New entity Coca-Cola Beverages Africa will combine SAB’s bottling operations with those of Coca-Cola Sabco – 80% owned by Gutsche Family Investments (GFI) – and Coke’s own South African soft drinks businesses. Gutsch chairman Paul Gutsche will chair the new company in Port Elizabeth, South Africa.
If the proposed merger goes through then SAB Miller will have a 57% shareholding, Gutsche will hold 31.7% and The Coca-Cola Company 11.3%; the two-phase deal is subject to regulatory approval in Africa and South Africa and is expected to go through in full by summer 2016 at the earliest.
SAB Miller CEO Clark praises ‘significant’ opportunity
“Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa,” SAB Miller CEO Alan Clark said today; the brewer of Peroni, Pilsner Urquell and Miller Genuine Draft currently bottles Coke-branded drinks in 21 of its African markets, and with Castel in 14 of these - it is the soft drinks giant's largest bottler in the region.
Nonetheless, as part of the transaction, SAB will sell its global non-alcoholic ready-to-drink brand (NARTD) Appletiser (water, apple concentrate, CO2) to Coke and license the latter rights to 19 further NARTD brands in Africa and and Latin America, for $260m in cash.
“The opportunity is significant, with favorable demographics and economic development pointing to excellent growth prospects,” Clark said, adding that the deal also signified a strengthening of SAB’s ‘strategic relationship’ with The Coca-Cola Company.
Coca-Cola Beverages Africa will run 30 bottling plants and employ 14,000+ staff. As the largest Coke bottler on the continent, it will, according to SAB and Coke, have the financial firepower to invest in production, sales and distribution and marketing, and invest in best operating practices.
Consumers promised greater choice, broader availability, better value…
The new bottler will serve what the new partners describe as 12 high-growth countries accounting for approximately 40% of all Coca-Cola beverage volumes in Africa.
Initially, Coca-Cola Beverages Africa will produce and distribute Coke-branded beverages in South Africa, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros and Mayotte, with Swaziland, Botswana and Zambia expected additions at a later date.
SAB and Coke said today that Africa’s growth potential in beverages was underpinned by rising disposable income levels, fast-growing populations and increasing per capita consumption.
The partners said that Coca-Cola Beverages Africa will be strongly positioned to offer consumers greater choice, broader availability and better value.
Muhtar Kent, The Coca-Cola Company CEO, said the new bottler would be one of Coke’s 10 biggest worldwide, with the “scale, resources, capability and efficiency needed to accelerate Coca-Cola growth and contribute to the economic and social prosperity of African communities.”