Venezuela Sugar Shortage Leads To Coca-Cola (KO) Production Halt

The Venezuelan bottler of Coca-Cola has halted production of the sugar-sweetened beverage due to a lack of the ingredient, a Coca-Cola Co. spokeswoman said Monday.

Venezuela is in the midst of a deep recession, and spontaneous demonstrations and looting have become more common amid worsening food shortages, frequent power cuts and the world's highest inflation.

Production of sugar-sweetened drinks has stopped, but output of diet drinks such as Diet Coke and other zero-sugar beverages continues, spokeswoman Kerry Tressler wrote by email.

"Sugar suppliers in Venezuela have informed us that they will temporarily cease operations due to a lack of raw materials," Tressler added.

Coca-Cola Femsa SAB, Latin America's biggest coke bottler and operator of four plants in Venezuela, added that it was hoping the nation's sugar inventories would recover "in the short term."

The bottler, which gets some 7 percent of its income in Venezuela, is a joint venture between Coca-Cola and Mexico's Femsa.

Over the past several years, the combination of price controls, rising production costs, lack of foreign exchange, restrictive labor laws and a lack of basic materials such as fertilizer have resulted in a drop in Venezuela's sugar cane production, with fewer planted hectares and lower yields.

Many smaller farmers have turned to other crops that are not price-controlled and thus provide greater income.

The country is expected to produce 430,000 tons in 2016/17, down from 450,000 tons the previous year, and import 850,000 tons of raw and refined sugar, according to the U.S. Department of Agriculture.