In this Issue: US and South Africa seal poultry EXPORT deal
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Industry Report:
The bakery industry in Kenya
Year in Review 2015:
Some of the headline grabbing news of 2015
American Fast Food
Giants Zero in on Africa
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Year of deals, deals and more deals
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Danone exits China baby food market after scare
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p.12 DuPont and Dow combine as agro giants seek growth
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Year in Review 2015:
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NUTRITION, WELLNESS & HEALTH
Product Focus: High Protein
24
cereals
Why allergens matter
special focus
Formulation: Soya
26
Nutrition: Omega 3
American fast food giants zero in on Africa
Dairy Business africa
trends 30
Mid-calorie beverages
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New products on the shelf: Castle Lite, Blue Band, Raka Brie cheese, Jesa flavoured milk, Inyange butter
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Editorial
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International News
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Calendar of Events
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Product Focus: Traditional
Nutrition: Natural colours Processing: Aseptic processing january 2016 | Food Business Africa
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Editorial
Food industry must tackle corruption
www.foodbusinessafrica.com Volume 3 Issue 6, No.16 • ISSN 2307-3535
Food and beverage industry has a role to stamp out corruption; as our magazine turns 4.
founder & Publisher
he Organisation for Economic Cooperation & Development (OECD) defines corruption as “the abuse of public or private office for personal gain. It includes acts of bribery, embezzlement, nepotism or state capture. It is often associated with and reinforced by other illegal practices, such as bid rigging, fraud or money laundering.” Corruption has gone beyond being a buzz word in Africa lately, with the word taking a more serious angle following elections in Nigeria, perceived to be one of the World’s most corrupt countries, and which brought in Muhammadu Buhari as President; and another election in Tanzania, where President Pombe Magufuli took office in late 2015. These two leaders have elicited a lot of debate on social media and in homes within and out of the continent about the ways these two leaders have led from the front in the fight against corruption in their countries. Their key message has been that that the continent must change its ways to deliver itself from the yoke of corruption. And the food and beverage industry better take note. For corruption engulfs the continent beyond the scandals that we read about in the newspapers and watch on our TVs about public officials who have made away with loads of cash and are living beyond their means. President Uhuru Kenyatta of Kenya, has even on many occasions thrown the challenge back to the private sector, pushing for the sector to play its role and nip corruption in the bud, for he says there has to be a taker and giver for corruption to continue to thrive in Africa – where the private sector comes into the corruption debate. “In developing countries, corruption is a killer,” says David McNair, ONE’s transparency and accountability policy director. “Up to 3.6 million lives could be saved if we end the web of secrecy that helps the criminal and corrupt. When governments are deprived of their own resources to invest in the essentials – like nurses and teachers – the human cost is devastating.” ONE estimates that corruption costs these countries, majority of them in Africa, between US$972 billion to 2 trillion dollars a year. So where does the food and beverage industry come into this corruption vortex,
TJ Kwach
T
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you may ask, after all we only produce food and drink that we sell to willing buyers? The food and beverage industry is involved in corruption, just like all other industries are. Remember that tender that you had to pay something small to the purchasing contact to ensure you were prequalified? Can you think of how you have reduced the weight of your bread below the indicated weight, or boosted the sweetness of your drink or tomato sauce with some unlabeled sweetener to reduce your cost of production? Think of it, how has been the damage to the community, as you made public officials look the other way as your effluent continued to pollute the only source of water in your locality? And, just ask yourself, if your company and others paid a fair share of their taxes, wouldn’t that road leading to your factory be tarmacked already? That is corruption. Think about it. The entire food industry has everything to gain from a corruption-free society, and must do its best to eradicate all forms of corruption, for the gains made in Africa in the last few years to have a lasting effect. If the money lost through corruption could be invested in education, healthcare and food security in the continent, the food and beverage industry will have a more aware, able and healthy population to feed, boosting the industry’s incomes. In this corruption debate, no one gains – we are all losers. In this issue, we are glad that the magazine is having its 4th year anniversary, years that have been full of promise and a rising African economic progress. The food and beverage industry has not been left behind, with many local African enterprises having grown in volume and regional reach, while major international retailers, suppliers and manufacturers continue to invest in the continent – some of these happenings could not have been conceivable when the first issue of Food Business Africa came out in February 2013. We are glad to have been there to report and analyse these key moments, and look forward to many more in the years to come.
Francis Juma Editor:
Contributors: Liz Wawire • Loretta Mugo Design & Production: Centrepress Media Advertising & Subscription: Dorothy Akoth • Elly Okutoyi
Foodworld Media P.O Box 1874-00621, Village Market, Nairobi Kenya Tel: +254 20 8155022, Cell: +254 725 343932 info@foodworldmedia.net www.foodbusinessafrica.com
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SUBSCRIPTION Contact: info@foodworldmedia.net Annual Subscription: Kenya: KSh 2900 (VAT inclusive); Africa: US$ 70; Rest of World: US$ 90 (including postage) Two Years: Kenya: KSh 5600 (VAT inclusive); Africa: US$ 130; Rest of World: US$ 170 (including postage) Food Business Africa (ISSN 2307-3535) is published 6 times a year by FoodWorld Media Ltd. The magazine is distributed for free to food and beverage processing companies in Africa. The magazine is available through subscription for the other stakeholders in the food chain, including suppliers to the sector. Postage is paid at Nairobi, Kenya. Send address changes to FoodWorld Media Ltd by phone or email. Copyright 2015. Reproduction of the whole or any part of the contents without written permission from the editor is prohibited. All information is published in good faith. While
Have a good read Editor
care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of any action taken on the basis of information published.
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Whatever you make, make certain. january 2016 | Food Business Africa
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Year in Review: | 2015
Year of deals, deals and more deals
T
he year 2015 was a year rich in new plant openings, unique new products and many transitions in management in Africa and the World’s food and beverage industry. But the lasting headline of the year was the many big coup corporate deals that were sealed in 2015. Driven by low commodity prices (oil prices were below US$30 per barrel, the lowest in since 2004 as we went to press), rich cash reserves and pressure to deliver to expectant shareholders, 2015 was a year in which the most improbable of corporate acquisition deals were initiated, discussed and closed around the World. According to data released by Dealogic, global mergers and acquisitions (M&A) increased for the third consecutive year to a record US$5.03 trillion in 2015, up 37% from 2014 to surpass the US$5 trillion mark for the first time ever. Quarter 4 of the year accounted for $1.61tr, the highest quarterly level on record and 32% of this year’s total, with 8481 deals. These deals cover the entire M&A activity in the World, from pharmaceticals, food, media etc, with deals in the pharmaceuticals driving most of the volume. Pfizer’s deal to acquire botox maker, Allergan for US$160 billion, makes the deal the second biggest ever. 2015 was also a drastically fundamental year for the food and beverage industry around the World, including in Africa. We have seen acceleration in the development of the industry in Africa, with new investments, acquisitions, new plants and expansions right across the continent. These are some of the most important news we covered in 2015: The first major deal of 2015 was the eye-popping deal between HJ Heinz and Kraft Food Group, which made the World’s number five food company in a deal worth
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january 2016 | Food Business Africa
US$53.8 billion. The popular Heinz brand of sauces and ketchups and centuries old Kraft Food brands including Velveeta, Tang, Kraft Macaroni & Cheese and Maxwell House coffee are now under one roof. SABMiller made the news at the start and the end of 2015, closing 2014 with the announcement of the creation of a new bottler, Coca-Cola Beverages Africa. This followed the merger of SABMiller and CocaCola Sabco, with the new bottler becoming the largest Coca-Cola bottler in Africa, with more than 30 bottling plants and over 14,000 employees. The new bottler covers operations in nine Eastern and Southern African countries, from South Africa to Ethiopia into the Indian Ocean islands of Comoros, is owned 57% by SABMiller, the GFI Family (majority owners of Coca-Cola Sabco 31.7%) and Coca-Cola 11.3%. The brewer was also in the news in the recent past, closing the year with the news
that AB Inbev, the world’s biggest beer company had snooped for the number two, placing a US$106 billion bid. The deal, still going through regulatory reviews around the World, will create a brewing behemoth that makes about 30% of all beers produced in the World. The deal provides AB Inbev with entry into Africa, through the good work SABMiller did in Africa, having invested heavily in the continent over 20 years. In other news, in early 2015 Olam International, which originated from Nigeria into one of the leading commodity traders in the world, acquired the global cocoa business of American conglomerate Archer Daniels Midland Company (ADM). The deal, valued at US$1.3 billion, pushed Olam to the top ranks of the cocoa business globally, alongside Barry Callebaut of Switzerland and Cargill of the US. Majority owned currently by a unit of Singapore’s state-owned investment company Temasek Holdings Pte, Olam is one of the shining
Buhler opened the first milling school in sub-sahara Africa last year. foodbusinessafrica.com
lights of African origin enterprises that have gone global. In supplier news, private equity firm Onex Corporation acquired packaging producer SIG Combibloc Group AG in a deal worth up to $4.7 billion. 2015 was a busy year for Israeli flavour house Frutarom after the company made 12 acquisitions of companies including in Slovenia, Austria, Poland, Spain and India. With a focus on India and Africa, the company acquired 60% shareholding in Sonarome in May, enabling the company to further reach into the food and beverage industry in Nigeria, South Africa, Ethiopia, Kenya and Mozambique, plus other African markets. Meanwhile, Unilever acquired Minneapolis based gelato producer Minnesota, US-based Talenti Gelato & Sorbetto providing the ice cream maker with a premium brand. The company also acquired premium Italian gelato business, GROM, pushing into the Italian ice cream market. In Kenya, East Africa’s biggest brewing group East African Breweries Ltd (EABL) sold off its glass making enterprise Central Glass Industries to South Africa’s Consol group, the diversified supplier of glass to the wine, food, beverages, cosmetics, and pharmaceuticals to South Africa and the region for about US$ 47 million, concentrating its efforts in the beer and malt business. The deal added to Consol’s footprint, which includes its home, South Africa and Nigeria in the continent.
Cereals get the focus
2015 was a significant year for Kellogg’s, the US based cereal giant in its quest to grab the rising consumer numbers in Africa. Having appointed former Diageo executive Gerald Mahinda as its subSahara Africa CEO in 2014, 2015 was the time to reap the benefits. “As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years, Sub-Saharan Africa provides tremendous opportunity for our company,” notes John Bryant, Chairman and CEO, Kellogg Company. In Egypt, the company having acquired the Egyptian biscuit maker Bisco Misr earlier, it added another major food company after the acquisition for US$50 million of the family owned Mass Food Group, the makers of Temmy’s cereals and NutriFit cereal bars. In West Africa, it formed a joint venture with Tolaram Africa to develop snacks and breakfast foods for the West African market. Kellogg’s has the right to acquire a stake in Tolaram Africa Foods (which owns 49% of Dufil Prima) in the future. Dufil Prima manufactures and markets several leading food brands, including the popular Indomie noodles, Minimie snacks, Power oil and Power pasta, which are some of the big brands in the region. At the same time, the company acquired a 50% stake in another company owned by Tolaram Africa, Multipro, a sales and distribution company in Nigeria and Ghana, with a focus to grow into several African countries, including Democratic Republic of Congo, Ivory Coast, Cameroon and Ethiopia. Diageo, the brewing company, has taken control of United National Breweries’ traditional sorghum beer business in South Africa. The company acquired a 50% interest in the company thereby making it a wholly owned subsidiary of Diageo in a potential US$ 36 million deal, cementing the reputation that sorghum beer has as a growth engine in Africa’s beer industry Meanwhile, Diageo ceded its shareholding in the Sedibeng and Namibia Breweries (NBL) in South Africa and Namibia respectively for a total sum of US$150 million, handing over the two breweries to Heineken and NBL. cont page 6 foodbusinessafrica.com
Uganda Office Muganzirwazza Commercial Complex P.O. Box 70472 Kampala Tel: +256756411669 | +256772755354 january 2016 | Food Business Africa
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from page 5
Dairy attracts further investments
The effect of Danone’s acquisition of a 40% stake in Brookside with an eye on the fast growing dairy demand in Eastern and Central Africa became evident with last year’s acquisition of Sameer Agriculture & Livestock Ltd, Uganda’s leading dairy processor of fresh, UHT milk and value added products for an undisclosed sum. Meanwhile, in North Africa, Danone acquired an additional 21.75% shareholding in Centrale Laitière of Morocco from SNI for an amount of €278 million, raising its stake to 90.86%, as the giant seeks to add to its African expansion targets. In West Africa, PZ Cussons Plc, a leading international consumer products group, acquired Glanbia Ireland’s 50% stake in Nutricima, the dairy company based in Lagos, Nigeria. The deal worth £21 million (US$ 32 million) gives PZ Cussons full ownership and control of the maker of milk powder and UHT milk products.
of firms in the continent invested millions or even billions of dollars in 2015. Early 2015, the International Finance Corporation (IFC) revealed its investment in Marina Market, Burkina Faso’s leading supermarket chain, to support the company’s operations and expansion beyond the six supermarkets. Swiss milling equipment maker, Buhler opened the year by unveiling sub-Sahara Africa’s only milling school, to build capacity in the region’s grain milling industry. In Uganda, RCL Foods South Africa, formerly called Rainbow Chickens, took its interest in Africa’s chicken industry a notch higher with the purchase of 33.5% of Hudani Manji Holdings, the producer of YoKuku, Uganda’s major chicken producer. It will be interesting how this investment pans out in the next few years, after RCL bought into Zambeef’s Chicken operation recently. Meanwhile, the growth of retail in Africa continued unabated, with the entry of
“The growth of retail in Africa continued unabated, with the entry of Walmart owned Game supermarket chain’s entry into Kenya the highlight of the year” In Southern Africa, R&R Ice Cream Plc acquired the ice cream business of Nestlé South Africa. R&R, the third largest ice cream manufacturer in the world, with annual sales approaching US$1.12 billion notes that the deal will enhance its reputation as a global player in the ice cream sector following the firm’s acquisition of Peters Food Group in Australia in May 2014. The deal hands R&R Nestlé South Africa’s ice cream brands portfolio including Dairymaid, Country Fresh, Eskimo Pie and King Cone. In Ethiopia, New Zealand dairy giant Fonterra opened a facility that packages milk powder for the increasingly important Ethiopian and regional market.
New investments
One noticeable pattern in 2015 was the number of fast food retailers and big box retailers, which continued to invest in Africa, some for the first time. The lure of Africa to the fast food retailers is captured in our Special Feature on page 26. Investments in factory upgrades, new systems or even expansion in supply chain capabilities rarely make it to the news in Africa, but we are confident that majority 6
january 2016 | Food Business Africa
Walmart owned Game supermarket chain’s entry into Kenya the highlight of the year. However, Shoprite, an early entrant into Africa, moved out of Eastern Africa, with Kenya’s leading retailer Nakumatt using the opportunity to grow its footprint in Uganda and Tanzania. The Wrigley Company kicked off the construction of a US$63 million plant in Machakos County, Kenya, with the factory expected to serve the company’s growing business in Africa. The factory is expected to go into production in the first quarter of 2017 and will replace an existing plant located in Nairobi’s Industrial Area. Keroche Breweries, Kenya’s second biggest local brewer upped the stakes in the country’s beer market by opening an expanded brew house as it seeks to claw market share from the EABL group in the region. With a target to control more than 20% share of the beer market in Kenya, Keroche opened the KSh5 billion (US$ 52 million), 100 million litre per year capacity brewing plant in the Rift Valley town of Naivasha.
Food Safety Conference – a regional first
In May, our company organized the first ever food safety focused conference in the region. The Food Safety Summit Africa Conference & Expo took place in Nairobi, Kenya on May 28-29, 2015. Bringing together about 200 professionals, managers, Government officials and NGO managers from the region, this inaugural forum demonstrated the importance that food safety plays in international trade and consumer health. The follow-up event, renamed the African Food Manufacturing & Safety Summit conference and expo is slated for June 8-10, 2016 in Nairobi, Kenya. More info can be found on the website www.afmass. com
New products and packaging
Coca-Cola was in the news in 2015, venturing for the first time into the dairy business, after forming a joint venture with Select Milk Producers to launch a high end lactose free milk brand in the US. The milk brand named Fairlife costs twice as much as regular milk and has 50% more protein and 30% less sugar. Fairlife is made through a proprietary milk filtering process that increases protein by 50%, reduces sugar by 30%, and removes lactose. Dannon, the US subsidiary of Danone also introduced a ‘first-of-its-kind’ yogurt protein snack with a strong nutritional profile. The product, named Triple Zero, has 0 fat, 0 added sugar, and 0 artificial sweeteners – plus 15g of protein per 150g pack. It is sweetened with stevia. The US beverage giant PepsiCo announced its intention to remove aspartame from its Diet Pepsi range starting August 2015, as it aims to tackle consumers’ health concerns, turning the tide in the US soda industry as diet soda volumes continue to decline. “Decades of studies have shown that aspartame is safe, but the reality is that consumer demand in the U.S. has been evolving. The U.S. diet cola consumer has been asking and asking and asking for an aspartame-free great diet cola.” Seth Kaufman, senior vice president of Pepsi, told Bloomberg.
foodbusinessafrica.com
In the region, a number of new products were launched in the year. Coca-Cola rejigged its Dasani brand with a new bottle design (which keeps us wondering when the Plant Bottle technology will sail into East Africa’s shores), while confectioner Kenafric Industries changed its packaging for its Fresh bubble gums. Packaging aside, Sky Foods launched its not-so-new Tree-Top brand of fruit juices back onto the shelves after some few decades since Unilever discontinued its production. NAS-Servair served up a new line of ready-to-eat food products including chicken/meat stew/mutton with rice or ugali, a local staple in Eastern Africa. On the dairy side, packaging has increasingly taken the bulk of the product innovation, with Brookside, New KCC and Bio Food Products taking the lead in introducing new packaging formats for their high value dairy products.
People changes
New executive changes with the word “Africa” is increasingly being used, as major multinationals focus on the continent. The New Zealand dairy company Fonterra appointed Johan Priem as
Managing Director Asia Middle East and Africa (Asia MEA). Some changes in Guinness Africa’s operations occurred in 2015, with Peter Ndegwa becoming Guinness Nigeria’s CEO and Managing Director having moved from the Guinness Ghana Breweries in the same position. Meanwhile, John O’Keeffe who had been Guiness Nigeria CEO was appointed President, Diageo Africa, joining the Diageo Executive from 1 July 2015. Nestle had a change at its executive position with a new Executive Vice President for its Zone Asia, Oceania and Africa taking over after Nandu Nandkishore took early retirement from the company. Wan Ling Martello take over the role for the Zone starting May 1, 2015 from her previous role as the Chief Finance Officer (CFO) of the company. Kenya’s second-largest supermarket chain Tuskys, made changes at its top management, appointing a non-family chief executive for the first time in its 25-year history. The appointment of Daniel Githua, the chief executive of Speed Capital, removes the Kamau family – which founded the retail chain and has been running it – from operational control in favour of a professional manager.
Executive changes also arrived at the number four retailer Uchumi, where Jonathan Ciano was replaced by Julius Kipng’etich as the retailer seeks to turn around its fortunes. At Kenya’s biggest sugar miller, new management led by Errol Johnson took over after the former team led by Peter Kebati was shown the door.
In other News
Nestle had a year to forget when its Indian unit ran into challenges from regulators concerning lead content of its marketleading Maggi noodles. Maggi is back on the shelves, though after the company went through a lengthy court process to clear its long-held clean name and reputation.
What does 2016 portend?
We think that 2016 will be like 2015, with investments and growth in retail the major drivers of the happenings in the industry. Mergers and acquisitions in 2016 will continue unabated, due in part to low oil prices, which opened 2016 even at lower prices than 2015, going below US$30 per barrel in mid January. Sadly, we shall not take a bet on who will be bought out this year, for we also do not know
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news | international international BRIEFS
Nestlé celebrates 150 years
SWITZERLAND – Nestle, the world’s leading food company is celebrating 150 years since its founding in 1866. Nestlé’s story began when the Anglo-Swiss Condensed Milk Company launched Europe’s first condensed milk, before it merged with Henri Nestlé’s company to form the Nestlé & Anglo-Swiss Milk Company, which was renamed into Nestlé in 1977. The company has been a leader in a number of innovative products, including introducing first instant coffee, Nescafe in 1938 Today the company spans beverages, waters, dairy, confectionery, petcare, and skincare and operates in over 197 countries and employs almost 340,000 people.
Premium water to reach 12B litres in 2020
WORLD - Worldwide sales of premium bottled water advanced 3.9% to 10.3 billion litres in 2014, taking its overall retail value to more than US$15 billion, according to a new study by consultancy firm Zenith International. Majority of the volume is from mature markets of North America and West Europe, with Asia Pacific, China and Middle East growing fast. It estimates that the global market for premium water will have exceeded 10.6 billion litres in 2015 and will increase to more than 12.5 billion litres by 2020.
Pepsi-Muller end dairy US JV
AB Inbev to sell assets; list in South Africa as SABMiller deal proceeds
BELGIUM - Anheuser-Busch InBev (AB InBev) is on the look out to offload some of its European and American premium brands and related businesses as the SABMiller deal, last year’s biggest in the food and beverage industry proceeds, and as the company faces scrutiny by regulators who must approve the deal. The company in a statement announced that it is contacting potential purchasers to assess their interest in the Peroni and Grolsch brand families and their associated businesses in Italy, the Netherlands and the UK. It is also considering selling SABMiller’s recently acquired craft brewer UK-based Meantime, given the brand’s premium positioning. Meanwhile, the company has plans to unlock its US partnership with Molson Coors Brewing – one of SAB’s biggest deals – by selling its 58% in the business in the joint venture MillerCoors LLC US in a US$12 billion deal, to deflect regulatory concerns in the US, where AB Inbev and MillerCoors hold a 70% piece of the beer market. In China, where AB Inbev is also a significant player in the beer market, concerns have been raised about the SABMiller’s joint venture CR Snow, the brewers of the leading Snow beer brand, with analysts noting that AB Inbev may be
forced to sell off SABMiller’s partnerships in the country, according to Forbes. “In addition, while SABMiller is a key Coca-Cola bottler in Africa, AB InBev bottles PepsiCo beverages in Latin America – another potential conflict of interest,” notes Forbes. Any sale may include one or more of these brands or businesses and would be conditional upon closing of the acquisition of SABMiller by AB InBev. Meanwhile, in Africa, SAB’s original home, AB Inbev has announced its intention to list on the Johannesburg Stock Exchange in mid-January 2016. In a move that is meant to cool down concerns by South African investors and regulators, the company notes that the listing will show “commitment to the Republic of South Africa and the African continent, which will be a critical driver of future growth for the company” and provides South African investors with an opportunity to invest in, and participate in, the future growth of AB InBev. The deal, which has been narrowed down to AB Inbev’s thirst for Africa, considering that SABMiller has the experience and holds a 34% stake in the continent has gone quiet over the last few months. An announcement of a firm deal is expected this year.
Aseptic packaging to grow 24% by 2020 US – Beverage giant PepsiCo has ended its joint venture dairy deal with German Theo Muller Group in the US, citing “a competitive and dynamic marketplace.’’ Built in 2003 to take advantage of the aggressive growth of yoghurt in the US market, the US$200 million plant located in Batavia, New York has been sold to the Dairy Farmers of America, a milk-marketing cooperative. Pepsi has dairies in Brazil and Russia, where it owns a controlling stake in Will- BillDann dairy and juice processor that it acquired in 2010. The company has a strategic goal of building a US$30 billion nutrition business by 2020. 8
january 2016 | Food Business Africa
gea
The world market for aseptically packed products amounted to over 140 billion litres in 330 billion packs during 2014, according to the new Global Aseptic Packaging report from consultancy firm Zenith International
and packaging experts Warrick Research. White milk and beverages more than 80% of all aseptic packages worldwide, while soups, sauces, tomato products and baby foods have seen increased usage over the years. Volumes have risen by 4% a year since 2011, with China achieving the fastest rate of 8% a year, followed by South and South East Asia on 7%, with volumes static in much of Europe. China is set to become the leading region by 2020, followed by Latin America. By 2020, Zenith and Warrick estimate that the world market will reach 182 billion litres and 438 billion packs. The majority of additional demand will come from China as well as South and South East Asia. foodbusinessafrica.com
June 8-10, 2016
Kenya school of monetary studies (Ksms), nairobi, Kenya
one industry one region one event Africa’s industry converges at the only event that covers trends, opportunities, innovations and technologies of the future in the processing, packaging and safety of foods and beverages in Africa. Don’t be left out. Register today to Speak, Exhibit or be a Delegate at the African Food Manufacturing & Safety Summit Conference & Expo. More info:
www.afmass.com foodbusinessafrica.com
january 2016 | Food Business Africa
9
news | international
FDA approves GM salmon
US - The US Food and Drug Administration has cleared the first genetically engineered (GE) animal intended for food use. The AquAdvantage Salmon by AquaBounty Technologies is an Atlantic salmon that reaches market size more quickly than non-GE farm-raised Atlantic salmon. Based on a comprehensive analysis of the scientific evidence, the FDA determined that AquAdvantage Salmon meets the statutory requirements for safety and effectiveness under the Federal Food, Drug, and Cosmetic Act.
Fonterra sells Aussie yoghurt business
NEW ZEALAND - New Zealand dairy group Fonterra has sold its yogurt and dairy dessert brands to Parmalat Australia Pty Ltd, a Lactalis-owned dairy firm. The divestment includes manufacturing sites at Tamar Valley and Echuca. Terms of the deal were not disclosed.
Set legal limits on trans fat - EU report
EU - The European Commission has adopted a report that has called for setting of a legal limit for industrial trans fatty acids in foods as the most effective measure to guard public health, consumer protection and to improve compatibility within the single market. However, the implementation of such a limit would require further investigation. The EU’s move follow a recent decision by the US Food & Drugs Administration to give food companies three years to stop the use of partially hydrogenated fats, the primary source of trans fats in foods.
Starbucks picks new India CEO
Arla launches new strategy with Nigeria and US in focus.
EU - Arla, the European dairy cooperative has launched a new strategy that has set out to grow its business in eight global dairy categories and six market regions around the world, with Nigeria noted as one of the key markets. Since 2007 Arla’s milk volume has grown from eight billion kilos to 14 billion kilos through mergers and, since April 2015, through organic growth in the milk production of Arla’s farmer owners as EU milk quotas no longer exist. It is anticipated that Arla’s farmers will grow their milk production by another 2.5 billion kilos by 2020, giving Arla more growth opportunities than ever before.
Coke decries tax plan, threatens plants closure INDIA - The Coca-Cola Company has revealed that it will “have no option but to consider shutting down certain factories” in India, as a planned sin tax legislation that could lead to a “sharp decline in consumer purchases” and its business in the country. The proposed Goods and Service Tax (GST), seeks to impose a 40% tax on luxury items, and which includes aerated beverages, an inclusion the company seeks to be removed, as, if enacted the punitive tax could reduce consumption of its beverages, to the detriment of its huge investments in India. According to the company, the The Coca-Cola system has already invested more than US$2.5 billion in establishing raw material supply chain from farmers
Gatorade to have organic version INDIA - Tata Starbucks, the joint venture between the American coffee giant Starbucks and Tata Global Beverages has appointed Sumi Ghosh as CEO, as the company, which opened in 2012 and currently has 78 stores, seeks to entrench itself in Asia’s third economy, and turn the business to profitability. 10
january 2016 | Food Business Africa
The new strategy, dubbed Good Growth 2020, which anticipates milk volume by the coop to grow to 16.5 billion kilograms by 2020 from the current 14 billion kilograms. The company has identified eight product categories that will be central focus for the company’s efforts to shape the dairy market. These include butter and spreads; specialty and spreadable cheese; yoghurt; milk powder; mozzarella; and to be the global leader in whey ingredients. “We have identified the markets in which Arla has the biggest potential to grow a long-term profitable business for our farmer owners. We are stepping up our efforts in the United States and Nigeria, while continuing to build on our positions in Europe, the Middle East and China. We also remain hopeful that Russia will re-open for business, at which point it will still be a very attractive market for Arla,” says CEO “Over the coming five years we expect about half of our growth to come from outside the EU as we grow market shares while the other half will come from within the EU as we grow in key categories and add value through innovation,” he added.
US - PepsiCo has announced plans to launch an organic version of its popular sports drink Gatorade this year. The company has also made announced that its Tropicana Pure Premium orange juice and a few other products will carry the Non-GMO Project seal, a label that verifies products as being free of GMO ingredients.
and producers, setting up 57 factories, supporting retailers and distributors and in creating direct and indirect employment for more than 200,000 people. It says it is on course to invest another US$5 billion in India by the end of 2020, having recently opened commenced operations in two plants over the last year. The proposed tax could lead to a “significant rationalization of manufacturing capacity” by the company, fundamentally changing the environment and the company “will have no option but to consider shutting down certain factories,” it said.
Storm kills 35,000 cows in US
US – A severe storm that lashed several US states after Christmas Day for 48 hours buried thousands of dairy animals, killing over 35,000 of them in west Texas and eastern New Mexico, with many more suffering from frostbite and might die, reports the New York Times. Milk production could be affected, considering the area produces 10% of US milk total.
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US breweries count surpasses 4,000 mark June 8-10, 2016 Kenya school of monetary studies (Ksms), nairobi, Kenya
US - The total number of breweries in the US has reached a record level at the end of 2015. According to a review by the Brewers Association, a trade association dedicated to small and independent American brewers – the so called craft brewers - as at the end of November, there were 4,144 breweries in the country, topping the historic high of 4,131 breweries in 1873. The US has seen an explosive growth in craft brewers, with craft beer constituting 11% of the total beer volumes in 2014, growing 20% in dollar terms in a stagnant market for mainstream beer brands. “This is a remarkable achievement, and it’s just the beginning. Beer has always been a hallmark of this country and it is even more apparent today as America’s beer culture continues to expand,” said Bart Watson, chief economist, Brewers Association. Brewery openings now exceed two a day in the country, with 15 leading states having more than 100 breweries, including California, Washington, Colorado, Oregon, Michigan, New York, Pennsylvania and Illinois. The Indian Pale Ale variety remains the top style sold by craft brewers, and continues to grow faster than the overall
craft category. According to Watson, the craft beer market is still bright. “There are still thousands of towns currently without a brewery - but with populations potentially large enough to support one. With beer lovers continuing to desire more fullflavored, innovative options from small and independent local breweries, ample opportunities exist for well-differentiated, high-quality entrants in the marketplace.” By surpassing the 4131 breweries that existed in 1873, the US beer market has gone full circle, from the 1800s when beer was mainly brewed to serve small communities in small plants, to the consolidation years of the 19th and 20th Century, to the Prohibition Era when beer brewing and consumption dwindled with further consolidation (in 1978 only 50 breweries existed, with 100 plants), and back to the small, independent craft brewers that have grown like bush fire in the country since the early 1980s. The craft beer craze now extends beyond the US, with several countries having caught the bug, from UK, Brazil and South Africa. The Brewers Association notes that about 1,800 new craft breweries are being planned in the US in the next few years.
Danone exits China baby food market after scare
CHINA - Yashili International Group Ltd has completed a 150 million euro ($159 million) deal to buy all of Danone infant formula unit Dumex China. France’s Danone has been struggling to revive its Dumex China unit after food safety scares damaged the business, squeezing its share of a fiercely competitive $20 billion infant formula market. “By bringing the Dumex and Yashili brands closer together, the operation will build a strong local infant milk formula foodbusinessafrica.com
(IMF) brand platform,” Danone said in a statement on Wednesday, confirming completion of the deal. Danone said in July it was planning to sell its flagship Dumex infant formula unit in China, which has been hit by food scares, taking a 398 million Euros ($437 million) impairment charge. Dumex China saw its net sales plummet to 1.3 billion yuan (US$203.2 million) in 2013 from 5.7 billion yuan (US$890.8 million) in 2012, after a food safety scare in 2013 hit the brand’s reputation with consumers. The scare, linked to New Zealand supplier Fonterra, was later shown to be unfounded. Mengniu owns just over 51 percent of Yashili, while Danone holds a 25 percent stake - Reuters
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DuPont and Dow combine as agro giants seek growth June 8-10, 2016 Kenya school of monetary studies (Ksms), nairobi, Kenya
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US – Two the World’s biggest chemical and materials companies, DuPont and The Dow Chemical Company (Dow) have announced that their boards of directors have approved a definitive agreement under which the companies will combine in an all-stock merger of equals. Dow and DuPont shareholders will each own approximately 50% of the combined company. The combined company, to be named DowDuPont, will eventually be split into three independent, publicly traded companies within 18-24 months following the closing of the merger, which creates a new company with a combined market capitalization of US$130 billion at the time of the announcement. The new companies will focus on the various aspects of the merged company, comprising Agriculture, Material Science and Specialty Products. “This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” said Andrew N. Liveris, Dow’s chairman and CEO. “Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex
challenges and opportunities.” “For DuPont, this is a definitive leap forward on our path to higher growth and higher value. Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each business will be a leader in attractive segments where global challenges are driving demand for these businesses’ distinctive offerings,” said Edward D. Breen, chairman and CEO of DuPont. The merger transaction is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders. The deal comes at a time that commodity prices, the lowest since 2009, and a strong dollar have pushed the agro industry to consolidate as lower incomes make investors jittery about company performance. “The biggest impact will certainly be in the agriculture market, where the seeds and crop chemical industries are to undergo rapid consolidation,” SunTrust’s Sheehan told Reuters. Seed and agrochemical giant Monsanto had abandoned luring Swiss crop protection leader Syngenta in a US$46 billion offer in August 2015, a move considered too cheap by Syngenta. Analysts say that Monsanto may be forced by the changing circumstances to improve its offer for Syngenta, considering that China’s Stateowned China National Chemical Corp’s (ChemChina) offer to buy Syngenta in late 2015. On the other hand, other agro giants BASF and Bayer AG could be forced to consider deals as the industry faces a period of unprecedented change.
Godrej takes majority stake in Creamline Dairy INDIA - Godrej Agrovet Limited, a subsidiary of Godrej Industries Ltd, has acquired a controlling stake in Creamline Dairy Products Ltd, improving its stake from 26% to 51%. Creamline is a prominent dairy company in South India with significant operations across Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and Nagpur in Central India. The company has very strong farm linkages across the four southern states, which assures it quality milk supply around the year. The retail presence of the company is strengthened by its “Jersey” Brand of milk and its derivatives. The company also operates dedicated “Jersey” milk parlours
across southern India. According to Godrej, India is the world’s largest producer of milk and the Indian milk demand is expected to cross 200 million tonnes by 2020 from 135 million tonnes in 2014. The demand will be largely driven by the fact that milk will remain the preferred source of protein for the Indian population while a rising per capita income in the country will increase demand for value added dairy products like cheese, butter, curd, ice cream, flavored yoghurts. The company expects to increase its focus on these “value added products” and increase its footprint into new geographies to drive its future growth. foodbusinessafrica.com
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Tiger Brands pulls plug on Nigeria Company sells Dangote Flour Mills, reviewing Deli Foods following losses in Nigeria
NIGERIA – South African FMCG group Tiger Brands has sold back its stake in Dangote Flour Mills for a nominal US$1, and assumed debt of about 400 million Rand, ending a costly and painful episode for the Group as its Nigerian entry strategy unraveled after only two years. With a target to grow its international business to 30% of the company’s
total net sales by 2017, Dangote Flour Mills’ acquisition ticked a number of boxes: Africa’s largest economy, highest population (170 million) and a fast growing urban population that would ensure growing returns to the business, considering flour, noodles and pasta market are house hold items in many Nigerian homes. Tiger Brands had also successfully grown into Africa, with Kenya and Ethiopia joining the ranks of investment destinations in the few years before getting into Nigeria. Further growth into Africa’s biggest pie looked the next best option. This was not to be. In its full year financial report, the company “recorded a solid performance in its 2015 financial year, driven by its core South African business”, which was “partially offset by underperformance in certain of its international operations. The group’s Nigerian operations were particularly hard hit. Following a sharp drop in the price of crude oil, which is Nigeria’s main export commodity, the naira was devalued and the concomitant impact on the Nigerian macroeconomic environment was widespread,” the statement said. “We spent a bucket load of cash learning
Olam ventures into animal feeds business
NIGERIA – Leading commodity trader Olam International has announced that its grains business line intends to expand into animal feed and related businesses in Nigeria. The expansion involves investments in setting up poultry and fish feed mills as well as hatcheries to produce day-old-chicks. According to the company, Nigeria was the preferred entry market as it ranks favourably on the “country selection criteria, which include meat consumption per capita, degree of fragmentation, extent of vertical integration and of commercial feed penetration, scalability potential and supply and demand factors impacting the feed raw material trade,” after conducting foodbusinessafrica.com
market studies. Increasing urbanisation in the country and a change in consumer preference towards more protein-rich diets is driving a strong demand for poultry and aquaculture products and the commercial feed market is expected to grow at over 10% CAGR over the next 5 years, notes Olam. The investment adds to Olam’s investments in Nigeria - where the multinational originated in 1989 before going global – which comprise its commodity trading business, rice growing and milling, biscuits and candy processing, noodles and condiments, biscuits and beverages, and wheat milling business.
those lessons and shareholders are clearly upset,” outgoing chief executive, Peter Matlare Matlare, who is leaving after 8 years, with failure in Nigeria hanging around his tenure, told Reuters. “We have to revise what the strategy should look like and that’s work that is underway right now,” added Matlare. The company, which paid about US$200 million for a 65% stake in the venture three years ago, was forced to take 1.7 billion Rand (US$120 million) impairment on top of another impairment last year of 924 million Rand (about US$70 million) in 2014. Despite modernizing the plant and equipment and introducing new, higher margin products, the company’s efforts were dealt a blow by the devaluation of the Naira that affected input costs, and lower oil prices that adversely affected the economy. The company also struggled with tough local market conditions. Tiger Brands also wrote down 250 million rand (US$18 million) from its investment in Nigeria’s Deli Foods, in which it holds 100% stake, citing a weaker currency and slowing demand. Its 49% investment in UAC Foods has however not been mentioned in the press release.
Israelis partner Indians for Sudan dairy project SOUTH SUDAN – South Sudan, the newest state in Africa is set to have its first major dairy enterprise following a partnership between Israeli and Indian companies that are seeking to build a large-scale dairy project costing US$150 million. The project, designed by Israeli firm Alef Bet Partners (ABP) for Indian developers seeks to tap the potential of milk production that lies in a country ravaged by war since the 1980s, and which has failed to achieve peace even after gaining independence from its northern neighbour, Sudan. Milk production in South Sudan is low, serving the needs of local communities. Uganda, Rwanda and Kenya are some of the neighbouring states that have taken advantage of improving economic ties, exporting mainly long life milk products to the country. The project, one of the largest on the African continent, is expected to include five dairy farms, each housing some 2,000 cows, attached to advanced milking parlors, according to Jewish Press. january 2016 | Food Business Africa
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news | african african BRIEFS
Ornua opens Kerrygold factory in Nigeria
Coke opens Liberia bottling line
The Coca-Cola Company has opened a US$5million PET bottling line in Liberia, its first PET line in the country. The company also unveiled a significant expansion of its commitment to expanding its own operations and the community initiatives it supports in the country.
Famous Brands CEO departs after 16 years
SOUTH AFRICA - Kevin Hedderwick, the Group Chief Executive Officer of Famous Brands is set to retire at the end of February after 16 years with the group. Kevin, who has been with the company in various roles of increasing importance since 2000, retires on 29 February 2016. During his period at the company, Kevin oversaw “the transformation of the Group from a small, two-brand company into a vertically integrated business comprising 27 brands represented by over 2,500 franchised restaurants across South Africa, Africa, the UK and the Middle East, underpinned by substantial manufacturing and logistics operations,” according to Panagiotis Halamandaris from the founding family. Darren Hele, currently Chief Executive: Food Services, succeeds Kevin, who will stay on for one more year as Strategic Advisor to the Group from 1 March 2016.
Private equity firm exits two ventures
EGYPT – Private equity firm Qalaa Holdings, formerly known as Citadel, has announced that RIS, a business unit of its agrifoods subsidiary Gozour, is selling its two halawa and biscuits plants in Sudan to a Sudanese investor at a value of US$ 4.3 million. The company is also in the process of selling Misr October for Food Industries (El-Misrieen), an Egyptian manufacturer of cheese products, to a domestic industrial investor at a value of EGP 50 million (US$6.4 million).
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january 2016 | Food Business Africa
NIGERIA - Ornua, formerly called the Irish Dairy Board and Ireland’s largest dairy product exporter, has opened a new Kerrygold milk powder packing factory in Nigeria. The facility will provide a new route to market for Irish powdered milk, which will be exported to Nigeria and then packaged and marketed under the Kerrygold brand. It is a joint venture between Ornua and distribution and packing partners, Fareast Mercantile Company Limited (FMCL). The African market has been of importance to the company, having opened its African headquarters in Port Elizabeth in 2013, to strengthen its foothold in the African market, where it currently employs
250 people both directly and indirectly. “The opening of our Kerrygold facility in Nigeria is another important step in our growth plans for Africa. Nigeria is a young, vibrant country and one in which we see a real opportunity to grow the Kerrygold brand,” said Kevin Lane, Ornua CEO said. In 2014, Nigeria imported 166,000 tonnes of milk powder products, with the retail market valued at €455 million (US$500 million). Ornua’s move comes at a time that the recent deregulation of the European milk market is forecast to increase milk supply in the market. Exports to Africa could mop some of this excess. Ornua’s move follows Fonterra’s investment in a milk powder packaging facility in Ethiopia in late 2015.
Krispy Kreme enters South Africa SOUTH AFRICA - Global doughnut and coffee retailer Krispy Kreme has opened its first store in South Africa marking the company’s first venture into Africa, as it steps up efforts to expand in developing markets, reports BD Live “Krispy Kreme is a strong emerging market brand in countries that have similar demographics to ours…. There is also no one playing in the sweet treat space in South Africa,” Krispy Kreme Doughnuts South Africa CEO Gerry Thomas said. The New York Stock Exchange-listed group is due to open stores in Myanmar, Bangladesh, Cambodia and Guatemala. In May the company signed a master licence agreement with Fournews and John & Gerry’s Brands for an undisclosed sum to open 31 Krispy Kreme shops in South Africa. Fournews is a restaurant franchisor that owns brands including News Café, Moyo and Smooch, a frozen yoghurt chain. The
joint venture between Fournews and John & Gerry’s will hold the Krispy Kreme licence for five years with an option to renew for a further five years. The first chain opened in Rosebank, Johannesburg. The store produces hot doughnuts in front of customers, and along with a factory) in the Linbro Business Park in Sandton, will serve as a manufacturing and distribution hub for other stores in Gauteng. “Our roll-out strategy is mall-based because the South African retail landscape is dictated by malls and that is where you mitigate your risk and you know you will get the right foot count coming into your stores. However, we would in the future like to look at the possibility with our franchisor of supplying other retailers and forecourts,” Mr Thomas said. Stores in KwaZulu-Natal and the Western Cape will be opened in 2017 and 2018. foodbusinessafrica.com
Famous Brands partners with French bakery chain SOUTH AFRICA – Pan-African foodservice chain Famous Brands has signed an agreement with global brand PAUL to become their South African licensed partner for a ten-year period. PAUL is a family-owned French chain of bakery-cafés established in 1889 in Northern France. PAUL has partnered with operators across Europe, Africa, Asia, America and the Middle East, and is present in 41 countries, with the French homeland having over 400 stores. The deal commits Famous Brands to open five restaurants over a five-year period in three trading formats, with the first PAUL restaurant set to open by the end of year
2016. According to Maxime Holder, President of PAUL International, “South Africa is one of the most sophisticated, diverse and promising emerging markets globally. In addition, Famous Brands, specifically, appealed to us as a partner because the Group is Africa’s leading branded foodservice franchisor with an enviable track record and extensive experience of the industry and market.” “In the longer term, Famous Brands can provide PAUL with access to African countries outside of South Africa where we are not currently represented,” he added.
June 8-10, 2016 Kenya school of monetary studies (Ksms), nairobi, Kenya
US and South Africa seal poultry deal SOUTH AFRICA – The US and South African governments have reached an agreement after long and sometimes acrimonious discussions to allow the US to export meat products into South Africa. The deal allows US poultry, pork and beef and their products to re-gain access to the South African market, while allowing South African agricultural and other product exports to continue being allowed into the US under the African Growth and Opportunity Act (AGOA), a trade deal that seeks to boost trade between the US and Africa. “Unwarranted” phytosanitary concerns, according to the US Agriculture Secretary Tom Vilsack, caused by highly pathogenic avian influenza and Salmonella from the US products had been used by South
African food and veterinary authorities to ban the import of US meat products, with most poultry exports blocked for 15 years, according to Vilsack. The US had threatened to pull the AGOA plug off South Africa, thereby denying South African products access to the US market, before South Africa gave way for the imports. The deal allows the importation of up to 65,000 tonnes of US poultry products a year, and will have a significant boost to US farmers’ incomes, generating US$75 million of shipments annually, notes Vilsack. However the South African industry has been roundly critical of the deal with South African Poultry Association CEO Kevin Lovell concerned that health and safety concerns had been put aside due to worries of losing trade with the US.
Nakumatt boosts Western Kenya presence
KENYA – East Africa’s biggest retailer Nakumatt Holdings has acquired Yako Supermarkets and opened a new outlet in Kericho, Kenya’s leading tea growing zone. To strengthen its foothold in the emerging Western Kenya zone, the company has acquire acquired Yako Supermarkets Ltd’s assets in Kakamega, Bungoma and Busia, preferring to acquire a smaller operator in the area. “The acquisition, of Yako Supermarket outlets is fundamentally aligned to our foodbusinessafrica.com
commitment to enhance our local and regional footprint,” Nakumatt Holdings Regional Operations and Strategy Director Thiagarajan Ramamurthy. Alongside the acquisition, the retailer is set to close its trading year (ending February 2016) on a 60-branch strong position, with plans for the opening of new stores before the end of the trading year in Emali in Eastern Kenya and new outlets in Kampala, Uganda and Kigali, Rwanda.
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Uchumi targets US$50m from new strategic investor KENYA - Uchumi Supermarkets, one of Kenya’s major retailers is seeking a strategic investor to take a controlling stake in the retailer for Sh5 billion (US$50 million). “The directors are hereby authorised to identity and negotiate with any suitable investor to raise any sum up to a maximum of Sh5 billion… by way of debt capital through the issue of convertible debt instruments or by way of equity capital by way of private transfer of shares in Uchumi to the investor or a combination of both options,” reads part of a resolution that is to be tabled at a scheduled Annual General Meeting set for January 20, 2016. The move by Uchumi comes at a critical time for the retailer, having closed its outlets in the regional markets of Uganda and Tanzania, thereby pulling back from a regional expansion plan that failed to deliver to its shareholders. A new CEO, Julius
Kipng’etich, who is well known in corporate circles in Kenya, has been in the helm of the retailer for the last several months after the former CEO was fired by the Board. With the Kenyan retail scene changing with the entry of Walmart-owned Game, and the planned entry of Carrefour, and the continued growth of Nakumatt, Tuskys and Naivas into the Kenyan retail space, can Uchumi make a bold move as it seeks a strategic investor to break lose from the fears that Kenyan retailers have grappled with and bring on board a global giant as an investor? Secondly, which strategic partner could this be? Having failed in its quest for Naivas as it planned its Kenyan entry, could this be the opportunity for Game to grow its footprint in Kenya by taking up the stake in Uchumi?
Pizza Hut opens in Kenya KENYA - American restaurant chain Pizza Hut has entered the growing Kenyan fast food market with two stores in Nairobi’s Westgate Mall and another outlet in the town centre. The pizza chain, part of the Yum! Brands which also owns Taco Bell and KFC, joins KFC in Eastern Africa, as the list of global fast food, food service and restaurants break new ground in Africa. The company has other locations in South Africa, Mauritius
and Zambia, with the Uganda operations nearing opening. “We have two stores that we expect will open in the next few weeks and several more next year,” said Yum! Brands spokesperson Laurie Schalow told Business Daily in an interview before the December openings. “Kenya is an incredibly exciting market for Pizza Hut! Expanding into one of the biggest African economies is very exciting,” Laurie added.
Kasapreko opens new bottling plant
GHANA - The Kasapreko Company Limited has unveiled a 70-million-dollar ultramodern bottling plant with four high speed and quality assurance production lines, capable of churning out nearly 120,000 16
january 2016 | Food Business Africa
bottles of beverages per hour, reports the Ghana News Agency. The project is seen by industry players as the most single largest investment made by a local beverage company with global outlook that could absorb thousands of jobless Ghanaian youth and improve household income. Dr kwabena Adjei, Chairman of the Kasapreko Group said the plant was equipped with world class machinery that would contribute to the production of high quality brands of beverage in different specialized packaging formats that could compete favourably with international brands. “We have invested in two state of the art customized high speed production lines for our spirit brands, these two lines have a combined capacity to package 70,000 bottles in one hour. We have just completed the installation of two additional high speed lines to produce our water and non-alcoholic drinks with a combined capacity of 40,000 bottles per hour.”
Pepsi bottler to invest US$30m in Zimbabwe
ZIMBABWE - Indian billionaire Ravi Jaipuria is set to invest US$30 million in a Pepsi bottling plant in the country, promoters of the project have said. Entrepreneur Adam Molai, who is the promoter of the project, told businessdigest that Varun Beverages, Ravi’s bottling business, would invest US$30 million in the first phase of the project. He said the US$30 million would go into the installation of a PET, canning and bottling plant. “From the Zimbabwe plant, we are going to supply the DRC and Namibia,” he said, noting that the bottling plant would create 600 direct jobs and 6,000 downstream jobs. Molai said that in the second phase of the project, the company plans to set up a juice plant, adding Varun planned to spend US$50 million within the next 3-5 years in the country
Razco acquires Ooh! brand products from Alpha KENYA - Razco Limited, long-term producer of the Lyons Maid ice cream and a recent entrant into the premium yoghurt category through its Frusion brand has added to its portfolio the Ooh! ice cream and Ooh! Lala drinking yoghurt brands. The acquisition of Alpha Dairy Products, which had a turnover of KSh 207.8 million (US$2 million) in 2014 by Razco Ltd, whose turnover in the same year was KSh457.5 million (US$4.5 million), according to the Competition Authority of Kenya provides Razco with an opportunity to enter the premium drinking yoghurt space and to increase its share of the ice cream market in Kenya and the region. It is also a major boost to the dairy industry in Kenya, as increasing urbanization and formal trade provides opportunities for dairies to increase their incomes and profits. foodbusinessafrica.com
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Price in US$/to
190
Wheat prices have fallen in the last year
220 Jan 180
COMMODITIES | UPDATE
Cereal utilisation Global cereal utilization in 2015/16 is now forecast at 2,529 million tonnes, 1.0 percent greater than in 2014/15. Total utilization of coarse grains is projected at 1,302 million tonnes. Global utilization of wheat is anticipated to expand by 1.8% to 728 million tonnes in 2015/16, with its food use increasing by almost 1% to 491 million tonnes and feed use by 3.5% to 145 million tonnes. World rice utilization is anticipated to grow by 1.3% to 499 million tonnes, of which around 402 million tonnes expected to be consumed as food, some 1.4% more than in the previous season and broadly in line with world population growth. Cereal stocks According to FAO’s total cereal stocks by the close of seasons ending in 2016 are forecast at 643 million tonnes, 0.4% below the 2015 estimate. The forecast for world coarse grains inventories has been raised by 5.3 million tonnes to 271 million tonnes, with the United States accounting for most of the revision. The forecast for global rice stocks was also scaled 18
january 2016 | Food Business Africa
Price in US$/tonne
May 193.15
Jun 199.82
Jul 199.2
1
Jul 3325.96
3
Wheat prices have fallen in the last year
Price in US$/tonne
Oct
150 180
Sep Jan Jan Feb Feb Mar Apr Mar May Jun AprJul Aug May 170 Wheat, 2915.6 2961.94 2878.03 2868.27 No.1 Red Winter, regular protein, FOB Gulf of M3096 exico
Nov
Dec
Nov Jun 3239.88
Dec
Oct
160
Cocoa beans have bucked the trend in 2015
150
Jan
Cocoa
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Price, US$/tonne
3400 Jan May Wheat, NFeb o.1 Red Winter, Mar regular protein, Apr FOB Gulf of Mexico 2915.6 2878.03 2868.27 3096 3300 2961.94
Cocoa
Oct
Nov
Dec
Jun 3239.88
Jul 3325.96
31
Jul 3325.96
31
3200 3100
Cocoa beans have bucked the trend in 2015
Jan 3000 3400 2915.6
Feb 2961.94
2900 3300
Mar 2878.03
Apr 2868.27
May 3096
Jun 3239.88
2800 3200
Price, US$/tonne
Cocoa beans have bucked the trend in 2015 2700 3100 3400 2600 3000 Jul Aug Sep Oct Nov 3300 Jan Feb Mar Apr May Jun 2900 Cocoa beans, ICCO cash prices, US & Eu ports 3200 2800 3100 2700 3000 2600 Jan 2900 Jan Feb Feb Mar MarApr May Apr May Sep Oct JunNov Jun Jul Aug Cocoa beans, ICCO cash prices, 290.74 US & Eu ports 313.81 269.62 2800 296.35 307.56 355.88 Price, US$/tonne
Tea
Dec
Jul 403.03
Dec
2700 2600
Tea
Jan 269.62450
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov TeaCocoa prices have been on a rise, dipping recently beans, ICCO cash prices, US & Eu ports
Feb 296.35
Mar 307.56
Soya beans 400 Jan Feb Tea 367.49 364.74
Mar 359.93
Prices, US$/tonne Prices, US$/tonne Price, US cents/Kg Prices, US$/tonne Price, US cents/Kg Price, US cents/Kg
Cereal production World cereal production in 2015 is forecast at 2,527 million tonnes 1.3 percent below the 2014 record. Most of the downward revision is due to a lowering of maize and wheat forecasts, as that of barley was raised and that of rice kept unchanged, according to FAO’s Cereal Supply and Demand Brief released in early December. Coarse grains production is forecasted to drop 2.4% to 1,301 million tonnes. China is anticipated to harvest a record crop, with Brazil, Mexico and the United States. Improving their figures. World barley production was also lifted by 1.4 million tonnes since November, almost entirely on account of the EU. Wheat’s global production is estimated at 735 million tonnes, slightly above 2014, due to adverse weather in Pakistan, Brazil and Argentina. At 491.4 million tonnes, FAO’s forecast for global rice production (milled rice basis) in 2015 has remained virtually unchanged, still suggesting a year-on-year contraction of almost 3 million tonnes, or 0.6 percent. Meanwhile, China’s total grain output rose by 2.4% in 2015 to 621 million tonnes from last year, the country’s statistics bureau, reported Reuters in December. Total output of grains including rice, corn and wheat went up 2.7% to 572 million tonnes, with maize coming in at 224.6 million tonnes, up 4% on last year. China, the world’s second largest corn consumer is grappling with bulging state stockpiles, which could exceed more than a year’s worth of consumption by the first half of next year, according to estimates. The government recently proposed to let some land lie fallow in a bid to ease the pressure on scarce water resources and reduce the burden of excess grain stocks, reports Reuters.
Apr 195.9
160 190
Cocoa
Cereals
FAO’s Cereal Price Index declined 1.3% in December from its November value, due to intensifying export competition among maize producers and expectations of more wheat supplies entering world markets after Argentina removed export taxes. The cereals index shed 15.4% on average during 2015 from the previous year. Following the removal of export taxes in Argentina, expectations of larger supplies entering world markets have weighed on wheat prices, while maize prices fell in December amid intensifying export competition and sluggish international demand, notes the FAO.
Mar 202.68
190 150 220 Jan Feb Mar Apr May Jun Jul Aug Sep 180 210 Wheat, No.1 Red Winter, regular protein, FOB Gulf of Mexico 170 200
Apr 290.74
Apr 356.93
May 313.81
Jun 355.88
May 351.95
Jun 354.82
Jan Feb Mar Apr May Jun 350 Tea prices have been on a rise, dipping recently 269.62 296.35 307.56 290.74 313.81 355.88 450
Soya beans 300 Jan Feb Mar Apr May Jun 400 bean prices fallen about 13% in 354.82 2015 367.49 Soya 364.74 359.93have 356.93 351.95
250 Tea prices have been on a rise, dipping recently 380 350 450 370 Soya beans 200 Jan FebFeb Mar Mar Apr May Apr Jun Jul Aug Jan360 May Sep Oct JunNov 300 400 Tea prices at AucKon, ombasa, Kenya, Babout PF grade, CFI U.K. warehouses Soya bean prices fallen 13% in 2015 367.49350 364.74 359.93Mhave 356.93 351.95 354.82 380 250 340 350 370 330 200 360 320 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Soya bean prices have fallen about 13% in 2015 350 310 Tea prices at AucKon, Mombasa, Kenya, BPF grade, CFI U.K. warehouses 380 250 340 300 370 330 290 200 360 320 Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep Sep Oct Oct Nov Nov 350 prices at 2A yucKon, ombasa, Kenya, fButures PF grade, CFI U.K. warehouses beans, No. ellow, M Chicago soybean contract 310 Soya Tea 340 300 330 290 320 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Coffee
Jan 310 Soya Feb May beans, No. 2 yMar ellow, Chicago sApr oybean futures contract 102.33 103.74 98.07 98.73 94.35 300 290
Coffee
Jan
Feb
Mar
Apr May
Jun
Jul
Aug
Sep
Jun 96.89
Oct
Nov
Coffee have tended in the year Jan Feb Jun Soya beans, prices No. 2 yMar ellow, Chicago sApr oybean flower utures May contract 102.33 110 103.74 98.07 98.73 94.35 96.89
Dec
Jul 403.03
lower Jan 100 Coffee Feb prices Marhave tended Apr Mayin the year Jun 102.33 110 103.74 98.07 98.73 94.35 96.89
Palm oil
95
105 90
Jul 403.03
Jul 372.35
Dec
Jul 372.35
Dec
Dec Dec
Dec
Jul 92.71 Dec
Jul 92.71
Jan
90 75 85
Jan
80
Feb 634.38
75
Palm oil
Jun
Jul
Aug
Sep
Oct
Nov Dec
Jan
Feb Mar Apr May
Jun
Jul
Aug
Sep
Oct
Nov Dec
Robusta coffee, ICO, New York cash price, ex-‐dock New York
Mar 607.65
Apr 591.79
Feb Mar Apr May
Jun
May 601.4
Jul
Aug
Jun 606.4
Sep
Oct
Mar 607.65
Apr 591.79
May 601.4
Jul 575.68
Nov Dec
Robusta coffee, were ICO, New York cash price, by ex-‐dock New Palm oil prices down 15% end ofYork year
Jan Feb 641.6 675 634.38
Palm oil
Feb Mar Apr May
Robusta coffee, ICO, New York cash price, ex-‐dock New York
95 80
Jan 641.6
Jul 92.71
Coffee prices have tended lower in the year
100 85 110 95 80 105 90 75 100 85
Jun 606.4
Jul 575.68
625
15% by end ofJun year Jan 575 Palm Feb oil prices Mar were down Apr May Jul 641.6 675 634.38 607.65 591.79 601.4 606.4 575.68 525 625 475 575 675
Palm oil prices were down 15% by end of year
425 525 625 375 475 575
Jan
375 475 425
Feb Mar Apr May
Jun
Jul
Aug
Sep
Oct
Nov Dec
Palm oil, 4-‐5% FFA, Malaysia Palm oil futures
425 525 Jan
Feb Mar Apr May
Jun Jul Aug Sep Oct Nov foodbusinessafrica.com Palm oil, 4-‐5% FFA, Malaysia Palm oil futures
3
Jul 372.35
105
Coffee
Price, US cts/pound Price, US cts/pound Price, US cts/pound
A
recently released report by UN’s Food & Agriculture Organisation (FAO) indicates that the prices of major food commodities declined for the fourth year in a row in 2015, averaging 19.1% below 2014’s levels due to the dwindling global economy, marking the fourth consecutive annual decline. In December, the index declined a 1% from its the November value, as falling prices for meat, dairy and cereals more than offset gains by sugar and vegetable oils. “Abundant supplies in the face of a timid world demand and an appreciating dollar are the main reason for the general weakness that dominated food prices in 2015,” said FAO senior economist Abdolreza Abbassian.
200 160
Price, US$/tonne Price, US$/tonne Price, US$/tonne
Food price index drops further in December
Feb 201.71
210.61
210 170
Dec
3
up, by 900,000 tonnes to nearly 166 million tonnes. At this level, world rice inventories would be some 6 million tonnes (3.6 percent) lower than in 2015, with much of the drawdown concentrated in India and Thailand. By contrast, world wheat carryovers may increase to 207 million tonnes in 2016 with much of the increase in world inventories expected to reflect sharp rises in the EU, China, the United States and the Russian Federation.
Dairy products
The Dairy Price Index dropped 1% in December, and over the year was 28.5% below its average level in 2014, the sharpest decline of any food commodity and marking its lowest annual average since 2009. Weak demand for whole milk powder has led manufacturers to focus on producing other dairy commodities. With butter being the product most in demand, particularly in the Middle East, North America and North Africa, which boosted its price by over 3% in December.
Meat products
The Meat Price Index dropped by 2.2% in December, due to a surge in pork output in Europe and reduced US demand for imported beef. Over the year, meat was on average 15.1% cheaper than in 2014.
Vegetable Oils
The Vegetable Oil Price Index rose 2.1% in December, pushed up by uncertainties regarding Brazil’s soybean crop. Overall, 2015 prices were as a whole 19% below 2014, representing a 9-year low. The increase was driven by soybean oil, the prices of which leaped to 6-months highs, reflecting persisting uncertainties regarding Brazil’s soybean crop amid prospects of firming soy oil demand worldwide, while palm oil prices remained stable, as concerns about possible production declines in Southeast Asia were counterbalanced by weak global import demand.
Sugar
FAO’s Sugar Price Index rose 0.6% in December, but was on average 21% lower in 2015 than the previous year. International sugar prices continued to be influenced by concerns over harvesting delays in the South-Central producing regions in Brazil caused by excessive rain. Prospects of reduced sugar harvests in other main producing countries, in particular India, Thailand, and South Africa, also added weight to the move towards a higher price in December.
Coffee
World coffee production for 2015/16 is forecast to rise by 600,000 bags to 150 million bags over the previous year due to record output in Indonesia and Honduras plus recovery in volume Vietnam that shall offset the shortfall in Brazil, according to the latest USDA Foreign Agricultural Service Coffee: World Markets and Trade. Global exports and consumption are forecast at record quantities, lowering ending stocks to 36.7 million bags. Brazil’s coffee output is expected to fall by 4.9 million bags to 49.4 million bags due to lower rainfall and higher temperatures in the main coffee growing regions of Espirito Santo, Minas Gerais and Sao Paulo. Vietnam’s production is forecast up 1.9 million bags to 29.3 million on higher yields in most growing regions, while Indonesia’s production is forecast to gain 1.8 million bags to a record 10.6 million.
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Food security situation in Africa Southern Africa feels El Nino pinch The food security situation is alarming, with the Southern part of the continent experiencing severe drought brought about by the severest El Nino in decades. According to the FAO, in a recent regional report, crop and livestock production prospects in Southern Africa a reduced agricultural output would follow on last year’s disappointing season, which has already contributed to higher food prices and “could acutely impact the food security situation in 2016,” according to a special alert by FAO’s Global Information and Early Warning System (GIEWS). The report notes that the season for planting maize in Southern Africa has already experienced delays, while crops sown stand to be negatively affected due to inadequate rains and higher temperatures. The impact of El Niño on agricultural production appears more muted in northern areas of Southern Africa. “Weather forecasts indicate a higher probability of a continuation of below-normal rains between December and March across most countries,” according to the GIEWS alert. South Africa, which is the largest cereal producer in the subregion and typically exports maize to neighbouring countries, is itself looking at importing up to 5 million tonnes of maize, according to Grain SA CEO Jannie de Villiers. “We can now, with a lot of confidence, say we are in a disaster in the maize belt,” he said. “We will be lucky if we produce 5-million tonnes this year and then we will need to import 5-million tonnes. This is the sort of scenario that we are looking at,” de Villiers said. The country may have to use US$1-1.2 billion to import the 5 million tonnes according to Wandile Sihlobo, an economist at the Grain SA. With that level of imports, South Africa could import half of its yearly requirements, forecast at 10.5 million tonnes, leaving the rest of the continent that relies on the country’s supply of white maize during times of shortfall, and which is preferred by consumers from Zambia to Kenya, to find alternative countries to import from. Wholesale maize prices are up 50% from a year earlier in South Africa by December, while retail maize prices had doubled in Malawi and Mozambique, according to the FAO. Zambia delivered 2.7 million tonnes of maize in its main season early this year, 21% below 2014/15 figures, according to FAO. Despite lower cereal output this year, record crop of 2014 reinforced grain stocks and resulted in Large carryover supplies of about 1 million tonnes from the 2014/15 season into the 2015/16 marketing year, ending April have provided cover, with maize supplies healthy as at October 2015. Maize situation in Kenya Aggregate cereal production in 2015 was forecasted in October 2015 by FAO at 4.3 million tonnes, about 6 percent above the last five-year average due to good rainfall in most areas as a result of the El Nino weather pattern. The report also cereal import requirements for the 2015/16 marketing year were set at 2.8 million tonnes. It remains to be seen how this pans out, considering the ‘expected’ higher production from parts of Nyanza and Western were affected by excessive rains, and with late planting in the middle of October, are still not yet harvested. Our contacts at one major commodity trader has informed that with Tanzanian maize being sold to China, Tanzanian traders are coming into Kenya to buy maize, reversing the earlier pattern, and risking Kenya’s and the region’s food security situation, considering the next harvest is more than six months away january 2016 | Food Business Africa
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industry report | bakery
Baking Industry in Kenya
The baking sector registers aggressive growth despite challenges
T
he baking industry took an important new dimension about a year ago when Unga Group, the pioneer baking company in the entire Eastern Africa region bought Ennsvalley Bakery, re-entering the baking sector after having exited the industry to concentrate on its milling business in the early 1990s, as a liberalized economy took its toll on the baker of the Elliot’s bread. For those consumers of the Ungaversion of the Elliot’s bread before it
disappeared from the shelves, this was the epitome of what bread could be. The Elliot’s brand is back on the shelves, but as a brand of Uzuri Foods, who took over the former Elliot’s bread factory and the brand, and continues to sell it to the trade. The re-entry of Unga Group back to the baking sector was quite symbolic, considering the vast changes that have occurred during the time Unga Group was away from the bakery scene. While at the exit of the miller there ware
only a handful of bakeries, the number of bakeries that have emerged since the last 30 years has been phenomenal, while the ones that were small players at the turn of the 1980s have grown into big bakeriess over the period.
The industry
The baking industry is one of the key sectors of the economy, providing jobs to thousands of people and critical nutrition to millions, as the country’s population grows and more Kenyans go up the income ladder, and with it, the consumption of bread increases. Driven mainly by increasing urbanization and rising incomes, bread and cakes consumption has seen doubledigit growth over the last decade, as bread remains a critical indicator of economic progress. This discussion focuses on the bread and sweet goods market, which includes cakes and muffins. Increase in retail malls in the country has also been a key driver for the industry, with international brands and local retail chains including Nakumatt, Tuskys, Uchumi and Naivas growing their footprint in the major towns and cities. cont page 22
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january 2016 | Food Business Africa
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industry report | bakery from page 20
Family owned businesses, with a number having been managed by generations of family members since inception, dominate the sector. However, Unga Group’s involvement in the sector through its Ennsvalley stake is the only baking concern that is listed at the Nairobi Securities Exchange. Equity investment is also active in the sector, with GAL Baking Services having sold a 45% to Fusion Capital some two years ago. “The family ownership of a majority of these bakeries may be seen as a weakness by some observers, but after many years of management by family members, these bakeries have become the identity of these families,” argues Philemon Aduda, the Technical Director at Kenya-based ingredients supplier Pack Ingredients East Africa Ltd. “These business owners have endured the worst times in the business, and we must admire their resilience in the face of the myriads of challenges that face the sector,” he adds. The industry has in the recent past grown quite aggressively, due to increasing urbanization and rising incomes. Figures are hard to come by, but our back-of-hand statistics shows that the industry produces about 2 million 400-gram loaves every day. Kenya can meet less than its demand for wheat grain, with the bulk of the imports sourced from the Black Sea region (Russia, Ukraine and Kazakhstan), Pakistan, Brazil, and Argentina. According to the US Foreign Agricultural Service GAIN report of August 2014, the country projected to produce only 350,000 metric tonnes (MT) of local wheat, w h i l e
importing 1.4 million MT of grain; meaning the country can only meet quarter of its demand. The baking sector therefore relies on imported flour that is milled in the country by several millers, many of which face their own set of challenges. The sector produces mainly pan and sandwich breads from white and whole meal flours. While whole meal bread continues to grow, especially within major supermarkets, white pan bread remains the most dominant bread type in Kenya. Brown bread remains a critical part of the industry, due to the concerns with health issues by consumers – whole meal bread is also growing because of this consumer concern.
The structure
The industry is made up of tens of bakeries at various levels of sophistication and production capacity. Hundreds of smaller bakeries, especially in the cakes and pastries business exist in the country, with a number having grown to significant levels over the last decade. However, it is worth noting that a number of smaller bakeries have found the going tough and folded, even as the market grew. About 10 bakeries produce a minimum of 100,000 loaves every day, while another 10-15 produce between 20,000 to 100,000 loaves per day. Industrial scale plants are common for the bigger bakeries, including Broadways, Kenblest, United Millers, Mayfair, Valley, DPL Festive, Mafuko among others. “Comparing the level of technology in the production, Kenya has also done better in terms of the level of automation especially the regular British type tin loaves and the American type sandwich bread,” notes Aduda. Other bakeries operate manual systems that tend to lack any significant automation. The biggest bakery enterprise in Kenya is Mini Bakeries. Part of the Mini Group of companies, the company’s ‘mini bakery’ concept, where small units producing less than 20,000 loaves are scattered across the country,
producing bread and sometimes cakes and pastries to deliver to the urban and rural parts of Kenya, and the region. One unique bakery enterprise is the Unga Group owned Ennsvalley, who have concentrated their focus on the higher end bread and pastry products. On the cakes and muffins sub-sector, Mill Bakers is arguably the biggest, baking cakes, cookies and other pastry products and distributing around the country.
Challenges in the sector Reliance on imported supplies The industry relies on imported supplies of most of the technology, equipment and ingredients that make the costs of capital expenditure and running costs higher compared to other countries, say India that have local industries to manufacture quite an array of equipment and have developed appropriate technology for the industry. “The country would be better off if we could source some of our equipment, wheat and fine ingredients locally,” commented a medium scale bakery in Nairobi that we talked to. Higher costs of importing and associated costs and time required to source equipment and ingredients continue to strangle the sector. Further, with Kenya relying on imported wheat, global price swings and foreign exchange rates impact the cost of the most critical ingredient, beyond the influence of the baker. High production and distribution costs “At the bakery, we are always striving to meet costs within the pricing model we have. White bread being a mass product, customers are very sensitive to pricing. It is quite easy as well to lose key vendors if their margins are reduced,” said a baker in Mombasa. Energy costs in Kenya remain a big challenge for bakeries in Kenya and the region, “providing a big challenge to upcoming bakeries, leading a large number of new bakeries to fail in their quest to enter the baking industry. Even the largest bakers face huge electricity and diesel costs every month due to fluctuations in electricity supply. In fact in many bakeries in the country, energy is a critical element for the owner to put his/her thumbs on for the business to succeed,” cautioned a businessman, who closed shop in 2014. Inconsistent quality of wheat flour Flour quality is one of the key draw-backs in the industry, especially its relation to
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january 2016 | Food Business Africa
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final product quality, production costs and ability to run a smooth and consistent operation, including automation. “Flour quality is one of the biggest headaches. Because of the poor quality of local wheat and reliance on imports, most of the time millers mill the wheat that is available, not even looking at our requirement for softer wheat flour. So we are forced to do a lot of adjustments in the processing, affecting our costs and quality,” a Production Manager in one of the cake and muffin makers informed us. “Kenya’s wheat is sourced from various regions including the Americas, Australia, the Balkans, central Europe & Russia. These wheat flours exhibit various differences in terms of quality and baking performance. Most flour millers blend the various wheat flours to achieve desired baking performance. When millers go wrong in the blending, the bakers suffer. And Kenyan bakers do suffer a great deal, affecting their capacity to run bakeries efficiently,” Aduda comments.
Private label and the future of baking
The growing retail network in Kenya is both a plus and a negative for the baking sector, considering the aggressive growth of international and local brands into Kenya. And as the malls and supermarkets proliferate, providing the bakeries with opportunity to reach more consumers, the supermarkets have set up their own bakeries that have affected the bakers. According to Jinit Shah, Director Kenblest Bakery, the growth of private labels has not affected his bakery’s business performance. However, a baker who has since closed
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shop, reckoned that private label brands have seriously affected smaller bakers. “It became increasingly difficult to sell our cakes to the supermarkets, as they were basically our competitors. If you look at the space taken up by private label brands, you will realise that they take up the bulk of the space; the rest is shared by all the others, hence crowding the independent bakers out of the shelves,” she said.
What does the future hold? Process and people optimization The baking industry in Kenya will continue to face the many challenges highlighted above. However, according to Aduda, the bakeries will have to up their game. “The adoption of technology is critical in the sector, considering the challenges will not just be wished away,” he says. Aduda says that bakers may have to invest in human capacity to boost their capacity to meet production and cost challenges. The bakery of the future will have to optimize human and capital investments that shall ensure the sector remains vibrant, he adds. Automation, use of finer chemicals and processes that can even out the discrepancies in production will be required. “Knowledge about the interaction of flour, ingredients and processes must be increased in the sector, considering that a majority of the bakery managers learnt the art of baking on the job. Baking science knowledge is such a critical part of the baking industry going forward,” adviced a consultant we talked to. “It is good to know that these trainings are actually now available in Kenya,” he concluded.
New products innovation It is true that the supermarket chains, with their small batches can take advantage of this to innovate, as the supermarket chains in Europe have done, notes a consultant to the bakery industry. But, the mainstream bakers must also innovate to remain in the business. Innovations that target the health and wellness aspect are especially a good line to take. “I can foresee specialty breads and cakes like low fat, high fiber systems, fortified breads, gluten free, multigrain systems and low glycemic systems (especially for the diabetics) occupying a much greater space amongst lifestyle consumers in future,” says Aduda. And this is something that some bakers are already taking. According to Devan Shah of Broadways Bakery, the bakery sector must now start engaging consumers on the health aspects of bread and other bread products. While the company has maintained a natural formulation for their bread, Devan says that they would like to communicate further the benefits of their bread products to consumers directly. Regional markets beckon The greater Eastern Africa market is a prime expansion area for Kenyan based bakeries, considering their decades-old experience running bakeries in Kenya, and the growth in population and retail in these countries. Apart from Mini Bakeries that has operations in Uganda and Tanzania, no other bakery has crossed the border. In the future, it will be interesting to see Kenyan bakers enter new territories to grow their businesses beyond Kenya, especially in Uganda, Tanzania and Rwanda
january 2016 | Food Business Africa
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NUTRITION, WELLNESS & HEALTH | ALLERGENS
Why Allergens Matter
Always on the lookout: allergens
It is critical to note that in the US and Canada, undeclared allergens constitute the majority of food recalls by authorities there. The number of food allergies seems to be on the rise. While improvements in regulation, better diagnostics and reporting could be attributed to these statistics it is worrisome to consumer health experts that the actual reported cases of allergens are on the rise. Changes in eating habits by populations around the world could also be blamed for the rising allergen problem, though. With new regulations in place to deal with allergens in many countries in the last few years, the subject of allergens has gotten more prominence between the food and beverage processing community, the regulators and consumers.
How allergies occur
Food allergies remain a controversial issue. Many people attribute certain complaints to a food allergy, whether it is suspected or diagnosed. But ‘real’ clinically proven food allergies are estimated to occur in only 1 to 5% of the total population (the incidence is considerably higher among children). The occurrence of food allergies also varies across different geographical 24
january 2016 | Food Business Africa
areas, because of differences in exposure and dietary patterns. While there is a genetic factor at play to some extent, scientists still don’t know exactly what causes food allergies. A food allergy means that the body produces antibodies against certain nutrients (sometimes even when consumed in very small amounts), generally proteins, also called food allergens. This is an abnormal reaction of the immune system. These antibodies trigger a chain reaction, causing various symptoms such as shortness of breath, rashes or swellings on the skin, tongue or mouth or in the throat, which can appear during the meal or several hours later. Serious allergies can affect the respiratory tract or blood circulation. Worst-case scenario is anaphylactic shock, which is rare but can be life-threatening if not immediately treated with adrenaline. Intestinal complaints are only rarely linked to food allergies. Any food can theoretically cause a food allergy, though about 90% of food allergies are caused by just a handful of allergens. Among the known culprits – which vary between countries – are fish, crustaceans and shellfish, cereals (especially wheat), soya beans, eggs, cow’s milk, peanuts and tree nuts. Cross-reactivity is a secondary
allergy. People who are allergic to pollen or latex for example, may develop an allergy to certain foods that have chemically similar proteins. Most food labelling laws stipulate that known allergens (based on a regulatory list which includes 8 major food allergens for the US and 14 allergens for the EU) must always be listed and even emphasised in the ingredient list.
Prick or pick
Diagnosis can be made through skin tests, blood tests or an elimination diet. The only possible treatment, unfortunately, is complete avoidance of the nutrient in question. However, if the reactions are limited and tolerable (tingling in the mouth, for example), regular exposure to small amounts of the allergen in question may be recommended as this has been linked to progressive and natural desensitization. Experts argue that systematically avoiding all foods that may cause allergies is not a good idea, especially in children, as this may lead to nutritional deficiencies and may in fact increase the likelihood and the severity of allergic reactions if the nutrient in question is consumed inadvertently. foodbusinessafrica.com
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In 2014, European researchers showed – for the first time – that increased diversity of food in the first year of life may in fact help to prevent the development of allergic diseases (including food allergies, allergic rhinitis and asthma). Early exposure to a range of different foods, including some specific foods such as milk products and fish, increases the immune system’s acceptance of the antigens present in those foods, possibly by the acquisition of beneficial gut bacteria. Other studies have also indicated that most children with allergies to cow’s milk, eggs or soya will somehow have ‘outgrown’ their allergy by age 5.
Not to be confused
Food intolerance, also called pseudo-allergy, can cause the same symptoms as a food allergy, but is not linked to the immune system and does not entail the production of antibodies. Food intolerances are still a scientific mystery but have sometimes been linked to certain digestive enzyme deficiencies or levels of histamine in food. Contrary to allergies, food intolerances merely cause discomfort but are not harmful to our health. Food poisoning, with symptoms such as abdominal cramps, nausea, diarrhoea and vomiting, is also not linked to allergens but caused by toxic substances produced by bacteria or fungus in food. Bacteria, viruses or parasites in turn directly cause food-borne infections.
Special case of gluten intolerance
According to the Food and Drugs Administration, an estimated 2 million people in the US suffer from celiac disease or about 1 in 133 people. Celiac disease (also known as celiac sprue) is a chronic digestive disease due to intolerance of gluten that damages the small intestine and interferes with absorption of nutrients from food. Gluten, a key component in baked goods and flours, describes a group of proteins found in certain grains (wheat, barley and rye). People with celiac disease cannot tolerate gluten, leading to the emergence of gluten free products around the World.
Food manufacturers better take note
Food manufacturers must beware of food labelling requirements in their jurisdiction to ensure compliance with food allergens requirements. In this regard, ensuring that allergens are identified and labelled in all products becomes paramount. The FDA Food Allergen Labelling and consumer Protection Act of 2004 (FALCPA) provides two options in declaring an allergen: 1) include the name of the food source in parenthesis (brackets) following the common or usual name of the major food allergen in the list of ingredients in instances when the name of the food source of the major allergen does not appear elsewhere in the ingredient statement, and 2) place the word “Contains” followed by the name of the food source from which the major food allergen is derived, immediately after or adjacent to the list of ingredients, in type size that is no smaller than the type size used for the list of ingredients. Regulations also exist to ensure that measures are put in place to guard against cross-contamination during processing, handling and storage of products, in case a known allergen is used in the facility. Failure to comply with these regulations poses significant risk to consumer health, with the regulators taking a hard stance most of the time, leading to recalls that can be avoided in the first place By Liz Wawire foodbusinessafrica.com
Efficient Material Handling for Bakery Plants Accuracy, reliability and food safety are key for high quality and consistent bread and pastries. Bühler AG presents a simple, economical and advanced material handling solution for medium-size and industrial bakeries. The connection is obvious: The quality of baked products depends on the consistency of the dough. And consistent dough quality is only possible if the composition of dough ingredients accurately follow the recipe without fluctuations. With the increasing number of components added to the dough, accuracy to the formulation is becoming more and more important. One-Line Conveying Based on their knowledge and experience in the milling industry the process engineers at Bühler AG have developed a process that is oriented to the key needs of industrial bakeries. The “One-Line Conveying” (OLC) principle conveys the main ingredients from the storage bin to the receiving station above the dough mixer. Minor and micro ingredients can be added manually or in higher automated bakeries by a recipe controlled system. The backbone of the OLC principle is the powerful pneumatic designed for throughputs of 2 t/h up to 30 t/h. Along the line Flour is delivered either in bags or in bulk. To assure a safe operation the incoming product flows through a control sieve avoiding major impurities to enter the process. The OLC process starts in the flour silo. Proven vibrating feeders, which operate on a first-in, first-out principle, guarantee a clean mass flow. The minor and micro ingredients are added along the line and then continuously blended into the base flour. The accurate weighing and dosing is controlled through the plant automation. In case of manual addition of minor and micro ingredients they are weighed by the operators and confirmed to the control system. Quality and consistency A high quality and consistent finished product is essential for brand recognition and value generation. Furthermore, consumers expect a tasty and healthy product. This can only be achieved when the raw material is accurately weighed and controlled according to the recipe. As the product range from the white toast to the brown bread is likely to increase, a material handling plant which avoids cross contamination is a prerequisite for operational excellence and diversified end products of top quality. All in all, the OLC principle supports the cost effective production of baked goods by already creating the conditions decisive for the quality of the baked goods during the preparation of the ingredients. Bühler Limited Nairobi, Kenya Contact:GL +254 720 180 011/+254 775 180 011/12 Email :buhler.nairobi@buhlergroup.com www.buhlergroup.com/bakery january 2016 | Food Business Africa
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special focus | fast food
The bulging youth population, like these in a Burger King store in South Africa, is pulling in investors into the fast food space Courtesy: Burger King SA
American Fast Food Giants Zero in on Africa
Fast food, fast casual and sit-in restaurants expand into the rest of Africa, as urbanization and incomes increase
T
Col. Sanders’ image at the entrance of new KFC and which is next to a Pizza Hut store in Nairobi’s Westgate Mall 26
january 2016 | Food Business Africa
he writer remembers the mid-1990s when Pizza Inn, part of Nandos chain, used to run promotions at their outlets every Tuesday for pizza. Dubbed Terrific Tuesdays, the food retailer offered a pair of pizza at the price of one and as students, we could once in a long while into Nairobi city center to have a taste of pizza on these Tuesdays, for cash was tight – and we felt the need to have a taste of the new craze in town, even if we had to travel nearly 40 kilometres from the university. Fifteen or so years since those college days, I shall not be shocked when soon, my former university Jomo Kenyatta University of Agriculture & Technology
(JKUAT), will host one of the many American fast food restaurants that are fast growing into the World’s last frontier, Africa. Am sure this will not be long in coming. With a youthful, upwardly mobile population with sophisticated tastes and some income, universities offer a good and captive audience that fast food retailers love. The university environment is reflective of the youth market that fast food retailers crave for – and Africa offers this in abundance. “An upwardly mobile, confident, Western-leaning and young consumer class bodes well for an American burger boom,” Elias Schulze, managing partner of The Africa Group, an Africa-focused foodbusinessafrica.com
investment consultancy told CNN in 2013, commenting on why American fast food retailers had turned their focus on Africa. And it is the youth, just like the one at my former university, which will drive the fast food train into Africa. And the retailers have taken note.
Growth driving entry into Africa
The sub-Sahara African fast food market has been dominated by brands from the continent with many years experience in operating the continent, despite the many challenges that they had to endure. These were Zimbabwean Innscor Africa’s Galitos, Nandos, Pizza Inn, Chicken Inn brands; and South Africa’s Famous Brands with its Steers, Debonnairs Pizza and Wimpy brands. The fast growing Java Coffee House and Mr Biggs in Nigeria, and other smaller brands that have taken advantage of the growing affluence in Africa’s cities later joined the fast food craze. But, we digress. This is a story for another day. The interest of American fast food retailers has taken a much more urgent dimension since 2012. These chains, who have several decades in perfecting the fast food business concept, have over the last few years made important strides in investing in the rest of Africa, having been comfortable investing in South Africa and the northern African giants of Egypt and Morocco. Hardly a month or two goes by without some sort of announcement about an American fast food retailer opening a new store or entering a new territory in Africa. From KFC, Subway, Dominos, Pizza Hut, Burger King and Dominos Pizza, Africa has become the next destination for these decades-old American brands that are well-known even in remote parts of Africa, where in real sense these brands may take years to ever open their stores, due to the huge American influence in art, music, food, education and culture in Africa. The situation has not been this way, with Africa for a long time being viewed as a tough place to do business, with low incomes that couldn’t support these giants. “The business environment in Africa for us has been relatively sluggish until recently,” says Don Fertman, Subway’s chief development officer told Wall Street Journal in 2013, echoing the often standard reply to why it took the chain a long time to venture into Africa. So what is finally driving the likes of KFC, Dominos and Burger King to Africa? Is it just the hard-nosed franchisees that have decided to put their reputation on the foodbusinessafrica.com
A Subway billboard in Nairobi. The major retailers are all out to grab the attention of consumers
To meet local tastes, KFC has ugali on its menu
line to convince skeptical brand owners, or there’s more to Africa’s rise in the fast food space?
1. Bright economic prospects in Africa
“As incomes rise and all of the usual emerging market dynamics are in play, such as urbanisation, more hectic lifestyles, many people in Africa are also gaining access to chained/branded restaurants for the first time,” says Elizabeth Friend, strategy analyst at Euromonitor International, a research firm told CNN recently. The recently released economic forecast by the International Monetary Fund provides a bright outlook for Africa, with projected 4.6% economic growth in 2016, and growth rates above 5% into
Take-aways are key to the retailers’ success. Here, motor bikes ready to deliver for Dominos Pizza
2020. Increasing wealth in the continent is luring back these giants as disposable incomes drive consumer demand for food and beverage products in Africa. In what consultancy firm calls the “US$400 billion African consumer opportunity,” with demand for food january 2016 | Food Business Africa
27
million people by 2050. It is these types of numbers that make these American giants consider Africa as the next growth platform.
It’s not all rosy, though
expected to rise by US$400 billion between 2012 and 2020, the Africa of the future could help these companies grow, as their expansion in other developing countries like China, India, Brazil and Russia plateau.
2. Positive effects of demography
The youth market that we talked about at the start of this article not only holds the future but also a future with much more sophisticated palettes than their parents from other generations. According to a McKinsey report, Daring dreamers: Today’s (and tomorrow’s) African youth consumers released in 2012, “Africa is by far the youngest continent in the world: over 50% of Africans are under 20 years old and, over the next decade, this age group will grow faster in Africa than on any other continent.” And with the 16-34 year age group accounting for 65% of the total consumer spending the youth dividend will work in favour of food retailers in the continent, says to the report. “By virtue of their sheer numbers, young people (16 to 24) are easily the most important consumer demographic on the African continent. The attitudes and behaviours of these young people will shape and define the consumption patterns of tomorrow’s emerging market consumer. At a time when companies in the developed world are trying to understand the needs of a rapidly aging consumer class, the opposite dictum holds true in Africa: understanding the young consumer is the
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january 2016 | Food Business Africa
key to unlocking the broader, $400 billion African consumer opportunity between now and 2020,” states the report. And there is more to it than mere figures: the young African consumer is also more brand conscious and loyal; is image conscious; values quality first, and price second; is online and tech savvy and is 40% more likely to move to urban centres than their elders, the report adds. What’s more, with fast food retailers gambling on takeaways and deliveries to drive sales growth not only in Africa, but also in developed economies, African youth’s addiction to mobile and their increasing adoption of online shopping bodes well for fast food retailers.
3. Increasing urbanization
According to the Population Resource Bureau (PRB), of the ten countries with the most population in 2050, three (Nigeria, DRC and Ethiopia) will be from Africa. Nigeria’s population is projected to increase about 120% to 397 million people; DRC’s population will rise to 194 million people, while Ethiopia’s numbers will increase 65% to 165 million souls by 2050. 40% of Africans lived in cities in 2012, and with most countries experiencing high rates of urbanization as the youth move into cities, this rate will increase significantly to 56% in 35 years, according to PRB. Africa is also home to some of the mega-cities of the future, with Cairo, Johannesburg, Kinshasa, Lagos, Khartoum and Nairobi leading the cities that are projected to have more than 10
The aggressive growth of multinational companies in Africa face a number of head winds, many of which we may not have space to elucidate in this article. However, unfortunately, getting through these hurdles in Africa are the recipes to success. Some of the most successful multinational companies in Africa, including Coca-Cola, SABMiller, Heineken, Barclays and Pepsi have learnt the art of operating in Africa. The fast food retailers better take some vital lessons from them. Companies must be aware of Government regulations and bureaucracy that may hinder the establishment of the company in the first place, and challenges with identifying partners for the franchise business to develop, and last but not least, find appropriate locations for the stores at affordable rates. Even though retail space continues to be put up by investors in the continent, costs can still be prohibitive, and risks abound. Bottlenecks around supply chain to feed Africa’s demand for meat, fruits and vegetables, equipment, packaging and ingredients continue to persist. With many countries lacking adequate local capacity to provide local sourcing for most of the required supplies, supply chain challenges require more commitment by the retailer than they would otherwise have to do in other countries. The retailers must also realise that finding one supplier with capability to deliver a majority of supplies is not a given in Africa; multiple suppliers may have to be engaged to reduce risks of getting enough supplies every day, but with the increased risk of non-compliance. To make it worse, a number of countries have banned outright the importation of chickens, a vital part of the menu for many of these retailers, and with local capacity lacking, executives have a hard time meeting internal product and safety requirements. Food safety concerns
foodbusinessafrica.com
around product traceability and meeting product specifications of the retailer many a time could force the retailer to identify local companies and train them to ensure they comply with set standards, adding further costs to the retailer. Lack of power, roads and refrigeration and other infrastructure continue to disadvantage Africa retailers. Generally higher costs ensure that the retailers have to sell at higher prices than in the West, denying consumers from accessing the food.Below are some of the multinationals that have commenced or plan to enter Africa:
KFC
Owned by Yum! Brands, one of the World’s biggest chains, KFC’s footprint in Africa is unrivalled, having over 1047 stores in Africa, with South Africa (771) and Egypt (146) taking the lion’s share with the rest of the continent having 130. With a goal of having 1200 stores in Africa by end of 1200, the company seemed to have missed its goal, but the activities in 2015 have added significant numbers to the retailer. Yum! Brands also owns Pizza Hut and Taco Bell.
Pizza Hut
Pizza Hut had 112 outlets in Africa in 2014, before ramping its new store openings by entering Zambia and Kenya in late 2015, with the Ugandan unit almost ready as we went to press. The company aims to have 200 outlets in the region by 2018, after returning to the South African market since folding its operations there in 1998, but with a strategy to focus on the takeaway and delivery service in its expansion into Africa, from its earlier dine-in restaurant option that failed in South Africa.
Subway
According to the company’s website, Subway had 51 outlets in Africa in 2015, with the number expected to grow further as the maker of the 6-inch subway sandwich squeezes its stores into the growing African malls. The company’s stores are in South Africa, Egypt, Kenya, Zambia, Tanzania, Mauritius and Djibouti.
foodbusinessafrica.com
Dominos Pizza
Dominos Pizza is present in South Africa (through Taste Holdings) and recently opened its 50th outlet in the country. The company is also has stores in Nigeria, Morocco, Egypt and Kenya. “Nairobi is a terrific market for pizza delivery, and we are very excited to deliver the one-of-akind Domino’s experience to Kenya. The people of Kenya are eager to try new food and we are incredibly excited to bring them our delicious, quality pizza that is so loved around the world,” said Eric Andre, director and co-founder of Om Nom Nom Ltd, the franchise holder for the region when the chain announced their intention to open the first Domino’s store in Kenya in 2014. The company has partnered with the ice cream chain Cold Stone Creamery in many of its African expansion footprint.
Burger King
Burger King is currently in South Africa, where it launched its sub-Sahara Africa operations in 2014. It has 15 outlets in the country as at end of 2015. The company is also in Morocco and Egypt.
Dunkin Brands
Dunkin Brands, the owners of Dunkin Donuts and Baskin-Robbins last year announced their intention to open 50 stores of Baskin-Robbins to take advantage of the rising ice cream market in South Africa. The company intends to use South Africa as a ‘hub to develop Africa over time,’ said Jeremy Vitaro, Dunkin’ Brands vicepresident of international development.
Krispy Kreme
Krispy Kreme, the American retailer of donuts and coffee opened their first store in Africa in December 2014 in South Africa, with plans to open 31 stores in the country in five years. It has not indicated its intention to enter other African markets.
McDonalds
72 in Egypt. However, the chain is biggest in South Africa, where it has over 200 stores and 10,000 employees. The retailer has recently made a commitment to enter the rest of Africa, including Kenya. It entered Namibia and Tunisia in 2015.
Starbucks
The coffee chain is entering South Africa in early 2016. It has not committed its plans to enter the rest of Africa, but this may not be for long.
Kenya, and Nigeria drive next growth phase
To the keen observer, Kenya disproportionately drives the current wave of growth of the fast food giants into the regional market, with Nigeria, Mauritius and Zambia following closely. A more educated, urban and consumer base with sophisticated tastes due to good exposure of a significant population to the fast food concept, Kenya also provides a critical base from which human resource can be directed into the regional expansion plans of these retailers. Nigeria, Africa’s leading country in economic might has attracted a number of brands, but challenges remain with infrastructure and a perceived business environment that continues to hinder aggressive entry by many retailers, despite having the right demographic and income credentials. While Zambia, the Central African quiet destination continues to attract the retailers as they seek stable countries to invest in. It is worthy to note that KFC is back to Zimbabwe after having discontinued its operations there, despite the country continuing to go through economic challenges. Zimbabwe is a key destination with the right credentials if the current political and economic challenges can be resolved. Other interesting African markets include Uganda, Tanzania, Ethiopia, Ghana, Ivory Coast and Angola
McDonald’s, the leading fast food brand entered Africa through Morocco in 1992, where it has about 34 outlets, plus another
january 2016 | Food Business Africa
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trends | beverages
Mid-Calorie Beverages come through Could mid-calorie beverages become mainstream in future?
W
ithin the beverage sector, especially the carbonated soft drinks (sodas), two opposing forces exert opposing influence on the growth of the industry. One force is the concerns around sugar and its associated contribution to disease and health concerns, that continues to give bad press to full-calorie carbonates which have been the lifeline to the major producers, Coca-Cola and Pepsi, and thousands of other smaller producers around the World. On the other hand, safety and organoleptic concerns about nonnutritive sweeteners weigh in on the nocalorie beverages, even as the bottlers have over the years, developed no-sugar no-calorie beverage lines to correspond to the concerns above. Consumers around the World would like to use more natural sugars, pushing the non-nutritive sweeteners, which have been used by the soda industry for so long, into the periphery of their imagination. Falling sales of sodas in the US since 1995, including a decline in diet soda sales have provided an opportunity for soda giants, Coca-Cola and Pepsi to experiment with a different message: moderation. With a message that consumers may not necessarily have sugar, but would be willing to moderate their sugar consumption, the mid-calorie soda segment was born.
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january 2016 | Food Business Africa
Lessons from the milk industry
“The most important change in the world of non-alcoholic beverages this year, I think, is the growing push towards midcalorie carbonates as the possible future mainstream of regular soft drinks,” said Robert Hall, Chairman of Zenith International said in 2013 in an article. And the soda industry can learn some vital lessons from the milk industry, according to Hall. “Natural milk is not full fat at all. It has around 4% fat. But semi-skimmed milk is now more popular in some countries. It tastes just as good, if not better, and has half the fat. Skimmed milk, at 0.1% fat, is preferred by (only) a minority,” he said, referring to these mid calorie beverages as ‘semi-skimmed soft drinks’.
Mid-calorie debuts
Since 2014, there has been a lot of experimentation with mid-calorie drinks. Coca-Cola debuted its mid-calorie drink Coke Life in 2013, rolling it in Argentina, before rolling out into the US in a major way at the end of 2014. Coke Life is made from a blend of cane sugar and stevia, a natural high intensity sweetener from the stevia leaf, which is found in South America. With 35% less calories than similar products, Coke Life has also been introduced into Europe, Australia, South Africa and other countries.
“We ultimately want to be leaders in this emerging segment, and Coca-Cola Life is our first effort to make this a reality,” said Andy McMillin, vice president, CocaCola brands, Coca-Cola North America at the launch. “For consumers looking for a reduced-calorie soft drink sweetened with cane sugar and stevia leaf extract, this is a great-tasting option.” Pepsi was not left behind, launching their version of a mid-calorie drink in the same year. Called Pepsi True, the drink has 30% calories from regular Pepsi. It is also sweetened with sugar and stevia. Even Dr. Pepper, another soda producer joined the mid-calorie craze, introducing its TEN variant.
Africa still a long way
It must be said that markets like in the UK, where in 2014 49% of all soft drinks were no or low calorie, with mid-calorie products having a growing 5% market share could be the best targets for the mid-calorie drinks, but the possibility still exists in Africa, as the same concerns around health and obesity and consumer health around highintensity sweeteners continue to rise in the continent. It is a long way before mid-calorie products become mainstream, but we must be on the look out for opportunities in Africa foodbusinessafrica.com
trends | new products on the shelf
Castle Lite comes in a bigger pack SABMiller Kenya has introduced a bigger 440ml pack for its Castle Lite lager beer. The new pack, from the previous 375ml pack, could be a game-changer considering the competition continues to avail their premium beers in 330ml packs.
Blue Band with omega-3 and 6 Unilever Kenya has reformulated its Blue Band brand, incorporating canola oil into its spread, which provide a natural source omega-3 and omega-6. Several studies indicate that omega-3 and 6 are important for heart health, cognitive function and important in other diseases including cancer. Available in various pack sizes from sachets to 1kg.
Inyange debuts butter line Rwandese dairy producer has introduced Inyange Butter to its products line. The dairy adds butter to its fresh and long life milk, yoghurt, flavoured milk, cream ghee, juices and drinks. Available in 500g tubs
Related publications
Jesa introduces flavoured milk Jesa Farms has introduced flavoured milk products, adding to their fresh milk, long life milk and yoghurts. The product is available in full cream, strawberry and chocolate variants. Pack size: 200ml slim packs
IN thIS ISSue: El NiNo EffEcts oN coffEE productioN ISSn no: 2412-3366
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N E w s , p o l i c y & t E c h N o l o g y f o r a f r i c a ’ s c r o p, a N i m a l & h o r t i c u l t u r E i N d u s t r y
African superfruits in dairy products The nutritional benefits of dairy products can be further improved by the addition of fruits. Super-fruits, many of them available locally in many African countries, can be great additions to dairy products. Some of these fruits may surprise you
Contents formuLation: african superfruits
dairy nEWS:
p.15 p.17
nutrition: p.21
Whey
packaging: p.22
ESL packaging foodbusinessafrica.com
Raka introduces Brie cheese Raka Cheese has added an extra line of cheese products. The Brie variety comes in 200g packs.
D
airy products provide a good avenue through which the dairy processor can add to the already good consumer perception of milk. The addition of fruits provide consumers with other options to consume fruits, which are considered as key to consumer health and wellness. However, the increased focus on the two most common fruit varieties, strawberry and vanilla in the region, continue to deny consumers the opportunity to have a taste of other important fruits that are locally available, and which in many cases, even have better nutritional profile. Superfruits, though a formal
definition doesn’t exist, have been identified by nutritionists since 2005 as those fruits that are packed with antioxidants, fibre, vitamins and minerals and other benefits that can make a consumer feel better, live longer, look better and even prevent disease. Below, we provide a run down on some superfruits that are widely available in Africa and that the dairy can incorporate into its products, and some of the candidates will surprise you, since they may regularly be available at the road side or at your grocery store. These fruits may not sound exotic, but they have a big advantage since consumers know
Mira Mehta, CEO, Tomato Jos, Nigeria
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Events | calendar
February 3-5: Dar es Salaam, Tanzania 14th African Fine Coffee Conference & Expo
www.afca.coffee/conference/
news | SUPPLIER
Nampak to expand in Nigeria, Ethiopia
March 6-8: Addis Ababa, Ethiopia
Pack Ingredients opens Uganda office
4th World Coffee Conference
www.coffee2016.com March 15-18: South Africa Propak Africa, Johannesburg,
www.propakafrica.co.za April 26-28: Lagos, Nigeria Nigeria agrofood
www.agrofood-nigeria.com April 30- May 2: South Africa South African Cheese Festival, Stellenbosch,
www.cheesefestival.co.za June 19-21: South Africa Africa’s Big Seven - Johannesburg,
www.exhibitionsafrica.com/ems/africa-sbig-seven.html
from continuing operations by 10%, but were hit by uncontrollable foreign exchange issues in some key markets, booking R141 million in Angola and Nigeria.
INVESTMENTS – South African based packaging producer Nampak plans to open new glass bottle factories in Nigeria and Ethiopia at a cost of $155 million as part of the South African packaging firm’s strategy of generating half of its profit outside its home market in five years, reports Reuters. The bottle plant in Nigeria would cost about $90 million and the one in Ethiopia would need about $65 million, said Chief Executive Andre de Ruyter. The Ethiopian plant will produce up to 30,000 tonnes of glass per year, driven by the beer industry, while the Nigerian plant will produce 50,000 tonnes of glass per year. During the latest financial reports, both revenue and trading profit from the rest of Africa rose 43%, boosting group trading profit
NEW OFFICE – Specialty ingredients provider Pack Ingredients has opened a new office and warehouse for its improvers, baking oils and other ingredients in the capital city of Uganda, Kampala. The new facility is targeted at servicing the growing market in Uganda, Sudan and the Great Lakes Region, and provides a whole range of products and technical service that were not originally available in the country. “The baking industry of today requires more than just supplying products to customers. Technical service, product and market knowledge are key to delivering in this increasingly competitive market,” says Philemon Aduda, the Technical Manager, Pack Ingredients. “By opening the Uganda office, we believe we shall offer all these, contributing to the industry’s growth into the Great Lakes region,” he added.
Buhler introduces high definition camera for fruits and vegetables
June 8-10, 2016 nairobi, kenya
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TECHNOLOGY – Processors of frozen fruits and vegetables can now gain from a new high definition camera technology pioneered by the Swiss equipment manufacturer, Bühler. The new technology offers better detection and removal capabilities for a wide range of foreign materials in different stages of the processing and packing line and is particularly beneficial for processors with stringent safety specifications such as for the baby food market. The new InGaAsHD cameras are now available for Bühler’s SORTEX E product line. Processors that are already operating SORTEX E optical sorters with Enhanced InGaAs cameras will be offered an upgrade option, enabling them to benefit from the improved detection performance of the new HD cameras with their current solution. “By combining a new hardware, software and lens package, we were able to engineer a new camera with double the resolution. As a result of this in-house development, our sorter will be able to identify foreign material objects down to half the previous size,” Benedict Deefholts, Head of Sensor Development at Bühler, describes the key advantage of the new HD cameras. foodbusinessafrica.com
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B端hler Bakery & Ingredient Handling. All-round expertise from grain to bread.
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Innovations for a better world.