BEIRUT: Regional beverage manufacturer Aujan Coca-Cola Beverages Company is planning to substantially increase its investment in Lebanon, after this month acquiring a majority stake in the National Beverage Company, the bottler and distributor of Coca-Cola in Lebanon.“In the mid-term range, anywhere from three to five years, we will invest substantially more than the initial purchase of our 80 percent stake in NBC,” Nicolas Nusmeier, CEO of ACCBC told The Daily Star in an interview.
ACCBC acquired its 80 percent stake in NBC from Transmed, a regional consumer products distributor that was established in Lebanon more than 60 years ago and still retains a 20 percent share. The deal was closed on July 9, 2014, for an amount that Nusmeier did not disclose.
“It is not so much about the initial investment, but much more about the investment in the market, in products and things that are of interest to Lebanese consumers,” Nusmeier said.
He added that ACCBC would capitalize on its future investments in NBC to boost its sales of locally manufactured products outside Lebanon.
In addition to being the authorized bottler of Coca-Cola in Lebanon, NBC manufactures products such as Pampa juice, among others that are currently being sold locally and in a number of other countries in the region.
NBC’s annual production reaches around 10 million unit cases, including products destined for both local consumption and export, according to Nusmeier, who put NBC’s market share in Lebanon in the “single-digit area.”
The reasons behind ACCBC’s decision to enter the Lebanese market – which is relatively small compared with that of the Gulf Cooperation Countries that represent the company’s core markets – lie in the strategy that Saudi Arabia-based Aujan Industries has adopted since it entered in a joint venture with Coca-Cola, Nusmeier said.
In September 2012, Aujan Industries and Coca-Cola Company finalized a binding agreement worth nearly $1 billion for The Coca-Cola Company to acquire approximately half of the equity in Aujan’s beverage business. The deal led to the creation of two companies: Rani Refreshments, which holds the global rights to brands such as Rani and Barbican, and ACCBC, an authorized manufacturer and distributor of Vimto and RR products in the Middle East.
“One of the logics behind the deal with Coca-Cola is to search together for growth opportunities in sparkling juice and carbonated soft drinks. ... The first good opportunity that came up in the context of the Middle East and North Africa is in Lebanon,” Nusmeier explained.
“In this particular case, Transmed was interested in selling the Coca-Cola franchise system and we were interested in acquiring it.”
Nusmeier added that, from an investment perspective, the Lebanese market represented an environment in which the company felt comfortable to innovate, but he did not give further details on the new line of products that NBC plans to roll out in the future.
“In broad terms, we will rely on the strength of our portfolio and innovation to get to the hearts and minds of consumers with new propositions,” Nusmeier said when asked about the company’s strategy to grow sales and increase its market share in Lebanon. “We will adopt a step-by-step approach. ... It is difficult to be specific for competitive reasons.”
ACCBC will be investing in new equipment in NBC’s manufacturing facility and will undertake some restructuring following NBC’s recent recruitment of 130 new employees from a sister company, Nusmeier said.
Asked whether ACCBC had any other investment plans in Lebanon, Nusmeier said the company would be looking at opportunities – either through organic growth or acquisitions – when they present themselves.
While ACCBC’s core markets are in the GCC, the company’s operations also extend into Iran, Iraq, the Levant, North Africa, South East Asia and Europe.