Coca-Cola pouring R17.6 billion into South Africa

Coca-Cola and its two authorised bottling partners in South Africa plan to invest R17.6 billion in domestic operations through 2030 to expand capacity and bolster distribution. 

The drinks producer, together with Coca-Cola Beverages South Africa and Coca-Cola Peninsula Beverages, also wants to use the funds to “accelerate innovation,” it said in a statement Tuesday. 

The investment comes five months after Coca-Cola HBC AG said it would buy 75% of Coca-Cola Beverages Africa from Coca-Cola and its other holder, Gutsche Family Investments.

This will create the second-largest bottling partner for the caffeinated soft drink by volume in a transaction valued at about $2.6 billion.

The Coca-Cola system in South Africa, the continent’s biggest and most industrialized economy, employs about 7,800 people directly and a further 79,300 through supplies partners and customers, according to a study by consulting firm Steward Redqueen. 

Coca-Cola first made the announcement at an investment conference where President Cyril Ramaphosa pitched the country as a reform-driven investment haven.

He set a target of attracting R3 trillion of capital to the country over the next five years. 

“We are meeting at a time of uncertainty for the global economy. Geopolitical fragmentation, supply chain disruptions from conflicts and wars, and trade tensions are radically impacting global capital flows,” he said.

“In such conditions, South Africa presents a favourable proposition as a resilient, credible, and reform-oriented investment destination.”

The conference is the sixth iteration of a forum first introduced in 2018, and which has drawn pledges totaling about R1.5 trillion, with about R600 billion deployed into the economy.

Over that time, Ramaphosa’s administration can point to progress on reforming the economy, including ending chronic power outages that once constrained output.

Efforts are underway to overhaul freight rail and port infrastructure, key bottlenecks for exporters.

“Our economy is much stronger than it was five years ago, precisely because of the structural reforms that we’ve been undertaking,” Deputy Finance Minister David Masondo said in an interview at the conference.

“The sovereign risk premium has been declining, which sets better conditions for us to attract capital, not only for equities but also for fixed income, and that will enable us to raise capital to invest in infrastructure,” he said.