Africa is an important market for Coke as it fights a street-by-street campaign to increase per-capita annual consumption.

By Ian Armitage

Coca-Cola is the most recognised brand on the planet. There is nothing as global as Coke. It is a billion-dollar product, sold in 206 countries. It has been 125 years in the making.

Coke has been in Africa since 1929 and in South Africa since 1938 when the first bottling plant and distribution centre were opened in Johannesburg, providing an important base for future growth in South Africa and across the continent. Today, Coca-Cola operates in nearly all of Africa’s countries; it is one of the continent's largest employers, with 68,000 employees and 160 plants.

Its impressive position is made possible by the hard work and commitment of its dedicated employees, as well as the strength of its local partnerships: bottlers, suppliers and retailers. Its main vision is to benefit and refresh the people of Africa.

To truly succeed Coca-Cola has always known its products needed to be more than products. They needed to be reminders of good times and warm feelings.

What many people don’t realise is that the Coca-Cola business is actually a local business. No matter where in the world it operates, its brands are produced, packed and distributed by bottlers that are deeply rooted in the communities in which it operates.

South Africa is no different and a key contributor to Coke’s success here is its network of four bottlers: Amalgamated Beverage Industries (ABI) (a subsidiary of SabMiller), Coca-Cola Fortune (part of Coca-Cola SABCO), Peninsula Beverages (sometimes called Forbes Group) and Coca-Cola Shanduka Beverages SA (Pty). Each bottler is responsible for a specific geographic territory and they’re significant creators of opportunity in their communities, driving economic development through employment, procurement and other commercial activity.

But these are more than bottlers. They are Coke’s partners in the true sense, sharing the same vision and mission.

The bottlers do something The Coca-Cola Company doesn’t do: make Coca-Cola. Bottlers produce the beverages and deliver all those bottles and cans. They also distribute most of Coke's entire line of beverages, stock and maintain everything at each outlet.

South Africa is the largest Coca-Cola market in Africa and consistently ranks among the best performing countries in the world of Coca-Cola. Consumers love it. Coca-Cola is the preferred brand in South Africa for the fourth year running, is in the top five best employers in the country and has high-standing in terms of corporate reputation.

But for Coke, Africa is still the untold story, and could be the big story, of the next decade.

“There's nowhere in Africa that Coca-Cola isn’t enjoyed. Being in a country is easy; you can go and set up a depot in every capital city. That's not what Coke is about. It goes to every town, every village, every community, every township,” says Bill Egbe, President, Coca-Cola South Africa.

The potential is huge. Africa is finally emerging as a viable market, riding a hoped-for wave of improving governance and demographics. Coke is in a street-by-street campaign to increase per-capita annual consumption of its beverages. To do so, Coca-Cola is applying lessons learned from its worldwide business with the hopes of having Coca-Cola within arm’s reach of every consumer.

And according to Egbe, “Africa offers enormous opportunity for The Coca-Cola Company. In the last 10 years, $5 billion has been invested in the continent and an additional $12 billion is estimated to be invested by 2020.”

Annual per capita consumption of Coca-Cola in South Africa is nearly 260 servings of 8 ounces. Mexico is 665 servings per year where an aggressive courtship of small stores helped boost per capita of Coca-Cola beverages to the highest in the world. The possibilities are huge.

John Ustas, the chief executive of ABI, Coca-Cola’s largest bottler in South Africa, recently described Africa as the “best market” for Coca-Cola. He said he believes there is opportunity for the “embedded” annual growth rate for Coca-Cola in South Africa to be pushed to as much as six percent. It is currently two. That opportunity lies in the townships, he said.

“We are servicing just under 70,000 customers; we believe there’s potential for 200,000,” Ustas explained.

He said he sees a lot of “similarities between South Africa and Mexico” and through investment – and by basically sending more reps out to the streets – the ambitious target was achievable.

ABI accounts for about 60 percent of the Coca-Cola sold in South Africa, with the rest shared by the other three bottlers. Ustas is worth listening to.

Coke sees the potential too. CEO Muhtar Kent is looking to capitalise on the company’s position in Africa by adding beverage plants and developing packages and products to serve a growing population with rising incomes.

To do that Coke has to get the product "close” to customers. In Alexandra, a dense township in Johannesburg, Coca-Cola has done just that. Last year, ABI filled streets with drink coolers and Coke signage. To keep the coolers full, the bottler extended credit to merchants who didn't have the capital to take on inventory.

Coca-Cola’s long-time CEO Robert Woodruff said that Coca-Cola should always be “within an arm’s reach of desire.” The Company is working to ensure that Woodruff’s vision in 1923 is a reality.

Coke plans to spend several billion dollars in Africa over the next 10 years as part of its plan to double, by 2020, the $100 billion in global system revenue last year.

Okay, you ask, why Africa? Well, mature markets such as the U.S. and Europe are growing at slower rates than many emerging economies. Coca-Cola has as its strategy to ensure its beverages are affordable and available. In Africa, most soft drinks are sold in returnable glass bottles. Returnable bottles help keep prices down so the company can reach more customers.

Despite its plans for growth, Coca-Cola’s business in Africa is about more than just maximising profits, it is based on the idea that the health of its business depends on the health and sustainability of the communities in which it operates. It has put significant resources into HIV/AIDS education, prevention and treatment programmes, water projects, recycling, and education and infrastructure improvement. In addition, Coca-Cola has invested in economic development and entrepreneurship, through the development of spaza shops, taxi ranks and car washes in the townships, and retail training and support.

The Coca-Cola Africa Foundation headquartered in Swaziland, was established in 2001 as a response to the growth and impact of the HIV pandemic. Today, the Foundation’s community activities focus on four key areas central to life in Africa: water, health, education and entrepreneurship. The Foundation’s RAIN (Replenishment Africa Initiative) Water for Schools programme has resulted in a nearly $4 million (nearly R30 million) investment in South Africa from Coca-Cola and the government. Coke has made a huge investment in terms of social and economic development and has a dedicated team that focuses on this market and develops sustainable small businesses.

On 8 May 2011, Coke will be 125 years old. It started out in business in 1886, selling about nine servings a day. That number is 1.7 billion now. It used to have one product; it now has 3,300 beverage products.

The company says its mission is to benefit and refresh everyone touched by their business. It seems they are delivering on that promise.

There is a real magic around brand Coca-Cola. It conjures up personal memories. Happy times had. Happy times to come. As the business expands throughout Africa that magic will rub off on many more local communities, much in the same way as it has in South Africa.


South Africa Magazine Issue 12