Leading Soft-Drink Company to Quadruple Production in Vietnam
SINGAPORE (AP) _ Coca-Cola Co. will quadruple production in Vietnam under a $48.8 million deal that makes the soft-drink leader the first U.S. company to expand there since relations were normalized two weeks ago.
The contract announced Wednesday calls for the Singapore arm of Coca-Cola to co-produce Coke and other drinks like Sprite and Fanta in Ho Chi Minh City with a Vietnamese company that bottles Coke under a prior arrangement.
``The joint venture signifies an increasing maturity in our relationship and in the potential of the market,″ Huynh Thi Min, deputy general director of Coca-Cola’s Vietnamese partner, Chuong Duong Beverage Co. Ltd., said at a contract signing ceremony.
The new venture, to be called Coca-Cola Chuong Duong Soft Drinks Co. Ltd., will quadruple current production capacity to around 136 million liters or about 36 million gallons per year, Coca-Cola said in a statement from its Singapore-based operation, Coca-Cola Indochina Pte. Ltd.
Facilities of Pacific Beverage Co., another Vietnamese bottler that also produces Coke in Ho Chi Minh City under a prior arrangement, will now become part of the new joint venture, the statement said.
Based in Atlanta, Coca-Cola is one of the biggest U.S. companies, with revenues exceeding $16 billion last year and a product array sold in more than 195 countries. Coke, Diet Coke, Fanta and Sprite rank among the world’s top-selling soft drinks.
Coca-Cola re-established a modest presence in Vietnam when President Clinton lifted a trade embargo in February 1994. But anticipating broader ties, the company has been working to increase production capacity in the country of 73 million, one of Asia’s last great untapped consumer markets.
The new deal marks the first between Vietnam and an American corporation since the normalization of diplomatic relations between the two countries on July 11. Coca-Cola also is completing a joint-venture production factory outside of Hanoi, the capital.
People in the former South Vietnam developed a taste for American cola during the Vietnam War, when the beverage was supplied to hundreds of thousands of U.S. troops based there.
Coca-Cola continued to trickle into postwar Vietnam through third countries during the 19-year embargo. Today, many Vietnamese see Coke and rival Pepsi as status symbols and don’t mind paying a bit extra for them as opposed to locally produced brands of soda.
Pepsico, producer of Pepsi, has been bottling Pepsi and 7-Up for more than a year in Ho Chi Minh City. Pepsi’s venture also has signed bottling agreements with two firms in northern Vietnam.