Monday 17 December 2018

Uncertainty over future of Coca-Cola

Coca-Cola has warned it may be forced to review Irish operations

Then Taoiseach Enda Kenny, pictured with former Coca-Cola director Donald Keough, at Whites Hotel, Wexford when Coca-Cola opened its Wexford plant in 2011.
Then Taoiseach Enda Kenny, pictured with former Coca-Cola director Donald Keough, at Whites Hotel, Wexford when Coca-Cola opened its Wexford plant in 2011.

Esther Hayden

The future of Coca-Cola in Wexford and Ireland is under threat after the company warned the Government it will be forced to 'review' its Irish operations following Brexit.

In a letter to Minister Paschal Donohoe Coca-Cola said it will forced to review its operations in Ireland if borders tariffs are introduced following Brexit.

The letter which is signed by Petre Sandru, country manager and Matthieu Seguin, general manager outlines a number of 'serious business challenges' which its said could threaten its investment in Ireland.

'The uncertainty of Brexit compounds the enormous pressure the [sugar] tax will have on our business and threatens our ability to continue to invest in our operations here, and to maintain and grow our direct and indirect employment levels,' it said.

In the correspondence, obtained through a freedom of information request, Coca-Cola warned Minister Donohoe that 'the introduction of border tariffs or custom arrangements based on the WTO [World Trade Organisation] tariffs would be extremely detrimental to our business and could require us to review our operating model in Ireland'.

WTO tariffs will apply to all trade between the UK and EU following Brexit unless the British government can agree a new trade deal. Coca-Cola believes its all-island business would leave it particularly exposed to high tariffs for exports from Ireland to the UK.

Trade is also likely to be more cumbersome. Customs authorities in Ireland have indicated that up to 8 per cent of freight between the Republic and Northern Ireland could be subject to checks after Brexit which could cause delays of up to an hour for some deliveries.

Coca-Cola outlined to Minister Donohoe that uncertainty around a proposed sugar tax was 'causing significant stress to [its] business at a time when [it is] also trying to put in place a range of mitigation strategies for the potential impact of Brexit'.

The company said the scale of the proposed sugar tax was so high that it will be forced to 'pass on the cost' to customers, resulting in 'higher prices for consumers at a time when inflation is rising and consumer spending is slowing'.

Coca-Cola asked Donohoe for a meeting at his 'earliest convenience'. However on August 31, the Minister's diary secretary responded that Donohoe was 'not available to meet at this time'.

At the weekend Coca-Cola played down the threat to review its operations in Ireland. In a statement, the company said it had a 'record of growth here and remained fully committed to our extensive operations'.

'Like all organisations with an all-island business, we are closely following the Brexit negotiations. We continue to talk to elected officials and their representatives on both sides of the border to ensure the potential impacts on industry are known and understood and receive due consideration,' it said. Until negotiations conclude we won't know what, if any, impact Brexit will have on our business, but we continue to put in place mitigation strategies.'

The €200 million Wexford plant, which opened in September 2011, employs more than 100 people and includes manufacturing, laboratory and pilot plant facilities to enable process development and product commercialisation.

In addition to its Wexford plant, Coca-Cola also has operations in Antrim, Dublin, Kildare, Louth and Mayo.

New Ross Standard