SABMiller wants more Coke
Brewer SABMiller PLC, which distributes Coca-Cola Co drinks in Africa, would like to have even more business from the world’s largest soft drink maker, a senior executive said on Thursday.
“For us the major opportunity is actually to try to expand our relationship with Coke. We’d like to have more bottlers in Africa that for us make sense,” said Mark Bowman, managing director of SABMiller Africa.
Growth prospects for beer and soft drinks are similar, he said.
“Both of them track very closely to economic growth, so if we’re getting 5 percent growth in Coke, we’re going to get 4 or 5 or 6 percent (growth) in beer, so they tend to track quite closely,” Bowman said.
Many analysts are closely watching Coke’s strategy regarding its global bottling system in light of PepsiCo Inc’s imminent purchase of Pepsi Bottling Group and PepsiAmericas Inc.
But Bowman said he did not expect Coke to try and acquire any bottlers in Africa.
“I think in Africa it will be quite difficult for Coke to do that,” Bowman said. “You have small markets, so for them to acquire their bottlers, I think the economies of it are not great. The markets are too small.”
A spokesman for Coca-Cola declined to comment on its intentions for bottler acquisitions in Africa.
Bowman said it made more sense for Coke to make a move in Europe, where the markets are big enough to support distributors that only sell soft drinks.
But he doesn’t expect any big changes in Africa, where the markets remain small enough that his company gains efficiency and scale by distributing everything from beer, soft drinks, water and even spirits in some markets.
“I don’t see any major change,” Bowman said.
While some African economies are suffering “quite significantly,” Bowman said his overall beer business is still growing. As a result, he expects the company to raise prices on beer this year, in line with the typical practice of price increases that track local currency inflation.
Bowman said inflation generally ranges from 6 percent to 15 percent in most of his markets and that the company normally raises prices in the 4 percent to 10 percent range as a result.
Earlier on Thursday, SABMiller, which brews Grolsch, Miller Lite, Peroni Nastro Azzurro and Pilsner Urquell, announced a $2.23 billion deal to merge Tsogo Sun, its South African hotels and gaming unit, with Gold Reef Resorts Ltd to create one of the biggest casino groups in Africa, the Middle East and Europe.
Source: Reuters