Newly Shuttered Brewery Stands At The Center Of Venezuela’s Socialist Meltdown

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Guy Bentley Research Associate, Reason Foundation
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Venezuela has hit a new low. The country’s leading beer manufacturer shut down its breweries Monday thanks to a lack of raw materials, as the country’s economic crisis gathers pace.

Empresas Polar Breweries, which makes 80 percent of Venezuela’s beer is finding it close to impossible to import the necessary amount of barley to maintain production. The company has suspended production at two of its six breweries. The closures could disrupt a quarter of Venezuela’s domestic beer production, according to the Federation of Beer Brewers.

“Beer shortages will essentially force our sector to go broke; beer accounts for 70 percent of our sales,” Fray Roa, a spokesman for Venezuela’s National Association of Liquor Store Owners, said July 23.

Rigid currency controls have made importing essential foreign goods a nightmare for Venezuelan businesses. To add to the country’s woes, the collapsing price of oil has meant there are too few U.S. dollars with which to buy imports.

Polar has been embroiled in a battle with Venezuela’s socialist government for more than a month. President Nicolas Maduro accused the company of sabotaging the economy and hoarding produce in a deliberate effort to create long lines outside supermarkets.

On July 29, government troops occupied a warehouse used by Polar and Nestle, arguing space was needed as housing for the poor. The company’s chief executive was perplexed by the move, telling the Associated Press, “We’re not questioning the desire to build homes, which are so necessary, but we wonder why there is this need to disrupt active industrial facilities.”

Beer is the latest product to come under strain due to aggressive economic policies. Flour, cooking oil and toilet paper have all been in short supply. Inflation in Venezuela is running rampant at 65 percent, with some experts warning of hyperinflation in the near future. The Cato Institute’s Steve Hanke told the El Nuevo Herald in July, “the underlying inflation, which I’m figuring daily, is 615 percent. That’s the real inflation of Venezuela.”

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