Coca-Cola is chasing the youth market in North Africa through diversifying its drinks offer and creative thinking on points of sale
Coca-Cola’s North African headquarters, in a characterless building 30 minutes’ drive from downtown Casablanca, hardly match the image of the ‘best known brand in the world’. The marketing champion, whose global headquarters in Atlanta is a landmark in the US, does not have the same dominant position here. That is especially the case in Egypt and Sudan, where its arch-rival Pepsi gives it a hard time. Local brands are also providing fierce competition in the high-growth market, particularly in Algeria.
Morocco’s Imad Benmoussa, who became director for Egypt and North Africa in February 2017, drinks, talks and lives Coca-Cola. He previously headed Coke’s French and Middle Eastern operations. Between two gulps of soda, he tells how he plans to improve the availability of Coke’s products and strengthen its marketing in North Africa,
TAR: You have been in charge of North Africa since February 2017. How does Coke see this part of the world?
Imad Benmoussa: It is a very dynamic region of about 250 million consumers, however, the consumption of store-bought drinks per capita is weak. According to our calculations, the growth in value for the non-alcoholic drinks sector will be between 5% and 6% in the next few years, compared with 1-2% in Europe and North America. This strong potential is due to economic growth, rising buying power, urbanisation and the fact that the sector is poorly diversified. Fizzy drinks account for 40% of the market, water 35-40% and juice 15-20%. That leaves room for innovations like ready-to-consume tea and coffee and also for energy drinks.
Which countries have the most potential?
Egypt, Algeria and Morocco, due to the size of their populations and the structure of their markets.
Is Coke crushing the competition?
In the fizzy-drinks market, which is what we focus on, we are by far the leader in Morocco and Tunisia. But in Algeria, where there is more competition – with more than 400 different operators – our market share is less than 50%. In Egypt, as well as the two Sudans, we are challengers. But competition is good: it allows us to measure ourselves and pushes us to innovate, which seduces our core market – young adults and teenagers.
What are your investment plans?
Alongside our bottlers, we are planning about $500m in industrial, commercial and marketing investment over the next three years. Globally, that is $200m in the Maghreb and $300m in Libya, Egypt and the two Sudans. In some countries in the region, 40% of consumers said in a survey that they had not had a Coca-Cola in the 30 days prior. Our top goal is thus to penetrate our markets more. What is important is not that those who drink Coke drink more, but that those who do not drink Coke get to know us.
Availability is fundamental to this. We sell ‘enjoyment’ products that are driven by an impulse. If it is not satisfied in half an hour, it can disappear or be satisfied by another product. We, at the same time, have to be sure that we are associated with something positive and have to be there each time a consumer wants to see us. That is why we set goals each year for the number of new points of sale.
You have to be creative and adapt to different regions. In Morocco, for example, we had the idea to offer little refrigerators to dried-fruit sellers, who are numerous out there on the streets, which helped us to improve our penetration rate.
Coca-Cola is focused on marketing. How much do you spend on advertising?
That is very sensitive information. Our marketing investment in each country depends first on our brand portfolio. In Morocco, for example, we have seven fizzy-drink brands, two juice brands and one for water. In Algeria we only have four fizzy-drinks brands. Another variable that influences our spending is the intensity of competition [in each country].
Where are you on the water market?
There are two markets where this is a sizeable business for us: Sudan, where we are the leader with our Safia brand; and Egypt, were we are challengers with our Dasani brand – in a market that is rapidly growing. On the other hand, our presence is very weak in the Maghreb. We have the Ciel brand in Morocco, which has a tiny market share, and nothing in Algeria and Tunisia. But we are interested in the market segment because the market for water is growing faster than the market for fizzy drinks and juice in North Africa and the rest of Africa.
Are you planning on launching a brand of water in Algeria?
For the moment, we are focusing on fizzy drinks because we still have a long way to go in terms of market share. But we are listening to the market. In our diversification strategy, we are always debating whether to acquire a brand or to start our own. In Sudan with Safia, in Egypt with Dasani and in Morocco with Ciel, we went with the second option because we did not find an acquisition target that met our criteria.
How many bottlers do you work with in the region?
We work with eight bottlers. The biggest one is our partner Coca-Cola Bottling Company of Egypt (CCBCE), as the country is the biggest market. The second-largest is Equatorial Coca-Cola Bottling Company (ECCBC), which covers some parts of Algeria, Morocco and Mauritania. And the third is Brasseries et Glacières Internationales, which covers Tunisia and part of Algeria. We also work with independent bottlers: two in Morocco (SBGS and ABC), one in Libya (GBC) and another in Sudan (DAL). We have minority stakes in CCBCE and ECCBC.
What do you get from these shareholdings?
It is not uncommon for us to control a minority stake in the biggest regional bottlers. It is often for historical reasons. At the beginning, the Egyptian bottler belonged to the government. Several years ago, we decided to take a stake and we have not questioned that investment since then. As for ECCBC, the majority shareholders were Spanish and wanted to expand into sub-Saharan Africa. They wanted Coca-Cola to work with them on this geographical expansion. There are not global reasons for those decisions, just particular ones. What is certain is that we decided several years ago not to be the majority shareholder or the manager of our bottlers.