Coca-Cola is present in every African country, has more than 100 factories, and some 50,000 employees and bottlers. Bruno Pietracci, Coca-Cola’s president for Africa, brings up these figures to remind us of the US giant’s footprint on the continent ($38.7bn in turnover in 2021). Although Coca-Cola only generates a very modest share of its overall business in Africa (estimated at 5%, as Coca-Cola does not detail its African turnover), it remains the dominant player in soft drink sales in many countries.
Its market share amounts to 50% in the sub-Saharan zone (on sales in large-scale distribution), with even stronger positions in the soft drinks segment – 55% in Nigeria, 56% in South Africa, 82% in Kenya -, according to data from Euromonitor International. However, the Atlanta-based multinational is facing increasing competition from local brands. This competition is set to increase after the partnership between the US company and one of its historical bottlers, the French group Castel, which intends to take advantage of the situation to push its own brands, came to an end.
Added to this are the difficulties caused by the Covid-19 pandemic and the war in Ukraine: higher raw material costs, logistical tensions and erosion of purchasing power. Bruno Pietracci, a former McKinsey employee who joined Coca-Cola 14 years ago, personally believes that this environment encourages people to be ever more agile and inventive. Based on the continent (in Johannesburg) since 2018, this Brazilian football fanatic was for a time president of Africa and the Middle East. He then, following the group’s reorganisation, focused on African operations from the beginning of 2021. His mission is to accelerate the deployment of the strategy to make Coca-Cola a multi-drink giant.
Jeune Afrique: Covid-19, the war in Ukraine, rising commodity prices, increased competition… The economic environment is difficult on the continent. How are you coping?
Bruno Pietracci: For the past two and a half years, there has been no shortage of challenges in our industry, whether during the Covid-19 pandemic, which has constrained the operations of many of our distributors or in the current context of pressure on production costs and supply chains. Fortunately, Africa is in a good position to deal with this environment because, prior to the last two years, the continent has experienced episodes of disruption and volatility. So our management in Africa is used to dealing with these kinds of external shocks.
Our response is to continue to put the consumer at the centre of everything, with innovation playing a key role. An example of this is our 2019 acquisition of the CHI dairy group in Nigeria, which broadened our offering and became ever more relevant to our customers. In addition, the Covid-19 pandemic has led our company to reorganise its international activities and simplify its structure, reducing the number of business units from 17 to 9, including one dedicated to the continent. This unit, which I chair, is in direct contact with the head office in Atlanta, which allows us to have a clear view of the opportunities and challenges in the region while improving efficiency and speed.
The other major change is the end of the decades-long partnership between Coca-Cola and Castel, as the French group has not been producing your drinks in more than 10 countries, particularly West Africa, since the beginning of July. Do you have any regrets about ending this partnership?
This is the end of a long partnership, and we are grateful for the road we have travelled together. But it is also an evolution that will ensure our future on the continent for the next century. The new partnerships align with our long-term strategy of listening to our consumers 24/7. Through them, we will gain flexibility, and the ability to invest and innovate. We will learn a lot from this process and we are giving ourselves the means to carry it out through a $150m investment by Coca-Cola and its bottling partners to increase our production capacity and continue to promote our drinks.
In some countries, such as Cameroon and Gabon, the new bottlers are unfamiliar with soda. In others, including Côte d’Ivoire, Senegal and Mali, the production lines are not immediately operational. How do you avoid stock-outs?
We are working with local bottlers to accelerate our growth, both when it comes to innovation and sustainable development issues. We have always been careful to select strategic partners whose profile aligns with long-term opportunities; an industrially and financially strong bottler helps ensure success in any market and this is our goal with the move. One of the selection criteria is expertise in the beverage sector, which all our bottlers have. As an example, I was in Angola recently and the partnership with our new bottler, Refriango, is very promising.
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There are many places where we can continue to grow and improve. Our motto is to focus on the things we do well, to put the consumer and the customer at the centre of our strategy and not to waste time on things that are beyond our control. Having said that, we will obviously have some difficulties implementing a change of this magnitude. But we are doing everything to limit the impact. In the medium and long term, once this transition period is over, we will be stronger than in the past.
Castel, which produces a range of sodas that compete with yours, intends to use its spare capacity to bring more ‘home-made’ drinks to the market. In other words, its break with the French group will increase already strong competition…
The local competition is indeed getting stronger. Pioneer Foods, which was already a serious competitor, gained momentum when it was taken over by Pepsi. Clover, another major South African player, wants to strengthen its position through its merger with the Milco conglomerate. We welcome this movement because it helps improve the services we offer to consumers and because it pushes the different players to reinvent themselves. We are watching these developments without being distracted or deviating from our proven strategy.
This consists of consolidating your status as a multi-drinks group by emphasising diversification into juices, dairy products, water, coffee… How far have you got on the continent?
We are well on our way. In most countries, the system formed by Coca-Cola and its bottlers already has a strong position in two segments, fruit juices and water, and is also seeking to further expand its portfolio. In South Africa, we are now present in the alcoholic and flavoured sparkling water (hard seltzer) segment through the Topo Chico brand. In Nigeria, local producer CHI’s acquisition has enabled us to enter the dairy and yoghurt drinks market. At the same time, we are investing in producing glass containers and recycling, while contributing to the promotion of African talent in terms of human resources. To sum up our ambitions, I’ll use a football analogy: whatever the context, however tough the competition, we want to win the Champions League every year.
Isn’t the fact that you are a multinational company a handicap in fragmented, diversified African markets that have specific national requirements?
Having a global strategy – being a multi-drink group – does not mean that you can’t apply this strategy on a continental, regional and national level. Even if the objective is the same everywhere in the world, the way to achieve it may be different from one region to another or even from one country to another, bearing in mind that the direct link with Atlanta facilitates the local application of our global strategy. The double requirement is to maintain quality and an affordable price.