Coke cooks up R100bn for Africa
COCA-COLA this week launched a new Africa strategy which it estimates will add R100-billion to the continent's economy by the year 2003.
The Africa strategy will require a multibillion rand investment programme, now being finalised by the Atlanta-based multinational. SA will receive a significant proportion of this capital outlay.
The strategy is in addition to the R1.25-billion investment in infrastructure announced last year to boost Coke's presence in SA townships.
The announcement of Coke's Africa strategy coincides with the appointment of Don Knauss to head the 10-country southern African operation, run out of Johannesburg. Knauss takes over from Charlie Frenette, who has been promoted to chief marketing officer worldwide at Coke's Atlanta head office.
Coke's Africa strategy has been formulated over the past two years after the group conducted an economic impact study, which is ongoing.
"Our future capital investment will be extrapolated from the study, which shows that Coca-Cola, its bottlers and distributors add R13.5-billion to the SA economy at present," says S'bu Mngadi, communications director for Coke SA.
"If we are to sustain and grow our contribution we need to invest substantial amounts in our operations," Mngadi says. The investment impact in SA this year is forecast to amount to R561-million, growing with inflation of 6% a year for the following five years.
For sub-Saharan African the 1998 the figure is R1.4-billion, rising gradually with inflation to reach R1.878-billion by 2003.
Mngadi stresses that the current estimate for sub-Saharan Africa is based on SA infrastructure levels. However, since most other African countries are still underdeveloped, they would require far greater capital outlays than is expected for SA.
"We believe we can double our business here over five years. Our investment - in capacity, people and marketing - follows that belief," says Knauss, who joins Coke SA after two years as head of Coke subsidiary Minute Maid.
Knauss's ambitious target requires sales growth of 15% a year until 2003.
Over the past two years Coke has achieved significant volume growth. SA sales were up by 11.2% last year, after a modest growth of 3% in 1996. For the southern African region as a whole, growth in 1997 was 11.3% and 5% in 1996.
Sales volume in 1998 is estimated at 400-million cases, with SA accounting for 300-million. This ranks SA as the 10th largest country in the Coke hierarchy.
In the last two years the company invested R1.25-billion in infrastructure in SA and spent almost $150-million in three countries in southern Africa - Zimbabwe ($60-million), Mozambique ($50-million) and Angola ($35-million).
In 1997 sub-Saharan Africa accounted for 5% (745-million cases) of the group's global sales. Top of page