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Coca-Cola Halts Production In Venezuela Due To Nation's Sugar Shortage


Venezuela has just become one of the few countries in the world where you cannot buy a Coca-Cola. Other countries include Cuba and North Korea. But it's not because of embargoes in Venezuela. It's because there isn't enough sugar. Venezuela is in the middle of a deep recession. The country has been dealing with a food shortage and the world's highest inflation.

To talk more about this, we've reached out to Tom Standage. He's the deputy editor of The Economist and the author of "The History Of The World In 6 Glasses" (ph). He joins us now from London. Thanks so much for being with us.

TOM STANDAGE: Thanks for inviting me.

MARTIN: First off, how did Venezuela get to the point where they don't have enough sugar? What economic policies got them there?

STANDAGE: Well, the whole of the Venezuelan economy is just in a big mess. Essentially, Hugo Chavez, the previous president, had this, you know, great idea of a socialist revolution where he would give lots of money to the poor. And it all looked really good to start with. Essentially, the whole thing was funded by oil money. The oil prices collapsed. Chavez has died. His successor Nicolas Maduro is in a bit of a bad way because, actually, as well as giving money to the poor, the regime was helping itself to massive amounts of money.

And they're now in this very odd situation where the official exchange rate means that you have to pay something like 10 bolivares for a dollar. The unofficial exchange rate, the black market rate, is about 100 times higher than that. And members of the regime are still allowed to exchange this pretty worthless local currency for dollars, which they can then sell for 100 times as much. So that means that they are not really terrifically well-incentivized to change this ridiculous policy.

And in the meantime, there are shortages of lots of products because if you import any products, there's no way you want to sell them at the fixed prices the government is forcing you to sell them at. If you're a sugar producer, you certainly don't want to be making sugar because you're forced to sell it at this ridiculously low price.

MARTIN: So people seize on this whole idea of Coca-Cola not being available in Venezuela 'cause it's a catchy headline. But you argue - you have written in your book that it has symbolic power - that this particular product and not having it has symbolic meaning. Can you explain why?

STANDAGE: Well, Coca-Cola has always been the nearest thing to capitalism in a bottle. And, in fact, in 1997, The Economist did this correlation of Coca-Cola consumption in different countries. And it turns out to correlate positively with wealth, quality of life and social and political freedom. Now, of course, that's not because Coca-Cola causes all of those things. It's because, we think, free market capitalism encourages all of those things.

And whenever a country opens up, like Burma, for example, recently has - who are the first people to move in? You see the Coca-Cola lorries going in. And they go in and they find a partner. And, you know, off they go. So it really is this sort of symbol of moving towards greater economic freedom. And obviously, in Venezuela's case, we sadly have this example of Coca-Cola going the opposite direction saying - actually, you can't have that anymore in the same way that you can't have social, political freedom, quality of life and economic growth.

MARTIN: So what happens now? How does this country get itself out of this - what has become a very devastating recession?

STANDAGE: It really is very hard to see an easy way out. The difficulty is that the opposition won the most recent election. And so they are trying to have a sort of recall vote to get rid of Maduro who's technically meant to be in power until 2018. And I think if change does come, it will be because people within Maduro's own party see that he is unviable.

And the only way that they can keep control and keep their cushy jobs is to push him out. So will the revolution happen within his own party, or will there be a sort of explosion on the streets? Neither of these scenarios is terribly nice. It's all really quite frightening.

MARTIN: Tom Standage is deputy editor of The Economist. He also wrote a book titled "A History Of The World In 6 Glasses." Tom, thanks so much for talking with us.

STANDAGE: Thank you. Transcript provided by NPR, Copyright NPR.

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