nigeriaSeven-Up Bottling Company

Company Profile and History

Seven-up Bottling company started business in Nigeria in 1960 as a limited liability company. The Seven-Up bottling company Plc is one of the largest independent manufacturer and distributor of well-known and widely consumed brands of soft drinks in Nigeria from nine manufacturing plants.

A Lebanese Mohammed El-Khalil who came to Nigeria in 1926 founded the company. Mohammed is the father of the company's current chairman Faysal El-Khalil. The company metamorphosed from a very successful transport business [El-Khalil Transport] in a bid to diversify the then largest transport company in West Africa. In the early 1990s when Pepsi International took over Seven-Up International, the company introduced the Pepsi brand in Nigeria.

In Country Location

247 Moshood Abiola Way, Ijora, Apapa, Nigeria;
Voice: +234-1-5803420-9;
Fax: +234-1-5877146, 5873030

Services and Products

Seven-Up Bottling Company Plc engages in the bottling and distribution of soft drinks. The company offers its products under the 7-UP, Mirinda, Pepsi, and Mountain Dew brands.

Number of Employees

3,458 Employees

Financial Information

Between 2004 and 2008, 7-up has grown sales by at a CAGR of 15.4%, from N15bn to
N30.5bn while profit after tax has grown annually on a compounded basis by 7%.

Currency in Millions of Nigerian Nairas Apr 02 2005 Apr 02 2006
Restated
Apr 02 2007
Reclassified
Apr 02 2008
Revenues 17,346.7 22,071.7 27,309.1 30,572.2
TOTAL REVENUES 17,346.7 22,071.7 27,309.1 30,572.2
Cost of Goods Sold 10,117.5 13,089.1 16,293.4 18,058.7
GROSS PROFIT 7,229.1 8,982.6 11,015.7 12,513.6
Selling General & Admin Expenses, Total 5,393.0 6,908.6 8,359.3 9,246.7
Other Operating Expenses -3.2 -3.5 -14.2 -10.9
OTHER OPERATING EXPENSES, TOTAL 5,389.8 6,905.1 8,345.1 9,235.8
OPERATING INCOME 1,839.3 2,077.5 2,670.6 3,277.8
Interest Expense -191.9 -278.6 -606.9 -673.3
Interest and Investment Income -- 2.8 4.3 4.5
NET INTEREST EXPENSE -191.9 -275.8 -602.5 -668.8
Other Non-Operating Income (Expenses) -127.9 -94.7 -107.5 -129.3
EBT, EXCLUDING UNUSUAL ITEMS 1,519.5 1,707.0 1,960.6 2,479.7
Gain (Loss) on Sale of Assets -- -1.0 0.2 1.1
EBT, INCLUDING UNUSUAL ITEMS 1,519.5 1,706.0 1,960.7 2,480.8
Income Tax Expense 565.2 538.8 741.3 871.9
Earnings from Continuing Operations 954.3 1,167.2 1,219.4 1,608.9
NET INCOME 954.3 1,167.2 1,219.4 1,608.9
NET INCOME TO COMMON INCLUDING EXTRA ITEMS 954.3 1,167.2 1,219.4 1,608.9
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS/th> 954.3 1,167.2 1,219.4 1,608.9

Market Share

7-Up has the second largest market share in terms of volumes in the packaged drinks sub-sector, following closely behind Nigeria Bottling Company (NBC), which occupies the first position. However, relative to NBC, 7-Up is more stable in terms of earnings sustainability, pricing and cost management.

Business Objective

“To become the most admired and innovative company in Nigeria by 2010”

Business Model

The company’s strategy focuses on strong marketing, constant technological innovation, introduction of new products to increase its share of the beverage market and boost its profitability, a wide distribution network (200 distributors); boost sales by enhancing manufacturing capacity and strengthening its sales and distribution; and regular promotions.

Ownership of Business

Seven-Up was incorporated in Nigeria in 1959 as a Private Limited Liability Company under the name Seven-Up Limited. Its name was later changed to Seven-Up Bottling Company Plc in 1991 to compile with the Company and Allied Matters Act 1990.

The majority of the company’s shares, 72% are held by the El-Khalil family, which has moved the business from a distributorship to the sole manufacturer and marketer of the Pepsi-Cola brand in Nigeria.

Benefits Offered and Relations with Government

The National Agency for Food and Drugs Administration and Control (NAFDAC) provides testing and certification of imported and domestically produced food, drug, cosmetic, medical, water and chemical products.

A few multinational companies substantially control manufacturing in Nigeria. For example, the soft drinks industry is dominated by the Nigerian Bottling Company (franchisee of Coca-Cola of the US) and Seven-Up Bottling Company (franchisee of Seven-Up and Pepsi, both of the US).

The market dominance of these companies reflects the length of time they have operated in the country. They maintained their investments in the Nigerian market throughout the difficult military era when their competitors either pulled out or failed to enter. Their dominance is also testimony to the vast size of the multinational parent companies backing these Nigerian companies.

Monopolies are not legally defined under Nigerian law. Examples abound of companies already dominant in particular manufacturing sectors that have extended their market dominance still further.

Manufacturers may sell to whomever and at whatever prevailing market-determined price for their goods. Unauthorised dealers may be sued if they deal in merchandise originating from abroad and protected under a registered Nigerian trademark, logo or patent. Usually, unauthorised dealers are collectively sued in a class-action suit. The courts often grant an aggrieved plaintiff an “Anton Pillar” order, empowering entry into warehouses or other designated places where such protected goods are kept. The Anton Pillar order also empowers the plaintiff in such a class-action suit to remove the offending goods for destruction. The Federal High Court has in the last few years granted several such orders and injunctive relief to restrain the unauthorised sale of protected products.

Nigeria has had no laws to uphold resale-price maintenance, though trading companies have reportedly tried to exercise some control over their larger distributors. Hence, prices are seldom uniform throughout the country. The small traders who dominate retail supply outlets at the municipal level are generally free to set their own prices.

There are no price-control laws for manufactured goods and products.

Product Development

In 2009 Seven-up introduced a new product to the Nigeria market called Pepsi Light. The company also created a website for the product. The product is targeted at health conscious individuals, especially young adult women between the ages of 16 to 30 years, with a purchasable income, who are very conscious of keeping their figure and shape intact, including other people who might prefer drinks with low calories because of their health status.