Coca-Cola Buys Stake in Juice Company Based in Nigeria
Coca-Cola Co agreed to purchase the largest juice maker in Nigeria, accelerating its plans to push into the continent and deepening its diversification in response to the slowing sales of soda.
On Saturday, Coke said it acquired an initial 40% stake in the company called IGI Groups Chi Ltd., which sells snacks and dairy, Coke intends to purchases the remaining 60% before the next three years are over.
The deal by Coke values Chi at a price of $1 billion according to people familiar with the situation.
The investment in the largest economy in Africa represents the largest acquisition overseas in 4 years, when it paid close to $980 million for close to half of Aujan Industries based in Dubai, which is one of the Middle East’s leading juice maker.
Coca-Cola based in Atlanta is increasingly targeting Africa following growth amidst sluggish sales in markets that are much more developed.
Coke said two years ago that it would be investing $17 billion in Africa during the current decade, with partners for bottling, close to three times as much as during the previous decade.
It also has signaled a new effort to expand from just its core soda brands such as Sprite, Fanta and Coke during a time when health officials in a number of areas in the world are singling out the sugary drinks for their contribution of rising diabetes and obesity.
This past week, a commission from the World Health Organization recommended the government consider new special taxes on beverages that are sugar sweetened, following the example in Mexico, in which levies were introduced in 2014 on junk food and sweets.
The commission has estimated that the number of children less than 5 years old that are overweight in Africa has doubled to more than 10.3 million during the 1990s.
Coke owned a share of 45% of the soda market worth $18.12 billion in Africa and the Middle East in 2015, just 3.5% of the fragmented region’s $8.03 billion market of juice.
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