SABMiller Plc, Coca-Cola to merge soft drinks bottling operations in Africa

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

Based in Port Elisabeth, South Africa, Gutsche Family Investments is th majority shareholder of Coca-Cola South African Bottling Company (Sabco).

The new company, with headquarters in South Africa, would be 57-per cent owned by SABMiller, 31.7-per cent by GFI, with The Coca-Cola Company owning the remaining 11.3 per cent owned, the groups said today.

As part of the deal, Coca-Cola would also take over SABMiller's sparkling soft drink Appletiser brands globally, and buy get licenses for 19 additional non-alcoholic names in Africa and Latin America for about $260 million.

With over 30 bottling plants, the new bottler, Coca-Cola Beverages Africa, will be the largest bottler inAfrica and serve 12 high-growth countries accounting for approximately 40 per cent of all Coca-Cola beverage volumes in Africa, SABMiller said in a statement.

Alan Clark, SABMillerChief executive said the opportunity was significant, with favourable demographics and economic development pointing to excellent growth prospects.

He added, this also signified a strengthening of the company's strategic relationship with The Coca-Cola Company.

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

According to management consultancy McKinsey, African consumer spending on shopping, banking, telecoms and tourism would grow to $978 billion by 2020, from $570 billion in 2010.

Meanwhile, SABMiller said in a press release, "Africa offers significant growth potential in beverages, underpinned by rising personal disposable income, a fast-growing population and increasing per capita consumption. With more than 30 bottling plants and over 14,000 employees, Coca-Cola Beverages Africa will be the largest Coca-Cola bottler on the continent, with the scale, complementary capabilities and resources to capture and accelerate top-line growth.

"With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent, Coca-Cola Beverages Africa will be strongly positioned to offer consumers greater choice, broader availability and better value. The new bottler will continue the shareholders' strong commitment to the economic and social development of the communities it serves, which includes providing access to clean water, supporting women's economic empowerment and promoting wellbeing."