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Coca-Cola Enters 'Frontier Market' Myanmar

Tuesday, 4 Jun 2013 | 4:47 AM ET
Myanmar 'Wonderful Opportunity' for Coca-Cola: CEO
Muhtar Kent, chairman and CEO at The Coca-Cola Company, explains Coca-Cola's strategy of opening new plants in Myanmar and why being "local" will help them sell their premium brand.

As Coca-Cola unveiled its first processing plant in Myanmar after a six-decade hiatus in the country, one analyst warned that the move into frontier markets could mean emerging markets are not as attractive to multi-nationals as they once were.

At the ceremonial inauguration of a bottling plant in Crystal Springs, Hmawbi Township, the global drinks giant's CEO Muhtar Kent said the company had earmarked $200 million to help the business grow in the country over the next five years.

"Within a month, there'll be a second plant operational here. So that will give us two production facilities in the country, and we're looking obviously to expand that in the future," he told CNBC on Tuesday.

(Read More: Coca-Cola Beats Estimates, Boosted by Emerging Market Sales)

"For every one job that we create directly in the Coca-Cola business, there's about another 10 jobs that are created in the supply chain for country. Supply chains means provisions of bottles for us, labels, closures, crowns, cold drink equipment, distribution equipment, advertising agencies - all of that combined. In five years' time, we expect to generate 25,000 jobs in the country."

But the strong growth prospects of frontier markets like Myanmar could spell danger for more developed emerging markets. A number have begun to show signs of a slowdown, with countries like Brazil and China feeling the strain from a fall in demand from developed nations.

The Biggest Challenge Facing Frontier Markets
Monday, 3 Jun 2013 | 7:50 PM ET
Myanmar's lack of infrastructure is proving to be the biggest challenge to foreign investment. Poor-quality roads make it difficult to transport goods from place to place. CNBC's Martin Soong reports.

(Read More: Myanmar: The Next Austria?)

"We've always had this view of emerging markets as this great opportunity because we can improve productivity, but this has been playing out for a while now," Daniel Morris, global strategist at JP Morgan Asset Management, told CNBC on Tuesday. "Maybe that's part of why emerging markets have done poorly recently. So now you're looking at frontier markets."

They appeal to multi-nationals because frontier markets give companies a fast profit boost and quicker return on investment, he added.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81.

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