Pepsi in $20-Million Partnership to Return to S. African Market : Investment: Group of prominent African Americans and soft drink maker announce joint venture in post-apartheid nation.
A group of prominent African Americans, including actor Danny Glover and basketball star Shaquille O’Neal, on Monday announced a $20-million partnership with Pepsi to reintroduce the company’s products to South Africa.
The announcement--designed to encourage others to make similar investments--coincided with South African President Nelson Mandela’s trip to New York in search of U.S. business investment in his post-apartheid nation.
The soft drink venture--believed to be among the largest by a group of individuals since Mandela renounced economic sanctions against South Africa last year--comes as companies are slowly considering investing in the nation.
Other companies that have announced a desire to reinvest in South Africa are CPC International, Eastman Kodak, Honeywell, International Business Machines and Sara Lee, according to the Investors Responsibility Research Center in Washington. Apple Computer, Hyatt International, Reebok and USAfrica Airways have all entered South Africa for the first time within the last year.
All told, 30 U.S. companies have invested in South Africa since Mandela renounced the sanctions last September, the research center said.
Investors in the venture with Pepsi-Cola International said they consider it appropriate for those who once worked for sweeping political changes in the formerly white-ruled country to support its new black leaders.
Announcement of the venture was timed to coincide with Mandela’s visit, said James A. Lawrence, president of Pepsi’s Asia, Middle East and Africa operations. Mandela told the General Assembly at the United Nations on Monday that economic development is crucial to the survival of South African democracy.
“We thought it was important to give him (Mandela) as much ammunition as possible in seeking out investors by being able to say, ‘Look what Pepsi is doing,’ ” Lawrence said.
The investors group, which includes Motown Records executives Jheryl Busby and Clarence Avant, attorney Johnnie L. Cochran Jr. and publisher Earl Graves, will initially provide $15 million and control 75% of the bottling venture. Pepsi will provide $5 million in start-up capital, with a goal of investing $100 million over the next three years, Lawrence said.
Pepsi had announced in June that it planned to re-enter the South African market, which it left in 1985 in protest of apartheid, the government’s policy of strict racial segregation and political and economic discrimination against nonwhites.
The new venture could prove golden for South Africa and Pepsi, said Bill Moses, a senior analyst with the research center.
“You’ve got some of the best-known black businessmen and managers here working with South African businessmen,” he said. “You’ve got a real chance for success with that package.”
The increased incomes of South Africans could benefit Pepsi especially, Moses said.
“When they (South Africans) get some money, they are going to buy sodas,” he said.
Moses noted that Pepsi may have to battle for its share of the nation’s 40 million consumers. Coca-Cola now controls more than 90% of South Africa’s cola market.
Associated Press contributed to this report.
