Coca-Cola is no newcomer to Africa. The firm has had a presence in South Africa for more than 80 years and has since established operations in every country across the continent.
William Egbe, president of Coca-Cola Africa, puts the company’s long engagement in Africa down to attitude. “We’ve always been optimistic about the potential of business in Africa,” he says. And, of course, the brand travels well. Rather than regarding Coca-Cola as the ultimate symbol of the US’s global reach, Mr Egbe says the African consumer base has come to regard it as a local brand.
This brand strategy serves the company well, because the African market, along with other emerging economies, makes up the bulk of Coca-Cola’s revenue: more than 70% of the company’s profits are now generated overseas. A $1.1bn writedown in its second-quarter results this year demonstrated the problems the multinational is having with dwindling sales in the US and rising commodities prices, which the firm hopes will be offset by its international success.
Significant investment in Africa is needed to keep up with the rapid growth of the market. Expansion for Coca-Cola means expanding the range of brands and packages it offers consumers.
“Our strategy is to offer every consumer the broadest range of options in every single market in Africa,” says Mr Egbe. A component of this strategy is a $6m technical centre that Coca-Cola opened in March in Johannesburg where the company has its African headquarters.
“If we are going to establish something state-of-the-art to support analytics for the whole of Africa, it made sense for us to put it in a country with access to skills and technology and with a good regulatory environment,” says Mr Egbe.
The centre is part of a global support framework for analytical testing across Coca-Cola’s operations. The laboratory will safeguard product quality, drive innovation and support long-term growth in the African market.
But the facility was established at a time when South Africa was experiencing crippling power shortages which led many multinationals to question the long-term viability of operating there. All Coca-Cola’s 16 plants in South Africa were affected by the outages for between one and three months.
“Over the year – and on an accelerated basis over the past six months – we have been investing in back-up power generation capacity as well as adjusting our production schedules for power savings,” says Mr Egbe.
The same energy challenges exist across the whole of Africa because of the continent’s rapid economic growth rate. Coca-Cola has adjusted the way it operates as a result.
The right skills mix
In Kenya, where the firm has seen rapid expansion of between 6% and 7% in the past five years, slightly ahead of GDP, the company opened a $10m office complex in August which incorporates solar panels to supplement its energy supply. The office complex houses the company’s east African headquarters, overseeing operations in 27 countries and employing 130 staff.
Finding the right mix of skills is always difficult. “As with most multinationals we never have enough talent to deal with all the needs of our business and the problem is not unique to our business in Africa,” says Mr Egbe.
South Africa’s alleged brain drain is not an issue for Coca-Cola, which relies on its brand equity for recruitment. And by locating its four regional headquarters in Cairo, Johannesburg, Nairobi and Lagos, the company ensures it has access to the biggest skills base available.
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