Delta deal with Coca-Cola on the line

The AB InBev, SABMiller deal is set to cost Zimbabwe based associate Delta Corporation (Delta) its bottler’s agreements with The Coca-Cola Company (TCCC).In a cautionary statement released by Delta recently, and seen by Fin24, TCCC has given the former its intention to terminate the Bottlers’ Agreements with the latter.

“The Company has since been notified by The Coca-Cola Company (TCCC) of its intention to terminate the Bottlers’ Agreements with Delta Beverages and its associate Schweppes Holdings Africa Limited (Notified Intention),” said Delta.

Delta and its associate Schweppes produce and sell TCCC brands under bottler’s deals.

Delta’s company secretary said in the statement that the company is considering the ramifications of the notice which may have a material impact on the company’s business.

Delta sold more than 1 385 000hl of soft drinks per year.

Gross sales from the soft drinks business were worth $183m or 28,9 percent of the company’s total revenue for the financial year ended March 31 2016.

Makamure, however, said no changes to the operations of the company and its associates are anticipated at this time.

“The Company will continue to operate in the usual manner in the meantime,” said Makamure.

Makamure said the notice has been given on account of AB InBev becoming an indirect shareholder in Delta Corporation Limited following the combination of AB InBev and SABMiller Plc.

SABMiller holds more than 40 percent of Delta’s shareholding.

With SABMiller being a key Coke bottler in Africa, while AB InBev bottles Pepsi beverages in Latin America, the deal was always going to complicate bottling strategies.

Analysts said if TCCC decides to terminate all its bottling agreements with SABMiller related parties in Africa, it could cause a major disruption in a fast-growing region. – Fin24.