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Tuesday 02 September 2014

The Coca-Cola Company

Nathan Kalumbu, Business Unit President Coca- Cola East & Central Africa explains the company’s sustainability strategy.

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Coca-Cola, Kenya

Coca-Cola: The World’s Most Valuable Brand

Established in 1886, The Coca-Cola Company operates in more than 200 countries, and markets nearly 500 brands and more than 3,000 beverage products around the world. These products include sparkling (carbonated soft drinks) and still beverages, such as waters, juices and juice drinks, teas, coffees, sports drinks and energy drinks. In Africa alone, we operate in all the territories in the continent. We are a global business that operates on a local scale in every community where we do business. In each one of the countries in which we operate, we employ local people, source local ingredients and produce and sell our products locally, thereby directly and indirectly creating millions of jobs, investment and economic opportunities.

 

We create global reach with local focus because of the strength of the Coca-Cola system, which comprises our Company and our independent bottling partners, which are more than 300 worldwide. Voted for 11 years in a row by Interbrand as the world’s Most Valuable brand, Coca- Cola’s enduring commitment is to refresh consumers by delivering the highest quality, best tasting variety of beverages to satisfy every lifestyle, life stage and occasion.

 

Our Footprint in Africa

Coca-Cola began operations in Africa in 1928, in South Africa. Local production began in 1949 in Tunisia. By the 1960s, Coca-Cola had gained a foothold on the continent, establishing presence in Mozambique, Ethiopia, Kenya and Djibouti. By 1970, Coca-Cola was available and enjoyed in virtually all African countries. We have four of the world’s top five nonalcoholic sparkling beverages, namely Coca-Cola, Diet Coke, Fanta and Sprite. Today, we have more than 160 bottling plants on the continent and are one of the largest private sector employers.

 

In Kenya, Coca-Cola’s footprint spans over 60 years. Our beverages are manufactured, packaged, merchandised and distributed by our seven bottling partners – Nairobi Bottlers, Coastal Bottlers (Mombasa), Equator Bottlers (Kisumu), Mount Kenya Bottlers (Nyeri), Rift Valley Bottlers (Eldoret), Kisii Bottlers and Beverage Services Kenya (Industrial Area Nairobi), creating an unmatched reach in the Fast Moving Consumer Goods (FMCG) sector.

 

Sustainable Success

Coca-Cola is one of the leading blue-chip companies that have embraced inclusive business practices or sustainability to achieve success, on a global scale. We work closely with our customers, who distribute our offerings – sparkling beverages, water and juices, to our consumers.

 

The recently announced Fruit project with local farmers in Kenya and Uganda and work on sustainable water sources, are highlights of what we view as doing business in a way that benefits the long term interests of the different facets of the communities in which we operate while at the same time growing the economic value of our local businesses.

 

We define sustainability as creating meaningful benefits for society as we manage and grow our business – in effect, an inclusive business model.

 

“We strive to embed sustainability into every aspect of our business. Our business model ensures that we create employment and entrepreneurial opportunities for thousands of Kenyans. Our system creates value for everyone who touches our products along the value chain and contributes positively to the economy,” says Nathan Kalumbu, Business Unit President Coca-Cola East & Central Africa.

 

Our commitment to integrated  

 

sustainable business practices is broadly supportive of the developmental agenda of the Kenya Government as espoused in the long term development strategy paper – Vision 2030. This is also why we are passionate about the sustainability of the communities in which we do business. If extreme poverty and hunger can be eradicated, the goal of achieving universal primary education becomes more viable. If gender equality and women’s empowerment issues are addressed, the improvement of maternal health and the reduction of child mortality become possible.

 

Similarly, we see environmental sustainability as a priority to communities where basic needs of hunger, health-care and education have been realised. In focusing on our core business, we are in effect helping to make a real change to the lives of many people.

 

Live For a Difference (L4AD)

The framework for our commitment to sustainability is called “Live For a Difference” or L4AD. Live for A Difference is a way for us to think holistically and globally about sustainability efforts throughout the Coca-Cola system. It is a modern expression of our company’s heritage of caring about our people and the planet. It includes goals, metrics and principles for our work in developing beverage benefits; supporting active & healthy living programs; building sustainable communities; improving environmental programmes for our operations; and creating a safe, inclusive work environment for our employees.

 

Inclusive Business Model

As economies grow, prosperity is not spread to everyone. We have designed business practices that will ensure that those who traditionally would otherwise not be in the mainstream of entrepreneurship find a place in our value chain or supply chain with the ultimate aim of improving their own life and that of their family.

 

Micro Distribution Centres (MDCs)

In a bid to expand the reach of our brands to consumers everywhere, we continually review our distribution models. Infrastructural challenges in Kenya, remain a key concern for product accessibility in the country. In many cases, roads are not suitable for heavy trucks and small shops cannot store bulk deliveries of products. We therefore work with local entrepreneurs to build distribution centres that function as hub points from which products are delivered using low cost means- such as bicycles, pushcarts, motorcycles or small hybrid vehicles- to hard-to-reach small retail outlets in urban and peri-urban centres across the country.

 

Although this business model is present in more than 15 African countries, in Kenya, we have over 700 MDCs. A typical MDC supports an average of 200-400 stores. Each store owner supports a family base of between 4-11 people. Coca-Cola MDCs in Kenya serve about 100,000 stores, reaching over a million people with our products daily.

 

“This model is especially beneficial for economic development because it populates the so-called “missing middle” with competitive business opportunities. Research shows that small and medium enterprises, such as MDCs, are the engine of macro economic growth since every dollar invested in a small enterprise generates $12 (Sh900) of activity in the local economy,” says Mr Kalumbu.

 

The small businesses that are serviced by MDCs also benefit from the model because they gain a product supply that is reachable, affordable, and reliable. Small retailers get better customer service and more frequent deliveries. For these cash-based, high turnover businesses, being able to purchase small quantities with frequency is a real advantage.

 

Additionally, the MDCs have proven to be an important opportunity for women. In Kenya, MDCs have created entrepreneurship opportunities for over 300 women, who own or manage these businesses. These opportunities build the skills, confidence, and social status of women in our communities.

 

There are also innumerable multiplier effects. MDC owners can use their contracts with Cola-Cola to secure financing for business expansion and for mortgages and educational loans. Owners report that MDCs enable them to better educate their children, and provide them with the business knowhow and confidence to initiate additional investment opportunities.

 

The Farmer as a local business partner

Early in 2010, The Coca-Cola Company entered into a partnership with the Bill & Melinda Gates Foundation to enable 50,000 mango and passion fruit farmers in Kenya and Uganda participate in the Coca-Cola supply-chain for the very first time. Of the 50,000, about 37,000 farmers

 

are in Kenya. The project aims to support smallholder farmers by building their capabilities and providing access to credit facilities to improve fruit yields, enabling farmers to double their average daily income from Sh95 to sh190 per kg. It will also enable us increase local supply of juice and improve local processing infrastructure to allow for the development of the company’s local juice business while also potentially providing surplus product to our global system.

 

Small farmers are being empowered to capitalise on the increased local and global demand for juice by supplying fruit that meets the needs of local buyers. The programme aims to enable growers to lift themselves out of poverty by doubling their incomes with gains from improved productivity and the sale of fruit for processing as well as of fruit for the fresh market. Increased incomes often result in better health, increased education opportunities for children and greater empowerment for women, among other benefits. Increased production of fruits can help to secure local food supply and improve nutritional intake of rural populations.

 

A variety of measures are in place to help ensure that the benefits for participating farmers continue accruing beyond the 4-year lifespan of the project.

 

“We are helping farmers to set up and strengthen business-oriented producer groups, the farmers will have lasting networks for pooling resources and saving on transaction costs. These organisations will also serve as information centres for future farmers to learn best practices. The project will also establish a sustainable supply chain between farmers, juice processors, and Coca-Cola that will last beyond 2014”.

 

Not only is this endeavour helping to secure jobs but it is also addressing issues of food security, poverty and hunger.

 

Our Commitment to be waterwise

The Coca-Cola Company has committed to return to communities and nature an amount of water equivalent to what we use in our beverages and their production by 2020. We will do this by Reducing, Recycling and Replenishing.

 

To achieve our water stewardship goal, we are focusing our efforts in three areas:

  • Reducing our water use ratio while growing our unit case volume. We have a global target to improve water-use efficiency by 20 per cent by 2012.
  • Recycling water used in our manufacturing processes and returning it to the environment at a level that supports aquatic life. Eighty eight per cent of our bottling operations comply with this stringent wastewater treatment standard, and we have pledged 100 per cent compliance by the end of 2010.
  • Replenishing water in communities and nature through the support of healthy watersheds and community water programs to balance the water used in our finished beverages.

 

In response to the severe water challenges faced by the nearly 300 million Africans living without access to clean water, The Coca-Cola Company launched the Replenish Africa Initiative (RAIN). RAIN aims to provide over 2 million people in Africa with access to clean water by 2015. RAIN is The Coca-Cola Company’s contribution to helping Africa achieve the United Nation’s Millennium Development Goal on access to clean water and sanitation. RAIN has been made possible by a 6 year $30 million commitment by The Coca-Cola Company. RAIN will leverage this investment and aims to attract dollar for dollar match funding over its 6 year lifespan. Already RAIN has secured 100 per cent matching funding for all current projects from the US Agency for International Development (USAID) and others and continues to seek additional cofinance partners for subsequent years.

 

In Kenya, we have undertaken several such projects aimed at increasing access to sustainable safe water and sanitation services in communities and schools, promoting behavior change and point-ofuse drinking water treatment, strengthening governance of water resources as well as expanding economic uses of water by the poor.