Nigerian Senate wades into Rites Foods, 7-Seven Up controversy

soft drinks

The Nigerian Senate last week tried to mediate between two warring soft drinks companies who are fighting for market share and economic survival.

According to the Senate Committee on Ethics, Privileges and Public Petitions, it said it received a petition from the management of Rites Foods Limited, an indigenous soft drinks company and makers of Bigi soft drinks over alleged threat to its security and existence by Seven-Up Bottling Company Limited, bottlers of Pepsi cola, Mountain Dew and others.

The two companies were expected to appear before a Public Hearing organised by the committee to hear submissions from both parties.

However, Chairman of the Committee, Senator Patrick Akinyelure (Ondo Central) told reporters that the committee decided to mediate between the parties behind closed doors to ensure amicable resolutions.

He said the Committee gave the parties two weeks to come up with resolutions that they adopt upon which the committee will make its report to the Senate.

“There are three dominant players in the soft drink industry. We have the Coca-Cola, Seven-Up and Rites Foods Nigeria Limited, makers of Bigi soft drink,” Akinyelure said.

“We appreciate as senior citizens of this country that Rites Foods Limited is a wholly-owned indigenous company that should be encouraged in all ramifications.

“They have only one plant and they have been able to do the magic through the dedicated team of management staff.

“Within four years, they were able to compete favourably with Coca-Cola and Seven-Up and by market rating they have the market rating.

“When we heard from the Seven UP management, they appreciated the competitiveness of Rites Foods Nigeria Limited, the makers of Bigi drinks and also they are developing strategies on how to compete favourably in the market.

“We have been able to sit the two management together because we believe it is an issue that can be resolved through Alternative Dispute Resolution mechanism that will bring more result to this country than damaging a wholly-owned indigenous company that is competing favourably and we encouraged them to ensure that the issue is resolved amicably.

“So we resolved in the Committee that we give them about two weeks to go and come back with resolutions that would be adopted by both parties and then we will make our report to the Senate to ensure that they go out to go and compete and also develop strategies that would employ more Nigerians.”

The dispute stems from a leaked memo written by the Managing Director of Seven-Up Bottling Company, Mr Ziad Maalouf to its sales staff in November. Parts of the memo by Maalouf read as follows:

“Let me start by explaining the competitive playground once again. This season is not like any other, so the mindset of growing vs last year, achieving budget, business as usual cost management, Will Not Work!!! The outcome of this season must write the future and destiny of the 3 major competitors, along with the future of B-Brand industry (Bigger pack and lower price concept) disruptions in Nigeria.”

“One company will flourish. One company will diminish. One company will finish. B-Brand disruptive business model will either become a temptation for anyone who has a bit of money to start own brand in Nigeria, or it will be a curse that ensures no one takes such a decision again.”

According to the senate petition, the management of Rite Foods saw the memo as a threat to its existence.

The soft drinks industry in Nigeria has become more competitive in recent years following the recession of 2014 to 2017. The impact of the recession was reduced purchasing power as some Nigeians traded popular brands for lesser-known brands.

The industry has also seen the entrance of new low-cost players since 2015. They include Ajeast Nigeria Limited, a Peruvian company and maker of Big Cola soft drinks which touts its low price and bigger pack as its selling point; Rites Foods Limited, an indigenous company that also sells low-cost soft drinks. Others are RC Cola which entered the market in 2019; Nigerian-German Chemical Company (formerly Hoechst Nigeria) which now bottles its own line of soft drinks, among others. This has put a lot of pressure on the perennial market leaders, Coca-Cola and Seven-Up Bottling, both multinational companies with a long history in the country. Seven-Up was until 2018 listed on the Nigerian Stock Exchange (NSE) but was forced to delist as mountain losses led to declines in its share price.

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