Coke is it!
Coca-Cola Nigeria Limited and its authorised bottler, Nigeria Bottling Company (NBC), have announced plans to expand their investments in…
Coca-Cola Nigeria Limited and its authorised bottler, Nigeria Bottling Company (NBC), have announced plans to expand their investments in Nigeria. Over the next five years, with a predictable and enabling environment in place, the company plans to accelerate its investments in Nigeria to reach $1 billion. Over the last ten years, Coca-Cola Hellenic Bottling Company, known locally as Nigerian Bottling Company, has invested $1.5 billion in Nigeria. The investment is expected to support various value chain areas, including suppliers, distributors, retailers and recyclers. The company announced the investments at the State House in Nigeria, where President Bola Tinubu hosted the Coca-Cola delegation.
Coca-Cola is one of the largest operators in Nigeria’s beverage sector, and this move will solidify its position in the market. It would not be surprising to hear news of a partial acquisition from Coca-Cola in the coming months. Nigeria may not have everything working in its favour, but its large population often proves useful. While businesses targeting the middle-income and lower-upper-income segments of the population have suffered in recent years, those dealing in the retail segment across all income categories have fared slightly better. The proposed Coca-Cola investment is a foreign direct one. It is usually seen as a long-term investment, as it helps generate employment opportunities, increases economic activity, and boosts the country’s GDP growth rate of around three percent. This billion-dollar investment may also help the government achieve its goal of becoming a trillion-dollar economy by 2030. According to the firm’s statement, the investment is expected to support various value chain areas, including suppliers, distributors, retailers, and recyclers. Three of these areas are in the trade sector, which recorded a growth rate of 0.70 percent in Q2, the lowest since Q1 2021. This investment pledge adds to Nigeria’s total investment pledges of about $30 billion USD under President Bola Tinubu. Furthermore, Coca-Cola’s investment comes at a period when at least seven multinationals have exited the country in the past year, so this might boost the confidence of other foreign investors in different sectors. However, it is worth mentioning that this investment was initially announced in 2021 during the last administration, but nothing materialised. Several factors may have contributed to this, including the impending change in government at the time and how it could affect such a long-term investment. The company may have also decided to step back to observe how its businesses would perform, particularly given the 2019 acquisition of Chi Limited in Nigeria and its wide range of juice and dairy products. Moreover, the campaign for introducing a sugar tax by health-focused civil society organisations could have played a role. Nevertheless, considering the recent fines against the company, we believe this is a PR move aimed at securing a win for the company and the Tinubu administration, which desperately seeks validation and endorsement of its economic policies. The announcement also includes an important caveat about a predictable and enabling environment. Given the foreign exchange volatility, this caveat offers a fallback if the investment does not materialise.