Coca Cola bottling plant in Ethiopia shuts down


EDITOR’S NOTE: Addis Fortune reports that Foreign currency shortage has forced Coca Cola bottling plant in Ethiopia to shut down. It is to be noted that Woyanne-owned or affiliated companies, such as Al Amoudi’s MOHA, are not facing the same problem. Importing material for building a large stadium in Mekelle is also not affected.

ADDIS ABABA (Addis Fortune) – The newly operational production unit (left) with a capacity to fill 30,000 bottles per hour stays idle as East Africa’s door (above right) stays closed and trucks lined-up empty (below right)

For the first time in nearly half a century, bottlers of Coca-Cola and sister beverage brands closed their plant on Thursday, March 12, 2009, sending 1,000 workers on a forced annual leave, but with full pay.

The plant, located in Addis Abeba on Dejazmach Balcha Aba Nefso Street, and one of the two operated by East Africa Bottling Share Company (EABSC), was closed after instructions given last week to the Acting General Manager, Izan Bombom. The management told Fortune that the closure would be “temporary;” however, no one seems to know when production will resume.

The plant was quiet on Friday; machines were no longer running, and medium-sized distribution trucks, flourishing the company’s logo, were parked idle inside the compound. The scene outside was more revealing. The line of heavy trucks and trailers, that had been waiting for their load for the past three weeks had not yet disappeared.

But there were no workers to load them. Only a very few management staff members were still in their offices, and security personnel were guarding the facility when Fortune visited the complex.

Employees hope that this is just a temporary drawback.

“I expect to get my job back very soon,” an employee in the Supply Chain Department of the company, told Fortune. “In case this is not an alternative, I am hopeful that the company will do something for us.”

The supreme body of the company, the Board of Directors, are scheduled to meet next Tuesday, March 17, to discuss the crises, in addition to the regular agenda of reviewing EAB’s performance for 2008, sources disclosed.

The news of the closure of the plant was shocking to some of the shareholders. Dereje Yesuwork (Jambi) and Munir Duri, were two of the five shareholders informed about it by this newspaper when approached for comments.

“It can’t be true,” Dereje reacted on the night the plant was closed.

The company said it was forced to stop bottling beverage brands — Coca Cola, Fanta, Coca-Light, Sprite, Orange and Fanta Ananas (Pineapple) — and shutdown the plant because it is unable to import raw materials for production due to the shortage of foreign currency the country currently suffers from.

Recently, Ethiopia was confronted with a depilated amount of foreign currency in its reserve. This is what the International Monetary Fund (IMF) described as a positioning “into critical territory.” Ethiopia’s gross reserve, amounting to 906 million dollars in 2007/08, was the lowest recorded since 2004. Although modestly improved lately, and reaching an amount that could pay for seven weeks of the nation’s imports, commercial banks are no longer at ease with processing requests for letters of credit for imports of goods.

EABSC is one of the victims.

Restructured to its current format in May 1995, after businessmen bought the factory from the Privatization Agency for 10 million dollars, East Africa Bottling has been in continuous expansion. Its original shareholders – Negussie Hailu, Munir Duri, Bereket Haregot, Kassim Hussien and a fifth shareholder sold all or part of their shares to newcomers. Today, 73pc of the company is owned by the South African Beverage Company (SABCO), while Negussie Hailu, Munir Duri, Dereje Yesuwork and Abinet G. Meskel, own the remaining 37pc. The latter two are close confidantes of the Saudi tycoon, Sheikh Mohammed Ali Al-Amoudi, who, together with his wife, owns MOHA Soft Drinks Industry, bottlers of the competing soft drink, Pepsi Cola.

East Africa Bottling has grown so much ever since the mid-1990s. Its current capital is 400 million Br. Its expansion project, that cost 12 million dollars spent on procurement of two plants and a bottle washing machine, helped it enhance its production capacity from five million crates in 1995 to 21 million crates last year.

It was unable to fill a single crate of soft drinks beginning last week.

“Due to the current shortage of foreign currency, we are now faced with quite a shortage of crown cork,” said the management in a statement faxed to Fortune a day after the closure of the plant.

The management said that although it tried to substitute imported raw materials with locally produced ones, it was not able to substitute all of its requirements. Neither was the company permitted to receive loans of million of dollars from its major shareholder, SABCO, nor supply on credit for six months offered by Coca Cola International, as authorities from the central bank are reluctant to commit the country into debt, sources disclosed.

“The shortage is forcing us to temporarily stop the production of Coca Cola products,” EABSC said. “We are using this opportunity to maintain our machines and fleets.”

But there are many affected by this decision, in addition to the work force of the plant. Immediately hit are the 761 distribution vending shops, and the drivers and their assistants of the 250 trucks EAB contracted for deliveries. Around 35,000 outlets, scattered throughout the country will also be unable to serve Coca Cola and its sister brands for an unknown period. This will affect an estimated 150,000 beneficiaries involved in the value chain of the bottler, according to East Africa’s management.

And its customers are the most disappointed.

“Almost every customer asks for Coca,” a cafeteria owner around Piassa area, on Arbegnoch Street, told Fortune.

One of these could be Hagos Sahle, a Lada-taxi driver. He cannot spend a day without consuming Coca Cola.

“I am addicted to it,” Hagos told Fortune. “I don’t know what I am going to do.”

Industry observers see a wider effect of the problem than that simply confined to East Africa Bottling. Although bottlers of Pepsi Cola are still running their plant, owing to their opening of letters of credit earlier, they could face tough time in the months ahead should the forex crunch persist.

“We are alright so far,” Getachew Birbo, chief executive officer of MOHA, told Fortune. “We have planned our imports for up until June to July. And we’re supported by Dashen Bank; should there come the need, we’ll depend on the owner of our company.”

The two giant bottlers share the 40 million crates provided to the market almost equally. Nevertheless, Ethiopia’s soft drink market is estimated to reach at 100 million crates, 38pc of which is believed to be in the south. Both have series limitations in their capacity to satisfy this market, which is growing annually by 25pc, according to industry experts.

Industry observers believe it is just a matter of time before other beverage companies find themselves in the same position as the soft drinks bottlers, due to empty stock of raw materials. They anticipate that the breweries are next on the line.

By HILINA ALEMU | ADDIS FORTUNE


11 comments on “Coca Cola bottling plant in Ethiopia shuts down

  1. onethiopia on

    Now we are coming to the end of TPLF leaderships, they did not no who to lead, the education the Ethiopian people are give is no good, they have very bad in communication, now they are also failing on something they think they good at it, business.

    they are not a good leader, let alone leading 80m people they just cannot manage to run a restaurant with 10 member of staff, and 100 people per-week costumer.

    look what they are doing to our country, you people you to rethink again and enjoined EPPF to fight them out of our country.

    Long Leave EPPF
    http://www.eppfonline.org

    hey do not understand how to lead 80m peoplein business they are shown us they just do

  2. Tesfa on

    While the reason for the closure is discomforting Ethiopian can do without coke. In fact the closure might give local beverages a better chance.

    Peace

  3. Tariku on

    Weyane govt. didn’t want to bailout the Coca Cola company because it wants it main fanancier Sheik Almoudi to monopolize the the soft drinks market in the 80 million people nation. I am sure top TPLF officals will be main beneficiaries of this scam!

  4. Tariku on

    This is one of the saddest news our country has ever faced. Don’t tell me Sheraton will be next, then Ethiopians will really riot and overthrow this nasty government. We all know what a great development it is to have a cold coke sitting at the sherator lobby or in Al amoudi’s bedroom. Specially those beautiful girls couldn’t live with out a cold coke in sheraton’s bedroom.

  5. kebede on

    Guys can’t you read between the lines? It was let to shut down because SO aLAMOUDI COULD MONOPOLIZE THE SOFTDRINK MARKET…AND OFCOURSE TOP TPLF BRASS WILL BE REWARDED HANDSOMLY!!

  6. Assta B. Gettu on

    Shortage of raw material or shortage of foreign currency is much better than shortage of well- educated and productive laborers.

    Shortage of raw material and shortage of foreign currency have forced, we are told, EABSC to dismiss its employees for the time being; however, it is fair to say the company is very generous and considerate toward its employees for allowing them to leave with a pay, and I hope these employees will soon come back and begin their productive work.

    I know there are hundreds of Ethiopians who have lost their jobs, and, unlike in America or other democratic countries, there are no unemployment benefits for workers who lost their jobs in this undemocratic land of Ethiopia, and Meles Seitanawi (Zenawi) and his wife Azeb or Jezebel Mesfin who are the main shareholders of big companies in Ethiopia don’t care about those jobless young Ethiopians as far as the old and the young Tegarues have jobs, thanks to Meles Seitanawi.

    In Ethiopia or in other countries, there are good and bad injera-enat (stepmothers), and those unfortunate children, like some of us, who grew up under the care of the bad injera-enat have had bad memories about our bad injera-enat.

    In the same way, Meles and Azeb have been the bad injera-enat of many Ethiopians for almost two decays, and those children who grew up under their cares are absolutely different from those Ethiopian children who grew up under the care of the good injera- enat: Emperor Haile Selassie.

    These young Ethiopian children who grew up under Meles’ and Azeb’s cares are malnourished, unhappy, unhealthy, diffident, and unproductive.

    On the other hand, the children who grew up under the care of Emperor Haile Selassie are bright, independent, self-confident, happy, outgoing, humorous, and productive in their respective fields.

    The Ethiopian children under the regime of Meles Seitanawi have grown up with bad memories of the everyday sufferings of the Ethiopian workers, the Ethiopian educators, the Ethiopian clergies, the Ethiopian musicians, the Ethiopian newsmen, and the Ethiopian farmers who are being dragged everyday for a simple or no reason at all from their homes and sent to jail without first trial at least in the kangaroo court.

    Those Ethiopian children, especially the Oromo ones, the Amhara ones, and the Ogaden ones who grew up, seeing their fathers being beaten up by Meles death squad, their mothers and sisters being violated by the blood-thirsty federal police cannot be the future doctors, nurses, engineers, judges, musicians, authors, poems, factory workers, and leaders of Ethiopia because Meles Seitanawi has purposely starved them to death when they were infants, babies, and toddlers.

    The damage done to such innocent Amhara, Oromo, Ogaden, and other Ethiopian children by Meles and his wife in order to be subservient subjects to the Tigrean tribes is beyond someone’s imagination.

    Therefore, in the future, there will be, not only shortage of raw material or foreign currency but shortage of more educated and productive laborers in Ethiopia, mostly in the Oromo, Amhara, and Ogaden regions because many of Ethiopian children who were supposed to be productive workers are mostly handicapped while the Tigrean children are selectively protected, nourished, sent abroad for higher education, and offered the highest place in Ethiopia after they have finished their education.

    Meles Seitanawi (Zenawi) has purposely emasculated the future hopes of the children of Oromo, Amhara, Ogaden, and others not to be effective workers or leaders of their country so that only the children of Abay Tigray would be the future leaders of Ethiopia. In this case, shortage of labor force will be an economic disaster for the Amhara, Oromo, Ogaden, and other regions of Ethiopia in the future.

    I always thought Ethiopia is very rich in raw material and poor in foreign currency. It now seems Ethiopia is short of both – the raw material and the foreign currency but rich in producing corrupt leaders and managers of the Ethiopian big corporations.

    The problem of foreign currency can easily be solved if there were peace and security in Ethiopia for those Ethiopians in “sidet” or diaspora who would like to go to their mother land and invest their assets, their knowledge, and their know-how-to skills in their country. However, Meles Zenawi will not let them in to help their country because they are highly educated, and he does not want to surround himself, like Barack Obama, with highly educated politicians, and he is very suspicious of them in case they may overthrow him and liberate their country.

    Ethiopia cannot get a lot of foreign currency if foreign investors are not interested in the way Meles is running the country; in Ethiopia it is hard to open one’s own business unless one bribes the political officials – the Tigreans – and more than that, the investors are obligated to hire workers only from the Tigrean tribes. This type of business investment is unproductive for the business owners as well as for the workers.

    Note: I have designated Azeb as Jezebel because Jezebel was the one who secretly murdered that innocent farmer- Naboth – and gave his fertile vineyard to her husband, Ahab, King of Israel. (1st King 21:1-29) At this time, we do not know how many Ethiopian farmers might have been killed, their land and properties confiscated and given to Meles by his wife Azeb Jezebel that Baal worshiper and loose lady. We know that Azeb took the Humera-Setit land from the Wolkait farmers and gave it to her husband and to her children without the permission of the people of Wolkait.

  7. yenatulj on

    Don’t worry,

    Someone from the West will come and reinvest in Coke, not for the sake of the Ethioian masses, but for the sake of their tourists that frequent Adiss to “Help us the poor, the downtrodden”! Who needs enemies when we have the West as our friends? Think about it ladies and gentlemen…

  8. Pepsi products have been abandoned by most non alcohol beverage lovers in favor of Coca products because of the Sheck’s political stand. Now this can be a good opportunity for Pepsi to impose itself with a cynical smile on Ethiopian consumers.

  9. Enat on

    Ethiopian people have nothing to eat, all you guys are worried about Coca-Cola, How crazy you all are! From what I am reading, Pepsi and Coca-Cola’s stakeholders are the same. Are we worried about making the wealthy not wealthier?

  10. yenatulj on

    Comentators #6 & #9 above have nailed the real reason for shutting down the Coca Cola factory.

    The reason why the Coca Cola company went under has more to do with helping Alamoudi than shortage of hard currency. After the past election, most Ethiopians abandoned drinking “Pepsi” which is owned and distributed by Moha-Alamoudi’s company to show their disgust to sheik’s open support for the vampires of Addis. Now, using the hard currency shortage as blessing in disguise, the weyane officials pulled the plug on Coca Cola so that Alamoudi could have 100% monopoly on the soft drinks market in the 80 million people nation. I am sure Meles will be rewarded for his action..that is how things work in today’s Ethiopia!
    The other big scandal in Ethiopia is that the sale of the Adola Gold mining to Alamoudi more than a decade a go was very under valued1 The Sheik acquired the mine for 175 million USD and for the last five years, he has been making around 200 million USD a year! Believe it or not, The Sheik’s investment in Ethiopia mainly in Coffee plantation, Leather, hospitality and mining activities helped him to fare well in these terrible Economic turn down days. Nothing could be further from the truth, his claim that he is investing in Ethiopia not to accumulate profit but to help his country is full of lie-he is there to milk the nation by collaborating with corrupt weyane leaders! At the end, Alamoudi’s support of Meles is mainly to protect his business empire in Ethiopia…but one thing Alamoudi never aware of is the MLLT gangs in Addis have the habit of biting the very fingers that feed them…so enjoy the honeymoon now Alamoudi, it won’t last because the Vampire nature of Weyanes will resurface sooner or later!!

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