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Coca-Cola Completes Buyout of Nigeria's Dairy & Juice Maker

Zacks Equity Research

The Coca-Cola Company KO has acquired full stake in Nigeria’s leading producer and distributor of value-added dairy, iced tea and juices — Chi Ltd. In 2016, Coca-Cola had acquired 40% equity stake in Chi. As previously planned, the company increased its stake in Chi to 100% after three years.

Notably, Chi’s diversified beverages fully complement Coca-Cola’s existing portfolio and provides it solid opportunities to expand in new categories and strengthen its business in Africa. This is in sync with Coca-Cola’s mantra of evolving as a total beverage company. In fact, the latest acquisition perfectly fits in with the company’s long-term investment and growth plans for Africa as juices and value-added dairy categories are among the fastest-growing beverage segments in Nigeria and Africa. Investment in leading value-added dairy and juice brands like Hollandia and Chivita, should bolster Coca-Cola’s beverage portfolio in Africa, where the company has operations for more than 90 years.

The company has been eyeing strong consumer opportunity in Africa as clear from its plans to invest around $17 billion in the continent between 2010 and 2020.
Overall, Coca-Cola commands a strong presence in the developing and emerging markets of Latin America, India, Russia and China encouraged by growth opportunities that these countries. Among these, China represents a significant long-term growth opportunity for Coca-Cola, where it is presently investing $4 billion. Markedly, this is an addition to the $9 billion of investments already made in China since 1979.

Additionally, Coca-Cola plans to explore opportunities in the $500-billion coffee market, particularly the on-the-go-coffee business with its recent buyout of Costa. It is also looking to enter into the fast-growing cannabis market like many of its beverage peers.

These apart, the company has been gaining from the ongoing productivity efforts and disciplined growth strategies. Coca-Cola’s strategy of introducing new products alongside focusing on lifting and shifting successful brands globally is aiding its performance.

In past six months, this Zacks Rank #3 (Hold) stock has gained 3.2% against the industry’s 8.4% decline.

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Monster Beverage Corporation MNST has long-term earnings growth rate of 16% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coca-Cola European Partners plc CCEP delivered average positive earnings surprise of 3.3% in the trailing four quarters. It has long-term earnings growth rate of 8.7% and a Zacks Rank #2.

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