Pepsico to leg-up its SA child
PEPSICO, the US soft drinks and snacks company, is set to announce major "new investments" in New Age Beverages, bottler and distributor of Pepsi's products in South Africa.
The investment is likely to be used for further expansion into new markets, which have been hampered by lack of capital and losses. But the investment is unlikely to match the R1.25-billion announced by arch-rival Coca-Cola recently, says a source.
Khehla Mthembu, chairman of NAB, declined to comment on the speculation but confirmed that a "high powered" PepsiCo delegation was on its way to South Africa, possibly including Roger Enrico, chairman and chief executive of PepsiCo, and Wayne Mailloux, president of the group's Africa and Europe division.
"It is not necessary at this stage to disclose the details - we will call a media conference in due course," said NAB spokesman Pule Pule.
Sources say both Enrico and Mailloux will announce the investment, pledging PepsiCo's support for New Age Beverages. The visit, due at the end of the month, comes in the face of persistent reports suggesting that PepsiCo, which has a minority interest in NAB, may restructure or pull out if its current deal with NAB.
"Both men will pledge PepsiCo's commitment to NAB and dispel rumours about a possible break-up with its bottlers," says a source.
Mthembu described reports suggesting PepsiCo may pull out or restructure as "totally disturbing" and "not true".
The speculation has been fuelled by NAB's reported huge losses and Mthembu's rumoured departure to join Sun International, where he is non-executive chairman.
Mthembu conceded there had been losses, but said these were "projected".
"Any start-up business expects to make losses initially and we are no different," he said. He denied reports that he would step-down as NAB chairman and be replaced by Monwabisi Fandeso, NAB's president and chief operating officer.
Fandeso is currently based at PepsiCo's office in New York.
"It is definitely out of the question that I will leave NAB - my position at Sun International is a non-executive one. I represent government and do not serve in a personal capacity," said Mthembu.
PepsiCo returned to South Africa three years ago via New Age Beverages, a joint venture company which includes PepsiCo, Egoli Beverages (representing African-American investors) and black SA business. NAB currently operates and distributes Pepsi's products in Gauteng and KwaZulu-Natal.
Pepsi's re-entry into the SA market has not been easy. Job seekers besieged its Germiston plant when it first launched two years ago and it has spent the better part of the two years fending off problems in its operations.
NAB recently instituted legal proceedings against 16 of its distributors, who reportedly owe it millions of rands.