Coca-Cola Hellenic Bottling Company, the world’s second-largest Coke bottler, announced this week the closure of two production lines in Thessaloniki and Patras, in the context of the group’s restructuring program aimed at reducing operational costs.
Besides the fact that the decision entails the loss of 30 jobs, it sends a very negative message to the market and is a clear warning to the government about the unfavourable consequences on investment from the increase in taxation.
It is no coincidence that the decision comes just a few months after the increase of value-added tax for refreshments from 13 to 23 per cent, which played a key part in the reduction of group sales in Greece by 12 per cent in 2011.
Coca-Cola HBC announced on Thursday that the activity of the Thessaloniki and Patras production lines will be transferred to the three remaining plants at Schimatari and Volos in central Greece and Iraklio on Crete. The Thessaloniki and Patras units will only operate as distribution centres and offices. The company is already involved in negotiations with the employees’ union for some of the 30 workers to be absorbed by other CCHBC units.
The statement suggested that the operating restructuring of the group in Greece is due to the reduction in consumers’ purchasing power which has led to a considerable drop in consumption since 2009.
Sources from the board of Greece’s biggest company in terms of capitalization told Kathimerini that there is no other similar decision planned for Greece in 2012, provided that the situation in the market does not deteriorate further.
In the last three years CCHBC sales in Greece have declined by 23 per cent. The non-alcoholic beverages market as a whole was dealt a hefty blow in 2011, with sales volumes shrinking by 8.9 per cent for refreshments, 10.1 per cent for juices and 5.7 per cent for bottled water.
At the same time, the first forecast for industrial investment in 2012 creates significant worries as an investment survey conducted by the Foundation for Economic and Industrial Research (IOBE) in October-November 2011, found that investment activity is set to drop by 5.6 per cent this year.
While in March 2011 enterprises had expected an increase in investment for last year by 17.7 per cent from 2010, at the end of the year they estimated investment to have declined by 2.9 per cent. In the apparel sector, in particular, the decline reached a massive 88.5 per cent on an annual basis.
The IOBE report added that the procedures of the bond swap and the assessment of real estate properties managed by banks are continuing to have a negative effect on loans issued, while the new reduction of the Public Investment Program will mean a further drop in subsidies. Consequently the funding of enterprises for investment in 2012 is awash in uncertainty.