Coca-Cola walks out on Tabani deal, govt mulls legal action
Thursday, 25 September 2008
Mushir Ahmed
The government is considering litigation against global soft-drink giant Coca-Cola after it scrapped a four-decade long deal with the state-owned bottler Tabani beverage, an official said Wednesday.
Masud Ahmed, director general of government's Freedom Fighters Welfare Trust, which owns the Tabani Beverage, said Coca-Cola informed them four weeks back that it would not renew its bottling agreement with his company.
The sudden decision has dried up supply of Coke from the capital Dhaka and frozen operation of Tabani, one of the biggest bottler and a once the most profitable company of the Trust.
Coca-Cola signed the bottling agreement with Tabani in 1964 when the company was privately-owned and has been renewing the deal ever since.
Officials said this was the first time the global beverage maker has refused to sign a new deal with Tabani, resulting in a steep decline in the company's share in the country's fast-growing soft-drink market
"It's a setback for Tabani Beverage. We're discussing with officials of Coca-Cola head office in Atlanta in the United States for renewing the deal," Ahmed said.
"Bangladesh embassy in Washington DC is helping us," he said.
Ahmed hinted that if talks don't persuade the Coca-Cola officials, the government would consider litigation against the company.
"We'll think about legal action only after we exhaust discussions," he said, adding that there are rumours that Coca-Cola was looking for private bottlers.
He did not specify the reason for Coca-Cola's refusal to renew agreement, but insiders said the multinational company was not happy at Tabani's 'laggard' approach in business operation.
Under the deal, Tabani used to market Coca-Cola's non-alcoholic beverages in the capital Dhaka and Rajshahi division, but it has so far failed to make its products the top name in the city.
There have also been some bickerings over Pet-bottled coke, as Tabani has to buy plastic bottles produced by Coca-Cola's other local bottler, Abdul Monem Limited, to market its products.
Ahmed said the government has earmarked Tk240 million for a Pet bottle manufacturing plant at Tabani's factory at Mirpur, but it would go ahead with the project only after it renews the deal with Coca-Cola.
Coca-Cola country chief Debasish Deb denied that the company was looking for any private bottler.
"It's pure speculation. It's not true at all," he said, adding that talks with Tabani were still on.
"Usually in the past we used to conclude discussions much before the deal expired. But this time the deal has already expired, but we could not complete our discussions," Deb said.
He also rejected as 'mere rumour' that his company was also thinking of wrapping up from Bangladesh.
"It is a growing market. We don't have any plan to quit," he said.
Deb said the brands marketed by his company own some 22 per cent of the country's non-alcoholic beverage market, which is crowded with a slew of small and medium players.
He did not give the size of the market, but conceded that non-renewal of Tabani deal has resulted in business decline.
Experts said the market size of non-alcoholic beverage is about Tk15-20 billion, with Pepsi, Coca-Cola, RC Cola, newcomer Akij and Pran the dominant players.
The government is considering litigation against global soft-drink giant Coca-Cola after it scrapped a four-decade long deal with the state-owned bottler Tabani beverage, an official said Wednesday.
Masud Ahmed, director general of government's Freedom Fighters Welfare Trust, which owns the Tabani Beverage, said Coca-Cola informed them four weeks back that it would not renew its bottling agreement with his company.
The sudden decision has dried up supply of Coke from the capital Dhaka and frozen operation of Tabani, one of the biggest bottler and a once the most profitable company of the Trust.
Coca-Cola signed the bottling agreement with Tabani in 1964 when the company was privately-owned and has been renewing the deal ever since.
Officials said this was the first time the global beverage maker has refused to sign a new deal with Tabani, resulting in a steep decline in the company's share in the country's fast-growing soft-drink market
"It's a setback for Tabani Beverage. We're discussing with officials of Coca-Cola head office in Atlanta in the United States for renewing the deal," Ahmed said.
"Bangladesh embassy in Washington DC is helping us," he said.
Ahmed hinted that if talks don't persuade the Coca-Cola officials, the government would consider litigation against the company.
"We'll think about legal action only after we exhaust discussions," he said, adding that there are rumours that Coca-Cola was looking for private bottlers.
He did not specify the reason for Coca-Cola's refusal to renew agreement, but insiders said the multinational company was not happy at Tabani's 'laggard' approach in business operation.
Under the deal, Tabani used to market Coca-Cola's non-alcoholic beverages in the capital Dhaka and Rajshahi division, but it has so far failed to make its products the top name in the city.
There have also been some bickerings over Pet-bottled coke, as Tabani has to buy plastic bottles produced by Coca-Cola's other local bottler, Abdul Monem Limited, to market its products.
Ahmed said the government has earmarked Tk240 million for a Pet bottle manufacturing plant at Tabani's factory at Mirpur, but it would go ahead with the project only after it renews the deal with Coca-Cola.
Coca-Cola country chief Debasish Deb denied that the company was looking for any private bottler.
"It's pure speculation. It's not true at all," he said, adding that talks with Tabani were still on.
"Usually in the past we used to conclude discussions much before the deal expired. But this time the deal has already expired, but we could not complete our discussions," Deb said.
He also rejected as 'mere rumour' that his company was also thinking of wrapping up from Bangladesh.
"It is a growing market. We don't have any plan to quit," he said.
Deb said the brands marketed by his company own some 22 per cent of the country's non-alcoholic beverage market, which is crowded with a slew of small and medium players.
He did not give the size of the market, but conceded that non-renewal of Tabani deal has resulted in business decline.
Experts said the market size of non-alcoholic beverage is about Tk15-20 billion, with Pepsi, Coca-Cola, RC Cola, newcomer Akij and Pran the dominant players.