Coca-Cola Nigeria has unveiled plans to invest $600 million by 2020 to boost sales, in line with a global strategy to extend the product range beyond its soft drinks.
The soda giant plans to expand its offering of drinks to include flavored and condensed milk, iced tea and bottled water to meet demand in Africa’s most populous country.
Its President, West Africa operation, Peter Njonjo spoke in an interview in Lagos, said: “Our objective is to provide whatever beverages you need across your life stages.”
The money is part of a pledge by Coca-Cola to invest $17 billion in Africa by 2020.
Its Global Chief Executive Officer James Quincey has said the company needs to grow beyond its biggest brand and has called for the soda giant to become a “total beverage company,” being less reliant on carbonated soft drinks.
In 2017, Coca-Cola bought a 40 per cent stake in Nigerian juice and dairy company Chi Ltd. for $240 million and said at the time it intended to take total control within three years.
Coca-Cola has felt the pinch of an economic slump in Nigeria caused by a decline in output and prices of oil, the nation’s main foreign-exchange earner, and dollar shortages. The economy expanded 0.6 per cent in the three months through June, ending five straight quarters of contractions that saw gross domestic product shrink 1.6 per cent in 2016, the first time since 1991.
High inflation increased production costs, while the price of imported goods rose due to the dollar scarcity, just as consumers had less money to spend, Njonjo, 41, said.
The company, which has 3,600 direct employees, 11 bottling plants and 30 distribution depots across Nigeria, isn’t listed in the West African nation and Njonjo declined to share details on production capacity or earnings.
After peaking at 18.7 per cent in January, the inflation rate fell to 16 per cent in August, while food prices have continued to surge. This is “a big issue,” for Coca-Cola, present in Nigeria since 1951, Njonjo said. “As disposable incomes start getting under pressure, expenditure in products like ours start becoming inaccessible to most consumers,” he said.
In response to the challenges in Nigeria, Coca-Cola increased prices, introduced new product-sizes and sought more inputs locally. To reduce its foreign-exchange exposure, the company plans to raise to 75 per cent the share of raw materials produced in Nigeria by 2020, from 70 percent currently, Njonjo said.