Coca-Cola Femsa pushes Philippines as Asean hub

MEXICO CITY  – Global bottling giant Coca-Cola Femsa remains bullish on its operations in the Philippines, pushing the country to become its production hub for the ASEAN market.

Coke Femsa corporate affairs director Jose Ramon Martinez said the Philippines now has the largest production operation of the company in Asia and is part of  nine other Latin American subsidiaries, benefitting from a substantial investment of  $2.2 billion over the past four years.

Philippine Ambassador to Mexico Eduardo Jose de Vega said there is a need to encourage and support the entry and continued expansion of Mexican investments in the Philippines, led by Coke Femsa, Cemex and Kidzania.

In an interview with The STAR, De Vega pointed out Mexico’s investments in the Philippines are important as the Latin American economy tries to broaden the scope of its trade and investments beyond its traditional neighbor, the US.

De Vega said Coke Femsa is pouring in substantial investments in the Philippines with the intention of making the country its hub for further penetration of the ASEAN market.

The company, however, is facing headwinds from the Philippine sugar industry on renewed moves from lawmakers to pass a tax on sugar-sweetened beverages.

A proposal to impose a tax on sugar-sweetened beverages would be discriminatory and inflationary, said John Santa Maria Otazua, chief executive officer of Coca-Cola Femsa.

In a press briefing, Otazua pointed out imposing tax on sugar-sweetened beverages is discriminatory as the beverage sector does not account for a big portion of sugar use and that if such a tax is imposed, it should be slapped on the ingredient.

At the same time, Otazua said the tax is meant as a revenue measure rather than to discourage consumers to change their preference.

Otazua pointed out if such a tax is passed, beverage manufacturers would likely just reduce their use of sugar and reformulate or shift to non-sugared beverages.

Coke Femsa is already in the process of expanding its product lineup,  venturing into water, isotonics, energy drinks, tea and even into dairy with recent acquisitions.

Furthermore, Otazua said the sugar industry would ultimately harm itself as beverage firm shift or reformulate to lower their sugar use.

Additionally, he said a sugar tax would be inflationary, harming consumers and the small sari-sari store retailers.

The Coke Femsa executive explained that the local sugar industry’s push for the increased use of domestic sugar is difficult since domestic production is not enough to meet demand.

Otazua stressed the need for the Philippine government to allow Coke Femsa to buy from the international sugar market to meet its sugar requirement.

According to Jorenz Tanada, director for legal and corporate affairs of Coca-Cola Femsa Philippines, local sugar production can only provide for 56 percent of Coke Femsa’s requirement, further constrained by the fact that only 7.3 percent of local sugar meets the quality standard of Coca- Cola.