Major investments for regional drinks sector

By Eliot Beer

- Last updated on GMT

Major investments for regional drinks sector

Related tags: Middle east

The Middle East drinks industry is seeing significant investment, with Aujan spending in Egypt and Lebanon, and UK firm Rexam buying up a Saudi can manufacturer for US$122m.

Saudi firm Aujan Coca-Cola has said it will build a US$100m fruit juice factory in Egypt, and expects to make more regional investments in the near future. In January, the Saudi company acquired 80% of Lebanese drinks firm National Beverage Company for an undisclosed amount.

The new Egyptian plant will be operational by 2017, and construction work has already started, according to Aujan Coca-Cola. The investment will be a boost to Egypt, which has seen many regional firms shy away from investing in the country, over concerns around political and social stability, and also their ability to repatriate profits from Egypt-based ventures.

Long-term growth

January's deal saw Aujan Coca-Cola agree the purchase of an 80% stake in Lebanon's NBC from parent company Transmed, a regional beverage distributor. NBC is the distributor for Coca-Cola in Lebanon.

This partnership reflects [Aujan Coca-Cola's] commitment to invest in beverages for long-term growth, and we look forward to developing and growing this business over time. We will work closely with the local team over the coming months as we embark on what we believe will be a highly successful partnership for the employees, consumers and suppliers of NBC​,” said Aujan Coca-Cola CEO Nicolaas Nusmeier at the time of the NBC deal.

Nusmeier has also suggested Aujan Coca-Cola will make more regional acquisitions and investments in the near future, without providing any details.

Two years ago Coca-Cola bought nearly 50% of Aujan's Saudi operations for US$980m, as part of the US drinks giant's plan to invest US$5bn in the Middle East beverage industry.

Canned investment

Meanwhile UK-based Rexam has agreed to purchase 51% of Dammam-based United Arab Can Manufacturing (UAC) for US$122m. The deal is expected to close in Q3 this year, subject to regulatory approval.

UAC is a modern business with respected partners, well established customer relationships, a strong competitive position in an attractive market with good returns. While the plant is operating well, given our own global scale and technical expertise, we see a number of opportunities for synergies​,” said Rexam CEO Graham Chipchase.

Growth prospects for the beverage can in the Middle East are attractive and we look forward to working together with our partners in UAC to lead further expansion in the region​,” he added.

UAC currently produces around 1.8 billion cans a year, and supplies both Coca-Cola and PepsiCo, along with Heineken and other drinks producers. Its current owners, which include Aujan Industries, will continue to hold the remaining stakes in the company.

Related topics: Beverage

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