Coca-Cola Beverages Africa IPO will come at the right time, says CEO Jacques Vermeulen

Following the initial announcement in April 2021, plans for a dual listing of Coca-Cola Beverages Africa (CCBA) in Johannesburg and Amsterdam are on hold as capital markets across the globe struggle in the ongoing economic slowdown.

“Globally, very few IPOs are coming to the market because these are clearly not the right conditions,” Jaques Vermeulen, CEO of CCBA tells The Africa Report on the sidelines of the Africa 2023 CEO Forum in Abidjan on 5 June.

“We are waiting for markets to stabilise,” Vermeulen says.

Positive start

The year started positively with consumer goods company, Premier Group, returning to the Johannesburg Stock Exchange (JSE) in March after delisting 18 years ago.

Across the continent, more market activity is expected. In February, the Egyptian government promised to list shares of 32 state-owned enterprises (SOEs) within a year. In Kenya, President William Ruto also pledged to list SOEs to kick-start the stock market after six years of no listings on the Nairobi Stock Exchange.

But the global economic downturn still looms large.

Globally, while there were a record number of IPOs listed in 2021 as business re-started after the Covid-19 pandemic, listing activity fell 45% and 61% by number of deals and proceeds, respectively, year-over-year (YOY) in 2022 due to lower valuations and poor stock market performance according to Ernst & Young.

Since the pandemic, there has been a substantial reduction in equity raised in the market and a dispiriting number of delistings on the JSE.  According to information collated from the JSE, there were 79 delistings in 2022 compared to 21 listings in 2020.

“I spoke to investment advisors. We will take our time, and at the right time, we will float CCBA,” says Vermeulen.

Delayed recovery

The non-alcoholic beverages industry is yet to recover from the effects of the pandemic, which prompted customers to change their shopping habits, Vermeulen says.

“We have seen costs increase in the supply chain and they haven’t gone back to pre-pandemic levels,” he adds.

Moreover, inflation has been a double-edged sword affecting both consumers’ disposable income as well as manufacturers’ production and transportation costs. Though the company has increased prices, not all production costs have been pushed on to customers, Vermeulen says.

Instead, the company is focussing on improving productivity, efficiency and innovation of the value chain to manage costs.

“The fact that we are a growth organisation makes us look at pricing of our products differently,” says Vermeulen.

“We look at how to provide products that are affordable and relevant to our customers.”

The African Continental Free Trade Agreement (AfCFTA) may help solve supply chain challenges for companies doing business in multiple countries given the focus on policy harmonisation, common custom practices, liberalisation and standardisation of taxes and property rights, says Vermeulen.

“However, countries have different approaches on applying the policy,” he says

Revenue potential

According to a Statista market intelligence report, revenue in the non-alcoholic drinks market will reach $96.14bn in 2023 in Africa, growing annually by 10.16%. This, Vermeulen said, provides an incredible growth opportunity for CCBA to expand across the continent.

“I am very excited about the future of the beverage sector,” he says.