It does look like a major gamble, but then that would be nothing new for Coca-Cola, a company that has redefined the free spirit of capitalism.

At a time when the non-alcoholic beverages market has become very competitive, the giant soft-drinks firm and its partners have pumped Sh1.9 billion ($25 million) into an ultra modern bottling plant in Nairobi.

But the commissioning of the new Nairobi Bottlers Limited factory in Embakasi this morning by President Mwai Kibaki, marks a milestone in the restructuring of Coca-Cola operations, and the Government's industrialisation goal.

Speaking to BusinessWeek at the Sh1.9 billion plant's offices last Friday, Nairobi Bottlers managing director, John Donnachie, said that the consolidation of three bottling plants at the 4.04-hectare site is a culmination of Coca-Cola’s plans to rationalise its business by removing unnecessary costs from its operations in order to maintain affordable prices.

"One of the first steps we took towards returning to growth can be traced back to 2003 when we reduced the prices of our products in order to better meet the cost demands of our consumers," recalls Donnachie.

He says that the second important turning-point for Coca-Cola came last year, when the Government, in its 2004/2005 budget, agreed to slash excise tax from 15 per cent to 10 per cent, after the company lobbied for the decrease.

This, noted Mr Donnachie, is a testimony of successful engagement of government by the private sector in creating a business-friendly environment.

Coca-Cola and the Kenya Association of Manufacturers (KAM) had tried, for many years, to impress upon the previous government every year, to effect the tax chop.

Over the same period, Nairobi Bottlers made a decision to close its plants in both Machakos and Nakuru, a move that the CEO says was part of the bottler's strategy to become a "cost-efficient producer by taking unnecessary costs out of the business".

The operations of the two plants – East Kenya Bottlers in Machakos, and the Flamingo Bottlers plant in Nakuru, have now moved to the new location, which was owned by Anspar, former bottlers of Schweppes, the soft drink that evaporated in the stiff competition offered by makers of non-carbonated soft drinks and juices.

The old plant at Addis Ababa Road is expected to be moved to the new site by June, adding up to a total of six production lines.

Says Donnachie: "This makes Nairobi Bottlers one of the largest production lines in the Coca-Cola family in Africa." He adds that it now has a capacity of producing 75,000 cases (about 1.8 million bottles) of soda per day.

With the Embakasi plant now fully operational, Donnachie is confident that the company can now have a long-term view of its business with the aim of introducing new brands in the Kenyan market, depending on the dictates of consumer and market research.

Explaining the recent soda shortages experienced in some areas recently, NBL chief said that the prolonged hot weather increased demand of the company’s products by over 30 per cent while production grew by about 20 per cent over the same period.

"Although the Coca-Cola business is growing by double digits, the challenge now is to invest ahead of demand to satisfy the customer and consumer needs not just today but also in future," says Donnachie.

Nairobi Bottlers is a joint venture of Coca-Cola Sabco and the ICDC Investment. The company says that the $25 million investment is expected to lead to low production costs, stable pricing, competitiveness in the FMCG sector, improved productivity and higher growth potential.


The new world-class facility currently includes five filling lines, modern services, new syrup room and a new water treatment plant. The plant is also expected to be one of the most productive returnable-glass bottling operations in East and Southern Africa.

The $25 million investment puts Coke on renewed growth path besides huge production capacity and opens up fresh job creation opportunities.