Exclusive Coca-Cola:

Keeps Refreshing

By Aklile Tsige /ABN/

Did you know? The first servings of Coca Cola were sold for 5 cents per glass. During the first year, sales averaged a modest nine servings per day in Atlanta. Every day, people all over the world drink 1.9 billion servings of Coca-Cola between them. It is, by some measures, the most widely distributed product in history.

The Coca-Cola Company (NYSE: KO) is a total beverage company, offering over 500 brands in more than 200 countries and territories. In addition to the company’s Coca-Cola brand, its portfolio includes AdeS, Ayataka, Costa, Dasani, Del Valle, Fanta, Georgia, Gold Peak, Honest, innocent, Minute Maid, PowerAde, Simply, smart water, Sprite, vitamin water and ZICO.

The brand’s humble, up-by-the-bootstraps origin story, its history of innovation in both marketing and technology, and its close association with American men in uniform have made Coca-Cola virtually synonymous with America’s image overseas. Coca-Cola has been operational in Ethiopia since 1959 opening three factories in three parts of the country: Addis Ababa, Dire Dawa and Bahirdar. ABN Editor-in-Chief Aklile Tsige sat down with Daryl Wilson, Managing Director Coca- Cola Beverages Africa (CCBA) Ethiopia to ask some questions on the company’s overall operation while compiling reports from other sources, including Company’s Communications Department.

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Photo by Sol Image

Daryl Wilson

Managing Director Coca- Cola Beverages Africa (CCBA) Ethiopia

Throw back

History has it that Coca-Cola began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John S. Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains. He created a flavored syrup, took it to his neighborhood pharmacy, where it was mixed with carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca Cola” as well as designing the trademarked, distinct script, still used today.

Prior to his death in 1888, just two years after creating what was to become the world’s #1-selling sparkling beverage, Dr. Pemberton sold portions of his business to various parties, with the majority of the interest sold to Atlanta businessman, As a G. Candler. Under Mr. Candler’s leadership, distribution of Coca Cola expanded to soda fountains beyond Atlanta. In 1894, impressed by the growing demand for Coca Cola and the desire to make the beverage portable, Joseph Biedenharn installed bottling machinery in the rear of his Mississippi soda fountain, becoming the first to put Coca Cola in bottles.

Photo by Sol Image

Among the biggest challenges for early bottlers, were imitations of the beverage by competitors coupled with a lack of packaging consistency among the 1,000 bottling plants at the time. The bottlers agreed that a distinctive beverage needed a standard and distinctive bottle, and in 1916, the bottlers approved the unique contour bottle. The new Coca Cola bottle was so distinctive it could be recognized in the dark and it effectively set the brand apart from competition.

The contoured Coca Cola bottle was trademarked in 1977. Over the years, the Coca Cola bottle has been inspiration for artists across the globe -a sampling of which can be viewed at World of Coca Cola in Atlanta.

The first marketing efforts in Coca Cola history were executed through coupons promoting free samples of the beverage. Considered an innovative tactic back in 1887, couponing was followed by newspaper advertising and the distribution of promotional items bearing the Coca Cola script to participating pharmacies.

Fast forward to the 1970s when Coca Cola’s advertising started to reflect a brand connected with fun, friends and good times. Many fondly remember the 1971 Hilltop Singers performing “I’d Like to Buy the World a Coke”, or the 1979 “Have a Coke and a Smile” commercial featuring a young fan giving Pittsburgh Steeler, “Mean Joe Greene”, a refreshing bottle of Coca Cola.

The 1980s featured such memorable slogans as “Coke is It!”, “Catch the Wave” and “Can’t Beat the Feeling”. In 1993, Coca Cola experimented with computer animation, and the popular “Always Coca Cola” campaign was launched in a series of ads featuring animated polar bears. Each animated ad in the “Always Coca

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Cola” series took 12 weeks to produce from beginning to end.

The bears were, and still are, a huge hit with consumers because of their embodiment of characteristics like innocence, mischief and fun. A favorite feature at World of Coca Cola is the ability to have your photo taken with the beloved 7′ tall Coca Cola Polar Bear.

Coca-Cola Beverages Africa (CCBA) is the 8th largest Coca-Cola bottling partner worldwide by revenue and the biggest on the African continent, accounting for about 40% of all CocaCola volumes sold in Africa. The CocaCola Company has been investing in Africa for 90 years, since 1928, and is present in every African country.

CCBA - headquartered in Port Elizabeth, South Africa - boasts a diverse panAfrican footprint with more than 37 bottling plants servicing over 600 000 outlets that serve a combined population of over 300 million people across the continent.

Coca-Cola Beverages Africa serves 13 countries in subSaharan Africa: South Africa, Ghana, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros, Mayotte, Eswatini, Botswana and Zambia. The company directly employs more than 16 000 people and enjoys the number one market position in most of these territories.

CCBA is pursuing an ambitious growth strategy that is aligned with The Coca-Cola Company's 2020 Vision and which is supported through investment in manufacturing, sales, distribution and marketing. It is a world class, customer-orientated, socially and environmentally conscious fastmoving consumer goods (FMCG) company.

Sales and distribution excellence are the company's core strengths and employees conduct themselves with the utmost integrity for shared value and greater good. The company's vision is to refresh Africa every day and make the content a better place for all, an inspiration that is driven by engaged, motivated and capable employees.

Coca-Cola in Ethiopia

According to the vision statement of the company, CocaCola Beverages Africa (CCBA) aspires to refresh Africa every day and to make the continent a better place for all. Its contribution as the Coca-Cola system in Ethiopia is very massive and significant.

Coca-Cola Beverages Africa (CCBA) in Ethiopia operates the East Africa Bottling Share Company (EABSC) as well as Ambo Mineral Water Share Company (AMWSC).

EABSC has three plants in Addis Ababa, Dire Dawa and Bahir Dar and AMWSC has one plant in Ambo.

Apart from refreshing Ethiopians with quality beverages for the past 60 years in Ethiopia, EABSC aims to create greater shared opportunity for the business and the communities it serves across the value-chain.

The company’s sustainability narrative states that shared opportunity is more than just money, it’s about a better future for people and their communities, adding that the company holds the belief that doing business the right way by following company’s values and working toward solutions benefit the company.

“At CCBA, we are confident that we will reach this goal well in advance of the global target date and we are also able to support the creation of small business and employment opportunities as we increase our effort and investment.”

Daryl Wilson, Managing Director Coca-Cola Beverages Africa (CCBA) Ethiopia stated that Coca-Cola entered Ethiopia six decades ago and has since created about 2 100 direct and more than 50 000 indirect jobs in the country and Ethiopia boasts the second-largest population on the African continent. While consumption of soft drinks is low

compared to major markets, demand is expected to grow as the middle class rises and consumers are empowered with spend.

The Managing Director indicated that since 2010, CCBA has invested an estimated $150 million in Ethiopia. The business contributes an estimated $217 million to the economy annually in salaries, taxes, manufacturing, distribution and local shareholder profits.

Daryl Wilson further noted that in July 2020, an announcement was made of a $300 million investment over the next five years to expand CCBA’s operations in Ethiopia. An immediate investment was planned for 2020 of more than $70 million and the balance of the investment will be to build a fourth plant in Sebeta, 25km outside Addis Ababa with a fifth plant planned at Hawassa. This includes specifically making investments in response to and in support of changing consumer preferences such as the launch of Zero variants in Coke, Sprite and Fanta as well as Fanta Red Apple with reduced sugar with plans to introduce additional categories of beverages into the future.

Furthermore, through its plastic waste collection and recycling initiatives, CCBA enables a green circular economy by training unemployed women and youth to establish collection enterprises which in turn grows plastic collection and recycling infrastructure and supports the development of a circular value chain. This is a key component of the objective of The CocaCola Company and its bottlers to lead industry with a bold, ambitious global goal: to help collect and recycle a bottle or can for everyone it sells by 2030.

“At CCBA, we are confident that we will reach this goal well in advance of the global target date and we are also able to support the creation of small business and employment opportunities as we increase our effort and investment. We want to

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At CCBA, we are confident that we will reach this goal well in advance of the global target date and we are also able to support the creation of small business and employment opportunities as we increase our effort and investment.

support local Governments’ waste management objectives by stimulating a green economy where we operate.”

Said Wilson.

Also, as the first ingredient in most of its beverages, safe, clean water is critical to the long-term success of the CCBA business. Furthermore, a number of the countries in CCBA are water-stressed and in this context, the company takes its water stewardship responsibilities very seriously. Together with The Coca-Cola Company, CCBA are leaders in using water responsibly in operations and giving it back to communities.

The company continues to manage water resources through country projects that reduce water use in its operations, protect local water resources and provide safe, clean drinking water to communities in need. As part of the world's leading beverage company, CCBA has a responsibility to use water as respectfully and efficiently as possible. The company is continuously looking for new ways to reduce water use in its operations, while treating its own wastewater to the highest standards.

Coca-Cola, as a socially responsible company, has also been empowering women from communities across its markets through the 5by20 program. This global initiative

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aims to help five million women entrepreneurs within the Coca-Cola value chain overcome barriers as they grow or establish businesses by 2020. 5by20 programs specifically offer women business owners access to business opportunities, educational courses, financial products and mentors. Since 2010, 159 848 women have been enabled in this way across CCBA as the company's contribution to the global goal.

“We are very happy that we have been in Ethiopia for the last sixty years, and we strongly feel that we spend our money in the right country. I think this is just our demonstration of efforts in contributing share to the ongoing reform in the country.”

According the Managing Director, CCBA, together with The Coca-Cola Company, is a leader in using water responsibly in our operations and increasing reliable community access to good, safe water. It continues to manage water resources through initiatives that reduce water usage in our operations, by protecting local water resources and providing safe, clean drinking water to communities in need.

Through Coca-Cola’s Replenish Africa Initiative (RAIN), in partnership with The Coca-Cola Foundation We are very happy that we have been in Ethiopia for the last sixty years, and we strongly feel that we spend our money in the right country. I think this is just our demonstration of efforts in contributing share to the ongoing reform in the country. ”

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(TCCF), we have invested over $670 542 which positively impacts 148 454 people - including families working in the agricultural sector – by giving them access to water and sanitation services in Benishangul-Gumuz and the SNNP regions. By the end of 2020, over 332 000 people will have benefitted from the 5 projects we have implemented to date, it was learnt.

With regards to environmental protection endeavours, CCBA in Ethiopia took the initiative in mobilising relevant stakeholders to come together in partnership to establish an NGO called PET Recycling Community Organisation (PETCO). “We have supported the

establishment of PETCO by providing $150 000 initial funding. PETCO is aimed at facilitating the collection and recycling of PET by creating the platform that will also directly benefit women collectors and recyclers.”

Noted the Managing Director. As part of its support in education, the company has built two state-ofthe-art school blocks at Shimb it Elementary School, Bahir Dar, at a total cost of $220,000, benefitting 1600 students. A similar school at the ongoing new factory at Sebeta is under construction at a total cost of $236,000 following consultations with the Sebeta community to understand the community’s needs. Moreover, the company has invested $31,000 in a bursary programme for outstanding university students from low income families and run a Graduate in Training (GIT) programme for the past 11 years, benefitting 275 employees to date.

For CCBA it's about shared opportunity: the company meets the needs of its consumers, develops its retailers and distributors, local suppliers benefit, jobs are created in communities where there weren't any before and its shareholders benefit from the increased viability of its operations and the security of their investments.

“We are very happy that we have been in Ethiopia for the last sixty years, and we strongly feel that we spend our money in the right country. I think this is just our demonstration of efforts in contributing share to the ongoing reform in the

country.” Said Wilson.

Well-known that there are villages named after the company’s product-Coca cola in Addis Ababa and Dire Dawa. This shows that the company has left foot prints within communities it has been operating with. “We are so proud and happy to have those villages named after one of our products; it’s very fantastic. I don’t think there are other places we are

operating in that are named after the product.” He said and expressed hopes that there will be more villages to be named after our product in the next sixty years.

With regards to the recent visit paid by heads of Coca-Cola Company to Ethiopian Premier Abiy Ahmed (PhD), Wilson recalled that James Quincy Chairman and CEO of the CocaCola Company and Jacques Vermeulen CEO of Coca-Cola Beverages Africa exchange views with Premier Abiy on support of the Ethiopian Government Reform Program and the company’s interest to expand its investment in Ethiopia, adding that Abiy appreciated, and welcomed the initiative as well as commended the company’s move to expand its social responsibility through backing the city development works like the Entoto Parks and Beautifying Sheger projects.

Regarding challenges the company is facing, the Managing Director noted that Ethiopia is not unique as there are challenges all over the world, and the company understands African challenges ranging from power and water to forex shortages. “We are closely working with the Ministry of Finance and Ministry of Revenues, and establish a good relationship to deal with major challenges.” Wilson said.

A document obtained from the Public Affairs and Communications Department, Coca-Cola Ethiopia disclosed that tax policy uncertainty as well as foreign currency shortages are a concern for our business. For

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example, the level of excise tax (as a % of revenue) makes Ethiopia (25%) the market with the highest excise across the countries where Coca-Cola Beverages Africa operates (13 African markets in total while Uganda (11%), Kenya (8%) and Tanzania (7%).

Prior to the new excise tax framework that was adopted in February this year, the excise tax in Ethiopia was based on 30% of cost of production (which translated to 14% of revenue). "While we welcome the new

framework, which is based on revenue (which is simpler to administer and improves tax collection efficiencies), the new framework represents an increase to around 25% of

revenue for our business." Said Wilson.

This, according to the company, has a significant impact: If the company does take a price increase commensurate with an attempt to mitigate the increase in tax, we anticipate a volume loss of at least 15% in the first year. It does not welcome the risk of a 15% volume loss since the impact on the business be a restructure with a possible negative impact on direct permanent jobs lost and additional indirect job losses in our value chain. While the excise reduction on sugar does cushion the impact slightly, the net impact is still of great concern.

As far as short-term and long-term plans of the company is concerned, Wilson indicated that the Company will keep expanding, expanding and expanding. It will get in all corners of the country to invest in the community we are working with, providing new consumption and beverages, and seeing into a plastic bottle-free country.

The Coca-Cola Company and CCBA have clearly demonstrated its commitment to investing in Ethiopia as well as its confidence in the growth of the Ethiopian economy. However, the quantum of its investment commitments was decided upon based on its projected returns under very different circumstances, i.e. prior to the new excise tax as proposed at 25% of revenue.

While closing his remarks Wilson said,

“The 60-year-journey of the company in Ethiopia has been amazing; we have witnessed continued growth and continued investment. As I said earlier, our 300 million USD investment will bring about continued development.”

Today, Coca-Cola is sold virtually everywhere in the world. Researchers working at the South Pole can enjoy a frosty Coca-Cola in the subzero temperatures. Mountain climbers in the high Himalayas can stop for a Coca-Cola at their basecamp 20,000 feet above sea level – so high that breathable air itself is a rare commodity.

Here in Ethiopia Coca-Cola is said to be one of the most loved and wanted refreshing soft drink people of all ages anxious to drink whenever they are badly in need of relaxation and enjoyment. It’s everywhere in cafes, restaurants, play fields, gymnasiums, star hotels, lodges, resorts, beaches and remotest areas. The drink not only helped to alter consumption patterns, but attitudes toward leisure, work, advertising, sex, family life, and patriotism.