24915 - Coca Cola Sabco

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Summary of Proposed Investment

Project Number

24915

Company Name

COCA-COLA SABCO (PTY) LTD

Date SPI Disclosed

Apr 24, 2006

Country

Africa Region

Industry

Agribusiness and Forestry

Projected Board Date

May 25, 2006

Status

Completed

Sector

Soft Drink

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : May 25, 2006
Signed : Jun 20, 2006
Invested : Aug 6, 2007

Project Description

Coca-Cola Sabco (Pty) Ltd (“CCS”), an existing IFC client since 2002, is one of The Coca-Cola Company’s (“TCCC”) key bottling partners in developing markets in Africa and Asia, having been awarded Anchor Bottler status in 1995. CCS has invited IFC to support its corporate investment program in several frontier countries in Africa and Asia namely Cambodia, Ethiopia, Laos, Mozambique, Nepal, Sri Lanka and Vietnam. After developing a strong base in South Africa, CCS leveraged on its experience to take over and successfully turn around several Coca-Cola bottling companies in Eastern Africa—Ethiopia, Kenya, Mozambique, Tanzania, and Uganda. Based on this success, CCS was recently granted the opportunity by The Coca-Cola Company (“TCCC”) to acquire underperforming assets in Asia.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	35.0
Equity

Development Impact

CCS has acquired a strong reputation in process management and financial performance. The Group has achieved The Coca Cola Quality System (“TCCQS”) accreditation from TCCC and was the first bottler in Africa to implement Hazard Analysis Critical Control Points (“HACCP”). Additionally, the Group has state of the art management information systems and a proven track record in managing efficient distribution networks.

The Investment Program will allow CCS to deploy that experience in frontier countries in Asia, for the benefit of local bottlers. CCS will:

- provide technology transfer in terms of best practice, process control and management information systems;
- upgrade and expand production capacity using the latest equipment and technology;
intensively invest in training local staff in frontier countries to upgrade their skill level to world standards, thus enhancing productivity and helping build capable managers in private enterprise;
- improve product quality and reduce production costs;
transfer and deploy innovative micro distribution systems leading to significant entrepreneurial activity at the bottom of the business pyramid resulting in sizable job creation; and
- develop and better plan the portfolio mix of beverages for the local bottlers, increasing overall profitability.

The CCS Group directly employs over 9,500 employees in its African and Asian operations. Its staffing needs are expected to increase upon implementation of the Investment Program. A large portion of the increase in jobs will come from the expansion of its Asian operations in frontier countries like Laos, Vietnam, Cambodia, Nepal and Sri Lanka.

As CCS invests in the upgrade of the bottling operations in Asia and Africa it also plans to expand its distribution network, resulting in an increased direct and indirect employment and micro enterprise development through the forward linkages in distribution and retailing.

IFC’s support of this corporate investment program will facilitate “South-South” investments in several companies in frontier countries in a “wholesale” manner while engaging with an existing client with an established reputation and long-term commitment to expanding its operations across Africa and emerging Asia. CCS has already demonstrated a successful track record of such investments in East Africa. IFC will also explore the possibility of technical assistance to enhance linkages and capacity building of CCS’s micro distributors in its Asian operations.

This is a category B project according to IFC''s environmental and social review procedure. Environmental and social issues associated with this project and that will be evaluated during appraisal include: site selection, acquisition, development and permitting; quality and sustainability of potable water supply; handling and disposal of hazardous and non-hazardous waste; liquid effluent management; air emissions; occupational health and safety and implementation of good management practices; and systematic management of quality, environmental issues, and occupational health and safety.
Location of environmental documents In locally affected community
Environmental documentation will be made available at the following locations:

IFC Website;
Coca-Cola Sabco – Head Office Reception, 159 Harrower Road, Port Elizabeth

Contacts

For Inquiries About the Project, Contact

Project Manager: Keith Stacey
Media Enquiries: Adrian Ristow
P.O. Box 3509
North End
Port Elizabeth
6056
South Africa

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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