Solibra: Beverages

THE COMPANY: The small family business founded in 1955 by Louis Dailland as Société de Limonaderies et Glaces d’Abidjan (Soliglace) became Société de Limonaderies et Brasseries d'Afrique (Solibra) in 1960 after joining with the Belgian brewer group Artois. In 1994, a new alliance with Ivoirian brewery Bracodi, following the acquisition of the majority share of Solibra by French group Brasserie et Glacières Internationale (BGI), pushed it to the first rank of local breweries.

Solibra is among the companies that show the greatest growth prospects in the country. Boosted by the economic upturn, Solibra should definitely show a strong performance in 2013 and beyond. The company specialises in the manufacture and distribution of carbonated beverages and beers, and handles the bottling and distribution of well-known brand names such as Coca-Cola, Fanta, Sprite, Youki, Guinness, Flag, Tuborg and Bock Awa in Côte d’Ivoire. Despite the global financial crisis, which strongly disrupted the firm’s production and distribution in 2011, Solibra finished 2012 registering double-digit growth of 16.8%, with volumes up 18.3% compared to 2011. Indeed, turnover reached CFA140.3bn (€210.5m), against CFA120.1bn (€180.2m) for 2011, with an operating profit growth of 21.6% to CFA29.8bn (€44.7m) and net income of CFA21.8bn (€32.7m), up 15.9%.

Solibra holds 94% of the beer market, 93% of the soft drinks market and 53% of the mineral water market, although it saw its monopoly on production ended by the entry of a new brewer and soft drink distributor, Les Brasseries Ivoiriennes. With a capacity of 280,000 hl per year for beer, Les Brasseries Ivoiriennes started its activities in 2013 in Côte d’Ivoire and acts as a soft drink distributor for the brands American Cola, Planet Orange and Bubble Up. Les Brasseries Ivoiriennes is looking to partner with local producers of soft drinks and wine to have a depth range similar to Solibra. Another player in the field of soft drinks, the promoter of American Cola in Mali, plans to build a soft drink PET factory in Côte d’Ivoire.

Solibra, with a price-to-earnings ratio of 10.76x, is currently trading below the sector average of 12.95x. This shows good potential for growth in line with the recovery of the wider Ivoirian economy in the medium term.

Furthermore, the company has a generous dividend policy, with an average historical payout ratio of 87% over the past 10 years. Looking ahead, the company should be able to maintain its dividend policy given the cash flow generation level.

DEVELOPMENT STRATEGY: To its four existing sites (Abidjan, Bouaflé, Yopougon and Sadem) producing more than 1m hl of beer and soft drinks a year, Solibra added a plant in Bouaflé in the western part of the country. The new bottling line has a capacity of 30,000 large beverage bottles per hour and around 35,000 small bottles. This main supply point for the hinterland regions of the country represents an investment of CFA10bn (€15m), and is the first part of a production tool development programme. In addition, Solibra has added a new name to its brands, Le Booster, a mix of liquor and fruit juice. The start of a new PET line in the Yopougon site will also allow for the expansion of Solibra’s soft drink range, and should help to slow down the entry of new players.

At the marketing level, 2013 will see the implementation of a promotional launch event for each of the brands to give them greater visibility at the consumer level. This is in line with the management’s desire to strengthen trade marketing and business development. Indeed, to see off growing competition in the drinks sector, the management of Solibra is seeking to develop an internal door-to-door distribution service, which at first will handle draught beer, and will later be expanded to include other products, such as Awa water.