Coca-Cola faces market sale challenges in Nigeria, Russia

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A labourer walks past crates of soda inside a Coca Cola processing plant in Kenya's capital Nairobi

Coca-Cola HBC (CCHBC) is currently facing challenges in Nigeria, Russia and some main markets as its sales hit ($8.016 billion) 6.5 billion EUR.

It was gathered that the depreciation in the value of Naira affected its sales adversely in 2017.

The company complained that the headwinds in Nigeria and Russia had softened solid growth for Coca-Cola HBC last year, but it noted that its turnarounds in both markets are expected to spur 2018.

In full-year 2017 results, released on Wednesday, organic sales for the Coca-Cola bottler jumped 6 per cent as volumes grew by 2 per cent.

Its emerging markets include Armenia, Belarus, Bosnia & Herzegovina, Bulgaria, FYR Macedonia, Moldova, Montenegro, Nigeria, Romania, Russia, Serbia, Ukraine

However, Russia was flat, dipping 0.3 per cent.

It said: “The rising volumes in Russia for brand Coke were offset by a marked fall in water sales. In Nigeria, a spate of price increases coincided with the “significant depreciation” of the country’s currency. Consequently, group volumes in the country were down 1 per cent.”

The company in its financial report, also said it had delivered good EBIT margin expansion in the 12 months, up 1.2 percentage points, even as it increased marketing spend.

It said: “There were volume declines in Russia and Nigeria as the markets continued to suffer macroeconomic challenges, including a depreciation of the Nigerian Naira that saw CCHBC raise prices in the country three times in the year.”

However, the company said that 2018 would perform better for both markets as they return to volume growth and Nigeria’s economy stabilises. Russia, which posted Q4 volumes growth, is preparing to host the FIFA World Cup this Summer, with CCHBC planning a number of activations.

Commenting on his first set of results, its Chief Executive, Zoran Bogdanovic said: “I am fortunate to have taken over a business performing well and with a clear strategic direction. 2017 was an exceptional year for us, and we are delighted to have delivered strong growth in volume, revenue and margin, overall demonstrating significant progress towards our 2020 objectives.”

It was learnt that the group enjoyed a healthy 2017, maintaining the 5.7 per cent sales lift reported at the half-way point. For the full-year, sales increased by 5.9 per cent, with the currency headwinds that blew hard in 2016 dying down in 2017: Sales in reported terms were up 4.9 per cent compared to the 2 per cent dip in reported sales recorded in the 12 months prior.

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