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Cape Town – Coca-Cola Beverages Africa (CCBA) opened its doors on Monday, two months after the Competition Commission approved a merger between SABMiller [JSE:SAB], the Coca-Cola Company and Gutsche Family Investments.
Africa's largest Coca-Cola bottler was formed through the combination of African non-alcoholic ready-to-drink bottling interests of the above companies, with the transaction concluded on 2 July.
It will produce and distribute about 40% of all Coca-Cola beverage volumes in Africa and will manufacture and sell 40 still and sparkling brands from more than 30 African bottling plants.
"The creation of CCBA will provide a stronger, more successful Coca-Cola system in Africa and create greater shared value for the business and the communities we serve across the value-chain, including local suppliers and retailers,” said CCBA CEO Doug Jackson in a statement on Monday.
CCBA, headquartered in South Africa, will serve 14 high growth countries. In the first phase of the merger, which is now complete, the countries are South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte, Comoros and Nigeria. Botswana, Swaziland and Zambia are expected to join CCBA in the next 12 to 18 months.
The Competition Commission approved the merger on 10 May after an agreement was reached on May 4 between the companies and Economic Development Minister Ebrahim Patel, the Food Allied Workers Union and the National Union of Food Beverage Wine Spirits and Allied Workers.
“The commitments address concerns regarding employment, access to retail cooler space for smaller competitors, localisation of production and inputs used in the production of Coca-Cola products and Appletiser brands, economic empowerment and the location of the headquarters,” government said in a statement at the time.
“The merger parties undertook to ensure that the merged entity maintains its total permanent employment at current levels for a period of three years from the date of approval of the deal; that employees in the bargaining unit will not be subjected to involuntary retrenchment as a result of the merger and that retrenchments of senior management staff be limited.”
During the SABMiller/AB InBev merger Competition Tribunal hearing in June, the commission alerted the tribunal to this bottling merger, which is the tenth largest Coca-Cola bottler worldwide.
The commission’s Anisa Kessery said they had concerns relating to the AmBev and AB InBev’s interests in Pepsi and Coca-Cola and as such had imposed conditions for the megabrew merger.
“… we imposed conditions to ensure that there’s no exchange of competitively sensitive information and that the parties’ employees who are sitting on bottling operations of both firms will basically not be involved in each other’s bottling operation, and also there’s an undertaking there to implement internal training to ensure that the employees are aware and understand the provisions of the Competition Act,” she said.
As part of the conditions for the merger, CCBA agreed to invest R800m to support enterprise development for two groups of entrepreneurs.
Firstly, a R400m fund was created for enterprise development in the agriculture value chain, particularly to support and train historically disadvantaged developing farmers and small suppliers of inputs to Appletiser and CCBSA products on a competitive and sustainable basis.
Secondly, R400m was allocated for the incremental investment 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.
