US-based beverage giant, Coca-Cola Company, said it will like to retain a majority stake in its African bottling business, Coca-Cola Beverages Africa (CCBA). This is a deviation from its previous plan to re-franchise the unit.
The company’s President and Chief Operating Officer, Brian Smith, disclosed this on Monday. He stated that Coca-Cola feels it is in its best interest to keep its stake in CCBA.
“While we remain committed to the refranchising process, we believe it’s in the best interests of all involved for Coca-Cola to continue to hold and operate CCBA.” -Smith
Speaking further, the CEO said Coca-Cola has had deliberations with a number of prospective buyers for CCBA, including Coca-Cola HBC and rival Coca-Cola European Partners.
In line with its new plan, the company said it would reclassify its financial statements starting from the second quarter of 2019 so as to include CCBA as part of its continuing operations.
The initial plan to re-franchise: The firm had initially wanted to re-franchise the unit as part of its global plan to focus mainly on its beverage business while offloading its manufacturing and distribution assets.
Focus now on boosting sales: The company is now more focused on boosting the sales of its beverages. This became important after its shares went down 7.4% following the release of its Q4 earnings for 2018. Note that the shares of its arch-rival, Pepsi, after it reported an increase in sales which was boosted by its snack unit.
2019 Forecasts: In the meantime, Coca-Cola is predicting that its 2019 performance could be even less impressive. This is unlike Pepsi which has projected a favourable year. Both companies expect their sales for the year to grow by 4 percent.
Note that Coca-Cola recently launched a carbonated drink called ‘Limca Cola’ in a bid to expand the footprint of the Limca brand within the country.
About Coca-Cola Beverages Africa: CCBA is a company that was formed in 2014 from the merger of SABMiller plc, The Coca-Cola Company, and Gutsche Family Investments (GFI) beverage bottling operations in Southern and East Africa.