Africa's biggest drinks bottling operation will promote local suppliers

SABMiller, The Coca-Cola Company and Gutsche Family Investments have agreed to promote local production as part of efforts to gain regulatory approval for a merger.

Under proposals the three will merge operations to form Coca-Cola Beverages Africa (CCBA), which is being described as Africa’s largest soft drinks bottling operation.

The commitment to local supply chains, part of a deal with the South African government, includes an annual local supplier development conference, production of an annual report on localisation and training for managers on the advantages of such a policy.

The merger parties have also agreed to create a R400m fund for enterprise development in the agriculture value chain. This would focus on support and training for historically disadvantaged farmers and small suppliers to Appletiser and products of CCBSA, the South African-based subsidiary of CCBA, on a competitive and sustainable basis.

Another R400m of investment will be committed to develop downstream distribution and retail capabilities with associated skills development and training. This is expected to create an additional 20,000 black-owned retailers.

Other commitments address concerns about employment, access to retail cooler space for smaller competitors, economic empowerment and the location of the headquarters.

The commitments agreed include allowing small retailers to provide 10% of space in Coca-Cola coolers for smaller competitor products where there are no other coolers available, and selling a 20% shareholding in Appletiser South Africa to black shareholders.

The merged entity will maintain its total permanent employment at current levels for a period of three years from the date of approval of the deal.

CCBA will serve 12 countries in Southern and East Africa, which account for 40% of Coca-Cola sales. It will have annual revenues of $2.9bn.

Ebrahim Patel, South African minister of economic development, welcomed the commitments. “Employment creation and development of small businesses are a vital part of building a more inclusive economy,” the minister said.

SABMiller CEO Alan Clark said he hoped the agreement now provided a clear path to the conclusion of the transaction and the creation of Coca-Cola Beverages Africa.

“As the location of CCBA’s headquarters, South Africa will be the heart of this business and our belief is that our commitments will provide a strong footing from which the business will flourish in South Africa and across the continent,” he said.

A Competition Tribunal hearing on the merger is due to start this week in South Africa. 

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