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COCA - CO LA SABCO M O Z A M B I Q U E

Embracing opportunity to become the largest Coca-Cola bottler on the continent www.cocacolasabco.com

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Gaining Momentum through a

STRATEGIC Acquisition Leveraging the global non-alcoholic beverage giant’s unified vision to capture an even bigger market share, East and Southern Africa have presented enormous growth opportunities for Coca-Cola Beverages Africa Writer: Emily Jarvis • Project Manager: Josh Hyland

ith a global beverage portfolio comprised of more than 20, one billion-dollar brands, The Coca-Cola Company is taking all the right steps to capture the enormous growth opportunities available in the non-alcoholic ready-todrink beverage industry worldwide. After the announcement of an agreement to combine its European businesses into a new company called Coca-Cola European Partners Plc in August, 2015 – becoming the world’s largest independent Coca-Cola bottler based on net revenues – the globally prominent bottling Company has been aggressively driving productivity and streamlining the business to accelerate growth across all its countries of operation. In Africa, Coca-Cola Sabco has also benefitted from this Groupwide vision, with preparations well underway to combine its non-alcoholic ready-to-drink

beverages and bottle operations with SABMiller Plc and Gutsche Family Investments (GFI, majority shareholders in Coca-Cola Sabco) in East and Southern Africa. The new bottler, Coca-Cola Beverages Africa, will serve 12 high-growth countries accounting for approximately 40 percent of all Coca-Cola beverage volumes in Africa. “A combined Coca-Cola bottling operation is further evidence of our commitment to Africa, and our firm belief in the tremendous growth prospects that the continent offers,” the Chairman and CEO of The CocaCola Company, Muhtar Kent said in a statement at the time of the announcement. “As one of the top 10 largest Coca-Cola bottling partners worldwide, Coca-Cola Beverages Africa can leverage the scale, resources, capability and efficiency needed to accelerate Coca-Cola growth and contribute to the economic and social prosperity of African communities.”

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Coca-Cola Sabco Mozambique

With an estimated consumer base of 24 million people, Coca-Cola Sabco Mozambique has been increasing its production capabilities by stabilising its distribution network and investing in state-of-the-art equipment. For the past few years, the Mozambican economy has been experiencing a prosperous GDP growth of between seven and eight percent; this is of course having a positive impact on businesses in the country, helping to provide much needed support to local infrastructures. Sabco, the South African-based flagship bottler for CocaCola’s African operations, has reaped the benefits and invested heavily in further developing its operations in Mozambique. Coca-Cola Sabco’s three manufacturing plants are strategically placed throughout Mozambique; with Nampula serving the north, Chimoio

Coca-Cola Sabco Mozambique has increased its production capabilities by stabilising its distribution network

Coca-Cola Sabco’s three manufacturing plants are strategically placed throughout Mozambique; with Nampula serving the north, Chimoio serving central regions and Maputo the South

Mozambique is renowned for its upbeat atmosphere, friendly and welcoming people, overflowing markets and stunning beaches

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serving central regions and Maputo the South. In relation to the changing nature of the beverage market in the country, Coca-Cola has a growing team of sales developers who undergo continuous on-the-job training in the field to push the brand forward. As a globally-recognised brand, Coca-Cola represents quality around the world and the drink is seen as a premium brand on the African continent, particularly in Mozambique where the Coca-Cola Sabco Country Manager, Simon Everest, alluded to the vast possibilities up ahead to grow the brand. In a previous interview with Africa Outlook, he highlighted: “In general, Africa offers significant growth potential for non-alcoholic beverage manufacturing and this is down to a rise in disposable income. The advantage of buying a Coke is that wherever you are in the world, the ingredients and the label is the same. It is a truly global brand, and people like to be seen holding a drink that is recognised the world over.”

Leveraging technology convergence THE DISTRIBUTION SYSTEM of a company often has components supplied by multiple vendors that prove difficult to integrate. This environment regularly leaves the business operation with the dilemma of “too much data, not enough information”. Meaningful operational and strategic information is difficult to compile and therefore not available timeously for effective decisionmaking. In a recent project, Sunstone and a global bottling company identified the need for a real-time, holistic view of the distribution operation and a more scientific approach to planning and route execution. Some of the questions that arose were: - What is the optimal fleet size required? - Do we need to hire in external fleet during peak periods? - How do we sequence deliveries to minimise cost? The solution needed to be appropriate in a dynamic environment with seasonal demand variations, rising fuel and transportrelated costs, an increasingly competitive market, scarce IT and planning skill sets, and increasing customer service demands. To this end, a set of fully integrated route-to-market distribution tools were implemented: - A fleet route optimisation and scheduling application (FLO) - Advanced Telemetry (Sunstone Telematics) - A distribution execution and KPI dashboard (ControlHub) The implementation process began by consulting with business to set up and customize the planning and routing systems taking into account the constraints of the

operational environment. The system aided in reducing travel distances and resource requirements by generating feasible and efficient daily route plans. This was accomplished while maintaining customer service demands. Minimal interruptions were experienced when integrating to their existing ERP system. Advanced telemetry devices were installed in the fleet to provide real time visibility of vehicle activity and driver behaviour scorecards. To actualize the benefit of the route planning and telemetry systems, the data needed to be integrated and presented in real-time to the operational and strategic business units in a relevant and actionable way. The ControlHub was implemented to fulfil this need by providing a live ‘planned vs. actual’ view of distribution operations, intuitively providing numerous KPI’s, such as planned vs. actual distance, route adherence, customer hit rate, and depot departure/arrival times. This gave management a birds-eye view of the delivery progress, with visual maps and graphs, and automated debrief reports. Thus, distribution operation visibility has been increased throughout the organisation with a unified KPI measurement tool, it has encouraged a constructively competitive atmosphere at all levels: depot, region and country. Sunstone provides a holistic fleet analytics tool set which affords businesses the opportunity to measure, monitor, predict and adapt to realise genuine cost savings.

T +27 11 482 4768/+27 71 015 0894 E sales@sunstonels.com www.sunstonelogisticsystems.com

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Africa represents a market with significant growth potential, with a fast-growing population underpinned by rising personal disposable income and increasing per capita consumption. With more than 30 bottling plants and 14,000 employees, Coca-Cola Beverages Africa is to become the largest Coca Cola bottler on the continent; equipped with the scale, complementary capabilities and resources to capture and accelerate top-line growth. As a result, the newly formed African bottler will be able to free up additional capital to further develop its best operating practices and invest in production, sales, distribution and marketing to benefit from growing demand and to drive profitability. In a transaction to be completed in two phases, Coca-Cola Beverages Africa will bring together SABMiller’s South African soft drinks bottling

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businesses, Amalgamated Beverage Industries (ABI) and Appletiser, and its soft drink bottling businesses in eight other African countries, in a process that will see Phase I of the merger through the first six-nine months. “Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa. The opportunity is significant, with favourable demographics and economic development pointing to excellent growth prospects,” said Alan Clark, SABMiller Chief Executive at the time of the announcement in late 2014. “This also signifies a strengthening of our strategic relationship with The Coca-Cola Company,” he added. As part of the transaction, The Coca-Cola Company will also acquire SABMiller’s Appletiser brands on a worldwide basis, and acquire or hold licensed rights to a further 19 non-alcoholic ready-to-drink brands

Coca-Cola Beverages Africa is set to become the largest Coca-Cola bottler on the continent

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Soft drinks are an important element of our growth strategy. This transaction increases our exposure to the total beverage market in Africa

arclays Africa Group Limited has around 150 years of presence in the region as its first branch was established in Egypt in 1864. Barclays has been present in Mozambique since 2002, when Absa acquired an 80% stake in a local bank, Banco Austral. Barclays Bank Mozambique has become a major bank in the country, serving more than 270,000 customers across the country through a network of 43 branches, which include three corporate business centres in Maputo, Beira and Nampula. Barclays Bank Mozambique is a subsidiary of Barclays Africa Group Limited (BAGL) and listed in JSE limited. BAGL is owned by Barclays Bank Plc, with 62.3% of shares and by several other public shareholders, which compose the remaining 37.7%. Barclays was recently capitalised to the extent of US$ 120mln. This has improved balance sheet strength and position in the market to absorb high value transactions. Barclays and Coca Cola in Mozambique Barclays Mozambiqueâ€™s relationship with Coca Cola has begun in 2013. The relationship has continued to grow and further cemented by mutual understanding of the needs and capabilities from both sides alike. Barclays has bilateral financing

arrangements with the Coca cola and also indirect through its Barclays At Work services. This offer focuses on the welfare of the employees, and aims to empower them financially. Overall, the Bank takes its banking offer to the work place of the employees, as they get access to exclusive financial solutions, reduced fees and lower interest rates, when it comes to financing their personal projects. For the employer this is also of great benefit as it minimizes interruptions in the day to day activities in their work environment, and reduces the impact some HR departments feel from constant company loans towards their workers. Barclays has also a great commitment towards Citizenship, as its biggest goal as a brand and as a company is to be able to focus on shared growth, teaching both communities and companies on how to improve their financial management skills and knowledge on actually starting and running a company, as well as managing their assets and liabilities. This financial institution has also proudly worked hand in hand with Coca Cola in activities that impact the local communities in a positive way. Highlights from such partnerships include a â€œCharity Rideâ€? in November

2014, where Barclays Mozambique organized the “Charity Ride” for the disadvantaged and abandoned children, sheltered by the sisters of the São José de Lhanguene church, in Chamanculo. Coca Cola sponsored the event by providing soft drinks for the participants and the children’s’ shelter. In 2015, Luisa Diogo, Mozambique’s former Prime Minister, and current President of the Board at Barclays Mozambique, chaired a forum with Coca Cola’s female staff on “Women empowerment and leadership”. What are Barclays’ goals for this year? Accordingly to Rui Barros, the CEO of Barclays Bank in Mozambique, in his recent interview for The Business Year magazine, “We aspire to be the best bank in Mozambique, not the largest. It is important to know how we measure ourselves, and not just focus on the current market challenges. We want to establish our presence as a truly local, regional, and global bank, as we understand this country and

believe we offer added value services at the same quality or in some cases unique, comparative to our local competitors. We are proud to say that a big percentage of the people who currently work with us have more than 25 years in the Bank, bringing with them the experience from the former BPD and Banco Austral, which Barclays took over in 2002. The fact that we are part of Barclays Africa Group is also a great asset for our customers, as it is one of the largest financial institutions on the continent and it is present in 13 different countries, truly understanding Africa. We can leverage a lot from the knowledge about specific sectors and markets, where we have been operating outside Mozambique. Ultimately we are a global brand with offices all around the world, giving us the required connectivity to work with Global Corporate Customers. We really want to make 2016 the year in which we consolidate this ambition for Corporate and Investment Banking, for Commercial Clients, and for Premier and Prestige Clients.”

Competitive Differentiators: The “Go-to” Banking partner across Africa: Why Barclays: • Strong Regional Commitment • Africa is key to Barclays Global Strategy • Long track record and experience • Fully Local, Global operating Model • Globally coordinated coverage model • Committed Product investment Plan • Upgrading connectivity channels across internet, SWIFT and H2H solutions • Leading innovation drive (through mobile and cash-less banking) • Award winning franchise • One of the most respected banks in Africa • Regularly win Awards recognizing devotion to customer service/Product quality Key value added offer: • Global and Regional coverage team to coordinate all Africa requirements • Facilitation of interactions with Central Banks in all our Markets • Access to leading macro-economic research/Economists • Ability to support geographical expansion into countries across Africa given growing Barclays presence

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in Africa and in Latin America, for an approximate cash consideration of US$260 million. This will be achieved in phases during the transaction and includes the contribution of SABMiller’s Coca-Cola bottling franchise (ABI) and Appletiser bottling business in South Africa, together with its soft drinks businesses in Comoros and Mayotte, as well as its water businesses in Ethiopia, Kenya and Uganda. SABMiller will retain ownership of its non-alcoholic malt beverages in Africa and Latin America and will retain its Coca-Cola franchises in El Salvador and Honduras.

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11.3%

31.7%

57%

On full completion of the proposed merger, shareholdings in Coca-Cola Beverages Africa will be SABMiller: 57%, Gutsche Family Investments 31.7% and The Coca-Cola Company 11.3%.

Moreover, GFI’s bottling interests in Coca-Cola Sabco, including its South African bottler, Coca Cola Fortune, and its bottling operations in six other African countries - namely Ethiopia, Kenya, Mozambique, Namibia, Tanzania and Uganda - are also included in the strategic deal to capitalise on the continent’s growing middle class and rising consumption per capita. Phil Gutsche, Chairman of Gutsche Family Investments (GFI) and future Chairman of Coca-Cola Beverages Africa, further stated: “Our family sees this merger as an important and logical step to enable Coca-Cola Beverages Africa to optimise the opportunities for development in the rapidly-evolving Africa beverage market. We are very excited about the opportunity and are totally committed to ensuring that Coca-Cola Sabco’s distinctive culture is successfully integrated with that of our new partners in order to create an even more successful business in the future.” The merger will also comprise The Coca-Cola Company’s South African soft drinks businesses in the form of Coca-Cola Canners, Valpré and Coca-Cola Shanduka Beverages, with the newly formed Coca-Cola Beverages Africa initially producing and distributing Coca-Cola beverages in nine key countries, namely; South Africa, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros and Mayotte.

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ECOBANK Ecobank at a glance Our dual purpose is to build a world-class pan-African bank and to contribute to the economic development and financial integration of Africa. We operate as ‘One Bank’ across 36 African countries with common branding, standards, processes and technology to provide a consistent and reliable customer experience. We provide wholesale, retail, investment and transactional banking services to governments, financial institutions, multinationals, local companies, SMEs and individuals. We believe we have a responsibility to be socially relevant to the communities that we serve. Ecobank and Coca Cola Partnership Ecobank provides a Value Chain Collections Solution, which is used by distributors/ merchants to make payments directly to their suppliers account on delivery of the goods. The VCCS platform is the most efficient and secure way for payments and collections and can be fully integrated with the companies and management system. In markets where most transactions hare handled in cash, the VCCS has been primarily developed to simplify collection. The traditional ‘POS’ terminal is being replaced with an EMV/PCI certified PinPad and an off the shelf application for smartphones. Benefits: • Merchants can make payment directly to supplier/corporate account on delivery. • Payment is authorized and transferred to supplier/corporate account immediately – no delayed settlement. • Cash handling and the associated issues are removed from the process. • Payments to supplier/corporate can be allocated to merchant “account”. • Company can automate reconciliation as an electronic confirmation (in agreed format) can be sent as soon as each transaction is processed • Easy and convenient to use. • Supports financial transactions with Ecobank debit card.

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During Phase II of the merger, which is expected to be completed 12-18 months after Phase I, SABMiller intends to include its Swaziland soft drinks business and those of its listed subsidiaries in Botswana and Zambia in the merger; subject to agreement in due course with those subsidiaries and the requisite regulatory and shareholder approvals.

The Coca-Cola Africa Foundation

With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent, Coca-Cola Beverages Africa will be strongly positioned to offer consumers greater choice, broader availability and better value. Meanwhile, the new bottler will continue the shareholdersâ€™ strong commitment to the economic and social development of the communities it serves, which includes providing access to clean water,

STANDARD BANK

With a shared vision, extensive experience of operating in African markets, and longterm commitment to the continent, CocaCola Beverages Africa will be strongly positioned to offer consumers greater choice

he Corporate and Investment Banking division of Standard Bank provides a full range of services to support the banking, finance, trading and advisory needs of corporate clients and institutions. We have evolved continuously in order to provide clients with seamless banking solutions across a range of corporate and investment banking products and services. By maintaining a diversified earnings stream across key business areas, we are able to meet both the needs of our clients and maintain a steady performance as the top-rated bank in South Africa and further afield. We pride ourselves on being the leading bank in our chosen markets, driven by a commitment to outstanding customer service and state-of-the-art systems and technology. Our corporate structure ensures that we are able to provide customised products and services to both established customers as well as newer, entrepreneurial companies. By focusing on personalised solutions and ongoing financial product development, we are committed to delivering solutions that support our clientsâ€™ success where it matters most. We are deeply committed to Mozambique and to the transformation of our country and its economy. We believe in supporting social and cultural development by sponsoring and actively participating in projects that uplift our nation. As part of the Standard Bank Group we have a vast reach with a strong presence throughout Africa, around the world.

www.standardbank.com/cib Coca-Cola Beverages Africa will offer consumers greater choice, broader availability and better value

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supporting women’s economic empowerment and promoting wellbeing. One such set of activities which received extended investment last year included the Replenish Africa Initiative (RAIN). Announced at the seventh World Water Forum by Ahmet Bozer, Executive Vice President and President of Coca-Cola International, The Coca-Cola Africa Foundation (TCCAF), pledged an additional US$35 million to support Pan-African safe water access and sanitation programmes for four million more people by 2020. The new funding builds on an original RAIN commitment of US$30 million to bring safe water access to two million people across the African continent by the end of 2015 made at the fifth World Water Forum in Istanbul in 2009. Taking the total funding to US$75 million will help to improve the lives of more than a total of six million Africans through access to safe water,

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Through the RAIN programme expansion, TCCAF and its partners will work to improve safe water access for six million Africans...

sanitation and hygiene (WASH) by 2020. Today, with more than 140 partners, RAIN is a public-private partnership led by TCCAF whose programmes currently empower 2,000 communities through WASH programmes in 37 African countries. The expansion builds on the strong progress RAIN has made toward its goal of improving safe water access for two million people across Africa; a goal the programme is on track to achieve by the end of 2015. “Through the RAIN programme expansion, TCCAF and its partners will work to improve safe water access for six million Africans; economically empower up to 250,000 women and youth; promote health and hygiene in thousands of communities, schools, and health centres; and return up to 18.5 billion litres of water to nature and communities,” commented the Company. RAIN and its partners announced

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programmes that will protect watersheds, provide sustainable safe water access and create new opportunities for women and youth entrepreneurs in Africa by the end of 2020. Dr Susan Mboya, President of The Coca-Cola Africa Foundation added: “Our commitment to the wellbeing of African communities is unwavering. Through the efforts of RAIN, we are reinforcing the incredible progress made to date with our many partners and are pledging to do even more. As we begin work in this era of new commitments, we must continue the progress made from the Millennium Development Goals to set these economies up for success. “Through programmes and partnerships focused on safe water access, women’s economic empowerment, job creation and community wellbeing we are investing in the future progress and prosperity of the African people and economy.”

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T: +258 21 400 189