February 2, 2016

As sales of soda in developed markets slow, Coca-Cola is diversifying its portfolio and strengthening its geographic reach through the acquisition of a 40% stake in Nigeria’s largest juice company, Chi, from its holding company, Tropical General Investment (TGI) Group. The deal, which values CHI at approximately $1 billion, marks the largest overseas acquisition for Coca-Cola since 2012 according to Ventures Africa, and is a step in Coca-Cola’s strategic plan to expand across Africa by 2020 in order to profit from the continent’s young, growing, and upwardly mobile population.

“We are extremely optimistic about Africa’s continued economic and social growth and recognize the importance of ensuring we stay one step ahead of evolving consumer tastes by broadening our portfolio and introducing new products,” said Kelvin Balogun, President of Coca-Cola Central, East and West Africa, in a company statement. “Today’s announcement positions both Coca-Cola and Chi well for future growth in what is an exciting time in the beverage industry in Africa.”

As Nigeria is facing an economic slow-down due to falling oil prices, industry watchers have been aware that TGI, which also owns a portfolio of other food companies including poultry and fish farms, in addition to frozen food, and cotton businesses, has seeking to divest its stake in Chi for a reported total target price of $1 billion since 2014.

Lagos-based Chi is one of Nigeria’s top food and beverage companies with significant market share in iced tea, fruit juices, snacks, and value-added dairy products, selling products under the brand names CHIVITA 100%, CHIVITA Active, CHI Exotic, CHI Happy Hour, CHI Iced Tea, Capri-Sonne, Hollandia, Chi Super Bite and Beefie.

“For more than 30 years Chi’s leadership has built a greatly admired business that has quickly grown to become Nigeria’s leading producer and distributor of value-added dairy and juice products and we are delighted to enter the next phase of our growth journey together,” said Nathan Kalumbu, President, Coca-Cola Eurasia and Africa in a company statement.

Coca-Cola has a long history on the African continent, being first served in Johannesburg in 1928. Since that time the company has increased its presence to every country on the continent. In 2014, Coca-Cola announced it was increasing its investment in Africa for the decade of 2010-20 to $17 billion – triple the company’s investments throughout the previous decade. The funding will support manufacturing, distribution, and cold drink equipment as the company seeks out new opportunities for growth.

Both Coca-Cola and TGI have agreed to jointly work toward mutual regional opportunities and the strengthening of their strategic relationship, and in a joint announcement, Coca-Cola stated that it plans to increase its stake in Chi to 100% over the next three years if regulatory approvals are granted.