SABMiller, Coca-Cola Form Joint Bottling Venture in Africa

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SABMiller Plc, The Coca-Cola Company and Gutsche Family Investments (GFI) are combining their soft drinks bottling operations in South and East Africa to create a group with $2.9 billion in revenue across 12 fast-growing markets.

The new company, which will be headquartered in South Africa, will be 57 percent owned by the brewer, 31.7 percent by GFI, which is the majority owner of South Africa-based bottler Coca-Cola Sabco, and 11.3 percent owned by The Coca-Cola Company, the groups said on Thursday.

As part of the deal, Coca-Cola will also acquire SABMiller’s sparkling soft drink Appletiser brands globally, and buy or be licensed for a further 19 non-alcoholic names in Africa and Latin America for about $260 million.

“The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects,” said Alan Clark, SABMiller Chief Executive.

“This also signifies a strengthening of our strategic relationship with The Coca-Cola Company.”

Households in fast-growing African economies are finding themselves with much more disposable income, which they are spending on what previously would have been considered luxuries.

Management consultancy McKinsey says that Africa’s consumer spending on shopping, banking, telecoms and tourism could grow to $978 billion by 2020, from $570 billion in 2010.

The new firm, Coca-Cola Beverages Africa, will have more than 30 bottling plants when the deal is completed, bringing together brands such as Appletiser and spring water Valpre in countries such as South Africa, Kenya, Ethiopia, Mozambique and Tanzania.

Others are Uganda, Namibia, Comoros and Mayotte. At a later date, operations in Swaziland, Botswana and Zambia will be included in the transaction.

Nomura and NLA advised Coca-Cola Sabco and Rothschild advised SAB Miller on the deal. Source: Reuters


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