The Economic Impact of The Coca-Cola System on South Africa ICA FR HA UT SO Prepared by Division of Research March 2005 The Economic Impact of The Coca-Cola System on South Africa Executive Summary This executive summary presents the major findings of an in-depth study of the Coca-Cola system’s economic impact on South Africa. Conducted during 2003-04, the study represents a wide-ranging assessment of economic linkages, enterprise development, and employment. In the decade following the introduction of multiparty democracy, South Africa has seen tremendous economic progress. Yet serious challenges remain. The Coca-Cola system serves as an example of long-term commitment to the country. It has invested significantly in almost every year since 1994 and spread its business network into all segments of the South African market. The extent of the Coca-Cola system’s participation in South African markets is evident throughout the country. The Coca-Cola Company and affiliated brands are prevalent in the shopping centers of major cities, the informal retail outlets of townships, and the small shops found in rural villages. As one of the world’s most efficient business systems, the Coca-Cola system offers potentially expanding economic opportunity as South Africa’s renewal moves forward in the decade ahead. In particular, entrepreneurial development and employment creation are key objectives of economic policy in South Africa. This study emphasizes that enterprise expansion and job creation result from thriving local business networks, or clusters. Accordingly, the Coca-Cola system in South Africa is seen as the core of a competitive cluster. This core encompasses the country office of The Coca-Cola Company and local bottlers and canners who make products under the Coca-Cola trademark. Moreover, a larger network of businesses is tied to this core system, including suppliers, distributors, wholesalers, and retailers spanning every region of South Africa. The Coca-Cola system employment network thus extends from plant managers to street hawkers. The study explores the nature of the Coca-Cola system beverage cluster, providing employment estimates and other economic impacts generated by its activities. In addition, the research team surveyed 760 informal retail outlets that sell Coca-Cola products throughout South Africa. This survey was designed to probe a business system that unites South Africa’s formal and informal sectors. The small retail operations covered in the survey are considered important to South Africa’s future since they form the commercial hub of their local economies and, indeed, the local communities. While the South African informal retail sector has developed largely without demanding scarce government resources, informal retail is often considered to be unstable or “survivalist.” The survey results suggest, however, that participation in an advanced cluster may help these retailers to become stable businesses. Principal Findings The study presents a wealth of information on the economic linkages between the Coca-Cola system and the South African economy. In particular, the study shows the extent to which the Coca-Cola system provides employment and income for South African citizens as well as tax revenue for local and central governments. It can be seen that The Coca-Cola Company’s bottling activities engender substantial direct and indirect effects, creating significant business and employment opportunities throughout the economy. Overall, this impact is measured by an economic “multiplier” that captures the ripple effects of the Coca-Cola system investment and ongoing operations. The main findings of this study are the following: • The total economic impact of the Coca-Cola system’s activities on gross domestic product (GDP) is valued at 17.5 billion rand (all rand figures in the study are expressed in 2003 prices). This represents about 1.4 percent of South Africa’s total GDP for the year. • The Coca-Cola bottling system directly employed 9,740 workers in 2003. • Overall, it was estimated that 166,360 jobs were supported, directly and indirectly, by the Coca-Cola system in South Africa. This calculation is based on the complex interactions of the Coca-Cola system with the local economy through production and distribution. The calculation relies on the most reliable and detailed impact model available for South Africa. • The Coca-Cola system’s employment impact represented about 1.4 percent of total South African employment (formal and informal) in 2003. • Thus, the direct employment multiplier (the ratio of total to direct employment in bottling) is approximately 17.1; that is, for every direct job created in the bottling system, an additional 16.1 jobs were supported through upstream and downstream linkages. Clearly, then, there is a considerable amount of employment activity associated with the system as a whole. • In particular, the employment supported by the informal trade sector’s activity contributes significantly to the total impact. Informal trade accounts for 70,000 jobs in South Africa. This is most likely a conservative estimate. • A diverse range of sectors benefit from the production and distribution of Coca-Cola products, including plastic products, metal products, chemicals, iron & steel, motor vehicles, electricity, business services, trade, food, and agriculture. In particular, the sugar industry along with its important linkages to agriculture benefit from the large local purchases documented in this study. • Total government income associated with the Coca-Cola system’s impact is estimated to be approximately 5 billion rand for 2003. Economic Impact of The Coca-Cola System on South Africa, ii Details for the summary points given above can be found in the full study. Moreover, the effects of the Coca-Cola system on micro enterprise development are presented in the study. The informal trading sector provides an alternative source of income and employment when the formal sector cannot absorb all those individuals seeking work. At the same time, many small retail operations stay in business and remain profitable for years. They develop into a stable segment and prominent features of many communities. Some expand from small home-based operations into larger distribution centers and even into soft drink production. The survey results presented in the study reveal that entrepreneurs who work closely with the Coca-Cola system can attain high turnover and high margins with CocaCola products. The interaction of the Coca-Cola system with the informal sector can provide help as entrepreneurial activities blossom into bona fide, sustainable businesses. Methods and Terms The primary research presented in this study entails an economy-wide analysis designed to measure the economic multiplier effect of the Coca-Cola system’s capital investment and ongoing operations. Based on information taken from a survey of the Coca-Cola system’s bottlers in South Africa, the researchers evaluated the cluster of business activities that developed indirectly around the bottling system. To introduce the informal retail sector into the framework, the research team surveyed 800 informal retail outlets (obtaining more than 760 completed surveys). The outlets were selected to reflect both South Africa’s mix of retail channels and its geographical diversity—the cities, townships, and rural areas. Owners and managers of informal retail trade outlets were asked to respond to a pre-tested, structured questionnaire, administered by trained interviewers. The survey instrument included requests for detailed business information, such as employment, turnover, and net income, as well as demographic characteristics of the small business owners and their employees. A high response rate ensures that this would be one of the most complete informal sector surveys ever undertaken in South Africa, or indeed anywhere. Primary data collection from the Coca-Cola system’s bottlers, the informal retailers, and other sources of information provided the inputs needed to model the Coca-Cola system’s total impact on South Africa’s employment, GDP, and other economic variables. The research team used a Social Accounting Matrix (SAM) to calculate the extent of the linkages between the Coca-Cola system in South Africa and other local business. This model allowed for a detailed assessment of employment (and other impacts) related to both the informal and formal sectors. The scope of the study is to assess the economic impact of the Coca-Cola system in South Africa, its suppliers, and its distribution network. Throughout the study, the following points concerning terms and definitions should be kept in mind. • The Coca-Cola system specifically refers to The Coca-Cola Company and its bottling partners in South Africa. • The Coca-Cola Company in South Africa is represented by Coca-Cola Southern and East Africa (CCSEAD). Economic Impact of The Coca-Cola System on South Africa, iii • The distribution network refers the transportation of finished product from the plants (to the retailers, warehouses and distributors), distribution centers, and outlets/ retailers both formal and informal. Conclusion The Coca-Cola system—encompassing the bottlers, suppliers, and the many vendors that sell Coca-Cola brands—has a wide-ranging impact on the South African economy. This study goes beyond conventional economic and employment impact analysis to consider both upstream and downstream (including informal) linkages. Over 166,000 jobs are associated, directly or indirectly, with producing and distributing CocaCola products. This employment network comprises about 1.4 percent of South African total employment. This employment network spreads advanced marketing know-how and production expertise to many regions of the country. This is one of the most extensive multi-local business systems in the country. Consequently, the study’s findings on employment and enterprise development should be of interest to policy analysts, economists, the media, government, and business leaders in South Africa. Economic Impact of The Coca-Cola System on South Africa, iv Preface This study explores the relationship between multinational enterprise and entrepreneurial development in African economies. There are few effective studies of international business committing to the future of South Africa. Given its business presence throughout South Africa’s diverse communities, the Coca-Cola system has a potentially significant influence on the economy. Research on the impact of the Coca-Cola system in South Africa began in 2003. The final study was completed in November 2004. The study was funded through a grant to the University South Carolina, based on a proposal submitted to The Coca-Cola Company. We thank numerous executives, managers and staff of The Coca-Cola Company for their cooperation. The results are wholly based on field research by independent academic institutions and widely accepted economic modeling techniques. Three research/ academic institutions collaborated to produce the study, setting the research agenda, defining the methodology, collecting the data, analyzing the results, and preparing the final report. The Division of Research at the Moore School of Business, the University of South Carolina (USC) conceptualized the project, coordinated the research, and produced the final report. The responsibility for the study, including the initial design and the final narration given in the pages that follow this preface, falls on the Division of Research in the Moore School of Business. The study is part of an ongoing effort led by faculty to explore the interaction between international business and local entrepreneurs. The School’s international business programs have consistently been ranked highly by U.S News & World Report. The impact analysis draws on the proficient economic modeling work performed by Ernest (Dirk) van Seventer. In addition, we thank the Bureau of Market Research, University of South Africa, especially Professors A.A. Ligthelm and J.H. Martins, for superb survey work. As for the contributors from University of South Carolina, the lead researchers were Dr. Douglas Woodward and Dr. Robert Rolfe. It is also important to recognize Dr. Sandra Teel, associate director of the Division of Research, who prepared the study in excellent fashion for final publication. Jan Collins, senior editor for the Division of Research, deserves credit for expert copy editing. Patrick Warren, research associate with the Division, merits special thanks for playing an invaluable role in the research. Also on the Division staff, Cissy George helped in the wide variety of important tasks involved in preparing manuscript. Finally, it should be recognized that this study, and the research that underlies it, represents the effort and cooperation of many more people than recognized here. Economic Impact of The Coca-Cola System on South Africa, v The Economic Impact of The Coca-Cola System on South Africa Table of Contents EXECUTIVE SUMMARY .......................................................................................... i Main Findings ..................................................................................................................... ii Methods ......................................................................................................................... iii Conclusion ......................................................................................................................... iv PREFACE ........................................................................................................................... v TABLE OF CONTENTS .......................................................................................... vi CHAPTER 1: INTRODUCTION: GOALS AND OBJECTIVES OF THE STUDY ................. 1 CHAPTER 2: COCA-COLA SOUTH AFRICA: COMPETITIVENESS AND CLUSTERING ................................................................................................................ 4 Macroeconomic Conditions ......................................................................................... 4 Table 1. Macroeconomic Summary ................................................................................... 5 Table 2. Employment by Sector ........................................................................................ 6 The Coca-Cola System’s Upstream and Downstream Network .................... 6 The Upstream Network ...................................................................................................... 6 Figure 1. Coca-Cola Production and Distribution ............................................................. 7 The Downstream Network ................................................................................................. 7 The Beverage Cluster ....................................................................................................... 7 Meeting Demand ................................................................................................................ 9 Resource Development ..................................................................................................... 10 Competitive Dynamics ...................................................................................................... 11 Economic Impact of The Coca-Cola System on South Africa, vi Related and Supporting Industries.................................................................................. 12 Supporting Institutions .................................................................................................... 13 Summary ......................................................................................................................... 14 CHAPTER 3: THE ECONOMIC IMPACT OF THE COCA-COLA SYSTEM .................... 16 Introduction ...................................................................................................................... 16 Impact Analysis Methodology ................................................................................... 16 Direct Economic Effects ............................................................................................... 17 Direct Bottler Impact ....................................................................................................... 17 Export and Division Office Direct Impact ....................................................................... 18 Table 1. Current and Capital Expenditures by Coca-Cola Bottlers in South Africa (2003 current R ‘000) ............................................................................... 19 Table 2. Labour at and Employment Skill Distribution by Coca-Cola Bottlers South Africa ......................................................................................................... 20 Direct Formal and Informal Trade Impacts .................................................................... 18 Direct Formal Trade Impact ......................................................................................20 Table 3. Current and Capital Expenditures by Coca-Cola Related Activities in South Africa (2003 current R ‘000) ......................................... 21 Direct Informal Trade Impact ....................................................................................20 Total Direct Impacts ................................................................................................... 22 Overall Economic Impact ............................................................................................ 24 Table 4. Sizing the Annual Market for Coca-Cola Products Trade in the Informal Sector (winter sales, 365 days per annum) ................................... 23 Table 5. Sizing the Informal Market for Coca-Cola Products ............................. 24 Table 6. Employment in Informal Sector Trading of Coca-Cola Products ........ 24 Table 7. Consolidated Expenditures Associated with the Coca-Cola System’s Activities in South Africa (2003 R ‘000) ....................................... 25 Current Expenditure ........................................................................................................ 26 Table 8. Consolidated Impact of the Coca-Cola System in South Africa (2003 current R ‘000) ................................................................ 27 Capital Expenditure .......................................................................................................... 28 Impacts from Exports ................................................................................................ 28 Coca-Cola Southern Africa Division Office ..................................................................... 28 Formal Trade Impacts ...................................................................................................... 29 Informal Trade Impacts ................................................................................................... 29 Economic Impact of The Coca-Cola System on South Africa, vii Conclusions ........................................................................................................................30 References ......................................................................................................................... 31 Endnotes ......................................................................................................................... 31 CHAPTER 4: RESULTS OF THE SURVEY ........................................................................... 32 Introduction ...................................................................................................................... 32 Characteristics of Business Owners ....................................................................... 32 Job Prior to Starting the Business ................................................................................... 32 Table 1(A). Job Before Starting This Business by Type of Business ........................ 33 Table 1(B). Job Before Starting This Business by Urbanisation .............................. 33 Career Orientation ........................................................................................................... 33 Table 2(A). Acceptance of a Job in the Formal Sector If Offered Today by Type of Business .............................................................................................. 34 Table 2(B). Acceptance of a Job in the Formal Sector If Offered Today by Urbanisation .................................................................................................... 34 Household Size .................................................................................................................34 Table 3(A). Average Household Size by Type of Business ....................................... 34 Table 3(B). Average Household Size by Urbanisation .............................................. 34 Household Income, Other Sources than from the Business ........................................... 35 Table 4(A). Household Members (Including Owner/Manager) Earning an Income Outside This Business by Type of Business ...................................... 35 Table 4(B). Household Members (Including Owner/Manager) Earning an Income Outside This Business by Urbanisation ............................................ 35 Table 5(A). Distribution of Respondents by Income Group for Income Earned From All Sources Outside This Business by Type of Business ........................... 36 Table 5(B). Distribution of Respondents by Income Group for Income Earned From All Sources Outside This Business by Urbanisation ................................. 36 Reason for Starting Business ........................................................................................... 37 Level of Education ............................................................................................................ 37 Table 6(A). Reason for Starting Business by Type of Business ................................ 37 Table 6(B). Reason for Starting Business by Urbanisation ...................................... 37 Table 7(A). Level of Education by Type of Business ................................................. 38 Table 7(B). Level of Education by Urbanisation ....................................................... 38 Characteristics of Businesses .................................................................................... 38 Legal Status of Businesses................................................................................................ 38 Years in Operation ............................................................................................................ 38 Table 8(A). Legal Status of Business by Type of Business........................................ 39 Table 8(B). Legal Status of Business by Urbanisation.............................................. 93 Economic Impact of The Coca-Cola System on South Africa, viii Table 9(A). Distribution of Business by Time in Operation and Type of Business ................................................................................................... 39 Table 9(B). Distribution of Business by Time in Operation and Urbanisation .......40 Type of Products Sold .......................................................................................................40 Table 10(A). Categories of Products Sold by Type of Business ................................40 Table 10(B). Categories of Products Sold by Urbanisation ...................................... 41 Table 11. Ranking of Product Sales in Order of Contribution to the Turnover of Spazas/Tuckshops ........................................................................... 41 Table 12. Ranking of Product Sales in Order of Contribution to the Turnover of Shebeens .......................................................................................... 42 Table 13. Ranking of Product Sales in Order of Contribution to the Turnover of Hawkers ........................................................................................... 42 Table 14. Ranking of Product Sales in Order of Contribution to the Turnover of Other Businesses.............................................................................. 43 Business Hours .................................................................................................................43 Table 15. Distribution of Businesses by Weekday and Number of Hours Open ..... 44 Table 16. Highest Percentage for Trading Hours by Weekday and Type of Business ................................................................................................... 44 Table 17. Highest Percentage for Trading Hours by Weekday and Urbanisation ... 45 Role of The Coca-Cola Company ............................................................................... 44 Affordability ...................................................................................................................... 44 Table 17(A). Coca-Cola Products Are Affordable by Type of Business .................... 45 Table 17(B). Coca-Cola Products Are Affordable by Urbanisation .......................... 46 Coca-Cola Products Attract Customers ........................................................................... 46 Table 18(A). Coca-Cola Products Attract People to Store by Type of Business ....... 46 Table 18(B). Coca-Cola Products Attract People to Store by Urbanisation ............. 47 Table 19(A). When Buyers Purchase Coca-Cola Products, They Also Buy Other Goods by Type of Business ........................................................................ 47 Table 19(B). When Buyers Purchase Coca-Cola Products, They Also Buy Other Goods by Urbanisation .............................................................................. 47 Frequency of Purchases .................................................................................................... 46 Table 20(A). Frequency of Purchase of Coca-Cola Products by Type of Business ...................................................................................................48 Table 20(B). Frequency of Purchase of Coca-Cola Products by Urbanisation ........48 Frequency of Coca-Cola Truck Deliveries ........................................................................48 Table 21(A). Frequency of The Coca-Cola Company’s Truck Deliveries by Type of Business ................................................................................................... 49 Table 21(B). Frequency of The Coca-Cola Company’s Truck Deliveries by Urbanisation ......................................................................................................... 49 Frequency of Deliveries by Wholesalers .......................................................................... 49 Economic Impact of The Coca-Cola System on South Africa, ix Table 22(A). Frequency of Deliveries by Wholesaler and Type of Business ............ 50 Table 22(B). Frequency of Deliveries by Wholesaler and Urbanisation .................. 50 Frequency of Fetching from Wholesaler ......................................................................... 50 Table 23(A). Frequency of Fetching From a Wholesaler by Type of Business ........ 51 Table 23(B). Frequency of Fetching From a Wholesaler by Urbanisation .............. 51 Frequency of Fetching from Retailer ............................................................................... 51 Table 24(A). Frequency of Fetching from a Retailer by Type of Business ............... 52 Table 24(B). Frequency of Fetching from a Retailer by Urbanisation ..................... 52 Restocking of Coca-Cola products ................................................................................... 52 Table 25(A). Wait for Next Delivery When Running Out of Stock by Type of Business ................................................................................................... 53 Table 25(B). Wait for Next Delivery When Running Out of Stock by Urbanisation ......................................................................................................... 53 Table 26(A). Fetch Stocks from the Wholesaler/Retailer When Running Out of Stock by Type of Business ......................................................................... 53 Table 26(B). Fetch Stocks from the Wholesaler/Retailer When Running Out of Stock by Urbanisation .............................................................................. 53 Table 27(A). Average Number of Cases Fetched When Run Out of Stock by Type of Business .............................................................................................. 54 Table 27(B). Average Number of Cases Fetched When Run Out of Stock by Urbanisation .................................................................................................... 54 Table 28(A). Method of Transport for Fetching of Coca-Cola Products by Type of Business ................................................................................................... 54 Table 28(B). Method of Transport for Fetching of Coca-Cola Products by Urbanisation .................................................................................................... 54 Temporary Closure of Business Due to The Coca-Cola Company Stock Shortages ...... 55 Table 29(A). Temporary Closure of Business Because Coca-Cola Products Were Not Available by Type of Business ............................................................. 55 Table 29(B). Temporary Closure of Business Because Coca-Cola Products Were Not Available by Urbanisation ................................................................... 55 Consumption of Coca-Cola Products: Location of Consumption .................................. 55 Table 30(A). Location of Consumption of Coca-Cola Products by Type of Business ................................................................................................... 56 Table 30(B). Location of Consumption of Coca-Cola Products by Urbanisation ......................................................................................................... 56 Physical Characteristics of Business ...................................................................... 56 Location of Business ......................................................................................................... 56 Equipment Installed in Business ..................................................................................... 56 Table 31(A). Location of Business by Type of Business ............................................ 57 Table 31(B). Location of Business by Urbanisation .................................................. 57 Economic Impact of The Coca-Cola System on South Africa, x Table 32(A). Percentage of Respondents With Equipment Installed by Type of Equipment and Business ........................................................................ 58 Table 32(B). Percentage of Respondents With Equipment Installed by Type of Equipment and Urbanisation ................................................................. 58 Table 33(A). Percentage of Equipment Owned by The Coca-Cola Company by Type of Equipment and Business ........................................................................ 58 Table 33(B). Percentage of Equipment Owned by The Coca-Cola Company by Type of Equipment and Urbanisation ................................................................ 58 Impact of Refrigerated Drinks on Turnover ................................................................... 59 Table 34(A). Having a Fridge Help Selling More Coca-Cola Products by Type of Business .............................................................................................. 59 Table 34(B). Having a Fridge Help Selling More Coca-Cola Products by Urbanisation .................................................................................................... 59 Type of Business Accommodation of Business ............................................................... 59 Table 35(A). Type of Business Accommodation by Type of Business ......................60 Table 35(B). Type of Business Accommodation by Urbanisation ............................60 Direct Access to Electricity and Tap Water ..................................................................... 61 Table 36(A). Direct Access to Electricity by Type of Business ............................... 61 Table 36(B). Direct Access to Electricity by Urbanisation ....................................... 61 Employment ...................................................................................................................... 61 Total Employment ............................................................................................................ 61 Table 37(A). Direct Access to Tap Water by Type of Business ................................. 62 Table 37(B). Direct Access to Tap Water by Urbanisation ....................................... 62 Table 38. Employment of Spazas by Race, Gender and Full- and Part-time ........... 63 Table 39. Employment of Shebeens by Race, Gender and Full- and Part-time ...... 63 Table 40. Employment of Hawkers by Race, Gender and Full- and Part-time ....... 64 Table 41. Employment of “Other” Businesses by Race, Gender and Full- and Part-time ............................................................................................... 64 Table 42. Employment in Metropolitan Areas by Race, Gender and Full- and Part-time ............................................................................................... 65 Table 43. Employment in Urban Areas by Race, Gender and Full- and Part-time ............................................................................................................... 65 Table 44. Employment in Rural Areas by Race, Gender and Full- and Part-time ............................................................................................................... 66 Table 45. Employment by All Respondents Included in the Study by Gender and Full- and Part-time ........................................................................................ 66 Features of Ownership and Management ............................................................ 67 Status of Owner ................................................................................................................ 67 Gender of Owner ............................................................................................................... 67 Economic Impact of The Coca-Cola System on South Africa, xi Table 46(A). Full- or Part-time Engagement of Owner in the Business by Type of Business ................................................................................................... 67 Table 46(B). Full- or Part-time Engagement of Owner in the Business by Urbanisation ......................................................................................................... 67 Table 47(A). Gender of Owner by Type of Business .................................................68 Table 47(B). Gender of Owner by Urbanisation .......................................................68 Race of Owner ...................................................................................................................68 Nationality of Owner ........................................................................................................68 Table 48(A). Race of Owner by Type of Business ..................................................... 69 Table 48(B). Race of Owner by Urbanisation ........................................................... 69 Table 49(A). Nationality of Owner by Type of Business ........................................... 69 Table 49(B). Nationality of Owner by Urbanisation ................................................. 69 Work done by Owner ........................................................................................................ 69 Table 50(A). Type of Work Done by Owner by Type of Business ............................ 70 Table 50(B). Type of Work Done by Owner by Urbanisation .................................. 70 Table 51(A). Running of Business by Type of Business ............................................ 70 Management ..................................................................................................................... 70 Table 51(B). Running of Business by Urbanisation .................................................. 71 Table 52(A). Owners With Business Training by Type of Business ......................... 71 Table 52(B). Owners With Business Training by Urbanisation ............................... 71 Business Training ............................................................................................................. 71 Table 53(A). Owners Who Said They Need Business Training by Type of Business ................................................................................................... 72 Table 53(B). Owners Who Said They Need Business Training by Urbanisation ..... 72 Financing of Business ................................................................................................... 72 Start-up Capital ............................................................................................................... 72 Table 54(A). Training Needs of Owners in Order of Importance by Type of Business ......................................................................................................... 73 Table 54(B). Training Needs of Owners in Order of Importance by Degree of Urbanisation .............................................................................................. 73 Time Required to Mobilise Sufficient Start-up Capital .................................................. 73 Sources of Finances .......................................................................................................... 74 Table 55. Start-up Capital by Type of Business And Urbanisation .......................... 74 Table 56(A). Time Required to Mobilise Start-up Capital by Type of Business ...... 74 Table 56(B). Time Required to Mobilise Start-up Capital by Urbanisation ............ 74 Table 57(A). Sources of Finance by Type of Business ............................................... 75 Table 57(B). Sources of Finance by Urbanisation ..................................................... 75 Government Incentives .................................................................................................... 76 Expansion and Growth Plans ..................................................................................... 76 Business Expansion in Terms of Turnover...................................................................... 76 Economic Impact of The Coca-Cola System on South Africa, xii Table 58(A). Government Business Development Incentive by Type of Business ................................................................................................... 76 Table 58(B). Government Business Development Incentive by Urbanisation ......................................................................................................... 76 Table 59(A). Business Performance in Terms of Overall Turnover by Type of Business ................................................................................................... 77 Table 59(B). Business Performance in Terms of Overall Turnover by Urbanisation ......................................................................................................... 77 Funding of Expansion ...................................................................................................... 77 Table 60(A). Business Performance in Terms of Coca-Cola Products by Type of Business ................................................................................................... 78 Table 60(B). Business Performance in Terms of Coca-Cola Products by Urbanisation ......................................................................................................... 78 Table 61. Average Additional Amount for Expansion by Type of Business and Urbanisation .................................................................................................. 78 Table 62(A). Source of Funding of Expansion by Type of Business ........................ 79 Table 62(B). Source of Funding of Expansion by Urbanisation .............................. 79 Plans or Intentions for Future Development .................................................................. 79 Table 63(A). Most Important Plan or Intention for the Development by Type of Business .................................................................................................. 80 Table 63(B). Most Important Plan or Intention for the Development by Urbanisation ........................................................................................................ 80 Financial Performance ................................................................................................. 81 Monthly Turnover ............................................................................................................ 81 Table 64. Average Monthly Turnover of Sales by Type of Business and Urbanisation .................................................................................................. 81 Operating cost ................................................................................................................... 81 Table 65(A). Average Monthly Operating Cost by Type of Cost and Business ........ 82 Table 65(B). Average Monthly Operating Cost by Type of Cost and Urbanisation . 82 Coca-Cola Products ........................................................................................................ 83 Support by The Coca-Cola Company ............................................................................... 83 Table 66(A). Support by The Coca-Cola Company by Type of Business ................. 83 Table 66(B). Support by The Coca-Cola Company by Urbanisation ....................... 84 Average sales per day of Coca-Cola products .................................................................. 84 Mark-up on Coca-Cola products ......................................................................................84 Table 67(A). Average Number of Products Sold During Winter by Type of Product and Business .............................................................................. 85 Table 67(B). Average Number of Products Sold During Winter by Type of Product and Urbanisation ...................................................................... 85 Economic Impact of The Coca-Cola System on South Africa, xiii Table 68(A). Average Number of Products Sold During Summer by Type of Product and Business ...........................................................................................86 Table 68(B). Average Number of Products Sold During Summer by Type of Product and Urbanisation ....................................................................................86 Table 69(A). Cost Price, Selling Price And Mark-up of Coca-Cola Products by Type of Business ................................................................................................... 87 Table 69(B). Cost Price, Selling Price And Mark-up of Coca-Cola Products by Urbanisation .................................................................................................... 89 Marketing and Advertising ......................................................................................... 91 Table 70(A). Marketing/Advertising Methods of Promotion by Type of Business . 91 Table 70(B). Marketing/Advertising Methods of Promotion by Urbanisation ....... 91 Table 71(A). Assistance by The Coca-Cola Company in Marketing/Advertising by Type of Business ................................................................................................... 92 Table 71(B). Assistance by The Coca-Cola Company in Marketing/Advertising by Urbanisation .................................................................................................... 92 Business Problems ......................................................................................................... 92 Table 72(A). Problems Experienced by Type of Business......................................... 93 Table 72(B). Problems Experienced by Urbanisation............................................... 93 Crime ......................................................................................................................... 93 Table 73(A). Victim of Crime During the Past Twelve Months by Type of Business ......................................................................................................... 94 Table 73(B). Victim of Crime During the Past Twelve Months by Urbanisation .......... 94 Environmental Issues ................................................................................................... 94 Customers ......................................................................................................................... 94 Number of Customers ...................................................................................................... 94 Table 74(A). Type of Crime Experienced by Type of Business ....................................... 95 Table 74(B). Type of Crime Experienced by Urbanisation ............................................. 95 Table 75(A). Usage of Coca-Cola Products After Consumption by Type of Business ......................................................................................................... 95 Table 75(B). Usage of Coca-Cola Products After Consumption by Urbanisation ......... 95 Table 76(A). Recycling Depot or Centre in Vicinity by Type of Business ................ 95 Table 76(B). Recycling Depot or Centre in Vicinity by Urbanisation ...................... 95 Table 77(A). Distribution of Businesses by Number of Customers and Type of Business ................................................................................................... 95 Table 77(B). Distribution of Businesses by Number of Customers and Urbanisation .................................................................................................. 97 Economic Impact of The Coca-Cola System on South Africa, xiv Table 78(A). Distribution of Businesses by Customer Spending and Type of Business ................................................................................................... 97 Table 78(B). Distribution of Businesses by Number of Customers and Urbanisation .................................................................................................. 97 Customer Spending .......................................................................................................... 97 Customer Profile ...............................................................................................................98 Table 79(A). Customer Profile by Type of Business .................................................. 98 Table 79(B). Customer Profile by Urbanisation ........................................................ 99 Table 80(A). Frequency of Settlement of Accounts by Type of Business ................ 99 Table 80(B). Frequency of Settlement of Accounts by Type of Urbanisation ....... 100 Table 81(A). National Lottery’s Effect On Sales by Type of Business .......................... 100 Table 81(B). National Lottery’s Effect On Sales by Urbanisation ................................ 100 National Lottery Influence on Business .............................................................. 100 Table 82(A). Sale of Lottery Tickets by Type of Business ............................................. 101 Table 82(B). Sale of Lottery Tickets by Urbanisation ................................................... 101 Influence of AIDS on Businesses ............................................................................ 101 Table 83(A). Reduction in Turnover As A Result of AIDS by Type of Business .......... 101 Table 83(B). Reduction in Turnover As A Result of AIDS by Urbanisation ................ 102 Appendix A: Disaggregation of a 2000 SAM for South Africa Appendix B: Bottler Survey Appendix C: Informal Sector Survey Economic Impact of The Coca-Cola System on South Africa, xv The Economic Impact of The Coca-Cola System on South Africa Chapter 1 Introduction: Goals and Objectives of the Study No doubt the most significant economic challenge facing South Africa is to alleviate poverty. Increasing incomes will necessitate meeting the empowerment goals set by the country’s leaders. It will also require creating thousands of jobs annually and channelling entrepreneurial dynamism into viable local businesses. The expertise and knowledge embodied in investments by the world’s leading companies will be crucial in moving the South African economy forward. To employ South African labour productively, new capital needs to spring from many sources, both internal and external. In turn, the African employment base will expand only to the extent that private investors will make substantial, long-term commitments. The Coca-Cola enterprise system represents Africa’s largest employer, with products sold in all segments of the continent’s diverse markets. It is a major employer in South Africa as well. For over a decade, The Coca-Cola Company has been dedicated to a large-scale private investment expansion program in the country. Investments in production and the distribution infrastructure have extended The Coca-Cola Company’s linkages deep into the country’s market structure. Understanding The Coca-Cola Company’s competitive character, its employment network, and its business linkages may offer some clues to solving some of South Africa’s current poverty, employment, and other economic problems. Potentially, the Coca-Cola system brings competence and globally competitive standards of production, marketing, and management to local economies. Yet how does this significant actor in the South African economy spread benefits throughout the country? What are the real contributions of the Coca-Cola system to the economic and business climate? Building on previous work conducted by the research team in the late 1990s, this study looks at the economic impact of the Coca-Cola system in South Africa in 2003-04. As before, the research undertaken for this project is far-reaching. University and other researchers from South Africa and the United States looked at many ramifications of The Coca-Cola Company as an enterprise system and its effects on the economy. Specifically, the researchers’ intent has been to assess how manufacturing soft drinks spreads employment across different, seemingly unrelated industries. Trading activities are given special attention, in large part because the economic implications of trade are poorly understood. Thus, a central purpose of this research is to investigate how micro enterprise in the trade sector fits within a larger framework of business linkages in South Africa. Informal trading may serve as a safety net for the unemployed? Does it provide a catalyst to legitimate enterprise when linked to an advanced business cluster? The study was designed to answer these and many other questions. While covering many issues, the study has the following central objectives: • To explain the cluster of business activities directly and indirectly tied to The Coca-Cola Company’s system of production and distribution. • To assess the economic multiplier effect of the Coca-Cola system, with a special focus on employment impacts. • To explore the relationship between the Coca-Cola system and the informal micro enterprise sector of South Africa. Above all, an exhaustive effort was undertaken to calculate the economic multiplier effect of the Coca-Cola system. The research team examined the entire value chain of goods and services involved in the production and distribution of soft drink products by the Coca-Cola system across the country. Primary data used for the analysis (and reported in the study) are based on surveys sent to all affiliated bottling and canning manufacturers. Economic impacts of production and investment were analysed through the most reliable economic model available, known as the South African social accounting matrix (SAM). The South African SAM estimates the impacts on production activities from agriculture to manufacturing industries and services, labour, household income distribution, and government revenue. Most economic impact analyses focus exclusively on upstream linkages captured by a similar SAM (or input-output) model; that is, impact analysis typically means tracing the supplier relations and other indirect effects stemming from production activities. A unique aspect of this analysis is a novel extension of existing economic methods to capture the specific nature of the downstream linkages, including informal trade, in South Africa. A few caveats should be given at the outset of the report. First, the methodology is oriented toward examining the current structure of the Coca-Cola system, based on the available data for its operations and capital expenditure. Yet, it should be stressed that every model requires complete data and rests on many assumptions. The appropriate assumptions are explained in subsequent chapters. No model can ever completely account for all the complex economic effects of international business and local economic activity. It should also be noted that the results represent a snapshot in time— as modeled during 2003. As the South African economy continues to develop and restructure, the relationships underlying this analysis will change as well. To obtain credible results, the most complete data and best modeling techniques were employed. In addition to calculating multiplier effects through the South African social accounting matrix, this study examined other important aspects of the Coca-Cola system’s complex connections with the local economy. Notably, we present the results of a large survey, probing the special role the Coca-Cola system plays in the informal trade sector of the South African economy. Economic and political opportunities denied the population during apartheid gave birth to many informal retail businesses—the ubiquitous spaza shops, shebeens, and tuck shops. Many survive today, and others have Economic Impact of The Coca-Cola System on South Africa, 2 started. To gain more insight into the informal sector and its interaction with the CocaCola system in South Africa, the research team obtained 760 detailed surveys. The micro businesses canvassed were selected to reflect both the South Africa’s mix of retail channels and geographical diversity—the county’s cities, townships, and rural areas. Owners and managers of informal retail trade outlets were asked to respond to a pretested, structured questionnaire, administered by trained interviewers. The survey instrument included requests for precise business information, such as employment, turnover, and net income, as well as demographic characteristics of the small business owners and their employees. A high response rate ensured that this would be one of the most complete informal sector surveys ever undertaken in South Africa, or indeed anywhere. This primary data collection provided essential information on the extent of the linkages between the multinational enterprise and local business. A primary objective is to discern whether these micro enterprises offer sustainable livelihoods and thus help to alleviate poverty and spread economic benefits. In sum, this study examines the structure and impact of The Coca-Cola Company as an important business system—the hub of a beverage cluster. Accordingly, this cluster may serve to exemplify South Africa’s potential for expanding job and business opportunitys, even in otherwise impoverished settings. Expanding employment and enhancing small-business development will be crucial as the South African economy continues its transformation in the 21st century. The rest of this study is divided into the following three chapters. • Chapter 2 explains the Coca-Cola enterprise system, or beverage cluster, in detail. • Chapter 3 presents the methods, findings of the multiplier, and social accounting matrix analysis. • Chapter 4 presents the findings of the informal trade sector survey. Economic Impact of The Coca-Cola System on South Africa, 3 The Economic Impact of The Coca-Cola System on South Africa Chapter 2 Coca-Cola South Africa: Competitiveness and Clustering This chapter sets the stage for the study’s findings by providing background on the current macro and microeconomic challenges shaping the business climate in South Africa. At the macroeconomic level, the country must elevate growth, control inflation, stabilize the currency, and instill investor confidence. If this were not enough, the most significant challenge is to stimulate employment. However, in many respects, creating and sustaining employment is a microeconomic issue—it will require boosting the country’s competitive advantages from the bottom-up—raising firm competitiveness and productivity. Indeed, according to the widely embraced theory of economic development put forth by Harvard University Professor Michael Porter, a country like South Africa should focus its strategy on firm competitiveness and build business linkages through clustering. These serious economic challenges and the position of the Coca-Cola system in the competitive structure of the economy are key themes explored in this chapter. The next section begins with a brief overview of the major macroeconomic issues confronting South Africa. This is followed by a look at South African employment, both in the formal and the informal sectors. We then turn to understanding the Coca-Cola system’s role in building a competitive cluster in the beverage industry of South Africa. The Coca-Cola system interacts extensively with the formal and informal sectors of the economy, with particularly deep linkages in the trade sector. The nature of these linkages is covered in the last section of the chapter. Macroeconomic Conditions A principal goal for South Africa is to spur aggregate economic growth. In many respects, South Africa has the necessary conditions for macroeconomic expansion. The country’s resources, market size, and superior infrastructure make it a prime candidate for domestic and international investment. It is well known that South Africa’s manufacturers, financial institutions, business services, and commercial enterprises comprise sub-Saharan Africa’s most advanced and diversified economic base. Many financial Economic Impact of The Coca-Cola System on South Africa, 4 institutions, mining multinationals, and manufacturers—including those in beverages and its supplier industries—are competitive with businesses in developed economies. South Africa has charted an ambitious course for the economy, embraced in the government’s Growth, Employment and Redistribution (GEAR) program. There have been successes in stabilizing the macroeconomic environment. Government spending has been generally conservative under President Mbeki, bringing the budget deficit to a sustainable level. This may set the stage for a loosening of fiscal policy that would spur economic growth. South Africa also has a good reputation for sound monetary policy, setting inflation targets and a commitment to getting the fundamentals right. Risks to meeting macroeconomic targets are always present, however. Potential macroeconomic shocks include sharply rising oil prices and the threat of currency instability. Nevertheless, as seen in Table 1, the overall macroeconomic trends since the recession of the early 2000s have been largely favorable. South Africa has had notable success in maintaining moderate growth in real (inflation-adjusted) gross domestic product (GDP). Manufacturing has increased production every year since 2001, and agriculture has shown improvement as well. Table 1 shows positive effects in controlling inflation (the rate of change in consumer prices), along with moderation in interest rates. As the economy has grown, the government fiscal balance has turned negative, but as a percentage of GDP it has remained relatively low. Fueling economic growth, exports have risen and outstripped imports. Table 1. Macroeconomic Summary (%, unless otherwise indicated) Real GDP Growth Manufacturing Production Growth Gross Agricultural Production Growth Consumer Price Inflation (average) Short-term interbank rate Government Balance (% of GDP) Export of goods fob (US$ billion) Import of good (US$ billion) 2001 2.8 2.8 -1.7 5.7 13.8 -1.0 30.7 25.9 2002 3.0 5.3 4.0 9.2 15.8 -0.8 31.1 26.7 2003 2.5 5.7 3.6 6.3 15.4 -2.6 32.3 28.7 2004 3.0 5.0 3.5 0.8 12.6 -2.4 33.6 29.3 Sources: World Bank, Economist Intelligence Unit (EIU) Estimates, South African Reserve Bank (SARB). a There is a discrepancy between SARB and World Bank figures. EIU estimates are used for some years. Along with creating the macroeconomic conditions for stability, South Africa, like all countries, must expand business opportunities and foster job creation across the country. Sluggish formal sector employment growth and widespread informal employment pose particular burdens on South Africa. Stepped-up economic growth is obviously needed to reduce the persistently high unemployment, reaching nearly one-third of the workforce. At the same time, the growth sectors of the economy, including informal sector businesses, must become more competitive if employment gains are to last. Table 2 shows the breakdown of formal and informal sector employment. It can be seen that the trade sector, where the Coca-Cola system has extensive interactions, is an especially large part of the employment structure. The formal trade sector accounts for more than 17 percent of employment. For informal trade, the trade sector dominates Economic Impact of The Coca-Cola System on South Africa, 5 with 36 percent of total employment. Table 2. Employment by Sector (% of The nature of these informal trade Total) businesses—the spazas, shebeens, and Formal Informal Total other points of sales—along with their Agriculture 10.3 23.4 12.2 business relationship with The Mining 6.3 0.2 4.5 Coca-Cola Company is documented in Manufacturing 18.3 8.2 14.8 the survey results presented in Electricity 1.0 0.0 0.7 Construction 4.2 10.2 5.2 Chapter 4. 17.3 36.0 19.7 Achieving macroeconomic stabil- Trade Transport 5.7 4.6 5.0 ity can be an arduous, never-ending Business Services 12.2 2.6 9.3 task for South Africa’s policy makers, as Community Services 23.8 7.7 18.6 is true elsewhere. At the same time, the Private Households 0.2 6.7 9.4 Unspecified 0.7 0.4 0.6 macroeconomic fundamentals (includTotal 100.0 100.0 100.0 ing low inflation, a stable currency, and the government budget balance) repreSource: Statistics South Africa: Department of Trade and sent only certain necessary, but not Industry. Data for September 2002. sufficient, conditions for South Africa to achieve its economic goals. In addition, microeconomic (firm-level) conditions must be present in the economy, creating a competitive climate that supports productive firms, and, more importantly, deeply rooted clusters of businesses in the local economy. The Coca-Cola System’s Upstream and Downstream Network In this section, we explore the beverage cluster. To understand how the Coca-Cola system can contribute to the competitiveness and growth of South Africa, it is necessary to understand its linkages with the economy. Hence this section begins with an explanation of the business linkages—upstream and downstream—between the Coca-Cola system and the South African economy. This serves as a prelude to a more detailed examination of the Coca-Cola system and the beverage cluster in South Africa. Figure 1 shows the Coca-Cola bottling system (including support of the country and regional headquarters) in the middle of the value stream, with a surrounding network of upstream and downstream businesses. Overall, the Coca-Cola business network spans agriculture to retail, from sugar production facilities to vendors with street pushcarts. Almost all of the value-creating activities—from manufacturing through distribution—are locally based. The Upstream Network The actual soft drink production process is capital intensive, with highly automated production lines. The upstream supplier network directly supplies inputs and services to the bottling production system. Further upstream suppliers then feed the first tier suppliers (increasing the economic multiplier effect explained in the next chapter). Thus, to make the final product, the lines draw on numerous inputs supplied upstream by companies, from agriculture to manufacturing to services. Some of the main local inputs include: sugar, CO2, beverage ingredients, and packaging (paper, PET, glass, closures, and crowns). Moreover, equipment input suppliers contribute to the value chains, such manufacturers of bottling line machinery, trucks, and lifting machinery. Economic Impact of The Coca-Cola System on South Africa, 6 Figure 1. Coca-Cola Production and Distribution Wholesalers Packaging Suppliers Transport & Other Equipment Suppliers Advertising & Other Business Services Construction U pstream N etwork Production Coca-Cola Bottlers Retailers System Final Consumers Further Upstream Linkages Beverage Ingredient Suppliers Other Points of Sale Downstream N etwork Local business services include financial institutions, advertising agencies, sign makers, design firms, business consultants, accounting firms, law offices, repair services, and hotel and travel companies. On the downstream side, transportation of the product to bottlers also represents a significant economic activity. Finally, construction firms are major partners during expansion programs. The Downstream Network On the upstream side, we have seen that most of the inputs shown Figure 1 represent South African production activities. Local inputs account for the vast majority of the final product. That is certainly true of the downstream side (also shown in Figure 1). The Coca-Cola system has extensive ties through its sophisticated local network—an infrastructure that reaches across all South African provinces. Arguably, it is the international business system with the greatest commitment to the diverse population of South Africa. Although Coca-Cola is the most recognized brand in the country, reaching consumers requires a complex network of distribution channels. The downstream network is responsible for delivering the product of all bottlers to meet demand. The bottling system distributes some Coca-Cola products directly through retailers. South African retail outlets run the gamut from large stores to small-scale, privately-owned enterprises, convenience stores, restaurants and small individual pointsof-sale. The distribution network includes informal outlets—spaza shops, tuck shops, shebeens, and hawkers. In addition, wholesalers distribute products to local retailers and other outlets. Besides bottling plants, the Coca-Cola system includes warehouses and sales depots. Chapter 4 will present a comprehensive survey of the informal distribution network. The Beverage Cluster How can Coca-Cola’s extensive business system contribute to South Africa’s competitiveness? To answer this question, it useful to place beverage activities in the Economic Impact of The Coca-Cola System on South Africa, 7 context of cluster theory. Modern cluster analysis has its origins in Harvard Business School Professor Michael Porter’s work, first published in The Competitive Advantage of Nations.1 In this book and subsequent articles, Porter introduced a model of competitive dynamics that now forms the basis for microeconomic strategy from Singapore to Spain. In contrast with traditional economic models, Porter argues that it is not what a country produces, but how productively and efficiently. In theory, a country like South Africa can develop competitive businesses in any sector by upgrading productivity. Porter’s approach suggests that upgrading firm competitiveness can best take place through clusters. A cluster is a group of interconnected companies and associated institutions in a particular economic field, linked by mutual interests and complementarities. Clustering differs from the traditional industry approach to understanding economic development. With a cluster, there is synergy across industries, tying core firms, suppliers of specialized inputs, components, machinery, services, financial institutions, and service companies. A beverage cluster would certainly include the upstream and downstream activities already discussed but also producers of complementary products; specialized infrastructure providers; government and other institutions providing training, education, information, research, and technical support; along with standards-setting agencies. To identify a cluster, Porter recommends first starting with a key firm or group of firms. No doubt The Coca-Cola Company acts as a key firm in the South African beverage cluster. As a major producer of non-alcoholic beverages in South Africa, Coca-Cola’s name is synonymous with soft drinks. The core presence of The Coca-Cola Company in the South African economy is Coca-Cola Southern and East Africa Division (CCSEAD), a wholly owned subsidiary. Based in Johannesburg, CCSEAD acts as a liaison between bottlers throughout southern Africa, East Africa, and the African Islands and the U.S. multinational company, providing technical, marketing, and managerial support, while promoting quality assurance, distribution efficiency, and human resources development. It strives to ensure that local bottlers realize continuous growth and profitability, which spurs higher concentrate sales that benefit the multinational company. In addition, The Coca-Cola Company has a significant interest in two canning/ bottling companies in South Africa. It owns a share in Coca-Cola Fortune (approximately 21 percent sales volume contribution), and a share in Coca-Cola Canners of Southern Africa (CCCSA), operator of the largest canning facility in the Southern Hemisphere. Along with CCSEAD, the core businesses in the South African cluster are franchise bottlers. In addition to Coca-Cola Fortune, licensed/franchise bottlers are Amalgamated Beverage Industries (ABI) (approximately 60 percent of sales volume), Cook (approximately six percent of sales volume), and Peninsula Beverages—Forbes (approximately 13 percent of sales volume). Coca-Cola Canners of Southern Africa produces canned products mainly and these are distributed via the bottlers’ network. As stipulated in the Bottlers agreement, for bottlers to participate in the cluster, the critical competency is a mastery of the actual bottling process, for no bottler without a advanced level of technical expertise could become a Coca-Cola licensee. In turn, the South African bottlers join (or are part of) a network of the most experienced bottlers in the world. This network has established best practices for production quality and efficiency, practices which new affiliates are then able to adopt, adapted to their needs. Essentially, CCSEAD serves as a nexus in the alliance with the South African bottlers, Economic Impact of The Coca-Cola System on South Africa, 8 responsible for activities like joint marketing, public relations, and information flow. The productive success of the beverage cluster, like others examined by Porter, is driven by five factors. • • • • • demand conditions resources, or factor development firm strategy, structure and rivalry supplier relations supporting institutions These are the competitive drivers of any business cluster, helping to create and expand firm-level, cluster-level, and even country-level competitive advantage. The following elucidates these five aspects of the beverage cluster in the South African context. MEETING DEMAND The viability of any private enterprise system like the Coca-Cola system is determined by demand conditions; that is, by meeting consumer preferences. Strong domestic demand can be fundamental in the development process. Consumers interact with production through markets—with retailers and other points of sale. Customers with sophisticated demand drive product differentiation and competition on non-price grounds. Local demand can also reveal market segments ripe for differentiation. Marketing campaigns can cultivate sophisticated demand conditions, as can higher levels education and industrialization. Discerning and sophisticated consumers help promote the beverage cluster and push it to improve both its products and its efficiency. To meet that demand, an enterprise system like the Coca-Cola system must obviously understand the peculiarities of local demand conditions in South Africa, from its rural to its urban regions. To meet consumer demand, the licensed bottlers must build effective, highly localized marketing and distribution systems. CCSEAD works closely with its affiliated bottlers on regional marketing strategy. International marketing experts work with experienced local firms to promote awareness, launching marketing and advertising programs designed to preserve Coca-Cola’s brand recognition, increasing sales and profits for both the bottlers and CCSEAD. But the only facet of business that rivals The Coca-Cola Company’s success in branding is its reputation for effective and flexible distribution networks. This experience too is shared with affiliated bottlers. In South Africa, the majority of production goes directly to retailers, but about 20 percent first passes through the hands of wholesalers and/or sub-wholesalers. Licensed bottlers have close relationships with their major retailers and wholesalers, and CCSEAD provides proven methods to keep these relationships strong and mutually beneficial. These downstream linkages will be more carefully examined as that aspect of the cluster is considered in its own right. In short, success in meeting demand depends on the distribution and retail part of the businesses. Twenty-eight percent of Coca-Cola products are distributed through wholesalers, mostly to smaller retailers and retailers in rural areas. There are over 1,500 primary wholesalers and hundreds of sub-distributors and runners. The primary wholesalers have a strong and direct connection to one of the licensed Coca-Cola bottlers, and Economic Impact of The Coca-Cola System on South Africa, 9 act as an intermediary, using their greater knowledge of their local area to ensure the broadest distribution of Coca-Cola products to interested retailers. The sub-wholesalers, on the other hand, usually do not have a direct link to a bottler. They work with wholesalers and are integral to distribution among small, informal retailers who bring much of the product to the townships and countryside. Often, they also engage in retailing themselves. A larger bar in a village may make a trip into town and overbuy from a formal wholesaler, selling off the extra product to small spaza shops in the village. When there is no such sub-wholesaler to provide for these very small retail outlets, they are often provisioned by runners. Runners truck product to small retailers, mostly to those who cannot hold large inventories to meet any unusual demand or need frequent re-supply. Runners are especially common in South Africa’s townships, where they are a crucial link in the downstream network. This final link in the downstream network is retailers. To subsume all Coca-Cola retailers under one category is deceptive. Formal retailers encompass a gamut of businesses: hyper markets, supermarkets, gas stations, restaurants, cafes, and bars. Informal retailers are equally diverse: spaza shops, shebeens, kiosks, hawkers, tuck shops, and small informal restaurants. While some retailers purchase their product from wholesalers, about eighty percent is purchased directly from a bottler. The relationship between retailers and wholesalers/bottlers is often very close. For many smaller retailers, Coca-Cola products represent a large part of their turnover (see Chapter 4). In most cases, retailers make use of advertising materials provided by the core of the Coca-Cola system, and based on favorable need assessment by the bottler; traders are provided with branded coolers as a means to improve sales velocity. Such coolers are the property of The Coca-Cola Company. These can be used only for Coca-Cola products. The Coca-Cola system also requires a certain level of record keeping in line with any sound business practice, which some retailers find burdensome, but this situation is similar to the strict requirements for suppliers (discussed later). The initial investment in setting up these records can lead to greater efficiency in other aspects of the business, beyond the relationship with the Coca-Cola system. In many areas, informal traders provide the necessary access to the diverse demand for beverages across market segments. Thus, even an advanced business must have close connections with small-scale enterprise to reach the ultimate consumer. It is hard to overemphasize how important formal and informal retail outlets (as probed later in this study) are critical to building a cluster. Potentially, entrepreneurs who work closely with the Coca-Cola system can attain high turnover and margins with Coca-Cola products. The Coca-Cola Company helps entrepreneurial activities blossom into bona fide, sustainable businesses. It should be recognized that the demand conditions in the beverage cluster are not limited to the downstream consumer of the products. the Coca-Cola system’s production places demand on suppliers, and stringent requirements for suppliers are a great example of sophisticated demand in Porter’s sense. This cluster driver will be explained later in a discussion of related and supporting industries. RESOURCE DEVELOPMENT Next, Porter maintains that clusters must have the resources to succeed in meeting demand. Resources, or factors, include tangible assets such as infrastructure (roads, Economic Impact of The Coca-Cola System on South Africa, 10 electricity) and less-concrete factors such as the legal system, information, and educational resources/research institutes. Most important for competitive clusters, however, are two basic factors: labour and capital. Coca-Cola bottlers must be able to marshal human and capital resources to elevate productivity. The critical, often scarce resource in cluster development is managerial talent. In the core, CCSEAD offers training sessions to update workers’ and, more importantly, managers’ abilities to work efficiently and productively. CCSEAD also offers technical training. Capital is needed to continually upgrade beverage cluster development. To secure and develop a license, a local Coca-Cola bottler must have sufficient capital to invest in the requisite land, building structures, machinery, equipment, trucks, bottles, and crates. The actual production process is capital intensive and highly automated. Moreover, as discussed earlier, bottlers must market their beverage to wholesalers and retailers, as well as to consumers, and therefore invest in an efficient distribution system to get it “within an arms reach of desire.” As far as capital requirements are concerned, Cola-Cola’s role varies from bottler to bottler. In some cases, The Coca-Cola Company will take an active role in financing (equity) and control (management), whilst in other cases it only offers contacts and suggestions to owners. The goodwill and prestige associated with the Coca- Cola name should not be overlooked. Being connected with one of the top consumer brands in the world can open up opportunities for financiers, who are comforted by the knowledge that licensed bottlers will have the full support of The Coca-Cola Company and a proven business model. COMPETITIVE DYNAMICS In any cluster, the particular nature of firm strategy, market structure, and rivalry can spur or deter productivity, efficiency, innovativeness, and new business formation. Every successful cluster depends on key, innovative firms, like The Coca-Cola Company and local bottlers, to drive a strategy of enhancing local value-creating activities. In the Porter development model, both advanced and developing economies benefit from highly efficient firms. In upgrading competitiveness at the microeconomic level, producers shift from simple imitation to focus on total competitive advantages, requiring constant technology and efficiency upgrades in production and distribution. Cluster competition begins to play itself out in terms of differentiation, not simple price competition. This level of firm competition requires that the cluster innovate and commit to high levels of investment. Also important to cluster competitiveness is the quality and strength of firms in the upstream and downstream network. For example, an important supplier industry in beverages is sugar. In this case, CCSEAD, through the South African Sugar Association, works directly with sugar suppliers to upgrade the quality standards of sugar to meet the world standards that are a requirement for the Coca-Cola company’s beverages, increasing quality outside the core firms. The Coca-Cola network improves the competitiveness of the whole cluster through relations in the upstream and downstream network. Upstream, the Coca-Cola system’s specifications are particularly demanding, but South African businesses have proven to have the capability for advanced, competitive manufacturing and service operations. Many supplies are delivered on a just-in-time basis. CCSEAD selects suppliEconomic Impact of The Coca-Cola System on South Africa, 11 ers according to their ability to deliver quality products on demand. The application of World standards for quality in the local market improves the global competitiveness of suppliers in the value chain. In rounding out this discussion on competitive cluster development in beverages, it should also be recognized that CCSEAD has interactions with other core companies. Notably, SAB-Miller has a unique relationship with the Coca-Cola system. SAB-Miller is a major player in the beverage production business, while at the same time it owns the largest Coca-Cola bottler in South Africa, ABI. Currently, SAB-Miller is the second largest brewery in the world, by volume, and ABI is one of the largest bottlers of Coca-Cola products outside the United States. The advantages to productivity that come with this relationship are myriad. Both companies have decades of experience in the beverage industry. Each ranks among the top five in most recognized and esteemed brands in South Africa, a credit to their ability to work together to mutual success. Working through CCSEAD, intentionally or not, SAB-Miller indirectly improves the efficiency and productivity of Coca-Cola bottlers by sharing information on best practices. But in the end, the global improvements help all bottlers, including SAB-Miller, by increasing brand awareness and customer goodwill. In a network like this, success breeds success. In this relationship of leading beverage firms, one finds the mixture of competition and coordination that is the key feature of a mature cluster. With two firms on the forefront of the world wide beverage industry, South Africa can glean global benefits for its local economy. The relationship is an example of complex business systems driving innovation in any cluster. As they compete for consumers, these two major producers must continually work together to improve quality and efficiency where they have mutual interests. RELATED AND SUPPORTING INDUSTRIES As indicated already in this study, a viable cluster also depends on a strong supplier network. To make the final product, the beverage lines combine concentrate with other inputs: water, sugar, carbon dioxide, bottling, and packaging materials. Every unit off the line must meet strict quality standards, as required by the Coca-Cola license agreement, yet costs must be low enough for production to be profitable. For this to be possible, bottlers must possess a number of important competencies, each with a related linkage to CCSEAD. Bottlers must be able to identify reliable suppliers of inputs and master a complex and exacting production process. A full complement of local suppliers helps anchor a cluster in the local economy and engender strong multiplier effects. For many of the suppliers, the Coca-Cola system is a major purchaser. Strong relations are built; they form a cluster rooted in the local economy. Close supplier relations in the system—economies of scale, joint production planning, and inventory control—generate cost savings for the suppliers and the bottlers. A key competency is supply chain management: the ability to locate quality suppliers that fit well in the production process. Every bottler has its own procurement pattern, but the inputs are standard. Bottlers prefer local suppliers: packaging suppliers to provide plastic, glass, paper, closures, and crowns; equipment suppliers for bottling line machinery, trucks, and lifts; business services such as financing, advertising, designing, and accounting; and, most importantly, local sugar refiners capable of producing high quality sugar. But the demanding production process requires competitive manuEconomic Impact of The Coca-Cola System on South Africa, 12 facturing and service business. Coca-Cola bottlers select suppliers according to their ability to deliver products on demand to the right quality specification, with many suppliers delivering on a just-in time basis. CCSEAD works with bottlers and potential suppliers to ensure the creation and stability of such a network. More will be said of CCSEAD’s connection to input suppliers when we move more explicitly up the supply channel. It is difficult to overestimate the importance of high quality and dependable sources of supplies to the success of the Coca-Cola system in South Africa. A reliable source of high quality sugar is of special importance. For example, since the Coca-Cola system accounts for 20 percent of the South African sugar market, the relationship is central for the sugar industry as well.2 This leads to benefits of scale, joint production planning, and inventory control. As recently as last year, however, the relationship has produced friction as the Coca-Cola system pushed back on sugar price increases. This is an example of the complex mix of coordination and competitiveness that one often finds in a cluster. Another example of the importance of supply linkages is packaging. This includes glass, PET bottles, cans, paper, closures, and crowns, as well as crates and boxes for shipping. South Africa’s level of development ensures that advanced, competitive manufacturing businesses are able to supply these products on demand and to the high standards the Coca-Cola system requires. Since the Coca-Cola system is often a major purchaser for these firms, strong supplier relations are the norm. This relationship runs both ways, as the Coca-Cola system will often catalyze supplier upgrading by providing technical know-how and experience. But perhaps the strongest impact the core Coca-Cola system has on its upstream suppliers is its high expectations. The modernization in production and delivery required of Coca-Cola suppliers has also allowed these firms to compete more broadly in their individual markets. Services such as just-in-time provision and cutting-edge quality control spillover into other aspects of the suppliers’ businesses, making them more efficient and profitable in their own right. These considerations apply to other supplier firms which have a continuing relationship with the Coca-Cola system, such as equipment suppliers, business services, repair services, and hotel and travel companies. In terms of social impact of the cluster, the Coca-Cola system has programs to remove all solid waste generated by its operations (cans, PET, glass, and so forth). This process creates jobs and improves the economic status of ordinary South Africans who would otherwise not have a source of income. SUPPORTING INSTITUTIONS The final driver in the beverage cluster is the local presence of supporting institutions. This includes industry organizations which provide a venue for sharing best practices, educational facilities which provide trained personnel, financial institutions which provide ready capital, and governmental institutions which provide regulatory supervision and support. A great example of an industry organization which plays a key role in the beverage cluster is the South African Sugar Association (SASA). This association, which had been in existence since 1935, brings together both millers and growers to discuss common problems and solutions. SASA funds research into increasing sugar yields and quality, bringing these results to the field through extension programs offering training and Economic Impact of The Coca-Cola System on South Africa, 13 education. It also offers development financing to small-scale sugar cane growers who could not obtain credit through normal banking channels or through the Umthombo Agricultural Finance Initiative. Finally, the presence of the SASA allows the sugar industry, a collection of growers and millers of various sizes, to enter a nexus of complementarity and competition with the Coca-Cola system very similar to that between SAB-Miller and The Coca-Cola Company. In some ways, they are strongly dependant and must work very closely together, but they also have their own individual interests which are sometimes in conflict, as evidenced by a recent row over the price of sugar. This give and take pushes progress in the cluster, increasing productivity and competitiveness. More generally, many sector participants belong to the South African Association of Food Science and Technology. This organization is a national association, which is concerned with advancing the knowledge of Food Science and Technology. This it does through encouraging scientific research, organizing meetings, seminars, workshops and congresses, publishing papers and assisting in educational activities. The National Secretary maintains a membership office equipped with telephone, fax, photocopier, and computer. Currently the Association has about 1400 members throughout Southern Africa—the Cape, KwaZulu-Natal and Northern branches attend to the regional affairs of the Association. The educational system in South Africa is also a major boon to the competitiveness of the beverage cluster. By far the most advanced higher education system in Africa, the South African university system consists of 21 universities serving some 400,000 students. But perhaps more important is South Africa’s unique system of technikons. South Africa’s 15 technikons represent a dynamic and highly innovative sector of higher education in South Africa. Today, the technikons are far more than technical colleges— many aspire to the title of “universities of technology” and since 1995 have offered degree programs up to the doctoral level. Technikons are distinguished from the universities not by the quality of their educational product, but rather by their focus. According to the Committee of Technikon Principals (CTP), technikons aim to “. . . provide and promote, in conjunction with the private and public sectors, quality career and technology education and research for the development needs of a transforming South Africa and a changing world.” Many technikons are involved in collaborative industry-directed research programs, and this involvement in turn is reflected in curriculum design. The ability of graduates to “hit the ground running” and immediately begin to be economically productive is a key objective. These graduates form a base of highly trained technicians, business managers, engineers, and production supervisors, all of whom are required by the modern production techniques in a dynamic sector such as beverages. A final important institution included in the beverage cluster is the sector representative of the South African Department of Trade and Industry. The role of this institution is best seen by examining one of its key programs, the Regulatory Environment Program. This program works to create a regulatory environment that will boost business and consumer confidence while actively promoting economic development and growth. It also focuses on disseminating knowledge of existing legislation administered by the economic cluster. Economic Impact of The Coca-Cola System on South Africa, 14 Summary In many respects, South Africa has the conditions for a stable, growing, aggregate economy. Admittedly, growth will have to accelerate to create sufficient employment for South Africans, especially in the formal sector. At the same time, the conditions for enhancing firm and cluster competitiveness must be present. The beverage cluster shows how the country can develop at the microeconomic level. Competitiveness is driven by firms that respond to shifting, differentiated demand, commit capital resources, find talented workers, and upgrade productivity. In the next chapter, we explore the quantitative dimensions of the Coca-Cola cluster. It should be emphasized that no economic model can account fully for all the interrelationships that make up a complex business system. Nevertheless, an impact model can help measure how deeply the Coca-Cola system is embedded in the South African economy. We will follow the best-practice techniques available to calculate the extent of the Coca-Cola system’s local linkages. The main metric that emerges from this modeling exercise is the economic (and employment) multiplier. The multiplier effect for employment, economic output, and related measures provide the parameters for the Coca-Cola system’s participation in the South African beverage cluster, as described in the chapter. Endnotes 1 See Michael Porter, The Competitive Advantage of Nations, New York: The Free Press, 1990; and “Clusters and the New Competitive Agenda for Companies and Governments” in On Competition, Boston: Harvard Business School Press, 1998. 2 “Coke’s Sugar Ultimatum” by Herb Payne, MoneywebKZN 11/08/2002. Economic Impact of The Coca-Cola System on South Africa, 15 The Economic Impact of The Coca-Cola System on South Africa Chapter 3 The Economic Impact: Methods and Results Introduction This chapter presents the economic impact of the Coca-Cola system on South Africa. It relies on operational and capital expenditure data for Coca-Cola bottlers, export activity, Coca-Cola division office operations, and downstream formal and informal traders. The total impact is then determined by a large complex model of the South African economy. Strong employment impacts spring from soft drink production and distribution channels. It will be shown (in the final section of this chapter) that the Coca-Cola system supported, directly and indirectly, approximately 166,000 jobs in 2003. Moreover, the results reported in this chapter reveal that informal trade generates some of the largest employment impacts. In South Africa, hundreds of thousands of informal trading enterprises sell soft drinks. Based on the number of establishments, volumes, and trade margins, it is estimated that the Coca-Cola system sales underlie the employment base of more than 70,000 South Africans as a result of informal trade. These enterprises and individuals support community development in every region of the country. The impact results are presented in this chapter as follows. First, there is a brief discussion of the methods used in the impact analysis. The direct impact is then given for operational and capital expenditures by the bottlers, South African exports to bottlers elsewhere in Africa, the expenditures by Coca-Cola division office, and spending of the formal and informal traders. The latter information is drawn from a purposedesigned survey in selected informal areas of South Africa. The procedure used to estimate informal trade impacts is discussed in detail. The chapter then presents the consolidated or total impact. The results for all direct and indirect effects of the CocaCola system are given in a table 8 at the end of the chapter. Impact Analysis Methodology This section describes the methods used to evaluate the impact of the Coca-Cola system’s operations on the South African economy. The analysis begins by collecting information from bottlers and using the direct input data to model the total economic impact. Essentially, the direct inputs into the model are operational and capital expenditure data for the various the Coca-Cola system expenditure components (supplied by The Coca-Cola Company and its bottling affiliates in South Africa). A survey of informal trade outlets added additional information needed to model the downstream linkages. This survey information provides the input needed to calibrate the economic impact. The actual impact calculations are based on the best available economic model for South Africa, commonly referred to as the South Africa SAM (Social Accounting Matrix).1 The characteristics of this model are briefly described next. Every SAM analysis begins with an injection of new money into the economy— this is the direct effect. The direct economic impact of the Coca-Cola system is mostly the result of operational expenditures from bottlers. This ongoing spending creates direct income and jobs for individuals in the Coca-Cola system. The SAM then calculates indirect and induced impacts. The indirect and induced effects derive from several sources. For example, Coca-Cola bottlers buy supplies in South Africa. The suppliers receive this income and then spend it, leading to further rounds of income and expenditure by other businesses and individuals in South Africa. More employment and income is generated. This indirect effect, along with specific impacts on industries, can be modeled through the SAM. Moreover, employee income in the Coca-Cola system will be spent, creating yet another impact, called the induced impact. A SAM can trace these ripple effects and provide estimates of total employment and income. Essentially, the SAM offers a complete model of the economy at hand, focusing on relationships among production activities (various industries), labor, households, and the public sector. In addition, the SAM offers a way to analyse the total impact on South African employment (along with skill levels) and income (including its distribution among different groups). Typically, the South African SAM identifies 43 activities in the economy (agriculture, manufacturing, services, government, and other sectors). However, special modifications are needed to examine the Coca-Cola system. Notably, this analysis includes sugar-cane growing and sugar refining as a special feature. This is because the Coca-Cola system is a large user of sugar. So 45 activities (43 regular + 2 sugar related) are examined in the SAM. The SAM also estimates the inpacts according to labour skills and household income classes. In the final analysis, the SAM accounts for the complex interactions among sectors of the South African economy, allowing us to determine the impact or multiplier effect of the Coca-Cola system. A full description of the SAM model’s dimensions is given in Appendix A. Direct Economic Effects In this section, we explain the first round of the Coca-Cola system’s impact—the direct injection of spending from the bottlers and other sources—based on data obtained from the Coca-Cola system. This is the starting point for understanding the overall economic impact (presented later in the chapter). We first look at the bottlers’ direct impact on the economy through their direct expenditures (before the multiplier effect ripples through the rest of the economy). Then we turn to examine other parts of the Coca-Cola system—export activity, the regional division office, and distribution (formal and informal trade). Together, the bottlers and these other activities act as an economic catalyst, stimulating employment and income for South Africans. The direct effect is Economic Impact of The Coca-Cola System on South Africa, 17 shown in a consolidated table for all relevant activities at the end of this section (table 1). Direct Bottler Impact For the bottler direct impact, income and expenditure information was obtained from surveys conducted during 2003 and 2004. Once the information was compiled, income and expenditure streams by the bottlers were allocated to industries (see Appendix B for the bottler survey instrument). Most allocations of income and expenditure from the survey are straightforward since the instrument was designed to work with the South African SAM categories. For example, Coca-Cola cans are considered to be inputs from the metal products industry, Coca-Cola PET bottles are assumed inputs from the plastic products industry, and so forth. The bottling system information is shown in table 1 for current expenditure (columns 1-5) and capital expenditure (columns 6-10). Total direct sales are given in row 51. The table also shows how different sectors of the South African economy income from the Coca-Cola bottlers. The product groups that will receive a direct demand injection from the current expenditures of Coca-Cola bottlers are refined sugar (row 7), plastic products (row 20), metal products (row 25), other industries (row 33), transport (row 40) and business services (row 43). The materials imported into South Africa, mainly concentrate, as can be seen in row 46, while row 49 shows labour inputs. The bottom of table 1 gives the government revenue estimates. The difference between total costs (row 50) and revenues (sales in row 51) is shown in row 52. Coca-Cola bottlers report that they directly employed 9,740 in 2003. As explained in Chapter 2, this direct employment sits at the core of the Coca-Cola system. Employment skill distributions are shown in table 2. Export and Division Office Direct Impacts Beyond the bottling system, the direct impact of the Coca-Cola system in South Africa includes the effects of exports from South African businesses to bottlers elsewhere in Africa. For example, a source of expenditure impact in South Africa arises when bottlers in other African countries purchase goods from South Africa. This impact offers a legitimate stimulus to the South African economy. It is important to account for the effects of these exports and it will be part of the total impact given later in this chapter. In column 1 of table 3 it can be seen that the direct export amount is about 211 million rand mainly on refined sugar, plastic, glass and metal products. Besides exports, the direct impact calculated in this study includes estimates for the operations of the CCSEAD office. The estimates are shown in the second column of table 3. It can be seen, for example, that the largest expense associated with the regional office is on business services, which includes advertising. Direct Formal and Informal Trade Impacts So far we have discussed the direct impact of bottler spending, exporting, and the regional office. The distribution channels used by the Coca-Cola system exert another direct influence on the South African economy. For example, the gross margins earned by the formal and informal trade sector will lead to expenditures that can be associated with the Coca-Cola system’s South African activities. These expenditures give rise to further rounds of income and expenditure in the South African economy. Economic Impact of The Coca-Cola System on South Africa, 18 Table 1. Current and Capital Expenditures by Coca-Cola Bottlers in South Africa (2003 current R ‘000) SIC codes 1 11-13 2 3 21 4 23 5 22, 24, 25, 29 6 301-304 7 8 305-306 9 311-312 10 313-315 11 316 12 317 13 321-322 14 323 15 324-326 16 331-333 17 334 18 335-336 19 337 20 338 21 341 22 342 23 351 24 352 25 353-355 26 356-359 27 361-366 28 371-373 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 374-376 381-383 384-387 391 392 41 42 51 52-53 61-62 63 71 72 81-82 83 93 99 Description ABI Fortune Forbes Canners TJC ABI Fortune Forbes Canners TJC Current Current Current Current Current Capital Capital Capital Capital Capital 1 2 3 4 5 6 7 8 9 10 Agriculture, forrestry & fisheries, excluding sugar 0 Sugar cane 0 Coal mining 0 Gold & uranium ore mining 0 Other mining 0 Food 0 Refined sugar 336 Tobacco 0 Textiles 0 Wearing apparel 1 Leather & leather products 0 Footwear 0 Wood & wood products 0 Paper & paper products 23 Printing, publishing & recorded media 1 Coke & refined petroleum products 33 Basic chemicals 12 Other chemicals & man-made fibres 0 Rubber products 0 Plastic products 254 Glass & glass products 0 Non-metallic minerals 0 Basic iron & steel 0 Basic non-ferrous metals 0 Metal products excluding machinery 4 Machinery & equipment 36 Electrical machinery 0 Television, radio & communications equipment 0 Professional & scientific equipment 1 Motor vehicles, parts & accessories 0 Other transport equipment 0 Furniture 0 Other industries 611 Electricity, gas & steam 19 Water supply 18 Building construction 0 Civil engineering & other construction 5 Wholesale & retail trade 0 Catering & accommodation services 12 Transport & storage 214 Communication 17 Finance & insurance 61 Business services 127 Other services 138 Other 56 Imported 808 Gross Operating Surplus (payments, interest and others) 189 Subtotal 2,974 Wages & Salaries 580 Total inputs 3,554 Sales 4,589 Gross Operating Surplus (surplus before tax) 1,035 Gross Operating Surplus (total) 1,224 Indirect taxes on production 12 Indirect taxes on products 0 Direct tax 297 0 0 0 0 0 0 149 0 0 2 0 0 0 4 0 33 100 0 0 96 0 0 0 0 3 43 0 0 0 0 0 0 0 69 0 0 0 0 0 0 3 0 6 2 0 0 65 0 0 0 0 1 1 0 0 0 0 0 0 144 0 0 0 0 0 0 3 0 1 11 0 0 62 0 0 956 0 0 1 0 0 0 0 0 0 0 39 0 0 0 0 0 0 1 0 6 1 0 0 39 0 0 1 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 229 0 0 0 0 49 77 0 0 0 0 0 0 0 0 0 0 0 19 0 0 0 0 0 0 3 0 0 0 0 0 0 51 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13 0 0 0 0 0 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 13 0 0 0 0 6 5 0 0 0 0 0 0 0 7 7 0 8 0 68 0 6 12 212 35 18 357 0 0 0 0 0 2 1 0 0 0 0 12 4 2 21 6 14 156 0 0 0 0 0 5 5 4 0 0 0 1 2 5 1 3 1 1 344 0 0 0 0 0 12 1 0 0 0 0 2 4 1 1 7 3 2 92 0 72 0 8 0 0 0 0 0 0 0 0 0 0 0 0 15 0 0 0 7 0 0 0 0 0 0 0 0 0 0 0 11 0 19 0 0 0 0 10 0 0 0 0 0 4 0 0 0 0 0 0 0 0 0 0 16 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 1 79 1,242 126 1,368 1,705 17 381 22 403 836 102 1,651 315 1,965 2,631 14 227 33 260 348 0 451 0 0 0 0 111 0 0 0 0 50 0 0 0 0 0 0 0 0 0 34 0 0 0 337 416 4 0 97 433 449 19 0 131 666 769 13 0 167 88 102 2 0 22 0 451 0 0 0 0 111 0 0 0 0 50 0 0 0 0 0 0 0 0 0 34 0 0 0 Source: CCSEAD. Economic Impact of The Coca-Cola System on South Africa, 19 Table 2: Labour Skill Distribution by DIRECT FORMAL TRADE IMPACT Coca-Cola Bottlers in South Africa The direct impact of trade in the formal sector is based on specific Employment Wage trading margins for wholesale and distribution distribution retail; that is, the income (margin) 1 Highly skilled 13.4% 19.0% gain from sales (turn0ver). 2 Skilled 37.3% 40.8% Total turnover by the Coca3 Low skilled 49.2% 42.2% 4 Total 100.0% 100.0% Cola bottlers is drawn from the bottler surveys (given in the Source: CCSEAD. appendix). Using the average markup rate of 25 percent for wholesale and 26-30 percent for retail and the bottler’s information on sales by channel, the impact model calculates a total mark-up of about 1.6 billion rand. With the mark-up and the expenditure patterns of the trade sector as shown in the Social Accounting Matrix, an estimate is obtained for the formal trading sector—the spending pattern from Coca-Cola derived income. This impact is shown in column 3 of table 3. As expected, it can be seen that the expenditure pattern of the trade sector mainly favours other tertiary sectors, such as transport, business services, financial and insurance services as well as the paper and printing and construction industries. DIRECT INFORMAL TRADE IMPACT One of the unique contributions of this study is to model the direct and total impact of informal trading activity—the income attained by selling Coca-Cola products. Income and expenditure associated with the Coca-Cola system sales by informal traders is drawn from a 2003 survey undertaken by the Bureau of Market Research (BMR), University of South Africa. Obtaining an estimate of total income and expenditure associated with the sales of Coca-Cola products in the informal sector required estimating the size the market for Coca-Cola products. Because this type of analysis required a number of assumptions and an original modeling approach, we explain our methods next in some detail. Readers mainly interested in the total impact of the Coca-Cola system may want to proceed to the next major section of this chapter. The starting point of sizing the market is the average number of products sold by type of package (Question 34, table 67A in Chapter 4). The selling price and cost price as well as the mark-up are available from the BMR survey (table 69A in Chapter 4). Adjusting for the number of respondents as to how much they are selling Coca-Cola products in a particular type of package, we can then calculate the estimated turnover. The results are shown in table 4. For example, in the last row it can be seen that an average spaza shop is estimated to sell 57,000 rand worth of Coca-Cola products per annum, shebeens: 89,000 rand, hawkers: 47,000 rand and other vendors 56,000 rand per annum. Next, the research team had to make some assumptions to arrive at the number of informal vendors. Basically, the total population of informal ventors was estimated by taking the number for each informal trade type from a previous study of the Coca-Cola system’s impact in South Africa (completed in 1998) and then increasing it with the demographic growth rate of the black population. The proportion of vendors that Economic Impact of The Coca-Cola System on South Africa, 20 Table 3: Current and Capital Expenditures by Coca-Cola Related Activities in South Africa (2003 current R ‘000) SIC Codes 1 11-13 2 3 21 4 23 5 22,24,25,29 6 301-304 7 8 305-306 9 311-312 10 313-315 11 316 12 317 13 321-322 14 323 15 324-326 16 331-333 17 334 18 335-336 19 337 20 338 21 341 22 342 23 351 24 352 25 353-355 26 356-359 27 361-366 28 371-373 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 374-376 381-383 384-387 391 392 41 42 51-53 61-62 63 71 72 81-82 83 93 99 Description Agriculture, forrestry & fisheries excluding sugar Sugar cane Coal mining Gold & uranium ore mining Other mining Food Refined sugar Tobacco Textiles Wearing apparel Leather & leather products Footwear Wood & wood products Paper & paper products Printing, publishing & recorded media Coke & refined petroleum products Basic chemicals Other chemicals & man-made fibres Rubber products Plastic products Glass & glass products Non-metallic minerals Basic iron & steel Basic non-ferrous metals Metal products excluding machinery Machinery & equipment Electrical machinery Television, radio & communications equipment Professional & scientific equipment Motor vehicles, parts & accessories Other transport equipment Furniture Other industries Electricity, gas & steam Water supply Building construction & engineering Wholesale & retail trade Catering & accommodation services Transport & storage Communication Finance & insurance Business services Other services Other Government services Imported Gross Operating Surplus (payments, interest and others) Subtotal Wages & Salaries Wages & Salaries unskilled Wages & Salaries skilled Wages & Salaries highly skilled Indirect taxes on production Direct taxes Household income Total Total Exports 1 Total CCSEAD 2 Total Formal Trade 3 Total Informal Trade 4 Informal Trade Capital Expenditure 5 0 0 0 0 0 0 27,752 0 0 0 0 0 0 0 0 0 0 0 0 35,617 18,831 0 0 0 128,716 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 125 26 0 0 0 3,596 0 0 0 4,439 0 175 2,128 35,515 40,673 19,321 586 5,077 192 12,422 75 6,323 0 0 6,495 8,956 2,280 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 22,195 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,157 0 0 0 0 0 0 11,798 45,709 0 0 0 0 35,523 52,533 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16,157 4,847 0 0 382,924 0 16,157 497 0 6,057 54 4,941 2,961 14,067 2,733 20,432 73,333 10,789 73,634 108,582 104,405 165,030 0 8,927 0 0 0 0 0 0 0 122,526 0 0 0 0 103,427 34,074 4,167 0 27,476 3,588 0 0 0 28,455 0 203 35 0 0 8,127 0 0 0 0 0 487 0 1,513 0 17,785 0 0 0 210,916 413,290 72,707 2,946 22,396 47,365 495,185 85,164 265,330 144,691 36,530 492,793 1,653,320 Source: CCSEAD, BMR and own calculations Economic Impact of The Coca-Cola System on South Africa, 21 205,744 1,078,881 1,602,077 203,324 actually sell Coca-Cola products are kept at the same level as the previous study, assuming that no further penetration of the market was achieved. The results for sizing the informal market are shown in the table 5. The first column repeats the sales information from the last row of the previous table. The second column reveals that applying the demographic growth rate of the black population of 9.1 percent over the period 1998-2003 (or 1.8 percent compounded per annum) to the number of spaza shops of 60,000 in 1998 results in an estimated total of 66,000 in 2003. Given the proportions of vendors that sell Coca-Cola products, as shown in column 3, we then arrive at total economy-wide annual turnover of Coca-Cola products in the informal sector of 6 billion rand (see last column of table 5). The South African SAM is then used to determine the spending stimulus. That is, as the income from the sale of Coca-Cola products is spent, informal trade acts as a catalyst to spur economic activity. This stimulus is given in the last two columns of table 7 for current and capital spending. To estimate the direct employment impact from informal trade, the survey gives the average number of people employed per type of business (Question 17, tables 38-41), the average number family members employed per type of business (Question 23), as well as the proportion of the business run by the owner (Question 20). Multiplying through with the estimated number of businesses we get the results shown in table 6. According to these estimates, the direct number of workers supported by informal trade of Coca-Cola products is approximately 55,000. This number reflects the amount of employment generated by trade margins from Coca-Cola products—not the number of vendors selling Coca-Cola products. TOTAL DIRECT IMPACTS Given all the expenditures and income associated with the sale of Coca-Cola in South Africa now mapped out—that is, the bottlers, exports, and trading activities discussed so far—we can now calculate the total direct impact. All direct economic stimuli are consolidated into table 7. Note that in column 1 of table 7 we present the consolidated injection created by the bottlers, followed in column 2 by their capital expenditures. In column 3 we report on the exports created by demand for South African products emanating from other bottlers in Southern and Eastern Africa. Injections created by trading margins of formal and informal trade are shown in columns 5 and 6 while column 7 shows capital expenditure associated with trading in the informal sector. The next last column of the table summarizes all injections. In row 59 of table 7 it can be seen that the bulk of the total injection created by the Coca-Cola system’s activities in South Africa is accounted for by the bottlers, followed by almost equal contribution of 13 percent by the downstream formal and informal trading activities. Summed over all these injections of spending in the Coca-Cola system, we can see in the last two columns the refined sugar, plastics industry, metal products, transport and business service industries are likely to benefit most directly. Other direct beneficiaries include capital and labour, as well as direct income earned by households, mostly those in the 40 percent- 50 percent income decile. Economic Impact of The Coca-Cola System on South Africa, 22 Economic Impact of The Coca-Cola System on South Africa, 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 500 ml returnable glass bottle 300 ml non-returnable glass 250 ml returnable glass bottle 200 ml returnable glass bottle 2 litre non-returnable plastic bottle 1.5 litre non-returnable plastic 1.5 litre returnable plastic bottle 1.25 litre returnable glass bottle 1 litre non-returnable plastic bottle 750 ml non-returnable plastic 450 ml can 340 ml can 250 ml can 200 ml can 1 litre tetra (box) 250 ml tetra (box) 200 ml tetra (box) 200 ml pouch Total sample / Total Product 70 53 12 5 8 14 61 170 52 7 48 130 3 3 6 0 2 28 340 15 20 10 15 10 23 26 16 15 11 13 17 17 17 15 0 10 15 0 3.69 2.36 4.20 2.26 9.22 7.12 6.58 5.81 5.61 1.96 3.80 3.79 3.55 2.46 5.00 1.25 1.27 1.30 4,239.80 2,685.54 541.06 181.96 791.84 2,446.24 11,160.13 17,272.69 4,816.55 168.65 2,610.17 8,748.47 190.59 132.07 483.09 0.00 27.27 600.21 57,096.34 Spaza/tuck shop N Mean price Turnover 27 15 16 74 4 13 3 13 1 10 1 20 32 42 90 27 18 11 4 13 20 13 61 42 1120 3 13 3 10 0 0 0 0 1 10 170 0 3.90 2.78 2.10 2.35 8.62 6.16 6.78 5.89 5.71 2.00 3.88 3.90 3.55 3.42 5.00 1.25 1.30 1.30 36 27 13 10 0 10 13 15 10 0 16 20 10 20 15 0 0 16 0 3.95 2.36 3.82 2.00 9.99 7.00 6.74 5.91 5.78 2.02 3.82 3.89 3.50 3.42 5.00 1.25 1.30 1.30 Other N Mean price 4.09 12,826.09 21 12 2.24 3,292.02 17 17 2.40 293.96 6 10 2.00 48.99 2 15 7.75 0.00 3 10 7.00 342.95 3 10 6.90 675.94 11 12 5.89 4,904.83 36 29 5.71 1,678.51 11 11 2.00 0.00 0 0 3.91 4,981.42 16 18 3.92 16,422.51 47 23 3.33 489.44 4 13 3.42 167.56 2 20 5.70 418.89 1 10 1.43 0.00 0 0 1.30 0.00 1 30 1.28 344.82 4 13 46,887.94104 0 Hawker N Mean price Turnover 3,434.24 36 7,043.21 22 225.44 4 201.77 1 185.08 0 264.52 2 19,653.19 3 30,354.62 23 2,330.32 12 214.54 0 2,165.95 33 21,350.83 85 914.65 6 293.64 1 322.06 2 0.00 0 0.00 0 27.91 7 88,981.98 149 Type of business Shebeen N Mean price Turnover 3,464.36 2,402.15 804.40 210.58 1,051.83 737.02 3,075.60 21,983.02 2,434.47 0.00 3,753.88 14,745.42 614.18 480.12 175.48 0.00 136.88 228.13 56,297.50 Turnover Table 4. Sizing the Annual Market for Coca-Cola Products Trade in the Informal Sector (winter sales, 365 days per annum) Table 5. Sizing the Informal Market for Coca-Cola Products Type of outlet Annual sales (Rm) per unitNumber of outlets vendors that sell Coca-Cola products Annual sales (Rm) per type Type of outlet 1 2 3 4 5 Annual sales (Rm) per unit Spaza/tuck shop Shebeen Hawker/Street vendor Other informal outlets Total 57,096 88,982 46,888 56,298 Number of outlets 65,668 25,089 142,245 18,108 Proportion of Proportion of vendors that sell Coca-Cola products 95% 80% 5% 37% Annual sales (Rm) per type 3,561,946,988 1,785,989,657 333,478,475 377,188,130 6,058,603,249 Source: BMR Informal Sector survey of Coca-Cola products 2003 and 1998 and own calculations Table 6. Employment in Informal Sector Trading of Coca-Cola Products: Jobs Supported by Coca-Cola System Sales, by Type of Business Employment Spazas Shebeens Hawkers Other Total Total average Work done employment by owner (including working owners) 33,430 9,481 6,807 5,538 55,255 11,186 3,517 3,816 1,690 20,209 Work by family member 20,143 4,839 2,042 2,154 29,178 Work outside the family, i.e., on the payroll 2,100 1,125 949 1,694 5,869 Source: BMR Informal Sector survey of Coca-Cola products 2003 & 1998, and own calculations Overall Economic Impact With all direct expenditures associated with the sale of the Coca-Cola system in South Africa consolidated into table 7, we have all the necessary ingredients to present the total impact. Now we turn to the results of the impact modeling, based on the South African Social Accounting Matrix. Recall that the SAM accounts for the indirect and induced effects of Coca-Cola system activities along with the direct effects presented in table 7. The results of the SAM modeling of all effects on the South African economy are given in table 8. As before, in column 1 we present the consolidated results created by the bottlers, followed in column 2 by their capital expenditures. In column 3 we report the impact of exports—demand for South African products emanating from other bottlers in Southern and Eastern Africa. In column 4 we see the effects of the division office. Next, impacts created by trading margins of formal and informal trade are shown in columns 5 – 6. Column 7 shows the impact of the capital expenditure associated with trading in the informal sector. The last column of the table summarizes all impacts. Economic Impact of The Coca-Cola System on South Africa, 24 Table 7. Consolidated Expenditures Associated with Coca-Cola’s Activities in South Africa (2003 R ‘000) SIC codes Description Current, bottlers 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 Agriculture, forrestry & fisheries excluding sugar 0 Sugar cane 0 21 Coal mining 0 23 Gold & uranium ore mining 0 22, 24, 25, 29 Other mining 0 301-304 Food 0 Refined sugar 735,700 305-306 Tobacco 0 311-312 Textiles 0 313-315 Wearing apparel 3,039 316 Leather & leather products 0 317 Footwear 0 321-322 Wood & wood products 0 323 Paper & paper products 34,100 324-326 Printing, publishing & recorded media 516 331-333 Coke & refined petroleum products 78,488 334 Basic chemicals 125,526 335-336 Other chemicals & man-made fibres 0 337 Rubber products 0 338 Plastic products 516,100 341 Glass & glass products 0 342 Non-metallic minerals 0 351 Basic iron & steel 956,500 352 Basic non-ferrous metals 0 353-355 Metal products excluding machinery 7,805 356-359 Machinery & equipment 81,676 361-366 Electrical machinery 0 371-373 Television, radio & communicationss equipment 0 374-376 Professional & scientific equipment 930 381-383 Motor vehicles, parts & accessories 0 384-387 Other transport equipment 0 391 Furniture 0 392 Other industries 627,624 41 Electricity, gas & steam 32,952 42 Water supply 30,799 51-53 Building construction & engineering 286 61-62 Wholesale & retail trade 13,949 63 Catering & accommodation services 0 71 Transport & storage 82,533 72 Communication 231,481 81-82 Finance & insurance 32,372 83 Business services 77,469 93 Other services 370,455 99 Other 184,249 Government services 91,036 Gross Operating Surplus (total before tax) 2,960,608 Wages & Salaries highly skilled 432,590 Wages & Salaries skilled 439,116 Wages & Salaries unskilled 203,937 HH Decile 30%-40% 0 HH Decile 40%-50% 0 HH Decile 50%-60% 0 Government revenue (imp tax) 0 Government revenue (oth comm tax) 0 Government revenue (activity tax) 49,121 Government revenue (direct tax) 713,884 Imports 1,757,132 Total expenditure 10,108,966 Total expenditure % of total injection 69.1% Employment highly skilled 3,463 Employment skilled 2,626 Employment unskilled 943 Capital, CCSEAD bottlers Exports Office 2 Current, formal traders 5 Current, Capital, Total Share in informal informal injection total traders traders (spending) injection 6 7 8 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 125 26 0 0 0 3,596 0 0 0 4,439 0 175 2,128 35,515 40,673 19,321 586 5,077 192 12,422 75 6,323 0 0 6,495 8,956 2,280 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 22,195 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,157 0 0 0 0 0 0 11,798 45,709 0 0 0 0 35,523 52,533 125 26 0 0 0 3,596 763,452 0 0 7,478 20,153 175 3,285 69,615 41,190 97,809 126,111 30,389 192 831,360 64,615 6,323 956,500 0 249,689 215,342 54,813 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 5.2% 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.5% 0.3% 0.7% 0.9% 0.2% 0.0% 5.7% 0.4% 0.0% 6.5% 0.0% 1.7% 1.5% 0.4% 0 0 0 0 0 0 0 0 0 0 0 0 0 2,468 0 2,307 0 0 0 0 0 0 0 15,338 0 4,602 0 2,425 0 6,736 0 363,522 0 21,906 0 16,335 497 0 6,057 54 4,941 2,961 14,067 2,733 20,432 73,333 10,789 73,634 108,582 104,405 165,030 0 8,927 0 0 0 0 0 0 0 122,526 0 0 0 0 103,427 34,074 4,167 0 27,476 3,588 0 0 0 28,455 0 203 35 0 0 8,127 0 0 0 0 0 487 0 1,513 0 501 94,837 34,512 8,744 5,144 630,621 172,014 40,211 28,845 87,282 10,789 274,932 378,739 155,126 249,721 781,664 235,824 107,372 0.0% 0.6% 0.2% 0.1% 0.0% 4.3% 1.2% 0.3% 0.2% 0.6% 0.1% 1.9% 2.6% 1.1% 1.7% 5.3% 1.6% 0.7% 3 4 11-13 0 0 0 0 0 0 0 0 0 0 20,153 0 0 0 0 0 0 3,117 0 255,423 0 0 0 0 106,674 89,188 0 4 93,907 0 8,690 0 0 0 4,373 0 0 0 0 0 11,758 0 20,212 15,641 0 0 0 0 0 0 0 0 0 0 0 0 16,762 645,900 4.4% 0 0 0 0 0 0 0 0 0 27,752 0 0 0 0 0 0 0 0 0 0 0 0 35,617 18,831 0 0 0 128,716 0 0 0 28,806 413,290 0 0 0 3,643 433 0 0 0 30,402 204 0 0 0 63,629 144,691 0 0 0 0 0 279,309 0 0 0 0 653,393 0 0 0 0 351,923 0 0 0 0 0 0 0 0 0 0 0 0 0 36,530 0 0 0 0 0 39,436 0 0 0 0 0 17,785 210,916 562,120 1,303,463 1,602,077 203,324 1.4% 3.8% 8.9% 10.9% 1.4% 0 22 0 32,879 0 0 172 0 22,377 0 0 112 0 0 0 Source: CCSEAD. Note: Rows 1-45 represent the activities (from agriculture to government services) identified in the SAM. Economic Impact of The Coca-Cola System on South Africa, 25 3,402,704 23.2% 436,665 3.0% 469,722 3.2% 412,257 2.8% 279,309 1.9% 653,393 4.5% 351,923 2.4% 0 0.0% 0 0.0% 85,652 0.6% 753,320 5.1% 1,791,678 12.2% 14,636,766 100.0% 100.0% 36,363 25,175 1,055 Thus, this column is the end result of the impact model, including the total employment estimate for the Coca-Cola system input. Current expenditure Since table 8 represents the summary of the impact analysis, it is worth examining in some detail. For example, in the first column we can see the impact of current spending by bottlers on different activities (industries) of the South African economy. Rows 1-46 represent increases in gross output in different sectors or activities—from agriculture to manufacturing and services.. Gross output is the broadest economic impact measure. The sectors that are likely to benefit most directly and indirectly are agriculture, food, sugar refineries, plastic products, iron & steel, trade, transport, communication, finance, and business services. Some of these activities did not benefit directly from the bottler’s expenditures; instead, their output is affected indirectly for the most part. Examples are agriculture, iron & steel, and trade. Row 46 of table 8 reveals that overall output in the South African economy will increase by more than 17 billion rand. As can be seen in the next row, this implies an output multiplier of about 1.7. Net output, as opposed to gross output, is perhaps a better indicator of the Coca-Cola system’s contribution to the South African income. Net output accounts for the value added by the activities benefiting from the bottlers expenditures. The components of value added (at factor costs) are shown in rows 48 – 51. It can be seen that the gross operating surplus appropriates a large share of value added. The rest of the value added is spread across high-, medium-, and low-skill workers. This will have implications for the impact on income distribution. For current spending alone, the impact on GDP (at factor costs) is expected to be around 12 billion rand. In rows 54 – 56 of table 8 we present the impact on household income as a percentage change from the base income of these households. It can be seen that high income households are expected to benefit more than low income households. Although the impact includes both direct and indirect effect, the former typically dominates. Moreover, while Coca-Cola bottlers do not necessarily favour highly skilled labour over unskilled labour, the large proportion of value added appropriated by the production factor capital is, given economy-wide averages, mainly distributed to high income households. Note that, due to lack of any further information on the shareholding of Coca-Cola bottlers, we make use of economy-wide average distribution patterns. This may not necessarily reflect the current distribution policies of the bottlers. It does indicate, however, that an effective way of influencing the distributional outcome of the Coca-Cola system’s activities in South Africa is to broaden the shareholding of the bottlers towards the lower income section of the households. Next, we present the impact on government income. In row 57 it can be seen that given the direct taxes paid by the bottlers, and, if all the backward linkages materialize and every beneficiary gets taxed at the economy-wide average collection rates, tax revenues associated with the bottlers activities amount to almost 3.5 billion rand. Based on the same assumptions we calculate the potential impact on imports to be 4 billion rand. Finally, we report the potential impact on employment for current spending associated with the Coca-Cola system in South Africa. The results are shown in rows 59 – 62. The impact on total employment is more than 70,000. Economic Impact of The Coca-Cola System on South Africa, 26 Table 8. Consolidated impact of the Coca-Cola System in South Africa (2003 current R ‘000) SIC codes Description Current, bottlers Capital, bottlers Exports 1 1 11-13 2 3 21 4 23 5 22, 24, 25, 29 6 301-304 7 8 305-306 9 311-312 10 313-315 11 316 12 317 13 321-322 14 323 15 324-326 16 331-333 17 334 18 335-336 19 337 20 338 21 341 22 342 23 351 24 352 25 353-355 26 356-359 27 361-366 28 371-373 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 374-376 381-383 384-387 391 392 41 42 51-53 61-62 63 71 72 81-82 83 93 99 2 Agriculture, forrestry & fisheries excluding sugar 702,852 47,666 Sugar cane 151,481 1,408 Coal mining 207,518 13,047 Gold & uranium ore mining 5,111 380 Other mining 343,746 21,794 Food 946,535 66,758 Refined sugar 523,379 4,115 Tobacco 419,987 26,974 Textiles 135,539 14,123 Wearing apparel 95,277 6,642 Leather & leather products 11,851 17,378 Footwear 34,548 2,166 Wood & wood products 66,128 5,464 Paper & paper products 305,244 33,029 Printing, publishing & recorded media 155,076 11,254 Coke & refined petroleum products 461,404 36,557 Basic chemicals 414,067 70,721 Other chemicals & man-made fibres 382,819 37,007 Rubber products 53,469 3,763 Plastic products 442,294 175,150 Glass & glass products 27,059 4,231 Non-metallic minerals 48,011 3,874 Basic iron & steel 993,884 42,478 Basic non-ferrous metals 137,941 16,299 Metal products excluding machinery 224,485 102,345 Machinery & equipment 131,783 37,379 Electrical machinery 65,998 7,898 Television, radio & communications equipment 25,909 1,964 Professional & scientific equipment 15,158 11,129 Motor vehicles, parts & accessories 352,662 26,990 Other transport equipment 15,862 3,750 Furniture 59,939 5,233 Other industries 301,924 7,615 Electricity, gas & steam 361,804 25,534 Water supply 171,337 15,972 Building construction & engineering 111,945 8,262 Wholesale & retail trade 2,155,692 186,427 Catering & accommodation services 248,150 16,263 Transport & storage 1,041,650 78,803 Communication 845,724 38,516 Finance & insurance 1,352,582 109,309 Business services 1,236,352 86,351 Other services 660,855 38,366 Other 611,858 44,107 Government services 135,159 2,446 Output 17,192,050 1,516,936 Output multiplier 1.7 2.3 Gross Operating Surplus (total before tax) 7,084,498 313,859 Wages & Salaries highly skilled 1,452,544 113,004 Wages & Salaries skilled 1,983,647 131,823 Wages & Salaries unskilled 1,360,378 102,192 GDP 11,881,067 660,878 GDP multiplier 1.2 1.0 HH D0-D3 (% increase from base) 1.0% 0.1% HH D4-D8 (% increase from base) 1.2% 0.1% HH D9-D10 (% increase from base) 1.3% 0.1% Government revenue 3,466,063 168,044 Imports 4,162,366 197,755 Employment highly skilled (average) 41,223 2,318 Employment skilled (average) 24,895 1,742 Employment unskilled (average) 6,828 451 Employment total (average) 72,947 4,511 CCSEAD 3 4 17,933 5,444 7,214 183 10,922 23,005 18,929 10,244 3,921 2,329 310 830 1,936 9,240 3,921 11,778 14,222 10,432 1,393 26,447 14,027 1,577 35,349 11,532 105,991 5,521 2,921 50,467 1,654 9,476 326 11,533 72,300 4,575 31,228 9,900 7,489 908 2,619 4,722 20,518 14,560 32,289 19,690 44,046 4,415 6,940 1,796 3,975 9,397 5,007 9,397 7,161 5,481 596 1,954 360 2,545 12,360 27,691 406 1,188 1,601 4,871 1,852 5,226 10,858 28,166 3,148 15,852 3,040 11,204 66,215 141,893 5,791 21,308 28,158 76,193 16,687 54,753 35,486 109,578 31,139 121,552 7,420 362,193 13,598 50,823 713 29,448 596,978 1,458,309 2.8 2.6 124,781 398,112 46,508 72,936 48,854 159,120 34,905 202,736 255,048 832,904 1.2 1.5 0.0% 0.1% 0.0% 0.1% 0.0% 0.1% 63,094 199,554 66,874 170,928 1,138 2,318 650 1,863 169 588 1,957 4,770 Current, Current, formal informal traders traders 5 6 Capital, informal traders 7 Total economic impact 10 273,061 8,300 44,514 934 32,875 399,925 26,070 180,667 40,364 36,779 4,091 13,879 15,994 60,117 36,197 92,027 59,439 104,573 11,793 23,980 6,365 11,686 27,853 14,297 30,411 23,317 17,344 12,609 366 3,039 270 6,786 16,461 1,060 7,362 3,306 1,649 334 597 2,787 7,389 3,075 8,772 9,966 7,557 1,313 12,176 32,426 2,298 8,361 7,353 7,301 13,514 32,166 1,210,361 171,768 304,899 8,259 454,418 1,670,766 587,391 740,236 227,141 166,054 36,860 60,077 110,602 520,661 282,227 714,759 627,898 642,439 84,991 709,699 89,745 86,462 1,140,181 204,101 506,378 237,584 144,800 5,370 6,269 2,244 2,719 61,378 74,274 2,665 4,381 11,279 18,907 10,194 11,628 63,071 216,470 23,254 39,508 43,684 32,816 350,781 537,615 47,231 61,652 188,687 327,377 203,962 193,170 359,959 337,447 320,693 242,461 50,659 115,016 82,207 127,734 4,960 9,252 2,719,078 3,955,549 2.1 2.5 1,142,585 1,002,595 131,612 220,792 275,496 362,735 331,895 260,755 1,881,589 1,846,876 1.4 1.2 0.1% 0.7% 0.2% 0.7% 0.2% 0.2% 459,395 598,032 357,417 523,475 4,641 42,379 3,291 28,129 890 1,530 8,822 72,038 1,321 281 32,491 332 1,243 1,251 7,227 2,302 11,266 55,653 4,422 21,994 10,884 26,611 24,750 5,334 11,538 516 429,711 2.1 90,323 29,982 35,408 27,189 182,901 0.9 0.0% 0.0% 0.0% 47,015 70,966 675 507 132 1,315 43,383 34,435 587,848 28,584 103,073 339,689 713,130 271,373 222,217 3,494,276 404,816 1,762,861 1,363,696 2,330,972 2,063,298 1,239,844 941,866 182,493 27,868,611 1.9 10,156,753 2,067,378 2,997,083 2,320,049 17,541,263 1.2 1.9% 2.4% 1.9% 5,001,197 5,549,781 94,693 61,078 10,589 166,360 105,773 3,115 20,092 1,054 26,762 145,781 9,263 63,773 19,987 15,890 1,988 5,436 13,571 85,124 58,144 71,932 39,792 56,005 8,846 22,713 3,841 15,041 22,858 11,671 26,448 18,909 12,990 Source: Social Accounting Matrix (SAM) calculations for South Africa. Note: Rows 1-45 represent the activities (from agriculture to government services) identified in the SAM. Economic Impact of The Coca-Cola System on South Africa, 27 Capital expenditure Column 2 of table 8 shows the estimated total impact of Coca-Cola bottler’s capital spending. In column 2, it can be seen that the likely impact of Coca-Cola bottler’s capital expenditure on the South African economy is relatively modest. The main reason is that the initial outlay, as reported by the bottlers is small compared to their current expenditure. The industries that are expected to benefit most directly are plastic products, iron & steel, and metal products. Indirectly, it can be seen from the table 8, other sectors such as the services industries but also food and agriculture. The latter is typically due to labour income earned during the manufacture of direct and indirect supplies to satisfy these capital expenditures. Total gross output amounts to just over 1.5 billion rand which, given the initial capital expenditures of 650 million rand implies a multiplier of 2.3. This is slightly higher than the output multiplier of the current expenditures, mainly because the import leakages are much lower. Evidently, capital expenditure is less import intensive, which makes sense as a large part is spent on locally manufactured glass and vehicles. GDP at factor costs associated with the capital expenditures of Coca-Cola bottler’s capital expenditures are shown in rows 48 – 51 and amounts to about 660 million rand which implies a GDP multiplier of 1.0. In rows 54 – 56, it can be seen that the impact on household income is small, only showing percentage changes in the first decimal. Given the economy-wide average tax collection rates, government income associated with the capital expenditures is about 170 million rand, while direct and indirect imports are estimated at 200 million rand. The capital expenditures require the support of about 4,500 person year equivalents. Export Impacts Exports of South African industries to Coca-Cola bottlers elsewhere in Southern and Eastern Africa offer another stimulus to the South African economy. We present the impact of these exports in column 3 of table 8. The main beneficiaries are mainly refined sugar, plastic and metal products. Indirectly, food, agriculture, and iron & steel also benefit along with the usual tertiary sectors. Total output is expected to rise by about 600 million rand which implies a multiplier of about 2.8. The reason for the output multiplier to be much higher than those for current as well as capital expenditure of the bottlers is the relatively low imports, as can be seen in row 58. The government receives about 60 million rand worth of revenues associated with these imports, while imports are about 66 million rand. The latter has to be seen in the context of the initial 200 million rand export injection, so that the net effect on the trade balance is not more than 140 million rand. Coca-Cola Southern and East Africa Division Office Next we turn to column 4 of table 8. The beneficiaries of the expenditures of the Coca-Cola Southern & East Africa Division office are business services—advertising in particular. In addition, other tertiary industries that benefit (directly or indirectly) are financial services, trade, transport, and communication. Total gross output associated with these expenditure is estimated to be 1.5 billion rand, which, given estimated Economic Impact of The Coca-Cola System on South Africa, 28 expenditures of 560 million rand, implies a relatively high output multiplier of 2.6. The reason is that there are relatively low direct and indirect imports involved, as most expenditures are channeled through the tertiary sector. Similarly, GDP is expected to benefit to the tune of more than 800 million rand which entails a multiplier of around 1.5. Close to 5,000 workers are expected to be supported by these expenditures if we assume employment-output elasticities of unity (as we have in all the employment impact calculations). Formal Trade Impacts As explained earlier, we estimated the total margin derived by formal traders from the sales of Coca-Cola products. With that margin, formal traders will be able to finance part of their current expenditures. (At this stage we ignore capital expenditures associated with this margin). The pattern of current expenditures is based on industry averages and not on expenditures associated specifically with the sales of Coca-Cola products. Nevertheless, we will get some idea of the backward linkages when applying the same methodology discussed and implemented above with regard to the other expenditures. In column 5, we present the results of the application of our SAM based impact framework. It can be seen that a general increase in the expenditures by the wholesale and trade sector benefits paper products and fuel, as well as food, beverages, agriculture, and services. Given the initial expenditures of 1.6 billion rand, the total impact on gross output is expected to be just under 3.5 billion rand, implying an output multiplier of 2.1. The value added that is generated in the process is shown in rows 48 – 51 to amount to about 2.3 billion rand and a relatively high GDP multiplier of around 1.6. Given that the initial income distribution patterns embedded in the SAM are skewed in favour of high income households, the expenditures by the trade sector will also favour poor households less, as can be seen in rows 54 – 56. Government income associated with this expenditure is about 600 million rand, including all types of taxes. Imports that are necessary to sustain these expenditures amount to less than 500 million rand, hence the relatively high GDP multiplier shown in row 53 and employment supported by the formal trade in Coca-Cola products, based on the unit employment output elasticity, amounts to just over 12,000. Finally, it should be noted that we assume that no additional capital expenditure is required by formal sector traders so as to take Coca-Cola products to the market, i.e., existing capital stock is deemed to be sufficient. Informal Trade Impacts Based on the assumptions we made with regard to informal trading in Coca-Cola products, we had estimated a similar injection to the South African economy as the one emanating from the formal trade in these products. However, the 1.6 billion rand injection has a slightly different impact on the South African economy as can be seen in column 6. Interestingly, the impact of informal trading on output is higher than formal trading, although the impact on GDP is lower. The reason for the latter can be explained by the fact that a large part of the expenditures of the informal sector are allocated directly to households, including owners’ income and labour income of family members, bypassing the GDP accounting for reasons mentioned above. With a lower direct impact on (formal) GDP, the total (direct plus indirect) impact will also be lower than formal Economic Impact of The Coca-Cola System on South Africa, 29 sector trading. The main sectors (higher up in the column) that are expected to benefit from informal trading are food and beverages (and consequently agriculture as well), some chemicals, electricity, and finally a range of tertiary industries. The direct impact of transfers to owner households also dictates the income distribution outcome, with most of the gains being made by the middle household income class, followed by the high household income class, but relatively low gains for the low household income class. The biggest impact of informal trading in Coca-Cola products is, however, made in terms of employment creation. Again, driven mainly by the direct employment of owners and family and also outside labour contracts, the total impact on employment is estimated to be about 72,000 based on unit employment output, of which 55,000 are estimated to be created directly. The only similarities between the analysis of informal and formal trading is the impact on government revenue and imports. Estimated at 600 million rand and 500 million rand, respectively, both are more or less the same for formal and informal sector trading. This implies that, informal sector trading is estimated to double the income of the government from formal sector trading of Coca-Cola products. Finally, we report on the impact of informal sector capital expenditure. The total impact is estimated to be around 400 million rand, with a multiplier of around 2.1, but the impact on GDP is less than 200 million rand. The reason is that capital expenditure, as with the bottlers, does not involve the remuneration of the production factors capital and labour directly, only indirectly do these accounts benefit. There are expected to be about 1,200 full time equivalent workers associated with this expenditure. Conclusions We conclude that the Coca-Cola system has a significant impact on the South African economy. The overall economic effects are shown in the last column (10) of table 8. It can be seen that the total impact on gross value of production (the broadest measure of economic impact) is considerable: estimated to be 28 billion rand in 2003 (see line 46). Table 8 also reveals the main sectors expected to benefit (in the first 44 rows, last column): food, plastic products, iron & steel products, petroleum refineries, other chemicals, motor vehicles, electricity, and wholesale and retail trade. Business service impacts (including advertising) are also strong, as are the Coca-Cola system’s effects on the finance and insurance industries of South Africa. The upstream agriculture sector benefits substantially as well, notably sugar-cane growers. As can be seen in Column 10 of table 10, about 170 million rand worth of gross economic output in the sugar growing industry is expected to be associated with the Coca-Cola system’s activities in South Africa. Note also that sugar refiners gain 587 million rand in economic output. Among the major findings presented in table 8, one in particular stands out: the impact of the Coca-Cola system’s activities on South Africa’s gross domestic product (GDP). This is shown to be 17.5 billion rand (row 52, column 10). For 2003, the Coca-Cola system, along with the economic linkages described in this study, represent about 1.4 percent of the country’s total GDP. Next consider how household income is Economic Impact of The Coca-Cola System on South Africa, 30 distributed according to the final South Accounting Matrix calculations. The household income distribution emanating from the Coca-Cola system is shown in rows 54 – 56 of table 8. The categories in these rows refer to deciles (D0-D10) of the South African household (HH) income distribution. The numbers here give the percent increase from the household base for 2003, for low-, middle- and high-income groups. The results show that middle-income households gain most from Coca-Cola activities. Total government income associated with the Coca-Cola system activities is estimated to be around 5 billion rand. This includes direct and indirect taxes at the current collection rates which may deviate from the actual collection rates. Finally, the employment impact is shown to be substantial in table 8, rows 59- 62. Employment is generated through direct and indirect effects captured by the SAM. As calculated in the model, the Coca-Cola system system supported about 166,350 full-time equivalent person years in South Africa in 2003. As a caveat to the results presented this chapter, it should be stressed that the economic impacts rest on assumptions about the structure of the South African economy (like employment-output ratios) that will change over time. The results, moreover, depended on information from surveys (obtained from the bottlers and the informal sector) that were not always complete. To fill data gaps, numerous assumptions were made, mostly based on previous experience with modeling the beverage industry’s economic impact in South Africa. In sum, this chapter offers a comprehensive view of the Coca-Cola system’s economic effects. A unique aspect of this impact analysis is the attempt to calculate upstream production impacts (from bottlers) along with downstream linkage effects stemming from formal and informal trade . Nevertheless, there are some economic effects that are not captured by this study. For example, on the formal side of retail an impact that could be considered in future research is the restaurant/catering industry. It could be argued that this downstream activity warrants a special survey to obtain accurate information on the income gained from the sale of Coca-Cola products. On the upstream side, more attention should be given to sugar growing and refining, among other important suppliers. Thus, despite the comprehensive nature of this analysis, there remain some aspects of the Coca-Cola system impact that were not included. References Thurlow J. (2003): A Standard Dynamic Computable General Equilibrium Model for South Africa, TIPS Working Paper. Thurlow, J & van Seventer, DEN, 2002: A standard computable general equilibrium model of the South African economy, TIPS working paper, IFPRI TDM, Discussion Paper, no: 100, http://www.ifpri.org/divs/tmd/dp/papers/tmdp100.pdf. Endnotes During 1998 Coca-Cola commissioned an analysis of the economic impact of its operations in South Africa based on a first generation SAM based model. The SAM is updated by Thurlow (2003) from the earlier SAM by Thurlow & van Seventer (2002). 1 Economic Impact of The Coca-Cola System on South Africa, 31 The Economic Impact of The Coca-Cola System on South Africa Chapter 4 Results of the Survey Introduction The aim of this chapter is to present detailed results from the survey of South Africa’s informal sector. The results of this survey, which covered 760 businesses in informal retail trade, were used to model the impact presented in the last chapter. In addition, the answers to the survey reveal many interesting features of the informal sector of South Africa—its economic vitality and viability. The sustainability of the businesses and the role of the Coca-Cola system in informal retail development, major issues queried in the survey, are explored in this chapter. The sample frame was developed to capture South Africa’s mix of informal retail channels—from street hawkers to shebeens. Moreover,, the sample accounts for South Africa’s diverse regions and covers all levels of its urban and rural mix from the major cities to South Africa’s townships and rural villages. Owners and managers of informal retail trade outlets were asked to respond to a pre-tested, structured questionnaire, administered by trained interviewers. The survey instrument included requests for precise business information, such as employment, turnover, and net income, as well as demographic characteristics of the small business owners and their employees. For purposes of this discussion, data have been cross-tabulated by degree of urbanisation (metropolitan, urban and rural areas) and type of business (spazas, shebeens, hawkers and “other”—consisting of kiosks, take-aways and persons selling from home). Characteristics of Business Owners Job prior to starting the business Table 1 reflects the response to the question: “What was your job before you started this business?” Table 1(A) reflects the results by type of business and Table 1(B) by degree of urbanisation. More than a third of the respondents (34.5 %) were unem- * Other cross-tabulation not reported herein may be requested from BMR in South Africa. Table 1(A) Job Before Starting This Business By Type of Business Question 55: What was your job before you started this business? Spaza/tuck shop N % Shop assistant/ sales person Office worker Housewife Retired Unemployed Other Total 47 14.3 20 6.1 30 9.1 19 5.8 91 27.7 121 36.9 328 100.0 Shebeen N % Type of business Hawker N % 23 13.8 10 6.0 12 7.2 10 6.0 59 35.3 53 31.7 167 100.0 15 10.1 1 0.7 18 12.2 6 4.1 79 53.4 29 19.6 148 100.0 N Other % 15 14.6 10 9.7 15 14.6 8 7.8 28 27.2 27 26.2 103 100.0 Total N % 100 13.4 41 5.5 75 10.1 43 5.8 257 34.5 230 30.8 746 100.0 Table 1(B) Job Before Starting This Business By Urbanisation Question 55: What was your job before you started this business? Urbanisation Metropolitan Urban Rural N % N % N % Shop assistant/ sales person Office worker Housewife Retired Unemployed Other Total 55 14.2 28 7.2 41 10.6 14 3.6 111 28.6 139 35.8 388 100.0 31 17.4 10 5.6 21 11.8 13 7.3 57 32.0 46 25.8 178 100.0 14 7.8 3 1.7 13 7.2 16 8.9 89 49.4 45 25.0 180 100.0 N Total % 100 13.4 41 5.5 75 10.0 43 5.8 257 34.5 230 30.8 746 100.0 ployed before they started their businesses. Other important activities prior to commencing the business were: · · · Shop assistant (seller) 13.4 % Housewife 10.1 % Retired 5.8 % More than half (53.4 %) the hawkers were previously unemployed (Table 1(A)), and this was more so in the rural areas (49.4 % in Table 1(B)). Career Orientation Respondents were asked whether they would accept a job in the formal sector if offered one today. It was reasoned that a negative answer is an indication of the permanency of what they are currently doing. Table 2(A) shows that more than half the reEconomic Impact of The Coca-Cola System on South Africa, 33 Table 2(A) Acceptance Of A Job In The Formal Sector If Offered Today By Type Of Business Question 56: Will you accept a job in the formal sector if offered today? Yes No Total Spaza/tuck shop Shebeen N % N % 167 50.6 88 53.0 163 49.4 78 47.0 330 100.0 166 100.0 Hawker N % 93 64.6 51 35.4 144 100.0 Other N % 58 57.4 43 42.6 101 100.0 Total N % 406 54.8 335 45.2 741 100.0 Table 2(B) Acceptance of a Job in the Formal Sector If Offered Today by Urbanisation Question 56: Will you accept a job in the formal sector if offered today? Yes No Total Urbanisation Metropolitan Urban Rural N % N % N % 206 54.2 90 50.8 110 59.8 174 45.8 87 49.2 74 40.2 380 100.0 177 100.0 184 100.0 Total N % 406 54.8 335 45.2 741 100.0 spondents of spaza shops (50.6 %), shebeens (53.0 %), hawkers (65.6 %) and “other” (57.4 %) are not satisfied with what they are doing. Respondents from metropolitan and urban areas are more satisfied with what they are doing in comparison with those in rural areas where 59.8 % indicated that they would accept a job in the formal sector when offered. Household size The household size of business owners/managers is depicted in table 3. This ranges from 4.92 household members in the households of hawkers to 5.59 members in the households of spaza owners. Rural households (5.46 members) are generally larger than urban (5.10) and metropolitan households (5.27). Table 3(A) Average Household Size by Type of Business Table 3(B) Average Household Size by Urbanisation Question 57: How many people, including yourself, are in your household? Question 57: How many people, including yourself, are in your household? Type of business Urbanisation Spaza/tuckshop Shebeen Hawker Other Total N 325 164 143 99 731 Mean % 5.59 4.95 4.92 5.34 5.28 Metropolitan Urban Rural Total Economic Impact of The Coca-Cola System on South Africa, 34 N 382 169 180 731 Mean % 5.27 5.10 5.46 5.28 Household income, other sources than from the business Household income, other than business income, earned by any household member is shown in tables 4(A) and 4(B). The number of households who received an income other than business income is shown as 330 or 43.9 % of 751 in table 4. The highest percentage by type of business is for “other” (47.1 % in table 4(A)) and by degree of urbanisation for metropolitan area (48.3 % in table 4(B)). Table 4(A) Household Members (Including Owner/Manager) Earning an Income Outside This Business by Type Of Business Question 58: Do any of your household members (including yourself) earn an income outside this business? Yes No Total Spaza/tuck shop N % 155 46.4 179 53.6 334 100.0 Type of business Shebeen Hawker N % N % 70 41.9 57 38.5 97 58.1 91 61.5 167 100.0 148 100.0 Other N % 48 47.1 54 52.9 102 100.0 Total N % 330 43.9 421 56.1 751 100.0 Table 4(B) Household Members (Including Owner/Manager) Earning an Income Outside This Business by Urbanisation Question 58: Do any of your household members (including yourself) earn an income outside this business? Yes No Total Metropolitan No % 189 48.3 202 51.7 391 100.0 Urbanisation Urban Rural No % No % 77 43.5 64 35.0 100 56.5 119 65.0 177 100.0 183 100.0 Total No % 330 43.9 421 56.1 751 100.0 Table 5 shows the distribution of respondents by income group for household income outside the business by type of business (table 5(A)) and area (table 5 (B)). Approximately one third (32.8 %) of those who earn an outside income earn 3,000.00 rand or more per month. The percentage of spaza owners/managers who earn 3,000.00 rand or more per month is 38.1 % while 39.1 % of the respondents from metropolitan areas earn 3,000.00 rand or more per month. Respondents were asked how many other retail businesses they owned. The average number owned is as follows: Type of business Spaza/tuckshop Hawker 0.31 0.32 Shebeen Other Economic Impact of The Coca-Cola System on South Africa, 35 0.31 0.25 Table 5(A) Distribution of Respondents by Income Group for Income Earned from All Sources Outside This Business by Type Of Business Question 58: Do any of your household members (including yourself) earn an income outside this business? Spaza/tuck shop N % R1-R299 1 0.7 R300-R799 14 9.5 R800-R899 6 4.1 R900-R999 5 3.4 R1,000-R1,499 24 16.3 R1,500-R1,999 16 10.9 R2,000-R2,999 25 17.0 R3,000-R4,999 26 17.7 R5,000-R9,999 19 12.9 R10,000-R19,999 9 6.1 R20,000-R49,999 2 1.4 Total 147 100.0 Shebeen N % 3 4.5 6 9.1 5 7.6 1 1.5 13 19.7 8 12.1 10 15.2 11 16.7 6 9.1 3 4.5 66 100.0 Type of business Hawker N % 4 7.1 11 19.6 4 7.1 5 8.9 5 8.9 6 10.7 9 16.1 7 12.5 3 5.4 2 3.6 56 100.0 Other N % 8 1 18.2 2.3 7 4 9 8 5 2 15.9 9.1 20.5 18.2 11.4 4.5 44 100.0 Total N % 8 2.6 39 12.5 15 5.1 11 3.5 49 15.7 34 10.9 53 16.9 52 16.6 33 10.5 16 5.1 3 0.6 313 100.0 Table 5(B) Distribution of Respondents by Income Group for Income Earned From All Sources Outside This Business by Urbanisation Question 58: Do any of your household members (including yourself) earn an income outside this business? Income group (monthly) R1-R299 R300-R799 R800-R899 R900-R999 R1,000-R1,499 R1,500-R1,999 R2,000-R2,999 R3,000-R4,999 R5,000-R9,999 R10,000-R19,999 R20,000-R49,999 Total Metropolitan N % 4 2.3 20 11.3 10 5.6 5 2.8 22 12.4 24 13.6 23 13.0 32 18.1 24 13.6 12 6.8 1 0.6 177 100.0 Urbanisation Urban N % 1 1.3 8 10.7 2 2.7 1 1.3 17 22.7 7 9.3 16 21.3 13 17.3 7 9.3 2 2.7 1 1.3 75 100.0 Rural N % 3 4.9 11 18.0 4 6.6 5 8.2 10 16.4 3 4.9 14 23.0 7 11.5 2 3.3 2 3.3 61 Total N % 8 2.6 39 12.5 16 5.1 11 3.5 49 15.7 34 10.9 53 16.9 52 16.6 33 10.5 16 5.1 2 0.6 100.0 313 100.0 Economic Impact of The Coca-Cola System on South Africa, 36 Degree of urbanisation Metropolitan 0.25 Rural 0.41 Urban Total 0.29 0.30 Reason for starting business Almost half (48.4 %) the respondents indicated that unemployment was the reason for starting the business (table 6). The next most important reason was to increase income (31.7 %). Two thirds (66.4 %) of all hawkers said unemployment was their reason for starting their hawking businesses (table 6(A)) while 54.4 % of the respondents in urban areas supplied this reason (table 6(B)). Level of education Table 7 shows the distribution of respondents by level of education. The largest percentage (36.9 %) falls into the secondary grade (grade 8-11) group followed by matric Table 6(A) Reason For Starting Business By Type Of Business Question 59: Reason for starting this business Spaza/tuck shop Shebeen N % N % To increase income 125 36.9 55 32.5 Unemployed 143 42.2 80 47.3 Family business 23 6.8 9 5.3 To seize business opportunity (entrepreneurship) 18 5.3 10 5.9 To work from home 23 6.8 12 7.1 Other 7 2.1 3 1.8 Total 339 100.0 169 100.0 Type of business Hawker N % 31 20.8 99 66.4 4 2.7 9 3 3 149 6.0 2.0 2.0 100.0 Other N % 30 28.8 46 44.2 7 6.7 12 4 5 104 11.5 3.8 4.8 100.0 Total N % 241 31.7 368 48.4 43 5.7 49 42 18 761 6.4 5.5 2.4 100.0 Table 6(B) Reason For Starting Business By Urbanisation Question 59: Reason for starting this business Metropolitan N % 143 36.4 177 45.0 18 4.6 To increase income Unemployed Family business To seize business opportunity (entrepreneurship) 24 To work from home 22 Other 9 Total 393 6.1 5.6 2.3 100.0 Urbanisation Urban Rural N % N % 54 29.7 44 23.7 99 54.4 92 49.5 7 3.8 18 9.7 12 6 4 182 6.6 3.3 2.2 100.0 13 14 5 186 7.0 7.5 2.7 100.0 Economic Impact of The Coca-Cola System on South Africa, 37 N 241 368 43 Total % 31.7 48.4 5.7 49 42 18 761 6.4 5.5 2.4 100.0 Table 7(A) Level Of Education By Type Of Business Question60: What is your educational level? Spaza/tuck shop Shebeen N % N % No formal schooling 26 7.7 12 7.1 Primary (Gr 1-7) 68 20.2 29 17.1 Secondary (Gr 8-11) 124 36.9 67 39.4 Matric (Gr 12) 79 23.5 50 29.4 Tertiary (Post matric) 39 11.6 12 7.1 Total 336 100.0 170 100.0 Type of business Hawker Other N % N % 11 7.4 4 3.8 34 23.0 17 16.3 58 39.2 31 29.8 35 23.6 36 34.6 10 6.8 16 15.4 148 100.0 104 100.0 Total N % 53 7.0 148 19.5 280 36.9 200 26.4 77 10.2 758 100.0 Table 7(B) Level Of Education By Urbanisation Question60: What is your educational level? No formal schooling Primary (Gr 1-7) Secondary (Gr 8-11) Matric (Gr 12) Tertiary (Post matric) Total Metropolitan N % N 19 4.8 3 64 16.2 34 165 41.9 63 109 27.7 53 37 9.4 25 394 100.0 178 Urbanisation Urban Rural % N % 1.7 31 16.7 19.1 50 26.9 35.4 52 28.0 29.8 38 20.4 14.0 15 8.1 100.0 186 100.0 N 53 148 280 200 77 758 Total % 7.0 19.5 36.9 26.4 10.2 100.0 (grade 12), with 26.4 %. A relatively high percentage of all respondents (10,2 %) and even a higher percentage of 15.4 % for ‘other’ businesses in table 7(A) and 14.0 % for urban businesses in table 7(B) indicated that they had completed a tertiary level course. Characteristics of Businesses Legal status of businesses Table 8 shows that the vast majority (61.8 %) of the businesses included in the study are sole proprietors while 32.4 % are family businesses. Family businesses (46.1 %) in rural areas are almost as important in legal status as sole proprietorship (table 8(B)). Years in operation Table 9 shows the distribution of businesses according to for time in operation. With more than a third (34.9 %) of all businesses in operation for five years or longer, it can be assumed that a sizeable proportion of businesses are well established. InterestEconomic Impact of The Coca-Cola System on South Africa, 38 Table 8(A) Legal Status Of Business By Type Of Business Question 53: What is the legal status of your business? Spaza/tuck shop Shebeen N % N % Sole proprietorship 192 57.5 104 62.3 Partnership 8 2.4 5 3.0 Family business 127 38.0 56 33.5 Close corporation 3 0.9 2 1.2 Cooperative 1 0.3 Other 3 0.9 Total 334 100.0 167 100.0 Type of business Hawker N % 108 74.5 5 3.4 28 19.3 1 3 145 0.7 2.1 100.0 Other Total N % N % 58 57.4 462 61.8 4 4.0 22 2.9 31 30.7 242 32.4 4 4.0 9 1.2 1 1.0 3 0.4 3 3.0 9 1.2 101 100.0 747 100.0 Table 8(B) Legal Status Of Business By Urbanisation Question 53: What is the legal status of your business? Sole proprietorship Partnership Family business Close corporation Cooperative Other Metropolitan N % 252 64.9 10 2.6 116 29.9 5 1.3 5 1.3 Urbanisation Urban Rural N % N % 125 69.8 85 47.2 7 3.9 5 2.8 43 24.0 83 46.1 1 0.6 3 1.7 3 1.7 3 1.7 1 0.6 Total N % 462 61.8 22 2.9 242 32.4 9 1.2 3 0.4 9 1.2 Table 9(A) Distribution of Business by Time in Operation and Type of Business Question 4: How long has this business been in operation? Spaza/tuck shop Shebeen N % N % Less than 6 months 30 8.8 11 6.5 > 6 months & < 1 year 41 12.1 19 11.3 > 1 year & < 2 years 39 11.5 27 16.1 > 2 years & < 3 years 51 15.0 17 10.1 > 3 years % < 5 years 55 16.2 25 14.9 > 5 years & < 7 years 39 11.5 21 12.5 > 7 years 85 25.0 48 28.6 Total 340 100.0 168 100.0 Type of business Hawker Other N % N % 18 12.1 13 12.6 18 12.1 13 12.6 23 15.4 15 14.6 20 13.4 17 16.5 22 14.8 21 20.4 12 8.1 6 5.8 36 24.2 18 17.5 149 100.0 103 100.0 Economic Impact of The Coca-Cola System on South Africa, 39 N 72 91 104 105 123 78 187 760 Total % 9.5 12.0 13.7 13.8 16.2 10.3 24.6 100.0 Table 9(B) Distribution of Business by Time in Operation and Urbanisation Question 4: How long has this business been in operation? Less than 6 months > 6 months & < 1 year > 1 year & < 2 years > 2 years & < 3 years > 3 years % < 5 years > 5 years & < 7 years > 7 years Total Metropolitan N % 39 9.9 31 7.9 48 12.2 55 14.0 63 16.0 35 8.9 123 31.2 394 100.0 Urbanisation Urban Rural N % N % 13 7.2 20 10.8 28 15.5 32 17.3 24 13.3 32 17.3 26 14.4 24 13.0 36 19.9 24 13.0 20 11.0 23 12.4 34 18.8 30 16.2 181 100.0 185 100.0 Total N % 72 9.5 91 12.0 104 13.7 105 13.8 123 16.2 78 10.3 187 24.6 760 100.0 ingly, it was found that small businesses show a relatively high attrition rate. In addition, a number of businesses in the survey are fairly young, (9.5 % have been in operation for less than six months and 12.0 % for six months and longer but less than one year). The age of businesses according to type of business (table 9(A)), shows that shebeens have been in operation for a longer period than the other types (41.1 % for 5 years or longer) while the opposite is true for ‘other’. Type of products sold Table 10 shows the main types of goods sold by type of businesses (10(A) and degree of urbanisation 10(B)). The most diversified of all business types are spazas. More than three quarters (76.5 %) engage in selling beverages as well as food and nonfood products. As could be expected, shebeens are primarily involved in the beverage Table 10(A) Categories of Products Sold by Type of Business Question 5: What category of products do you sell? Spaza/tuck shop Shebeen N % N % Food products including beverages 69 20.3 14 8.2 Food products only 5 1.5 1 0.6 Non-food products 1 0.3 Food including beverages & non-food products 260 76.5 67 39.4 Beverages only 2 0.6 79 46.5 Other 3 0.9 9 5.3 Total 340 100.0 170 100.0 Type of business Hawker N % N Other % Total N % 41 8 27.5 5.4 39 3 37.5 2.9 163 17 1 21.4 2.2 0.1 74 20 6 149 49.7 13.4 4.0 100.0 40 21 1 104 38.5 20.2 1.0 100.0 441 122 19 763 57.8 16.0 2.5 100.0 Economic Impact of The Coca-Cola System on South Africa, 40 Table 10(B) Categories of Products Sold by Urbanisation Question 5: What category of products do you sell Urbanisation Metropolitan Urban N % N % Rural N Total N % % Food products including beverages Food products only Non-food products Food including beverages & non-food products Beverages only Other 84 7 1 21.3 1.8 0.3 39 1 21.4 0.5 40 9 21.5 4.8 163 17 1 21.4 2.2 0.1 222 72 9 56.2 18.2 2.3 107 31 4 58.8 17.0 2.2 112 19 6 60.2 10.2 3.2 441 122 19 57.8 16.0 2.5 Total 395 100.0 182 100.0 186 100.0 763 100.0 Table 11 Ranking of Product Sales in Order of Contribution to the Turnover of Spazas/Tuckshops Question 6: Indicate the five most important products to your business in terms of monthly turnover (sales) or rank them in order of importance if turnover cannot be provided. Product Ranking of sales Soft drinks (eg Coca Cola) Bread Cigarettes/tobacco Paraffin/candles Milk Maize meal Sweets and chocolates Groceries Sugar Alcoholic beverages Meat Eggs Fruit & Vegetables Soap Fish Total 1 97 110 25 12 3 25 8 16 4 27 6 1 2 2 1 339 2 97 51 50 22 24 7 8 14 20 10 9 3 4 4 1 324 3 53 41 72 13 21 18 17 16 20 8 3 9 10 5 2 308 4 32 30 39 32 30 11 33 12 15 2 8 15 11 7 13 290 Index Index value ranking 5 28 22 21 25 26 15 44 15 30 3 4 20 6 7 1 267 1 124 959 640 276 260 244 233 223 220 206 95 94 84 62 42 4,762 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 trade. However, it should be kept in mind that, due to the screening question, businesses not engaged in the selling of soft drinks are excluded from the survey. Tables 11 to 14 show the specific products that contribute mostly to the turnover of the businesses. Respondents were asked to give the actual turnover for each product listed in question 6 but very few were willing to do so. Therefore only the rankings, together with an index, are shown in tables 11 to 14, one table for each type of business. The index is calculated by giving a value of 5 to the first-ranked product, a 4 to the second, a 3 to the third, a 2 to Economic Impact of The Coca-Cola System on South Africa, 41 Table 12 Ranking of Product Sales in Order of Contribution to the Turnover of Shebeens Question 6: Indicate the five most important products to your business in terms of monthly turnover (sales) or rank them in order of importance if turnover cannot be provided. Product Ranking of sales Alcoholic beverages Soft drinks (eg Coca Cola) Cigarettes/tobacco Bread Sweets and chocolates Paraffin/candles Groceries Maize meal Milk Sugar Total 1 110 30 7 8 0 2 0 0 0 0 157 2 20 83 30 3 2 1 4 0 0 0 143 3 6 30 51 9 3 4 1 3 0 2 109 4 5 5 10 9 9 3 2 1 2 2 48 5 0 2 3 5 13 3 4 2 8 0 40 Index Value Index ranking 658 584 331 102 48 35 27 13 12 10 1,820 1 2 3 4 5 6 7 8 9 10 Table 13 Ranking of Product Sales in Order of Contribution to the Turnover of Hawkers Question 6: Indicate the five most important products to your business in terms of monthly turnover (sales) or rank them in order of importance if turnover cannot be provided. Product Ranking of sales Soft drinks (eg Coca Cola) Cigarettes/tobacco Sweets and chocolates Fruit & Vegetables Bread Meat Milk Alcoholic beverages Groceries Fish Soap Total 1 82 15 4 17 4 3 0 3 2 0 0 130 2 34 30 23 14 6 6 2 2 0 2 0 119 3 14 28 30 19 5 1 4 0 0 1 0 102 4 6 10 13 11 8 0 2 0 3 0 0 53 Index Value 5 2 6 10 1 2 1 1 0 1 3 2 29 Economic Impact of The Coca-Cola System on South Africa, 42 602 305 238 221 77 43 25 23 17 14 2 1,567 Index ranking 1 2 3 4 5 6 7 8 9 10 11 Table 14 Ranking of Product Sales in Order of Contribution to the Turnover of Other Businesses Question 6: Indicate the five most important products to your business in terms of monthly turnover (sales) or rank them in order of importance if turnover cannot be provided. Product Ranking of sales Soft drinks (e.g., Coca-Cola) Other Sweets and chocolates Bread Alcoholic beverages Fruit & Vegetables Groceries Maize meal Fish Milk Eggs Sugar Soap Total 1 46 17 3 2 4 0 3 3 1 0 0 0 0 79 2 29 5 8 9 4 7 1 1 1 0 0 0 0 65 3 11 4 9 8 1 1 3 3 3 1 3 0 0 47 4 4 3 9 1 2 3 3 1 2 5 2 1 1 37 Index Value 5 3 0 5 3 1 2 0 3 1 4 1 3 0 26 390 123 97 75 44 39 34 33 23 17 14 5 2 896 Index ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 the fourth and a 1 to the fifth rank. The index ranking in the tables represents the order of index values. Table 11 shows that 110 spazas said bread contributes most to their turnover, while softdrinks were mentioned by 97. However, 97 of the spazas indicated that softdrinks are the second most important contributor to their turnover while only 51 indicated that bread is second on their list. The calculated index value for softdrinks tops the list in table 11. Without actual sales values it can be stated that softdrinks contribute, if not the most, a very important share in the turnover of spazas. Alcoholic beverages, as expected, are the main contributor to the turnover of shebeens, followed by softdrinks (table 12). Softdrinks also top the list for hawkers (table 13) and other businesses (table 14). However, it must be remembered that a screening question excluded businesses not selling softdrinks. Business hours Table 15 shows the distribution of all businesses according to the number of hours open by weekday. Approximately a quarter of the businesses are open from 1 to 8 hours (25.3 %) and from 11 to 12 hours (25.4 %) on Mondays. A similar pattern is shown for Tuesdays, Wednesdays and Thursdays. Table 15 shows that businesses tend to be open for longer on Fridays and Saturdays. Although 122 or 16.7 % of the respondents indicated that they do not do business on Sundays, a substantial number (63.6 %) do business for longer than 8 hours on Sundays. Economic Impact of The Coca-Cola System on South Africa, 43 Table 15 Distribution of Businesses by Weekday and Number of Hours Open Question 61: Indicate number of hours open each day of the week: Weekday Hours open None 1-8 % 0.9 0.8 0.5 0.7 0.4 5.1 16.7 Monday Tuesday Wednesday Thursday Friday Saturday Sunday % 25.3 24.9 25.1 25.0 22.3 20.9 19.7 9-10 11-12 13-14 15-16 17-18 18+ Total % 18.1 18.0 17.8 17.6 18.4 17.3 15.6 % 25.4 25.9 26.2 26.3 22.6 19.5 18.5 % 17.2 17.1 17.1 17.0 17.0 17.6 15.5 % 11.1 11.3 11.1 11.2 13.6 13.4 10.7 % 1.8 1.8 1.8 1.9 3.5 4.0 2.3 % 0.3 0.3 0.3 0.4 2.2 2.3 1.0 % N 100.0 740 100.0 735 100.0 736 100.0 735 100.0 735 100.0 729 100.0 730 Table 16 Highest Percentage for Trading Hours by Weekday and Type of Business Question 61: Indicate number of hours open each day of the week: Weekday Monday Tuesday Wednesday Thursday Friday Saturday Sunday hours % hours % hours % hours % hours % hours % hours % Spaza 11 - 12 25.0 11 - 12 25.5 11 - 12 25.8 11 - 12 26.4 11 - 12 24.3 13 - 14 23.0 11 - 12 22.0 Shebeen 11 - 12 32.9 11 - 12 3.3 11 - 12 34.3 11 - 12 33.3 13 - 14 22.3 13 - 14 21.3 11 - 12 23.5 Type of business Hawker Other 1-8 1-8 36.6 31.0 1-8 1-8 36.1 30.0 1-8 1-8 36.8 31.0 1-8 1-8 36.1 31.0 1-8 1-8 35.4 32.0 1-8 1-8 33.8 27.6 Not open Not open 46.2 30.2 Table 16 gives a summary of the highest percentage of trading hours by weekday and type of business. The table shows that spazas and shebeens generally do business for longer hours than hawkers and ‘other’. Table 17 provides information similar to that in table 16 but by degree of urbanisation. In general, it seems that businesses do business for longer hours in metropolitan and rural areas. Role of Coca-Cola Affordability Respondents were asked to indicate, on a five-point scale, whether they strongly disagreed at the one end of the scale or strongly agree at the other end with the stateEconomic Impact of The Coca-Cola System on South Africa, 44 Table 17 Highest Percentage for Trading Hours by Weekday and Urbanisation Question 61: Indicate number of hours open each day of the week: Weekday Monday Tuesday Wednesday Thursday Friday Saturday Sunday hours % hours % hours % hours % hours % hours % hours % Urbanisation Metropolitan Urban Rural 11 - 12 1-8 11 - 12 23.2 32.9 33.9 11 - 12 1-8 11 - 12 23.6 37.3 34.7 11 - 12 1-8 11 - 12 23.8 34.3 35.2 11 - 12 1-8 11 - 12 23.6 37.3 36.4 11 - 12 1-8 11 - 12 20.9 30.1 27.8 13 - 14 1-8 1-8 19.0 24.3 24.3 Not open & 11 - 12 1 - 8 1 - 8 & 11 - 12 16.8 25.4 22.5 Table 17(A) Coca-Cola Products Are Affordable by Type of Business Question 7: To what extent do you agree/disagree—“Coca-Cola Products are Affordable” Strongly disagree Disagree Neutral Agree Strongly agree Total Spaza/tuck shop Shebeen N % N % 15 4.5 9 5.4 17 5.0 8 4.8 39 11.6 23 13.7 154 45.7 73 43.5 112 33.2 55 32.7 337 100.0 168 100.0 Type of business Hawker Other N % N % 9 6.1 6 5.8 8 5.4 5 4.8 19 12.9 10 9.6 55 37.4 49 47.1 56 38.1 34 32.7 147 100.0 104 100.0 N 39 38 91 331 257 756 Total % 5.2 5.0 12.0 43.8 34.0 100.0 ment ‘Coca-Cola products are affordable’. The response to this statement is shown in table 17(A) by type of business and in table 17(B) by degree of urbanisation. By far the majority of owners/managers of all types of businesses agree or strongly agree with the statement that Coca-Cola is affordable. This positive opinion is also reported in metropolitan, urban and rural areas. In total, only 10,2 % of the respondents disagree or strongly disagree with the statement while 77.8 % agree or strongly agree that Coca-Cola products are affordable. Economic Impact of The Coca-Cola System on South Africa, 45 Table 17(B) Coca-Cola Products Are Affordable by Urbanisation Question 7: To what extent do you agree/disagree—“Coca-Cola Products are Affordable” Strongly disagree Disagree Neutral Agree Strongly agree Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 23 5.9 12 6.7 4 2.2 39 5.2 27 6.9 5 2.8 6 3.2 38 5.0 40 10.2 24 13.4 27 14.6 91 12.0 180 45.9 71 39.7 80 43.2 331 43.8 122 31.1 67 37.4 68 36.8 257 34.0 392 100.0 179 100.0 185 100.0 756 100.0 Coca-Cola products attract customers Almost eighty percent (79.4 %) of the respondents agree or strongly agree with the statement that Coca-Cola products attract people to their businesses. A high percentage of respondents from all type of businesses (table 18(A)) and those in metropolitan, urban and rural areas (table 18(B)) held this opinion. Tables 19(A) and 19(B) show that Coca-Cola products do not only attract people to their businesses but, according to the vast majority of respondents, stimulate the sales of their other products. A total of 81.6 % of all respondents agree (43.6 %) or strongly agree (38.0 %) with this statement and this positive opinion is held by respondents of all types of areas. Frequency of purchases Tables 20(A) and 20(B) indicate how often Coca-Cola products are bought. The majority of owners buy Coca-Cola stock on a weekly basis (63.6 %), followed by daily purchases (24.4 %). All business types, with the exception of hawkers, favour weekly purchases. Just more than half (53.1 %) the hawkers/street vendors replenish stock on a daily basis. The frequency of purchases does not differ significantly by area (table 20(B)). Table 18(A) Coca-Cola Products Attract People to Store by Type of Business Question 7: To what extent do you agree/disagree—“Coca-Cola Products Attract People to Store” Strongly disagree Disagree Neutral Agree Strongly agree Total Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % 13 3.9 5 3.0 4 2.7 4 3.9 12 3.6 5 3.0 2 1.9 46 13.6 30 17.9 21 14.2 14 13.6 143 42.4 72 42.9 74 50.0 46 44.7 123 36.5 56 33.3 49 33.1 37 35.9 337 100.0 168 100.0 148 100.0 103 100.0 Economic Impact of The Coca-Cola System on South Africa, 46 Total N % 26 3.4 19 2.5 111 14.7 335 44.3 265 35.1 756 100.0 Table 18(B) Coca-Cola Products Attract People to Store by Urbanisation Question 7: To what extent do you agree/disagree—“Coca-Cola Products Attract People to Store” Urbanisation Metropolitan Urban Rural N % N % N % 13 3.3 12 6.7 1 0.5 12 3.1 4 2.2 3 1.6 52 13.3 24 13.4 35 18.9 180 45.9 62 34.6 93 50.3 135 34.4 77 43.0 53 28.6 392 100.0 179 100.0 185 100.0 Strongly disagree Disagree Neutral Agree Strongly agree Total Total N % 26 3.4 19 2.5 111 14.7 335 44.3 265 35.1 756 100.0 Table 19(A) When Buyers Purchase Coca-Cola Products. They Also Buy Other Goods by Type of Business Question 7: To what extent do you agree/disagree—“When Buyers Purchase Coca-Cola Products, They Also Buy Other Goods” Type of business Spaza/tuck shop Shebeen Hawker Other Total Strongly disagree Disagree Neutral Agree Strongly agree Total N 10 7 29 152 136 334 % N 3.0 3 2.1 8 8.7 27 45.5 69 40.7 61 100.0 168 % 1.8 4.8 16.1 41.1 36.3 100.0 N 8 2 17 65 51 143 % 5.6 1.4 11.9 45.5 35.7 100.0 N 6 4 16 40 36 102 % 5.9 3.9 15.7 39.2 35.3 100.0 N 27 21 89 326 284 747 % 3.6 2.8 11.9 43.6 38.0 100.0 Table 19(B) When Buyers Purchase Coca-Cola Products. They Also Buy Other Goods by Urbanisation Question 7: To what extent do you agree/disagree—“When Buyers Purchase Coca-Cola Products, They Also Buy Other Goods” Strongly disagree Disagree Neutral Agree Strongly agree Total Metropolitan N % 7 1.8 13 3.4 39 10.1 185 47.9 142 36.8 386 100.0 Urbanisation Urban Rural N % N % 17 9.6 3 1.6 4 2.3 4 2.2 20 11.3 30 16.3 71 40.1 70 38.0 65 36.7 77 41.8 177 100.0 184 100.0 Economic Impact of The Coca-Cola System on South Africa, 47 Total N % 27 3.6 21 2.8 89 11.9 326 43.6 284 38.0 747 100.0 Table 20(A) Frequency of Purchase of Coca-Cola Products by Type of Business Question 8: How often do you purchase Coca-Cola products? Frequency Spaza/tuck shop Shebeen N % N % Daily 48 14.2 29 17.2 Weekly 249 73.7 120 71.0 Monthly 25 7.4 13 7.7 Not on a regular basis 16 4.7 7 4.1 Total 338 100.0 169 100.0 Type of business Hawker Other Total N % N % N % 78 53.1 30 28.8 185 24.4 51 34.7 62 59.6 482 63.6 6 4.1 6 5.8 50 6.6 12 8.2 6 5.8 41 5.4 147 100.0 104 100.0 758 100.0 Table 20(B) Frequency of Purchase of Coca-Cola Products by Urbanisation Question 8: How often do you purchase Coca-Cola products? Frequency Daily Weekly Monthly Not on a regular basis Total Urbanisation Metropolitan Urban Rural N % N % N % 112 28.4 32 17.8 41 22.3 242 61.4 124 68.9 116 63.0 23 5.8 11 6.1 16 8.7 17 4.3 13 7.2 11 6.0 394 100.0 180 100.0 184 100.0 Total N % 185 24.4 482 63.6 50 6.6 41 5.4 758 100.0 Frequency of Coca-Cola truck deliveries The frequency of the Coca-Cola system truck deliveries is shown by type of business is shown in table 21(A) and by degree of urbanisation in table 21(B). Two thirds (66.8 %) of all respondents indicated that deliveries are made once a week. The percentages for spazas (72.6 %) and shebeens (72.1 %) exceed 70 % while a relatively high percentage (28.6 %) of the hawkers receive daily deliveries by a Coca-Cola truck. The deliveries by area (table 21(B)) show a higher percentage for deliveries once a week in urban (73.0 %) areas when compared with metropolitan (64.6 %) and rural (64.9 %) areas. The number of respondents who answered this question is considerably lower than the number included in the sample, indicating that the balance do not receive deliveries. Percentages for those who receive deliveries are as follows: Type of business Spazas/tuckshops Hawkers 42.9 % 18.8 % Degree of urbanisation Metropolitan 36.5 % Rural 19.9 % Shebeens Other 35.3 % 26.0 % Urban 34.6 % Economic Impact of The Coca-Cola System on South Africa, 48 Table 21(A) Frequency of Coca-Cola Truck Delivers by Type of Business Question 9: How and how often do you get your Coca-Cola products? Frequency Daily Every other day Once a week Once a month Twice a month Other Total Spaza/tuck shop Shebeen N % N % 5 3.4 4 9.3 4 2.7 2 4.7 106 72.6 31 72.1 9 6.2 3 7.0 12 8.2 1 2.3 10 6.8 2 4.7 146 100.0 43 100.0 Type of business Hawker Other Total N % N % N % 8 28.6 5 18.5 22 9.0 3 10.7 2 7.4 11 4.5 10 35.7 16 59.3 163 66.8 3 10.7 2 7.4 17 7.0 3 10.7 2 7.4 18 7.4 1 3.6 13 5.3 28 100.0 27 100.0 244 100.0 Table 21(B) Frequency of Coca-Cola Truck Delivers by Urbanisation Question 9: How and how often do you get your Coca-Cola products? Frequency Urbanisation Metropolitan Urban Rural Total N % N % N % N % 14 9.7 4 6.3 4 10.8 22 9.0 6 4.2 3 4.8 2 5.4 11 4.5 93 64.6 46 73.0 24 64.9 163 66.8 7 4.9 7 11.1 3 8.1 17 7.0 13 9.0 2 3.2 3 8.1 18 7.4 11 7.6 1 1.6 1 2.7 13 5.3 144 100.0 63 100.0 37 100.0 244 100.0 Daily Every other day Once a week Once a month Twice a month Other Total Frequency of deliveries by wholesalers Tables 22(A) and (B) show information similar to that in tables 21(A) and (B) but for deliveries by wholesalers. Forty seven or 60.3 % of respondents who receive deliveries from a wholesaler said they receive deliveries once a week. The percentages of respondents who receive deliveries by wholesalers are as follows: Type of business Spazas/tuckshops Hawkers 15.0 % 5.4 % Degree of urbanisation Metropolitan 9.1 % Rural 9.1 % Shebeens Other Urban Economic Impact of The Coca-Cola System on South Africa, 49 8.8 % 3.8 % 13.7 % Table 22(A) Frequency of Deliveries by Wholesaler and Type of Business Question 9: How and how often do you get your Coca-Cola products? Frequency Daily Every other day Once a week Once a month Twice a month Other Total Spaza/tuck shop N % 4 7.8 3 5.9 36 70.6 2 3.9 4 7.8 2 3.9 51 100.0 Shebeen N % 4 26.7 1 6.7 7 46.7 1 6.7 1 6.7 1 6.7 15 100.0 Type of business Hawker Other N % N % 4 50.0 2 25.0 2 50.0 2 25.0 2 50.0 8 100.0 4 100.0 N 12 8 47 3 5 3 78 Total % 15.4 10.3 60.3 3.8 6.4 3.8 100.0 Table 22(B) Frequency of Deliveries by Wholesaler and Urbanisation Question 9: How and how often do you get your Coca-Cola products? Frequency Metropolitan N % 7 19.4 3 8.3 22 61.1 1 2.8 3 8.3 Daily Every other day Once a week Once a month Twice a month Other Total 36 100.0 Urbanisation Urban Rural N % N % 2 8.0 3 17.6 5 20.0 15 60.0 10 58.8 2 11.8 1 4.0 1 5.9 2 8.0 1 5.9 25 100.0 17 100.0 Total N % 12 15.4 8 10.3 47 60.3 3 3.8 5 6.4 3 3.8 78 100.0 Frequency of fetching from wholesaler Tables 23(A) and (B) show the frequency of fetching Coca-cola products from wholesalers. The frequency of fetching is far higher than the frequency of deliveries by wholesalers (section 2.4.5). Although fetching from wholesalers on a weekly basis is the most popular practice (55.0 %), the percentage for daily fetching is 23.8 % as against 15.4 % for daily deliveries (table 22). The percentages of respondents who fetch Coca-Cola products from wholesalers are as follows: Type of business Spazas/tuckshops Hawkers 40.0 % 47.0 % Degree of urbanisation Metropolitan 43.3 % Rural 40.3 % Shebeens Other 37.1 % 40.4 % Urban 35.7 % Economic Impact of The Coca-Cola System on South Africa, 50 Table 23(A) Frequency of Fetching from a Wholesaler by Type of Business Question 9: How and how often do you get your Coca-Cola products? Frequency Daily Every other day Once a week Once a month Twice a month Other Total Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % 13 9.6 13 20.6 37 52.9 11 26.2 14 10.3 3 4.8 4 5.7 4 9.5 89 65.4 41 65.1 18 25.7 23 54.8 6 4.4 1 1.6 5 7.1 2 4.8 8 5.9 2 3.2 2 2.9 6 4.4 3 4.8 4 5.7 2 4.8 136 100.0 63 100.0 70 100.0 42 100.0 N 74 25 171 14 12 15 311 Total % 23.8 8.0 55.0 4.5 3.9 4.8 100.0 Table 23(B) Frequency of Fetching from a Wholesaler by Urbanisation Question 9: How and how often do you get your Coca-Cola products? Frequency Urbanisation Metropolitan Urban Rural N % N % N % 49 28.7 12 18.5 13 17.3 11 6.4 6 9.2 8 10.7 91 53.2 35 53.8 45 60.0 4 2.3 6 9.2 4 5.3 9 5.3 2 3.1 1 1.3 7 4.1 4 6.2 4 5.3 171 100.0 65 100.0 75 100.0 Daily Every other day Once a week Once a month Twice a month Other Total Total N % 74 23.8 25 8.0 171 55.0 14 4.5 12 3.9 15 4.8 311 100.0 Frequency of fetching from retailer The frequency of fetching from retailers by respondents is shown in tables 24(A) and (B). The percentages for the frequency of fetching from retailers in tables 24(A) and (B) do not differ significantly from the percentages for fetching from wholesalers (tables 23(A) and (B)). The percentages of respondents who fetch Coca-Cola products from retailers are as follows: Type of business Spazas/tuckshops Hawker 27.9 % 44.3 % Degree of urbanisation Metropolitan 26.1 % Rural 51.1 % Shebeens Other 34.7 % 35.6 % Urban 32.4 % Economic Impact of The Coca-Cola System on South Africa, 51 Table 24(A) Frequency of Fetching from a Retailer by Type of Business Question 9: How and how often do you get your Coca-Cola products? Frequency Daily Every other day Once a week Once a month Twice a month Other Total Spaza/tuck shop N % 8 8.4 10 10.5 52 54.7 11 11.6 8 8.4 6 6.3 95 100.0 Type of business Shebeen Hawker Other N % N % N % 6 10.2 32 48.5 8 21.6 4 6.8 4 6.1 35 59.3 17 25.8 23 62.2 8 13.6 4 6.1 3 8.1 3 5.1 3 4.5 2 5.4 3 5.1 6 9.1 1 2.7 59 100.0 66 100.0 37 100.0 Total N % 54 21.0 18 7.0 127 49.4 26 10.1 16 6.2 16 6.2 257 100.0 Table 24(B) Frequency of Fetching from a Retailer by Urbanisation Question 9: How and how often do you get your Coca-Cola products? Frequency Daily Every other day Once a week Once a month Twice a month Other Total Urbanisation Metropolitan Urban Rural N % N % N % 31 30.1 11 18.6 12 12.6 9 8.7 1 1.7 8 8.4 46 44.7 31 52.5 50 52.6 4 3.9 6 10.2 16 16.8 5 4.9 5 8.5 6 6.3 8 7.8 5 8.5 3 3.2 103 100.0 59 100.0 95 100.0 Total N % 54 21.0 18 7.0 127 49.4 26 10.1 16 6.2 16 6.2 257 100.0 Relatively high percentages of respondents indicated that they fetch Coca-Cola products from retailers for re-sale to their own customers. This is especially the case for rural areas (51.1 %). Restocking of Coca-Cola products Tables 25 through 28 reflect the answers of respondents to the question: ‘What do you do when you run out of Coca-Cola products (stock)?’ According to the number of respondents who answered this question it is clear that the majority of businesses have experienced a shortage of stock at some time or other. To replenish stock, 89.1 % indicated that they fetch additional stock from the wholesaler/retailer (table 26). Only a small percentage (13.8 %) wait for the next delivery of Coca-Cola products (table 25). The average number of cases fetched by those that replenish stock amounted to 6.95cases (table 27). Less than half (45.4 %) the businesses fetched the additional stock using their own transport, a further 19.0 % rented a bakkie while 15.1 % used a wheelbarrow and 13.4 % walked to fetch stock and carried the cases back to the shop (table 28). Economic Impact of The Coca-Cola System on South Africa, 52 Table 25(A) Wait for Next Delivery When Running Out of Stock by Type of Business Question 10: What do you do when you run out of Coca-Cola products (stocks)? Yes No Total Spaza/tuck shop N % 54 17.4 257 82.6 311 100.0 Type of business Shebeen Hawker Other Total N % N % N % N % 18 11.7 11 7.9 13 14.0 96 13.8 136 88.3 129 92.1 80 86.0 602 86.2 154 100.0 140 100.0 93 100.0 698 100.0 Table 25(B) Wait for Next Delivery When Running Out of Stock by Urbanisation Question 10: What do you do when you run out of Coca-Cola products (stocks)? Yes No Total Urbanisation Metropolitan Urban Rural N % N % N % 52 14.7 29 16.5 15 8.9 301 85.3 147 83.5 154 91.1 353 100.0 176 100.0 169 100.0 Total N % 96 13.8 602 86.2 698 100.0 Table 26(A) Fetch Stocks from the Wholesaler/Retailer When Running Out of Stock by Type of Business Question 10: What do you do when you run out of Coca-Cola products (stocks)? Yes No Total Spaza/tuck shop Shebeen N % N % 287 87.0 144 87.3 43 13.0 21 12.7 330 100.0 165 100.0 Type of business Hawker Other N % N % 142 96.6 87 87.9 5 3.4 12 12.1 147 100.0 99 100.0 Total N % 660 89.1 81 10.9 741 100.0 Table 26(B) Fetch Stocks from the Wholesaler/Retailer When Running Out of Stock by Urbanisation Question 10: What do you do when you run out of Coca-Cola products (stocks)? Yes No Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 338 88.5 154 87.5 168 91.8 660 89.1 44 11.5 22 12.5 15 8.2 81 10.9 382 100.0 176 100.0 183 100.0 741 100.0 Economic Impact of The Coca-Cola System on South Africa, 53 Table 27(A) Average Number of Cases Fetched When Run Out of Stock by Type of Business Question 10: What do you do when you run out of Coca-Cola products (stocks)? Type of business Spaza/tuckshop Shebeen Hawker Other Total N 246 119 110 67 542 Average number of cases 7.57 7.25 5.11 7.12 6.95 Table 27(B) Average Number of Cases Fetched When Run Out of Stock by Urbanisation Question 10: What do you do when you run out of Coca-Cola products (stocks)? Type of business Metropolitan Urban Rural Total N 273 121 148 542 Average number of cases 7.42 7.05 5.99 6.95 Table 28(A) Method of Transport for Fetching of Coca-Cola Products by Type of Business Question 10: What do you do when you run out of Coca-Cola products (stocks)? Walk and carry Wheelbarrow Rent a bakkie Own transport Other Total Type of business Spaza/tuck shop Shebeen Hawker N % N % N % 9 3.1 8 5.6 60 42.3 37 12.8 19 13.3 25 17.6 66 22.8 32 22.4 17 12.0 156 53.8 78 54.5 27 19.0 22 7.6 6 4.2 13 9.2 290 100.0 143 100.0 142 100.0 Other N % 13 13.7 20 21.1 12 12.6 43 45.3 7 7.4 95 100.0 Total N % 90 13.4 101 15.1 127 19.0 304 45.4 48 7.2 670 100.0 Table 28(B) Method of Transport for Fetching of Coca-Cola Products by Urbanisation Question 10: What do you do when you run out of Coca-Cola products (stocks)? Walk and carry Wheelbarrow Rent a bakkie Own transport Other Total Metropolitan N % 63 18.4 31 9.0 41 12.0 182 53.1 26 7.6 343 100.0 Urbanisation Urban Rural N % N % 7 4.6 20 11.4 30 19.7 40 22.9 31 20.4 55 31.4 69 45.4 53 30.3 15 9.9 7 4.0 152 100.0 175 100.0 Economic Impact of The Coca-Cola System on South Africa, 54 N 90 101 127 304 48 670 Total % 13.4 15.1 19.0 45.4 7.2 100.0 Temporary closure of business due to Coca-Cola stock shortages Tables 29(A) and (B) show the responses to “Did you have to close your shop temporarily during the past 12 months due to the unavailability of Coca-Cola products?” There were indeed 43 or 5.9 % of the 726 respondents who answered this question in the affirmative. The highest percentage was for ‘other’ businesses (9.4 %) and the lowest for spazas (3.7 %) (table 29(A)). Temporary closure occurred more frequently in urban (10.1 %) than in metropolitan (4.1 %) and rural (5.6 %) areas (table 29(B)). Table 29(A) Temporary Closure of Business Because Coca-Cola Products Were Not Available by Type of Business Question 62: Did you have to close your shop temporarily during the past 12 months because Coca-Cola products were not available? Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 12 3.7 10 6.2 12 8.5 9 9.4 43 5.9 315 96.3 151 93.8 130 91.5 87 90.6 683 94.1 327 100.0 161 100.0 142 100.0 96 100.0 726 100.0 Yes No Total Table 29(B) Temporary Closure of Business Because Coca-Cola Products Were Not Available by Urbanisation Question 62: Did you have to close your shop temporarily during the past 12 months because Coca-Cola products were not available? Yes No Total Urbanisation Metropolitan Urban Rural N % N % N % 15 4.1 18 10.1 10 5.6 353 95.9 161 89.9 169 94.4 368 100.0 179 100.0 179 100.0 Total N % 43 5.9 683 94.1 726 100.0 Consumption of Coca-Cola products: Location of consumption Tables 30(A) and 30(B) show where Coca-Cola products are consumed by type of business and area. Two alternatives were provided, namely: ‘drink in or near the outlet’ or ‘at home’. Substantial variations occur by type of business. For example, 67.8 % of hawkers reported that clients tend to consume the product in or near the outlet while 85.5 % of the spazas reported that customers normally consume the product at home. Economic Impact of The Coca-Cola System on South Africa, 55 Table 30(A) Location of Consumption of Coca-Cola Products by Type of Business Question 11: When people buy Coca-cola products, where do they drink the product? Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % In or near the outlet 49 14.5 74 44.3 101 67.8 52 51.5 At home 289 85.5 93 55.7 48 32.2 49 48.5 Total 338 100.0 167 100.0 149 100.0 101 100.0 Total N % 276 36.6 479 63.4 755 100.0 Table 30(B) Location of Consumption of Coca-Cola Products by Urbanisation Question 11: When people buy Coca-cola products, where do they drink the product? Yes No Total Urbanisation Metropolitan Urban Rural N % N % N % 161 41.1 65 36.1 50 27.3 231 58.9 115 63.9 133 72.7 392 100.0 180 100.0 183 100.0 Total N % 276 36.6 479 63.4 755 100.0 Physical Characteristics of Business In this section attention will be given to location, equipment, appearance and facilities of the businesses involved in the study since these factors influence trading. Location of business Table 31(A) shows the location of the businesses included in the study by type of business while table 31(B) reflects location by degree of urbanisation. Spazas (56.5 %), shebeens (61.3 %) and other businesses (45.6 %) mainly are located in formal residential areas whereas hawkers (42.2 %) operate mainly near taxi ranks or train stations (table 31(A)). As can be expected, 37.1 % of the businesses in small towns and villages in the rural areas operate in a rural environment (table 31(B)). Equipment installed in business Table 32 shows the percentage of businesses according to the availability of equipment usually associated with the running of a business. the Coca-Cola system supplies some of the businesses with refrigerators and/or deep-freezers. The percentages of those supplied by the Coca-Cola system of all respondents with refrigerators and deep-freezers are shown in table 33. Economic Impact of The Coca-Cola System on South Africa, 56 Table 31(A) Location of Business by Type of Business Question 12: State location of your business Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % Formal residential area 192 56.5 103 61.3 16 10.9 47 45.6 358 47.2 Informal residential area 73 21.5 32 19.0 11 7.5 10 9.7 126 16.6 Hostel 5 1.5 6 3.6 21 14.3 12 11.7 44 5.8 Rural area 56 16.5 23 13.7 8 5.4 12 11.7 99 13.1 Taxi rank/train station 5 1.5 3 1.8 62 42.2 13 12.6 83 10.9 Other 9 2.6 1 0.6 29 19.7 9 8.7 48 6.3 Total 340 100.0 168 100.0 147 100.0 103 100.0 758 100.0 Table 31(B) Location of Business by Urbanisation Question 12: State location of your business Formal residential area Informal residential area Hostel Rural area Taxi rank/train station Other Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 208 53.1 95 52.8 55 29.6 358 47.2 67 17.1 25 13.9 34 18.3 126 16.6 33 8.4 9 5.0 2 1.1 44 5.8 2 0.5 28 15.6 69 37.0 99 13.1 55 14.0 11 6.1 17 9.1 83 10.9 27 6.9 12 6.7 9 4.8 48 6.3 392 100.0 180 100.0 183 100.0 755 100.0 Table 32(A) Percentage of Respondents With Equipment Installed by Type of Equipment and Business Question 13: Indicate what equipment the shop is equipped with Refrigerator Deep freezer Telkom telephone Cellphone Shelves Counter Cash register Other Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 259 76.2 143 84.1 29 19.5 67 64.4 498 65.3 215 63.2 125 73.5 25 16.8 50 48.1 415 54.4 93 27.3 60 35.3 4 2.7 17 16.3 174 22.8 160 47.1 59 34.7 38 25.5 50 48.1 307 40.2 258 75.9 71 41.8 22 14.8 37 35.6 388 50.9 209 61.5 67 39.4 15 10.1 34 32.7 325 42.6 69 20.3 29 17.1 4 2.7 18 17.3 120 15.7 7 2.1 3 1.8 59 39.6 12 11.5 81 10.6 Economic Impact of The Coca-Cola System on South Africa, 57 Table 32(B) Percentage of Respondents With Equipment Installed by Type of Equipment and Urbanisation Question 13: Indicate what equipment the shop is equipped with Refrigerator Deep freezer Telkom telephone Cellphone Shelves Counter Cash register Other Metropolitan N % 276 69.9 191 48.4 125 31.6 141 35.7 198 50.1 167 42.3 65 16.5 56 14.2 Urbanisation Urban Rural N % N % 123 67.6 99 53.2 115 63.2 109 58.6 32 17.6 17 9.1 80 44.0 86 46.2 103 56.6 87 46.8 96 52.7 62 33.3 30 16.5 25 13.4 13 7.1 12 6.5 Total N % 498 65.3 415 54.4 174 22.8 307 40.2 388 50.9 325 42.6 120 15.7 81 10.6 Table 33(A) Percentage of Equipment Owned by Coca-Cola by Type of Equipment and Business Question 13: Indicate what equipment the shop is equipped with Refrigerator Deep freezer Spaza/tuck shop Shebeen N % N % 97 37.5 42 29.4 6 2.8 3 2.4 Type of business Hawker Other N % N % 13 44.8 21 31.3 3 12.0 3 6.0 N 173 15 Total % 34.7 3.6 Table 33(B) Percentage of Equipment Owned by Coca-Cola by Type of Equipment and Urbanisation Question 13: Indicate what equipment the shop is equipped with Refrigerator Deep freezer Metropolitan N % 108 39.1 4 2.1 Urbanisation Urban Rural N % N % 53 43.1 12 6.5 10 8.7 1 0.9 Total N 173 15 % 34.7 3.6 Almost two thirds (65.3 %) of all respondents have a refrigerator but one third (34.7 %) of these refrigerators belong to the Coca-Cola system. More than half (54.4 %) has a deep-freezer and only 3.6 % of them belong to the Coca-Cola system. A low percentage of 22.8 % has Telkom phones while 40,2 % make use of cell phones. Even some of the hawkers (14.8 %) indicated that they have shelves to display their goods while 10.1 % even claim they have a counter and 2.7 % a cash register. Tables 32(B) and 33(B) show that relatively fewer respondents in the rural areas have refrigerators (53.2 %) and only 6.5 % of these are owned by the Coca-Cola system. Economic Impact of The Coca-Cola System on South Africa, 58 Impact of refrigerated drinks on turnover Tables 34(A) and (B) reflect the response to the question: ‘Does having a fridge help you sell more Coca-Cola products?’ No less than 73.5 % of all respondents confirm that access to a fridge results in the selling of ‘lots more’ Coca-Cola products. This is true for all types of businesses, except hawkers. However, almost half (46.4 %) the hawkers reported that this question is not applicable to them. If this group is excluded, 73.4 % of the rest agrees that a fridge helps to sell more Coca-Cola products. Table 34(A) Having a Fridge Help Selling More Coca-Cola Products by Type of Business Question 14: Does having a fridge help you sell more Coca-Cola products? Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % Yes 281 84.1 136 81.9 55 39.9 72 70.6 544 73.5 To some extent 29 8.7 12 7.2 13 9.4 6 5.9 60 8.1 No, it does not help at all 7 2.1 7 4.2 6 4.3 6 5.9 26 3.5 Not applicable 17 5.1 11 6.6 64 46.4 18 17.6 110 14.9 Total 334 100.0 166 100.0 138 100.0 102 100.0 740 100.0 Table 34(B) Having a Fridge Help Selling More Coca-Cola Products by Urbanisation Question 14: Does having a fridge help you sell more Coca-Cola products? Yes To some extent No, it does not help at all Not applicable Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 255 66.4 137 77.8 152 84.4 544 73.5 43 11.2 9 5.1 8 4.4 60 8.1 18 4.7 3 1.7 5 2.8 26 3.5 68 17.7 27 15.3 15 8.3 110 14.9 384 100.0 176 100.0 180 100.0 740 100.0 Type of business accommodation of business Table 35(A) shows that spazas and shebeens operate mostly from inside the main house, (42.2 % and 46.7 % respectively) or from an outside building on the same property, (29.2 % and 28.7 % respectively). More than half (56.5 %) the hawkers do business on the street while a third (35.3 %) of the other businesses operate from inside the main house. Table 35(B) shows that relatively more businesses in rural areas (41.3 %) do business from inside the main house than in the other two areas. Economic Impact of The Coca-Cola System on South Africa, 59 Table 35(A) Type of Business Accommodation by Type of Business Question 15: Type of shop accommodation Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 143 42.2 78 46.7 3 2.0 36 35.3 260 34.4 Inside main house Outside building on same property 99 29.2 48 Building other than home 44 13.0 23 Metal container(railway/ship) 10 2.9 3 Shack 20 5.9 5 Zozo 4 1.2 3 Fixed stall in market 2 0.6 2 Vehicle, cart, temporarystall in a market Other temporary structure Construction site No fixed location/mobile 1 0.3 On the street 3 0.9 Other 13 3.8 5 Total 339 100.0 167 28.7 13.8 1.8 3.0 1.8 1.2 3 2.0 7 5 3 4 9 9 4.8 3.4 2.0 2.7 6.1 6.1 11 83 3.0 10 100.0 147 7.5 56.5 6.8 100.0 9 12 9 4 1 6 2 5 2 8.8 159 11.8 79 8.8 29 3.9 34 1.0 11 5.9 14 2.0 11 4.9 14 2.0 2 12 8 7.8 94 8 7.8 36 102 100.0 755 21.1 10.5 3.8 4.5 1.5 1.9 1.5 1.9 0.3 1.6 12.5 4.8 100.0 Table 35(B) Type of Business Accommodation by Urbanisation Question 15: Type of shop accommodation Urbanisation Metropolitan Urban Rural Total N % N % N % N % Inside main house 124 31.6 60 33.7 76 41.3 260 34.4 Outside building on same property 77 19.6 47 26.4 35 19.0 159 21.1 Building other than home 36 9.2 24 13.5 19 10.3 79 10.5 Metal container(railway/ship) 21 5.3 1 0.6 7 3.8 29 3.8 Shack 15 3.8 15 8.4 4 2.2 34 4.5 Zozo 4 1.0 7 3.8 11 1.5 Fixed stall in market 9 2.3 3 1.7 2 1.1 14 1.9 Vehicle. cart. temporarystall in a market 8 2.0 1 0.6 2 1.1 11 1.5 Other temporary structure 6 1.5 4 2.2 4 2.2 14 1.9 Construction site 1 0.3 1 0.5 2 0.3 No fixed location/mobile 5 1.3 6 3.4 1 0.5 12 1.6 On the street 67 17.0 11 6.2 16 8.7 94 12.5 Other 20 5.1 6 3.4 10 5.4 36 4.8 Total 393 100.0 178 100.0 184 100.0 755 100.0 Economic Impact of The Coca-Cola System on South Africa, 60 Direct access to electricity and tap water Three quarters of the respondents (74.7 %) said they have direct access to electricity (table 36). If the not applicable group is excluded from the table, the percentage with access will increase to 81.6 % of the remaining 684 respondents. The percentage of respondents in rural areas with access to electricity is 69.9 % and if the ‘not applicable’ group (16 respondents) is excluded the percentage is 76.6 %. Table 36(A) Direct Access to Electricity by Type of Business Question 16: Does your shop have direct access to electricity on the same stand? Yes No Not applicable Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 304 90.7 155 91.7 24 16.9 75 74.3 558 74.7 21 6.3 9 5.3 78 54.9 18 17.8 126 16.9 10 3.0 5 3.0 40 28.2 8 7.9 63 8.4 335 100.0 169 100.0 142 100.0 101 100.0 747 100.0 Table 36(B) Direct Access to Electricity by Urbanisation Question 16: Does your shop have direct access to electricity on the same stand? Urbanisation Metropolitan Urban Rural Total N % N % N % N % 285 74.4 145 80.1 128 69.9 558 74.7 59 15.4 28 15.5 39 21.3 126 16.9 39 10.2 8 4.4 16 8.7 63 8.4 383 100.0 181 100.0 183 100.0 747 100.0 Yes No Not applicable Total Almost two thirds of the respondents (64.9 %) have access to tap water (table 37). However, the percentage for the rural areas is much lower (49.7 % in table 37(B)). Employment Tables 38 to 45 show the total as well as the average number of people employed, including the owner/manager. Total employment Table 45 shows that the 732 businesses included in the study employed a total of 1 651 people of which 1 248 were permanent and 403 part-time. More females (864) than males (787) were employed. The average employment of 2.26 people per business Economic Impact of The Coca-Cola System on South Africa, 61 Table 37(A) Direct Accessto Tap Water by Type of Business Question 16: Does your shop have direct access to water on the same stand? Yes No Not applicable Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 249 76.9 136 81.4 23 16.2 68 67.3 476 64.9 66 20.4 25 15.0 79 55.6 25 24.8 195 26.6 9 2.8 6 3.6 40 28.2 8 7.9 63 8.6 324 100.0 167 100.0 142 100.0 101 100.0 734 100.0 Table 37(B) Direct Access to Tap Water by Urbanisation Question 16: Does your shop have direct access to water on the same stand? Urbanisation Metropolitan Urban Rural Total N % N % N % N % 260 68.8 129 71.3 87 49.7 476 64.9 78 20.6 44 24.3 73 41.7 195 26.6 40 10.6 8 4.4 15 8.6 63 8.6 378 100.0 181 100.0 175 100.0 734 100.0 Yes No Not applicable Total includes working owners. Similar information as in table 45 is shown for spazas in table 38, shebeens in table 39, for hawkers in table 40, for ‘other’ businesses in table 41, for metropolitan areas in table 42, for urban areas in table 43, and for rural areas intable 44. Average employment is as follows: Type of business Spazas Hawkers 2.34 1.70 Degree of urbanisation Metropolitan 2.49 Rural 1.79 Shebeens Other 2.41 2.52 Urban Total 2.24 2.26 Owners were asked in question 23 how many of their employees are members of their family of household. The averages are as follows: Type of business Spaza Hawker 1.41 0.51 Shebeen Other Degree of urbanisation Economic Impact of The Coca-Cola System on South Africa, 62 1.23 0.98 Economic Impact of The Coca-Cola System on South Africa, 63 M+F Ttl Avg 434 1.33 156 0.48 590 1.81 M+F Ttl Avg 42 0.13 24 0.07 66 0.20 African Female Ttl Avg 221 0.68 74 0.23 295 0.91 Coloured Female Ttl Avg 25 0.08 15 0.05 40 0.13 Asian Female Ttl Avg 31 0.10 17 0.05 48 0.15 White Male Female Ttl Avg Ttl Avg 0.00 1 0.00 0.00 8 0.02 0.00 9 0.02 Male Ttl Avg 30 0.09 19 0.06 49 0.15 Male Ttl Avg Full-time 14 0.08 Part-time 7 0.04 Total 21 0.12 n = 167 Full-time Part-time Total M+F Ttl Avg 266 1.59 67 0.40 333 1.99 M+F Ttl Avg 27 0.16 10 0.06 37 0.22 African Female Ttl Avg 133 0.80 30 0.18 163 0.98 Coloured Female Ttl Avg 13 0.08 3 0.02 16 0.10 Male Ttl Avg 1 0.01 0.00 1 0.01 Male Ttl Avg 13 0.08 2 0.01 15 0.09 White Female Ttl Avg 0.00 0.00 0.00 Asian Female Ttl Avg 12 0.07 4 0.02 16 0.09 Question 17: How many employees, including owner/manager, work in the business? Male Ttl Avg 133 0.80 37 0.22 170 1.02 M+F Ttl Avg 1 0.00 8 0.02 9 0.03 M+F Ttl Avg 61 0.19 36 0.11 97 0.30 Male Ttl Avg 260 0.80 110 0.34 370 1.14 M+F Ttl Avg 1 0.00 0.00 1 0.00 M+F Ttl Avg 25 0.15 6 0.04 31 0.19 Male Ttl Avg 161 0.96 46 0.28 207 1.24 Table 39 Employment of Shebeens by Race, Gender and Full- and Part-Time Male Ttl Avg Full-time 17 0.05 Part-time 9 0.03 Total 26 0.08 n = 326 Full-time Part-time Total Male Ttl Avg 213 0.65 82 0.25 295 0.90 Question 17: How many employees, including owner/manager, work in the business? Table 38 Employment of Spazas by Race, Gender and Full- and Part-Time Total Female Ttl Avg 158 0.95 37 0.22 195 1.17 Total Female Ttl Avg 278 0.85 114 0.35 392 1.20 M+F Ttl Avg 319 1.91 83 0.50 402 2.41 M+F Ttl Avg 538 1.65 224 0.69 762 2.34 Economic Impact of The Coca-Cola System on South Africa, 64 M+F Ttl Avg 189 1.34 28 0.20 217 1.54 M+F Ttl Avg 4 0.03 3 0.02 7 0.05 African Female Ttl Avg 99 0.70 14 0.10 113 0.80 Coloured Female Ttl Avg 1 0.01 2 0.01 3 0.02 Asian Female Ttl Avg 6 0.04 0.00 6 0.04 White Male Female Ttl Avg Ttl Avg 0.00 0.00 0.00 0.00 0.00 0.00 Male Ttl Avg 9 0.06 1 0.01 10 0.07 M+F Ttl Avg 0.00 0.00 0.00 M+F Ttl Avg 15 0.11 1 0.01 16 0.12 Male Ttl Avg 102 0.72 16 0.11 118 0.83 M+F Ttl Avg 161 1.64 44 0.45 205 2.09 M+F Ttl Avg 9 0.09 10 0.10 19 0.19 African Female Ttl Avg 100 1.02 27 0.28 127 1.30 Coloured Female Ttl Avg 8 0.08 6 0.06 14 0.14 Male Ttl Avg 61 0.62 17 0.17 78 0.79 Male Ttl Avg 1 0.01 4 0.04 5 0.05 Full-time Part-time Total Full-time Part-time Total Asian Female Ttl Avg 10 0.10 3 0.03 13 0.13 White Male Female Ttl Avg Ttl Avg 0.00 0.00 4 0.04 1 0.01 4 0.04 1 0.01 Male Ttl Avg 3 0.03 2 0.02 5 0.05 Question 17: How many employees, including owner/manager, work in the business? M+F Ttl Avg 0.00 5 0.05 5 0.05 M+F Ttl Avg 13 0.13 5 0.05 18 0.18 Male Ttl Avg 65 0.66 27 0.28 92 0.94 Total Female Ttl Avg 118 1.20 37 0.38 155 1.58 M+F Ttl Avg 183 1.87 64 0.65 247 2.52 Total Female M+F Ttl Avg Ttl Avg 106 0.75 208 1.48 16 0.11 32 0.23 122 0.86 240 1.71 Table 41 Employment of ‘Other’ Businesses by Race, Gender and Full- and Part-Time Male Ttl Avg Full-time 3 0.02 Part-time 1 0.01 Total 4 0.03 n= 141 Full-time Part-time Total Male Ttl Avg 90 0.64 14 0.10 104 0.74 Question 17: How many employees, including owner/manager, work in the business? Table 40 Employment of Hawkers by Race, Gender and Full- and Part-Time Economic Impact of The Coca-Cola System on South Africa, 65 M+F Ttl Avg 601 1.61 115 0.31 716 1.92 M+F Ttl Avg 45 0.12 14 0.04 59 0.16 African Female Ttl Avg 307 0.82 58 0.16 365 0.98 Coloured Female Ttl Avg 24 0.06 7 0.02 31 0.08 Asian Female Ttl Avg 58 0.16 24 0.06 82 0.22 White Male Female Ttl Avg Ttl Avg 0.00 0.00 0.00 0.00 0.00 0.00 Male Ttl Avg 51 0.14 23 0.06 74 0.20 Male Ttl Avg Full-time 14 0.08 Part-time 14 0.08 Total 28 0.16 n= 173 Male Ttl Avg 83 0.48 52 0.30 135 0.78 M+F Ttl Avg 192 1.11 105 0.61 297 1.72 M+F Ttl Avg 37 0.21 33 0.19 70 0.40 African Female Ttl Avg 109 0.63 53 0.31 162 0.94 Coloured Female Ttl Avg 23 0.13 19 0.11 42 0.24 Male Ttl Avg 1 0.01 4 0.02 5 0.03 Male Ttl Avg 4 0.02 1 0.01 5 0.03 White Female Ttl Avg 1 0.01 9 0.05 10 0.06 Asian Female Ttl Avg 1 0.01 0.00 1 0.01 Question 17: How many employees, including owner/manager, work in the business? Full-time Part-time Total M+F Ttl Avg 0.00 0.00 0.00 M+F Ttl Avg 109 0.29 47 0.13 156 0.42 Male Ttl Avg 366 0.98 87 0.23 453 1.21 Total Female Ttl Avg 389 1.04 89 0.24 478 1.28 M+F Ttl Avg 2 0.01 13 0.08 15 0.09 M+F Ttl Avg 5 0.03 1 0.01 6 0.04 Male Ttl Avg 102 0.59 71 0.41 173 1.00 Total Female Ttl Avg 134 0.77 81 0.47 215 1.24 Table 43 Employment in Urban Areas by Race, Gender and Full- and Part-Time Male Ttl Avg Full-time 21 0.06 Part-time 7 0.02 Total 28 0.08 n = 374 Full-time Part-time Total Male Ttl Avg 294 0.79 57 0.15 351 0.94 Question 17: How many employees, including owner/manager, work in the business? Table 42 Employment in Metropolitan Areas by Race, Gender and Full- and Part-Time M+F Ttl Avg 236 1.36 152 0.88 388 2.24 M+F Ttl Avg 755 2.02 176 0.47 931 2.49 Economic Impact of The Coca-Cola System on South Africa, 66 M+F Ttl Avg 257 1.39 75 0.41 332 1.80 M+F Ttl Avg 0.00 0.00 0.00 African Female Ttl Avg 137 0.74 34 0.18 171 0.92 Coloured Female Ttl Avg 0.00 0.00 0.00 White Male Female Ttl Avg Ttl Avg 0.00 0.00 0.00 0.00 0.00 0.00 Asian Male Female Ttl Avg Ttl Avg 0.00 0.00 0.00 0.00 0.00 0.00 M+F Ttl Avg 0.00 0.00 0.00 M+F Ttl Avg 0.00 0.00 0.00 Male Ttl Avg 120 0.65 41 0.22 161 0.87 Total Female Ttl Avg 137 0.74 34 0.18 171 0.92 M+F Ttl Avg 257 1.39 75 0.41 332 1.80 Male Ttl Avg Full-time 35 0.05 Part-time 21 0.03 Total 56 0.08 n = 732 Full-time Part-time Total Male Ttl Avg 497 0.68 150 0.20 647 0.88 Male Ttl Avg 1 0.00 4 0.01 5 0.01 Coloured Female Ttl Avg 47 0.06 26 0.04 73 0.10 M+F Ttl Avg 82 0.11 47 0.06 129 0.17 Male Ttl Avg 55 0.08 24 0.03 79 0.11 African Female M+F Ttl Avg Ttl Avg 553 0.76 1 050 1.43 145 0.20 295 0.40 698 0.96 1 345 1.83 White Female Ttl Avg 1 0.00 9 0.01 10 0.01 Asian Female Ttl Avg 59 0.08 24 0.03 83 0.11 Question 17: How many employees, including owner/manager, work in the business? M+F Ttl Avg 2 0.00 13 0.02 15 0.02 M+F Ttl Avg 114 0.16 48 0.07 162 0.23 Male Ttl Avg 588 0.80 199 0.27 787 1.07 Total Female M+F Ttl Avg Ttl Avg 660 0.90 1 248 1.70 204 0.28 403 0.55 864 1.18 1 651 2.25 Table 45 Employment by All Respondents Included in the Study by Race, Gender and Full- and Part-Time Male Ttl Avg Full-time 0.00 Part-time 0.00 Total 0.00 n = 185 Full-time Part-time Total Male Ttl Avg 120 0.65 41 0.22 161 0.87 Question 17: How many employees, including owner/manager, work in the business? Table 44 Employment in Rural Areas by Race, Gender and Full- and Part-Time Metropolitan Rural 1.19 0.55 Urban Total 1.29 1.14 A comparison of the average number of household members employed with the average of total employment shows that many of these businesses can be considered as family businesses. Features Of Ownership And Management Status of owner Table 46(A) shows that 83.4 % of the owners with whom interviews were conducted are engaged in the businesses full-time. The percentages are as high as 90.5 % for shebeens and 94.6 % for hawkers. Full-time owner engagement in the rural areas (77.7 %) is lower than in the metropolitan (86.3 %) and urban (83.1 %) areas (table 46(B)). Gender of owner More owners of spazas (55.0 %) and shebeens (58.4 %) are male than female while the opposite is true for hawkers, where 52.1 % owners are female, and the other businesses, where 54.5 % owners are female (table 47(A)). Table 46(A) Full- or Part-Time Engagement of Owner in the Business by Type of Business Question 18a: Is the owner engaged full or part-time in the business? Full-time Part-time Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 255 77.3 152 90.5 139 94.6 78 75.7 624 83.4 75 22.7 16 9.5 8 5.4 25 24.3 124 16.6 330 100.0 168 100.0 147 100.0 103 100.0 748 100.0 Table 46(B) Full- or Part-Time Engagement of Owner in the Business by Urbanisation Question 18a: Is the owner engaged full or part-time in the business? Full-time Part-time Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 334 86.3 147 83.1 143 77.7 624 83.4 53 13.7 30 16.9 41 22.3 124 16.6 387 100.0 177 100.0 184 100.0 748 100.0 Economic Impact of The Coca-Cola System on South Africa, 67 Table 47(A) Gender of Owner by Type of Business Question 18b: Gender of owner Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 181 55.0 97 58.4 70 47.9 46 45.5 394 53.1 148 45.0 69 41.6 76 52.1 55 54.5 348 46.9 329 100.0 166 100.0 146 100.0 101 100.0 742 100.0 Male Female Total Table 47(B) Gender of Owner by Urbanisation Question 18b: Gender of owner Urbanisation Metropolitan Urban Rural Total N % N % N % N % 204 53.7 91 51.1 99 53.8 394 53.1 176 46.3 87 48.9 85 46.2 348 46.9 380 100.0 178 100.0 184 100.0 742 100.0 Male Female Total Table 48(A) Race of Owner by Type of Business Question 18c: Population group of owner? African Asian Coloured White Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 258 77.2 140 82.4 127 87.6 79 78.2 604 80.5 41 12.3 16 9.4 11 7.6 10 9.9 78 10.4 33 9.9 13 7.6 6 4.1 9 8.9 61 8.1 2 0.6 1 0.6 1 0.7 3 3.0 7 0.9 334 100.0 170 100.0 145 100.0 101 100.0 750 100.0 Race of owner Table 48 shows that 80.5 % of the owners of the businesses interviewed are African (black), 10.4 % Asian, 8.1 % coloured and only 0.9 % white. Nationality of owner Almost all (98.8 %) businesses where interviews were conducted belong to South Africans (table 49). Economic Impact of The Coca-Cola System on South Africa, 68 Table 48(B) Race of Owner by Urbanisation Question 18c: Population group of owner? African Asian Coloured White Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 279 72.5 140 78.2 185 99.5 604 80.5 76 19.7 2 1.1 78 10.4 28 7.3 32 17.9 1 0.5 61 8.1 2 0.5 5 2.8 7 0.9 385 100.0 179 100.0 186 100.0 750 100.0 Table 49(A) Nationality of Owner by Type of Business Question 18c: Nationality of owner? South African Other Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 320 98.5 164 100.0 139 97.2 98 100.0 721 98.8 5 1.5 4 2.8 9 1.2 325 100.0 164 100.0 143 100.0 98 100.0 730 100.0 Table 49(B) Nationality of Owner by Urbanisation Question 18c: Nationality of owner? South African Other Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 366 98.4 174 98.3 181 100.0 721 98.8 6 1.6 3 1.7 9 1.2 372 100.0 177 100.0 181 100.0 730 100.0 Work done by owner As can be expected from owners of micro-, very small and small businesses they have to fulfill many functions. Table 50 shows that their functions include those of management (89.1 %), cashier (59.6 %), stock clerk (56.5 %), driver (26.1 %) and a number of other duties (3.0 %). Shebeens are mostly (92.9 %) managed by their owners (table 50(A)) while owners of businesses in rural areas (80.1 %) are less involved in running their businesses when compared with owners of metropolitan (92.4 %) and urban areas (91.2 %). Economic Impact of The Coca-Cola System on South Africa, 69 Table 50(A) Type of Work Done by Owner by Type of Business Question 19: Work done by owner? Management Cashier Stock clerk Driver Other Spaza/tuck shop N % 300 88.2 200 58.8 201 59.1 97 28.5 8 2.4 Type of business Shebeen Hawker Other N % N % N % 158 92.9 132 88.6 90 86.5 97 57.1 102 68.5 56 53.8 96 56.5 85 57.0 49 47.1 53 31.2 23 15.4 26 25.0 3 1.8 7 4.7 5 4.8 Total N % 680 89.1 455 59.6 431 56.5 199 26.1 23 3.0 Table 50(B) Type of Work Done by Owner by Urbanisation Question 19: Work done by owner? Urbanisation Metropolitan Urban Rural N % N % N % 365 92.4 166 91.2 149 80.1 262 66.3 97 53.3 96 51.6 263 66.6 88 48.4 80 43.0 127 32.2 39 21.4 33 17.7 13 3.3 2 1.1 8 4.3 Management Cashier Stock clerk Driver Other N 680 455 431 199 23 Total % 89.1 59.6 56.5 26.1 3.0 Table 51(A) Running of Business by Type of Business Question 20: Who runs the business? Owner Manager Employee Family member Total Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 264 78.3 152 89.4 142 95.3 80 76.9 638 83.9 20 5.9 3 1.8 2 1.3 4 3.8 29 3.8 16 4.7 5 2.9 3 2.0 12 11.5 36 4.7 37 11.0 10 5.9 2 1.3 8 7.7 57 7.5 337 100.0 170 100.0 149 100.0 104 100.0 760 100.0 Management Respondents were asked who the business is run by (Question 20). Table 51 shows the responses to this question. The vast majority of businesses (83.9 %) are run by the owners. A further 7.5 % are run by a family member of the owner. This is especially true for spazas (11.0 %) and other businesses (7.7 %) and more so in rural (13.4 %) than in metropolitan (4.3 %) and urban (8.3 %) areas. Economic Impact of The Coca-Cola System on South Africa, 70 Table 51(B) Running of Business by Urbanisation Question 20: Who runs the business? Urbanisation Metropolitan Urban Rural Total N % N % N % N % 335 85.2 154 85.1 149 80.1 638 83.9 21 5.3 2 1.1 6 3.2 29 3.8 20 5.1 10 5.5 6 3.2 36 4.7 17 4.3 15 8.3 25 13.4 57 7.5 393 100.0 181 100.0 186 100.0 760 100.0 Owner Manager Employee Family member Total Table 52(A) Owners With Business Training by Type of Business Question 21: Do you have any business training? Spaza/tuck shop Shebeen Type of business Hawker Other Total N 34 303 337 Yes No Total % N 10.1 10 89.9 159 100.0 169 % N 5.9 9 94.1 138 100.0 147 % N 6.1 9 93.9 95 100.0 104 % N 8.7 62 91.3 695 100.0 757 % 8.2 91.8 100.0 Table 52(B) Owners With Business Training by Urbanisation Question 21: Do you have any business training? Urbanisation Metropolitan Urban Rural N % N % N % 30 7.6 22 12.3 10 5.4 363 92.4 157 87.7 175 94.6 393 100.0 179 100.0 185 100.0 Yes No Total Total N 62 695 757 % 8.2 91.8 100.0 Business training Very few (8.2 %) of the owners of the businesses indicated that they had some business training (table 52). The following types of training were mentioned by those who underwent training: · · · · · Marketing/selling Money management Stock control Computer training Business management Economic Impact of The Coca-Cola System on South Africa, 71 More than half (51.5 %) the owners of businesses said they need some business training (table 53). The percentages for owners of spazas (55.2 %) and shebeens (53.5 %) are higher than those for hawkers (45.6 %) and ‘other’ (44.2 %). Owners in rural areas (80.1 %) are far more in need of training than those of metropolitan (37.9 %) and urban (51.4 %) areas. Table 53(A) Owners Who Said They Need Business Training by Type of Business Question 22: Do you think you need business training? Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 186 55.2 91 53.5 67 45.6 46 44.2 390 51.5 151 44.8 79 46.5 80 54.4 58 55.8 368 48.5 337 100.0 170 100.0 147 100.0 104 100.0 758 100.0 Yes No Total Table 53(B) Owners Who Said They Need Business Training by Urbanisation Question 22: Do you think you need business training? Urbanisation Metropolitan Urban Rural Total N % N % N % N % 148 37.9 93 51.4 149 80.1 390 51.5 243 62.1 88 48.6 37 19.9 368 48.5 391 100.0 181 100.0 186 100.0 758 100.0 Yes No Total Owners who indicated that they are interested in training were asked to rank their training needs in order of importance. Their ranking order was used to construct an index according to priorities. Table 54 shows that training in management is the most urgent need among owners, followed by bookkeeping, computer skills and marketing. Training needs do not differ substantially between the types of businesses (table 54(A)) but there are slight differences in the priority allocated of types of training between areas (table 54(B)). Financing Of Business As mentioned before, current financial or even financial information of any nature whatsoever was hard to come by from respondents. No information is supplied for questions where too few respondents responded. Start-up capital On average, businesses were started with 1,972.14 rand (table 55). Rural businesses (1,451.83 rand ) needed far less initial capital than businesses in metropolitan Economic Impact of The Coca-Cola System on South Africa, 72 Table 54(A) Training Needs of Owners in Order of Importance by Type of Business Question 22: Do you think you need business training? Training Need Management Bookkeeping Computer skills Marketing Customer or human relations Sales Credit control Labour relations Type of business Spaza/tuckshop Shebeen Hawker Other Total Index Index Index Index Index Value Rank Value Rank Value Rank Value Rank Value Rank 227 1 113 1 78 1 62 1 480 1 152 2 69 2 55 2 36 2 312 2 115 3 47 3 32 5 35 3 229 3 109 4 45 4 35 4 27 4 216 4 75 78 48 28 6 5 7 8 42 30 24 5 5 6 7 8 42 31 17 7 3 6 7 8 21 17 15 6 5 6 7 8 180 156 104 46 5 6 7 8 Table 54(B) Training Needs of Owners in Order of Importance by Urbanisation Question 22: Do you think you need business training? Degree of urbanisation Metropolitan Urban Rural Total Training Need Index Index Index Index Value Rank Value Rank Value Rank Value Rank Management 179 1 97 1 204 1 480 1 Bookkeeping 139 2 73 2 100 2 312 2 Computer skills 89 3 40 6 100 2 229 3 Marketing 87 4 53 4 76 4 216 4 Customer or human relations 60 5 50 5 70 5 180 5 Sales 49 6 54 3 53 7 156 6 Credit control 32 7 11 7 61 6 104 7 Labour relations 6 8 15 8 25 8 46 8 (2,006.72 rand) and urban areas (2,462.44 rand). Start-up capital needed by type of business ranged from 643.77 rand for hawkers to 2,714.30 rand for shebeen owners. Time required to mobilise sufficient start-up capital Overall, more than half the businesses (54.0 %) managed to generate sufficient start-up capital within a period of six months. However, 16.9 % of the businesses took longer than a year to find funds to start operating (tables 56(A) and (B)). A comparison by type of business confirms that the smaller the amount needed (eg hawkers) the sooner the required capital was acquired. Economic Impact of The Coca-Cola System on South Africa, 73 Sources of finances Table 55 Start-Up Capital by Type of Business and Urbanisation Respondents were asked to indicate all sources of finance to start their Question 24: How much money was this business businesses and, where applicable, the started with? amount borrowed, interest paid, the installment and repayment period. Type of business Mean R N Table 57 shows that more than two Spaza/tuckshop 2,032.35 321 thirds (69.6 %) of respondents indicated Shebeen 2,714.30 150 that they used their own or household Hawker 643.77 145 Other 2,598.02 99 members’ savings to start their busiAll respondents 1,972.14 715 nesses. Stokvel money was used by 6.7 % as start-up funds. Stokvel money is a Urbanisation well-known method of saving amongst Metropolitan 2,006.72 359 poorer community members in South Urban 2,462.44 171 Africa. Community members, usually a Rural 1,451.83 185 group of 12 people, belong to a stokvel All respondents 1,972.14 715 club and each one contributes a relatively small amount to the club on a monthly basis. Once a year a club member will receive the total contribution of all members, which adds up to an amount that is enough to spend on an unusual item. Table 56(A) Time Required to Mobilise Start-Up Capital by Type Business Question 25: How long did it take you to find the funds to start the business? Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % Less than 6 months 155 47.1 84 51.5 98 66.7 63 61.8 6 – 12 months 75 22.8 30 18.4 22 15.0 15 14.7 More than 12 months 67 20.4 26 16.0 15 10.2 17 16.7 Not applicable 32 9.7 23 14.1 12 8.2 7 6.9 Total 329 100.0 163 100.0 147 100.0 102 100.0 Total N % 400 54.0 142 19.2 125 16.9 74 10.0 741 100.0 Table 56(B) Time Required to Mobilise Start-Up Capital by Urbanisation Question 25: How long did it take you to find the funds to start the business? Less than 6 months 6 – 12 months More than 12 months Not applicable Total Metropolitan N % 225 58.7 66 17.2 50 13.1 42 11.0 383 100.0 Urbanisation Urban Rural N % N % 85 48.3 90 49.5 31 17.6 45 24.7 38 21.6 37 20.3 22 12.5 10 5.5 176 100.0 182 100.0 Economic Impact of The Coca-Cola System on South Africa, 74 Total N % 400 54.0 142 19.2 125 16.9 74 10.0 741 100.0 Table 57(A) Sources of Finance by Type of Business Question 26: Source of finance to start your business Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % 235 69.1 114 67.1 108 72.5 74 71.2 20 5.9 16 9.4 10 6.7 5 4.8 Savings Stokvel Loan from relative or friend 37 Retrenchment 33 Loan from bank 8 Loan/money from government institution Loan from informal organisation/lender 4 Other 7 N 531 51 Total % 69.6 6.7 10.9 9.7 2.4 14 17 4 8.2 10.0 2.4 16 5 2 10.7 3.4 1.3 8 11 3 7.7 10.6 2.9 75 66 17 9.8 8.7 2.2 - - - 1 0.7 - - 1 0.1 1.2 2.7 2 4 1.2 2.4 2 7 1.3 4.7 3 2 2.9 1.9 11 20 1.4 2.6 Table 57(B) Sources of Finance by Urbanisation Question 26: Source of finance to start your business Metropolitan N % Savings 273 69.1 Stokvel 20 5.1 Loan from relative or friend 27 6.8 Retrenchment 42 10.6 Loan from bank 7 1.8 Loan/money from government institution 1 0.3 Loan from informal organisation/lender 7 1.8 Other 15 3.8 Urbanisation Urban Rural N % N % 152 83.5 106 60.0 6 3.3 25 13.4 10 5.5 38 20.4 11 6.0 13 7.0 4 2.2 6 3.2 2 4 1.1 2.2 2 1 1.1 0.5 Total N % 531 69.6 51 6.7 75 9.8 66 8.7 17 2.2 1 0.1 11 1.4 20 2.6 Respondents also made use of loans from relatives and friends (9.8 %), retrenchment payments (8.7 %), loans from banks (2.2 %), loans from informal money lenders (1.4 %) and other sources (2.6 %). So few respondents gave details on interest rates that they had to pay and on the amounts borrowed that no tables are supplied for this information. However, the maximum amounts mentioned were as follows: Economic Impact of The Coca-Cola System on South Africa, 75 Type of business and source of money Business Relative/friend Bank Government Spaza R25,000 R24,000 Shebeen R6,000 R18,000 Hawker R25,000 R19,000 R10,000 Other R23,000 - Informal R25,000 R60,000 R20,000 R45,000 Other R15,000 - Informal R60,000 R1,000 R20,000 Other R15,000 - Degree of urbanisation and source of money Area Relative/friend Bank Government Metropolitan R25,000 R24,000 R10,000 Urban R10,000 R23,000 Rural R25,000 R19,000 - Government incentives Table 58 confirms that very few of the businesses received any government development incentive or support. Only 1.6 % of all businesses received assistance. Support was received in the form of free training. Expansion And Growth Plans Business expansion in terms of turnover Just less than half (48.1 %) of all respondents indicated that their businesses had expanded in terms of turnover during the preceding year. A further 9.7 % indicated that Table 58(A) Government Business Development Incentive by Type of Business Question 27: Do you receive any government business development incentive? Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 5 1.5 4 2.4 2 1.4 1 1.0 12 1.6 334 98.5 164 97.6 144 98.6 103 99.0 745 98.4 339 100.0 168 100.0 146 100.0 104 100.0 757 100.0 Yes No Total Table 58(B) Government Business Development Incentive by Urbanisation Question 27: Do you receive any government business development incentive? Yes No Total Urbanisation Metropolitan Urban Rural Total N % N % N % N % 11 2.8 1 0.5 12 1.6 379 97.2 182 100.0 184 99.5 745 98.4 390 100.0 182 100.0 185 100.0 757 100.0 Economic Impact of The Coca-Cola System on South Africa, 76 their turnover had decreased while 42.2 % indicated that turnover had remained the same (table 59). More than half the shebeens (53.0 %) experienced an expansion in their turnover while 54.3 % of the respondents from rural areas indicated an increase in turnover. Table 59(A) Business Performance in Terms of Overall Turnover by Type of Business Question 28: During the past 18 months has your business . . . in terms of overall performance Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % Expanded 160 49.7 87 53.0 56 40.6 44 45.4 347 48.1 Contracted 28 8.7 17 10.4 13 9.4 12 12.4 70 9.7 Remained the same size 134 41.6 60 36.6 69 50.0 41 42.3 304 42.2 Total 322 100.0 164 100.0 138 100.0 97 100.0 721 100.0 Table 59(B) Business Performance in Terms of Overall Turnover by Urbanisation Question 28: During the past 18 months has your business . . . in terms of overall performance Expanded Contracted Remained the same size Total Urbanisation Metropolitan Urban Rural N % N % N % 183 49.2 69 39.7 95 54.3 29 7.8 31 17.8 10 5.7 160 43.0 74 42.5 70 40.0 372 100.0 174 100.0 175 100.0 Total N % 347 48.1 70 9.7 304 42.2 721 100.0 A comparison of the percentages of respondents who indicated expanded business performance in terms of Coca-Cola products (table 60) with those indicating expanded turnover in general (table 59) shows slightly higher performances for Coca-Cola for all types of businesses and areas except metropolitan areas where the percentages are the same (49.2 %). Respondents were also asked if their turnover expanded, what the total additional amount invested in buildings, transport, equipment, etc was (question 28.1). Table 61 shows an average amount of 4,666.00 rand, which varies from 2, 151.00 rand for hawkers to 7,492.66 rand for shebeens. Funding of expansion Respondents were asked how business expansion was financed (Question 29). The reply to this question (for those who expanded) is shown in table 62. Almost three quarters (73.5 %) of respondents indicated that they used retained earnings from business to finance expansions. This is especially the case for hawkers (83.9 %) and ‘other’ Economic Impact of The Coca-Cola System on South Africa, 77 Table 60(A) Business Performance in Terms of Coca-Cola Products by Type of Business Question 28: During the past 18 months has your business . . . in terms of Coca-Cola Products Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % Expanded 143 52.4 74 54.0 53 44.9 36 45.6 306 50.4 Contracted 23 8.4 9 6.6 10 8.5 5 6.3 47 7.7 Remained the same size 107 39.2 54 39.4 55 46.6 38 48.1 254 41.8 Total 273 100.0 137 100.0 118 100.0 79 100.0 607 100.0 Table 60(B) Business Performance in Terms of Coca-Cola Products by Urbanisation Question 28: During the past 18 months has your business . . . in terms of Coca-Cola Products Expanded Contracted Remained the same size Total Urbanisation Metropolitan Urban Rural N % N % N % 155 49.2 70 42.4 81 63.8 16 5.1 25 15.2 6 4.7 144 45.7 70 42.4 40 31.5 315 100.0 165 100.0 127 100.0 Table 61 Average Additional Amount for Expansion by Type of Business and Urbanisation Question 28: During the past 18 months has your business . . . in terms of Coca-Cola Products Type of business MeanR N Spaza/tuckshop Shebeen Hawker Other 4,188.23 7,492.26 2,151.00 3,588.00 122 58 30 28 4,666.00 238 6, 657.01 4,124.49 2,664.81 97 61 80 4,666.00 238 All respondents Urbanisation Metropolitan Urban Rural All respondents Economic Impact of The Coca-Cola System on South Africa, 78 Total N % 306 50.4 47 7.7 254 41.8 607 100.0 Table 62(A) Source of Funding of Expansion by Type of Business Question 30: If expansion is planned: How are you going to finance the expansion? Spaza/tuck shop N % Retained earnings from business 111 69.4 Stokvel 11 6.9 Loan from relative/friend 8 5.0 Savings (owner or household members) 15 9.4 Loan from bank 3 1.9 Loan/money fromgovernment institution 3 1.9 Loan from informal lender 4 2.5 Other 5 3.1 Shebeen N % Type of business Hawker Other N % N % 60 6 4 68.9 6.9 4.6 47 4 1 83.9 7.1 7.1 37 84.1 1 7 3 8.0 3.4 4 7.1 4 2 1 N Total % 2.3 255 21 14 73.5 6.1 4.0 9.1 4.5 30 8 8.6 2.3 3 4 6 1.2 1.2 1.7 1.8 Table 62(B) Source of Funding of Expansion by Urbanisation Question 30: If expansion is planned: How are you going to finance the expansion? N 126 10 2 14 4 Retained earnings from business Stokvel Loan from relative or friend Savings (owner or household members) Loan from bank Loan/money from government institution Loan from informal organisation/lender 3 Other 3 Urbanisation Metropolitan Urban Rural % N % N % N 68.9 53 76.8 76 80.0 255 5.5 2 2.9 9 9.5 21 1.1 5 7.2 7 7.4 14 7.7 10 14.5 6 6.3 30 2.2 2 2.9 2 2.1 8 3 4.3 3 1.6 1 1.4 4 1.6 3 4.3 6 Total % 73.5 6.1 4.0 8.6 2.3 0.9 1.2 1.7 businesses (84.1 %) and in rural areas (80.0 %). However, a wide variety of other sources such as stokvels (6.1 %), loans from relatives/friends (4.0 %), savings (8.6 %), loans from bank (2.3 %), loan from government (1.2 %), loan from informal money lenders (1.2 %) and other sources (1.7 %) were also used. Plans or intentions for future development Respondents were asked to indicate from a list of nine plans or intentions for development of their businesses which one they considered most important. Provision was also made for their own inputs under ‘other (specify)’. Table 63 shows ‘continue’ and ‘maintain business at present size’ was mentioned by 162 or 39.0 % of the 415 respondents. This was followed by ‘change informal business to formal business’ (26.3 %) and ‘move into another more profitable informal business’ (11.3 %). Economic Impact of The Coca-Cola System on South Africa, 79 Table 63(A) Most Important Plan or Intention for Development by Type of Business Question 29: What is your most important plan/intention for the development of your business in the next year? Spaza/tuck shop Shebeen Type of business Hawker Other Total N Continue and maintain business at present size 65 Change informal business to formal business 54 Move into another more profitable informal business 21 Switch to another line of business 11 Acquire new/better skills through training 17 Stop business and take up a wage job 2 Employ somebody andbecome less actively involved 4 Give business to children and retire 1 Sell business and retire 1 Other 10 Total 186 % N % N % N % 34.9 46 46.9 27 34.6 24 45.3 162 39.0 29.0 18 18.4 26 33.3 11 20.8 109 26.3 11.3 14 14.3 8 10.3 4 7.5 47 11.3 5.9 4 4.1 8 10.3 7 13.2 30 7.2 9.1 7 7.1 4 5.1 2 3.8 30 7.2 1.1 2 2.0 4 5.1 1 1.9 9 2.2 2.2 1 1.0 1 1.9 6 1.4 0.5 3 0.5 5.4 3 100.0 98 3.1 4 2 5.7 16 100.0 415 1.0 0.5 3.9 100.0 3.1 100.0 1 1.3 78 100.0 3 53 N % Table 63(B) Most Important Plan or Intention for Development by Urbanisation Question 29: What is your most important plan/intention for the development of your business in the next year? Metropolitan N % Continue and maintain business at present size 63 Change informal business to formal business 52 Move into another more profitable informal business 19 Switch to another line of business 8 Acquire new/better skills through training 12 Stop business and take up a wage job Employ somebody andbecome less actively involved 4 Give business to children and retire 3 Sell business and retire Other 5 Total 166 Urbanisation Urban Rural N % N % Total N % 38.0 49 47.1 50 34.5 162 39.0 31.3 10 9.6 47 32.4 109 26.3 11.4 4.8 7.2 18 15 2 1 17.3 14.4 1.9 1.0 10 7 16 8 6.9 4.8 11.0 5.5 47 30 30 9 11.3 7.2 7.2 2.2 2.4 1.8 1 1.0 3.0 8 100.0 104 7.7 100.0 1 1 2 3 145 0.7 0.7 1.4 2.1 100.0 6 4 2 16 415 1.4 1.0 0.5 3.9 100.0 Economic Impact of The Coca-Cola System on South Africa, 80 Financial Performance A word of caution on interpreting financial statistics is necessary. In previous studies by, inter alia, the BMR and the World Bank it was found that the average educational level of informal sector entrepreneurs is fairly low. Difficulties are experience in financial bookkeeping. In fact, bookkeeping is almost non-existent. Moreover, business finance and household needs are often so interwoven that it is difficult to distinguish between pure business finance and personal finance. Spaza shops, for example, are defined as a business operated in a section of an occupied residential home or in any other structure on a stand in an area which is zoned for residential purposes and where people live permanently. Costs of services such as electricity, water, sewerage, telephone and security are almost impossible to divide between business expenses and household expenditure. Monthly turnover Table 64 The average monthly turnover Average Monthly Turnover of Sales by of businesses amounted to 5,367.63 Type of Business and Urbanisation rand (table 64), ranging from a high Question 31: What was the turnover/sales of your of 8,285.23 rand for shebeens to business for the past month? 3,069.95 rand for hawkers. The average monthly turnover in metroType of business MeanR N politan areas (6,960.53 rand) and Spaza/tuckshop 4,991.36 279 urban areas (4,812.70 rand) is higher Shebeen 8,285.23 130 than in rural areas (3,306.13 rand). Hawker 3,069.95 112 Other 5,163.17 83 Respondents were asked the actual All respondents 5,367.63 604 amounts of their turnover and averUrbanisation ages were calculated from the Metropolitan 6,960.53 276 amounts whereas in the previous Urban 4,812.70 157 study averages were calculated by Rural 3,306.13 171 taking the mid-points of the income All respondents 5,367.63 604 categories as defined in the questionnaire. A direct comparison between the two studies is therefore not advisable. Operating cost Respondents were requested to estimate the running cost of their businesses for the last month by expenditure item. Tables 65(A) and (B) depict the estimated running cost by area, expenditure item and business type. The word of caution expressed in section 2.7 is particularly true for estimating the running cost of businesses. Table 65 shows that ‘purchase of merchandise’ amounts to an average of 2,540.60 rand, which is 63.8 % of the total running cost of 3,983.17 rand of all respondents who supplied this information. ‘Purchase of merchandise’ is followed by ‘salary and benefits to owner’ (510.54 rand or 12.8 % of total running cost) and ‘salaries and benefits to employees’ Economic Impact of The Coca-Cola System on South Africa, 81 Table 65(A) Average Monthly Operating Cost by Type of Cost and Business Question 32: Operating costs: Approximately how much did you spend last month on the following? Spaza/tuckshop Shebeen MeanR MeanR Purchase of merchandise 2,328.67 4,539.32 Salary and benefits to owner 589.08 496.09 Salaries & benefits to employees 330.05 476.47 Electricity, water and sewage 234.19 242.46 Transport for business 176.83 179.92 Telephone or fax for business 63.39 66.48 Cleaning materials for business 40.31 46.87 Storage costs of merchandise 6.22 6.77 Security of business 26.66 108.23 Other operating costs 6.15 2.07 Taxes 91.00 48.12 Interest payments 3.48 7.44 Total 3,896.03 6,220.25 Type of business Hawker Other Total MeanR MeanR MeanR 1,073.02 2,213.53 2,540.60 389.47 443.00 510.54 131.17 547.42 353.86 31.92 161.57 187.00 136.83 136.70 164.15 16.58 56.57 54.14 15.31 26.11 34.91 32.85 30.00 14.80 18.50 71.69 48.76 6.74 25.06 8.08 3.00 20.22 55.07 17.75 33.26 11.27 1,873.13 3,765.12 3,983.17 Table 65(B) Average Monthly Operating Cost by Type of Cost and Urbanisation Question 32: Operating costs: Approximately how much did you spend last month on the following? Purchase of merchandise Salary and benefits to owner Salaries & benefits to employees Electricity, water and sewage Transport for business Telephone or fax for business Cleaning materials for business Storage costs of merchandise Security of business Other operating costs Taxes Interest payments Total Metropolitan MeanR 3,396.17 556.23 511.66 205.08 213.86 77.11 30.67 23.19 74.19 9.58 28.77 21.62 5,148.14 Urbanisation Urban Rural MeanR MeanR 2,347.45 1,109.98 469.05 464.16 199.52 204.36 199.79 140.50 124.90 108.04 27.70 36.18 27.08 50.45 2.93 10.37 24.20 24.36 8.11 5.20 123.10 39.26 0.54 2.02 3,554.38 2,194.88 Economic Impact of The Coca-Cola System on South Africa, 82 Total MeanR 2,540.60 510.54 353.86 187.00 164.15 54.14 34.91 14.80 48.76 8.08 55.07 11.27 3,983.17 (353.86 rand or 8.9 %). A comparison of running costs (table 65) with turnover (table 64) shows the following surplus of income over running costs: Turnover R Type of business Spaza 4,991.36 Shebeen 8,285.23 Hawker 3,069.95 Other 5,163.17 Degree of urbanisation Metropolitan 6,960.53 Urban 4,812.70 Rural 3,306.13 Total 5,367.63 Costs R Surplus R % 3,896.03 6,220,25 1,873.13 3,765.12 1,095.33 2,064.98 1,196.82 1,398.05 21.9 24.9 39.0 27.1 5,148.14 3,554.38 2,194.88 3,983.17 1,812.39 1,258.32 1,111.25 1,384.46 26.0 26.1 33.6 25.8 The surplus of income over costs of 1,384.46 rand represents a surplus of 25.8 % on turnover. This surplus varies by type of business from 21.9 % for spazas to 39.0 % for hawkers and from 26.0 % in metropolitan to 33.6 % in rural areas. However, in actual amounts, the average surplus of 1,111.25 rand in rural areas is only 88.3 % of the 1,258.32 rand surplus in urban and 61.3 % of the surplus of 1,812.39 rand in metropolitan areas. Coca-Cola Products Support by The Coca-Cola Company Businesses were requested to indicate any support received from The Coca-Cola Company. The response is shown in tables 66(A) and 65(B) by type of business and by degree of urbanisation respectively. Table 66(A) Support by the Coca-Cola Company by Type of Business Question 33: Did the Coca-Cola Company help with the following? Product delivery Equipment support Kiosks Push carts Ice boxes Trolleys Short-term credit Signage Other Type of business Spaza/tuck shop Shebeen Hawker Other Yes No Yes No Yes No Yes No % % % % % % % % 34.7 65.3 24.1 75.9 11.0 89.0 28.9 71.1 26.6 73.4 21.1 78.9 10.7 89.3 27.8 72.2 0.8 99.2 0.8 99.2 3.4 96.6 2.4 97.6 3.1 96.9 2.3 97.7 11.7 88.3 1.2 98.8 2.8 97.2 3.0 97.0 20.8 79.2 4.7 95.3 2.7 97.3 1.5 98.5 13.4 86.6 3.6 96.4 0.8 99.2 1.5 98.5 100.0 100.0 27.1 72.9 17.1 82.9 10.8 89.2 19.5 80.5 3.7 96.3 100.0 5.9 94.1 100.0 Economic Impact of The Coca-Cola System on South Africa, 83 Total Yes No % % 27.1 72.9 22.5 77.5 1.5 98.5 4.4 95.6 6.9 93.1 4.7 95.3 0.7 99.3 20.6 79.4 2.8 97.2 Table 66(B) Support by the Coca-Cola Company by Urbanisation Question 33: Did the Coca-Cola Company help with the following? Product delivery Equipment support Kiosks Push carts Ice boxes Trolleys Short-term credit Signage Other Metropolitan Yes No % % 26.2 73.8 24.6 75.4 1.2 98.8 5.4 94.6 6.8 93.2 5.1 94.9 1.2 98.8 20.6 79.4 5.2 94.8 Urbanisation Urban Rural Yes No Yes No % % % % 38.3 61.7 18.5 81.5 35.6 64.4 6.0 94.0 2.6 97.4 1.4 98.6 5.3 94.7 1.4 98.6 6.8 93.2 7.0 93.0 5.2 94.8 3.4 96.6 100.0 100.0 18.3 81.7 22.4 77.6 100.0 100.0 Total Yes No % % 27.1 72.9 22.5 77.5 1.5 98.5 4.4 95.6 6.9 93.1 4.7 95.3 0.7 99.3 20.6 79.4 2.8 97.2 Table 66(A) shows the support by the Company for all the business types. It is evident that The Coca-Cola Company delivered Coca-Cola products to 27.1 % of all the businesses while 22.5 % received equipment support and 20.6 % were supported with signage. Other forms of support were limited. Average sales per day of Coca-Cola products Table 67(A) shows the average sales per day of Coca-Cola products during winter by type of business and table 67(B) by degree of urbanisation. Tables 68(A) and (B) show similar information for summer. The averages in the tables relate only to those respondents who indicated that they sell the specific product referred to. The 70 spaza shops who indicated that they sell 500 ml returnable glass bottles during winter, sell an average of 15.3 bottles per day per business (table 67(A)) while the 73 who said they sell the product during summer (table 68(A)) sell an average of 29.6 bottles. The 111 respondents in metropolitan areas sell an average 20.6 500 ml returnable glass bottles per day during winter (table 67(A)) and 40.4 during summer (table 67(B)). Mark-up on Coca-Cola products Respondents were asked to give the price at which they buy and sell products in which they trade by type of Coca-Cola product. Table 69(A) shows the cost price, selling price and mark-up of Coca-Cola products by type of business and table 69(B) by degree of urbanisation. There is no mark-up consistency among specific businesses for any of the different Coca-Cola products. The number of businesses that trade in some of the products listed in table 69 is also very low. The mark-up percentage varies from a low of 23.0 % among the relatively few shebeens (5) who sell 200 ml cans to 81.8 % by the single Economic Impact of The Coca-Cola System on South Africa, 84 Table 67(A) Average Number of Products Sold During Winter by Type of Product and Business Question 34: On average, how many units of Coca-Cola products do you sell per day? Type of business Spaza/tuck shop Shebeen Hawker Other N Mean N Mean N Mean N Mean 500 ml returnable glass bottle 70 15.29 27 15.19 36 35.56 21 11.90 300 ml non-returnable glassbottle 53 20.00 16 73.75 22 27.27 17 17.06 250 ml returnable glass bottle 12 10.00 4 12.50 4 12.50 6 10.00 200 ml returnable glass bottle 5 15.00 3 13.33 1 10.00 2 15.00 2 litre non-returnable plastic bottle 8 10.00 1 10.00 3 10.00 1.5 litre non-returnable plasticbottle 14 22.86 1 20.00 2 10.00 3 10.00 1.5 litre returnable plastic bottle 61 25.90 32 42.19 3 13.33 11 11.82 1.25 litre returnable glass bottle 170 16.29 90 26.67 23 14.78 36 29.44 1 litre non-returnable plastic bottle 52 15.38 18 10.56 12 10.00 11 10.91 750 ml non-returnable plasticbottle 7 11.43 4 12.50 450 ml can 48 13.33 20 13.00 33 15.76 16 17.50 340 ml can 130 16.54 61 41.80 85 20.12 47 22.98 250 ml can 3 16.67 1 120.00 6 10.00 4 12.50 200 ml can 3 16.67 3 13.33 1 20.00 2 20.00 1 litre tetra (box) 6 15.00 3 10.00 2 15.00 1 10.00 200 ml tetra (box) 2 10.00 1 30.00 200 ml pouch 28 15.36 1 10.00 7 15.71 4 12.50 N 154 108 26 11 12 20 107 319 93 11 117 323 14 9 12 3 40 Total Mean 19.55 28.98 10.77 14.55 10.00 19.50 28.98 20.60 13.23 11.82 14.53 23.19 20.00 16.67 13.33 16.67 15.00 Table 67(B) Average Number of Products Sold During Winter by Type of Product and Urbanisation Question 34: On average, how many units of Coca-Cola products do you sell per day? 500 ml returnable glass bottle 300 ml non-returnable glassbottle 250 ml returnable glass bottle 200 ml returnable glass bottle 2 litre non-returnable plastic bottle 1.5 litre non-returnable plasticbottle 1.5 litre returnable plastic bottle 1.25 litre returnable glass bottle 1 litre non-returnable plastic bottle 750 ml non-returnable plasticbottle 450 ml can 340 ml can 250 ml can 200 ml can 1 litre tetra (box) 250 ml tetra (box) 200 ml tetra (box) 200 ml pouch Metropolitan N Mean 111 20.63 66 34.85 21 10.95 5 18.00 9 10.00 13 23.85 84 31.79 152 23.62 4 32.50 3 10.00 84 13.81 219 28.08 7 10.00 3 16.67 8 12.50 2 26 10.00 16.15 Urbanisation Urban Rural N Mean N Mean 35 17.43 8 13.75 13 20.00 29 19.66 2 10.00 3 10.00 6 11.67 2 10.00 1 10.00 6 11.67 1 10.00 20 17.00 3 30.00 71 22.82 96 14.17 45 11.78 44 12.95 2 10.00 6 13.33 15 17.33 18 15.56 56 12.50 48 13.33 3 50.00 4 15.00 1 20.00 5 16.00 4 15.00 12 13.33 10 14.00 1 4 Economic Impact of The Coca-Cola System on South Africa, 85 30.00 10.00 Total N Mean 154 19.55 108 28.98 26 10.77 11 14.55 12 10.00 20 19.50 107 28.97 319 20.60 93 13.23 11 11.82 117 14.53 323 23.19 14 20.00 9 16.67 3 40 16.67 15.00 Table 68(A) Average Number of Products Sold During Summer by Type of Product and Business Question 34: On average, how many units of Coca-Cola products do you sell per day? Spaza/tuck N 500 ml returnable glass bottle 73 300 ml non-returnable glassbottle 54 250 ml returnable glass bottle 13 200 ml returnable glass bottle 6 2 litre non-returnable plastic bottle 8 1.5 litre non-returnable plasticbottle 14 1.5 litre returnable plastic bottle 59 1.25 litre returnable glass bottle 170 1 litre non-returnable plastic bottle 52 750 ml non-returnable plasticbottle 7 450 ml can 50 340 ml can 139 250 ml can 3 200 ml can 2 1 litre tetra (box) 6 250 ml tetra (box) 1 200 ml tetra (box) 2 200 ml pouch 33 Type of Business shop Shebeen Hawker Other Total Mean N Mean N Mean N Mean N Mean 29.59 26 37.31 35 65.71 22 21.36 156 37.82 37.04 15 104.67 22 65.45 16 48.75 107 54.11 21.54 4 32.50 4 22.50 6 23.33 27 23.70 25.00 3 23.33 1 10.00 2 35.00 12 25.00 15.00 2 10.00 4 10.00 14 12.86 46.43 1 20.00 2 10.00 3 16.67 20 37.00 55.59 32 65.00 3 20.00 11 17.27 105 53.43 39.71 91 56.81 23 29.57 37 63.24 321 46.54 30.19 18 17.78 12 13.33 11 14.55 93 23.76 20.00 4 32.50 11 24.55 24.60 20 29.00 34 32.06 16 38.13 120 29.25 31.73 61 79.67 86 42.56 47 42.34 333 44.80 16.67 1 240.00 6 16.67 4 17.50 14 32.86 20.00 3 26.67 1 40.00 2 25.00 8 26.25 21.67 3 16.67 2 30.00 1 20.00 12 21.67 10.00 1 10.00 2 10.00 15.00 1 60.00 3 30.00 35.15 3 33.33 7 31.43 4 42.50 47 35.11 Table 68(B) Average Number of Products Sold During Summer by Type of Product and Urbanisation Question 34: On average, how many units of Coca-Cola products do you sell per day? 500 ml returnable glass bottle 300 ml non-returnable glassbottle 250 ml returnable glass bottle 200 ml returnable glass bottle 2 litre non-returnable plastic bottle 1.5 litre non-returnable plasticbottle 1.5 litre returnable plastic bottle 1.25 litre returnable glass bottle 1 litre non-returnable plastic bottle 750 ml non-returnable plasticbottle 450 ml can 340 ml can 250 ml can 200 ml can 1 litre tetra (box) 250 ml tetra (box) 200 ml tetra (box) 200 ml pouch Metropolitan N Mean 111 40.36 64 64.69 22 24.55 6 28.33 11 10.91 13 48.46 83 59.40 152 50.59 4 50.00 3 23.33 83 31.08 224 54.55 7 18.57 3 40.00 1 2 27 10.00 15.00 32.96 Urbanisation Urban Rural N Mean N Mean 37 32.97 8 25.00 14 44.29 29 35.52 2 20.00 3 20.00 6 21.67 2 25.00 1 10.00 6 13.33 1 30.00 19 30.00 3 36.67 73 61.51 96 28.75 45 23.33 44 21.82 2 15.00 6 28.33 18 32.78 19 17.89 59 26.27 50 23.00 3 93.33 4 12.50 5 18.00 8 25.00 4 15.00 1 10.00 1 60.00 16 44.38 4 12.50 Economic Impact of The Coca-Cola System on South Africa, 86 Total N Mean 156 37.82 107 54.11 27 23.70 12 25.00 14 12.86 20 37.00 105 53.43 321 46.54 93 23.76 11 24.55 120 29.25 333 44.80 14 32.86 8 26.25 12 21.67 2 10.00 3 30.00 47 35.11 Table 69(A) Cost Price. Selling Price and Mark-Up of Coca-Cola Products by Type of Business Question 35: What is the cost and selling price per unit for the following products? Spaza/tuckshop N Rand or % 500 ml returnable glass bottle Cost price 58 R2.61 Selling price 59 R3.69 Mark-up % 41.4 Type of business Shebeen Hawker Other N Rand N Rand N Rand or % or % or % N Total Rand or % 20 20 R2.58 R3.90 51.3 27 27 R2.82 R4.09 45.0 19 19 R2.54 R3.95 55.5 124 125 R2.64 R3.85 45.8 300 ml non-returnable glass bottle Cost price 47 R1.64 Selling price 47 R2.36 Mark-up % 43.9 9 9 R1.75 R2.78 58.3 16 16 R1.60 R2.24 40.1 11 11 1.64 R2.36 44.2 83 83 R1.64 R2.38 44.9 250 ml returnable glass bottle Cost price 14 Selling price 14 Mark-up % R2.88 R4.20 46.5 2 2 R1.69 R2.10 24.6 3 3 R1.76 R2.40 36.6 5 5 R2.57 R3.82 48.6 24 24 R2.57 R3.73 44.9 200 ml returnable glass bottle Cost price 3 Selling price 3 Mark-up % R2.02 R2.26 32.2 2 2 R1.38 R2.35 70.9 1 1 R1.10 R2.00 81.8 1 1 R1.60 R2.00 25.0 7 7 R1.64 R2.39 45.2 2l non-returnable plastic bottle Cost price 10 Selling price 9 Mark-up % 1.5l non-returnable plastic bottle R7.53 R9.22 22.4 4 4 R6.57 R8.62 31.2 2 2 R5.91 R7.75 31.1 3 3 R7.73 R9.99 29.3 19 18 R7.19 R9.05 25.9 Cost price Selling price Mark-up R5.17 R7.12 37.6 6 7 R4.64 R6.16 32.8 1 1 R4.48 R7.00 56.3 2 1 R4.98 R7.00 40.6 16 18 R4.90 R6.73 37.3 1.5l returnable plastic bottle Cost price 46 Selling price 52 Mark-up % R4.89 R6.58 34.4 17 22 R4.74 R6.78 42.9 2 2 R5.11 R6.90 35.0 9 10 R4.95 R6.74 36.3 74 86 R4.87 R6.65 36.6 1.25l returnable glass bottle Cost price Selling price Mark-up % R4.38 R5.81 32.8 87 87 R4.38 R5.89 34.6 22 26 R4.45 R5.89 32.2 26 27 R4.44 R5.91 33.1 298 304 R4.39 R5.85 33.3 (cont) 7 9 % 163 164 Economic Impact of The Coca-Cola System on South Africa, 87 Table 69(A) (Continued) Spaza/tuckshop N Rand or % 1l non-returnable plastic bottle Cost price 37 Selling price 44 Mark-up % 450 ml can Cost price 53 Selling price 53 Mark-up % 340 ml can Cost price 111 Selling price 115 Mark-up % 250 ml can Cost price 6 Selling price 4 Mark-up % 200 ml can Cost price 4 Selling price 4 Mark-up % 1l tetra (box) Cost price 2 Selling price 2 Mark-up % 200 ml tetra (box) Cost price 3 Selling price 3 Mark-up % 200 ml pouch Cost price 25 Selling price 25 Mark-up % Type of business Shebeen Hawker Other N Rand N Rand N Rand or % or % or % N Total Rand or % R3.98 R5.61 41.2 19 20 R3.92 R5.71 45.7 11 12 R3.89 R5.71 46.9 7 9 R3.90 R5.78 48.1 74 85 R3.94 R5.67 43.8 R2.84 R3.80 33.5 23 23 R2.86 R3.88 35.6 30 31 R2.90 R3.91 34.7 13 13 R2.93 R3.82 30.3 119 120 R2.87 R3.84 33.9 R2.79 R3.79 35.5 44 46 R2.76 R3.90 41.4 74 79 2.89 R3.92 35.9 43 45 R2.97 R3.89 31.2 272 285 R2.84 R3.86 35.9 R3.55 R1.91 28.4 1 5 R3.55 2.78 23.0 3 0 R3.33 - 1 0 R3.50 - 11 9 R3.48 R2.39 24.9 R1.91 R2.46 28.4 5 5 R2.78 R3.42 23.0 0 0 - 0 0 - 9 9 R2.39 R2.99 24.9 R3.88 R5.00 28.9 0 0 - 1 1 R3.76 R5.70 51.6 1 1 R3.76 R5.00 33.0 4 4 R3.82 R5.18 35.5 R0.89 R1.27 42.3 1 1 R0.92 R1.30 41.3 0 0 - 0 1 R1.30 - 4 5 R0.90 R1.28 42.6 R0.90 R1.30 44.1 2 2 R0.94 R1.30 38.3 8 8 R0.88 R1.28 45.1 2 2 R0.94 R1.30 38.3 37 37 R0.90 R.130 43.7 Economic Impact of The Coca-Cola System on South Africa, 88 Table 69(B) Cost Price. Selling Price and Mark-Up of Coca-Cola Products by Degree of Urbanisation Question 35: What is the cost and selling price per unit for the following products? Metropolitan N Rand or % Degree of urbanisation Urban Rural Total N Rand N Rand N Rand or % or % or % 500 ml returnable glass bottle Cost price Selling price Mark-up % 81 82 R2.71 R3.93 45.8 36 36 R2.35 R3.44 46.4 7 7 R3.42 R4.93 43.9 124 125 R2.64 R3.85 45.8 300 ml non-returnable glass bottle Cost price Selling price Mark-up % 46 46 R1.60 R2.34 46.5 12 12 R1.67 R2.31 38.4 25 25 R1.71 R2.49 45.2 83 83 R1.64 R2.38 44.9 250 ml returnable glass bottle Cost price Selling price Mark-up % 15 15 R3.07 R4.59 49.5 7 7 R181 R2.17 20.0 2 2 R1.48 R2.65 79.1 24 24 R2.58 R3.73 44.9 200 ml returnable glass bottle Cost price Selling price Mark-up % 4 4 R1.49 R2.30 54.9 1 1 R2.68 R3.00 12.4 2 2 R1.45 R2.25 55.7 7 7 R1.64 R2.39 45.2 2l non-returnable plastic bottle Cost price Selling price Mark-up % 16 16 R7.04 R8.93 26.9 3 2 R8.00 R9.99 24.9 0 0 - 19 18 R7.19 R9.05 25.9 1.5l non-returnable plastic bottle Cost price Selling price Mark-up % 11 14 R4.79 R6.62 38.3 5 4 R5.16 R7.13 38.1 0 0 - 16 18 R4.90 R6.73 37.3 1.5l returnable plastic bottle Cost price Selling price Mark-up % 55 67 R4.78 R6.66 39.2 18 18 R5.19 R6.73 29.6 1 1 R4.17 R5.50 31.9 74 86 R4.88 R6.65 36.6 1.25l returnable glass bottle Cost price Selling price Mark-up % 138 139 R4.40 R5.82 32.4 76 76 R4.31 R5.76 33.6 84 89 R4.46 R5.99 34.4 298 304 R4.39 R5.85 33.3 (cont) Economic Impact of The Coca-Cola System on South Africa, 89 Table 69(B) (Continued) Metropolitan N Rand or % 1l non-returnable plastic bottle Cost price Selling price Mark-up % 8 8 R4.02 R5.44 35.3 34 42 R3.89 R5.56 43.0 32 35 R3.98 R5.85 47.1 74 85 R3.94 R5.67 43.8 - 1 1 R3.00 R3.50 16.7 6 6 R4.22 R5.80 37.5 7 7 R4.04 R5.47 35.3 86 87 R2.83 R3.86 36.2 25 25 R2.99 R3.78 26.4 8 8 R2.92 R3.89 33.2 119 120 R2.88 R3.84 33.9 186 195 R2.83 R3.91 38.0 48 52 R2.90 R3.79 30.5 38 38 R2.81 R3.71 32.1 272 285 R2.84 R3.86 35.9 5 5 R2.52 R3.50 39.1 4 4 R3.03 R3.58 18.0 1 2 R1.88 R3.25 72.9 10 11 R2.66 R3.48 31.0 2 2 R1.68 R2.15 28.0 5 5 R2.79 R3.44 23.5 2 2 R2.13 R2.70 27.1 9 9 R2.39 R2.99 24.9 3 3 R0.89 R1.27 42.3 1 1 R0.92 R1.30 41.3 0 1 R1.30 4 5 R0.90 R1.28 42.6 22 22 R0.87 R1.29 48.3 12 12 R0.97 R1.32 35.3 3 3 R0.88 R1.30 47.7 37 37 R0.90 R1.30 43.7 750 ml non-returnable plastic bottle Cost price 0 Selling price 0 Mark-up % 450 ml can Cost price Selling price Mark-up 340 ml can Cost price Selling price Mark-up 250 ml can Cost price Selling price Mark-up 200 ml can Cost price Selling price Mark-up 200 ml tetra (box) Cost price Selling price Mark-up 200 ml pouch Cost price Selling price Mark-up % % % % % % Degree of urbanisation Urban Rural Total N Rand N Rand N Rand or % or % or % Economic Impact of The Coca-Cola System on South Africa, 90 hawker who sells 200 ml returnable glass bottles. However, in general, it seems that the percentage mark-up among shebeens is higher than among the other businesses. Table 69(B) shows similar inconsistency in the percentage mark-up by area. The mark-up varies from a low of 12.4 % for one respondent in an urban area who sells 200 ml returnable glass bottles to a high of 79.1 % for two respondents in rural areas who sell 250 ml returnable glass bottles. Besides the results being affected by the small number of respondents, it is also possible that respondents could have mistakenly related the cost price and price of a specific type of Coca-Cola product to the selling price of another. Marketing And Advertising Table 70(A) shows that all types of businesses included in the study use signboards as a marketing/advertising tool. The percentages for those with signboards vary from 16.8 % for hawkers to 46.8 % for spazas. However, word of mouth is the most general method of marketing/advertising mentioned by respondents (55.8 %), while only a few have TVs in their shops (6.3 %), use brochures, flyers and/or pamphlets (7.1 %) and/or offer specials and promotions (8.3 %). More than half the respondents with Table 70(A) Marketing/Advertising Methods of Promotion by Type of Business Question 36: What type of marketing/advertising methods do you use to promote your business? Type of business Spaza/tuck shop Shebeen Hawker N % N % N % Signboard(s) 159 46.8 50 29.4 25 16.8 Brochures, flyers, pamphlets 30 8.8 10 5.9 7 4.7 Word of mouth 160 47.1 100 58.8 107 71.8 TV in shop for customers 19 5.6 18 10.6 2 1.3 Music in shop for customers 46 13.5 62 36.5 3 2.0 Posters 52 15.3 27 15.9 3 2.0 Offering of specials and promotions 28 8.2 23 13.5 6 4.0 Other N % 29 27.9 7 6.7 59 56.7 9 8.7 11 10.6 13 12.5 6 5.8 Total N % 263 34.5 54 7.1 426 55.8 48 6.3 122 16.0 95 12.5 63 8.3 Table 70(B) Marketing/Advertising Methods of Promotion by Urbanisation Question 36: What type of marketing/advertising methods do you use to promote your business? Urbanisation Signboard(s) Brochures, flyers, pamphlets Word of mouth TV in shop for customers Music in shop for customers Posters Offering of specials and promotions Metropolitan Urban N % N % 145 36.7 69 37.9 26 6.6 16 8.8 230 58.2 104 57.1 21 5.3 10 5.5 55 13.9 23 12.6 37 9.4 20 11.0 33 8.4 16 8.8 Rural N % 49 26.3 12 6.5 92 49.5 17 9.1 44 23.7 38 20.4 14 7.5 Economic Impact of The Coca-Cola System on South Africa, 91 Total N % 263 34.5 54 7.1 426 55.8 48 6.3 122 16.0 95 12.5 63 8.3 Table 71(A) Assistance by Coca-Cola in Marketing/Advertising by Type of Business Question 36: What type of marketing/advertising methods do you use to promote your business? Type of business Spaza/tuck shop Shebeen Hawker Other N 21 3 5 % 42.0 30.0 5.0 N 16 2 3 % 64.0 28.6 2.8 N 18 2 1 2 10 7 3.2 37.0 30.4 6 2 100.0 33.3 1 7 1 Total N Signboard(s) 100 Brochures, flyers, pamphlets 7 Word of mouth 4 TV in shop for customers 4 Music in shop for customers 4 Posters 27 Offering of specials and promotions 8 % 62.9 23.3 6.7 21.1 8.7 51.9 28.6 % N 62.1 155 28.6 14 1.7 13 4 9.1 7 53.8 50 16.7 18 % 58.9 25.9 2.8 8.3 5.7 52.6 28.6 Table 71(B) Assistance by Coca-Cola in Marketing/Advertising by Urbanisation Question 36: What type of marketing/advertising methods do you use to promote your business? Urbanisation Signboard(s) Brochures, flyers, pamphlets Word of mouth TV in shop for customers Music in shop for customers Posters Offering of specials and promotions Metropolitan N % 75 51.7 8 30.8 8 3.5 3 14.3 3 5.5 31 83.8 11 33.3 Urban N % 59 85.5 5 31.3 4 3.8 1 10.0 4 17.4 12 60.0 4 25.0 Rural N % 21 42.9 1 8.3 1 1.1 7 3 18.4 21.4 N 155 14 13 4 7 50 18 Total % 58.9 25.9 3.1 8.3 5.7 52.6 28.6 signboards (58.9 %) and posters (52.6 %) said they received assistance from The CocaCola Companyto put these up (table 71). Business Problems Table 72 shows the most important problems experienced by businesses covered in the study. The table shows that 211 or 43.7 % of the 483 factors mentioned were ‘high crime rate, robbery and burglary’. This was followed by ‘severe competition/small number of customers’ (22.6 %) and shortage/limited trading stock and finance’ (19.3 %). ‘High crime rate’ tops the list for all types of businesses (table 72(A)) but ‘severe competition or small number of customers’ (33.8 %), ‘shortage of/limited trading stock and finance’ (31.6 %) and ‘lack of adequate space/equipment’ (26.3 %) had higher percentages in the urban areas than crime (21.1 % in table 72(B)). Economic Impact of The Coca-Cola System on South Africa, 92 Table 72(A) Problems Experienced by Type of Business Question 36: What type of marketing/advertising methods do you use to promote your business? Type of business Spaza/tuck shop Shebeen Hawker Other N % N % N % N % High crime rate, robbery, burglary 95 Severe competition/small number of customers 49 Shortage/limited trading stock and finance 40 Allowing too much credit/ bad debt 43 Lack of adequate space/ equipment 42 Unavailable/expensive transport 22 Lack of water, electricity/poor infrastructure 15 High trading stock prices 13 Other 15 Total N % 42.8 56 51.4 36 38.7 24 40.7 211 43.7 22.1 18 16.5 28 30.1 14 23.7 109 22.6 18.0 16 14.7 21 22.6 16 27.1 93 19.3 19.4 32 29.4 6 6.5 7 11.9 88 18.2 18.9 13 11.9 18 19.4 13 22.0 86 17.8 9.9 10 9.2 8 8.6 4 6.8 44 9.1 6.8 5.9 6.8 5 2 6 4.6 1.8 5.5 3 5 17 3.2 5.4 18.3 3 1 6 5.1 1.7 10.2 26 21 44 5.4 4.3 9.1 Table 72(B) Problems Experienced by Urbanisation Question 37: Indicate the three most important problems experienced by your business Urbanisation Metropolitan Urban N % N % High crime rate, robbery, burglary 125 50.6 28 21.1 Severe competition/small number of customers 52 21.1 45 33.8 Shortage/limited trading stock and finance 28 11.3 42 31.6 Allowing too much credit/bad debt 53 21.5 14 10.5 Lack of adequate space/equipment 42 17.0 35 26.3 Unavailable/expensive transport 21 8.5 11 8.3 Lack of water, electricity/poor infrastructure 6 2.4 17 12.8 High trading stock prices 16 6.5 5 3.8 Other 22 8.9 14 10.5 Rural Total % N % 56.3 211 43.7 11.7 109 22.6 22.3 93 19.3 20.4 88 18.2 8.7 86 17.8 11.7 44 9.1 2.9 26 5.4 21 4.3 8 7.8 44 9.1 N 58 12 23 21 9 12 3 Crime Table 73 shows that 29.4 % of the respondents said they had been victims of crime during the preceding twelve months. The percentage for shebeens (32.5 %) and hawkers (30.1 %) is slightly higher than for spazas (28.8 %) and ‘other’ businesses (25.2 % in table 73(A)). Relatively more respondents in rural areas (34.4 %) than in metropolitan (31.1 %) and urban areas (20.6 %) have been victims (table 73(B)). Economic Impact of The Coca-Cola System on South Africa, 93 Table 73(A) Victim of Crime During the Past Twelve Months by Type of Business Question 38: Were you a victim of crime during the past twelve months? Type of business Spaza/tuck shop Shebeen Hawker Other Total N % N % N % N % N % 97 28.8 54 32.5 44 30.1 26 25.2 221 29.4 240 71.2 112 67.5 102 69.9 77 74.8 531 70.6 337 100.0 166 100.0 146 100.0 103 100.0 752 100.0 Yes No Total Table 73(B) Victim of Crime During the Past Twelve Months by Urbanisation Question 38: Were you a victim of crime during the past twelve months? Urbanisation Metropolitan N % 121 31.1 268 68.9 389 100.0 Yes No Total Urban Rural Total N % N % N % 37 20.6 63 34.4 221 29.4 143 79.4 120 65.6 531 70.6 180 100.0 183 100.0 752 100.0 Table 74 shows the type of crime respondents have experienced. Of the 221 respondents who experienced crime, 69.2 % said they had break-ins and property theft, 13.6 % vandalism, 15.4 % employee theft and 29.9 % physical attacks. Environmental Issues Table 75(A) shows the usage of Coca-Cola containers after consumption by type of business and table 75(B) by degree of urbanisation. More than a quarter (28.6 %) of the respondents said they re-use the empty containers for, for example, toys and water containers. A further 36.0 % said they collect them for recycling while 35.3 % discard them. A full 70.0 % of the respondents indicated that there are no recycling depots or centres in their vicinity (table 76). This is especially the case for rural areas where the percentage indicating a lack of recycling depots or centres in their vicinity is 81.4 % (table 76(B)). Customers Number of customers Table 77 shows the percentage of businesses by customer numbers. More than a quarter (28.0 %) said they serve fewer than 50 customers a week while 28.4 % said they serve more than 100 customers a week. Hawkers generally serve more customers (31.5 Economic Impact of The Coca-Cola System on South Africa, 94 Table 74(A) Type of Crime Experienced by Type of Business Question 39: If YES, list the type(s) of criminal activity (-ies) encountered. Spaza/tuck shop Shebeen Type of business Hawker Other Total N Break-ins and property theft 77 Vandalism 13 Employee theft 15 Physical attacks 29 Extortion Employees were subject to crime when arriving at/leaving from work 7 Other 3 % 79.4 13.4 15.5 29.9 N 40 7 9 13 1 % 74.1 13.0 16.7 24.1 1.9 N 18 6 5 19 1 % 40.9 13.6 11.4 43.2 2.3 N 18 4 5 5 % 69.2 15.4 19.2 19.2 N 153 30 34 66 2 % 69.2 13.6 15.4 29.9 0.9 7.2 3.1 4 1 7.4 1.9 1 1 2.3 2.3 1 1 3.8 3.8 13 6 5.9 2.7 Table 74(B) Type of Crime Experienced by Urbanisation Question 39: If YES, list the type(s) of criminal activity (-ies) encountered. Metropolitan N % Break-ins and property theft 79 65.3 Vandalism 16 13.2 Employee theft 24 19.8 Physical attacks 49 40.5 Extortion 1 0.8 Employees were subject to crime when arriving at/leaving from work 7 5.8 Other 3 2.5 Urbanisation Urban Rural N % N % 28 75.7 46 73.0 6 16.2 8 12.7 2 5.4 8 12.7 2 5.4 15 23.8 1 1.6 6 3 9.5 8.1 Total N % 153 69.2 30 13.6 34 15.4 66 29.9 2 0.9 13 6 5.9 2.7 Table 75(A) Usage of Coca-Cola Products After Consumption by Type of Business Question 40: For what purpose is packaging material of Coca-Cola products used after consumption? Type of business Spaza/tuck shop Shebeen Hawker Other Total N Re-used (eg toys, water holders) 97 Collected for recycling 128 Discarded 104 Other 18 % 28.5 37.6 30.6 5.3 N 51 61 49 7 % 30.0 35.9 28.8 4.1 N 44 51 71 5 % 29.5 34.2 47.7 3.4 N 26 35 45 10 Economic Impact of The Coca-Cola System on South Africa, 95 % 25.0 33.7 43.3 9.6 N 218 275 269 40 % 28.6 36.0 35.3 5.2 Table 75(B) Usage of Coca-Cola Products After Consumption by Urbanisation Question 40: For what purpose is packaging material of Coca-Cola products used after consumption? Urbanisation Urban Rural N % N % 82 45.1 40 21.5 29 15.9 77 41.4 62 34.1 48 25.8 23 12.6 2 1.1 Metropolitan N % Re-used (eg toys, water holders) 96 24.3 Collected for recycling 169 42.8 Discarded 159 40.3 Other 15 3.8 Total N % 218 28.6 275 36.0 269 35.3 40 5.2 Table 76(A) Recycling Depot or Centre in Vicinity by Type of Business Question 41: Is there a recycling depot/centre in your vicinity? Type of business Spaza/tuck shop Shebeen Hawker N % N % N % 94 28.3 50 29.9 46 31.5 238 71.7 117 70.1 100 68.5 332 100.0 167 100.0 146 100.0 Yes No Total Other N % 34 33.7 67 66.3 101 100.0 Total N % 224 30.0 522 70.0 746 100.0 Table 76(B) Recycling Depot or Centre in Vicinity by Urbanisation Question 41: Is there a recycling depot/centre in your vicinity? Yes No Total Metropolitan N % 137 35.8 246 64.2 383 100.0 Urbanisation Urban Rural N % N % 53 29.4 34 18.6 127 70.6 149 81.4 180 100.0 183 100.0 Total N % 224 30.0 522 70.0 746 100.0 Table 77(A) Distribution of Businesses by Number of Customers and by Type of Business Question 42: How many customers do you serve per week? Less than 50 50 - 100 More than 100 Total Spaza/tuck shop Shebeen N % N % 87 25.7 44 25.9 154 45.6 79 46.5 97 28.7 47 27.6 338 100.0 170 100.0 Type of business Hawker Other N % N % 43 28.9 39 37.9 59 39.6 39 37.9 47 31.5 25 24.3 149 100.0 103 100.0 Economic Impact of The Coca-Cola System on South Africa, 96 Total N % 213 28.0 331 43.6 216 28.4 760 100.0 Table 77(B) Distribution of Businesses by Number of Customers and by Urbanisation Question 42: How many customers do you serve per week? Metropolitan N % 79 20.1 179 45.4 136 34.5 394 100.0 Less than 50 50 - 100 More than 100 Total Urbanisation Urban Rural N % N % 56 31.1 78 41.9 83 46.1 69 37.1 41 22.8 39 21.0 180 100.0 186 100.0 Total N % 213 28.0 331 43.6 216 28.4 760 100.0 Table 78(A) Distribution of Businesses by Customer Spending and Type of Business Question 43: How much does a customer spend on average during a visit to your shop? Less than R10 R10 – R25 More than R25 Total Type of business Spaza/tuck shop Shebeen Hawker N % N % N % N 78 23.1 23 13.6 72 48.3 39 205 60.8 86 50.9 67 45.0 45 54 16.0 60 35.5 10 6.7 18 337 100.0 169 100.0 149 100.0 102 Other % 38.2 44.1 17.6 100.0 Total N % 212 28.0 403 53.2 142 18.8 757 100.0 Table 78(B) Distribution of Businesses by Customer Spending and Urbanisation Question 43: How much does a customer spend on average during a visit to your shop? Metropolitan N % 99 25.2 215 54.7 79 20.1 393 100.0 Less than R10 R10 – R25 More than R25 Total Urbanisation Urban Rural N % N % 46 25.6 67 36.4 96 53.3 92 50.0 38 21.1 25 13.6 180 100.0 184 100.0 Total N % 212 28.0 403 53.2 142 18.8 757 100.0 % said they serve more than 100) than the other types of businesses (table 77(A) while the customer base in metropolitan areas (34.5 % for 100+ customers) is larger than in urban and rural areas. Customer spending Table 78 shows the distribution of businesses by customer spending during a visit. More than a quarter (28.0 %) said their customers spend on average less than 10 rand per visit while 53.2 % said their customers spend on average between 10 rand and 25 rand per visit. The percentage of hawkers (48.3 %) who said their customers spent less than 10 rand per visit is relatively high (table 78(A)) while the percentage of rural Economic Impact of The Coca-Cola System on South Africa, 97 respondents with customers who spend less than 10 rand is relatively high (36.4 %) in comparison with the other areas. Customer profile Table 79(A) shows that the businesses included in the study have more male (53.2 %) than female (46.8 %) customers. This is especially the case for shebeens (64.0 % male customers) while the opposite is true for spazas (51.2 % female customers). The businesses generally also serve more adults (56.5 %) than children (43.5 %) except for spazas (52.7 % children). The average number of households that buy regularly at the businesses is estimated by respondents as 28.3 households and varies from 22.2 for ‘other’ businesses to 34.6 for hawkers. Overall, the average number of people served regularly is 52.7 persons. Surprisingly this number is higher for ‘other’ businesses (64.3) than for spazas (55.9), shebeens (39.2) and hawkers (53.3) whereas the number of households for ‘other’ businesses is lower than for spazas, shebeens and hawkers. The reason may be that they have more family members that they serve regularly while that is not the case with the other businesses. An average of 8.2 households are allowed to buy on credit while the average number of persons allowed to buy on credit is 10.8. The total amount of credit outstanding at the time of the survey date per business varied from 142.63 rand for hawkers to 908.78 rand for shebeens with an average of 745.84 rand for all respondents who allow credit purchases. Table 79(A) Customer Profile by Type of Business Question 44: Out of every ten people that you serve, how many on average are male or female? Question 45: Out of every ten people that you serve, how many on average are adults and children? Question 46: Give an estimate of the number of households or persons that regularly buy at this shop. Question 49: State total amount of credit outstanding (owing by all customers) at this moment. Gender Male Female % % Age Adult Child % % Spaza/tuckshop Shebeen 48.7 64.0 51.3 36.0 47.3 52.7 Number of households that regularly buy at this shop 28.9 Number of persons that regularly buy at this shop 55.9 Number of households allowed to buy on credit 8.5 Number of persons allowed to buy on credit 11.1 Total amount of credit outstanding 873.10 rand Hawker 51.5 48.5 Other 53.2 46.8 Total 53.2 46.8 71.7 28.3 58.4 41.6 59.3 40.7 56.5 43.5 26.7 34.9 22.2 28.3 39.2 53.3 64.3 52.7 8.1 6.5 8.2 8.2 11.5 7.5 13.5 10.8 908.78 rand 142.63 rand 591.49 rand 745.84 rand Economic Impact of The Coca-Cola System on South Africa, 98 Table 79(B) Customer Profile by Urbanisation Question 44: Out of every ten people that you serve, how many on average are male or female? Question 45: Out of every ten people that you serve, how many on average are adults and children? Question 46: Give an estimate of the number of households or persons that regularly buy at this shop. Question 49: State total amount of credit outstanding (owing by all customers) at this moment. Gender Male Female % % Metropolitan 54.6 45.4 Urban 50.8 49.2 Rural 52.7 47.3 Total 53.2 46.8 Age Adult Child % % 59.7 40.3 54.4 45.6 51.9 48.1 56.5 43.5 34.5 65.3 9.1 12.0 21.9 36.0 7.9 10.2 25.5 48.5 7.2 9.8 28.3 52.7 8.2 10.8 Number of households that regularly buy at this shop Number of persons that regularly buy at this shop Number of households allowed to buy on credit Number of persons allowed to buy on credit Total amount of credit outstanding 917.19 rand 882.00 rand 499.27 rand 745.84 rand Table 80 shows the frequency of settlement of accounts by customers as well as the percentage of respondents who said they don’t give credit to customers. Question 48 in the questionnaire allows for multiple responses for the frequency of settlement of accounts. Hawkers usually expect their customers to settle their accounts weekly (84.2 %). However, 60.5 % of them also allow monthly payments. Monthly settlement of accounts is the most common method of settlement at spazas (79.6 %), shebeens (79.5 %) and ‘other’ businesses (82.8 %). Table 80(A) shows that 63.0 % of spazas, 42.7 % of shebeens, 62.9 % of hawkers and 63.4 % of ‘other’ businesses give no credit. The percentages by degree of urbanisation (table 80(B)) shows no credit is given by 54.7 % of the respondents in metropolitan areas, 49.1 % in urban areas and 28.5 % in rural areas. Table 80(A) Frequency of Settlement of Accounts by Type of Business Question 48: State the frequency that accounts are settled Frequency Type of business Spaza/tuck shop Shebeen N % N % Weekly 70 33.2 35 39.8 Every two weeks 17 8.1 10 11.4 Every three weeks 5 2.4 6 6.8 Monthly 168 79.6 70 79.5 Longer than a month 3 1.4 2 2.3 No credit given 124 63.0 70 42.7 Hawker N % 32 84.2 1 2.6 2 5.3 23 60.5 1 2.6 90 62.9 Other N % 13 44.8 3 10.3 2 6.9 24 82.8 64 Economic Impact of The Coca-Cola System on South Africa, 99 63.4 Total N % 150 41.0 31 8.5 15 5.6 285 77.9 6 1.6 348 46.8 Table 80(B) Frequency of Settlement of Accounts by Urbanisation Question 48: State the frequency that accounts are settled Metropolitan N % Urbanisation Urban Rural N % N % Total N % Weekly 103 66.0 26 34.7 21 15.6 150 41.0 Every two weeks Every three weeks Monthly Longer than a month No credit given 16 9 120 3 209 6 5 60 8.0 6.7 8.0 86 49.1 9 1 105 3 53 6.7 0.7 77.8 2.2 28.5 31 15 285 6 348 10.3 5.8 76.9 1.9 54.7 8.5 4.1 77.9 1.6 46.8 Table 81(A) National Lottery’s Effect On Sales by Type of Business Question 50: Do you believe that the purchase of lottery tickets are the cause of a decline in your turnover? Spaza/tuck shop N % Increased sales 18 5.8 Decreased sales 25 8.1 No change in sales 266 86.1 Total 309 100.0 Type of business Shebeen Hawker Other N % N % N % 6 3.9 4 2.9 1 1.0 7 4.6 8 5.9 1 1.0 139 91.4 124 91.2 95 97.9 152 100.0 136 100.0 97 100.0 Total N % 29 4.2 41 5.9 624 89.9 694 100.0 Table 81(B) National Lottery’s Effect On Sales by Urbanisation Question 50: Do you believe that the purchase of lottery tickets are the cause of a decline in your turnover? Increased sales Decreased sales No change in sales Total Metropolitan N % 3 0.9 9 2.6 338 96.6 350 100.0 Urbanisation Urban Rural N % N % 2 1.2 24 14.0 11 6.4 21 12.3 160 92.5 126 73.7 173 100.0 171 100.0 Total N % 29 4.2 41 5.9 624 89.9 694 100.0 National Lottery Influence On Business The National Lottery started operating in 2000 in South Africa. Respondents were asked in question 50 how expenditure on the National Lottery had affected the total sales of their businesses during the preceding year. Table 81 shows the results to this question. The vast majority of respondents (89.9 %) said the National Lottery had no influence on their sales. A mere 5.9 % said it had resulted in a decrease in their sales while 4.2 % report an increase in sales. Economic Impact of The Coca-Cola System on South Africa, 100 Table 82(A) Sale of Lottery Tickets by Type of Business Question 51: Do you sell lottery tickets at your business? Type of business Spaza/tuck shop Shebeen N % N % 1 0.3 1 0.6 332 99.7 166 99.4 333 100.0 167 100.0 Yes No Total Hawker N % 2 1.4 144 98.6 146 100.0 Other N % 1 1.0 102 99.0 103 100.0 Total N % 5 0.7 744 99.3 749 100.0 Table 82(B) Sale of Lottery Tickets by Urbanisation Question 51: Do you sell lottery tickets at your business? Urbanisation Metropolitan Urban Rural Total N % N % N % N % 1 0.3 3 1.6 1 0.5 5 0.7 380 99.7 179 98.4 185 99.5 744 99.3 381 100.0 182 100.0 186 100.0 749 100.0 Yes No Total Table 82 shows that only 5 or 0.7 % of the 749 respondents who answered question 51 said they sell lottery tickets at their business. Influence of Aids On Businesses Question 52 of the questionnaire read as follows: ‘Do you experience a reduction in turnover as a result of the impact of AIDS on your clientele’. Table 83(A) and (B) show the results to this question. When comparing the negative influence of the National Lottery on businesses (5.9 % in table 81) to that of AIDS (11.5 % in table 83) it is clear that the National Lottery is seen to have a far smaller negative impact than AIDS. However, 88.5 % of the respondents indicated that AIDS had no influence on their businesses. Table 83(B) shows that the influence of AIDS is greater in rural areas than the other areas—16.7 % of the rural respondents answered in the affirmative as against 14.5 % in the urban and 7.6 % in the metropolitan areas. Table 83(A) Reduction in Turnover as a Result of AIDS by Type of Business Question 52: Do you experience a reduction in turnover as a result of the impact of AIDS on your clientele? Reduction Yes No Total Type of business Spaza/tuck shop N % 44 13.2 289 86.8 333 100.0 Shebeen N % 16 9.6 150 90.4 166 100.0 Hawker N % 12 8.2 134 91.8 146 100.0 Other N % 14 13.7 88 86.3 102 100.0 Economic Impact of The Coca-Cola System on South Africa, 101 Total N % 86 11.5 661 88.5 747 100.0 Table 83(B) Reduction in Turnover as a Result of AIDS by Urbanisation Question 52: Do you experience a reduction in turnover as a result of the impact of AIDS on your clientele? Yes No Total Metropolitan N % 29 7.6 353 92.4 382 100.0 Urban N % 26 14.5 153 85.5 179 100.0 Urbanisation Rural N % 31 16.7 155 83.3 186 100.0 Total N % 86 11.5 661 88.5 747 100.0 Economic Impact of The Coca-Cola System on South Africa, 102 Appendix A Disaggregation of a 2000 SAM for South Africa Appendix A Disaggregation of a 2000 SAM for South Africa Commodities/activities 1 11-13 Agriculture, forestry & fishing 2 Sugar cane growing 3 21 Coal mining 4 23 Gold & uranium ore mining 5 22, 24, 25, 29 Other mining 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 301-304 305-306 311-312 313-315 316 317 321-322 323 324-326 331-333 334 335-336 337 338 341 342 351 Food Sugar refineries Beverages & tobacco Textiles Wearing apparel Leather & leather products Footwear Wood & wood products Paper & paper products Printing, publishing & recorded media Coke & refined petroleum products Basic chemicals Other chemicals & man-made fibres Rubber products Plastic products Glass & glass products Non-metallic minerals Basic iron & steel 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Commodities/activities Basic non-ferrous metals Metal products excluding machinery Machinery & equipment Electrical machinery Television, radio & communication equipment 374-376 Professional & scientific equipment 381-383 Motor vehicles, parts & accessories 384-387 Other transport equipment 391 Furniture 392 Other industries 41 Electricity, gas & steam 42 Water supply 51 Building construction 52-53 Civil engineering & other construction 61-62 Wholesale & retail trade 63 Catering & accommodation services 71 Transport & storage 72 Communication 81-82 Finance & insurance 83 Business services 93-98 Medical and other services 99 Other 352 353-355 356-359 361-366 371-373 Labour categories Highly skilled Skilled Semi- and unskilled Professional, semi-professional and technical occupations Managerial, executive and administrative occupations Certain transport occupations, e.g. pilot navigator Clerical occupations Sales occupations Transport, delivery and communications occupations Service occupations Farmer, farm manager Artisan, apprentice and related occupations Production foreman, production supervisor The rest Appendix B Bottler Survey ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE This questionnaire is concerned with budgeted financial data for the year ended 31 December 2002. To the extent that your financial year does not end on 31 December, please provide your best estimates for the 12 months ended 31 December 2003. It is important that the data used in the final analysis is internally consistent. Should you require any clarity or assistance with the completion of this questionnaire, please contact [Name] from Coca-Cola at [phone number, email] Section 1 – Sales Please provide your expected turnover (excluding VAT and net of discounts) for the year ended 31 December 2002 as follows: Rand 1. Total turnover (excluding VAT and net of discounts) for the year 2. 3. 4. 5. 6. Turnover (excluding VAT and net of discounts) by pack type - Returnable glass - Non returnable glass - Can - PET Total by pack 7. 8. 9. 10. 11. 12. 13. Turnover (excluding VAT and net of discounts) by channel - Channel X – please disclose - Channel X – please disclose - Channel X – please disclose - Channel X – please disclose - Channel X – please disclose - Channel X – please disclose Total by channel ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE Page 1 of 6 Section 2 – Production Inputs How much will you spend on the following as it relates to production inputs (excluding VAT) : Production Input – Ex Labour 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Total Spend Concentrate Sugar Water Electricity * Gas PET Crowns Labels Other packaging materials Other material production input costs – please disclose Administrative & other expenses Totals * Please include entire electricity bill here. ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE Page 2 of 6 Source RSA Non - RSA Section 3 – Labour Inputs The following table requires you to estimate the number of staff working for you at the end of December 2002. Population Group Africans / Blacks Coloureds Indians / Asians Whites Total Total number of paid employees Casual Permanent Temporary Male Female Male Female Male Female Male Female Male Female -----------------------------------------------------------------------------------------------------------The following table requires you to estimate the annual cost of the staff that was working for you during the month of December 2002 only (please include gross salary, travel and entertainment allowances and directors remuneration and all bonuses, other payroll related expenses and other non-recurring items). Population Group 26. 27. 28. 29. Africans / Blacks Coloureds Indians / Asians Whites 30. Total Total paid to employees Permanent Temporary Casual ------------------------------------------------------------------------------------------------------------ ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE Page 3 of 6 Section 4 – Transactions with Government This table requests that you disclose all payments to Government – Please disclose amounts actually paid, not amounts accrued. Total 31. 32. 33. 34. 35. 36. SA Normal Tax VAT RSC Customs & excise Rates & Taxes Other taxes – please disclose 37. Total taxes paid Note : At this point, please take time to consider whether all Income Statement items, except depreciation and deferred taxation, have been accounted for in the responses above. It is imperative that all income and expense is captured to give an accurate reflection of the impact on the economy. ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE Page 4 of 6 Section 5 – Capital Expenditure This section requires that you disclose all capital expenditure to be made by you in the current and next two years. Please disclose all capital expenditure to be made regardless of whether the assets are to be employed in RSA or not. Further, please only disclose capital expenditure made from a South African source (i.e. Please exclude all imported items) Capital Expenditure 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. Buildings Company cars Computer hardware Computer software Coolers Crates Forklifts Office equipment Other fountain / vending equipment Other motor vehicles Pallets Plant & equipment Returnable bottles Other items – please disclose 52. Totals 2002 2003 2004 Thank you for the time taken to complete this study – it is most appreciated. ECONOMIC IMPACT STUDY – 2002 BOTTLER QUESTIONNAIRE Page 5 of 6 Appendix C Informal Sector Survey 1 1 Questionnaire No (For office use) MOORE SCHOOL OF BUSINESS UNIVERSITY OF SOUTH CAROLINA (USA) AND BUREAU OF MARKET RESEARCH UNIVERSITY OF SOUTH AFRICA 2003 SURVEY OF INFORMAL BUSINESSES IN SOUTH AFRICA FOR COCA-COLA, SOUTH AFRICA DEFINITION: COCA-COLA PRODUCTS INCLUDE THE FOLLOWING: COCA-COLA, SPRITE AND FANTA SCREENING QUESTION: DO YOU PAY VAT Make a cross Yes No (Question solely for sampling purposes. If No, continue with interview) NAME OF BUSINESS OR BUSINESS OWNER: __________________________________________________ ADDRESS OF BUSINESS: _____________________________________________________________________ 4 2 TEL NO OF BUSINESS/RESPONDENT: ________________________________________________________ NAME OF RESPONDENT: ____________________________________________________________________ INTERVIEWER: _______________________________________________________________ TEL NO OF INTERVIEWER: ____________________________________________________ DATE COMPLETED: ___________________________________________________________ 3 2003 COCA-COLA SURVEY OFFICE USE ONLY 1. Name of town/area: ____________________________________________________________________ 2. Name of Province: _____________________________________________________________________ A. NATURE OF BUSINESS 3. Type of business 4. 5. Spaza/tuckshop 1 (b) Shebeen 2 (c) Hawker 3 (d) Zinkies 4 (e) Rural route distributor 5 (f) Selling depot 6 (g) Other (specify) ___________________________________________ 7 9 12 13 Make one cross (a) Less than 6 months 1 (b) Over 6 months less than 1 yr 2 (c) Over 1 yr les than 2 yrs 3 (d) Over 2 yrs less than 3 yrs 4 (e) Over 3 yrs less than 5 yrs 5 (f) Over 5 yrs less than 7 yrs 6 (g) Over 7 yrs 7 What category of products do you sell 8 Make one cross (a) How long has this business been in operation? 5 14 Make one cross (a) Food products including beverages 1 (b) Non-food products 2 (c) Food including beverages and non-food products 3 (d) Only beverages 4 (e) Other (specify) ____________________________________________ 5 15 4 OFFICE USE ONLY 6. Indicate the five most important products to your business in terms of monthly turnover (sales) or rank them in order of importance if turnover cannot be provided. Product Make a cross Soft drinks (eg Coca Cola) 01 Cigarettes/tobacco 02 Parfin/candles 03 Maize meal 04 Groceries 05 Alcoholic beverages 06 Bread 07 Sugar 08 Milk 09 Soap 10 Meat 11 Fruit & Vegetables 12 Fish 13 Sweets and chocolates 14 Eggs 15 Monthly turnover/sales of product (R) Ranking (Most important product = 1) Other (specify) __________________________ 7. To what extent do you agree/disagree with the following statements: Make crosses Strongly Disagree Neither Agree disagree (a) Coca-Cola products are 1 2 3 4 affordable (b) Coca-Cola products attract 1 2 3 4 people to my store (c) When buyers purchase CocaCola products, they also buy other goods 16 22 23 29 30 36 37 43 44 50 Strongly agree 5 51 52 5 53 1 B. BUYING OF COCA-COLA PRODUCTS 8. How often do you purchase Coca-Cola products? 2 3 4 5 Make one cross (a) Daily 1 (b) Weekly 2 (c) Monthly 3 (d) Not on a regular basis 4 54 5 OFFICE USE ONLY 9. How and how often do you get your Coca-Cola products? [Interviewer: cross all that apply] (a) Coca-Cola truck delivers 1 Daily 4 Once a month 2 Every other day 5 Twice a month 3 Once a week 6 Other (specify) __________________________ (b) 1 55 Delivered by wholesaler. Name of wholesaler _______________________________ Daily 4 Once a month 2 Every other day 5 Twice a month 3 Once a week 6 Other (specify) _________________________ 56 58 59 60 (c) 1 Daily 4 Once a month 2 Every other day 5 Twice a month 3 Once a week 6 Other (specify) _________________________ I fetch it from a retailer Daily 4 Once a month 2 Every other day 5 Twice a month 3 Once a week 6 Other (specify) ________________________ (d) 1 10. 62 I fetch from a wholesaler. Name of wholesaler ____________________________ 63 64 What do you do when you run out of Coca-Cola products (stocks)? Make one cross (a) Wait for next delivery Yes 1 No 2 (b) Fetch stocks from the wholesaler/retailer Yes 1 (c) If yes, how many cases do you usually fetch? _______________________ (d) How do you fetch it? 65 Make one cross 11. (i) Walk & carry (ii) Wheel barrow (iii) Rent a bakkie (iv) Own transport (v) Other (specify) _________________________ When people buy Coca-cola products, do they drink the product (a) In or near the outlet (b) At home No 2 66 67 68 Make one cross 1 2 3 4 5 69 Make one cross 1 2 70 6 C. PHYSICAL CHARACTERISTICS OF BUSINESS 12. State location of your business OFFICE USE ONLY Make one cross 13. 14. 15. (a) Formal residential area (b) Informal residential area (c) Hostel (d) Rural area (e) Taxi rank/train station (f) Other (specify) _____________________________________ Indicate what equipment the shop is equipped with: 1 2 3 4 5 71 Make one cross (a) Refrigerator 1 (b) Deep-freezer 2 (c) Telkom telephone 3 (d) Cellphone 5 (e) Shelves 6 (f) Counter 7 (g) Cash register 8 (h) Other (specify) ____________________ 9 (i) Not applicable 0 Does having a fridge help you sell more Coca-Cola products (a) Yes (b) To some extent (c) No, it does not help at all (d) Not applicable Type of shop accommodation: (a) Inside main house (% of house area ______________) (b) Outside building on some property (c) Building other than home (d) Metal container (railway/ship) (e) Shack (f) Zozo (g) Fixed stall in market (h) Vehicle, cart, temporary stall in a market (i) Other temporary structure (j) Construction site (k) No fixed location/mobile (l) On the street (m) Other (specify) __________________________________________ 72 Make one cross 1 2 3 73 Make one cross 01 02 03 04 05 06 07 08 09 10 11 12 13 74 75 7 16. Does your shop have direct access to the following (on the same stand): OFFICE USE ONLY Make crosses (a) Electricity (b) Tap water 1 Yes 2 No 3 Not applicable 1 Yes 2 No 3 Not applicable D. EMPLOYMENT AND TRAINING 17. How many employees, including owner/manager, work in the business Black M Coloured F M F Indian M White F M 76 77 Total F M F Full-time (78 – 88) Part-time (89 – 104) Total 18. Status of owner Make crosses (one per row) (a) Is the owner engaged full or part-time in the business? 1 Full-time 2 Part-time 1 Male 2 Female 3 Asian 4 White (b) Gender of owner (c) Population group of owner (d) Nationality of owner 19. 1 Black 1 South African 2 Coloured 21. 106 107 2 Other (specify) 108 Work done by owner Make crosses Work 20. 105 Management 1 Cashier 2 Stock clerk 3 Driver 4 Other (specify) 5 Who runs the business? 109 110 111 112 113 Make one cross (a) Owner 1 (b) Manager 2 (c) Employee 3 (d) Family Member 4 (e) Other (specify) ___________________________________________ 5 Do you have any business training? 1 Yes 114 115 2 No 116 If YES, specify what type __________________________________________________________ 117 8 22. Do you think you need business training? Yes 1 OFFICE USE ONLY 118 No 2 If YES, indicate your training needs and rank he three most important needs where 1 = most needed, etc (a) Management 01 119 121 (b) Bookkeeping 02 122 124 (c) Marketing 03 125 127 (d) Sales 04 128 130 (e) Credit control 05 131 133 (f) Computer skills 06 134 136 (g) Labour relations 07 137 139 (h) Customer/human relations 08 140 142 (i) Other (specify) __________________________________________ 09 143 145 23. How many of your employees are members of your family or household? E. FINANCING OF THE BUSINESS 24. How much money was this business started with? R________________ 25. How long did it take you to find the funds to start the business? 146 147 148 152 Make one cross 26. (a) Less than 6 months (b) 6-12 months (c) More than 12 months (d) Not applicable 1 2 3 153 4 Source of finance to start your business (Rate the three main sources in order of importance where 1 = most important) Cost of finance Cross one or more Interest (%) Repayments Amount borrowed Installment (pm) Repayment period (a) Savings (owner or household members) (b) Stokvel 1 154 2 155 157 (c) Loan from relative/friend 3 158 160 (d) Retrenchment payment 4 161 (e) Loan from bank 5 162 164 (f) 6 165 167 7 168 170 8 171 173 Loan/money from government institution (g) Loan from informal organisation/lender (h) Other (specify) 9 27. Do you receive any government business development incentive? Make one cross Yes 1 OFFICE USE ONLY No 2 If Yes, what kind of incentive is it? __________________________________________________ F. EXPANSION AND GROWTH PLANS 28. During the past 18 months has your business Make one cross In terms of overall turnover 29. 174 Make one cross In terms of CocaCola products Expanded 1 1 Contracted 2 2 Remained the same size 3 3 175 176 177 178 What is your most important plan/intention for the development of your business in the next year? Make one cross 30. (a) Continue and maintain business at present size 01 (b) Switch to another line of business 02 (c) Move into another more profitable informal business 03 (d) Change informal business to formal business 04 (e) Stop business and take up wage job 05 (f) Give business to children and retire 06 (g) Sell business and retire 07 (h) Acquire new/better skills through training 08 (i) Employ somebody and retire 09 (j) Other (specify) 10 If expansion is planned: How are you going to finance the expansion? Make crosses (a) Retained earnings from business (b) Stokvel (c) Loan from relative/friend (d) Family savings (e) Loan from bank (f) Loan/money from government institution (g) Loan from informal lender (h) Other (specify) 1 2 3 4 5 6 7 8 179 10 G. TURNOVER AND EXPENDITURE 31. What was the turnover/sales of your business for the past month: R _____________________ 32. Operating costs: Approximately how much did you spend last month on the following? OFFICE USE ONLY 180 184 (a) Purchase of merchandise R________________ 185 189 (b) Salary and benefits to owner R ______________ 190 193 (c) Salaries & benefits to employees R ______________ 194 197 (d) Electricity, water and sewer R ______________ 198 201 (e) Transport for business R ______________ 202 205 (f) Telephone/fax for business R ______________ 206 209 (g) Cleaning materials for business R ______________ 210 213 (h) Storage costs of merchandise R ______________ 214 217 (i) Security of business R ______________ 218 221 (j) Other operating costs, specify R ______________ 222 225 (k) Taxes L______________ 226 229 (l) Interest payments R______________ 230 233 1 H. COCA-COLA PRODUCTS 33. Did the Coca-Cola Company help with the following? [Interviewer: read and cross all that apply.] (a) Product delivery (b) Equipment support such as freezers, umbrellas, glasses (c) Kiosks (d) Push carts (e) Ice boxes (f) Trolleys (g) Short-term credit (h) Signage (i) Other (specify) _______________________________ 4 2 Yes 1 No 2 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 6 7 8 9 10 11 12 13 14 5 11 34. On average, how many units of Coca-Cola products do you sell per day OFFICE USE ONLY Winter - when it is cold Summer - when it is hot Number Number Pack 2 L plastic bottle 15 18 500 ml plastic bottle 19 22 340 ml can 23 26 1,25 L glass bottle 27 30 500 ml glass bottle 31 34 450 ml can 35 38 1 L glass bottle 39 42 300 ml glass bottle 43 46 250 ml glass bottle 47 50 200 ml can 51 54 1,5 L bottle 55 58 35. What is the cost and selling price per unit for the following products - NB: (a) Indicate whether cases, bottles or cans under unit, (b) ask for invoice if available to verify, (c) Questions 35(a) – (f) refer to the difference brand names of Coca-Cola products. 35(a) All Coca-Cola products Cost Pack Unit Selling price Price Unit Price 2 L plastic bottle 59 64 500 ml plastic bottle 65 70 340 ml can 71 76 1,25 L glass bottle 77 82 500 ml glass bottle 83 88 450 ml can 89 94 1 L glass bottle 95 100 300 ml glass bottle 101 106 250 ml glass bottle 107 112 200 ml can 113 118 1,5 L bottle 119 124 12 35(b) Coca-Cola alone OFFICE USE ONLY Cost Pack Unit 35(c) Selling price Price Unit Price 2 L plastic bottle 125 130 500 ml plastic bottle 131 136 340 ml can 137 142 1,25 L glass bottle 143 148 500 ml glass bottle 149 154 450 ml can 155 160 1 L glass bottle 161 166 300 ml glass bottle 167 172 250 ml glass bottle 173 178 200 ml can 179 184 1,5 L bottle 185 190 2 L plastic bottle 191 196 500 ml plastic bottle 197 202 340 ml can 203 208 1,25 L glass bottle 209 214 500 ml glass bottle 215 220 450 ml can 221 226 1 L glass bottle 227 232 300 ml glass bottle 233 238 250 ml glass bottle 239 244 200 ml can 245 250 1,5 L bottle 251 256 Sprite products Cost Pack Unit Selling price Price Unit Price 13 OFFICE USE ONLY 1 35(d) Fanta products 4 5 Cost Selling price Pack Unit 35(e) Price Unit Price 2 L plastic bottle 6 11 500 ml plastic bottle 12 17 340 ml can 18 23 1,25 L glass bottle 24 29 500 ml glass bottle 30 35 450 ml can 36 41 1 L glass bottle 42 47 300 ml glass bottle 48 53 250 ml glass bottle 54 59 200 ml can 60 65 1,5 L bottle 66 71 2 L plastic bottle 72 77 500 ml plastic bottle 78 83 340 ml can 84 89 1,25 L glass bottle 90 95 500 ml glass bottle 96 101 450 ml can 102 107 1 L glass bottle 108 113 300 ml glass bottle 114 119 250 ml glass bottle 120 125 200 ml can 126 131 1,5 L bottle 132 137 Mineral/Water products Cost Pack Unit Selling price Price Unit Price 14 I. MARKETING AND ADVERTISING 36. What type of marketing/advertising methods do you use to promote your business? OFFICE USE ONLY Cross all that apply All methods used Assistance by CC 1 1 2 2 3 3 4 4 5 5 6 6 7 7 (a) Signboard indicating location of business (b) Brochures, flyers, pamphlets (c) Word of mouth (d) TV in shop for customers (e) Music in shop for customers (f) Posters (g) Offering of specials and promotions J. BUSINESS PROBLEMS 37. Indicate the three most important problems experienced by your business 138 139 140 141 142 143 144 145 146 147 148 149 150 151 (a) ___________________________________________________________________ 152 154 (b) ___________________________________________________________________ 155 157 (c) ___________________________________________________________________ 158 160 K. CRIME 38. Were you a victim of crime during the past twelve months? Make one cross 1 Yes 39. 161 2 No If YES, list the type(s) of criminal activity (-ies) encountered. Cross all that apply (a) Break-ins and property theft (b) Vandalism (c) Employee theft (d) Physical attacks (e) Extortion (f) Employees were subject to crime when arriving at/leaving from work (g) Other (specify) _______________________________________________ 1 2 3 4 5 6 7 L. ENVIRONMENTAL ISSUES 40. For what purpose is packaging material of Coca-Cola products used after consumption (eg tins, plastic, etc) Cross all that apply (a) Re-used (eg toys, water holders, etc) 1 (b) Collected for recycling (c) Discarded (d) Other (specify) ______________________________________________ 2 3 4 162 163 164 165 166 167 168 169 170 171 172 15 41. Is there a recycling depot/centre in your vicinity? Make one ross 1 Yes FOR OFFICE USE 2 No M. CUSTOMERS 42. How many customers do you serve per week? Make one cross 1 Less than 50 43. 2 50-100 3 More than 100 174 How much does a customer spend on average during a visit to your shop? Make one cross 1 Less than R10 44. 2 R10-R25 3 More than R25 175 Out of every ten people that you serve, how many on average are male or female? State 1 to 10 176 (a) Male 177 (b) Female (c) Total 45. 10 Out of every ten people that you serve, how many on average are adults and children? State 1 to 10 178 (a) Adults 179 (b) Children (c) Total 46. 47. 48. 10 Give an estimate of the number of households or persons that regularly buy at this shop. (a) Number of households: ____________________________ 180 182 (b) Number of persons: _______________________________ 183 185 (a) Number of households: ____________________________ 186 188 (b) Number of persons: _______________________________ 189 191 Give an estimate of the number of households or persons allowed to buy on credit. State the frequency that accounts are settled: Cross all that apply 49. (a) Weekly (b) Every two weeks (c) Every three weeks (d) Monthly (e) Longer than a month (f) No credit given 166 1 167 2 168 3 169 4 170 5 171 6 State total amount of credit outstanding (owing by all customers) at this moment: R_____________________ 172 175 16 N. GENERAL 50. Do you believe that the purchase of lottery tickets are the cause of a decline in your turnover? FOR OFFICE USE Make one cross 1 51. Yes 176 2 No Do you sell lottery tickets at your business? Make one cross 1 52. Yes 177 2 No Do you experience a reduction in turnover as a result of the impact of AIDS on your clientele? Make one cross 1 53. Yes 178 2 No What is the legal status of your business? Make one cross 54. (a) Sole proprietorship (b) Partnership (c) Family business (d) Close corporation (e) Cooperative (f) Other (specify) _________________________________________ 1 2 3 4 5 179 6 State the number of other retail businesses owned by the owner of this businesses? Number: ______________________________ O. SOCIODEMOGRAPHIC CHARACTERISTICS OF OWNER 55. What was your job before you started this business Shop assistant (seller) Office worker 1 2 Housewife 3 Retired 4 Unemployed 5 Other (specify) _________________________________________ 56. 180 181 6 Will you accept a job in the formal sector if offered today? Make a cross 1 57. Yes 182 2 No How many people, including yourself, are in your household? ____________________________ 183 184 17 58. FOR OFFICE USE 185 Do any of your household members (including yourself) earn an income outside this business? 1 Yes 2 No If YES, tick the estimated total amount earned from all sources outside this business Per month 59. 60. Per week Per day Tick (9) R1 - R299 R1 - R69 R1 - R9,99 01 R300 - R799 R70 - R184 R10 - R24,99 02 R800 - R899 R185 - R207 R25 - R29,99 03 R900 - R999 R208 - R230 R30 - R33,99 04 R1 000 - R1 499 R231 - R345 R34 - R49,99 05 R1 500 - R1 999 R346 - R461 R50 - R66,99 06 R2 000 - R2 999 R462 - R692 R67 - R99,99 07 R3 000 - R4 999 R693 - R1 153 R100 - R166,99 08 R5 000 - R9 999 R1 154 - R2 307 R167 - R333,99 09 R10 000 - R19 999 R2 308 - R4 615 R334 - R666,99 10 R20 000 - R49 999 R4 616 - R11 538 R667 - R1 666,99 11 R50 000+ R11 539+ R1 667+ 12 Reason for starting this business: (a) To increase income (b) Unemployed (c) Family business (d) To seize business opportunity (entrepreneurship) (e) To work from home (f) Other (specify) What is your educational level? (a) No formal schooling (b) Primary (Grade 1-7) (c) Secondary (Grade 8 – 11) (d) Matric (Grade 12) (e) Tertiary (Post matric) 186 187 Make a cross 1 2 3 4 5 6 188 Mark one 1 2 3 4 5 189 18 FOR OFFICE USE 61. Indicate number of hours open each day of the week: Make crosses Number of hours open Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday 62. not open 1-8 9-10 11-12 13-14 15-16 17-18 18+ 01 11 21 31 41 51 61 71 02 12 22 32 42 52 62 72 03 13 23 33 43 53 63 73 04 14 24 34 44 54 64 74 05 15 25 35 45 55 65 75 06 16 26 36 46 56 66 76 07 17 27 37 47 57 67 77 190 191 192 193 194 195 196 197 198 199 200 201 202 203 Did you have to close your shop temporarily during the past 12 months because Coca-Cola products were not available? Make a cross 1 Yes 2 No 204