Coca-Cola HBC says Russia a ‘risky’ developing economy

Coca-Cola HBC says Russia a ‘risky’ developing economy:
In the company’s opinion, legal ambiguity typical for Russia andNigeria can have a negative influence on its business in theseregions.
According to Coca-Cola HBC, Russia has a large and complexstructure of government and its national, regional and municipalauthorities may take contradicting decisions and propose a varietyof requirements, which may increase the company's costs.
In addition, Russia and Nigeria historically have very highlevels of corruption, and while the Coca-Cola brand is guided by USlaw forbidding corruption abroad, its competition with other marketparticipants can become unequal.
Coca-Cola HBC argued the uncertainty may affect company salesboth directly and indirectly, as the population, dubious about thefuture, will be spending less on non-essential goods likebeverages.
Coca-Cola Hellenic Bottling Company S.A. is the world'ssecond-largest Coca-Cola bottler responsible for the markets ofEastern Europe, CIS, Ireland and Nigeria.
The risks of developing a business in Russia were highlighted byCoca-Cola’s main competitor, PepsiCo. The corporation's annualreport talked about the unstable political situation, civil unrestand other risks in countries like Russia having a possible negativeimpact on PepsiCo’s business and financial results.
According to analyst Darya Pichugina from Moscow basedInvestcafe, a country’s investment climate is individual for eachparticular company, and if Coca-Cola HBC says Russia and Nigeriaare unfriendly to it, they must have a point. “These negativeforecasts can be due to a country’s individual legislationregarding food companies like Coca-Cola. For example, in Russia atax on sparkling beverages was proposed not long ago, a fact thatcan’t be seen positively from Coca-Cola HBC’s point ofview.”

“As for the risk assessment, the risk of investing in Russiadoes exist, but it has a positive side too. Our country is veryattractive to foreign investment as it has a lot of differentindustries still developing, like the food industry or agriculture,and a company can gain a lot by investing in these. So, if it isready for risks, it invests in the Russian economy, if not, itturns to safer places like Germany,” Darya Pichugina toldRT.

“Unfortunately, Russia traditionally has quite a negativeimage for investors that needs to be changed, and that can’t happenin a wink of an eye. Russia and Nigeria have been compared a lot,but if we look at the question more profoundly, Russia’s corruptionis much lower and it also has a much higher level of education andscientific development which can be attractive to investors,”the economist pointed out.
Russia has recently moved up in the ranking for economic freedomcompiled annually by the World Bank where it occupies 112th place.In this list economies are ranked on their ease of doing business,from 1 to 185.