Carlsberg has been forced to temporarily close its brewery in Nepal after refusing to give in to trade union demands for higher wages.

A Carlsberg spokesman in Copenhagen confirmed that the brewer had closed its Gorkha brewery in Nepal last week. The move came after trade unions affiliated to two political parties in Nepal began demanding higher wages and better terms for their workers.

"The reason is simple - we don't want to give in to the trade unions' demands," the spokesman told just-drinks today (26 June).

According to reports in India, Coca-Cola has also been forced to close its operations in the Himalayan country. Bottlers Nepal, the only bottler of Coca-Cola beverages in the country, was reported to have closed its plant in the Nepalese town of Bharatpur on Friday (23 June).

"The trouble started after the union of the Maoists began demanding better working conditions for workers," Rajendra Khetan, vice-president of the Confederation of Nepalese Industries, told the Indian newspaper The Hindustan Times. "Now the other trade unions fear they would lose their clout and want to secure still better terms for workers. The industries are becoming the victims of this competition."

Khetan was quoted as saying that the union rivalry was destroying the only competitive edge Nepal had - cheap labour. "Due to its geography, transport is costly in Nepal," he said. "So is electricity. Local taxes are high. Now labour is also going to be prohibitive."

Coke officials could not be reached for comment as just-drinks went to press.