Bloomberg's Crooks: Coca-Cola Halting Ops in Venezuela (Audio)

prospects for higher interest rates. They showed a reluctance to day to place any big bets before parsing day to this week on manufacturing, housing, consumer sentiment, and growth. For clues on the economy strength, here's a day to check the down. Industrial leverage fell eight points to close out the session at seventeen thousand, four hundred ninety two. S and P five thundered down four points to tenths of a percent to two thousand forty eight. The NAZDAC lost

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This is taking stock on Bloomberg. I'm Kathleen Hayes. We are broadcasting live from the b n Y mel And Asset Servicing Conference in Tucson, Arizona. Let's turn our attention nowt to Coca Cola. Get this, there is not enough sugar in Venezuela to keep the bottling system running. Here to tell us more. Nathan Crooks, Carraccos, Bureau chief for Bloomberg. All right, Nathan, so what is is? I thought that sugar supplies is one of the basic things in Venezuela.

For example, Venezuela used to be very famous for making rum. You're not gonna make that without sugar, you think. And we saw news today though that Coca Cola said that their suppliers have are starting to rint out and that they're not going to be able to keep making uh sugar drink stuetened with sugar. So, uh, you know this is happening in a time of Venezuela when we're seeing shortages of many things. Last last month, for example, they are one of the biggest companies in the country, said

that they didn't have enough hops to make beer. So, uh, you know, we're starting to see Venezuela running out of a lot of things, and not just sugar. So this is this a problem for Coca Cola that's confined to Venezuela, and if they they have, they have operations all over the world. So how how significant is it is this something that stands beyond Venezuela in any any way, shape or form. Uh, it'll probably be more of a problem

for Venezuelans who who like Coca Cola and other sweetened drinks. Uh, many of because of the strict currency controls here that we've had now for for the past decade, and it's gotten increasingly worse over the past two or three years. So, um, well, Venezuela used to be a large part of many companies operating operations. Because of continued currency devaluations, we've seen uh,

Venezuelan segments become less and less important on their balance sheets. Um, so you know, it's kind of the latest thing in Venezuela that we're not going to be able to find here, uh, you know. And and some of these companies that are having problems with with production, a lot of them have have already deconsolidated the country from their balance sheets. So I would imagine it's it's more of a local headache

for them. Nathan speak if you can about state monopolies when it comes to granting dollars six dollars two companies inside of Venezuela in order to import things, in this case sugar. But is that a general issue that is hurting the economy. Yes, and it's one of the you know, the main problems that are It's it's kind of the currency in Venezuela and the state controls. It's kind of the fundamental current that you see kind of at the base of many of the different problems here. At the moment.

For instance, we have an official exchange of ten bull of ours per dollar, and then we have a secondary exchange rate of about now almost five hundred bull of ours for the dollar, and then there's a black market which is illegal to to publish that information. But um, it's far above even the alternative rates. So if you just look at the two legal rates of ten and five hundred. The difference is just so so big and and you know, and you mix that with price controls.

For instance, sugar is a basic good, so it's it's one of the goods that the government sets the price on. Uh. So, so the only people that would want to import sugar, they're only going to want to do that if they can get the preferential rate of ten bull of ours per dollar, because because it's price controlled, so uh And then you have this all happening in the context with falling oil prices, and which is Venezuela's main product, and so they have less money to import what they need.

So it's kind of a perfect storm for Venezuela. You have these currency controls and they don't have as much money as they used to have to be able to import things at these preferential rates. So what about the people of Venezuela. At what point does this, uh, this broad problem lead to some some you know, protests, um political change. Where where's Venezuela's doing that cycle? Well, it's definitely you know, these are tough days for Venezuela. If

you come to Caracas, it's very normal. Just driving around outside of all the grocery stores, you see you see lines everywhere, you know, thousands of people. Uh. You're only allowed to buy certain items, the regulated items on certain days, depending on the digits and your national Identity card number. Uh And and we have inflation now, which the I m F Thinks is going to be about this year. Uh. So you know, Venezuelans are going through a really tough time.

And uh. You know that they might have trouble finding Coca cola, but it's a lot of the bigger problem them is uh there's real problems with people getting medicine that they need and and basic food. Uh And and you know we were starting to see uh there are agencies that track kind of civil unrest uh and and they're putting out reports saying instances of looting are increasing.

Uh And then on a political front, we have an opposition who late last year they got control of the National Assembly, but they've seen the Supreme Court kind of overturn everything they're trying to do. Right now, they're calling for a recall referendum on President Nicholas Maduro. Uh And so far they're accusing the government of kind of dragging their feet in terms of validating the signatures that they need to call that. So, so this is all happening

kind of a a tense political environment as well. Like I said, it's it's the perfect storm of an economic problems, currency controls, and and political and social unrest. And this is not the only company that is responding to this situation in a sense Colacola. But I know that, for example, the tire maker Bridge Stone, they're selling their business in Venezuela after doing business there for sixty years. Yeah, for instance.

And then the list goes on and on and on, and we said, you know, airlines have stopped flying here. Uh We saw Clorox pull out a couple of years ago and just say, you know, we're we're leaving. Uh. So it is definitely giving companies that operate here a lot of challenges. Thank you very much for joining us. Nathan Crooks, Caracas bureau chief for Bloomberg News. I want to thank all the people at ben Why Melon. You're live at Tucson, Arizona at the b n Y Melan

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