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Coca-Cola joins race for sugar plants

Cementing its six decades of business in the beverage industry of Ethiopia, the Coca-Cola Company under its subsidiary in Ethiopia has tendered its bid to acquire a sugar plant or plants the government is about to privatize in the early months of 2020, The Reporter has learnt.

Daryl Wilson, chief executive officer of East African Bottling Share Company, a subsidiary of  Coca-Cola Beverages Africa, told The Reporter that the expression of interest to acquire sugar plant/plants have been submitted to the Ministry of Finance and is awaiting the opening of the bid process.  

Intending to secure its main raw material supply for its operation in Ethiopia, Coca-Cola has sought to acquire sugar plant/plants in Ethiopia, it announced. Currently, sugar is provided to the food and beverage industry on the basis of quota and that has become a stifling process. The purchasing of sugar both from local and foreign markets has faced setbacks due to lack of production and hard currency shortages. 

Currently, Coca-Cola satisfies its demand for sugar both from the local and international market on the basis of 30/70 ratio; with the 70 percent sourced from the global market. According to the CEO, sometimes the quota could be 40/60 depending on the availability of sugar in the local market. Coca-Cola also intends to install packaging plants to further ease the shortage of raw material in the local market.

It is to be remembered that some months back the beverage giant has announced its USD 300 million expansion project intended to increase its production lines in Ethiopia in the coming five years. According to Wilson, apart from the existing plants in Addis Ababa, Dire Dawa and Bahir Dar, a greenfield plant in the town of Sebeta, some 25 kilometers from Addis Ababa, and perhaps the largest in the country with an investment out lay of USD 70 million and stretching on 14.3 hectares of land, is set to be finalized early next year. One more new plant is also on the pipeline in Hawassa, as the Company has acquired property in the Southern city. The estimated investment cost of the plant planned in Hawassa is around USD 80 million. The investment that is about to be made to acquire sugar plant/plants is separate from the overall USD 300 million the company has allocated for its expansion project, Wilson said.  

In a related news, Coca-Cola has launched a zero sugar coke brands that will initially constitute seven percent of the total annual production, Tigist Getu, brand manager with Coca-Cola told The Reporter. If not sugar, then what makes the coke sweet? Well, the wildly consumed aspartame or an artificial sweetener is one of the ingredients included in the formulation of the new zero coke.  

Wilson and Tigist noted that the sugar free products have made it to Ethiopian market based on surveys and customer demand. The introduction of sugar free products has got nothing to do with the existing sugar shortages in Ethiopia, Wilson underlined. Zero sugar Coke, Fanta and Sprite are the currently available brands availed to the market.