Bloomberg News

Colombian Soft-Drinks and Sugar Billionaire Bubbles Up

November 06, 2012

Colombian Soft-Drinks Billionaire Bubbles Up

Carlos Ardila Lulle poses for a portrait in this undated handout photo. Source: Organizacion Ardila Lulle

Six decades ago, as a recent college graduate working for his father-in-law’s soft-drinks company, Carlos Ardila Lulle came up with a fizzy, pink, apple-flavored concoction that started outselling all of their other products.

The rose-colored soda has become the centerpiece of Ardila’s closely held Postobon SA, Colombia’s largest soft- drinks maker with annual sales of $1.1 billion. Ardila also owns Colombia’s biggest sugar producer, and has interests in glass and metal packaging, media and car dealerships, making the 82- year-old tycoon worth $7.4 billion, according to the Bloomberg Billionaires Index. He is the world’s 150th-richest person, and hasn’t appeared on an international wealth ranking in more than a decade.

“His main companies are unlisted, so he hasn’t received the recognition he should,” said Juan Pablo Vieira, a trader at Interbolsa SA (INTBOL), Colombia’s biggest brokerage. “His companies are very strong, with an excellent position in the market. Postobon is everywhere.”

Ardila’s ascent comes after a U.S.-backed military offensive turned the tide against cocaine-funded guerrillas who previously controlled many highways and large swaths of countryside. In the past five years, Colombia’s economy has grown at an average annual rate of 4.4 percent. With household incomes rising, the country’s soft-drink market expanded by 71 percent during that time to $7.7 billion in 2011, according to data from consumer-research firm Euromonitor International Plc.

Third-Richest

Organizacion Ardila Lulle, the Bogota-based umbrella for the billionaire’s companies, posted combined revenue of 6.2 trillion Colombian pesos ($3.4 billion) last year. In an e- mailed statement, OAL confirmed the revenue, net income and earnings before interest, taxes, depreciation and amortization of its closely held units, while calling Bloomberg’s net worth valuation “conservative.” Ardila declined interview requests.

“Postobon is my life,” Ardila, owner of Medellin’s Atletico Nacional soccer team, told Dinero magazine in an August 2000 interview. “I’ve never intended or wanted to sell it.”

His fortune makes him the nation’s third-wealthiest person, according to Bloomberg’s daily ranking. The richest Colombian is banker Luis Carlos Sarmiento Angulo, with a net worth of $16.8 billion, followed by Alejandro Santo Domingo Davila, who controls an $11.3 billion fortune. For decades, Alejandro’s late father -- the jet-setting beer baron Julio Mario Santo Domingo - - competed with Ardila for control of Colombia’s beverage, media and aviation markets.

Sugar, Glass

Ardila’s wholly owned company produces the pink flagship Postobon soda that the billionaire invented in the 1950s, as well as a similar beverage called Colombiana. It also makes fruit drinks under the Hit brand and PepsiCo Inc. (PEP) products. The company is valued at $3.5 billion when comparing its 2011 results to the average enterprise value-to-Ebitda and price-to- earnings multiples of five publicly traded soft-drinks companies from emerging markets: Coca-Cola Femsa SAB and Arca Continental SAB of Mexico, Chile’s Embotelladora Andina SA (A:US), Turkey’s Coca- Cola Icecek AS and China’s Hebei Chengde Lolo Co. (000848)

Ardila owns stakes in four sugar and ethanol operations in Colombia and one in Mexico, giving his group a combined sugar- cane crushing capacity of more than 24,000 tons a day. His Incauca SA unit, with plantations in western Colombia, is the country’s largest sugar producer, according to the growers association known as Asocana. The interests generated revenue of $876 million last year. They’re valued at $2.1 billion when comparing their results to the average enterprise value-to- Ebitda and price-to-earnings multiples of two Brazilian peers -- Sao Martinho SA (SMTO3) and Tereos Internacional SA (TERI3) -- and two in South Africa, Tongaat Hulett Ltd. and Illovo Sugar Ltd.

Soap Operas

Through Cia. Iberoamericana de Plasticos SA, the billionaire produces his own glass bottles, metal caps and plastic crates for carting Postobon beverages. He also has joint packaging ventures in Colombia with Perrysburg, Ohio-based Owens-Illinois Inc. (OI) and Philadelphia-based Crown Holdings Inc. (CCK) Together these interests generated $670 million in sales last year, and are valued at $507 million when comparing their results to the average enterprise value-to-Ebitda and price-to- earnings multiples of five global peers: Crown Holdings and Ball Corp. in the U.S., Spain’s Vidrala SA, Switzerland’s Vetropack Holding AG and Japan’s Fuji Seal International Inc.

RCN Television SA (RCN), broadcasts a nightly news show, soap operas and reality programs. Together with Ardila-owned Radio Cadena Nacional SA, his media companies posted $399 million in sales last year. They’re valued at about $580 million, according to the ranking. His chain of car dealerships, Distribuidora Los Coches La Sabana SA, generated $214.4 million in sales and $3 million in profit. The company is valued at about $45 million, according to data compiled by Bloomberg.

Atletico Nacional

Based on estimated dividends, local taxes and market performance, Ardila probably has an investment portfolio of at least $675 million. That includes his ownership of the Atletico Nacional squad, whose players wear green jerseys emblazoned with the logo of Postobon.

Born in northeastern Colombia in 1930, Ardila studied engineering in the city of Medellin. In his early 20s, he married Eugenia Gaviria, whose father hired him at his soft- drinks company, Lux. Ardila experimented with new flavors and colors before coming up with his now-famous pink drink. He went on to buy the company from his in-laws and, in 1968, took over competitor Postobon.

To bolster his soft-drinks business, Ardila began acquiring interests in sugar mills and glass and metal packaging during the 1970s. He branched out into a variety of other industries, buying television and radio network RCN, textile company Coltejer SA and now-defunct record label Sonolux. He also dabbled in politics, serving as a Medellin city councilman and then as national senator for the Conservative Party.

Santo Domingo

Ardila, who remarried after divorcing his first wife, has been wheelchair-bound since an accident at one of his homes in the 1980s. He has two sons -- Antonio Jose, who sits on Postobon’s board, and Carlos Julio, who leads RCN -- and two daughters.

Until 1985, Ardila shared control of the airline Aerovias del Continente Americano SA, known as Avianca, with Julio Mario Santo Domingo, Colombia’s reigning beer baron at the time. A management dispute led Ardila to sell his stake to his fellow- billionaire, according to “Don Julio Mario,” an unauthorized biography of Santo Domingo by the journalist Gerardo Reyes.

“In both organizations, it became an obsession to follow each other’s steps, to investigate each other’s difficulties so as to make them public and not to save a single peso to compete on new investment fronts,” Reyes wrote.

‘Never Leave’

In the 1990s, the two broke a truce not to tread on each other’s central businesses, with Santo Domingo moving into soft drinks and Ardila opening a brewery. Ardila lost the battle. After piling up hundreds of millions of dollars in debt in the wake of Colombia’s 1999 recession, he sold his beer factory to Santo Domingo. He went on to sell other businesses -- such as Coletejer in 2008 -- to pay down debt and shore up Postobon’s finances. The company made a profit of $97.9 million last year, producing more than 1.9 billion liters of soda, according to Euromonitor data.

While the Santo Domingo clan remains one of Colombia’s most important investors, Alejandro and several other family members live in New York. Ardila splits his time between Bogota, Medellin and his other homes around Colombia.

“What I’ll never do is leave the country,” Ardila told Dinero magazine. “I believe in my country and my people.”

To contact the reporter on this story: Alex Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net


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