These are interesting times in the beverage industry. It was the Greek philosopher, Heraclitus, who said that “change is the only constant in life.” The global beverage industry is moving fast to adapt to changing consumer taste and preferences.

For anyone who has been paying attention to global events in the beverage industry, it is hard to miss the changes taking place in the soft drinks and beer industry. However, this article will focus on the changes taking place in the soft drinks industry as it relates to Nigeria and Africa, with particular emphasis on Coca-Cola.

Coca-Cola, the Atlanta-based soft drinks giant known for its iconic brands, Coke, Fanta, Sprite, among others has been consolidating its global bottling operations over the last four or five years, engineering regional bottlers to merge and take advantage of scale to improve inefficiencies and boost sagging sales as consumers preference for sugary drinks wane in favour of alternatives such as fruit juices, water, etc.

In August 2015 three independent bottlers of Coca-Cola products in Europe agreed to merge their operations in order to serve 300 million western Europeans. Coca-Cola Enterprises, the bottling group agreed to merge with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetranke, the German bottling business of the Coca-Cola Company. The merge was part of a global push by the Coca-Cola Company to consolidate and cut costs amid slowing sales. The new company was named Coca-Cola European Partners (CCEP), the largest independent Coca-Cola bottler in the world with expected 2015 revenue of $12.6bn. The new entity will serve the countries of Andorra, Belgium, Iceland, Luxembourg, Monaco, Norway, Portugal, Sweden, The Netherlands, Germany, Spain, Great Britain and France.

At the announcement of the formation of the new entity, Muhtar Kent, the Chairman and CEO of the Coca-Cola Company, said “formation of Coca-Cola European Partners was an important step in the systems evolution. It shows how Coca-Cola is adapting to meet the changing demands of the market,” he added.

Similarly, earlier in November 2014, the Atlanta-based soft drinks giant engineered the merger of three independent bottlers of Coca-Cola products in Southern and Eastern Africa – SABMiller’s non-alcoholic soft drinks business agreed to merge with Coca-Cola Sabco, and Coca-Cola Company’s South African bottling business (Coca-Cola Shanduka) to create what is known as Coca-Cola Beverages Africa. Prior to the merger, SABMiller operated Coca-Cola bottling plants in six Southern African countries namely South Africa, Comoros, Mayotte, Swaziland, Botswana, Zambia; and bottled water plants in three East Africa countries – Ethiopia, Kenya, and Uganda. Similarly, Coca-Cola Sabco, majority owned by the Gutsche Family Investments (GFI) also operated seven Coca-Cola bottling plants in Southern and Eastern African countries – South Africa, Ethiopia, Kenya, Mozambique, Namibia, Tanzania, and Uganda.

At the announcement of the merger in November 2014, Coca-Cola said that the combination would serve 12 high growth countries in southern and Eastern Africa, namely 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 plants and 14,000 employees in Africa. The combined companies will have equity stakes as follows: Coca-Cola will own 11.3% of the new entity; the Gutsche Family Investments, owners of Coca-Cola SABCO will control 31.7% of the new company while SABMiller will retain 57% stake.

Before CCBA could become operational, it had to obtain regulatory approval from the South African antitrust regulatory body, which after 18 months and in May 2016, the Competition Tribunal gave its conditional blessing. Coca-Cola Beverages Africa began business on 4th July 2016. At the unveiling of CCBA, the company said that the new company will initially serve 11 high-growth countries, but will eventually increase to 14 countries. The countries are South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte, Comoros and Nigeria. Botswana, Swaziland and Zambia are expected to join CCBA in the next 12 to 18 months. Yes, Ghana and Nigeria have been added to list of countries.

Ghana and Nigeria, both countries in West Africa and far removed from East and South Africa was included in a reconstituted list. Both countries already have existing Coke bottlers with long history in the region. Coca-Cola Equatorial, which serves 12 countries in West and North Africa – namely Algeria, Cape Verde, Gambia, Ghana, Equatorial Guinea, Guinea-Bissau, Guinea-Conakry, Liberia, Morocco, Mauritania, Sao Tome & Principe, Sierra Leone; and Coca-Cola HBC, which serves Nigeria and 27 other European countries.

This begs the question, why is the Coca-Cola Company pushing for new bottlers in Nigeria and Ghana? Are there unexplored opportunities in both countries? Nigerian Bottling Company, the Nigerian subsidiary of Coca-Cola HBC has been serving the Nigerian market for over 65 years with 13 bottling plants, 57 distribution depots and over 600,000 distribution and retail partners covering the entire country. What will CCBA bring to Nigeria that isn’t being offered by Coca-Cola HBC? Well the answer lies in CCBA’s depth of product offerings. The newly formed Coke bottler has about 40 products in its arsenal, comprising the usual Coca-Cola products of Coke, Fanta, Schweppes, but more localised offerings owned by SABMiller and Coca-Cola Sabco such as Appletiser, Grapetiser brands, Sparletta, Stoney Tangawizi sodas, among others. With Nigeria’s large population of 160m to 170m, it begins to make sense.

When Coca-Cola Beverages Africa (CCBA) enters the Nigerian market, it is likely to be on the back of SABMiller. The brewer of Hero Lager, Grand Lager, Grand Malt, among others holds a 57% stake in the newly formed CCBA. It helps that SABMiller already has four established breweries in strategic locations in the country – International Breweries, Ilesha; Intafact Beverages, Onitsha; Pabod breweries, Port Harcourt and Voltic. This would make the entry seamless as all it needs to do is add additional lines to its existing infrastructure to support bottling of soft drinks. Same could be said of the brewer’s Accra Brewery in Ghana where it already bottles Eagle Lager.

During the announcement of the formation of Coca-Cola European Partners last year, Muhtar Kent, CEO of Coca-Cola Company said he did not rule out more bottling consolidation in the coming years. So it begs the question if the addition of Ghana and Nigeria to the list of CCBA countries is a prelude to more mergers and acquisitions in the future.

Earlier in May, the CEO of Coca-Cola HBC, the Coke bottler in Nigeria said during Q1 trading update, that it was open to further acquisitions in Africa if the right opportunity became available, its chief executive, Dimitris Lois said. Similarly, in October 2015, Coca-Cola Equatorial Bottling Company said it would consider merging with other independent Coca-Cola bottlers in African countries, which may include Nigeria, Egypt or countries where it already has a presence, including Morocco and Algeria.

Cokes story gets even more interesting as SABMiller is in the midst of being acquired by its bigger rival, Anheuser-Busch InBev (AB InBev). The acquisition is expected to close in the second half of the year. The new company would inherit SABMiller’s stake in CCBA. There are speculations that Coca-Cola may not want to join with AB InBev and since it holds a “change of ownership” clause in the newly formed CCBA, it may decide to sell SABMillers interest to a new bottler. This obviously presents opportunities for other Coke bottlers in the region such as Coca-Cola HBC or Coca-Cola Equatorial.

But what if Coca-Cola decides to leave things as they are and allow AB InBev take ownership of SABMiller’s stake in CCBA, that throws up a whole slew of scenarios. The ever acquisitive AB InBev may push to acquire smaller bottlers and Coca-Cola HBC’s unit in Nigeria may be a prime target and so will Coca-Cola Equatorial. This would make CCBA a truly African Coke bottler spanning North, East, West and Southern Africa.

Another scenario is to see Coca-Cola HBC acquire the newly formed CCBA and extend its reach into Southern and Eastern African markets. Earlier in July, JPMorgan, the global investment banking group said that Coca-Cola HBC has the potential to make a major acquisition. JPMorgan put a value of $6bn and $10bn on newly formed CCBA, which is higher than Coca-Cola HBC current market value of $7.5bn. However, the investment banking group estimated that two two-thirds of CCBA’s volume business comes from South Africa, which is twice the volume in Coca-Cola HBC’s Nigerian operations and brings in revenue per case 40% higher than the emerging-markets average.

A third scenario is to see Coca-Cola Equatorial acquire Coca-Cola HBC’s Nigerian unit and add to its African franchise.

Being that the Coca-Cola Company is looking to consolidate its global bottling operations, it is likely one of these scenarios might see fruition in the near future. Coke has recently reconfigured its global management structure, merging some business units in Africa to form two new business units, South and East African Business Unit and West African Business Unit.

There is yet another dimension to the Coke intrigue. Castel Group is a French beverage company with interest in wines, beer and soft drinks in Europe and Africa. Since 1949, they have grown to become the second largest beer and Coca-Cola bottler on the African continent; the first being SABMiller.

In 2001, before SABMiller became the global beer behemoth that it is, it went into an alliance with Castel Group in Africa to cooperate instead of compete against each other. SABMiller purchased 20% share of Castel Group’s African business, while Castel Group took a 38% shareholding in SABMiller’s African business except for businesses in South Africa and Namibia. Castel operates primarily in French speaking West Africa, Angola and Mozambique, while SABMiller operates in English speaking African countries.

Since SABMiller is in the midst of being acquired by Anheuser-Busch InBev, SABMiller’s shares in the Castel Group will be transferred to AB InBev or the new company formed from the combination of SABMiller and AB InBev.

The question then becomes what does Coca-Cola do with the Castel Franchise? Does it push for a restructuring of the Franchise or does it leave it as is with Castel and the new owners of the AB InBev, SABMiller combination? Those are questions that will be answered in the coming months and years.