Ethiopia: Standard Bank Backs Coca-Cola's Expansion

The company recently launched a sugar-free, non-alcoholic malt drink.

The Coca-Cola Company, which recently invested 16 million Br to add a new production line that makes sugar-free, non-alcoholic malt drinks, secured 50 million dollars in financing from South Africa's Standard Bank.

Standard Bank has arranged the financing facilities in support of the expansion strategy of the company in Ethiopia over the next five years. The Coca-Cola Beverages Africa (CCBA), a subsidiary of the Coca-Cola Company, has planned a 300-million-dollar expansion project in the country.

The new malt drink Novida Pineapple, which launched on February 6, 2020, at a ceremony held at Marriott Hotel, is part of the expansion project of the company. With the 300 million dollars, the company plans to build a plant in Hawassa city on five hectares of land and construct a factory in Sebeta among others.

Located inside the premises of the company in Lideta, the new production line has started bottling the new drink in a green bottle.

Based on the demand for the product, the drink could be bottled at the company's Bahir Dar plant, according to Nigus Alemu, a legal counsel and director of public affairs and communications at Coca-Cola Beverages Africa.

The Coca-Cola Company has three operational plants in Addis Abeba, Bahir Dar and Dire Dawa. First established here six decades ago, the company has a production capacity of bottling over 70,000 bottles of soft drinks a day. It was established by Ethiopian Bottling Share Company, which later opened a second branch in Dire Dawa in 1965. Since its establishment, the company has created 2,100 direct and over 50,000 indirect jobs.

CCBA, which has over 16,000 employees in Africa with almost 40 bottling plants in 13 countries, established a representative office in Addis Abeba in 2015. East Africa Bottling S.C. has already invested 70 million dollars in the new plant.

The Coca-Cola Company holds a majority stake in CCBA, which is the largest bottler of Coca-Cola beverages in Africa - serving 13 countries on the continent - and the eighth largest in the world by revenue. CCBA began its operations as of July 2016 after a merger of the Coca-Cola Company, the then SABMiller and Gutsche Family Investments. The Coca-Cola Company owns a 66.5pc share of CCBA, while Gutsche Family holds the remaining.

"The CCBA deal holds significance as new foreign direct investment will be realised for Ethiopia, set to positively influence the country's economic trajectory," says Taitu Wondwosen, head of Ethiopia for Standard Bank Group, which had a 20-billion-dollar market capitalisation as of December 31, 2018.

Standard Bank Group, which operates in 20 African countries and is headquartered in Johannesburg, South Africa, has a 156-year history. It has over 53,000 employees, 1,200 branches and over 9,000 Automated Teller Machine (ATMs). Its earnings for 2018 were 2.1 billion dollars, while total assets stood at 148 billion dollars.

The new planned bottling plant in Sebeta will rest on 14.3ha of land, requires an investment outlay of 70 million dollars and is expected to create 500 new jobs.

"CCBA's expansion in the country ... is a vital part of our overall investment ambitions in Ethiopia," says Daryl Wilson, managing director of CCBA Ethiopia.

Novida Pineapple can be applied with other beverages as a cocktail, according to Tigist Getu, brand manager of the Coca-Cola Company in Ethiopia, who adds that the product targets supermarkets, hotels, bars, restaurants and quick-service eateries.

Mesfin Teshager (PhD), a lecturer at Bahir Dar University's College of Business & Economics, recommends the company aggressively promote the product.

"At this time all consumers are asking that new products have a distinctiveness from other goods," said Mesfin.

Mesfin also recommends that the company place a price tag on the product to sustain a large demand.

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