Nigerian soft-drink Company Big Cola has secured a $50 million (N15.3 billion) investment from UK-based Duet Partners, in a deal that could help the company compete better in the saturated consumer goods space.
Duet Private Equity Limited, a principal investor in emerging- and frontier markets, formally announced on August, 1st 2018 that it has acquired a majority stake in AJEAST Nigeria Limited, manufacturers of Big Cola.
The deal marks Duet’s 6th investment in the FMCG sector in Sub Sahara Africa, and its 1st ever in Nigeria.
Proceeds of the investment will be used to accelerate in select international territories, facilitate the launch of new products and brands, and increase our production capacity and volume, AJEAST told BusinessDay.
The company will also further intensify its focus on targeting a young demography of growing socio-economic segments, capturing both the significant advance of middle-income households, as well as the demographic dividend of the region’s expansive youth base.
The deal marks the fifth in the Nigerian consumer goods sector this year, following Affelka’s N21.45 billion buyout of Nigerian minority shareholders of 7up in January, De United Foods Industries Limited (Dufil) N775 million investment in Mimee noodles in April and Africa Capital Alliance (ACA)’s investment in Daraju Industries in July.
Echo venture capital’s investment in online fresh food shopping firm, Easy Shop Easy Cook, in April makes up the numbers.
The consumer goods sector in Nigeria has been tipped to continue to attract private equity interest, given its fast growing population which the UN estimates to hit 300 million by 2050, only behind China and India.
However, latest data from the Nigerian Bureau of Statistics (NBS) showed that in real terms, consumer spending fell 1 percent year-on-year in 2017, despite an 11.4 percent increase in employee income, the first increase since 2015.
The GDP of Africa’s most populous nation grew 1.95 percent in the first quarter, with full-year forecasts largely tilting towards 2 percent.
“At Duet we strongly believe in the African consumer growth story,” said Henry Gabay, CIO at Duet Private Equity Limited and Co-Founder at Duet Group.
“As the number of middle-income households in Nigeria and select West-African markets keeps expanding, and more consumers are entering the formal economy through urbanisation, the demand for products such as BIG Cola will grow exponentially,” Gabay said.
Manish Rungta, Managing Director at Duet Private Equity Limited, said: “We are delighted to work together with AJE Group to continue the footprint expansion of brands like BIG Cola in African markets.
“With its value proposition, AJEAST is uniquely positioned to capture market share in the rapidly expanding segment of affordable, high quality consumer goods,” Rungta said.
AJEAST is the Sub-Saharan Africa subsidiary of AJE Group, globally one of the largest multinational non-alcoholic beverage manufacturers. The Company was officially launched in Nigeria in September 2015, with a factory near Lagos.
Its brands include BIG COLA, BIG ORANGE, BIG LIME and BIG VOLT.
Angel Añaños, Chairman of AJE Group, was ecstatic about a partnership with Duet.
“We believe that Duet is the ideal partner to continue the growth of our brands in such a crucial market. We are confident that our longstanding experience will help replicate the successes we have had in our markets, and look forward to a fruitful partnership with Duet.”
“I am extremely excited about this partnership”, said Theo Williams, Country Managing Director, at AJEAST, “with a like-minded ally such as Duet, we believe we can steer this venture into new heights. We are committed to offering the highest quality products that are a viable alternative at an affordable price. Together we will grow to our full potential, and take up our rightful position as a valued contributor to the beverage industry on the African continent.
The initial introduction of BIG Cola into the Nigerian beverage market stiffened competition among the existing major players as they were forced to either increase the size of their products or reduce their prices.
