BUSINESS REPORT
SABMiller, Coke form drinks giant
SABMILLER and Coca-Cola plan to form one of the world’s largest bottling operations with annual revenue of almost $3 billion (R33bn) in 12 markets across southern and east Africa under the name of Coca-Cola Beverages Africa.
In a joint announcement yesterday the three firms, including Coca-Cola Sabco, said Africa offered a significant growth potential in beverages, underpinned by rising personal disposal income, a fast-growing population and raising per capita consumption.
SABMiller will hold 57 percent of Coca-Cola Beverages Africa, with Coca-Cola holding 11.3 percent and the Gutsche Family, which owns 80 percent of Coca-Cola Sabco, will hold a 31.7 percent stake in the operation.
“With more than 30 bottling plants and over 14 000 employees, Coca-Cola Beverages Africa will be the largest CocaCola bottler on the continent, with the scale, complementary capabilities and resource to capture and accelerate top-line growth,” the companies said.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola’s beverages at a rate of 1.9 billion servings a day.
In an interview with Bloomberg, Jonathan Fyfe, an analyst at Mirabaud Securities in London, said the pact with Coca-Cola would now present a potential burden for AnheuserBusch InBev should it seek to acquire SABMiller.
Anheuser-Busch InBev has shown some interest in acquiring SABMiller.
The new entity’s will have operations in 12 high-growth markets, which include countries such as Kenya, Ethiopia, Mozambique, Tanzania and Uganda, among others, its headquarters are planned to be in Port Elizabeth, Eastern Cape.
With beverage consumption growth slowing down in the developed markets such as Aus- tralia and the US, SABMiller focused its energies and investments on its African operations and Latin America. In their latest business update, the secondlargest brewery in the world said its soft drinks growth of 9 percent was driven by Africa, Latin America and Europe.
Chairman and chief executive of Coca-Cola Company Muhtrar Kent said: “A combined Coca-Cola bottling operation is further evidence of our commitment to Africa, and our firm belief in the tremendous growth prospects that the continent offers.”
SABMiller chief executive Alan Clarks said soft drinks were an important element to the group’s growth strategy. “This transaction increases our exposure to the total beverage market in Africa. The opportunity is significant, with favourable demographics and economic development point- ing to excellent growth prospects,” said Clark.
Once the transaction is completed, it will be implemented in two phases.
The first phase will include bringing together SABMiller’s local bottling business known as Amalgamated Beverage Industries (ABI) and Appletiser and its soft-drink business in eight other African countries. The bottle-giant will initially produce and distribute bever- ages in nine countries including South Africa, Kenya, Namibia, Comoros and Mayotte among others.
The firms also announced that Coca-Cola Company would acquire SABMiller’s Appletiser brands on a worldwide basis, and acquire rights to a further 19 non-alcoholic ready-to-drink brands in Africa and Latin America for $260m.
SABMiller’s share price fell 0.31 percent to R61.78.