Coca-Cola has discovered an untapped market to save the soda business
REUTERS/Dylan Martinez
One of the major regions of focus: Africa.
Coke said in 2014 it would invest $17 billion in the continent from 2010 to 2020, a figure that tripled the amount spent in the previous decade. In late January, the company announced its biggest overseas acquisition since 2012: a 40% stake in Nigeria's largest juice marker, TGI Group's Chi Ltd which sells beverage brands such as Chivita 100% and Chi Ice Tea, with plans to buy the rest within the next three years.
"We are extremely optimistic about Africa's continued economic and social growth and recognize the importance of ensuring we stay one step ahead of evolving consumer tastes by broadening our portfolio and introducing new products," Kelvin Balogun, President of Coca-Cola Central, East and West Africa, said in a statement about the acquisition.
While Americans are drinking less soda, there is still plenty of room for Coca-Cola's growth in Africa. In the third quarter, SABMiller - a key Coke bottler in Africa - experienced soft drink volume growth of 13% in Africa, with a 21% increase in South Africa.
In the US, per capita soda consumption by volume fell 25% from 1998 to 2015.
The soft drink giant is succeeding not just by marketing Coca-Cola classics to African consumers. Coke is gaining new customers by marketing to local tastes.
Coca-Cola crafts products such as Sparletta Stoney Tangawizi and Krest Bitter Lemon at micro-distribution centers and distributes the sodas to local retailers, reports CNN. These are beverages that can't be found anywhere else in the world, but are intended to make Coke the most relevant beverage producer in the area.
"The rate of growth in Africa is higher than that of Western markets and other parts of the world, so it'll continue to become a larger and larger part of our revenue," Coca-Cola CEO Muhtar Kent told CNN in January.
That also means the company has to grow outside of soft drinks.
As Coke diversifies its products available in the US with options like sparkling Smartwater, it is also working to provide non-soda options in Africa, an area where the Chi Ltd acquisition could be a key. In addition to juice, Chi brands include dairy beverages and snacks like sausage roll Chi SuperBite and Muff the Muffin.
Non-soda investments are also important due to shifting international nutrition trends. Coke has recently come under fire for playing a role in the rise of obesity globally. In January, the World Health Organization recommended that governments worldwide tax sugar-sweetened beverages, similar to Mexico's 10% tax on sugary drinks that resulted in a 12% reduction in sales of taxed items.
By investing in local non-carbonated options as well as increasing per capita soft drink consumption, Coke is dedicated to becoming the drink of choice in Africa. The company doesn't care if new customers are sipping juice or a Diet Coke - as long as it's a Coca-Cola brand.
- US buys 81 Soviet-era combat aircraft from Russia's ally costing on average less than $20,000 each, report says
- 2 states where home prices are falling because there are too many houses and not enough buyers
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- Foreign tourist arrivals in India will cross pre-pandemic level in 2024
- Upcoming smartphones launching in India in May 2024
- Markets rebound in early trade amid global rally, buying in ICICI Bank and Reliance
- Women in Leadership
- Rupee declines 5 paise to 83.43 against US dollar in early trade
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market