A senior executive told Reuters Coca Cola aims to complete plans to acquire Chi Limited, Nigeria’s leading juice company by early 2019. The acquisition is one of the strategies the US company is taking to diversify from its core business of sugary drinks.
Sources acknowledge the company is bidding for GlaxoSmithKline’s Indian Horlicks. Coca Cola also agreed to buy Costa Coffee for $5.1 billion.
Peter Njonjo, President of Coca Cola’s West African business said “we are still on track to complete the acquisition of Chi Limited, by the end of the first quarter of 2019”.
Coca Cola, which bought a 40 percent stake in the Nigerian juice producer in 2016, had promised to increase ownership in three years. The acquisition will fit into the US company’s attempt to offer drinks at a range of price points in Nigeria, to improve affordability.
In an interview at his office in Lagos, Njonjo said “affordability will start becoming a bigger issue in this market than it was in the past. As a company, that is what we need to factor in as we are thinking about the future of our business in Nigeria”.
Considering the United Nations estimates most of the population of 190 million survive on less than $2 a day, Njonjo noted that the company’s drive to diversify its product range, could also give it more flexibility in a market where unemployment is high.
Njonjo stated that “we realise that in certain pack formats you can only go down so low. But once you start looking at pouches and still products, like juice and drinking yoghurts, that allows you to start accessing much lower price points”.
He added that the purchase of Costa could also present an opportunity in Nigeria, despite the lack of a hot coffee drinking culture. Njonjo noted that “there definitely could be an opportunity around ready to drink coffee here in Nigeria. Having iced coffee, blends of dairy and coffee, packaged in different formats”.