VENTURES AFRICA – Three Coca-Cola bottlers in Kenya are set to merge to form a single entity named Almasi Beverages Limited. The value of the three bottlers, Mount Kenya, Rift Valley and Kisii Bottlers is expected to rise by 26 percent to 5.7 billion shillings ($ 67 million). The three firms are partly owned by listed investment company Centum and the Industrial & Commercial Development Corporation (ICDC).
Centum Investment owns a 44 percent stake in Rift Valley, 28.6 percent in Mount Kenya and 23.8 percent in Kisii.
“We are moving to form a single entity called Almasi Beverages Limited which will allow us to grow our market and increase our value. We will have a new board of directors and new managers who will run the overall functionalities of the business such as procurement and looking for extra capital,” said John Simba, chairman Kisii Bottlers.
The proposal is subject to shareholder and regulatory approval.
The merger has been inspired by challenges such as the rising cost of doing business, exchange rate risks and competition which has slowed expansion and reduced profit margins for the individual companies.
The three companies said the move will allow each of them to serve their respective territories by bringing together combined resources and taking advantage of economies of scale to capture greater production and distribution efficiencies.
“Currently we have no ready-to-drink coffee and tea, and that are some of the areas we are looking into and once we merge it will be easy to launch these products,” said Simba.
The planned deal has however elicited mixed reactions from shareholders. Entrepreneur Matu Wamae, a shareholder in the Mount Kenya factory has opposed the deal claiming it is being pushed by Centum and ICDC.
“I don’t think it is a good idea. How do you merge companies operating in Kisii and Nyeri? The companies are making profits and I don’t see the point for the merger” said Wamae.
There are also fears that senior and middle-level managers at the three bottlers could lose their jobs since the three companies will now have a single board and management team.
After the merger, Almasi Beverages will become the second largest in market share among the Coca-Cola bottlers with 29 percent. Nairobi Bottlers Limited (NBL), which is also 28 percent owned by Centum, controls 48 percent of market.
NBL recently invested 1.3 billion shillings ($15 million) in acquiring and commissioning a new PET (plastic) bottling line to double its capacity from 5 million cases to 12 million cases annually, in a bid to strengthen the company’s position and ability to serve a growing consumer demand.
According to a recent market report by Euromonitor International, Coca-Cola is the leading player in the Kenyan soft drinks market with a 41 percent volume share and a 63 percent share of carbonated drinks.