BrandArena: Coca-Cola Makes a U-turn, Retains Majority Stake in Coca-Cola Beverages Africa

Thursday 23 May 2019

Coca-Cola Makes a U-turn, Retains Majority Stake in Coca-Cola Beverages Africa

The Coca-Cola Company has announced that it will maintain its majority stake in African bottler Coca-Cola Beverages Africa for the foreseeable future.

The soft drinks giant had wanted to refranchise the bottling unit as part of its global plan to unload its capital intensive manufacturing and distribution operations to focus on its main beverage business and improve margins.

With the change, Coca-Cola will begin presenting the financial statements of CCBA within its results from continuing operations in the second quarter of 2019. Coca-Cola previously announced its intention to refranchise CCBA, which is the largest bottler of Coca-Cola beverages in Africa, serving 12 countries.

The company has had discussions with a number of potential partners about the divestment of its controlling stake. Last year, the beverage giant reported a 10% decline in net revenues as it was hurt by the refranchising of its bottling operations.

“Coca-Cola Beverages Africa is a very important part of the Coca-Cola system, and we see great opportunities to create even more value,” said Coca-Cola President and Chief Operating Officer Brian Smith. “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.”

The company said it has had discussions with potential bottling partners but could not reach a deal. Coca-Cola HBC, Cola-Cola European Partners, Coca-Cola SABCO and Heineken N.V. were all rumoured to be vying for the stake.

CCBA was formed in 2016 through the combination of the African nonalcoholic ready-to-drink bottling interests of SABMiller, The Coca-Cola Company and Gutsche Family Investments. AB InBev later acquired SABMiller and reached an agreement to transition AB InBev’s 54.5% equity stake in CCBA to Coca-Cola. 

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