The Coca-Cola Company has bought a 40-percent stake in Nigerian juice and dairy firm Chi Ltd from unlisted European firm TGI Group, both companies said in a statement on Saturday.
Coca-Cola “intends to increase ownership within three years, subject to regulatory approvals”, the statement said.
It gave no valuation for the deal but an industry source said Coca-Cola was paying a “triple-digit-million-dollar” amount for the 40-percent stake.
The deal demonstrates the long-term play multinationals and tech start-ups are making in the country of more than 180m, which has one of the world’s fastest growing populations. Companies such as Coke and Google are betting the trends of youth on the continent may mirror those elsewhere despite the fact that the oil-dependent country is grappling with a deepening economic crisis and a declining currency due to the crude price crash.
Coke is paying about $240m in cash for a 40 per cent stake in Lagos-based CHI, which is owned by TGI Group. Cornelis Vink, owner and chairman of TGI, said CHI would continue to invest in new products and production facilities.
The investment in Nigeria’s leading value-added dairy and juice beverage brands – which include Hollandia and Chivita – further expands The Coca-Cola Company’s West African portfolio of still beverages while establishing Coca-Cola’s presence in Africa’s high-growth value-added dairy category. The agreement will allow both companies to leverage their respective investments and expertise to further drive innovation, optimize efficiency and strengthen route-to-market to accelerate growth and increase consumer availability and choice.
TGI Group’s relationship with The Coca-Cola Company will also help Chi Ltd achieve its ambitious growth plans through access to Coca-Cola’s broad product portfolio and integration into global best practices in production, distribution and brand-building.
“For more than 30 years Chi’s leadership has built a greatly admired business that has quickly grown to become Nigeria’s leading producer and distributor of value-added dairy and juice products and we are delighted to enter the next phase of our growth journey together,” said Nathan Kalumbu, President, Coca-Cola Eurasia and Africa. “Coca-Cola and Chi share the same commitment to Africa, to investing in our operations and to continuous innovation, and our relationship will allow us to continue to provide Nigerian consumers the No. 1 beverage in each of the categories we serve.”
“We strongly believe in this journey we are starting with The Coca-Cola Company. The relationship will allow us to expand our regional footprint and product portfolio. We stay firmly committed to growing our investments in the Nigerian economy, increasing employment and local content while supporting the communities we operate in. Chi will continue to provide its consumers with innovative products in the dairy, juices and snacks categories,” said Cornelis Vink, Chairman of TGI Group and Chi Ltd.
“We are immensely proud of the success that Chi has achieved in building the much-loved Hollandia and Chivita brands. We recognize the unique opportunity that the relationship with The Coca-Cola Company brings to further develop Chi as a strong regional company, building on the tremendous progress achieved to date,” said Rahul Savara, Group Managing Director of TGI Group.
“Coca-Cola has been investing in Nigeria for more than 60 years and today’s announcement represents the latest significant step in our commitment to growing our business and providing trusted beverage brands for Nigerian consumers and communities,” said Kelvin Balogun, President of Coca-Cola Central, East and West Africa. “We are extremely optimistic about Africa’s continued economic and social growth and recognize the importance of ensuring we stay one step ahead of evolving consumer tastes by broadening our portfolio and introducing new products. Today’s announcement positions both Coca-Cola and Chi well for future growth in what is an exciting time in the beverage industry in Africa.”
In 2014, the Coca-Cola system announced an increased investment in Africa to a total of $17 billion from 2010 to 2020. This investment, which is roughly three times the amount invested in the last decade, is funding new manufacturing lines, distribution capabilities and cold drink equipment while creating additional jobs and opportunities on the continent.
Coca-Cola was first served in Johannesburg in 1928 and the Company’s products are now present in every country in Africa with its system employing more than 70,000 people in 145 bottling and canning facilities.
