Palatinose - Soft Drinks International

10 AFRICA
Soft Drinks International – February 2011
Uganda perseveres
with vanilla
WHEN a tropical cyclone hit Madagascar,
the world’s dominant producer of vanilla, in
April 2000, farmers in Uganda and other
African countries where conditions were
suitable, rushed to plant the crop.
Over the next few years, they did well,
some of them spectacularly so as international
market prices rose steadily. This was
helped by political instability and other factors
in Madagascar which slowed the industry’s
recovery. But recover it did, bringing
prices down, reintroducing market stability
and hurting some of the new vanilla producers
who had predicated their change of
crop on high revenues.
Since the mid-2000s, many of the opportunistic
farmers in Uganda have pulled out
completely, returning to former or other
crops. Incomes have dropped hugely. But a
few small community associations, such as
the Bitutwa Farmers’ Group, have worked
with Uvan, Uganda’s main vanilla processor
and exporter, to maintain and even extend
plantations.
Juice players in big
wine bid war
FOR some large beverage producers, soft
drinks and wine or other alcoholic products
are a good fit. For others, there’s a preference
to stick on one side of the ‘fence’. Over
recent months in South Africa, juice and fruit
drinks have played a role in a complicated bid
for control of the almost iconic wine and
brandy producer, Paarl-based KWV Holdings.
KWV, which was formed in 1918 as a
grower co-operative, has extensive interests
in the wine and spirits sector, with many of its
products being amongst popular South
African wine offers on export markets.
It was also previously a grape juice producer
but, as we reported at the time, it
decided in July 2009 to sell its concentrate
plant in Upington, Northern Cape, to the
neighbouring Orange River Wine Cellars. The
purchaser had been the plant’s sole contract
supplier for years and everyone agreed the
move made a lot of commercial sense, with
KWV saying it preferred to focus on its core
business of wine and spirits.
Looking at things in quite a different way,
the big FMCG group Pioneer Foods began a
bid for KWV, citing a desire to have wine and
brandy in its portfolio alongside its many juice
and fruit drink brands. These include some of
South Africa’s biggest-selling juice beverages,
including Ceres and Liqui-Fruit.
Pioneer is also a Pepsi bottler and has a
number of other soft drinks lines such as
Daly’s, Jungle Yum and Wild Island.
The bid ticked away over the southern
summer but it became increasingly obvious
Grading vanilla beans in Madagascar. Photo: Jonathan Talbot, World Resources Institute.
They are succeeding through co-operative
initiatives, an emphasis on quality control and
organic cropping, financing and other assistance
from Uvan, and by balancing vanilla
with other crops. Uganda’s vanilla production
that Pioneer Foods was not going to get the
required 75% shareholder support. Pioneer
and KWV issued a statement saying they had
ended discussions and that KWV was “no
longer subject to an offer period as defined in
the SRP Code”.
KWV also dismissed speculation that it was
in negotiations with others, including the UKbased
Halewood International which had
made no secret of its desire to one-up on
Pioneer.
Pioneer and KWV stressed that “the termination
of the transaction is not related to the
business performance of KWV or the trading
update released by KWV earlier”. For some
stakeholders the issue was the 12 rand share
price of the Pioneer offer, which some felt
was too low.
Within a few days of the Pioneer bid termination,
however, Hosken Consolidated
In brief…
● The Tanzanian government’s long-running
bid to clean up the country’s chaotic outdoor
advertising, especially in Dar es Salaam, has
again been opposed by many of the key players.
As in other African countries, soft drinks
brands use billboards extensively in Tanzania
and many are affected by the policy. The bigger
outdoor practitioners have argued that
their billboards meet professional standards,
generate good revenue streams for local government
and also bring in substantial tax revenue
for the central government. The Tanzania
Roads Agency has been endeavouring to pull
down most billboards and gantries along main
roads, while outdoor specialists have coun-
now seems assured, despite Madagascar’s
return to dominance.
Soft drinks are a key user of vanilla as an
ingredient, although vanilla also has many
other applications.
Investments (HCI) bought 21.8 million shares
from Zeder Investments: Zeder retained
about 2 million shares. WCI paid only 11.8
rand, a price Zeder was happy about given
the significant increase in value since purchase.
Zeder said the remaining 2 million shares
were available, hinting that it would sell only at
a higher price. Zeder also has a significant indirect
stake in Pioneer – it holds 41% of Kaap
Agri which owns over 27% of Pioneer.
HCI was a major shareholder in the dairy
and juice giant Clover, selling out last year. It
has described its KWV buy as opportunistic
and is seen as being open to offer, whether
by Halewood or another company seeking
control of KWV, a merger or other arrangement.
The KWV ownership saga is likely to continue
for some time yet.
tered this with injunctions. The companies are
also miffed that, while most billboards would
disappear from roads, the agency has given
two companies exclusive rights to permitted
locations.
● Two large delivery trucks carrying nonalcoholic
malt-based soft drinks ran foul of
religious authorities in Kano State, Nigeria. The
Islamic police had apparently been tipped off
that the articulated trucks were carrying alcoholic
drinks, prohibited in the area. Despite
pleas from the drivers, and from a nearby
civilian police patrol, they slashed tyres and
confiscated fuel.