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Coca-Cola sells stake in Appletiser to African Pioneer

| Supplier news

Coca-Cola Beverages SA (CCBSA) announced it has sold 17.5% of its shareholding in Appletiser SA (ASA) to black owned investment company African Pioneer Group (APG).

An additional 4% has been sold to a new entrant black empowerment partner, Sipho Excellent Madlala, a 20-year veteran of CCBSA. The value of the respective stakes was not disclosed.

The sale of the equity stakes was facilitated by Standard Bank and meets one of the merger conditions agreed to with the Competition Tribunal in relation to the creation of CCSBA last year. It was agreed on when the Southern and East African non-alcoholic ready-to-drink bottling operations of SABMiller, The Coca-Cola Company (TCCC) and Gutsche Family Investments were combined in May last year.

Appletiser was previously wholly owned by SABMiller. With the merger, the manufacturing facility, ASA, became a subsidiary of CCBSA, the South African operation of Coca-Cola Beverages Africa (CCBA).

The Tiser brands (Appletiser, Grapetiser and Peartiser), also previously owned by SABMiller, were sold to TCCC as part of the CCBSA merger agreements. This meant that following the brand sale, the operating model of ASA changed from one of an owned-brand production company to a licensed manufacturer of TCCC brands.

As part of the merger conditions the company undertook that ASA’s operations in Elgin (as well as related ASA operations) would be maintained and grown, and that CCBSA would sell 20% of Appletiser in SA to a black economic empowerment holding which we have concluded ahead of the required timeline.

Seat on the board

Through its 17.5% shareholding, APG will have a seat on the board of Appletiser. Stephen Dondolo, APG’s CEO, already has experience sitting on the CCBSA board - and the Coca-Cola Fortune board before that. Through his 4% acquisition, Madlala will also acquire a seat on the board of ASA. Both will be active partners in the business, in keeping with the provisions of the merger conditions.

Apart from Elgin, the Tiser brands are produced at one other South African facility, in Midrand, and at facilities in the UK, Canary Islands, Belgium and Australia. However, the Appletiser facility in the Elgin valley in the Western Cape is the original – and the largest – producer of the products, and accounts for some 59% of Tiser brands produced globally.

Tiser products produced at ASA are marketed in a range of territories including Botswana, Namibia, Zambia, Lesotho, Mozambique, Japan, Australia, New Zealand, Hong Kong, Mauritius and Swaziland.

CCBSA managing director Velaphi Ratshefola said the company was confident that Appletiser has capacity to increase production output considerably to serve the domestic market and to be used as a base for export to the rest of Africa and elsewhere in the world. There are plans in place for ASA to produce other TCCC brands - in addition to Tisers - that are currently produced at the other CCBSA manufacturing sites.

With the addition of 200ml, 330ml and 440ml cans of other Coca-Cola products, the facility will produce around 5 million physical cases - well in excess of prevailing volumes at the time of the merger.  

In terms of the merger agreement, at least 80% of the apples, pears, grapes and similar fruit inputs used for all juice concentrate used in producing Tiser products will be procured from fruit grown in SA, and plans are sufficiently in progress to increase the procurement of SA grapes for juice concentrate in Grapetiser over the next five years.

Currently all apple and pear concentrate is sourced from SA, with grape concentrate increasingly sourced locally, depending on availability and affordability of supply.

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