COCA-COLA SPIN-OFF ON BEE
The firm commits to divert R3.9bn in BEE procurement spend
A GIGANTIC move by Coca-Cola Beverages SA (CCBSA) to commit R4bn in procurement spend to black entrepreneurs will be seen by those calling for real black economic empowerment (BEE) as a good practical example for large firms to open doors for black citizens in the economy.
Sketchy BEE deals and fronting by large companies to secure lucrative government contracts has been singled out as the main stumbling blocks for the upliftment of black business.
Recently, Minister of Trade and Industry Rob Davies called on big companies to open doors for black operators in the supply chain business in order for the country to reach its goals of creating many black industrialists as much as possible.
CCBSA has now set the tone as it announced a dramatic shake-up of its procurement policy, committing to divert R3.9bn in procurement spend, or 30% of the total, to black-owned and black women-owned organisations over the next three years.
“Our new approach breaks down the barriers in the way of business growth and economic development.
“We’re laying the groundwork for an environment in which opportunities are available equally to all businesses and where collaboration across businesses builds a thriving and vibrant economy that benefits us all,” Velaphi Ratshefola, managing director of CCBSA, said.
Addressing thousands of delegates at the company’s annual Supplier Development Conference in Midrand, including 220 small business exhibitors and 750 SMME attendees, Ratshefola said it was time to make BEE meaningful.
The conference targeted specific commodity categories, including fleet maintenance, manufacturing plant spares and machinery, engineering and logistics and packaging suppliers to maximise opportunities to enter the supply chains of participating corporates.
CCBSA has gone beyond business as usual, to start a process that will catalyse transformation for its existing suppliers and open new opportunities for black-owned small and mid-sized businesses.
Research indicated that the majority of small businesses launched in South Africa will fail, many of them within the first year of operation.
Among the reasons for these failures are entrepreneurial capability, unscalable business models, access to market and access to capital.
According to CCBSAs new supplier development initiative, aims to take concrete steps to address these underlying hurdles in the way of small business growth in its supplier ecosystem.
Walter Leonhardt, CCBSA’s financial director, said the company had recognised that large enterprises like Coca-Cola were not always geared to collaborate with small and mid-sized suppliers and that it was time to turn around the situation.
He said some of the global best practice procurement guidelines that organisations like CCBSA adhere to, made it difficult for small and midsize businesses to participate in the supplier ecosystem.
“These ambitious programmes are designed to radically change the way enterprise and supplier development is done in SA and become the new best practice benchmark for the country.”
The group did not give any details when South Africans can expect the first CocaCola alcoholic drink, recently launched in Japan.
But some analysts said the introduction of the alcoholic drink was a plot by the multinational company to recoup some of the losses that will result from a sugar tax. They warned that more increases in their product prices were likely to pass on to consumers – to make sure profits are not impacted.
ALL WRAPPED UP: CCBSA is laying the groundwork for a vibrant economy with its R4bn investment.