10 AFRICA <strong>Soft</strong> <strong>Drinks</strong> <strong>International</strong> – 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 <strong>International</strong> 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. <strong>Soft</strong> 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.
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