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Pepsi Returns Through Joint Venture with Black South Africans

June 6, 1994

JOHANNESBURG, South Africa (AP) _ South Africa will soon be a battlefield in the cola wars.

Pepsi-Cola International announced Monday that it was returning to South Africa via a joint venture headed by black South Africans. Coca-Cola’s red- and-white cans are ubiquitous here, and its hold on the market will present a tough challenge for Pepsi.

Pepsi stopped doing business in South Africa a decade ago, as protests mounted against the country’s apartheid system of institutionalized racism.

Coke, Pepsi’s main rival around the world, divested in 1986, but left behind a South African firm with a bottling license.

By allying itself with black businessmen, Pepsi is casting itself as a champion of South African efforts to ensure black political empowerment is accompanied by economic empowerment. That could help make its products popular among consumers in a country that is 75 percent black.

Pepsi’s return comes after the first national elections to include blacks installed Nelson Mandela as the country’s first black president. Whites still control the economy, and Mandela’s African National Congress has vowed to change that.

″The emergence of a new South Africa has clearly heightened Pepsi-Cola’s interest in the market and we believe the time is now right for our return,″ Christopher Sinclair, president and chief executive officer of Pepsico Foods and Beverages, said in a statement Monday.

″Our commitment is to create the most dynamic and most admired black- managed and black-owned company in South Africa.″

The joint venture, New Age Beverages, will initially be 75 percent owned by Egoli Beverages and 25 percent owned by Pepsi.

Prominent black South African businessmen Kehla Mthembu and Monwabisi Fandeso were named to key positions in the joint venture. Mthembu, who will serve as chairman and chief executive, had been a life insurance executive. Fandeso had held senior positions at National Sorguhm Breweries, the most prominent black-owned business in South Africa.

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