Coke buys 50% of Peru's Inca Kola

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LIMA--U.S. giant Coca-Cola Co. has bought into Inca Kola, Peru's local soft drink marketer, in a deal announced Feb. 23.

Coca-Cola bought 50% of Inca Kola Peru, S.A, which owns the Inca Kola brand and others, including Inca Kola Diet, Bimbo and the Frugos line of nectars and fruit juices. It also purchased 23% of Inca Kola's bottling company, registered under the Jose R. Lindley & Sons Corp.

Both Johnny Lindley, president of Inca Kola, and Timothy Haas, Coca-Cola VP for Latin America, refused to reveal financial details of the merger. "The Lindley family has requested that all dollar amounts of the deal remain confidential, which we respect," said Mr. Haas. Both Mr. Lindley and Mr. Haas denied a Wall Street Journal report claiming that the merger was worth $200 million.

Mr. Haas praised Inca Kola, saying the Lindley family had built "a Peruvian national treasure." The company was started by Johnny Lindley's grandfather, Jose Lindley in 1910.

Inca Kola is one of the few locally-produced soft drinks worldwide that compete head-to-head with Coca-Cola. According to Mr. Haas, Inca Kola and Coca-Cola togther account for 70% of Peru's soft drink market, each brand holding about 35%. This is the first time Coca-Cola has admitted Inca Kola's equality in the market. However, any hard feelings were put aside during the merger announcement as Mr. Haas downed a yellow-green, bubble-gum-tasting Inca Kola, and Mr. Lindley drank a Coke.

Mr. Haas said the first step in the merger would be to strengthen Inca Kola's presence in Peru, as well as boost per capita soft drink consumption in the country.

Peruvians consume roughly 107 eightounce bottles of soft drinks a year, compared to the 160 drunk each year in Bolivia, 255 in Colombia, 289 in Argentina, 365 in Chile and 528 in Mexico.

Mr. Lindley said that after discussing the merger with his family he decided that "it would have been a sin" to reject the offer. ``This is good day for Peru, because a Peruvian product will now be able [to be exported] worldwide thanks to Coca-Cola's distribution channels," he said.

Several years ago, Inca Kola carried out "taste tests" in several Asian countries with positive results. The company's size and its debt of nearly $50 million, however, prevented it from expanding massively outside of Peru's borders.

Mr. Lindley will remain as president of Inca Kola and the structures of both companies will remain in place for the moment. Mr. Haas and Mr. Lindley denied there would be any personnel reductions.

Mr. Haas said that as the two companies begin to work together they will "look for synergies that will help us operate more efficiently in the global market."

Copyright February 1999, Crain Communications Inc.

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