Coca-Cola Nigeria to spend $600 million on new products by 2020

Coca-Cola Nigeria Limited said it plans to invest $600 million by 2020 to boost sales, as part of the parent company’s global strategy to offer more consumer likeable products that goes beyond its carbonated soft drinks.

The Nigerian subsidiary of the Atlanta-based soft drinks maker said it wants to expand its product offerings to include flavoured and condensed milk, ice tea and bottled water to meet demand, said Peter Njonjo, the President of Coca-Cola West Africa, in an interview with Bloomberg Business in Lagos.

“Our objective is to provide whatever beverages you need across your life stages,” he said.

The $600m is part of an ambitious programme by the Atlanta-based Coke to invest $17bn in Africa by 2020. Coca-Cola new Chief Executive officer, James Quincey has said the company needs to grow beyond its biggest brand and has called for the soda giant to become a “total beverage company,” with less reliance on its flagship carbonated soft drinks.

In 2016, Coca-Cola acquired a 40% stake in Nigeria’s leading juice and dairy firm, Chi Limited for $240m with a plan to acquire the rest of the company within three years if certain targets are met.

Coca-Cola, like other manufacturers in the country have felt the slowdown in the Nigerian economy caused by low oil price, the country’s main foreign exchange earner, and dollar shortages. However, for the first time in five consecutive quarters, the economy appears to be rebounding and grew by 0.6% in the three months through June.

Prior to that, the economy was beset by inflation which climbed to as high as 18.7% in January. The effect was increased production cost for manufacturers and higher cost of imported goods due to dollar scarcity amid low consumer spending.

Nonjo said that Coca-Cola Nigeria currently employs 3,600 direct employees in the country, and operates 11 bottling plants and 30 distribution depots.

The Coca-Cola West African President said that high inflation rate which has abated a little to 16% as of August is a big issue for the soft drinks maker because “As disposable income start getting under pressure, expenditure in products like ours start becoming inaccessible to most consumers,” he said.

He added that the company was forced to increase prices on its products, introduced new product-sizes and increased local input sourcing so as to lessen the effects of skyrocketing inflation and foreign exchange headwinds. The company said it is targeting 75% local sourcing of raw materials by 2020 as against the current 70%.

Nonjo noted that the recent efforts by the Central Bank of Nigeria to improve foreign exchange liquidity has had a positive effect on the company as it is now able to import raw materials before it runs out of stock.

“The only way that you can ensure that the business is sustainable is by taking prices up. Some of it we have passed to the consumers,” Njonjo said.

The company said it has also increased investment in distribution and innovation.

“It’s all about looking at how much money consumers have and how do I become relevant to consumers,” he said.

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