Coca-Cola adds fizz to Costa Rica's decentralisation plan

Costa Rica may be well known for the biodiversity of its geography but its economic landscape is much less varied, with most businesses concentrated in the sprawling urban area that has capital San José at its core. 

The government is now aiming to persuade investors to consider locations outside the metropolitan area, and one of the country’s main foreign investors, Coca-Cola, has taken up the proposition. 

The US drinks powerhouse is investing $50m in a new concentrate plant in the area of Liberia, in the north-western province of Guanacaste. The new facility, scheduled to come on line in late 2019 or early 2020, will replace the group’s current production site in San José. 

Coke's can do attitude

“Logistically, this is going to be a big advantage for the company,” says Erik Rojas, plant manager of Coca-Cola’s existing facility in San José, who oversees the country’s strategy for the group. “We want to expand our production capacity in Costa Rica, and we want to do it outside the metropolitan area. When we assessed the whole country, Liberia proved to be the place with the best infrastructure and logistics.” 

Coca-Cola will relocate its local operation in a new facility under construction in the Solarium Free Trade Zone, from where it will power up its concentrate production which already reaches 27 countries and 31 bottling plants across the Americas region and beyond. The free-trade zone lies in north-west Costa Rica, right next to Daniel Oduber airport – the second largest in the country, which is currently completing the construction of a new cargo terminal. It also offers easy access to the port of Caldera, which is 143 kilometres away, and the border with Nicaragua, which is 90 kilometres away. 

“We are confident that the local human talent will help the company to consolidate its operations and we hope that new jobs can be created in the future, thanks to the business’ development,” Luis Gamboa, the president of national investment promotion agency Cinde, said in July, when the project broke ground.  

The plant will be among the most innovative of all of Coca-Cola's facilities around the world, according to Mr Rojas, and will make Costa Rica a testing ground for some innovations that may be exported abroad.  

A local approach 

Coca-Cola's move will create about 130 direct jobs and another 100 indirectly in the area, boosting the government’s strategy to create employment and investment outside San José’s metropolitan area. Coca-Cola also intends to create opportunities for local suppliers, continuing an approach that has already paid dividends in San José. 

“We have been working with some local suppliers over the years and we help them develop a business strategy, to the point that some of them have become suppliers of the global Coca-Cola universe and export to other concentrate plants across the world,” says Mr Rojas, adding they are mostly involved in specialised packaging operations.

Costa Rica has seen the benefits of its free-trade zone programme also manifested through the development of local supply chains. Local suppliers now provide free-trade zone companies with about 40% of their production inputs, twice as much as a decade ago. However, a recent OECD report stated that there was room from improvement in this direction, as there is still a wide productivity gap between companies that work with foreign investors and those that remain at the margins of the global value chain. By locating both investors and local knowhow outside San José’s metropolitan area, the government is taking the first step towards improving the profile of domestic companies in general.