The chartered 22-passenger jet has been on the runway for about 45 minutes. The engine is roaring but the plane would not taxi. The battery has failed. Coca-Cola Sabco CEO Doug Jackson and CEWA BUP Kelvin Balogun quickly jump out and are driven off to a small fixed-wing, 8-passenger plane.
(L-R) Sabco CEO Doug Jackson, CEWA BUP Kelvin Balogun and Sabco Director Hailu Negusse during the commissioning of the $20 million RGB line and refurbished plant in Dire Dawa, Ethiopia.
In just under 75 minutes, we land in Dire Dawa (which means ‘empty plain’), a dusty town of less than 500,000 people. Several of us jump into the most popular mode of transport, the tuk-tuk, to get out of the airport and arrive just in time to join associates and local leaders in commissioning Coca-Cola Sabco’s newest investment - a $20 million building replete with a 36,000 BPH RGB line.
“Only someone who believes in the promise of Africa makes this kind of investment in such a place,” says Jackson – who has hung his jacket on his back in 35-degree (Celsius) heat to shield himself from the scorching sun.
But this is Coca-Cola, touted in a previous edition of The Economist as the bellwether of economic activity in Africa. In writing about the promise of Africa, the magazine argued that Coca-Cola sales provide a good measure of the economic buzz for investors who do not have other data points.
Such is the buzz here in Dire Dawa. In a town whose major economic activity is farming of narcotic leaves known as chat or khat – exported mainly to nearby Djibouti and parts of the Middle East, residents here spend their afternoons chewing khat and downing it with a cold bottle of Sprite or Coke.
The impact of this investment on the local community is immense, and Dire Dawa’s promise vindicates the decision to set up here.
“This is Coca town,” says Tibebu Mengesha, using a euphemism for a market where Coca-Cola enjoys significant market share. Mengesha has worked at the Dire Dawa plant for 24 years - since 1989.
A section of the warehouse at the newly refurbished Dire Dawa Plant in Ethiopia.
The system investment has gone towards building a Returnable Glass Bottling line, refurbishing the plant and constructing new buildings in keeping with the company’s tradition of maintaining world class standards. The glass line will increase production capacity five-fold and strengthen market position.
The Route to Market (RTM) here is quintessentially African. Customers mostly use the traditional forms of transport – tuk-tuks, push carts, trollies and sometimes donkeys – which are common among the Oromo, Afar and Somali, the ethnic peoples of this region.
Ethiopia is home to the now very successful MDC model, which was piloted by Coca-Cola Sabco in Addis Ababa in 1999 to fulfill the company’s undying promise: to ensure Coke’s availability is within arm’s reach in the populous capital.
Coca-Cola Sabco has implemented the model on a broad scale throughout markets in East and Southern Africa and parts of Central Asia. Today, much of Coca-Cola business in Africa and other emerging economies rely on the MDC model as its core distribution method. Overall, the model has led to positive business results in addition to being a major contributing factor to sales and volume growth in these countries. In Africa, it is estimated that MDCs account for more than $500 million in annual revenues.
The bottler sales team here has embraced it to near art-form, traversing dusty, potholed roads to deliver the world’s iconic drink to thousands of consumers.
“Economic development and job creation are powerful elements of our system’s overall sustainability story. When one considers that alleviating poverty is crucial to the future prosperity of Africa, one inevitably sees the role our system plays in creating sustainable small business and job opportunities. This new investment is in furtherance of this agenda,” says Balogun.
He adds that traversing Africa in sometimes poorly-serviced planes is a risk worth taking as the company’s investment champion.
“Our responsibility is to capture, within our system, the opportunities we see in the external environment. We do this by continuing to invest, while creating entrepreneurial opportunities and jobs in our distribution system. The beauty of this type of inclusive business model is that it makes sense for both business and development reasons.”
Ethiopia is also one of the many markets in Africa where Coca-Cola’s sustainability agenda has been widely successful. Through Replenish Africa Initiative (RAIN), The Coca-Cola Africa Foundation together with other development partners has spent about $430,000 to support water supply improvement and multiple uses of water, in addition to improving water, sanitation and health in schools, institutions and households and empowering women through water-related economic activities. In the Dire Dawa plant, the company shares water with the community through an external collection point.
After enjoying a sumptuous meal of local injera and joining the associates in a dance to popular traditional Ethiopian music, we barely notice the sweat running down our faces or that phone networks and 3G Internet connection are a luxury here.We depart proudly on the back of a commitment to invest in the deeper reaches of Africa - one that will be seen in the growth of the system business and the socio-economic transformation of Dire Dawa both directly at the plant and indirectly through the system value chain.
Bob Okello is Public Affairs and Government Relations Manager at the Coca-Cola Central, East & West Africa business unit.