Coca-Cola, SABMiller to merge soft drink operations in Southern, Eastern Africa

Coca-Cola and SABMiller’s soft drink business agreed to merge in November 2014. This information was brought forward to January 2015.

Coca-Cola Company and SABMiller, the brewing giant have agreed to merge their soft drink businesses to broaden their beverage offerings.

The name of the new entity will be ‘Coca-Cola Beverages Africa’ and will serve 12 high-growth countries in Southern and Eastern Africa. The new company is expected to generate $2.9 billion annually.

The new entity will combine SABMiller’s soft drink operations with those of Coca-Cola SABCO – 80 percent owned by Gutsche Family Investments (GFI) and Coke’s own South African soft drinks business. Gutsche Chairman, Paul Gutsche will chair the new company in Port Elizabeth, South Africa.

As part of the merger, SABMiller will sell its Appletiser business, a carbonated apple juice to the Coca-Cola Company for $260 million, and also grant Coke rights to another 19 non-alcoholic brands in Africa and Latin America, except for SABMiller’s malt drink business in Africa and Latin America, plus its Coca-Cola franchises in El Salvador and Honduras. The reason is so both companies are not competing against each other.

SABMiller's Appletiser sold to Coca-Cola Company for $260 million as part of the deal

SABMiller’s Appletiser sold to Coca-Cola Company for $260 million as part of the deal

For SABMiller, the deal offers the brewer greater exposure to another part of the overall drinks market on a continent where consumer spending is fast growing. Soft drinks now account for 20.6 percent of SABMiller’s total volume sale. SABMiller’s Chief Executive, Alan Clark, said: “Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa.

“The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects,” Clark said, adding that the deal also signified a ‘strengthening of SABMiller’s ‘strategic relationship’ with The Coca-Cola Company.

The combined companies will serve 12 high-growth countries, which represents approximately 40 percent of all Coca-Cola beverage volumes in Africa.

Coca-Cola Beverages Africa will bottle 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. The new company will have more than 30 bottling pants and 14,000 employees in Africa.

The partners said that the combined companies will be strongly positioned to offer consumers greater choice, broader availability and better value.

The new entity will be 57 percent owned by SABMiller, 31.7 percent owned by Gutsche Family Investments, and 11.3 percent owned by The Coca-Cola Company.

Coca-Cola is a global business operating on a local scale. The Coca-Cola system consists of the Coca-Cola Company and more than 250 bottling partners around the world. The Coca-Cola Company manufactures concentrates, beverage bases and syrups, selling them to bottling operations. The bottling partners manufacture, package, merchandise and distribute the beverages.

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