THE BEVERAGE COMPANY: Drinks Still Pouring at The BevCo

In 2018, a new soft drinks company was formed after the merger of several strong local players. The Beverage Company was born after the combination of Little Green Beverages and Softbev – both industry leaders and powerful brand owners in South Africa. Softbev had a strong presence in Gauteng, Kwa-Zulu Natal and the Western Cape thanks to subsidiaries Shoreline and Quality Beverages; and Little Green Beverages was strong in the Eastern Cape, Mpumalanga and Gauteng. Among the brand owned by Little Green Beverages and Softbev was Coo-ee, Jive, Refreshhh, 7UP, Capri-Sun, Mountain Dew, Pepsi and Pepsi Max. With this mighty portfolio, five excellent manufacturing plants, 1000 employees and nationwide coverage, The Beverage Company (The BevCo) had quickly built a presence that might one day challenge the market leaders.

SPARKLING SECTOR

The industry was in a good place. Soft drinks as a segment incorporates energy drinks, sports drinks, teas, water, juices and carbonated soft drinks. In 2017, the market had total revenues of $7,191.8m, growing at a compound annual growth rate (CAGR) of 7% since 2013. 2017 saw 9,096.2 million litres consumed, a CAGR of 5.3% since 2013. The industry was growing and The BevCo was looking to capitalise on new trends and a boom in demand from certain demographics. Europe, North America and the Asia Pacific regions represented the largest geographies for the industry and, while on a small contributor, Africa had massive growth potential. South Africa in particular was attractive for international brands thanks to its modern retail infrastructure, as well as good bottling operations.

In November 2019, James Quincy Global CEO and Chairman of The Coca-Cola Company completed a tour of African operations and commented on the immense potential in the region.

“Having operated in Africa for over 90 years as a local business in every country, we believe Africa is a region that will increasingly influence the growth trajectory of our global businesses in just a few years,” he said.

“It is clear that Africa is indeed a region that will increasingly influence the growth trajectory of global businesses and we have taken some bold measures to strengthen the Coca-Cola System in Africa for long term growth, enhancing our capacity to continue to win in the continent’s increasingly competitive landscape.” 

Of this, The BevCo wholeheartedly agrees with its rival. “One of our driving forces remains relevance in the local communities. We want to find ways to contribute that are relevant to our communities and impacts on them,” former CEO Michael Benjamin told Enterprise Africa in 2019.

Today, The BevCo remains committed to its community targets and uses its brand mix to ensure customers have quick and easy access to the drinks they want.

“Our brands represent some of the most loved local hero and global champion beverages in South Africa and abroad,” the company states. “Each has its own heritage and personality, some formed through South African culture and others through international influence. All our brands have become trusted household names that are of superior quality. We strive to enhance the lives of our consumers by offering choice and variety at an affordable price.

“With a national footprint and distribution supply-chain, we provide customers and consumers with high-quality beverages at a more affordable price.”

But even with this promise at the forefront of all minds in the business, there was no avoiding fallout from the Covid-19 pandemic. Five manufacturing plants, which were set to be upscaled, had to ensure new safety strategies were implemented. Delivery and retail networks were slowed, and the system struggled as people in South Africa were forced to stay at home while the worst of the virus spread was contained.

FRESH NEW CHALLENGES

All but essential retailers such as supermarkets and pharmacies were closed and this route to market for The BevCo products caused a headache for leadership. Even many of the countries small spaza shops were closed while the number of people visiting stores declined dramatically.

Fortunately, drinks were part of the essential group of products allowed to move restriction free during lockdown. The FMCG industry was hit hard by the lockdown with retailers having to find innovative new ways of serving customers – such as e-commerce, emailing of shopping lists to stores for collection, mobile payment, and contactless collection – and where manufacturing plants were forced to close, the industry was left with a big problem.

Massmart suggested that half yearly losses could be 42%, Pick n Pay warned that first half annual profits would be down by half, and in September the grim news that the South African economy – already struggling pre-Covid – had shrunk by 51% as a result of the lockdown.

But it was not all bad news. Digital retailers including the likes of Uber, Netflorist, Takealot and more report huge surges in demand. For The BevCo, at its heart, this problem is simply another hurdle to overcome.

“There have been headwinds over the past few centuries and people have found ways to thrive, growing really sustainable and powerful companies,” Benjamin said.

A major challenge came back at the end of 2017, just as The BevCo was preparing its launch as a new company. Water in Cape Town was running out and the dreaded ‘Day Zero’ – the day when drinking water in the city would officially dry up – was fast approaching. Businesses and the general public were urged to take preventative measures immediately. As a major water user, the company new it must act.

“We embrace the premise of a ‘good corporate citizen’ and actively consider and implement initiatives which positively impact the lives of our staff, their families, our communities and the environment in which we work,” The BevCo said.

“We believe that business can support the upliftment of society and that our activities should align with the government’s economic development policies.”

The business quickly implemented changes at its Cape Town facility.

“Severe drought and water shortages have been experienced over recent years in the Cape region of South Africa. Accordingly, we have been thinking smarter about our water usage, which is good for the environment and – of course – good for business. The successful implementation of numerous initiatives has resulted in: Our water usage ratio has reduced from 1.8 litres water per litre product to 1.3, putting this facility as one of the best in the world for this measure; and cost savings of over R1.8 million since Jan 2017.”

Clearly, The BevCo is a problem solver and within its subsidiary businesses, it has the experience to overcome challenges and ride out the storms in the economy. Thanks to its hard work pre Covid, the organisation now holds a strong position through its brands and its manufacturing plants, and because of its size, it has the ability to meet the needs of the community.

“The Beverage Company is South Africa’s leading independent manufacturer and distributor of carbonated soft drinks, energy drinks, mixers and still beverages. [We] produce a wide spectrum of own brand, private label and franchise brands. All are equally important to our business. We strive to enhance the lives of our consumers by offering choice and variety at an affordable price,” the company says.

And with the future looking so bright for the industry pre-Covid, there is now no reason that The BevCo cannot regain momentum and continue to “build an African legacy of true excellence.”