The parent company of Coca-Cola Nigeria, Coca-Cola HBC, has revealed that it will prioritize the production of plant-based beverages, juice smoothies, and PET juice packaging in Nigeria this year.
The company made this disclosure in its Full year 2017 Integrated Annual Reports recently released. The company also vowed to continue to optimize and invest in its production in Nigeria while maintaining a working capital discipline.
As part of its strategy, the company noted it had to change its price pack architecture to provide consumers with affordable options.
While lamenting the impact of high inflation rate on consumers, the report noted that Nigeria’s harsh economic conditions hampered its growth and profitability for 2017, it, however, expressed optimism that improved economic indices will further boost revenue in 2018.
Also as part of its environment-friendly projects, the company said it invested a €1.4 million worth investment in its wastes heat recovery boilers in Nigeria, this is expected to save over 400 tonnes of carbon emission each year.
Revenue impacted by Competiton
The Nigeria Bottling Company NBC, its local unit is faced with stiff competition from SevenUp Bottling company, makers of Pepsi, Mirinda and SevenUp soft drinks and also from new entrants into the market (Bigi-Cola brands)
The introduction of new price pack on its products has also impacted negatively on its sales volume as consumers are forced to buy substitutes which are relatively affordable.
Also its major competitor Seven-up Bottling Company is also struggling to boost revenue and growth caused by a harsh business condition which led to a slow in consumer demand.
The continued poor performance of SevenUp led to its acquisition by Affelka, a South African private equity firm which now has 100% shareholding in the Nigerian company.
For CocaCola, while its major regions grew volumes by 2.2% in 2017, Nigeria’s volume fell behind. Strong competition from other mid-size drinks made revenue growth difficult for both leaders in the soft-drink market in the country.
Scaling to Juice production
The planned move to extend its portfolio to juice production as contained in the report is aimed at boosting its revenue base.
Recall that in 2016, Coca-Cola Company and Tropical General Investments Group (TGI Group) – the holding company of Chi Ltd, had announced a binding agreement which will see Coca-Cola Company acquire an initial minority equity shareholding in Chi Ltd with plans to increase ownership to 100 percent within three years, subject to regulatory approvals.
Recently, the soft-drink company also announced it will go into the production of Chu-hi a canned sparkling drink brewed with sochu a spirit indigenous in Japan.
The agreement will see Coca-Cola increase an initial 40 percent minority equity shareholding investment in Nigeria’s leading value-added dairy and juice beverage company-Chi Limited whose brands which include Hollandia and Chivita to 100percent.
Although it is uncertain if Affelka, the new owners of SevenUp Plc would want to compete with Coca-Cola HBC in juice and beverages, industry experts are however of the view that CocaCola will have to cut prices below the competition to gain serious market share and return to the path of profit.
The Coca-Cola Company is headquartered in Atlanta, Georgia, but incorporated in Wilmington, Delaware, is an American multinational beverage corporation, and manufacturer, retailer, and marketer of nonalcoholic beverage concentrates and syrups.
The company is listed on the New York Stock Exchange and its share price has taken a dip in recent times. Its share price as at close of trading on Friday is $43.
The company is best known for its flagship product Coca-Cola (or Coke in some markets) invented in 1886 by pharmacist John Pemberton.