reported water levels have dropped close to a critical low in Venezuela’s main dam and hydroelectric plant, which provides the majority of the country’s electricity, leading the government to ration water. The oil-producing country’s economy is struggling to contend with low energy prices.
But currency controls and often erratic behavior by the Venezuelan government have long been an impediment to many Western consumer and packaged goods companies operating in the nation, which was once one of the richest countries in Latin America. Two years ago, Clorox (CLX) exited the market, while Avon Products (AV) scaled back operations.