Coca-Cola to Close Two Russian Juice Plants as Market Shrinks

Coca-Cola is closing two of its four fruit juice plants is Russia in response to falling demand in the country, putting at risk hundreds of jobs in a business which the US company had bought for $276 million only four years ago.

The company will close the two plants run by its Nidan unit on the 1st June, transferring some of their capacity to the other juice unit, Multon, before the year-end, spokesman Vladimir Kravtsov said.

The plants being close are located in Novosibirsk in Siberia and one in the Moscow region. Some of the unit's 1000 staff will be offered jobs at Multon, Kravtsov says. "The juice market fell by 5 percent last year and the performance of Nidan was worse than the market," he said, adding the company had been considering the move for some time and made the closure decision at the end of last year.

The beverage giant bought Nidan in 2010, which were the fourth-biggest juice maker in Russia at the time. Multon, which it acquired in 2005, has two plants with a combined production capacity of more than 790 million litres a year.

The Russian juice market fell by 6 percent year-on year in volume terms in January-September 2013, according to market researchers in Nielsen. In addition to falling market volumes, both Coca-Cola and its rival PepsiCo are faced with increased competition from local Russian brands.

The plant closures coincide with an economic slowdown in Russia. The economy is on the brink of recession, having started to shrink in the first quarter of this year due to capital outflows and declining investments, resulting from Moscow's involvement in the Ukraine crisis.

Kravtsov said Nidan accounted for around one third of Coca-Cola's juice production in Russia.