After Coca-Cola and Castel’s divorce, who’s keeping the bottles?

27 years ago, in 1995, the world of soft drinks celebrated a successful union. The Coca-Cola Company (TCCC) and the French group headed by Pierre Castel joined forces to flood the African market with sugary beverages under the North American giant’s label.

By bottling Coca-Cola, Sprite, Fanta, and Schweppes on its own production lines, Castel achieved a new level of profitability, strengthening its central role in the fast-growing soft drinks market alongside its brewing activities.

By joining forces with the French group, which had been present on the continent since the 1960s, Coca-Cola was able to secure a logistical base and distribution network commensurate with its sales volumes, which were set to grow in line with its massive investments in West Africa. The divorce, however, which has now been finalised, was almost a foregone conclusion.

Running out of gas

The last few years of the relationship between the two partners have been marked by numerous disputes, both public and private. The main cause of these disputes is the competition between the two groups in certain market segments.

Even before they joined forces, Castel’s own brands – Top in Senegal, Youki in Côte d’Ivoire and Boga in Tunisia – had placed them in direct competition. Although the two multinationals tried to resolve these tensions by agreeing on a price alignment clause, the deal fell through.

In 2016, at the same time as the launch of its World Cola, Castel decided to ignore the agreement with Coca-Cola and reduced the retail price of its own brands, claiming a more modest customer base.

This unilateral breach of its agreement marked a turning point in the partnership, leading to a divorce in June 2022, with the end of collaboration in Senegal, Cameroon, Angola, Burkina Faso, Togo, Benin, Gabon, Côte d’Ivoire, Malawi, Madagascar, Chad and Mali.

A bet in a bottle

The Coca-Cola Company now wants to focus on local players to minimise the risk of finding itself in competition with a major group once again. This desire for control is also reflected in the group’s shareholdings, as it is accustomed to acquiring stakes in the majority of its bottlers around the world (with the exception of Castel, which has always closed its doors to the group).

TCCC has imposed stringent conditions on its new partners in order to secure its corner of the market, like the Senegalese drinks industry, which was forced to stop producing its own brands: Africa Star, Uno and Black Power, in favour of the American company’s brands.

While Coca-Cola has visibly opted for greater security, on the flipside the giant will have to deal with players who are sometimes novices. With the exception of Carré d’Or in Côte d’Ivoire, the chosen buyers lack experience in beverage production, such as Gracedom Invest, a beer exporter present in Cameroon, or Sofavin of Gabon, a subsidiary of the Fokou group in the hardware business.

These profiles will require adjustment and investment: at least that’s what some drinks producers are hoping for, such as the Malian company Gaselia, which wants to take advantage of this transitional period to gain market share. Could this mean a completely new order?