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Cablegate: Coca-Cola Makes Case for Higher Prices

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HARARE 000202

SIPDIS

SENSITIVE

STATE FOR AF/S AND AF/EX
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR ROSA WHITAKER
TREASURY FOR ED BARBER AND C WILKINSON
USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ETRD EFIN ECON ZI
SUBJECT: Coca-Cola makes case for higher prices


1. (SBU) Summary: Coca-Cola reps have joined a procession
of companies lobbying the GOZ for a relaxation on price
controls. End Summary.

2. (SBU) Coca-Cola's Regional Director has met with
Zimbabwe's Finance and Trade/Commerce Ministers in the
past week to argue that his company cannot continue to
operate at a loss. Each of Coca-Cola's Zimbabwe products
is now price-controlled. The multinational lost US$ 3
million here last year and will lose considerably more if
price controls are not relaxed. Since it imports 80
percent of its inputs, the company is unable to keep a
lid on costs. Furthermore, its local operation is
cannibalizing operations in neighboring countries through
a brisk informal export of low-priced Zimbabwe products.

3. (SBU) Comment: Zimbabwe has become one of the few
countries in the world where Coca-Cola is sometimes in
short supply -- unfortunate, since the country recently
enjoyed one of the highest per capita cola-consumption
rates in the world. In the 1990s, it was Coke's 37th
worldwide market, impressive considering Zimbabwe's
modest 12-million population. In past weeks, executives
from a multitude of companies and industries have treated
President Mugabe's cabinet to countless lessons in
Economics 101, or why they won't produce and sell
products below cost. We only hope this logic penetrates
the President's inner circle before too many companies
seek greener pastures.

Sullivan

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