NEPAL: COCA-COLA FEELS THE PINCH OF THE

C O N F I D E N T I A L KATHMANDU 000498

SIPDIS

STATE FOR SA/INS
STATE ALSO FOR DS/IP/SA AND DS/DSS/OSAC
LONDON FOR POL/GUERNEY
NSC FOR MILLARD

E.O. 12958: DECL: 03/18/2014
TAGS: CASC BEXP ECON PTER NP
SUBJECT: NEPAL: COCA-COLA FEELS THE PINCH OF THE
MAOIST-IMPOSED EMBARGO

REF: A. A) KATHMANDU 489

B. B) KATHMANDU 437

Classified By: Deputy Chief of Mission Robert K. Boggs for reasons 1.5
(B,D)


1. (C) On March 18, NN Singh, Managing Director of Coca-Cola
Nepal reported to Econoff that the Coca-Cola's bottling plant
located in Bharatpur (130 kms southeast of Kathmandu outside
of Chitwan) ceased operations temporarily as a result of the
Maoist-imposed economic blockade (reftels). He said that
this was done as a precautionary measure; the company did not
receive a specific threat. The factory will likely re-open
on March 26.


2. (C) Resorting to bicycle rickshaw delivery to the smaller
shops, the distribution network of most commercial goods,
including Coca-Cola beverages, has been hit hard by the
economic blockade. Singh indicated that Coke's local
management decided to close the facility when it realized
that the Maoists were serious about their embargo, which
began on March 8. He said that Coke employees, recognizing
that the company would lose money if production was not
complete through to the bottling stage, decided to open the
factory themselves and finish the pending work. The
employees were able to complete the production run in the
course of one evening. Singh indicated that there will
likely be a supply gap once the Maoist imposed embargo is
lifted on March 25, but that Coca-Cola India would send an
initial shipment to supplement Nepal's Coca-Cola needs.
(Note: Coca-Cola is one of the largest U.S. investors and the
only large U.S. distributor in Nepal. End Note.)


3. (C) Ironically, the President of Coca-Cola India was in
Kathmandu this week to consult with local managers on the
advisability of opening two new bottling plants in Nepal.
MALINOWSKI