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Corporate

End of an era as Kenyan firm that took on Coca-Cola exits market

Mr Peter Kuguru has put up his 20-year-old Softa beverages firm for sale. PHOTO | FILE
Mr Peter Kuguru has put up his 20-year-old Softa beverages firm for sale. PHOTO | FILE 

Business tycoon Peter Kuguru has put up his 20-year-old Softa beverages company for sale, marking the end of an era in which a Kenyan firm took global giant Coca-Cola head-on.

Mr Kuguru announced Wednesday his Softa Bottling Company was exiting the market due to financial difficulties occasioned by failure to secure a joint venture partner.

The bottler’s products, including Softa soda, predominantly found acceptance among low-income consumers during its two-decade operation. 

“We have made a decision to go a different route. We have tried looking around for a joint venture partner without success. We advertised around the whole world but we did not get a joint venture partner,” said Mr Kuguru in an interview.

His strained business empire has diversified into other consumer goods like sanitary pads and diapers to stay afloat after hitting financial headwinds.

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He said a cash injection from an investor would have allowed the revamp and relaunch of the beverage maker, giving it more muscle to compete with its global rivals like Coca-Cola and Pepsi.

“We wanted to inject cash so that we can revitalise and relaunch the company. But unfortunately the climate for carbonated beverages at the moment in Kenya is not brisk and we do not want to go into losses but get out and give another person a chance,” he said.

Potential buyers will be allowed to bid for the whole business or buy the company’s assets.

Mr Kuguru remained cagey on the value of the plant. Estimates, however, show that if sold as a going concern Softa could be valued in billions of shillings.

“We have decided to look for an individual or a corporate that can come and buy us out. They can opt to buy the business or the assets. We are open,” he said.

A sale notice placed in the dailies identified assets owned by Softa Bottling Company as an operational plant with a capacity to produce 500 cases per hour.

The plant consists of a bottling plant, a water treatment plant, a syrup room plant, chiller plant, carbon dioxide plant, crates and bottles as well as boilers.

Also up for sale is a second decommissioned plant with a capacity for 1,500 cases an hour. All accessories in the second plant have also been put up for sale.

The buyer could also convert the processing plant for varied uses.

“This is a plant that can do many things. One can do soft drinks, water, carbonated drinks or even alcohol,” he said.

The veteran businessman bought Softa from Highlands Mineral Company in 1997. The latter was founded in 1947. In 1998, he launched Softa soda, which came with different tastes of cola, orange, bitter lemon, lemonade and pineapple.

Reflecting on the monumental decision to close shop, Mr Kuguru admitted Wednesday competition had got stiffer for Softa, leading to hard times for a company which epitomised the possible success of homegrown enterprise in its heyday.

“We have reduced our advertising budget over the years and this has reduced our returns,” said Mr Kuguru.

Softa has been an important player in Kenya’s soft drinks market estimated at over Sh100 billion and dominated by Coca-Cola, Pepsi and Del Monte.

Softa did well in the lower segment of the market in the 1990s and in later years announced plans to start processing fruit juices, raising competition in the ready-to-drink market segment in which Kevian — the makers of Pick and Peel and Afia juices — is also a significant player.

The popularity of sports as well as increasing openings of gyms and health spas in Kenya are key factors for growth in the market, according to a March 2016 Soft Drinks Report by Market Research Company Euromonitor International.

A burgeoning middle-class population, coupled with intensive marketing initiatives and cheaper pricing of products, has also seen the soft drinks market grow in Kenya, according to the report.

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