When Coca-Cola announced in 2014 that it would increase investment in Africa, Nigeria’s large consumer market made it one of the places everyone expected the beverage maker would focus on. The question was then, how it planned to invest. The company confirmed today that it had chosen to expand through Chi Ltd., a popular dairy, snack and juice brand in Nigeria.
Coca-Cola Co. said it would acquire a minority stake in the company as it seeks to expand its African portfolio.
“We are extremely optimistic about Africa’s continued economic and social growth and recognize the importance of ensuring we stay one step ahead of evolving consumer tastes by broadening our portfolio and introducing new products,” said Kelvin Balogun, president of Coca-Cola Central, East and West Africa, in a release by the company.
Coca-Cola will take an initial 40 percent in Chi, which is owned by TGI Group and intends to increase ownership to 100 percent within three years, subject to regulatory approvals. The company will be working on other long-term commercial structures while at it.
Coca-Cola will also be leveraging on the experience of Chi in the business space it has succeeded in over the last decade and both companies will jointly discuss and explore other opportunities in the region to further develop the relationship.
With this deal Coca-Cola has conveniently ended a growing rivalry between its Five Alive juice and Chi’s wide range of juices which include Hollandia and Chivita and also expands its business to the high-growth value-added dairy category.
While Coca-Cola expands its business, the deal will also help Chi, where TGI Group has majority shareholding, to achieve its ambitious growth plans through access to Coca-Cola’s broad product portfolio and integration into global best practices in production, distribution and brand-building.
“We strongly believe in this journey we are starting with The Coca-Cola Company,” said Cornelis Vink, Chairman of TGI Group and Chi Ltd. “The relationship will allow us to expand our regional footprint and product portfolio.”
The new deal is great for Coca-cola due to Chi’s clout in Nigeria, but even greater for Chi: Coca-Cola is the world’ largest beverage company. Rahul Savara, Group Managing Director of TGI Group acknowledges this.
“We recognize the unique opportunity that the relationship with The Coca-Cola Company brings to further develop Chi as a strong regional company, building on the tremendous progress achieved to date.”
The landmark deal is reported to be worth $240 million.