MOZAMBIQUE - Industry
Country Manager, Coca-Cola Sabco
Following education in the UK, Simon Everest embarked on an international career working extensively in the Middle East with long spells in Saudi Arabia and the UAE working with Coca-Cola, Mars, and Inchcape. He has also undertaken assignments in Eastern Europe and the Far East. He assumed responsibility for Mozambique in 2010.
We are part of Coca-Cola, which is a franchise bottler, and we have seven franchises across Africa. In Mozambique we hold the franchise for the entire country. In terms of volume, it is on par with our business in Tanzania, Kenya, and Uganda, and the returns enable us to invest in the market and develop infrastructure.
The room for growth is endless at the moment, and that is one of the reasons we are investing so heavily in capacity. By global standards, the per capita consumption rate here is low. As the country becomes richer, disposable incomes will increase, and people will consume more beverages. We are also bringing in a larger range of products. In 2014, we launched our water Bonaqua, and we have plans to launch into other beverage segments. We will continue to drive our sparkling range as well as continue to innovate in terms of flavors and packs. There are a number of different offerings. Certainly, with the capacity that we are going to have in Maputo, the capacity that we introduced in 2013 in Chimoio, and the plans we have for Nampula, we are excited about the huge potential of this market.
The Maputo plant will occupy a 21-hectare site. It is being developed and will ultimately have seven lines in place. We will initially run with three lines, which we believe will give us sufficient capacity until about 2022. Thereafter, we will need to put in additional lines. When it opens its doors, it will increase capacity four fold. The office and distribution center will relocate in May/June 2015, and the first line will enter production in 3Q2015, the second line by the end of 2015, and the third line will be commissioned in 1Q2016. The main challenge for this factory is getting the utilities connected. We have had to build a road, develop water pipelines from the reservoir, and now we need to get mains electricity connected to the plant. In all probability, though, we will commence operations with generators, rather than having a mains connection.
Principally it is all for the local market, but I wouldn’t discount any exports, and should a bottler in South Africa require additional product we could supply it. We have franchises all over; hence, there are intercompany transfers among us. One aspect of our business is that you need to have factories within a reasonable distance because transportation costs are prohibitively expensive in this part of the world. Right now, we can satisfy 100% of local demand from our factories in Mozambique, and we occasionally import cans, while juice drinks come in from South Africa.
In 2010, we were pretty much a two-pack company. Today, we have Coke, Fanta, Sprite, and other brands, as well a range of plastic, glass bottles, and cans. You can now see that our stock-keeping unit (SKU) range has significantly increased. One of the major innovations is the introduction of PET bottles. We brought in our first line in 2010, and in 2013 we introduced a large line up in Chimoio. Nampula will be the last factory with a PET line, scheduled to be in place in 2016. We have invested $130 million in these lines. In 2013, we invested $20 million in Chimoio and in Nampula we will be investing $15-20 million.
There are a few tiers to this, one being distribution. We make sure our distribution net is as wide as possible, and that our products are widely available. The second is effective marketing, which underpins all activities. This demands a committed, well trained sales team to execute on the ground effectively.
It is challenging, and not an easy market to enter. I would caution anyone coming in to definitely know the market. You can’t enter in as a “greenhorn”, comparing it to a market like the US. You have to understand; otherwise you will lose your shirt.
My mandate for this business is to see it through to the end of 2016. By the end of 2016, we will have all the capacity plans that I envisaged. We will have also mothballed the old plant and sold off buildings that we no longer need. Then, it is all about “selling”. The capacity will be there, the sales force will be trained, so it is just then a question of “pumping” out the volume, distributing it, and selling it. Our official vision for 2020 is that we will sell double volume, but my personal vision is significantly more. We are building a major, state-of-the-art plant, which will have modern, new lines. These lines need well educated and technically well trained personnel. Our old lines need 18 people per shift. Our new lines need fewer people per shift but produce four times the quantity. There is a small-qualified labor pool in this country, and there are too many companies that want to get them! People might come to me for 6 to 12 months, then they go on to whoever pays them the most. The labor market hasn’t matured in this country, meaning people think it is okay to spend a year here and a year there. Our policy within the group is to localize as much as possible and buy from local suppliers, but my only criteria is that they have to be measurable by world class norms. When I came here, we had three expatriates, we are now up to 15, which is optimal. My people are here to train and develop the local staff and return home.
© The Business Year – December 2014
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