What are the challenges specifically related to human resources in Mozambique, and how does Coca-Cola work to overcome them?
The biggest challenge we face in Mozambique is the high level of illiteracy, specifically in the area of technical education. We have spent $130 million on building a state-of-the-art factory. The equipment is extremely advanced, and one needs a high level of engineering skills to operate the equipment. Trying to find the caliber of people required within Mozambique is challenging due to a limited labor pool and insufficient technical education. We are working with technical colleges and we try to recruit the brightest pupils that graduate, but there are simply not enough of them for what we and other employers require. The problem is going to escalate once the oil and gas fields come online, as these companies have the ability to pay much higher salaries and they will take qualified human resources away from our industry. The alternative is to bring in expats to help train the local population, which is what we do. I believe there is real apathy regarding the scale of the challenge and we are going to have to accept that foreigners will be required to run certain parts of the industry for many years to come whilst continuing to develop Mozambican talent. All our plant managers are expatriates, and we feel at this time it is the most feasible way to control and manage the quality and technical efficiency of our plants. All expats come in for two or three-year assignments, and they are charged with selecting someone to take over from them when they leave. We at Coca-Cola are below the quota for foreign workers. We are spending $1.8 million on training and development for people in preparation for the move to the new factory.
The Minister of Industry and Trade recently announced that Coca-Cola is looking into the possibility of using Mozambican sugar to manufacture soft drinks. What are the company's motivations behind this step?
One of our goals whenever we go into a country is to use local goods as much as possible. However, the quality of the product has to be in line with the standards of the Coca-Cola Company. These standards do not vary between Atlanta or Delhi, or anywhere else in the world. Coca-Cola technicians audit and check factories that produce ingredients for us, and ensure that workers' rights are being upheld. We insist, for example, that ISO certificates are gained, and once the quality is right then the price also has to be right. We are currently working with the Mozambican government and other stakeholders, preparing them to possibly supply sugar to us. At the moment, the industry is not capable of producing the quantity of refined sugar that we require for our beverages. Investment in new refining capacity is needed if our projected requirements are to be met.
How is Coca-Cola's branding strategy in Mozambique different from that of other markets?
Mozambique is unique because it has a young population. Around 56% of people here are under 24 years of age, and that is really our target audience. We are also responsible in our marketing activities and do not target under-12s. Our campaigns are geared toward the teenage demographic. You have to remain relevant to the consumers and the continually changing landscape, so we have to constantly reinvent ourselves to keep coming up with new campaigns. You have to understand where the market is going, and for us the big trend we are seeing is the use of plastic bottles. When I first came here five years ago, about 85% of our volume came from glass bottles. As time has progressed, plastic has reached over 30% of our mix, and consumers have happily adopted this new form of packaging. We are making our investment decisions with this in mind. The trend works in our favor, as transportation costs are lower since there is no need to return the bottle. There are a lot of people in this country who have never tasted Coca-Cola, and per capita rates are probably amongst the lowest in the world at just 28 per capita per annum. We believe there is a huge amount of potential in Mozambique, as just across the border in South Africa consumption is over 200 per capita.
Where do you see Coca-Cola in the next five years?
One of the primary reasons we have invested over $200 million over the past five years is to expand capacity. In the past we never had sufficient capacity to meet demand, so my belief is if you build the capacity you will sell the volume. The Chimoio factory upgrade was completed in 2013, and we are about to open the newest factory shortly. The Nampula upgrade project has commenced, so all of our factories will have sufficient capacity beyond 2020. The second important point is that we are the only soft drinks business that has a dedicated sales source. We have a sales force on the ground, and 200 people across Mozambique selling our products. No other competitor has that sort of reach. There are sales reps but we call them developers because their focus is on developing the market. We have 15,000 coolers out in the market and 15,000 iceboxes to enable us to serve a perfect Coke all the time. In order for the consumer to go to the fridge and find Coke products in a Coke fridge nicely merchandised in an effective way, you need well-trained people to get it done.