As SA heads towards a VAT increase in May, Coca-Cola Beverages SA (CCBSA) says it is doing everything it can to protect consumers from higher prices without losing sight of its own bottom line.
The company has acknowledged that balancing rising costs and affordability is difficult, especially in a country where many are already under financial strain.
“We are very cognisant of the fact that consumers are very stretched,” said CCBSA logistics director Desilan Pillay.
“As a business, we want to be responsible and see what we are able to do to shelter consumers as far as possible. But we need to also be responsible to our shareholders.”
However, with Coca-Cola products considered a luxury item, there is concern that the VAT increase could affect demand.
“Our product is obviously seen as a luxury purchase, so there is definitely an element of that [a possible decline in demand]. But it is probably still early to see how the full impact is going to be felt,” said Pillay.
This latest trade war is creating a lot of uncertainty in terms of global supply chains. We have done quite well to localise our supply chains to a large extent.
— Desilan Pillay
Logistics director
Instead of pushing costs directly onto consumers, Pillay said that CCBSA was focusing on improving efficiency in its operations, using technology to cut waste, improve accuracy and keep service levels high.
“We have taken a very strong stance on: do we really minimise inefficiencies and waste within our own systems to be able to absorb as much of, if not all the increases that consumers are facing,” he said.
A part of that cost-containment strategy lay in technology. According to Pillay, CCBSA was using new technology to save money and work more efficiently.
Over the past two years the company had introduced a new system that helped them plan better, keep better track of stock and manage deliveries more smoothly, he said.
Coca-Cola had also launched AI powered cameras in their fleet and warehouses. In trucks, the cameras monitored driver behaviour to improve road safety, alerting drivers to fatigue or distractions. In warehouses, AI was helping maintain more accurate stock levels, which reduced over-ordering and waste, he said.
These changes helped the company give better service while keeping costs down, Pillay said.
“If we are able to curb the number of accidents, the cost of downtime within the fleet will be lower.”
Beyond the VAT increase, the company is also dealing with currency volatility and political uncertainty, particularly about the government of national unity (GNU).
Pillay said businesses, including CCBSA, were watching closely to see how the GNU would shape future regulations and policy. While there was some uncertainty, there was also cautious optimism. For businesses to thrive and create jobs, the SA economy had to grow, he said.
Another challenge facing the beverages industry is the ongoing trade war perpetuated by US President Donald Trump’s “reciprocal” tariffs. Pillay confirmed that the trade war and supply chain disruptions had an effect on the business even though the company had made progress in reducing reliance on imports by localising their operations.
“This latest trade war is creating a lot of uncertainty in terms of global supply chains. We have done quite well to localise our supply chains to a large extent. Being a business that reports in dollars to our shareholders, obviously any uncertainty or volatility in the rand relative to the dollar creates reporting challenges for us.”
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