Coca-Cola Affirms Brazil 2012 Commitment

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – U.S. soft drinks giant Coca-Cola has said that the company is to keep its word over plans to invest R$2.8 billion (around US$1.4 billion) in the company’s Brazilian arm, Coca-Cola Brasil, this year. The company’s top man in Brazil chief said the company would meet its investment target for 2012, and was also “certain” to improve on it further next year.

The announcement has bucked the recent trend of foreign investor reducing the capital flowing into Brazil due to the relative poor performance of the economy this year.

Arriving at the Presidential Palace in Brasília for a meeting with Brazil’s Chief of Staff Gleisi Hoffman, Coca-Cola Brasil president Xiemar Zarazúa briefly outlined the company’s vision for Brazil:

“Until now, we have been able to maintain this level of investment. We will stick to our word. Then we will look at how we pay for it. This is in keeping with our forecasts,” he told business edition Valor, adding the company was taking into account the legacy to be inherited by the country through events like the 2014 World Cup.

Zarazúa said he was “confident in the government’s policies” and that the country was being “well managed,” Reuters news agency reported.

The encouraging news from Coca-Cola comes after Brazil’s Banco Central (Central Bank) recently announced a dramatic forty-percent drop year-on-year in the amount of capital made by foreign investors in the first six months of 2012.

But after meeting with the Coca-Cola Brasil executive, Chief of Staff Gleisi Hoffmann said she believed foreign investment, and therefore confidence in Brazil from an overseas perspective, would be strengthened by the government’s “concession” of the country’s infrastructure investment programs to private investors, and that this would help buck the trend of the foreign investment exodus witnessed in the first half of the year.

Concessions have already been announced for roads and railways, and more schemes are set to be detailed in the near future after studying European concession models for ports and airports; the plans are expected to include Rio’s Galeão International Airport.

The government is hoping that this and a raft of other stimulus packages – included reducing the Selic, Brazil’s benchmark interest rate, to historically low rates, and major reductions in energy prices for 2013 announced by President Dilma Rousseff during her Independence Day national address – will stoke stronger growth in the Brazilian economy and greater confidence from abroad.

In November 2009 representatives of the Coca-Cola corporation said that the company intended to significantly increase its expenditure and investment in Brazil over the five years leading to 2014, to coincide with the World Cup and the 2016 Olympic Games.

The extra investment was expected to total US$5.8 billion over the five year period, represent a 75 percent increase when compared to its investment in the country of US$3.3 billion over the five-year period prior.

Coca-Cola was first made in Brazil in 1942 when its first production facility was inaugurated in April that year in São Cristóvão, Rio de Janeiro state. Along with its many world-renowned brands, Coca-Cola also sells a guaraná drink – Kuat – to compete with Brazil’s most famous soft drink, Ambev‘s Guaraná Antártica.

After recently restoring sales in Myanmar (Burma) after a sixty-year hiatus, there are now only two countries in the world where Coca-Cola is not officially sold, due to U.S. trade embargoes: North Korea and Cuba.