Bottling plants, Ekocentre come to Rwanda, more focus on Africa

Rwanda’s President Paul Kagame with Coca-Cola chairman and CEO Muhtar Kent and US ambassador to Rwanda Erica J. Barks-Ruggles at the launch of the Coca-Cola Ekocentre in Ruhunda on June 13, 2016. PHOTO | URUGWIRO VILLAGE  

By BERNA NAMATA

In Summary

• When Coca-Cola teamed up with Ericsson, Medshare, Petair, Philips, Solarkiosks and Tigo Rwanda on June 13 to open a flagship social enterprise initiative site dubbed Ekocentre in Ruhunda in Rwanda’s Eastern Province in Rwanda, the beverage company was in the middle of a restructuring that has already resulted in the merging of its units.
• The company aims to increase consumption as currently, Africa accounts for just about 10 per cent of the group’s sales, by volume. It hopes to grow this significantly in the coming years as it steps up investment on the continent.

When Coca-Cola teamed up with Ericsson, Medshare, Petair, Philips, Solarkiosks and Tigo Rwanda on June 13 to open a flagship social enterprise initiative site dubbed Ekocentre in Ruhunda in Rwanda’s Eastern Province in Rwanda, the beverage company was in the middle of a restructuring that has already resulted in the merging of its units.

On May 24, Coca-Cola merged operations, forming a unified Europe, Middle East and Africa group out of business units that formed the Europe, Eurasia and Africa groups.

In Europe, the Central and Southern Europe and Russia, Ukraine and Belarus business units will be combined into a new business unit – Central and Eastern Europe.

“Changes to our international operations streamline our structure, better align with our bottling footprint, and reflect strong talent succession and a commitment to developing the next generation of leaders at our company. This re-organisation has happened the world over, and the changes being made with a view to the long-term, and the growth opportunities in front of us, not only in Africa but across our international operations,” said Norah Odwesso, the public affairs and communications director, Coca-Cola Central, East and West Africa Ltd.

The changes come in the midst of a declining demand in carbonated drinks in developed markets — which contribute a large share of the company’s revenues — and the firm’s plan to penetrate the African market.

The company aims to increase consumption as currently, Africa accounts for just about 10 per cent of the group’s sales, by volume. It hopes to grow this significantly in the coming years as it steps up investment on the continent.

READ: Coca-Cola to invest $5bn in Africa

Per capita consumption

So far, the company has committed to invest $17 billion in Africa for 2010-2020, representing an increase of $5 billion in distribution, infrastructure, manufacturing as well as marketing.

Muhtar Kent, Coca-Cola chairman and chief executive, who was in Rwanda to officially open the company’s first Ekocentre in the country, told The EastAfrican that Africa has a low per capita consumption of the firm’s drinks with volumes directly correlated to disposable income growth.

“We feel that in the next 10 years, Africa will see better growth than the rest of the world in GDP and disposable income,” Mr Kent said.

In Rwanda, Coca-Cola invested in a $30 million returnable glass bottle line, utilities and water treatment plant in 2014.

A further $9 million was invested in polyethylene terephthalate (PET) products, a cost-effective and environmentally friendly plastic packaging option, in 2015. On May 6, Bralirwa Ltd launched locally produced soft drinks in plastic bottles.

In mid-June, Coca-Cola opened a $130 million bottling facility, the largest greenfield facility across its seven-country regional market in Africa (Ethiopia, Kenya, Mozambique, Namibia, South Africa, Tanzania and Uganda). The plant’s 30ml glass bottling line has capacity to bottle 48,000 bottles per hour.

The Ekocentre is a sustainable entrepreneurship project. Over 25,000 local residents stand to benefit from access to services that have not been readily available, including Wi-Fi Internet access, mobile charging services, a retail store, the only fully lit football field outside Rwanda’s capital Kigali, medical services and purified water.

Currently, there are over 120 Ekocentres around the world, with over 100 in Africa. By the end of the year, the company plans to have 177 Ekocenters operational.

In his forecast for Africa’s economies, Mr Kent described the continent as one with multiple stories — good and not-so-good stories. He said the “good stories” will achieve a growth rate of 7-9 per cent while the not-so-good stories will develop at 4-5 per cent, which is still higher than the rest of the world.

“Today Russia, Brazil, Egypt, Turkey and China are not growing like they used to. Africa will increasingly differentiate itself with higher growth,” Mr Kent said, adding that the continent’s huge infrastructure gaps remain a major challenge for the company.

Sub-Saharan Africa prospects

Growth in sub-Saharan Africa is projected to slow again in 2016, to 2.5 per cent, from an estimated 3.0 per cent in 2015. The forecast is 1.7 percentage points lower than the January 2016 projections, according to the June 2016 Global Economic Prospects published by the World Bank.

Low commodity prices, tightening global financial conditions, and drought in parts of the region will continue to weigh on growth this year. The recovery is expected to strengthen to an average of 4.1 per cent in 2017-18, driven by a gradual improvement in the region’s largest economies and as commodity prices stabilise.

Nonetheless, risks to the outlook remain tilted to the downside, including a sharper-than-expected slowdown in major trading partners, further decline in commodity prices, delays in adjusting to the negative terms-of-trade shocks, worsening drought conditions, and political and security uncertainties, according to the World Bank.