Soft drink giant, Coca Cola, says it is moving ahead with plans to take over Nigeria’s leading juice company, Chi Limited and aims to complete the deal early next year.
According to Reuters the acquisition for an undisclosed price is one of several steps the U.S. company is taking in a global strategy to diversify from its core business of sugary sodas.
Peter Njonjo, President of Coca-Cola’s West Africa business noted that the planned acquisition is still on track.
“We are still on track to complete the acquisition (of Chi Ltd) by the end of the first quarter of 2019.” – Njonjo
According to Njonjo, the company is focusing on smaller bottles and cans which is another way the company is trying to woo cash-strapped consumers in Nigeria, which emerged from its first recession in 25 years in 2017 but continues to suffer from sluggish growth and high inflation.
“Affordability will start becoming a bigger issue in this market than it was in the past. As a company, that is what we need to factor in as we are thinking about the future of our business in Nigeria.”
Scaling to Juice production
The planned move to extend its portfolio to juice production 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 Limited – had announced a binding agreement which will see Coca-Cola Company acquire an initial minority equity shareholding in Chi Limited with plans to increase ownership to 100 percent within three years, subject to regulatory approvals.
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 100 percent.
Prospects of a coffee market in Nigeria
Njonjo said the purchase of Costa could present a “significant opportunity” in Nigeria, despite the absence of a culture of hot-coffee drinking there.
In his words:
“There definitely could be an opportunity around ready-to-drink coffee here in Nigeria… Having iced coffee, blends of dairy and coffee, packaged in different formats.”
He also hinted at the possible acquisition of beverage drink, Horlicks noting that it could be an interesting proposition that could be a significant opportunity on the continent.
The Coca-Cola Company is headquartered in Atlanta, Georgia, but incorporated in Wilmington, Delaware is an American multinational beverage corporation, manufacturer, retailer, and marketer of non-alcoholic beverage concentrates and syrups.
The company is best known for its flagship product Coca Cola (or Coke in some markets) invented in 1886 by pharmacist John Pemberton.