Local sugar producers hope to end rift with Coke as FEMSA exits PH

As Atlanta-based The Coca Cola Co. (TCCC) takes Coke's Philippine operations away from Mexico's Coca Cola FEMSA, sugar stakeholders expressed high hopes that the troubled ties between the brand and local producers would also finally end.

In a joint statement, Sugar Regulatory Administration (SRA) and the Confederation of Sugar Producers (CONFED), the biggest sugar group in the Philippines, said they welcomed TCCC's reacquisition of the 51 percent stake of Coca Cola FEMSA.

“This will definitely mend the rift between the sugar producers and Coke under FEMSA," Francis de la Rama, national president of CONFED, said.

To recall, weeks before the takeover, Coca Cola FEMSA has been complaining non-stop about the "unreliable supply of sugar" in the Philippines and even sought the government's approval to directly import even if the law doesn't allow it.

The request also came at a time when SRA's importation program is on-going.

De la Rama said that TCCC President and General Manager for the Philippines Winn Everhart already assured the local industry that “he will fix the problem” between the industry and Coke, which is considered as one of the biggest buyers of sugar in the country.

"With this, I personally feel that we can sit down and work together in the future," De la Rama said.

For his part, SRA Board Member Dino Yulo, who represent the planters group, said he is hoping that FEMSA's exit from the Philippine market "will auger well for the industry" and that the agency is now ready to work together with Coke Atlanta.

“We hope there will be more transparency and collaboration between Coke and the sugar industry.” Yulo further said.

De la Rama also revealed that Coke has indicated that they are now ready to send a technical working group to sit down with sugar producers on how best they can resolve the sugar supply need of the beverage company.

“We are ready to get down on it as soon as possible," De la Rama said.

The acquisition came a few months after Coca-Cola FEMSA was forced to reduce the number of its workers following the difficult business environment that was triggered by the implementation of Tax Reform for Acceleration and Inclusion (TRAIN) law.

To be specific, the TRAIN law imposes a 16 per liter (/liter) tax on beverages using caloric and noncaloric sweeteners and 112/liter on beverages using high fructose corn syrup (HFCS).

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

Coincidentally, the deal is happening just a few weeks before the current sugar crop year ends.

Traditionally, a crop year ends August 31 and begins on September 1.

Right now, the prices of sugar in the local market already started improving.

A data from SRA showed that as of August 14, the price of raw sugar per 50-kilo bag in Metro Manila now averages around 11,994, which is lower than the average price of 12,165 in July.

As for refined sugar, the average price for one 50-kilo bag now stood around 12,726.00, which is also lower than 12,907.43 in July.