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Coca-Cola plans to terminate agreements with Zimbabwean bottler Delta

DBR Staff Writer Published 24 October 2016

Soft drinks giant Coca Cola Company is planning to end its bottling agreements with Zimbabwean beer and soft drink company Delta Corporation as well as its associate, Schweppes Zimbabwe.

The company is planning to end to the bottling deal as Anheuser-Busch InBev (AB InBev) becoming an indirect shareholder in Delta Corporation following its merger deal with SABMiller.

SABMiller is the largest shareholder in Delta with a 38% stake which is now in AB InBev’s control. Delta in turn holds 49% stake in Schweppes Zimbabwe, reported The Source.

AB InBev has also been a bottler of PepsiCo in some markets which creates a conflict of interest for Coca-Cola.

Delta Corporation said that it is considering the ramifications of the plan which may impact its business. However, it said that operations will continue normally in the meantime.

The Zimbabwean beverage company also advised its shareholders to exercise caution when dealing in the Delta shares.

Coca-Cola products form the bulk of Delta’s sparkling beverage businesses, accounting for about one third of total sales revenue. They are also considered to be the second biggest revenue source for Delta after its Lagers beers.

The sparkling beverages earned Delta revenue of $183m out of a total turnover of $633m for Delta in the full year which ended in March 2016 as per the publication.

Coca-Cola’s termination of bottling agreement will be a big blow for Delta in terms of revenue and job losses.

Delta’s loss of Coca-Cola bottling agreement could be a gain for Mutare Bottling Company owned by Econet Wireless which is the other Coca-Cola bottler in Zimbabwe.

Image: The Coca-Cola Company will be terminating bottling agreements with Delta Corporation. Photo: courtesy of THE COCA-COLA COMPANY.