South Korean-Burmese Joint Venture to Start Pepsi Drinks Production
By Kyaw Hsu Mon 17 January 2014
RANGOON — South Korea’s Lotte Chilsung Beverage Co. Ltd and Myanmar Golden Beverage Co Ltd (MGS) announced that they will team up to produce and distribute PepsiCo drinks in Burma.
The firms said on Thursday that they formed a joint venture, Lotte-MGS Beverage Co. Ltd, adding that the investment had been approved by the Myanmar Investment Commission a day earlier.
Lotte Chilsung Beverage will take a 70 percent stake and MGS a 30 percent stake in the joint venture, which will have US $81 million in capital, according to a press release.
MGS has a soft drinks production plant in Rangoon’s Hlaing Tharyar Industrial zone, which will undergo a technological upgrade in order to produce PepsiCo drinks such as Pepsi-Cola, 7-Up and Mirinda, according a MGS spokesperson. The joint venture firm will bottle and distribute the drinks in 17 major cities in Burma.
“Through this investment to bring Pepsi production back to Myanmar, we seek to bring benefits to Myanmar people. We will create thousands of good local jobs. We will provide career training,” Byoung-Tak Hur, managing director of Lotte-MGS Beverage Co. Ltd said in a press release.
From 1994 to 2012, Pepsi was not sold and distributed in Burma due to international sanctions, which were imposed on the country because of the poor human rights record of its military government.
Before the sanctions, MGS used to run a Pepsi plant in Rangoon. Lotte Chilsung Beverage has long worked with PepsiCo to produce drinks in South Korea.
In 2012, following democratic reforms and the lifting of sanctions, PepsiCo had entered into an agreement with Rangoon-based Diamond Star, which gave the Burmese company the exclusive rights to import, sell and distribute PepsiCo drinks.
Diamond Star, one of Burma’s largest packaged consumer goods distributors, imported Pepsi beverages bottled in Vietnam, but stopped the import in October last year. A staffer at Diamond Star, who declined to be named, said the firm had ended the imports as many PepsiCo cans produced in Thailand were being transported into Burma, undercutting the firm’s profits.
“Pepsi cans from Thailand are much cheaper than our imported Pepsi produced in Vietnam, so our company decided to stop selling,” he said.