Coke’s listing on JSE worth R124bn
The bottling unit known as Coca-Cola Beverages Africa plans to list in Amsterdam and on the JSE. By
The Coca-Cola Company plans to take its privately owned bottling unit public, a move that would give local investors exposure to its extensive operations in the rest of Africa and the company’s future growth plans in the region’s non-alcoholic beverage industry.
Coca-Cola announced in April 2021 that it plans to list Coca-Cola Beverages Africa (CCBA) in Amsterdam and on the JSE within 18 months, depending on market conditions. CCBA is Coca-Cola’s biggest bottling unit on the continent.
Although no further details have been announced by Coca-Cola or CCBA, it is understood that the listing is still on the cards.
The slated listing, which is likely to be worth about R124-billion on the JSE and will pave the way for the company’s inclusion in the bourse’s Top 40 index, is significant for several reasons.
It comes as the JSE faces a wave of delistings because of merger and acquisition activity that results in listed companies being taken private, and companies no longer see value in being publicly owned. In 2021, there were at least 20 company delistings from the JSE.
So, the planned listing of CCBA will bring new life to the local stock exchange and the company will compete for capital with close competitors such as AB InBev, Tiger Brands and AVI. Unlike these counters, CCBA has extensive rest-of-Africa operations, with bottling factories and other businesses in South Africa, Botswana, Namibia, Ethiopia, Kenya, Tanzania, Lesotho, Comoros and Eswatini — to mention a few.
The proposed listing will also hand investors ownership in CCBA, and the company might, in turn, tap them in the future for capital to fund its growth ambitions in Africa.
CCBA is a behemoth in the bottling space. It packages 40% of Coca-Cola products that are sold in Africa, including global brands such as Fanta, Sprite and Schweppes. CCBA also packages local products such as Stoney, Valpre and Bonaqua, Sparletta and others. Coca-Cola doesn’t usually own its bottlers around the world: it prefers to own drink brands, but outsources the bottling and distribution functions.
CCBA became majority owned by Atlanta-based Coca-Cola in 2016 after AB InBev sold its stake after the brewer’s takeover of SABMiller. Coca-Cola owns 66.5% of CCBA and the low-key Gutsche family owns the remaining 33.5%. The family, whose net worth is not known, has been involved in bottling Coca-Cola for as long as 80 years. The family also owns Woodlands Dairy, a producer of milk and household goods, and has other business interests beyond beverages, including property investments.
Coca-Cola, which has a presence in about 200 markets, will probably sell its shareholding in CCBA to allow for the participation of other investors in its ownership model. Two sets of investors are targeted; those in Amsterdam, where CCBA will have a primary listing, and the JSE, a destination for the company’s secondary listing.
CCBA’s growth ambitions
In a virtual presentation on 18 January that was designed to woo potential investors,
CCBA CEO Jacques Vermeulen said the company is in a strong position to take advantage of growth opportunities in Africa.
Although the company is open to brand acquisitions and partnerships with other beverage makers in Africa, Vermeulen said the first prize was growing the reach and consumption of CCBA-packaged products among consumers.
In other words, the primary focus will be organic growth.
CCBA, which reported a 14% growth in its interim revenue for 2021 to $3.2-billion (the company reports financial results in US dollars), expects the sales volumes of the products it bottles to nearly double by 2025. The value of total volumes is expected to grow from $12.1-billion in 2021 to $18.4-billion this year.
Vermeulen attributed this growth to economies in the rest of Africa beginning to recover from the Covid-19 pandemic and rising consumer spending.
He said consumption patterns among consumers have almost fully recovered to pre-pandemic levels, making CCBA’s goal of almost doubling its sales volumes by 2025 possible. He also said CCBA had returned to double-digit top-line growth, almost back to pre-pandemic levels.
Parent company Coca-Cola will report its full-year 2021 results in February, which will include the operational performance of CCBA.
If CCBA concludes acquisitions, it will focus on consolidating the highly fragmented bottling industry in the rest of Africa. Coca-Cola owns other bottling companies that serve different countries. For example, it owns Equatorial Coca-Cola Bottling Company, which serves countries CCBA doesn’t have exposure to, such as Algeria, South Sudan, Equatorial Guinea, The Gambia and others.
And beyond Coca-Cola, there are many other privately owned bottlers in the region. “At CCBA, we firmly believe in one bottler, one country, because that is the only way we can win in Africa,” said Vermeulen.