Coca-Cola Sabco – What a Journey!
From humble beginnings in Port Elizabeth in 1940 – where the South African Bottling Company (Sabco) was born – to exciting expansion throughout Africa and into Asia (with a name change to Coca-Cola Sabco along the way), South Africa’s favourite beverages company has enjoyed an extraordinary journey. We invite you to relive the adventure…
1940: The South African Bottling Company (Sabco) is born
An American’s interest
In the 1930s, American tanner, glove manufacturer and civic leader William Donald Hyde established a South African office to purchase sheep skins for his glove manufacturing business. By 1938, he had expanded his South African interests considerably and had numerous agencies for American goods. The visionary businessman felt Coca-Cola would be a good addition.
April 27, 1940 heralded the birth of the S.A. Bottling Company (Pty) Limited, with William Donald Hyde appointing his two sons, Gordon Byron Hyde and William Donald Hyde Jnr (called Donald), to run the business. Gordon Hyde managed the long-established importing and exporting business while Donald Hyde headed the newly-formed S.A. Bottling Company (Sabco).
By June, the first bottling operation was commissioned in Port Elizabeth, with a Dixie unit capable of producing 75 cases of regular size (6 oz.) bottles of Coca-Cola per hour. During the first month of operation, sales totalled 142 cases and five bottles (sold by the bottle back then). By the end of the first year (a 13-month period), 15 151 cases had been sold.
The Gutsche connection is made
In October 1940, Philipp Rowland Gutsche joined Sabco in Port Elizabeth as a route salesman and, in March the following year, was transferred to Brakpan as manager of the new acquisition. Production was delayed when bottling machinery destined for Brakpan was lost off the coast of Africa, as a result of enemy submarine action during World War II. This setback did not affect sales as Coca-Cola was still distributed in the area.
After 16 years of hard work, Philipp R Gutsche acquired a portion of the company’s shares and was appointed a director. Brakpan was sold to the Coca-Cola Export Corporation, and the funds were used to strengthen the Port Elizabeth and Bloemfontein operations.
End of the Hyde era
William Donald Hyde Snr died in late 1959. Early the next year, his son Donald Hyde sold his shares in Sabco to his brother Gordon Hyde and Philipp R Gutsche, and returned to the United States.
Gordon Hyde then invited Philipp R Gutsche to Bloemfontein to discuss an agreement whereby, in the event of the death of either party, the surviving partner would be given the option of buying the shares of the deceased. This agreement was signed on 30 January 1960. Sadly, Gordon Hyde died just a few weeks later, and Philipp R Gutsche became the sole owner of the company.
Philipp H Gutsche joins the company
Philipp R Gutsche’s son, Philipp H Gutsche, spent every university holiday working for the company, and gaining experience in the business. In February 1961, with his studies completed, he joined the Coca-Cola Export Corporation in Johannesburg as a trainee, and in February 1962 was appointed as a field manager, based in Natal.
Just five months later, on the recommendation of the Coca-Cola Export Corporation, Philipp H Gutsche joined Sabco as manager of the Port Elizabeth plant.
Thirteen years later, in 1975, he would be appointed Sabco’s managing director.
The ‘60s and ‘70s: Blazing an acquisition trail
Between, 1963 and 1979, the South African Bottling Company acquired an enormous number of bottling operations throughout South Africa.
- In 1963, Sabco bought Consolidated South Coast Bottlers (Pty) Limited and, in 1964, built a new plant in Marburg, Port Shepstone.
- In 1964, Sabco acquired the Karroo Mineral Water Works (Pty) Limited of Middleburg Cape, and changed the organisation’s name to S.A. Bottling Company (Karroo) (Pty) Limited.
- In 1966, Sabco purchased Goodwins Mineral Factory in Kokstad, which bottled Royal Crown Cola and Hubbly Bubbly, and also distributed Pepsi Cola. Sabco discontinued these brands.
- In 1972, Sabco purchased Lesnev Bottlers (Pty) Limited of Kimberley, together with its associated company, P Sullivan & Sons (Pty) Limited.
- In 1973, Sabco acquired Umtata-based Nelson’s Minerals from the Xhosa Development Corporation.
- In March 1974, Allied Food & Beverages Company (Pty) Limited of Port Elizabeth (known as “Frootall” and bottling Pepsi in the Port Elizabeth area) was purchased.
- Orandia Minerals of De Aar in the North-Eastern Cape was acquired in May 1974 and in June 1974 Sabco bought Whytes Minerals of Cradock in the Eastern Cape. These two acquisitions allowed the company to eliminate Pepsi competition from the entire territory covered by S.A. Bottling Company (Karroo) (Pty) Limited.
- In 1976, Sabco moved its Umtata operations to its new plant at Vulindlela Heights.
- That same year, Sabco purchased the assets of Schweppes S.A. (Pty) Limited in both Bloemfontein and Port Elizabeth.
- In 1978, Sabco broke the ground for its new Port Elizabeth plant – an investment of R2-million for the grounds and buildings alone.
- Later that year, Sabco purchased the entire shareholding of Outeniqua Bottlers (Pty) Ltd, the Coca-Cola franchise bottlers in George. This included a new modern factory, built in 1976.
- In 1979, in two separate deals, Sabco acquired the entire shareholdings of the Pietersburg Coca-Cola franchise as well as the Kuruman and Lichtenberg franchises. Lichtenburg was later exchanged for Queenstown.
The South African picture was thus completed – a responsibility for 77% of the landmass of the country, 30% of the consumers and 17% of The Coca-Cola Company’s business in South Africa at the time.
The ‘80s: Producing that perfect Coca-Cola
In the 1980s, much time and energy was devoted to perfecting Sabco’s manufacturing process to ensure it consistently produced that perfect Coca-Cola. At the same time, the company focused on growth opportunities in the existing markets.
In both these areas, the Group excelled, soon establishing itself as one of the pillars of the Coca-Cola system in Southern Africa.
During this decade, Sabco’s solid performance remained impressive, with sales out-performing the national soft drink average. It was an era of ‘double digit’ sales growth.
The ‘90s: The African adventure begins
Back in the global market
In 1990, and for the first time in almost two decades, South African companies like Sabco were able to compete in the global market.
In February 1993, Carl Ware, President of The Coca Cola Company’s Africa Group, met with Philipp H Gutsche and offered Sabco the Mozambique Coca-Cola franchise.
A few months later in July, Philipp H Gutsche convinced the Governor of the South African Reserve Bank to support the first South African Coca-Cola Bottler venture outside of the country – and thus the ‘African Adventure’ began.
In May 1994, Sabco commenced operations in Maputo, Mozambique. The astronomical growth in Mozambique proved to The Coca-Cola Company (TCCC) that Sabco, which had proved to be a ‘willing to do, can do and able to do’ company, could be trusted with nurturing their goals in Africa.
In October, TCCC made the first move by announcing their return to South Africa after a six-year absence and subsequently making South Africa part of its global market again.
Sabco achieves world-class status and recognition
During its absence from South Africa, TCCC started developing an elite global network of its top operations, called Anchor Bottlers.
Sabco, with its proud record of consistently out-performing other South African bottlers, was added to the network in November 1995, becoming the seventh Anchor Bottler of The Coca-Cola Company globally, a position that gave the company greater access to further investment opportunities.
In the true spirit of this achievement, the company changed its name to Coca-Cola Sabco, to reflect the new partnership commitment.
It was also the start of a joint venture between The Coca-Cola Company and the Gutsche family. Philipp R Gutsche retired as Chairman of Sabco, and his son Philipp H Gutsche was appointed Chief Executive Officer and Executive Chairman of Coca-Cola Sabco.
Sales for 1995 soared to 50-million unit cases.
Africa opens its arms to Coca-Cola Sabco.
On the same day Coca-Cola Sabco (CCS) was named an Anchor Bottler, four African countries were added to the new company.
The Coca-Cola North Africa Division asked CCS to partner their efforts in Kenya, Uganda and Tanzania. With fairly low per capita consumption figures, this was the type of challenge CCS had been denied in the preceding ten years. Namibia was also included in the joint venture.
Management teams were selected for each country. Together with the local teams, they wrote the script for an ambitious future.
- Doug Ivester, Chairman of The Coca-Cola Company, and President Benjamin Mkapa opened the new Mikocheni plant in Dar es Salaam, Tanzania.
- Coca-Cola Sabco Mozambique opened its new plant in Chimoio.
- Flamingo Bottlers in Nakuru, Kenya, was added to the Coca-Cola Sabco Group.
- The Mbarara plant in Uganda was officially opened.
- Ethiopia and Coca-Cola Sabco signed a joint venture agreement with plants in Addis Ababa and Dire Dawa.
- For a short period, Coca-Cola Sabco managed the operations in Zambia on behalf of The Coca-Cola Company and the Cook Group, another South African-based bottler.
Within six years of joining The Coca-Cola Company’s global network, Coca-Cola Sabco established itself as one of the leading bottlers in Africa, and one of very few with multiple country responsibilities.
New managing director leads transformation
August 1998 saw the retirement of Managing Director Tom Crisp, after 25 years’ service, and the appointment in his place of Martin Jansen, who immediately embarked on a transformation process to meet the demands of a rapidly changing business landscape.
Martin Jansen introduced the Competency and Capability Model, together with a Vision, Purpose and Values statement.
2000: Golden Jubilee and the end of an era
2000 marked the company’s 60th anniversary, with Philipp R Gutsche proudly reflecting on the growth of the company.
During its first year of operation, the Port Elizabeth plant sold 15 151 cases of regular 6 oz. bottles, a drop in the ocean compared with the 151 million unit cases it sold in 2000 – the equivalent of 204 million cases of 6 oz. drinks.
Sadly, Philipp R Gutsche did not live to celebrate the official 60th anniversary of the empire he had nurtured. He died peacefully on February 12, 2000, his passing marking not only the closing of an era but the dawn of a new one in a new millennium with its own challenges.
A world-first for Coca-Cola Sabco
In May 2000, Coca-Cola Sabco’s Port Elizabeth Plant made international history when it was awarded The Coca-Cola Company’s highest distinction for quality system implementation. The Coca-Cola Company’s Chairman, Douglas Daft, visited Port Elizabeth to present the award, which recognised the plant for being the first out of nearly 200 countries to achieve full accreditation for meeting all the stringent requirements for The Coca-Cola Quality System (TCCQS).
Africa grows and develops
- Coca-Cola Sabco introduced new non-carbonated beverages to South Africa, confirming its commitment to ensuring its products are always the beverages of choice, by providing beverages to suit all consumer tastes.
- An impressive new Coca-Cola Sabco plant in the Ugandan operation was opened in Namanve, just outside the country’s capital, Kampala. Situated on 10 hectares of land, the new plant was equipped with three bottling lines, warehouse space for over 120 000 cases of soft drinks, a 26,000m² concrete yard and the latest technology in water treatment.
- Coca-Cola Sabco opened its new bottling operation in Mozambique in the Northern town of Nampula – the third plant opened since 1994, reflecting the immense growth of the business over just seven years.
- In October, Philipp H Gutsche handed over the office of Chief Executive Officer (CEO) to Martin Jansen, and took up his new role as Executive Chairman of Coca-Cola Sabco.
- Coca-Cola Sabco and Fortune Beverages Limited merged their South African operations, resulting in the formation of Coca-Cola Fortune, and incorporating both the East London and Nelspruit territories in the deal.
- East Kenya Bottlers Limited jointed its two sister Coca-Cola Sabco plants in Kenya, Nairobi Bottlers Ltd and Flamingo Bottlers Ltd, which were acquired by Nairobi Bottlers in October 2001.
- East Africa Bottling Share Company (EABSC) of Ethiopia celebrated the start of the US$6.4-million upgrade project of its Addis Ababa plant.
- BevServ, a beverage services company, was established to provide value-adding services and business solutions to Coca-Cola Sabco and other clients, but focusing mostly on the beverage industry.
- In an effort to further grow their business in alternative beverages, Coca-Cola Sabco’s operations in Kenya entered into a joint-venture with The Coca-Cola Company and other bottlers in the country, forming a company called Beverages Services Kenya Ltd.
- Coca-Cola Fortune was the first Coca-Cola Sabco operation to ‘Go live’ on SAP implementation – the world’s first end-to-end bottling solution within the Coca-Cola system. In order to achieve this, Coca-Cola Sabco and Dimension Data created a joint venture company called Dataflo to develop and implement a fully-integrated IT system for Coca-Cola bottlers.
- Uganda became the first country in Africa to achieve full TCCQS Phase I, II and III accreditation in all its plants.
A change in leadership
In January 2004, Philipp H Gutsche relinquished his role as Executive Chairman of Coca-Cola Sabco, but continued as Non-Executive Chairman of the Board of Directors. He handed over his executive duties to CEO Martin Jansen, who was supported by his Group Management Team.
2004: Hello Asia!
During April and May of 2004, Coca-Cola Sabco acquired bottling rights from The Coca-Cola Company for Vietnam, Sri Lanka and Nepal, and made its first move out of Africa.
These acquisitions were in line with the Group’s growth strategy to expand into emerging markets, in order to underpin the organisation’s position as an Emerging Markets Specialist.
In terms of the 2004 agreement, Coca-Cola Sabco owns and operates three plants in Vietnam, two in Nepal and one in Sri Lanka. Together, the three countries employ more than 1,600 people and services over 120 million people.
In June that year, Cambodia and Laos were added to the newly-formed Coca-Cola Sabco Asia Division, servicing more than 150 million consumers in over 200 000 outlets in its five Asian operations.
Touching lives after devastating tsunami
On 26 December 2006, thousands of Sri Lankans were killed by a powerful earthquake and resulting tsunami, on what should have been the celebration of a religious holiday called Uduyap Poya Day.
Shareholders, management and staff in the Coca-Cola Group of Companies in Africa and Asia responded swiftly with contributions and support (providing resources and financial assistance), as well as much-needed safe drinking water.
Asian territories make their mark
Coca-Cola Sabco Vietnam became the first bottler in the Southeast and West Asia (SEWA Division) to pass the Global Quality Compliance Audit with an A-Grade at its three plants.
Coca-Cola Beverages Sri Lanka Ltd became the first Coca-Cola Sabco plant in Asia to achieve Hazard Analysis of Critical Control Point (HACCP) accreditation and later passed the Global Compliance Audit by Coca-Cola Atlanta. The Sri Lanka operations also commissioned and opened its own world-class Blow Moulding facility, producing up to 6 000 bottles per hour.
Mid-2000s: Africa gets stronger and Asia grows
In April 2005, Coca-Cola Sabco, in its quest to become the “best Coca-Cola bottler in the world”, opened one of the biggest soft drink plants on the African continent. The US$25-million bottling plant at Embakasi, Nairobi made a bold statement about Coca-Cola Sabco’s long-term view on the Company’s investments in Kenya.
In November, Coca-Cola Fortune’s Port Elizabeth Plant underwent a US$10-million refurbishment project, which included the installation of a new high-performance PET (polyethylene terephthalate) bottling line. Boasting the latest technology, its manufacturing capacity was 20,000 2-litre bottles and 28,000 500ml bottles per hour.
Following the inaugural SAP ‘Go-Live’ by the South African operation, Coca-Cola Fortune, in June 2003, the Coca-Cola Sabco Group of Companies implemented SAP in five operations, namely Namibia and Uganda in 2004, and Kenya, Tanzania and Mozambique in 2005.
The mid-2000s: The achievements continue
- Coca-Cola Sabco acquired a strategic minority share in the Southern Thai Bottler, Haad Thip Public Company Limited.
- November 1 marked the 10th anniversary of the joint venture partnership between Coca-Cola Sabco and The Coca-Cola Company.
- Mr Neville Isdell (Chairman and CEO) of The Coca-Cola Company visited the new state-of-the-art Embakasi plant in Kenya.
- Following the launch of the ‘I am the Values’ initiative in 2004, Coca-Cola Sabco entered the next stage with the roll-out of the ‘Everest Challenge’ Values journey.
- Coca-Cola Beverages Sri Lanka’s Coca-Cola ‘Fun Island’ promotion was nominated in The Coca-Cola Company Global Marketing Excellence Awards, for reaching new heights and standards.
- Mozambique’s Nampula plant celebrated its fifth anniversary of operation for Coca-Cola Sabco in Mozambique.
- Ethiopia set a new standard for manual distribution centres (MDCs) with the launch of the Distributors’ Operating Standards Assessment (DOSA), enabling MDCs to be more competitive, while enhancing their standard through the promotion of the company image and brand.
- Coca-Cola Sabco was honoured with the Editors’ Choice Award at the inaugural Herald-Absa-NMMU Business Person of the Year competition in Port Elizabeth, South Africa.
- The vibrant, exciting ‘Coke Side of Life’ campaign took the world by storm as it exploded onto the market.
- CEO Martin Jansen bid Coca-Cola Sabco farewell to join The Coca-Cola Company’s bottling operation in China.
- Coca-Cola Sabco welcomed Stephanus (Fanus) Nothnagel on board as its new CEO.
- In a move to be even more effective, Coca-Cola Sabco restructured its Executive Committee and its operation into three Divisions, namely North & East Africa Division (NEAD), South East & South West Asia Division (SESWAD) and the Southern Africa Division (SAD).
- Mozambique’s Nampula plant was awarded full E3 Certification (Quality/Environment/Safety), making it the fourth fully-E3 plant, together with the Uganda’s Kampala and Mbarara plants and Kenya’s Nairobi plant.
- Nairobi Bottlers was singled out as one of Kenya’s most prestigious companies in the annual Company of the Year (COYA) awards for 2008 by attaining the First Runners-up Award
- Namibia Beverages became the first bottler in Africa to launch the 1.25L PET bottle to the public, The bottle, nicknamed the “Big Thirst”, was introduced for Coca-Cola, Fanta Orange and Sprite products in a festive street parade along Windhoek’s Independence Avenue, the capital’s main street.
- Coca-Cola Beverages Sri Lanka’s Biyagama plant, as well as Namibia Beverage’s Oshakati plant, received the prestigious Evolution 3 (E3) certification awarded as part of the Coca-Cola Management System (TCCMS).With the certificate, which recognises superior performance in Quality, Environment and Occupational Health and Safety arenas, the Biyagama and Oshakati plants have joined the ranks of top-quality Coca-Cola Sabco plants honoured by The Coca-Cola Company.
- Coca-Cola Fortune sneaked in a hard fought victory for South Africa’s Bottler of the Year (2008) trophy. The Bottler (Ownership) of the Year award is contested among the four South African Bottlers based on their volume growth in Sparkling, Still and Immediate Consumption packs, as well as their quality and market share for the year of 2008.
- Cambodia Beverages Limited achieved a silver award in The Coca-Cola Company Southeast and West Asia division for the Technical Stewardship.