The La casera Company, one of the leading soft drinks companies in Nigeria sees a bright future for the industry.
Speaking recently with the media, the company’s Managing Director, Roland Ebelt described the recession as a telling experience, noting that an industry that was once growing at a rate of between 5% and 10% per year since the 1990s suddenly came to a screeching halt due to a drop in consumer spending caused by the recession.
He noted that the depreciation of the naira had a profound impact on his firm and the industry as a whole as prices of raw materials such as sugar, plastic, and other ingredients skyrocketed leading to record losses for industry participants.
The MD who joined the company a few years ago said that the naira depreciation affected both cost of imported raw materials and locally sourced raw materials like sugar which it buys from Dangote. The impact of the rising costs was felt in virtually all areas of the industry operator’s financial structure leading to losses because they all sold at the same price.
Ebelt credits the government for finding a way to stabilize the exchange rate as that has led to stabilization of raw material costs. He notes that the cost of sugar and plastic has decreased marginally following the exchange rate stabilization.
The MD of La casera said his company holds about 4% market share of the soft drinks industry, the same as Big Cola, while Coca-Cola and Seven-Up Bottling Company, the bottler of Pepsi-Cola hold 50% and 40% market share respectively, with the remaining 2% held by small regional players.
The company which is known for its namesake apple drink (La casera Apple drink), as well as Smoove Chapman and others, said that its focus is to grow market share in Nigeria, though it admitted it will take some time. He noted that the firm’s products are sold all across the West African coast by merchants, in places like Ghana, Benin Republic, Togo, Senegal among others, however, noting that the company does not have a physical presence in these countries. He said that the Nigerian market is its primary focus because two-thirds of the population of West Africa lives in Nigeria.
The MD said that the main challenges the industry still faces are poor roads and unstable power supply. Security, he said has improved, though there are still pockets of violence from time to time.
He said that the government should continue to work on stabilizing the naira, adding that there also needs to be an industrial policy to ensure energy supply to industry and consumers are adequate because no business can operate without energy as operating on generators is not only costly but bad for the environment. He said that Nigeria has enough gas to produce energy from gas-powered plants, adding that the way to do this is to look at local solutions like independent power plants, whereby every community needs to have its own power supply. He cites Agbara industrial Park as a good example of a thriving independent power supply model.
The company which was hit by industrial action and a temporary shutdown in 2015 said that those issues have now been resolved and the company follows union processes – the national contract between the beverage union and the employers. He stressed that the company pays its employees what the market requires it to pay.
Commenting on its flagship La casera Apple brand, Ebelt said it now contains 5% apple as against 4% in the past. He adds that the drink contains actual juice and less sugar.
He called on its two major stakeholders, dealers and consumers to buy its products. For consumers, they are getting the best quality apple juice there is in the market and comes in a fresh new packaging. And for dealers, dealing in these types of products has always been profitable and continues to be profitable. Today, plastic is one-third of the market and as this segment is growing because more and more consumers are coming in, the opportunities for beverage dealers also increases.