Selling Soft Drinks in Africa-Coke Builds a Distribution System
The U.S. Cola market has long been mature and has suffered declining revenue over the past five years. That has motivated companies like Coca-Cola and PepsiCo to diversify their product lines by adding bottled water, fruit juices and the like, and to seek future growth in undeveloped markets—such as many of the countries in Africa. Coke has been in Africa since 1929, is currently selling in every Africa country, and is the continent’s largest employer with 65,000 employer and 160 plants. But the firm is gearing up for what it predicts will be a major and sustained increase in future sales volume. In 2000 about 59 million Africa households earned $5,000 or more, which is the where families begin to spend half their income on nonfood items. Forecasts suggest that number could grow to 106 million household by 2014. Important too, Coke’s management believes that, in spite of recent turmoil in the Muslim countries of North Africa and in Ivory Coast and Zimbabwe, Africa governments will become more stable, democratic, and focused on economic development. Consequently, the company plans to invest $12 billion on the continent over the next 10 years, more than twice as much as in the previous decade.