Myanmar’s Gradual Embrace Of The Coke Trade

An illicit trade in Coke was quietly sustained for more than 60 years in Myanmar, serving the country’s elite and providing a living for a few bold smugglers. Only the wealthy could afford to shell out as much as $2.99 for a red can smuggled in from neighboring countries and sold in the country’s very few posh restaurants and five-star hotels.

Despite Coca-Cola ’s status as perhaps the world’s most ubiquitous product, available in some 200 countries, until two years ago it remained off-limits to most citizens of Myanmar. In fact, Myanmar was one of only three countries in the world in which the famous sugary soft drink was not legally available. Now there are only two: Cuba and North Korea.

But in September 2012, Coca-Cola made its first delivery to local customers. When the United States lifted its sanctions against the country in 2012, in response to political and economic reforms, Coca-Cola was the first foreign company to enter the country. In the post-sanctions liberalization, Myanmar became the world’s last capitalist market to embrace Coca-Cola.

“Even adults or older people had never drunk a Coke in their lives before. Now we are making it available to everyone. Everybody is drinking Coke, not just young people,” Rehan Khan, Coca-Cola’s country manager in Myanmar, said on the sidelines of a conference in Hong Kong hosted by Beacon Events. “The market is growing quickly. The question is how fast we can ramp up our capacity.” That is not a problem the company can solve on its own, however. “Our products are shipped by trucks,” Khan explained. “Myanmar’s road infrastructure is a challenge.”

Khin Maung Hien, a resident of Taunggyi, capital of Shan State, said ordinary Burmese bought Coke as gifts to friends or as bribes to officials in the old days. Until recently before the liberalization, a bottle of Coke, of 1.25l, smuggled from Thailand, was sold at 1800 kyats and only rich people could afford it, he added.

In sparkling drinks, Coca-Cola leads with more than a 50% market share in Myanmar, according to Nielsen MMRD. Even so, drinking coke, like bottled water,remains a special experience, mostly reserved for festivities such as weddings or football matches. A bottle of Coca-Cola or Sprite, of 425 ml, fetches 300 kyats (30 cents). Comparable to other markets, Khan said they are sold mostly in the country’s dominant mom-and-pop stores as well as supermarkets, but they are considered pricey in a poor country where the everyday drinks are tea, tap water and boiled water.

Masaki Takahara, executive managing director of the Japan External Trade Organization’s Yangon office and a two-year resident, said he has found locally made Coke slightly cheaper than imports from Thailand, sold at about the same price as in other ASEAN countries. “I bought Coca-Cola produced in Myanmar. They taste the same,” he said. He added that he and his wife feel comfortable living in Myanmar, despite worries over the quality of its hospitals, its patchy transportation, and exuberantly high telecommunications charges—making a telephone call to Japan sets him back $4.45 per minute. But on the plus side are the ready availability of products like Coke and Japanese food in a local high-end supermarket chain, City Mart. There is also the familiarity of Buddhist culture, shared between Myanmar and Japan.

Myanmar has come full circle in its embrace of Coke. Coca-Cola’s then local bottler, Solomon’s Ltd., began selling Coca-Cola in Burma in 1927. In 1931, its annual report identified Burma as a growth market for international expansion, along with Germany and Italy. More than six decades later, Coca-Cola re-launched its Myanmar operation by importing its products from Singapore and Thailand. Competitors are following closely in its footsteps. PepsiCo has a local joint venture with its Korean partner, Lotte NGS. And Asahi of Japan has become a market leader in bottled water through a local joint venture.

Khan said Coca-Cola aims to have everything produced locally, a laborious task it has repeated elsewhere, including Japan and Vietnam, to much fanfare. The initial planned investment of $200 million over five years has proved insufficient. “We did this before in countries such as Japan and Vietnam. It took 20 years for our system to break even, but you need to take a long-term view,” he said.

Source: Forbes

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