Coke inks Aujan deal to catch MENA consumption wave
Coke’s said its $980m (€754m) investment in the high-growth Middle Eastern non-carbonated drinks sector was the largest to date by any multinational company.
Aujan is the region’s largest fruit juice, juice and cordials company in the Middle East, and the deal is expected to close in the first half of 2012.
It sees Coke acquire 50 per cent of Aujan’s brand-owning entity, and 49 per cent of its bottling and distribution operations.
Vimto will remain as a brand licensed by Aujan’s bottling and distribution company – from UK soft drinks company Nichols (2010 turnover £83.8m) – and the deal excludes Aujan's Iranian manufacturing and distribution business.
Globally connected region
According to Coke, buying a stake in Aujan would enable it to leverage the international growth of the former’s brands (pictured), which include fruit drink Rani and alcohol-free beer Barbican, and would boost Vimto’s prospects as a licensed brand.
Ahmet Bozer, president, Coca-Cola Eurasia and Africa, said: “The Middle East is a high growth region, with some of the highest rates of non-alcoholic ready-to-drink per capita consumption.
“Today’s announcement is a demonstration of our commitment to consumers here that we are investing for the long term,” he added.
In a blog post yesterday, Bozer further discussed the potential of the Middle East and North Africa (MENA) as a “rapidly diversifying, entrepreneurial and globally connected business region”.
Regional GDP growth averaged 5 per cent in 2011, according to the International Monetary Fund (IMF), while population growth will see 60m new shoppers emerge within the MENA region over the next decade.
Bozer said Coke was investing in Aujan as a “successful, well-run business” that would provide a platform for further cooperation between the two firm and other regional bottling partners.
Aujan has an annual turnover in excess of $850m, and chairman Sheikh Adel Aujan said the partnership would allow his company to unlock “new and substantial opportunities”.
“Drawing upon Aujan’s deep regional insights and the international capabilities of the Coca-Cola Company, Aujan will continue to leverage the strength of its leadership team, and is now positioned for even greater success in the region and internationally," he added.
All brands should benefit
Damien McNeela, an analyst at UK-based stockbrokerage Panmure Gordon, hailed the deal as good news for UK drinks firm Nichols as well as the two other companies in a note this morning.
He said: “Following yesterday’s announcement, Aujan reiterated its objective of doubling sales over the next five years, and we would expect that the significant investment and partnership with the world’s leading soft drinks company, all three brands should benefit from increased investment in the MENA region over the medium term.”
“The Middle East is Nichols’ largest export market, accounting for £9.1m [€10.8m] of revenues in 2010, an increase of 13 per cent on the prior year and 11 per cent of group revenues,” McNeela added.
But since concentrate sales achieved higher margins than the group average, McNeela estimated that the region contributed approximately 30 per cent of Nichols’ group operating profits.
Coca-Cola said it employs over 40,000 staff across Arabia, and announced in October that it planned to invest $5bn in the Middle East and North Africa over the next 10 years.
