Food Business Africa Sept/Oct 2016

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Capwell

Inside:

Mars to combine Wrigley with chocolate business Land O’Lakes invests in Bidco Africa feeds line CDC invests in Zambeef PLC AFRICA’S

GRAINS,

MILLING

AND

BAKING

VOLUME 4 • ISSUE 4 • NO. 20 • ISSN 2307-3535

Industries Ltd:

Our focus is on Innovation & Diversification MAGAZINE

Industry Focus:

Grains Industry in Nigeria: Striving to feed Africa’s highest population A FOODWORLD MEDIA PUBLICATION

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CONTENTS

www.foodbusinessafrica.com Volume 4 Issue 4, No.20 • ISSN 2307-3535

FOUNDER & PUBLISHER Francis Juma

ADVERTISING & SUBSCRIPTION:

Photo courtesy SABMiller

Mary Nzioka • 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.foodworldmedia.net

RELATED PUBLICATIONS

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www.agribusinessafrica.net EDITORIAL 2

Milling & Baking Africa magazine joins FoodWorld Media industry publications

www.dairybusinessafrica.com

EVENTS PREVIEW 18 18

www.healthcareafrica.info

AFMASS Eastern & Central Africa Conference & Expo 2017 IAOM Middle East & Africa 2016

SUPPLIER NEWS AND INNOVATIONS 38

Senomyx and Pepsi sign new sweetener deal | PureCircle ups stevia capacity | Chr. Hansen acquires probiotics culture strain | TNA unveils new website | DuPont Nutriton & Health launches new cheese cultures.

INTERNATIONAL NEWS 6 8 12

SUBSCRIPTION Contact: info@foodworldmedia.net Annual Subscription: Kenya: KSh 2900 (VAT inclusive); Africa: US$ 70; Rest of World: US$ 90 (including postage)

Coca-Cola to acquire former SABMiller stake in CCBA Nestlé restructures Nestlé Professional business Mars to combine chocolate with wrigley business

TWO YEARS: Kenya: KSh 5600 (VAT inclusive); Africa: US$ 130; Rest of World: US$ 170 (including postage)

AFRICAN NEWS 18 19 20 21 22

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Bakhresa receives Govt nod for sugarcane land Guinness Nigeria report full year loss FrieslandCampina to partner universities to boost dairy production CDC invests in Zambeef McDonald’s SA gets regulator nod for acquisition

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 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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SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

1

EDITORIAL

Milling & Baking Africa magazine joins FoodWorld Media industry publications The new magazine insert follows the introduction of Dairy Business Africa insert in 2015, providing a focus on grain-based industries in Africa

T

“MILLING & BAKING AFRICA MAGAZINE IS AFRICA’S GRAINS AND COMMODITIES PROCESSING AND PACKAGING RESOURCE THAT IS TARGETED AT THE GRAIN AND COMMODITIES TRADING, PROCESSING, PACKAGING AND RETAIL INDUSTRY”

2

he grains, milling, baking and snacks industry in Africa have a new resource following the addition of a new publication to our food and agriculture-focused industry publications.

The introduction of Milling & Baking Africa magazine in this issue of the magazine fills a gap in the industry that we have always strived to fill, and are happy to have finally delivered.

As publishers of industry magazines, we realize that in Africa, the grain industry is one of the most important industries. There could be millions of village based grain mills dotted across the Continent, probably more than any other food processing equipment.

Further, there have been increased investments in the latest milling, grain handling and storage infrastructure across the Continent over the years, as Africa moves towards improving efficiency, safety and capacity of its grain based industries.

Africa has a yearning need for appropriate technologies, people and skills that are critical in enabling the Continent to provide wholesome, nutritious and safe grains, milled products and baked goods to its population - and I believe a publication like this one is a good avenue to pass on this information.

Milling & Baking Africa magazine is Africa’s grains and commodities processing and packaging resource that is targeted at the grain and commodities trading, processing, packaging and retail industry. It will highlight the trends, opportunities and challenges in Africa’s grains, milling and baking industry.

The magazine covers technologies and information on grains (maize/ corn, wheat, rice, barley, sorghum, teff plus other ancient grains) and other commodities including tubers (cassava, yams and potatoes), pulses, coffee and related crops that are of critical importance to Africa.

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

It also covers the value-addition component of the grains and commodities, including packaged products, flours for human and animal feeding, snacks (extruded and otherwise) and baked goods.

Milling & Baking Africa originally appears as an insert in the September, January and May issues of Food Business Africa magazine, before eventually being released as a standalone magazine in future.

The magazine becomes the second extension to the Food Business Africa magazine, after the introduction of Dairy Business Africa magazine insert in July 2015 that covers the fast-rising dairy industry in Africa.

By appearing as an insert within the Food Business Africa magazine, Milling & Baking Africa magazine is distributed as a hard copy to the 16 African countries where Food Business Africa is currently being distributed, offering wide distribution within the Continent to key decision makers in the industry.

Online distribution through an easy-to-read digital reader expands the reach of the magazine beyond the physical reach of the magazine to the rest of the World.

I am glad that this first issue of the magazine has come out in time for distribution at the IAOM Conference in Ethiopia, the milling conference that is coming to sub-Sahara Africa for the first time.

We are also proud to have a comprehensive feature of one of Kenya’s millers, Capwell Industries, in this issue. Further, in this issue, we have a full-length coverage of Africa’s grain based industry stalwarts – Nigeria.

I hope the magazine and the entire Food Business Africa magazine will be of value to your business – now and into the future I wish you a good read.

Francis Juma Publisher FOODBUSINESSAFRICA.COM

DATE: April 4-6, 2017

AFMASS

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NEWS | INTERNATIONAL M&A

The Coca-Cola Company to acquire AB InBev’s stake in Coca-Cola Beverages Africa The Coca-Cola Company to acquire AB InBev’s stake in Coca-Cola Beverages Africa

USA - The Coca-Cola Company plans to exercise its right to acquire AnheuserBusch InBev’s (AB INBev) stake in CocaCola Beverages Africa (CCBA) following the closing of the acquisition of SABMiller by AB InBev. According to a statement, Coca-Cola has chosen to exercise its right to acquire AB InBev’s stake in CCBA because it “intends to implement its long-term strategic plan” in the African markets with other partners.

It says that it has a number of existing partners who are “highly qualified and interested in these bottling territories.”

Coca-Cola Beverages Africa (CCBA), a recent created company following the

merger of SABMiller’s soft drink businesses in several eastern, central, southern and western African markets with Coca-Cola and the Gutsche Family Investments (GFI) from South Africa, started operations in July.

CCBA serves 14 high growth countries, accounting for about 40% of all Coca-Cola beverage volumes in Africa.

The countries include South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte, Comoros and Nigeria. Botswana, Swaziland and Zambia are expected to join CCBA by the end of 2017.

SABMiller had a 57% shareholding in

CCBA, with GFI taking 31.7% and CocaCola, 11.3%.

With the planned acquisition, Coca-Cola will take a majority stake of 68.3% before selling it to other bottling operators.

Coca-Cola says that it will negotiate the terms of the transaction with AB InBev over the next few months, while engaging with potential partners to refranchise CCBA as soon as possible.

Meanwhile, the acquisition of SABMiller

by AB InBev has received the critical shareholder approvals and has been sealed.

The new company will adopt the AnheuserBusch InBev name, ending the fairy tale history of the SABMiller brand.

M&A

Famous Brands acquires premium chain Gourmet Burger Kitchen to boost UK presence Company says the deal will be a game changer for its operations, its biggest acquisition so far

UK – Leading quick service restaurant operator, Famous Brands has acquired 100% share capital of Gourmet Burger Kitchen (GBK), a pioneer in the premium burger space in the United Kingdom (UK).

GBK has 75 company-owned restaurants across the UK and is widely renowned as the market leader in the premium burger category. Three New Zealanders started the restaurant chain in 2001.

Famous Brands has acquired the business from the Yellowwoods Group, providing it with further growth prospects in the UK, where it already has a number of its signature brands, including Wimpy and Steers. It has been acquired for a total of £120 million (US$150m).

“More recently we have stated our intent to pursue opportunities which will enhance our existing income stream with hard currency earned outside of Africa; the GBK acquisition achieves that goal, and simultaneously up-weights Famous Brands into a substantially higher league,” said Kevin Hedderwick, Famous Brands’ Group Strategic Advisor responsible for M&A activity.

“In terms of scale and scope, this is the biggest deal the Group has ever concluded,

and one which will transform the future of the business. It will be as much of a gamechanger for the Group as our acquisition of Wimpy South Africa was in 2003,” he commented.

GBK’s current management team will continue to manage the business, according to the company, with the transition in ownership to be effected seamlessly over time.

Good, strategic move The acquisition of GBK has a compelling rationale, according to Famous Brands CEO. “The GBK business is a unique asset of substantial scale, positioned in the wider, unexploited bespoke burger market segment. Both the Fast Casual and premium burger market segments are growing.

INVESTMENTS

IFC invests US$40m for expansion of WOW! Nutrition in Brazil BRAZIL–The International Finance Corporation (IFC), a member of the World Bank Group, has invested $40 million in WOW! Nutrition one of the largest companies in the non-carbonated and nonalcoholic beverages sector in Brazil.

IFC’s financial package comprises a US$25 million equity investment and a 5-year US$15 million loan. The investment will support WOW! Nutrition’s plans for growth, which include the expansion of its packaging lines and help it improve efficiency by 6

streamlining existing operational processes, and to increase competitiveness by strengthening its capital structure.

WOW! Nutrition manufactures juices and nectars, iced tea, soy-based beverages, artificial sweeteners, diet products, and infant nutrition products. The company has two sites, one in the state of São Paulo and the other in the state of Amazonas. It obtains most of its inputs from domestic fruit producers and families in the Amazon region.

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

Founded in 1999, Wow! Nutrition is a key player in the healthy and convenient beverages and specialty foods sector in Brazil. The company manufactures and distribute important brands such as: Sufresh, Feel Good, Soyos, Assugrin, Gold, Tal&Qual, Doce Menor and Vitalon. WOW! Nutrition has the largest and most modern industrial park of non-alcoholic beverages in Latin America

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KENYA, NUTRITION, HEALTH & WELLNESS EXHIBITION NAIROBI EDITION April 15-16, 2017 The Hub Karen Mall, Nairobi, Kenya Effective, safe, proven and healthy ways to nourish the body, mind and soul all come together at the first ever Kenya Nutrition, Health & Wellness Exhibition. If you are into healthy eating, healthy living and wellness, this is the event you have been waiting for.

Hosted over an entire weekend at one of Nairobi’s trendiest malls, The Karen Hub, this event is a one-stop shop for sourcing and finding vital information about foods and beverages, healthcare and wellness solutions that are best for you and your entire family from a host of local and international providers who will be on site.

Sponsorship, Exhibition and Speaking Opportunities available. Please contact us for details.

www.wellness.foodworldmedia.net

NEWS | INTERNATIONAL PEOPLE

Luis Cantarell retires from Nestlé S.A, as company restructures Nestlé Professional

SWITZERLAND Luis Cantarell, the Executive Vice President and Head of Zone Europe, Middle East and North Africa (EMENA) at Swiss food group Nestlé is retiring at the end of 2016 after a career of 40 years in the company.

Marco Settembri, currently Executive

Vice President and Head of Nestlé Waters, will replace Luis Cantarell at the start of January 2017 as Executive Vice President and Head of Zone EMENA. Luis Cantarell has led Zone Europe from 2005 and Zone Americas from 2008.

He was instrumental in the creation of the Nestlé Nutrition globally managed business, launched Nestlé Health Science and over the past two years successfully shaped the new Zone EMENA organisation, according to the company.

Marco Settembri, an Italian citizen has been with Nestlé since 1987. In 2007 he was appointed CEO of Nestlé Purina PetCare Europe. Under his leadership pet care became one of Nestlé’s largest and most profitable businesses in Europe.

Maurizio Patarnello, currently Market Head of Nestlé Russia and Eurasia Region, will be appointed Deputy Executive Vice President and Head of Nestlé Waters, effective 1st January 2017 to succeed Marco

Settembri. He has been with the company since 1993.

Meanwhile, the company’s Board of Directors has changed the business structure for Nestlé Professional from a globally managed business to a regionally managed business supported by a Nestlé Professional Strategic Business Unit. The new structure is in response to “increasing demand for more customized products and services on a local and regional basis often linked with developments in the in-home business,” says the company. In the new set-up the regional managers will report directly into their respective geographical zones, allowing a “better leverage of the company’s strengths, facilitate greater focus on customers and enhance alignment and execution in each region and market.”

Martial Rolland, who has been the Head of Nestlé Professional, has a new appointment as Market Head of Nestlé Russia and Eurasia.

STRATEGY

Burger King plans global reign on Indian innovations INDIA – Fast food chain Burger King has expanded its presence in India to 66 outlets in nine cities in two years, and has lined up US$100 million for aggressive expansion plans over the next few years.

“It’s a market where we are just getting started. Quick Service Restaurants (QSRs) are just evolving in India and we are in the market at the right time. In India, we now have all the ingredients in place to scale up aggressively,” says Jose Cil, global president, Burger King.

India master franchisee Everstone Capital is aiming to scale up the number of stores to three digits by the end of this year, or early next year. It holds a majority stake

in Burger King India through its subsidiary F&B Asia Venture.

“Capital is not a constraint for the company. We have focused on building a business that’s centred on quality. We have in place a great management, a much liked product portfolio and a robust supply chain.

It’s a platform that is geared for growth.

What is slowing us down is lack of good quality locations,” says Sameer Sain, cofounder, Everstone.

Everstone has the largest bouquet of restaurant brands in India, of which some are owned, some franchised, or are investee companies. The firm has bet big on India food services industry that’s expected to

touch US$77 billion (about 24,98,130 crore) by 2021, growing 10% annually.

Currently, Burger King has 11 burgers on its Indian menu that don’t exist anywhere in the world. Also, despite beef burger being its global bestseller, it follows a no-beef and no-pork policy in India. All its outlets have separate kitchens for vegetarian and nonvegetarian food.

“India was a unique market and we had to build the menu from scratch. We will now be taking Indian innovations like Veggie and Chicken Tandoori Burger across the globe.

Its good food at a great price,” says Cil.

RESEARCH

Edible oils market projected to hit US$130.3 billion in 2024, as health concerns drive growth WORLD - A new report published by Persistence Market Research, “Global Market Study on Edible Oils: Industry Analysis and Forecast 2016-2024”, reveals that the global edible oils market is expected to register a CAGR of 5.1% through the forecast period to reach the value of US$130.3 billion at the end of 2024.

The projected market trend can be attributed to the rising health concerns across the globe and growing demand for 8

healthy edible oils.

According to the report, manufacturers are adopting new techniques to increase production of edible oils such as cold pressing technology. This combined with growing disposable incomes and the growing demand for snacks and fried food globally are major drivers in the global market. The rising retail sector is a major boon to the global edible oils market as the wide organized market has helped bolster

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

growth of the edible oils in the market.

The palm oil segment is projected to register the fastest growth rate through the forecast period, with the segment accounting for over 32% share in the global market, in terms of volume, in 2015.

The soybean oil segment is projected to register a slight negative growth owing to the surplus availability of raw materials and shifting consumer needs to healthier edible oil options such as canola and olive oil.

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NEWS | INTERNATIONAL INVESTMENTS

Fonterra opens new milk powder factory

NEW ZEALAND – New Zealand dairy Cooperative has opened a new highefficiency milk powder plant, as the world’s joint-largest dryer comes online in the South Waikato, New Zealand.

The new 30 metric tonne an hour dryer at the Co-op’s Lichfield site will be capable of processing an additional 4.4 million litres of milk each day into high quality milk powder for global markets.

“Premium milk powder is a valuable product for Fonterra in its own right, but people often underestimate the strategic importance of powder production to the Cooperative’s overall asset mix. The capacity these assets give us takes the pressure off during the peak of the season, meaning we have more freedom to prioritise milk into higher returning products,” says Fonterra’s Chief Operating Officer Robert Spurway.

“Our goal is to strike a balance in our assets that enables us to switch between products quickly to meet demand changes

in global markets, push the pace on production when milk volumes dictate, and ultimately deliver the best product mix to generate returns,” says Mr Spurway.

A new distribution centre and a sophisticated wastewater treatment plant support the dryer. The distribution centre has the capacity to store 40,000 metric tonnes of whole milk powder, which is then loaded into containers and shipped directly to port via an in-built rail siding.

The new biological wastewater treatment plant is capable of turning dairy waste into fertilizer, which is then irrigated onto neighbouring farmland to help pastures flourish – part of the Cooperative’s commitment to environmental sustainability.

PEOPLE

Mondelez International names Deepak Iyer as Managing Director, India

INDIA – Mondelēz International, the maker of Oreo, LU and Cadburys, has announced the appointment of Deepak Iyer as Managing Director of Mondelez India.

“Deepak joins us with over twenty years

of management experience spanning sales, marketing, R&D, franchise management and general management. He also comes with extensive experience in the FMCG space in India. We look forward to him leading our India business – a priority market for Mondelēz International globally,” said Maurizio Brusadelli, EVP & President, Asia Pacific, Mondelēz International.

Deepak Iyer was recently CEO & Managing Director of Bharti Axa General Insurance Company. Prior to Bharti Axa, Mr Iyer was CEO and Managing Director of Wrigley India. He was earlier with PepsiCo Inc. for 17 years across different roles and in different markets.

Deepak Iyer will also be part of the Asia Pacific Leadership Team and will report into Maurizio Brusadelli, EVP & President, Asia Pacific, Mondelēz International.

Meanwhile, the company plans to spend US$15m to build a Research and Development Centre dedicated to its chocolate brands on the outskirts of Mumbai, India, part of its planned US$65m investment in R&D centres across the World. The latest investment follows the April 2016 opening of the US$190m plant in Andhra Pradesh, India, the company’s largest in the Asia-Pacific region.

FOOD SAFETY

NZ and China extend food safety partnership deal CHINA – New Zealand’s Food Safety Minister Jo Goodhew has announced a twoyear extension for a scholarship programme that seeks to deepen engagement between New Zealand and China, while boosting mutual understanding of each other’s food safety systems.

The scholarship programme is an initiative under the Food Safety Cooperation Agreement signed between New Zealand and China in November 2013. It was developed in partnership between New Zealand’s Ministry for Primary Industries (MPI) and the China Food and Drug Administration (CFDA).

“To date, 13 officials from CFDA have participated in the program. Given its success, we see value in extending this 10

scholarship program for a further two years.”

The scholarship covers best practice regulation, risk management, food processing and design, and the development and implementation of food standards.

It has an academic component led by Massey University, which is supported by applied learning through study tours and internships.

“This scholarship not only increases the understanding of our respective food safety systems, it also helps to strengthen the relationships between the two countries and help to align food safety practices,” says Mrs Goodhew. “The two year extension of this scholarship programme will further enhance the close cooperation between our

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

countries, resulting in a stronger bilateral relationship in the areas of food safety and consumer confidence,” Mrs Goodhew says.

China is a significant player in the exports from New Zealand, with the country importing concentrated milk powder worth US$3.15 billion in 2014. Fonterra is also a critical investor in China, recently setting up a 30,000-cow farm in the country, to boost local milk production.

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NEW PRODUCTS

PepsiCo’s Tropicana launches new 100% juice with probiotics

Tropicana Probiotics is available in three delicious flavors: Strawberry Banana, Pineapple Mango and Peach Passion Fruit

US – PepsiCo, through its leading juice maker Tropicana, has launched the first probiotic juice by a mainstream juice processor in the US. The new Tropicana Essentials Probiotics is a line of 100% juice with probiotics that seeks to take advantage of the fast rising probiotics market - combining the goodness of 100% juice with the functional benefit of probiotics.

“We are thrilled to be the first to bring probiotics more commonly seen in yogurts, supplements and kombuchas to the mainstream juice aisle,” said Björn Bernemann, vice president and general manager for Tropicana North America. “As a heritage brand rooted in innovation, Tropicana is dedicated to launching significant innovation within the rapidly evolving health and wellness space.”

Tropicana Probiotics is a 100% juice with one billion live and active cultures per serving available in three delicious flavors: Strawberry Banana, Pineapple Mango and Peach Passion Fruit.

Each eight-ounce serving contains more than the recommended daily value of Vitamin C and has no added sugar, preservatives or artificial flavors. The product will be availed in multi- and singleserve sizes early 2017, with limited early distribution in select retailers in October of this year.

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NEWS | INTERNATIONAL M&A

Cargill enters fast growing poultry market in Indonesia, to open food service opportunities

INDONESIA - Cargill and So Good Food, a wholly-owned Indonesian subsidiary of leading agri-food company Japfa, have entered into a 60-40 joint venture to produce and supply fully-cooked poultry products in Indonesia.

The strategic partnership will leverage Cargill’s broad industry expertise to boost So Good Food’s capabilities in consumer food processing technologies, product innovation and quality assurance. Cargill and Japfa will also work together to produce

a new range of value-added consumer food products, tapping into the growing Indonesian market.

Besides toll manufacturing for So Good Food, the joint venture company, Cahaya Gunung Foods (Shining Mountain Foods), will supply products to quick service restaurants, hotels, restaurants, and the food service sector as well as convenience stores and petrol kiosks in Indonesia. It will also export products to the region.

“Indonesia is an important growth market for Cargill. This is our first venture in the poultry business in Indonesia and we are excited to be partnering with Japfa. We will implement our world-class systems and processes to ensure high quality chicken products through our broad industry expertise and quality standards,” said newly appointed Managing Director of Cahaya Gunung Foods, Derek Schoonbaert.

According to Euromonitor, Indonesia is the largest foodservice market in ASEAN, notes

the company in a statement.

Indonesia’s huge foodservice potential The value sales for Indonesia’s foodservice market grew at a compound annual growth rate of 8.7% from 2010 to 2014, reaching US$36.8 billion in 2014, which was about US$14 billion higher than the next largest ASEAN market, Thailand.

Full-service restaurants, fast food and street stalls/kiosks are the top three growth drivers for Indonesia’s foodservice market.

The sales value of the foodservice market is estimated to increase at a CAGR of 9.0% from 2015 to 2019 to hit US$56.3 million by end 2018.

“As the world’s fourth most populous nation, Indonesia’s foodservice market offers immense opportunities. Our JV with Cargill will take us a step further into new growth segments with a wider range of consumer food products,” says Tan Yong Nang, Chief Executive Officer of Japfa.

M&A

Mars to combine chocolate and Wrigley businesses to create one company

USA – Leading food and petcare company Mars Incorporated plans to combine its chocolate and Wrigley businesses to create Mars Wrigley Confectionery, creating a “global confectionery category”.

According to the company, the combination will “help deliver greater value to customers, and enable the segment to address consumer trends and 12

insights holistically”, becoming one of the company’s diverse global businesses, which also include Petcare, Food, Drinks and Symbioscience.

The move follows the acquisition of Wrigley in 2008, which brought the leading gum manufacturer under the privately owned Mars Inc. Since the acquisition, Mars has, over the course of years, been

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

buying the minority stake held by Berkshire Hathaway in Wrigley, according to the company. The company has since bought out the entire Berkshire Hathaway equity, it says.

The new company will have some of the world leading brands including Snickers, M&M’s, Maltesers, Twix, Doublemint, Extra, Orbit, Skittles and Starburst. It will have about 30,000 employees in about 70 countries and be headquartered in Chicago, Illinois, USA. “We’re pleased that sole ownership of Wrigley provides us with an opportunity to rethink how we simplify our Chocolate and Wrigley businesses so that we can bring a more holistic approach to this vibrant category,” commented Grant F. Reid, Office of the President and CEO of Mars, Incorporated about the transaction.

However, Mars Chocolate and Wrigley will continue to operate separately for the time being, with Jean-Christophe Flatin being President, Mars Global Chocolate, and Casey Keller, previously Regional President of Wrigley Americas, will become President, Global Wrigley. The combination will be finished ion the course of 2017, says the company.

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ADVERTORIAL FOOD SECURITY

The FAO Food Price Index continues upward trend in September

WORLD - The FAO Food Price Index averaged 170.9 points in September 2016, up almost 5 points (2.9%) from August and 10% above the corresponding month last year. The September value is the highest since March 2015, according to the report issued by FAO in early October.

September increases in the index continues a trend that has been seen since the start of the year, mainly due to a surge in sugar prices and moderate increases for dairy products, meat and oils. August’s index rise in the index was driven mostly by stronger dairy and sugar quotations.

The FAO cereal price index averaged 140.9 points in September, down 2.7 points (1.9%) from August and 8.9% below last year. This decline marked the third consecutive month of decreases, largely due to ample global supplies. This year’s record wheat production, coupled with an expected rebound in global rice production and above-average performance of coarse grains, maize in particular, have continued to weigh on cereal export quotations.

The FAO vegetable oil price index averaged 172 points in September, up 2.9 points (or 1.7%) from August, reflecting higher quotations of palm, soy and rapeseed oils. Palm oil values continued to strengthen, underpinned by weaker than anticipated output growth and low stock levels in both exporting and importing countries.

International soy oil quotations appreciated

on tight global export availabilities, while rapeseed oil prices firmed on concerns about global output falling for a third consecutive year in 2016/17.

The FAO dairy price index averaged 176 points in September, up as much as 21 points (13.8%) from August. Quotations rose for all dairy products, in particular butter, which was bolstered by reduced stocks and strong internal demand in the EU. The current price surge stems from expectations that falling milk production in the EU and a muted opening to the dairy year in Oceania would result in tighter availabilities for export, following excess supplies in the preceding two years.

The FAO sugar price index averaged 304.8 points in September, up 19 points (6.7%) from August, the fifth consecutive monthly increase. The latest surge in international sugar prices was largely on the back of unfavourable weather conditions in Brazil, the world’s largest sugar producer and exporter. Reports of lower production in India, the world’s second largest sugar producer, and tight supplies in Thailand and China, also added to the upward pressure.

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NEWS | INTERNATIONAL INTERNATIONAL BRIEFS M&A

Mezzan Holding acquires majority stake in Saudi company Al Safi Food

KUWAIT — Mezzan Holding, one of the largest food, beverage, FMCG and pharma manufacturing and distribution companies in the Gulf, has completed its acquisition of 70% of Saudi-based Al Safi Food Company.

Based in Riyadh, Saudi Arabia, Al Safi Food Company is a start-up food manufacturing company established by the Al Faisaliah Group and began operations 2015. The Al Faisaliah Group, a leading diversified business group, will continue to be part of the Al Safi Food Company with the remaining 30% stake.

Mezzan Holding, a Kuwait Stock Exchange-listed company, acquired the 70% stake through a capital injection of SR90.75m (US$24m).

Mezzan Holding operates in seven countries through 29 subsidiaries and 7,500 employees, and generates approximately 75% of its revenues through retail-based activities. The capital injection includes planned capital expenditures leading up to end of 2017.

NEW PRODUCTS

Dunkin’ Donuts partners Coca-Cola to launch RTD coffee in 2017

USA – Coffee and pastries chain Dunkin’ Donuts plans to debut a line of Dunkin’ Donuts branded ready-todrink (RTD) coffee beverages in the United States in early 2017 as it seeks to follow the footsteps of Starbucks into the RTD business line.

The drinks, to be manufactured, distributed and sold by Coca-Cola Company will make the company’s first entry into the ready-to-drink coffee category, which has enjoyed very strong growth over the past five years and represents US$2.3 billion in annual sales, according to Nielsen.

Financial terms of the agreement were not disclosed.

Coca-Cola will produce the readyto-drink coffee beverages according to Dunkin’ Donuts specifications, then use its network of bottling partners to sell and distribute the beverages, which will include real milk and sugar in a variety of flavours.

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SUSTAINABILITY

Coca-Cola becomes first Fortune 500 company to replenish all the water it uses globally

USA - The Coca-Cola Company and its global bottling partners have announced they have met their goal to replenish the equivalent amount of water used in their global sales volume back to nature and communities, becoming the first Fortune 500 company to publicly claim achieving such an aggressive water replenishment target.

The company and its partners also announced progress against their water efficiency goal, improving water use efficiency by 2.5% from 2014 to 2015, adding to a cumulative 27% improvement since 2004.

According to the company, the CocaCola system returned an estimated 191.9 billion liters of water to nature and

communities in 2015 through community water projects, equaling the equivalent of 115% of the water used in Coca-Cola’s beverages last year. The global water use assessment was validated by LimnoTech and Deloitte, and conducted in association with The Nature Conservancy.

“This achievement marks a moment of pride for Coca-Cola and our partners. A goal that started as aspiration in 2007 is today a reality and a global milestone we plan to maintain as our business grows,” said Muhtar Kent, Chairman and CEO, The Coca-Cola Company. “Now, every time a consumer drinks a Coca-Cola product, they can have confidence that our company and bottling partners are committed to responsible water use today and tomorrow.

We are keenly aware that our water stewardship work is unfinished and remain focused on exploring next steps to advance our water programs and performance.”

The Coca-Cola system has achieved its water replenishment goals through 248 community water partnership projects in 71 countries focused on safe water access, watershed protection and water for productive use.

FOOD SAFETY

Smaller companies face challenges with meeting FSMA requirements USA – A new report has highlighted the challenges smaller food companies face in meeting new food safety regulations in the US, even as larger food companies are well on their way towards compliance.

Many food companies are still struggling to understand all aspects of the new Food Safety Modernization Act (FSMA), according to the latest FSMA Update Report by, The Association for Packaging and Processing Technologies (PMMI).

The report analyzes responses from 47 food industry stakeholders on FSMA preparedness and identifies what food manufacturers need from supplier partners.

According to the report, fresh fruit and vegetable processors and small food companies are expected to have the most difficulty with compliance.

With only limited regulatory oversight before FSMA, these businesses have been making more investments in new equipment to help meet compliance. Additionally, small food companies and farms are challenged

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

with overhead costs while those that source ingredients from foreign-based suppliers must now ensure that their suppliers comply with the law’s food supplier program. Some companies are still awaiting guidance from the Food and Drug Administration (FDA).

An additional challenge with FSMA is the continuing roll-out of new documentation requirements.

The PMMI report notes that many managers still need clarification on deadlines, as well as specifics on what parts of the law are relevant to their facilities.

“Understanding FSMA compliance and documentation requirements present significant challenges to implementation” says Jorge Izquierdo, Vice President of Market Development at PMMI. “As a result, about 30% of participating companies – particularly smaller ones – plan to use original equipment manufacturers (OEMs) as a consulting resource to help figure out how FSMA applies to their operations.”

FOODBUSINESSAFRICA.COM

EVENT PREVIEW

IAOM Middle East & Africa Conference & Expo - 24-27 October 2016, Millennium Hall, Addis Ababa, Ethiopia.

The 27th edition of the annual International Association of Operative Millers Mideast & Africa Region (IAOM MEA) Conference & Expo is set for 24-27 October 2016 at the Millennium Hall in Addis Ababa, Ethiopia.

AIOM Middle East & Africa Conference & Expo has its main goal of advancing education and training opportunities in the grain milling industries for this very important and growing region.

This year’s meeting brings the entire industry together at Africa’s political and diplomatic capital, Ethiopia. The country is Sub-Saharan Africa’s largest wheat consumer and fastest growing economy in the world.

In consultation with the local host, Ethiopian Millers Association, a number of technical topics and challenges that the Association would like to be addressed during the conference have been included. Oout of these consultations, a panel discussion titled, “Feeding the Fastest Growing Economies of East Africa,” was crafted, which will feature the region’s milling industry

leaders and their success stories, and will be moderated by Martin Schlauri, Managing Director, African Milling School, Buhler Middle East and Africa.

The other panel discussion, “Regional Review: The Modern Middle East,” will focus on the consequences of privatization and subsidy reforms in the United Arab Emirates (UAE), Saudi Arabia, Iran, Egypt, and Jordan. David McKee a world-renowned grain industry consultant will moderate this discussion.

Dan Basse, President and Founder of AgResource Company, will join both panel discussions and will also moderate the trading sessions.

More information on the event can be found at: http://iaom-mea.com/IAOMETHIOPIA-2016

AFMASS Eastern & Central Africa Conference & Expo – April 4-6, 2017, Nairobi, Kenya

The entire food, beverages, milling and animal feed industry in Eastern and Central Africa meets in Nairobi, Kenya at the premier event that covers food and feed processing, packaging and food safety.

AFMASS Eastern & Central Africa has separated itself out over the years as the industry’s most important meeting where industry leaders trade, learn and network with leading regional suppliers, Government agencies and NGOs with a focus on the food and agro allied industry in Africa.

Beginning 2017, the event will have two conference streams to meet the specific needs of the delegates and other stakeholders, plus one exhibition that will showcase some of the breakthrough

technologies in post-harvest management, processing, distribution and retail, packaging, food safety, nutrition and food security, sustainability and other relevant topics to the industry.

The African Food Manufacturing & Safety (AFMASS) Conference stream will focus on the technologies in the dairy, beverages, meat, fruit and vegetables, sugar and candy and food service sectors of the industry.

The African Grains, Milling & Feed (AFGRAINS) Conference stream will focus on the technologies in the grains, milling, baking and animal feed sectors of the industry. The AFGRAINS Conference is a critical addition to this conference. It will become the first regular conference that targets the grains, milling, baking and

animal feed industry in the region.

In 2017, the utilization of sorghum and insects in human and animal feeding will be highlighted at the conference streams.

Key industry leaders will attend a number of high-level panel discussions from the region. These include, “Sorghum: Unlocking the value of sorghum for use in the food and feed industry in Africa.” The other key discussion will be “Fortification: The challenges, opportunities and future trends in Africa” and the top executive focused panel discussion, “Industry Business Leaders’ Panel Discussion.”

More information about the event can be found at: www.afmass.com

NEWS | SUPPLIER NEWS & INNOVATIONS PARTNERSHIP

Senomyx and Pepsico sweetness partnership for three more years USA - Leading flavor company Senomyx, Inc, have signed an extension to their Sweet Taste Program collaboration agreement with beverages producer PepsiCo for a further three years.

The partnership, signed four years ago, has been amended and restated, extending PepsiCo’s research funding for Senomyx’s Natural Sweet Taste Program for three additional years to September 2019.

Under the amended and restated

agreement, Senomyx has granted PepsiCo non-exclusive rights to natural sweeteners and natural flavor ingredients discovered, developed and selected under the collaboration for use in all non-alcoholic beverage categories.

During the extension, Senomyx will be entitled to $18 million in research and development payments over the three-year research period. PepsiCo retains the option to further extend the research collaboration

for two more years, which would result in additional research funding commitments.

Senomyx will also be eligible for milestone payments based on the achievement of predetermined goals as well as royalty payments upon the sale of products containing natural sweeteners or ingredients selected under the collaboration, according to the two companies.

PLANT EXPANSION

PureCircle building new plant to expand stevia processing capacity MALAYSIA – Leading stevia supplier PureCircle is building a new processing plant that will double the company’s capacity to produce its proprietary stevia leaf extract as it prepares for the continued demand for stevia ingredients around the world.

The new plant is expected to increase the company’s stevia leaf extract output by 50% and has the potential to double the company’s stevia production capacity

moving forward, says the company. It will also have a line specifically designed and built for the Zeta Family ingredients, which are steviol glycosides, such as Reb M, with the most sugar-like taste and allow for the deepest calorie reductions.

The new plant, located in Malaysia, will help to support PureCircle’s fully integrated supply chain and agricultural plans throughout the world, which were

announced in July. These plans include an additional investment of $100 million in the PureCircle Agronomy Program resulting in a 10,000 hectare pipeline that will provide customers with year-round access to the highest quality stevia leaf extract.

The expansion of processing capabilities is expected to cost U$42m and is expected to be ready in early 2017.

M&A

Chr. Hansen acquires LGG strain from Valio OY to strengthen its probiotics offering

DENMARK – Leading culture provider Chr. Hansen has acquired the LGG business from Valio OY in a bid to strengthen its microbial platform across several industry segments, in a deal worth €73 million (US$82m).

According to Chr. Hansen, the acquisition of the Lactobacillus rhamnosus GG (protected under the trademark LGG), the best-documented probiotic strain in the world, will further strengthen its portfolio of probiotic strains, adding to its own BB-12 strain.

LGG has been used in the food and dietary

supplements since 1990 and has a proven beneficial effect on the gastrointestinal and immune system. It has been studied in more than 200 clinical studies and described in more than 800 scientific publications, says the company.

Cees de Jong, CEO of Chr. Hansen Holding A/S, says: “One of the ambitions in our Nature’s No. 1 strategy is to expand our current business within microbial solutions for human health. The acquisition allows us to capture the full potential of the LGG® brand across markets for dietary supplements and infant formula offerings, as well as pursuing new opportunities in dairy”.

Natural solutions that advance human health are in high demand and the expected growth for microbial solutions in this

industry is 7-9%, according to the company.

“The markets for well documented probiotic strains are experiencing very strong growth in dietary supplements and drives an entire category in fermented milk products, such as yoghurt, kefir, etc. We believe that there are vast opportunities for the LGG brand considering Chr. Hansen’s wide geographic reach and deep technical knowledge,” said Lasse Nagell, Senior Vice President, Human Health at Chr. Hansen.

Apart from acquiring the full rights to the strain, Chr. Hansen also takes over a number of specialty strains already in production and a bacterial strain collection of around 3,200 strains and a small production site in Tikkurila, Finland, which currently produces the LGG strain and a number of specialty strains used in dairy production.

FOOD SAFETY

Diversey care to eliminate triclosan globally from its hand care line USA - Sealed Air Diversey Care division has announced that it will remove triclosan from all of its hand care products globally within the next 12 months.

The company’s move follows the Food and Drug Administration’s (FDA) recent rule that over-the-counter consumer antiseptic 16

wash products containing triclosan can no longer be marketed in the U.S. “Our hand care products protect people across the globe. We are dedicated to providing the safest and most effective hand care products available and are proud to lead the industry in making triclosan

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

removal a global commitment,” said Dr. Ilham Kadri, president, Diversey Care.

According to the company, alternative solutions have been found and will be availed to customers across te globe, as the company also plans to expand its product offering in the area.

FOODBUSINESSAFRICA.COM

INNOVATION

TNA unveils new website to showcase complete range of turnkey solutions

Leading processing and packaging solutions provider tna has unveiled a brand new website to make it even easier for visitors to access its growing family of brands through

one online platform.

Designed to create a more engaging experience, www.tnasolutions.com features an improved user-friendly interface with enhanced navigation and functionality throughout. tna’s comprehensive portfolio of complete turnkey products and services are readily accessible through new megamenus, making it even easier for visitors to the find the right solution in just a few clicks.

In addition, the site offers access to tna’s library of brochures, product sell sheets and demo videos, technical white papers and

solution-based blogs.

“It’s an exciting time for tna and our customers,” comments Shayne De la Force, chief marketing officer at tna. “We’ve witnessed some immense growth over the last few years, so it was time to integrate our entire product offering in one site. The website is an important tool for us to engage with food manufacturers around the world and help them understand how our high performance turnkey food processing and packaging equipment can make a difference to their production line.”

INNOVATION

DuPont Nutrition & Health launches new cheese cultures USA - Leading dairy cultures provider DuPont Nutrition & Health has announced the introduction of two cheese cultures for use in soft-ripened cheese making.

The new DuPont Danisco CHOOZIT brand cheese cultures, CHOOZIT ST 20 and CHOOZIT PC FAST, are specifically designed to optimize production and consistently produce high-quality softripened cheese.

“Consumers prefer soft-ripened cheese

with a nice and stable white surface and soft texture,” explains Annie Mornet, global product leader, Cheese Cultures. “While cheese manufacturers want to satisfy these consumer desires throughout a cheese’s shelf life, they also want to maintain a high throughput level. These objectives don’t always align.”

The two cultures address the challenges of cheese makers by controlling acidification and rind formation times, which are

essential in making consistent, high-quality, soft-ripened cheese. They offer more rapid development of stable white rind, enabling packaging to begin earlier, while CHOOZIT ST 20 cultures offer direct vat inoculation in the milk with an early and controlled acidification to achieve desired cheese texture, while reducing phage issues, says the company.

TRADE #FatReduction Lawrence Mbithi, the Technical Sales Manager at Ingredion Kenya, leading supplier of specialty starches to the food and beverage industry in the region was one of the speakers and exhibitors at AFMASS Eastern & Central Africa 2016, where they showcased their fat reduction solutions in foods and beverages You too can showcase your products and services at the next edition of the event.

Contact us today for the opportunity to standout at next year’s event with your innovative products and services.

www.afmass.com

NEWS | AFRICAN FUNDING

IFC supports Promasidor Nigeria with loan for expansion NIGERIA - IFC, a member of the World Bank Group, is lending US$25 million to support the expansion and modernization of Promasidor Nigeria Limited, a leading Nigerian dairy and seasoning products company targeting low- and middle-income consumers.

The financial will support purchase of new machinery that will enable the company to increase efficiency, expand production and develop new products, leading to greater availability of nutritious food products in Nigeria at competitive prices.

“This is a very competitive market

for food products. We expect that this investment will help us optimize production costs, enabling us to reach and nourish more consumers with our affordable range of quality products. We will also target our portfolio extension by gradual integration of more locally sourced raw materials from producers in Nigeria and widening our network of distributors,” said the company’s CEO Olivier Thiry.

Agribusiness is Nigeria’s largest employer, according to Mary-Jean Moyo, IFC Head of Manufacturing, Agribusiness and Services for sub-Saharan Africa.

Increasing investment in food-processing

companies like Promasidor by the IFC will help diversify Nigeria’s economy and improve nutrition by expanding the supply of affordable food, she adds.

The company is a subsidiary of Promasidor Holdings limited a leading panAfrican consumer goods company operating in 25 countries across the continent, and founded in 1979 in the Democratic Republic of Congo by Mr. Robert Rose. The company has a line of products including Cowbell Milk, Loya Milk, Onga food seasoning and Top tea. It started operations in Nigeria in 1993.

INVESTMENTS

Two sugar plants being built to address sugar shortages, as Bakhresa also receives land for sugar production TANZANIA – Tanzania is set to reduce sugar deficits as two sugar factories are planned after an investor recently acquired land for the project, reports Daily News.

The two sugar plants are planned for Mkundi in Morogoro and Pemba in Zanzibar.

The US$50 million investment will have an annual installed capacity of 280,000 metric tonnes, according to the Quality Group Limited (QGL) Project Technical Advisor, Mr Stavros Isaakidis. The facility whose construction is expected to take 24 months, effective December 2016, will sit on the 20,000 hectares.

“We have received great cooperation from the ministry of agriculture, Sugar Board of Tanzania, Tanzania Investment Centre and all other stakeholders,” he said,

adding: “The investment is part of efforts to heed President John Magufuli’s call for industrial led economy across the country.”

The advisor said the project would be implemented in phases, with the first phase covering the installed capacity of 100,000 metric tonnes, and the second phase’s 180,000 metric tonnes.

“QGL has collaborated with worldrenowned international experts from the sugar industry, who have developed almost 300 of such sugar cane mills globally,” Mr Isaakidis told reporters.

Tanzania’s demand for sugar has been increasing dramatically, with the government directing the ministry of agriculture and its trade, industries and investment counterpart to conduct a

thorough assessment of the actual sugar demand.

Initially, the demand for the sweetener stood at 450,000 tonnes, with domestic producers just producing a combined total of 300,000 metric tonnes, leaving a deficit of 150,000 metric tonnes.

Meanwhile, Bakhresa Food Products, one of the largest conglomerates in the country has also been given a 10,000 hectares parcel of land by the President Magufuli to develop a sugar plantation and factory in the country, reports Daily News.

The company recently opened its fruit processing factory in the Coast region, one of its kind on the country.

AGRIBUSINESS

Processing companies commit to buy 600 tonnes of potatoes per month at AGRF meeting

KENYA – Potato processing potato products in East Africa have announced a commitment to purchase 600 metric tonnes of potatoes per month to meet 18

rapidly growing consumer demand.

This commitment will help to unlock much-needed investment in the regional potato value chain to achieve its production potential and benefit thousands of smallholder farmers. The market opportunity for potato processing in the East African Community (EAC) is estimated to represent up to US$1.2 billion by 2025.

The announcement was made at the 2016 African Green Revolution Forum (AGRF) in Nairobi, where potato value chain stakeholders convened to further their collaboration through an existing regional potato consortium co-convened by the Alliance for a Green Revolution in Africa

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

(AGRA) and Grow Africa.

The goal of the consortium is to increase regional production and supply of this high-potential commodity by addressing bottlenecks across the value chain through coordinated action. Farmers will be assured of a ready market for their produce and processors will get a steady supply of quality potatoes. To achieve this, the consortium brings together farmers, inputs companies, processing companies, county and national governments for provision of supporting infrastructure and finance providers.

FOODBUSINESSAFRICA.COM

FINANCIALS

Guinness Nigeria announces full-year loss as tough economic conditions bite But company focused on innovation and investing in local capacity to drive future growth

NIGERIA – Tough economic conditions and the devaluation of the Nigerian currency, the Naira, have adversely affected the performance of leading brewer Guinness Nigeria PLC, with the company announcing net loss for the year ended June 30.

The disappointing results saw the company declare total revenues for the year of N102 billion (US$326 million) and an overall loss after tax of N2 billion (US$6.4 million). Nigeria has been battling an insurgency in its Northeastern regions fronted by the Boko Haram terrorist group.

Peter Ndegwa, the Managing Director

and Chief Executive Officer of the company said that the combination of a tough economic environment and challenges with naira devaluation had a significant impact on Guinness Nigeria’s overall performance.

“When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line,” he said.

According to Babatunde Savage, the Chairman of the company, despite the continuing deterioration in the operating environment, the Board was pleased to note that its core brands of Guinness FES and Malta Guinness are showing growth in the market. He is also appreciative of the company’s strong participation in the growing value segment of the market through Satzenbrau and Dubic brands.

“We have also started to see early signs that our decisions to acquire the distribution rights in Nigeria to the International Premium Spirits brands of Diageo and to invest in local capacity for spirits manufacturing are the right ones for

the business,” he added.

The company acquired the distribution rights for Diageo, its parent company’s International Premium Spirits (IPS) and those for India’s United Spirits Ltd (USL) this year, bringing into its fold brands like Johnnie Walker, Ciroc and Baileys in Nigeria It has also announced an investment of £12m (US$15 million) into its Benin plant for the manufacture of mainstream spirits.

Innovation focus “Following the acquisition of distribution rights for IPS and USL brands, we are the first and only total beverage alcohol business in Nigeria offering the widest range of drinks - from adult premium non-alcoholic drinks to lager, stout, mainstream spirits and IPS. This puts us in a great position to continue to offer consumers quality brands, giving them a choice at every category and price point, said Ndegwa.

“Innovation continues to be one of our competitive advantages in this market and we have a strong innovation pipeline into F18,” he added.

LEARN #KeepItSimple Brian Milton, the Special Adviser, Global Food Safety Partnership at the World Bank believes that to have an effective food safety system, simplicity is key - and that it’s important to involve all stakeholders and seek partnerships with all in the value chain There is always a new way of doing things to learn at AFMASS Eastern & Central Africa Conference and Expo Contact us today to find out ways you can attend the next event

FOODBUSINESSAFRICA.COM

www.afmass.com

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

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NEWS | AFRICAN M&A

Rhodes Food Group acquires Pakco for US$14 million

SOUTH AFRICA – South African good company Rhodes Food Group today is acquiring Durban-based food producer Pakco for R200 million (US$14.4m), a producer of branded and private label

spices, condiments, instant meals and desserts.

Pakco is the seventh food producer acquired by Rhodes Food Group since listing on the Johannesburg Stock Exchange

in October 2014, with the acquisitions totaling R690 million (US$49m), according to the company.

Rhodes Food Group chief executive officer Bruce Henderson has said the group’s strategy is to complement organic growth by acquiring food producers, which will enable the business to expand into new and complementary product categories.

“The acquisition is aligned with our strategy of expanding into adjacent product categories and will allow us to gain entry into the dry packed foods market. Our strategy is evident in the acquisition of Pacmar which was the catalyst for our entry into the fruit juice market while Boland Pulp facilitated our entry into the baby food market through the Squish brand.”

The company has also recently acquired General Mills South Africa, which produces dry and frozen bakery products, and Alibaba Foods, which manufactures halaal foods.

PARTNERSHIPS

FrieslandCampina partners varsities to boost Nigeria dairy production

NIGERIA – Dairy producer FrieslandCampina WAMCO is exploring measures to expand its Dairy Development Programme (DDP) through knowledge sharing between the University of Ibadan and Wageningen University, Netherlands.

According to the company, the pact between the academic institutions is expected to aid the transfer of technology know-how on milk production to Nigerian farmers to improve the local content sourcing and enhance the well being of value-chain operators, reports The 20

Guardian.

According to the company’s Corporate Affairs Director, Mrs. Ore Famurewa, the firm hopes to surpass its 10% local content contribution target within five years from the current 3%, but was facing challenges, noting that this move was necessitated by the need to explore and exploit the untapped natural endowments in the country.

“We have signed a memorandum of understanding with the Federal Ministry of Agriculture and Rural Development to support us in our dairy development

programme. Presently, we are at three per cent because dairy development is a gradual process, but for us, slowly and steadily, we would surely win the race,” she said.

On his part, the, said the DDP is aimed at addressing the challenge of ageing farmers across the country, scarcity of natural resources and the fast growing population.

“We believe the way to address these challenges is having DDPs across all our regions. We have been working with the Fulanis and based on our experience in other countries, we have cross-breeds that would increase milk production,” said the company’s R&D/Dairy Development Manager, Lawrence Ohue Inegbenoise.

“We have started with the Fulanis and the next step will be having a crop of young graduates that would be trained as small holders dairy farmers in clusters to get the entire infrastructure needed to boost our operations in dairy production,” he added – The Guardian

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M&A

Zambeef receives CDC investment in as deal with RCL Foods ends

ZAMBIA – The CDC Group Plc has invested US$65 million in leading agribusiness company Zambeef, taking a significant stake in the company.

The deal, which gives CDC, the United Kingdom’s development finance institution, a 17.5% shareholding, and voting rights of 34.85% in the company, gives the British company a foothold in one of the

region’s most diversified food and agro conglomerates. Zambeef is involved in the production, processing, distribution and retailing of beef, chicken, pork, milk, dairy products, eggs, stock feed and flour principally in Zambia, but has growing operations in Ghana and Nigeria as well. It also has a palm oil project in Zambia.

According to the Zambeef, the CDC investment will “free up its internally generated cash flow in order to provide general working capital and to accelerate the roll out of the Company’s new Zambeef Macro outlet stores,” which are a key strategic priority of the Group during the year.

Meanwhile, Zambeef’s arrangements with South African chicken producer RCL

Foods has been terminated. The company is using the proceeds of CDC investment to buy the shares in Zam Chick and Zamhatch, deals that have been in existence for a few years, and to pay off debt.

The investments by RCL Foods in 2013 in Zam Chick (a 49% stake) and Zamhatch (a 51% stake) gave the leading South African chicken producer and processor gave RCL Foods a critical entry into the fast rising Zambeef Group. RCL Foods however, informed Zambeef of its intention of selling its stake in the company in March this year.

During the 2015 financial year, the company, disposed of its soybean crushing business, Zamanita, to Cargill Zambia for USD25.7 million, to reduce its debts and focus on core businesses.

NUTRITION

Clover, Tetra Pak and Kellogg’s partner to provide breakfast to schools

SOUTH AFRICA - Clover has announced that they have partnered with leading cereals producer Kellogg’s to provide the milk requirements for Kellogg’s Breakfasts for Better Days initiative, which provides

learners with a balanced breakfast every school day.

In the initiative, Kellogg’s is dishing up a breakfast of cereal and milk to 25,000 school children every school day, across Gauteng, KwaZulu-Natal, the Eastern and Western Cape provinces, with the endorsement of the Department of Basic Education and help of FoodBankSA which distributes the food.

It is now in its third year.

The Breakfast for Better Days initiative is part of Kellogg’s global target to feed one billion servings of cereal and snacks by the end of 2016.

Packaging solutions company Tetra Pak has also joined forces with with Clover and Kellogg’s in the initiative. Clover, along with Tetra Pak, will be providing 550,000 litres

of milk for the Kellogg’s initiative until the end of 2016, enabling children across the country to concentrate on their studies and achieve their full potential.

“Almost one in five learners goes to school without breakfast every day, and we aim to change that statistic. We are so grateful to Clover and Tetra Pak for partnering with us to allow us to make a tangible difference in the lives of thousands of children,” said Sylvia Radebe, Head of Corporate Communications and Public Affairs, Kellogg’s South Africa. “We are planning to extend the feeding programme and the commitment from Clover and Tetra Pak means we will be able to broaden our footprint,” Radebe added.

INVESTMENTS

Pepsi Zim beverage plant construction begins, ready mid 2017 ZIMBABWE – Varun Beverages, the Indian based bottler of Pepsi brands, has started the construction of the planned US$30 million beverages plant in Harare Zimbabwe, says the company’s Chief Executive Shankar Krishnan.

Quoted by The Herald newspaper, Krishnan, who is responsible for the company’s Zimbabwean operations, said that the plant would be ready by June 2017.

He says the company is confident of its prospects in Zimbabwe, saying that this is the right time to enter the country.

“Zimbabwe has huge potential for the beverage market. Yes, there are challenges FOODBUSINESSAFRICA.COM

currently but we are confident these are short term. To give you a different perspective, when we entered the Zambian market, it had been stagnant for years.

After we entered in late 2010, the industry started to grow and today it has doubled.

We expect similar results in Zimbabwe,” he said.

According to Shankar, the company will focus on regular Pepsi carbonated soft drinks, but will consider some juice products in future to augment its products, depending on what the company’s board will decide once the plant commences operations.

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

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NEWS | AFRICAN M&A

Middle East firm gets Competition Authority nod to take over McDonald’s SA SOUTH AFRICA – MSA Holdings, a company based in the United Arab Emirates, is set to be take over the operations of McDonald’s South Africa’s food restaurants from the country’s Vice President, Cyril Ramaphosa.

“McDonald’s South Africa can confirm that there is a process underway to find a suitable replacement for Mr. Ramaphosa, the current McDonald’s Developmental Licensee for South Africa,” according to a

statement by the company.

“This is in line with the public statement

by Mr Ramaphosa on his election to the position of ANC Deputy President in December 2012, that he would undertake a review of his business interests,” it added.

“The proposed transaction has recently been approved by the Competition Commission and we can confirm that MSA Holdings is not currently involved in the

restaurant business in South Africa,” it further continued.

McDonalds is the leading player in the fast food industry in South Africa, operating over 200 restaurants in the country, employing over 10,000 people. It has been present in the country from 1995, coming in immediately after the fall of Apartheid.

FINANCIALS

Distell posts strong results in tough SA economic climate, decline in rest of Africa SOUTH AFRICA - Africa’s leading producer of wine, spirits, ciders and ready-to-drinks (RTDs), the Distell Group, has delivered solid results with revenue rising 9.6% driven by its operations in South Africa and growth in key offshore markets.

Announcing its performance for the year ended 30 June 2016, the company reported a significant rise in revenue to R21.5 billion (US$1.6b), and operating profit up 12.3% to R1.6 billion (US$115m), despite a modest increase in volume of beverages sold of 2.8%.

In its South African market, the company reported a revenue increase of 12,1% to R15.4 billion (US$1.1b), on the back of a volume growth of 8.8% during a period of contraction in the economy and pressure on consumer spending. South Africa has been facing weak economic prospects driven by low commodity prices.

“In South Africa, we have improved our marketing and sales capabilities by

expanding our national footprint and deepening our market penetration to access 36,000 outlets nationwide and, in the process, have achieved growth across all our market categories. Our cider brands continue to flourish whilst our wine portfolio has significantly outperformed the growing domestic market. We are also starting to see encouraging early signs of renewed brandy volume growth. Cognac, Scottish and locally produced whiskies continue to record strong gains,” said Richard Rushton, the group’s Managing Director.

Distell’s wine portfolio, buoyed by 4th Street, was a top performer and surpassed the total industry volume growth rate of 9% by recording a 13,9% rise in volumes for the year. Ciders continued to drive RTD performance with innovation contributing to the momentum, according to Rushton.

African volumes decline However, the African continent has been a

disappointing location for Distell, coming from years of strong growth for the company. Total revenue in the rest of Africa beyond South Africa and the surrounding countries declined by 3,2%, with a 14,9% drop in volumes in the region, driven largely by Angola, where low oil prices and resulting consumer spending slump led to low volume sales.

The company achieved “strong growth” in Botswana, Lesotho, Namibia and Swaziland while in its other key African markets - Mozambique, Zambia, Nigeria and Kenya - the company posted strong revenue growth On the international front, revenues rose by 13,1%, aided by the weaker rand and improved product mix. The company has also established a joint-venture agreement with China Haisheng Juice Holdings Company Limited to launch Savanna and Bernini in China, as it bets on the lucrative and growing Chinese cider market.

M&A

Carlsberg bows out of Malawi, sells to Castel Group MALAWI – Danish brewing company Carlsberg Group has signed an agreement to sell its 59% shareholding in Carlsberg Malawi to African-focused beer drinks company Castel Group.

The registration of the transaction is pending certain regulatory and corporate approvals.

The transaction is in line with Carlsberg Group’s new strategy to fully exploit and leverage its strengths while positioning itself for future growth. As part of the agreement, the Group has agreed a license agreement with CML to continue to produce and sell Carlsberg in Malawi.

Carlsberg Malawi was the first brewing plant by Carlsberg outside its Denmark home and has been a dominant player in the relatively small Malawian market, producing 22

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

the likes of Carlsberg, Kuche Kuche and Malawi gin in its brewery and ginnery. It also runs bottling plants for Coca-Cola plants in the country, where it also bottles drinking water.

“In line with Carlsberg Group’s new strategy, we have evaluated all businesses in order to focus our efforts against a narrower and more precisely-defined set of priorities.

We will continue to be present in Africa, and I am happy that our partners will continue to provide our great beers to the people of Malawi,” said Executive Vice President Asia, Graham Fewkes.

The Castel Group has vast interest in Africa through their own investments and through a partnership with SABMiller in the Continent’s beer, wine and soda bottling operations FOODBUSINESSAFRICA.COM

AFRICA’S

GRAINS,

MILLING

Commodities Update:

FAO forecasts stable cereals production

In the News:

Buhler holds Networking Days event ADM acquires specialty pasta producer Caterina Foods Land O’Lakes invests in Bidco Africa feeds business FOODBUSINESSAFRICA.COM VOLUME 1 • ISSUE 1 • NO. 1

AND

BAKING

MAGAZINE

Company Feature:

Capwell Industries Limited

Milling Industry in Nigeria Striving to feed Africa’s largest population

MILLING & BAKING AFRICA | SEPTEMBER/OCTOBER 2016

A FOODWORLD MEDIA PUBLICATION

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CONTENTS www.foodbusinessafrica.com Volume 1 Issue 1 No.1

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25

COMMENTARY

Increase in agricultural productivity critical in Africa’s future prosperity, industry

“THE FACT THAT AFRICA CANNOT PRODUCE ENOUGH TO FEED ITSELF HAS A HUGE IMPACT ON THE FOOD AND GRAIN PROCESSING INDUSTRY IN THE CONTINENT”

26

In case you missed it, Kenya has just concluded the hosting of one of the major conferences focused on agriculture in Africa.

Hosted at the United Nations in Nairobi, Kenya, in early September, the African Green Revolution Forum (AGRF), was a water shed moment for the continent as it strategizes on ways to increase agricultural productivity and boost food security within the Continent.

AGRF covered several aspects of the agriculture value chain and how critical aspects of the sector can be boosted: funding and investments for agriculture and research, innovations in agriculture, market linkages and boosting food security and nutrition in the Continent.

Attended by some of the Continent’s most prominent leaders, from past and current presidents, business leaders, leaders from the African Union and other regional organisations, the forum had the right mix of Government, business and NGO/development partner leaders that is required to deliver Africa’s promises on agriculture. At the end of the forum, various governments and partners promised a significant commitment of US$30 billion to boost Africa’s agriculture.

However, as the dust settles on the forum, one must start to look keenly at the challenges Africa still faces to deliver on the promise of a modern and prosperous agricultural sector, considering the lack of progress in. With some of the fastest growing economies in the World, even some of Africa’s most agriculturally advanced economies like Kenya fail to deliver 2-3 years of growth in the agricultural sector, with the overall economic growth usually hiding the lackluster growth or even decline in the agricultural sector, especially due to the fact that agriculture in the Continent is still overly reliant on the weather.

“African countries spend U$35 billion every year on food imports, of which US$500 million is spent in the East African Community alone importing rice. In just about ten years we could be spending US$110 billion on food imports,” said Agnes Kalibata, the President at AGRA, in one of the

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

sessions at the AGRF. A few countries in Africa have recorded increases in agricultural production including Zambia and Ethiopia, but the gap that needs to be filled continues to increase, making the situation worse into the future.

The issue of food imports lies at the centre of the argument we have.

With such huge demand for food, and such astronomical quantities being imported, how can Africa turn off the tap on imported food, to boost local production and processing?

The fact that Africa cannot produce enough to feed itself has a huge impact on the food and grain processing industry in the Continent. It may not be so clear at first glance, but if you are to look at some of the initiatives that a number of companies have spent millions on to encourage local production in their ‘local sourcing’ initiatives, it becomes clearer. The fact that Africa will continue to import huge chunk of its food will always stand in the way of the Continent in its quest to boost local processing and value addition within its borders.

If Africa was able to produce adequate quantities of its food within, including cereals, dairy, meat, coffee, tea, poultry and fish, fruits and vegetables and other commodities, the net effect will be the creation of more opportunities to trade, store and process these commodities within the Continent, drastically increasing the number of the population that will get jobs, create new opportunities through innovation and processing and feed the growing population in Africa.

In the food and grain industry, from oil crushers, malt processors, beverage processors, millers and traders have spent huge amounts of money working with farmers to increase local production in several African countries, in their efforts to cut supply chain delays and reduce costs and complexity in their operations.

Isn’t it the right time that the contribution of the role of the private sector players in boosting local production is given the necessary support by governments to ensure that all the actors score the same goal: delivering more food production in Africa?

FOODBUSINESSAFRICA.COM

NEWS | INTERNATIONAL TECHNOLOGY PARTNERSHIP

Bühler holds Networking Days event, sign partnership pact with Bosch focused on IoT

SWITZERLAND – Leading technology providers Bühler and Bosch Connected Devices and Solutions have signed a deal to expand their existing collaboration for leveraging the opportunities of the Internet of Things for increased innovation in the market place.

Meanwhile, Bühler hosted its first ever Networking Days event at its headquarters in August, where the company presented innovations that make a contribution to a sustainable food value chain, by increasing energy efficiency, yield, and quality, at lower costs.

The Networking Daye event brought together around 750 key customers, scientists, and partners from around the World to discuss with Bühler how to feed people healthily and sustainably.

“We take the responsibility of the food and feed industry for a sustainable world very seriously. It is time to step up and make a difference,” said Stefan Scheiber, CEO of the Bühler Group, discussing the importance of the event.

Megatrends that are shaping the grainprocessing industry, including nutritional trends, sustainability, food and feed safety, and the Internet of Things (IoT) were discussed at the event. “As the leader of our industry, we want to anticipate megatrends and lead the discussion about how our businesses will evolve in the future,” says Stefan Scheiber, “Our industry plays a key role – since corn, rice, and wheat are the most important staple foods for four billion people. And with the impending protein gap, grain-processing will become even

more important,” says Scheiber.

The Bühler-Bosch cooperation provides great opportunities to leverage Bosch knowhow in electronics, sensor technology, and software around the Internet of Things for the food processing industry. The pact was signed at the Bühler Networking Days event.

The companies have decided to expand their research and development partnership, after a two-year research project to integrate Bosch MEMS (microelectro-mechanical systems) sensors into food production technology.

The two companies have managed to realise promising results from the partnership. For example, it is now possible for individual rolls in rotating machines to be equipped with wireless sensors to measure in real time temperature and vibration during the production process. This allows monitoring and optimization of the end product through better alignment of the rolls. Operators also benefit from predictive maintenance services, reducing down time and operating costs. First applications from this intensified cooperation will be launched in 2017.

“Following our successful R&D partnership, we are pleased to take the next step to form a commercial partnership. We are excited to utilise this partnership to create process solutions and services that improve yield and performance at reduced operating costs for our customers,” stated Johannes Wick, CEO Grains & Food at Bühler.

M&A

Bayer, Monsanto deal sealed as consolidation in agro industry continues GERMANY – The recent consolidation of the agriculture inputs industry continues with Bayer, the German crop protection giant, announcing the definitive agreement to acquire American seeds giant, Monsanto, with the promise to help meet the food needs of the future populations around the World.

The deal, which values Monsanto at US$66 billion, brings together two different, but highly complementary businesses, according to the company. The combined business will benefit from Monsanto’s leadership in seeds and traits and digital agriculture platforms along with Bayer’s broad crop protection product line across a comprehensive range of indications 28

and crops in all key geographies, says the company.

Lower commodity prices have affected the financial performance of the agricultural inputs providers, leading to a rush to consolidate the sector. Dow and Dupont are in the process of combining their operations in a ‘merger of equals’ that brings together these centuries old brands to chart the future together. Syngenta, the Swiss crop protection specialist is in the process of being acquired by ChemChina, the Chinese chemicals provider.

“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow,” said Hugh Grant, Chairman and Chief Executive Officer of Monsanto.

Apart from enhanced solutions for farmers, the combined business will be able to accelerate innovation and sales and cost synergies worth US$1.5 billion by the third year. The two businesses had proforma sales of 23 billion (US$25.5 billion) in 2015, according to a statement.

FOODBUSINESSAFRICA.COM

MILLING & BAKING AFRICA ADVERTORIAL RESEARCH

Pure commodities used in food and drinks grows to 1.2 billion tonnes in 2015

MAIZE PROCESSING COMPETENCIES Nigeria is an emergent country. Its economy is growing, and its food industry is developing. Bühler as a Technology Group supports the country’s economic progress with its process competencies – especially in the fields of maize (corn) processing and mycotoxin control.

Maize today plays an eminent role in feeding Nigeria’s population. In the past ten years, the country’s maize consumption has increased by 80% to seven million tonnes annually. Of this total, 60% or four million tonnes are consumed by the people of Nigeria. The balance of three million tonnes is used as animal feed.

WORLD – The use of pure commodities in the food and drinks industry continues to rise as health and wellness trends continue to weigh in on the food industry, new research by market research company Euromonitor International indicates.

According to the new research, a total of 1.2 billion tonnes of pure commodities were used in food and drink applications in 2015, an increase of 2% since 2014. This growth is linked to the ongoing health and wellness trend within the global food and drink market.

Attitude to health continues to evolve in the Americas and Western Europe, where naturally healthy foods are growing at a faster rate than fortified or functional products.

“The clean label tag can mean many things, but at its heart, it is consumers having trust in the products they purchase, and an understanding that they are beneficial and safe.” Madden adds: “The use of natural ingredients and the removal of artificial and more controversial ingredients, such as certain preservatives and antimicrobials, continues. In addition to the established clean label demands, Euromonitor predicts a greater pressure to simplify onpack information, delivering honest, simple messages so consumers do not have to wade through the small print or sort through a long list of claims to find the information they are looking for.

BIOTECH

China backs GMO soybeans in push for high-tech agriculture CHINA - China will push for the commercialization of genetically modified soybeans over the next five years as it seeks to raise the efficiency of its agriculture sector, potentially boosting output of the crop by the world’s top soy importer and consumer.

China, which has spent billions of dollars researching GMO crops, has already embraced the technology for cotton but has not yet permitted the cultivation of any biotech food crops amid fears from some consumers over perceived health risks.

In its latest five-year plan for science and technology to 2020, China for the first time outlined specific GMO crops to be developed, including soybeans and corn.

The blueprint, published on the government’s website in September pushed forward the commercialization of new pestresistant cotton and corn, and herbicide-resistant soybeans.

Support for new soybean varieties comes as China seeks to overhaul its crop structure. Farmers are being encouraged to switch from growing corn to soybeans and to rotate between crops. But analysts say boosting soybean production could be difficult without higher subsidies.

China is expected to produce 12.5 million tonnes of soy in 2016/17 but will import a record 86 million tonnes, according to a forecast by U.S. agriculture officials. China permits the import of GMO soybeans for use in animal feed. But cultivating GMO soybeans is likely to face strong resistance from consumers and a local industry that sells GMO-free soybeans at a premium to imported beans - Reuters FOODBUSINESSAFRICA.COM

Traditional foods Today, maize is one of the most important foods in Nigeria. It is used for preparing a variety of traditional dishes such as ogi, pap, tuwo, gwate, or donkunu. In addition, the almost 180 million inhabitants of this most populous country in Africa are increasingly consuming also numerous other basic foods and added-value products made of maize. This is continuously increasing the consumption of maize- and wheat-based foods – with or without the inclusion of vitamins and minerals – as well as the consumption of maize kernels and maize grits. Maize-based snack foods are also very popular.

Acknowledged competencies For the international Bühler Technology Group, Nigeria is an important market – in particular owing to the globally acknowledged competencies of Bühler in the field of maize processing. Bühler masters the entire process chain from reception, precleaning, storage, cleaning, degermination and grinding up to storage of the end products and their bagging or bulk loadout.

Regional solutions In addition to its industrial-scale maize processing capabilities, Bühler has also developed processes for making a number of specialty products from maize. They cater to regional peculiarities and nutritional preferences. For example, a process has been developed for the southern and western parts of Africa that slashes the time needed to cook maize grits. Nonetheless, these products still retain the texture and mouth feel of the traditionally prepared dish. This “convenient maize meal” is used for time-saving preparation of maize dishes such as pap.

Sembe Star Compact Maize Mill Another Bühler product tailored to the needs of the African population is its novel Sembe Star Maize Mill, a compact maize mill designed for industrial production of maize meal and maize grits. The completely equipped Sembe Star Maize Mill allows local maize processing as closely as possible to the source of harvesting. It is preassembled by Bühler. It can be quickly started up on site and requires only a simple infrastructure. Typically, the Sembe Star will be set up in a warehouse, eliminating the cost of special building structures.

Sembe Star is a simplified version of an industrial-scale maize mill. It incorporates bag intake, cleaning, conditioning, degermination, grinding, and sifting sections plus a manual bagging line for packing the finished products. This reliable mill produces nutritious and high-quality maize meal with a high yield.

The aflatoxins risk Mycotoxins are a “hidden” yet serious threat to farming and the food processing industry. Mycotoxin is a toxin produced by various fungi that occurs on grain fields as well as being caused by incorrect storage. The most frequent form of mycotixin is aflatoxin.

The FAO (Food and Agriculture Organization of the United Nations Organization) estimates that 25% of global grain production is affected by mycotoxins. The tropical climate of Nigeria fosters the development of such toxins. Bühler supports the food industry by supplying it with specialpurpose systems for controlling mycotoxin infestation, either on the field, in the cleaning section or during production. The flagship product in the fight to separate mycotoxin-infested grains from the sound product is the Sortex A optical sorter.

For more information, please contact: Alexandra Londoño Baderschneider Product Manager, Specialty Milling Bühler Uzwil,&TBAKING +41 71 955 25 20,| SEPTEMBER/OCTOBER alexandra.londono@buhlergroup.com MILLING AFRICA 2016 29

NEWS | INTERNATIONAL INVESTMENTS

Cargill unveils new feed plant for dairy industry in India

INDIA – American commodity and food industry company, Cargill, has inaugurated a new Indian Rupees 88 crore (US$13m) feed plant in Punjab India, as it strives to tap into the booming dairy industry in the country and meet rising demand for dairy in

a largely vegetarian population.

The plant will provide feed to dairy farmers in Punjab, Haryana, Uttar Pradesh and Rajasthan states in the country, producing 10,000 metric tonnes of feed per month, according to the company. It

follows the company’s previous work in the country. In 2008, the company’s animal nutrition business began working with dairy farmers in the country to optimize farm management techniques and boost milk productivity – with its teams educating nearly 30,000 farmers on nutrition and farm management best practices in 2014.

“We have been catering to the Punjab dairy farmer for more than 10 years now.

The continued trust of the dairy farmers in our feed products has encouraged us to build and invest in this new facility. Through this plant, we will be able to expand our supply of high-quality, safe and nutritious feed and services in the state of Punjab,” Achyuth Iyengar, Managing Director for Cargill’s complete feed and nutrition business in India, stated at the launch.

M&A

ADM acquires specialty pasta producer Caterina Foods

USA - Archer Daniels Midland Company (ADM) has announced the acquisition of Caterina Foods, a downstream toll manufacturer of specialty gluten-free and

high-protein pastas based in Lake Bluff, Illinois, USA. The company, which has been a toll manufacturer for ADM’s Harvest Innovations brands will further enhance ADM’s capabilities in the gluten-free and high-protein specialty pasta market, says ADM. It adds on the company’s strategy to create shareholder value by expanding its capabilities downstream in the value chain, to meet increasing consumer demand for healthier, vegetable based gluten free products “The addition of the Caterina business gives us yet another way in which to meet the needs of health-conscious consumers in this case expanding our ability to produce specialty pastas from legumes and grains

other than wheat,” said Vince Macciocchi, president of ADM’s Wild Flavors and Specialty Ingredients business.

Caterina produces gluten-free and highprotein pastas in a variety of shapes and sizes from flours made from corn, lentils, peas, rice, quinoa and many other grains and legumes.

“Since we purchased a controlling stake in Harvest Innovations, we have continued to see increased demand for gluten-free and other non-wheat pastas,” Macciocchi continued. “We are looking forward to finding new ways to expand and advance the Harvest and Caterina businesses, and working with customers across the country to meet their ingredient needs for healthconscious consumers.”

M&A

Ingredion buys rice starch and flour business in Thailand

THAILAND - Ingredion Inc., a leading global provider of ingredient solutions to a number of industries, is set to acquire from Sun Flour Industry Co, Ltd., a manufacturer of rice starch and rice flour based in Banglen, Thailand.

30

According to the company, the acquisition supports its global strategy to increase its higher-value specialty ingredients business around the World.

Details of the transaction have not been disclosed.

“Rice is an on-trend ingredient. It is nonGMO, hypoallergenic and gluten free. Plus, its superior functionality makes it ideal for a variety of uses, including baby foods, dairy products, snacks and gluten-free bakery,” said Jorgen Kokke, Ingredion senior vice president and president, Asia Pacific and

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

EMEA. “This acquisition enhances our global supply chain and leverages other capital investments we’ve made in Thailand to grow our specialty ingredients and service customers around the world,” Kokke added.

The dealt is subject to approval by Thai government authorities as well as to other customary closing conditions.

Once completed, Ingredion will have four manufacturing facilities and 870 employees in Thailand, including the 120 employees joining the Company from Sun Flour.

FOODBUSINESSAFRICA.COM

MILLING & BAKING AFRICA FOOD SECURITY

FAO foresees positive outlook for cereal production in 2016 By contrast, barley production is expected to fall below its 2015 level on smaller outputs in several countries, especially Morocco and Turkey.

Global utilization of coarse grains is anticipated to grow by 1.5% in 2016/17, driven largely by higher uptakes of coarse grains for animal feeding and industrial use. Relatively low prices are also likely to stimulate industrial uses, in particular of maize for the production of starch and biofuels.

World prices are likely to remain under downward pressure for most of 2016/17.

WORLD - A positive outlook for global cereal production in 2016, together with abundant stocks, points to a generally comfortable supply and demand balance in 2016/17, predicts the Food and Agriculture (FAO) in its latest global grains outlook.

World cereal production in 2016 is expected to increase by 1.5%, or 38 million tonnes, to hit a new record of 2,569 million tonnes, passing the 5.5 million tonnes the peak of 2014, due to upward revisions on wheat and rice.

Global cereal utilization in 2016/17 is projected to expand by 1.6% to 2,560 million tonnes, with feed usage, in particular, seen increasing by 2.7% in the year, amid large supplies of maize and low quality wheat.

According to FAO, an increase in the level of global cereal inventories is expected, driven by high wheat stocks.

Russia to overtake EU as major exporter, as wheat production up Output increases in India, the Russian Federation and the United States will push world wheat production in 2016 (July/June) past the 2015 record, up 1.2%.

The international wheat market in 2016/17 will most likely witness another season of abundant supplies, amid expectations of record production and rising stocks. FAO forecasts global wheat production in 2016 of 742.4 million tonnes, 1.2% above the 2015 all-time high, due to improved crop prospects in Argentina and Australia.

The forecast for world wheat trade (including wheat flour in wheat equivalent) in 2016/17 stands at 165 million tonnes, similar to the 2015/16 record figures. In the wheat exports side, an emerging feature is the anticipated emergence of the Russian Federation as the world largest wheat exporter, taking over from the EU which FOODBUSINESSAFRICA.COM

is expected to occupy a distanced second place, almost on par with the United States.

Total wheat utilization in 2016/17 is projected to reach 730.5 million tonnes, almost 15 million tonnes, or 2%, above the 2015/16 estimate, with food consumption taking the bulk of global wheat utilization of 498 million tonnes. The use of wheat in animal rations is forecast to increase by 6.2% to 146 million tonnes, reflecting the ample availabilities of low quality wheat at competitive prices.

World wheat stocks are forecast to increase further in 2016/17 and reach 234 million tonnes, up 8.4 million tonnes and the highest level since 2001/02. International wheat prices are likely to remain stable and relatively low during the 2016/17 season, according to the FAO.

Coarse grains production up, prices under pressure downwards Global production of coarse grains will increase 1.8% from the 2015 reduced level, due to good prospects for record maize crops in the United States, Argentina and India.

The overall supply and demand outlook for 2016/17 suggests a slight tightening of the market compared to the previous season. However, with large export availabilities and weak import demand prospects, international coarse grain prices could remain subdued.

Record maize outputs in the United States and Argentina, along with gains in a number of other major producing countries, are likely to boost world maize production in 2016, despite expected sharp declines in Brazil, China and South Africa.

World production of sorghum is also heading to an increase, with anticipated growth in Sudan and Mexico more than offsetting a reduction in the United States.

“International wheat prices are likely to remain stable and relatively low during the 2016/17 season” Rice production up on better weather in Asia Forecasts of world rice production in 2016 have been upgraded to a record 497.8 million tonnes, up 6.3 million tonnes, or 1.3%, from the depressed harvests of 2015 due to favourable conditions in the Northern Hemisphere, with abundant monsoon rains over Asia more than compensating for El Niño-related setbacks that occurred along or south of the Equator. Much of the expansion is forecast to stem from recoveries in Asia, although sizeable gains are also foreseen in Africa and the United States.

A combination of tighter export availability and subdued import demand depressed 2016 deliveries, early prospects point to world rice trade stagnating at 43.8 million tonnes in 2017. Improved local harvests may enable countries in the Far East and Latin America and the Caribbean to reduce imports, with good crops and depreciated currencies also tempering import growth in Africa.

With good production prospects, India could boost its sales to international markets, primarily at the expense of lower deliveries by Thailand, consolidating India’s position as the world’s leading supplier of rice.

Global rice reserves at the close of 2016/17 are anticipated to fall for the second successive season, reaching 169.6 million tonnes, due to expanding food use lifting total rice utilization over projected production in 2016.

MILLING & BAKING AFRICA | SEPTEMBER/OCTOBER 2016

31

NEWS | INTERNATIONAL

A three-month upward trajectory in international prices came to an end in August.

Balanced oil crops scenario Preliminary forecasts for the 2016/17 season point to a relatively balanced global supply and demand situation for both meals/cakes and oils/fats, after a tightening in market fundamentals in 2015/16.

In 2016/17, global oilseed production is forecast to recover fully from last season’s fall, possibly climbing to a new record. The expansion will be led by an increase in

soybeans, with other oilseeds anticipated to post sizeable gains, with the exception of rapeseed. Soybean growth would be concentrated in the United States, where record-high yields are set to boost output.

In South America, farmers are expected to reduce soybean plantings in favour of competing crops. In China and India, production could expand, reversing the downward trend observed in recent years.

Growth in global palm oil output is forecast to resume, as palms in Southeast Asia begin to recover from the effects of adverse weather in 2015/16.

World output and consumption of oils

and meals would reach record levels in 2016/17 based on current forecasts. Global oil consumption is projected to outstrip production by a small margin, therefore pointing to a modest reduction of world oil reserves. International trade in oils/fats is forecast to grow at a faster pace than last season, fueled by the anticipated recovery in palm oil production in Indonesia and Malaysia.

In the coming months, prices will be affected by developments impacting soybeans in South America and palm oil in Southeast Asia.

M&A

Cargill sells two European oilseed processing facilities to Bunge, enters Vietnam joint venture

USA – Commodity giants Cargill and Bunge have entered an agreement under which Cargill will sell to Bunge two oilseed processing plants and businesses in the Netherlands and France.

The company has also formed a new joint venture with Wilmar, a leading Asian regional player as both parties seek to boost their Asian businesses.

In the Netherlands, the transaction includes the soybean and rapeseed crushing and soybean oil refining facility in the Port of Amsterdam as well as part of the bulk port terminal assets dedicated to supporting discharge and storage of raw materials for the crushing plant. In France, it includes the soybean and rapeseed crushing facility located in the Port of Brest. The aggregate annual processing capacity at the two 32

locations is about two million tonnes.

According to Bunge, the acquired assets are highly complementary to its existing soy processing operations in Europe, and will allow the company to further expand its global oilseed processing footprint into key Northern European destinations, grow its presence in Europe’s protein market, and further optimize global flows and logistics to serve customers.

The acquired operations and business activities will be integrated within Bunge’s Europe, Middle East and Africa (EMEA) regional operations and global soy crushing platform, says Bunge.

Meanwhile, in Vietnam, Bunge and Wilmar International Limited (Wilmar) have come together in a joint venture to leverage both companies’ footprints in

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

Asia. Wilmar is the largest downstream edible oils player in Vietnam, which is one of the fastest-growing domestic edible oils markets in Asia.

According to a statement, Bunge is selling 45% of its equity in its Vietnam crushing operations to Wilmar, creating a three-party joint venture with Bunge and Wilmar as equal 45% shareholders and Quang Dung – a leading soybean meal distributor in Vietnam and majority owner of Green Feed, a growing Vietnamese feed milling business – retaining its existing 10% stake in the operations.

The transaction will unlock growth potential by connecting Bunge’s upstream crushing capabilities to Wilmar’s downstream oil refining and consumer products business, and to Green Feed’s feed milling and marketing activities, note the companies.

“Bunge is a natural partner for us.

In Vietnam, it is the largest producer of soybean oil and Wilmar is a major buyer of soybean oil,” said Kuok Khoon Hong, Chairman and CEO of Wilmar. “The soybean meal distribution capabilities of the joint venture also complement Wilmar’s animal feed ingredients business in Vietnam, including rice bran, wheat bran, palm kernel expeller, copra expeller, canola meal and feed oils.”

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COFFEE MARKETS

Export volumes fall as major producers reduce volumes Arabica will be required to supply the local market, potentially reducing availability 250 over the next year.

In Vietnam, exports were estimated to be lower by 5.9% to 1.65 million bags.

200 This would suggest that significant stocks of coffee are building up in Vietnam, which 150 could help alleviate supply issues over the next year.

In Colombia, exports dropped by nearly 100 60% to just 489,000 bags as a truck drivers strike disrupted the internal movement of 50 coffee. However, following the resolution of this strike, it is expected that the flow of exports should have resumed in August, Colombian Milds Other Milds Brazilian Naturals Robustas although a lack of rainfall due to El Niño is © 2016 International Coffee Organization (www.ico.org) expected to reduce output towards the end of the year.

WORLD Export volumes coffee of the green Arabica 300,000 bags Robusta–prices were relativelyofstable overinthe million course of month, with and the monthly average Indonesia has been recording theincreasing month of dramatically, of roasted and Arabica soluble and less than 40,000 for July the 6threduced consecutive month. Prices of the three group indicators all fell consistently lower exports since the recording thetolowest monthlytheir volume since supply bagsoutlook. of Robusta.

This was due narrowed to low compared July, reflecting respective The arbitrage therefore beginning of its crop year in April, as the October withitshipments totallinghigh justcompared domestic stocks thatofwere nearly exhausted slightly,2011, although remains relatively to the course the previous year.

2016/17 crop also seems to have been badly 7.7 million bags, 22% less than the volumes in Brazil, with the 2016/17 crop due to affected by El Niño. Total exports for the lastGraph year,3:according to a report byand the start to 30-day marketvolatility shortly.

However, Arbitrage between New York Graphcoming 4: Rolling of the ICO first third of its crop year (April to July) are markets (ICO).

International London Coffee futures Organisation concerns over the Robusta composite indicatorsupply, price which is down by over 45% to 1.5 million bags.

Brazilian exports were 33.1% lower than mostly 140 15%used for domestic consumption, and last year to 1.9 million bags, comprising 1.6 it is therefore likely that some lower grade US cents/lb

Graph 2: ICO group indicator daily prices

100 80

Volatility (%)

US cents/lb

120

10%

NETWORK 60

5%

40 20

© 2016 International Coffee Organization (www.ico.org)

0%

© 2016 International Coffee Organization (www.ico.org)

July saw a dramatic reduction in monthly export volumes, with #OpportuntiesInBreakfastCereals

shipments totalling just 7.7 million bags, 22% less than the same month last year and the lowest monthly volume since October 2011. Several major producers recorded lower exports, although for slightly different David reasons.Kamau, the CEO at leading breakfast

cereals manufacturer, Proctor & Allan, was In Brazil, exports were 33.1% lower than last year on 1.9 million bags, comprising 1.6 million one of the key speakers at AFMASS Eastern & of green Arabica (down -26.3%), 300,000 bags of roasted and soluble (-10.3%) and less than Central Africa 2016.

40,000 bags of Robusta (-90.9%). This reinforces the idea that domestic stocks are nearly

exhausted in Brazil, with the 2016/17 crop due to start coming to market shortly. However,

You can join the top business leaders like 2 Coffee Market Report – August 2016 Kamau at the next edition of the event to learn of the key trends and opportunities in Africa’s industry.

Contact us today for great speaking and panel discussion opportunities at next year’s event

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MILLING & BAKING AFRICA | SEPTEMBER/OCTOBER 2016

33

NEWS | AFRICAN MERGERS & ACQUISITIONS

Bidco Africa signs animal feeds partnership with Land O’Lakes

KENYA – The American agribusiness and food cooperative Land O’Lakes, Inc. and Bidco Africa have created a new joint venture called Bidco Land O’Lakes, that builds on Bidco Africa’s animal feed business.

Through the deal, Land O’Lakes, Inc. and Bidco Africa have each assumed a 50/50 ownership of the JV called that combines the animal feed leadership of the Land O’Lakes, Inc. business with Bidco’s market knowledge and distribution networks across East Africa, along with its rapidly growing feed business.

Bidco Africa is one of the largest manufacturers in the Eastern and African region and a leader in the vegetable oils and fats, hygiene products and laundry detergents in East and Central Africa. The deal was sealed in March this year, but the official announcement was released in early August this year.

Land O’Lakes, a leading cooperative in the US, has been present in Africa since

1981 through its Land O’Lakes International Development, a non-profit venture that has been active in the agribusiness environment in the region, working with other agencies to boost animal production.

“This is an exciting new chapter for us, and will allow us to experience meaningful growth in the feed sector, while making a positive impact on local farmers,” said Vimal Shah, President and CEO of Bidco Africa.

The Bidco Africa deal is the second commercial investment in Africa by Land O’Lakes following a recent joint venture with Villa Crop Protection in South Africa, a crop protection company, and reflects the cooperative’s accelerated focus on growing its business into Africa.

INVESTMENTS

NNFM starts installation of US$15m sorghum mill, to open 2017

NIGERIA - Northern Nigeria Flour Mills (NNFM) has commenced the installation of a sorghum milling facility worth US$15 million to produce flour from locally grown sorghum for inclusion into wheat flour products.

The milling facility, according to the

Chairman of the FMN Group, John G. Coumantaros, consists of yearly capacity of 100,000 metric tonnes, saving an estimated US$25 million in foreign exchange yearly.

He noted that the sorghum milling process, which would be ready for commissioning during the first quarter of 2017, is expected to enhance the usage and consumption of local grains, thereby creating jobs and stimulating economic activities in the rural areas.

To achieve this feat, he explained that NNFM is already working in partnership with the International Crops Research Institute for Semi-Arid Tropics (ICRISAT) to develop robust out-grower schemes and engage in sorghum seed development.

“It is also remarkable to note that NNFM has recently modified part of its site facilities at the Kano plant in preparation to receive locally grown wheat from the Wheat Farmers Association of Nigeria (WFAN) in line with the commitment of Flour Millers Association of Nigeria (FMAN) to continue to purchase all locally grown wheat at a mutually agreeable price.

“In furtherance of this goal, NNFM has made significant investments to convert some of its wheat mills into maize mills with an annual capacity of 100,000 metric tonnes.

The conversion has started generating positive results. Two new products, ‘Masavita’ and ‘Masaflour’ were re-introduced to the market – The Guardian

M&A

Beloxxi lands private equity funding, to expand across Africa

NIGERIA – Nigerian biscuit manufacturer Beloxxi Industries has landed a significant equity investment as the leading player focuses on regional growth.

The consortium of investors, including the Africa Capital Alliance fund, Germany’s government-owned development bank KfW and 8 Miles, owned by Bob Geldof, have invested US$80 million into Beloxxi, taking “a significant minority stake” in the 34

business, which sells products in Nigeria, Ghana and Angola.

Beloxxi plans to use the cash to expand its production capacity, “address significant unmet demand” and grow its regional distribution, 8 Miles said in a statement.

Nigeria’s biscuit sector has seen strong growth of 10-15% per annum, and this is expected to continue, driven by population growth, rising disposable incomes and increasing urbanisation coupled with the growing popularity of biscuits as a convenience snack. The growth in the sector is also a result of a relatively young population with 63% of the population, about 115 million people, below the age of 25 years.

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

“Our long term focus is to be one of the leading biscuit companies in the EMEA region. The completion of this funding process is the first of the many steps in the achievement of our objectives. The investment will enable us increase our capacity significantly and grow in both our domestic and export markets. The Beloxxi story has only just begun,” said Obi Ezeude, CEO and founder of Beloxxi.

The company operates several production lines from its plant in Agbara, Ogun State. It employs about 2,300 people and operates through a network of about 400 distributors. It has experienced growth rates in excess of 30% per annum in the last few years, according to a statement.

FOODBUSINESSAFRICA.COM

COUNTRY FOCUS | NIGERIA

STRIVING TO FEED AFRICA’S LARGEST POPULATION

The grains industry in Nigeria is in a critical point. Increased investment by millers and changing consumer food preferences provide the country with huge opportunities. But tough economic situation due to low oil prices and rising imports bill strain the sector’s growth and future prospects

I

n the grains industry, Nigeria provides a host of eye-popping statistics: the second largest importer of rice in the World, the largest producer of cassava, the largest importer of wheat in sub-Saharan Africa, the 10th largest producer of maize in the World and largest maize producer in Africa, second largest producer of sorghum, among other statistics.

With a population stated at 170 million, Nigeria is a grains industry paradise at first glance. The grains industry in the country is a critical contributor to the present and future of the grains industry in Africa. A huge and growing population; increasing urbanization; better economic prospects and the recent rise in local production of major grains continues to place Nigeria as FOODBUSINESSAFRICA.COM

one of Africa’s best potential investment locations.

However, the industry is presently at a critical moment, especially in regards to the harsh macro economic environment in the country: low oil prices, on which Nigeria’s economy depends disproportionately, and its effect on the general economy has led to a reduction in consumer incomes that continue to impact the industry.

Government interventions including restricting access to foreign exchange and banning of imports of key food and agricultural produce; and stagnating local production of major grains after a period of noticeable growth, places the industry at a cross-roads into the future.

The grain importers paradise with stagnating local production

Imported grains are significant in the availability of food in Nigeria despite Government policy over the years to reduce the country’s reliance on imports, and boost local production. In terms of policy initiatives, the country has since independence banned or restricted the importation of grains into the country at various times, with mixed results.

However, it is fair to say that despite the lack of popularity of these policy initiatives, Nigeria has managed to adopt the use of traditional grains like sorghum into the production of foods and beverages better

MILLING & BAKING AFRICA | SEPTEMBER/OCTOBER 2016

35

Wheat consumption2.496 Maize production in Nigeria

Production of major grains by Nigeria, 2014/15 season

Produc?on, consump?on and imports of major grains Type (million MT) Maize Rice Sorghum Wheat igeria, 2015/16 (million MT) Production 7.52into N2.84 6.7 0.06

4.06

than many African countries, who rely on Produc?on and consump?on f maize and rice rice in and the three regular grains: owheat, Nigeria 2001-­‐2016 (million MT) maize, almost exclusively.

Nigeria is the world’s 13th leading importer of wheat, projected to import more than 4 million tonnes this year, despite the government’s efforts to encourage wheat production in the country. From being a small player in the importation of wheat in the 1960s to early 1980s, the country’s import volumes hit the 2 million tonnes mark in 2001 as it soared towards the 4 million tonnes mark.

Local production, a critical focus for the Goodluck Jonathan administration and the famous Akinwumi Adesina, who was the Minister for Agriculture, rose to 100,000 tonnes during the 2008-11 period, before falling gradually to the projected 60,000 tonnes this year. Low production has not hampered the country’s increasing appetite for wheat-based products, with the country consuming only 510,000 tonnes in 1991, which has risen to over 4 million tonnes this year.

“Wheat millers note slower-thannormal flour production largely due to limited domestic supplies and restricted access to foreign exchange for imports.

Weakening local currency coupled with higher-than-normal market prices is lessening consumers’ purchasing power and preventing wheat millers to share rising production costs in the marketplace,” says the USDA in its annual Grains and Feed report on Nigeria, released in April this year, echoing the tough environment millers have endured as the new administration led by General Buhari restricted foreign currency access due to falling incomes from oil, from which Nigeria relies on more than 90% of its export earnings.

USDA projects Nigeria to import over 400,000 tonnes of maize by this year to meet its local demand. Despite a significant increase in local production of maize, which increased from 5 million tonnes in 1991 before hitting 9.25 million tonnes in 2011, then slipping to this year’s 7 million tonnes, the country is barely meeting local demand for maize. The country currently plays second fiddle to South Africa, which is the continent’s largest maize producer.

According to IITA, maize demand in the country is estimated to increase 3.2% per year due the growth of urbanization and population. IITA estimates that about 60% of maize produced in the country is used for industrial end uses for both for human and animal consumption, mainly in poultry 8

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2006 2011 Maize production 5 7.8 9.25 Maize consumption 5.03 0.986 7.6 9.25 0 1 2001 2006 2011 Rice production 1.651996 2.54 2001 2.87 1991 Maize production 5 7.8 9.25 Rice consumption 3.051 4.04 Rice 5.6 0.45 0.35 Maize consumption 5.03 7.6 9.25 0.5 Wheat c0.296 onsumption2.496 3.365 3.521 Rice production 1.65 2.54 2.87 Rice 4.04 5.6 0 consumption 3.051 1991 1996 Wheat consumption2.496 3.365 2001 3.521

1.5

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Produc?on and consump?on oWheat f maize and rice in Rice Nigeria 2001-­‐2016 (million MT) Produc?on and consump?on of maize and rice in Nigeria 2001-­‐2016 (million MT)

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36

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2001 2011 2016 Produc?on a2006 nd consump?on o7.2 f maize and rice in Maize production 5 7.8 9.25 Maize consumption 5.03 Nigeria 7.6 2001-­‐2016 9.25 7.3 (million MT) Rice production 1.65 2.54 2.87 2.7 10 consumption 3.051 Rice 4.04 5.6 5.1 Wheat consumption2.496 3.365 3.521 4.06

7.2 5.2 6.7 3.88 COUNTRY FOCUS 0.4 2.7 0| NIGERIA 4.11

Consumption 8 Imports 7

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SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

2006

Maize consumpKon

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feed production.

Per capita consumption of maize in Nigeria peaked in 1994, hitting 35 kg/ year, before undergoing an overall decrease throughout the 1990s, reaching a low in 2000 of 17 kg/year, growing again slightly between 2001 and 2007 according to the United Nation’s Food and Agriculture Organisation (FAO).

Nigeria has invested aggressively in the rice value chain in the last ten years, with the goal of stopping the importation of rice by 2017. Through the country’s Agricultural Transformation Agenda (ATA), the country has focused on boosting local production and processing of rice in the country.

However, local production has stagnated at between 2.5-2.7 million tonnes, while consumption has increased from 3 million tonnes in 2001 to over 5 million tonnes in 2016, with the gap widening.

The other significant grains of importance to the economy include cassava, yams and sorghum. Nigeria is the world’s largest producer of cassava, producing 54 million tonnes in 2014 according to several sources. The country is also a significant producer of sorghum, projected to produce 6.7 million tonnes this year. Sorghum and cassava have found increasing importance in the country, as industrial users adopt the blending of regular grains with the two, to meet government policy initiatives and meet consumer preferences.

Wheat consumpKon

Constrained business environment

“Food importers note that they are able to obtain only 20-30% of their foreign exchange demand from official sources; however, for the remaining 70-80%, they rely on the high-cost parallel market,” adds the USDA. “The political and economic challenges faced by the country in the past two years have had significant impact on all businesses in Nigeria. One of the critical issues has been the volatility of the Nigerian naira, which has led to very tight dollar availability for all importers,” FOODBUSINESSAFRICA.COM

“Besides being a large and growing market, Nigeria’s milling industry structure is highly consolidated with five key players, creating high barriers to entry,” Anurag Shukla, CEO, Crown Flour Mill says Anurag Shukla, CEO, Crown Flour Mill, owned by Singapore-based grains giant Olam. However, this ban has since been lifted, with a resultant devaluation of the currency, Naira, affecting the grain industry, especially with its heavy reliance on imported grain, spares and equipment.

Insecurity has also had its fair share of influence on the declining productivity and consumption of grains in the country.

An insurgency in the Northeast, led by the Boko Haram insurgency, has dislodged farmers from grain producing regions and affected sales for all the major grain companies in the region. With 37% of bread flour consumed in the Northern region, the effect of the insurgency has been noticeable on the millers who depend on the region for the bulk of their sales. Migrant herdsmen insurgencies have also affected grain production, and consumption, in the region.

Production of maize has also been affected in the northern regions. Maize is largely produced in the North Central Region, which produces one third of maize in the country, while most of the processing facilities are in the South West (Lagos and Ibadan) and in the North Centre (Kaduna and Kano) regions, notes the USDA. Wheat production has also been affected, considering the North East region is a significant region for its production, in addition to the Highlands areas.

It is not lost on observers that one of Africa’s largest milling and food giants Tiger Brands had a nightmare in Nigeria, after it acquired a 63% shareholding in Dangote Flour Mills, the then second biggest miller in the country in October 2012, ramping up losses and huge writeoffs before exciting in 2015.

Millers fight for market share, increase capacity

“Nigeria’s demographics underpin growth in demand for downstream food products, such as bread, pasta, noodles and biscuits, which in turn support demand for the principal products of the milling industry – bread flour, pasta flour, noodle flour, confectionery flour and semolina,” says Anurag Shukla, CEO, Crown Flour Mill, owned by Olam. The country uses 81% of its FOODBUSINESSAFRICA.COM

flour in bread, 12% in biscuits and 7% in noodles production, according to Olam.

The northern and middle belt regions take the bulk of the bread with 53%, while South West consumes 30% of the bread flour.

“The Nigerian flour market of approximately 3.2 million metric tonnes per annum is worth more than US$2 billion and is growing at a healthy pace of 3.5% per annum. Downstream products, such as pasta and noodles, are growing at 6-8%,” says Shukla.

The 22 milling plants in Nigeria are owned by eleven companies; of these, four have a combined installed capacity of 25,000 MT daily and control over 75 percent of the market, according to Honeywell.

“Besides being a large and growing market, Nigeria’s milling industry structure is highly consolidated with five key players, creating high barriers to entry. Port access and a nation-wide sales and distribution network are critical success factors in this business,” adds Shukla.

All the major millers also produce pasta and noodles to feed an increasing demand for the products in the country and beyond, with the Northern region taking the bulk of the pasta (62%) and macaroni being more famous (70%) than spaghetti in the country, according to Olam.

Despite the withdrawal of Tiger Brands from the country, the grains industry in Nigeria offers a great investment destination. In the face of rising demand, changing consumer preferences and competition in the market, the major millers in the country have invested heavily to meet rising challenges and take leadership in the market.

The FMN Group is Nigeria’s largest milling concern, pioneering grain milling in the country in 1962. The company’s Apapa milling complex, located in Lagos, has capacity to process over 8,000 metric tonnes of grain per day, making it one of the largest single site mills in the world, according to the company. The company has announced plans to expand its footprint into the rest of African region through acquisitions and joint ventures, spending US$1 billion in the next 3-5 years as it invests more in the food and agro-allied industry. The Group has

invested heavily in its backward integration plan, owning several farms including Kaboji Farms that feed into its processing facilities across the country to reduce its reliance on imports.

The Group has a 52.6% shareholding in publicly traded Northern Nigeria Flour Mills (NNFM), where it is currently installing a US$15 million sorghum milling facility at the Kano plant to process sorghum for inclusion into wheat flour, with plans to process 100,000 tonnes per year.

“NNFM has recently modified part of its site facilities at the Kano plant in preparation to receive locally grown wheat from the Wheat Farmers Association of Nigeria (WFAN) in line with the commitment of Flour Millers Association of Nigeria (FMAN) to continue to purchase all locally grown wheat at a mutually agreeable price. In furtherance of this goal, NNFM has made significant investments to convert some of its wheat mills into maize mills with an annual capacity of 100,000 metric tonnes,” says Chairman of the FMN Group, John G. Coumantaros.

Honeywell Plc, another significant player, has a combined milling capacity of 2,610 tonnes per day in six mills at its main factory location in Tincan Island Port, Apapa in Lagos. According to the company, increased competition in the flour milling and noodles and pasta industry, has made the company to make large investments in capacity upgrade and expansion, and is targeting markets outside Nigeria with their pasta products.

The Olam Group, a new entrant in the Nigerian milling and food processing industry has been aggressive, entering the country by acquiring the number flour miller in the country, Crown Flour Mills in January 2010.

“When we acquired Crown Flour Mill, it was ranked fourth in the industry with a very low market share and a focus largely on industrial consumers. Over the past six years, CFM has emerged as the second largest miller in Nigeria, with a strong presence across product categories and market segments,” says Shukla, the CEO. The company recently acquired Amber Foods, growing their footprint into “the fast growing pasta segment. We are currently the second largest pasta player in the country,” he adds. He contends that Olam’s daily wheat grind currently stands at 6,140 tonnes per day with a further 1,200 tonnes per day due to come on stream in Q4 this year

SEPTEMBER/OCTOBER 2016 | FOOD BUSINESS AFRICA

37

MILLER WITH A FOCUS ON INNOVATION & DIVERSIFICATION

Capwell Industries Limited is one of the most diversified food processing enterprises in Kenya. The company has been a trendsetter in the Kenyan market and is setting its eyes on new products and new markets in the near future. FoodWorld Media had a discussion with the company’s directors about their business.

C

apwell Industries Ltd (CIL) prides itself in having pioneered new concepts in the milling industry in Kenya and the region. The company’s many firsts are indicative of the constant drive by the company’s founders to stay ahead of consumer expectations, act on customer feedback and to focus on future anticipated technologies and market requirements. Be it on packaging, formulations and processing technologies, CIL has been a trendsetter in the industry in the short, 17, going to 18 years it has been in operation.

38

SEPTEMBER/OCTOBER 2016 | MILLING & BAKING AFRICA

Hard work and focus permeate the entire spectrum of CIL operation. Food industry veteran, Dalichand Shah, who is the Chairman of the company, started the company, which is privately owned. The Chairman’s family has roots in Kenya over 100 years, after his father moved from India to Kenya in 1911.

The 72-year-old patriarch of the Capwell group started his career in the industry in 1962 when he joined his brothers in the bakery industry where he remained until 1996 before starting the FOODBUSINESSAFRICA.COM

COMPANY FEATURE | CAPWELL INDUSTRIES

COMPANY PROFILE AT A GLANCE YEAR COMMENCED OPERATIONS: 1999 NUMBER OF EMPLOYEES: 400 NUMBER OF PLANTS: 4 The company’s management: Front row, left to right: Rajan Shah (CEO), Dalichand Shah (Chairman), Chetan Shah (Sales & Marketing Director), Mahesh Chavda (Head of Business). Back row: Margaret Kamaru (Marketing & Communications Head), Obadiah Gitiye (HR & Administration Head), Roni Painter (Production Manufacturing Head), Jagjit Singh (Projects Head) and Rajesh Patel (Finance Head)

Capwell group in 1999.

“One thing I always tell my team here is that they should make products that their own children will gladly take and enjoy.

When you are a producer of food products, it is important to look at your products from this angle,” advices the Chairman, who despite his fairly advanced age is found at the mill everyday, always at the factory floor, monitoring operations and mentoring younger staff.

Company focuses on entire cereals sector

“CIL started off with maize milling in 1999, installing a 240 tonnes per day (TPD) plant to start off,” says Chetan Shah, the Sales and Marketing Director. The company is based in the industrial town of Thika, about 45 km from Nairobi.

The company’s operations go beyond maize milling, a fact that separates the miller from its peers, which mainly concentrate on either maize or wheat milling exclusively.

The company also mills rice, porridge flours and pulses, using the best processes & technologies available, in its quest to cover the entire grains business. It also imports spaghetti and pasta products for sale distribution in the country. The company’s Best Cook wheat flour is outsourced from a miller, packaged and sold through its distribution channels to its customers.

“Four years since the company commenced operations, we expanded our business into rice milling in 2003. In 2007 we introduced porridge and pulses product lines. Our operations are currently based on FOODBUSINESSAFRICA.COM

milling of maize, rice, pulses and porridges, imports of spaghetti and pasta, and locally sourced wheat flour,” Chetan Shah explains.

“The company has grown fairly fast from 1999, driven by the growing customer demand for grain products in Kenya,” according to Chetan Shah. “We are proud to say that we are a multi-billion shillings company at the moment,” he adds.

The company’s growth has not been a walk in the park. “It is really being the result of hard work, hard work and more hard work,” the company’s Chief Executive Officer, Rajan Shah, informs us.

“We have always strived to listen to the customer because the customer is our pillar.

Whenever we talk to customers who give us new ideas or wants, we always come back to the factory where we ask ourselves as a team how we can meet that customer’s need. I feel that as time passes, the needs of the customers are getting more sophisticated.

The critical things for our customers are wholesome nutrition, vitality and health and these are the key aspects that are important to every family, and this is what every individual or family wants. So if we can meet these needs, we feel that we shall meet our goals as well,” explains Chetan Shah.

“Over the years we have grown our capacity to nearly 400 tonnes per day (TPD) of installed maize milling capacity.

Our milling capacity of rice is presently 100 TPD, for porridge flours is 60 TPD, while the pulses range has 100 TPD capacity,” Rajan Shah explains.

The company operates two maize milling plants, a 270 TPD plant and a

PRODUCT CATEGORIES: 6 (Rice Products, maize flour Products, porridge flour Products, pulses, wheat flour, spaghetti products) TOTAL INSTALLED CAPACITY: 660 tonnes per day LOCATION: Off Garissa Road, Thika Town, Kenya TEL: +254 20 2055422/+254 20 3596217/+254 736 237000 EMAIL: admin@capwell.co.ke WEBSITE: www.capwell.co.ke VISION: To be the preferred benchmark food and beverage company within East and Central Africa.

MISSION: To positively enhance wellness of our customers through provision of quality products and services throughout the value chain, with emphasis on continual innovation and diversification.

CORE VALUES: Integrity Customer Service Professionalism SLOGAN: Home of wholesome brands

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120 TPD plant that it acquired from a neighboring miller, few years ago.

The company has invested heavily in modern and technologically advanced milling systems and superior packaging machines for its products portfolio.

“In today’s competitive and regulated milling environment, we combine the latest technology which have boosted our investments in processing equipments, material handling and plant automation to ensure product quality and food safety,” the company Head of Business Mahesh Chavda explains.

The company has installed highly efficient milling plants, which are run by a team of qualified engineers and production personnel, he adds.

Raw material handling and challenges

The company receives the bulk of its raw materials by road from Kenya. In the case of rice, a significant quantity is purchased in form of paddy from local farmers. The 40

grains are then sampled and checked by quality control staff for compliance with Kenya Bureau of Standards (KEBS) and company standards, after which they are received into storage.

“At the commencement of the processing of the grains, the grains are cleaned to remove any debris, stones and other foreign matter, including in the case of maize, grains that may be affected by Aflatoxins that might have come through during receipt. Through metal detectors that are installed on the lines, we ensure that any pieces of metal are removed from the grains, before the grains are either packaged (in the case of pulses) or proceed for tempering and further on into the milling operations,” explains Roni Painter, the Production Manufacturing Head.

The milled flour is then blended through an online dosing system with fortification agents, that include essential vitamins and minerals, ensuring that the flour meet regulatory requirements. The flour is then passed through a high impact machine that destroys any insects and their eggs, ensuring

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product safety during storage.

“We have invested in our quality control process, be it in equipment and people to ensure that the raw materials that we are receiving are safe, the process of milling is safe and the end products are safe,” Roni explains. The company has an internal quality control laboratory that is manned

“Over the years we have grown our capacity to nearly 400 tonnes per day (TPD) of installed maize milling capacity” Chetan Shah - Sales & Marketing Director

by 8 quality control officers with the right skills and experience in the grain industry.

Presently the company is in the process of being awarded the critical HACCP certification, adding one more feather of success to its focus on quality of products and processing systems.

However, the CEO, Rajan Shah, urges FOODBUSINESSAFRICA.COM

that there is need to look at the agricultural value chain further by the Government and other stakeholders to boost local production and quality of grains. He also advises that the issue of Aflatoxins requires the improvement of post-harvest practices across the supply chain.

“As a country, we need to sort out our agriculture. We need to improve on the predictability of availability of raw materials. Every year, we are always worried as to where we shall source our maize and rice, considering that Kenya imports about 80% of its rice and continually imports maize from neighbouring countries. We should ensure self-sufficiency in production of maize and other grains within our borders and not rely on imports,” the CEO Rajan Shah urges.

The company is keen on building relationships with trusted suppliers. To support its contracts with rice farmers and other grain suppliers, it makes prompt payments, and gets involved with them to the extent of helping the partners to improve their own businesses. “For instance, we educate our rice farmers on the need for quality produce and support them to ensure the final produce meets our requirements,”

says the CEO, Rajan Shah.

“With these efforts, CIL has gained the ability to control the supply chain from the farm level to finished packaged product thus able to offer consistently trusted quality end products. This has been a key differentiator for us from our industry peers,” he adds.

Innovation is key to the company

“Innovation is one of our key values as a company and is one of our key critical success factors,” says Rajan Shah, the CEO. “Our focus on innovation is not only in terms of the product, but in terms of the people and processes as well.

“As an example, we were the first company to start producing fortified maize meal in the region in 2001. This was a time when it was not mandatory for millers to fortify maize meal but we felt that there was a proven need to boost the nutritional profile of the flour, and that of our consumers. This has since been made mandatory in Kenya, 15 years since we introduced the concept,” he explains.

The company’s Pendana fortified maize meal was introduced in 2001, and was a differentiated product from the rest in the

“Our focus on innovation is in terms of the product, the people and the processes.

We were the first company to start producing fortified maize meal in the region in 2001” Rajan Shah, CEO

market.

“On packaging, we were the first to introduce the 5kg and 10kg family packs in 2001,” he adds, referring to the company’s popular Soko maize meal brand that has a commanding share in Central and Nairobi regions of Kenya. CIL was also the first miller to introduce white outer packaging in the maize flour market, packaging its Pendana brand in white packaging, when all the brands in the market were still using brown packaging.

“In the rice area, we were the first to introduce laminated packaging that is more attractive and more functional; delivering a product with superior shelf life to our customers. Before that rice processors were

The company’s range of products include maize meal, rice, porridge, pulses, spaghetti and wheat flour FOODBUSINESSAFRICA.COM

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TEAM LEADERS

Rajan Shah CEO

Chetan Shah Sales & Marketing Director

Mahesh Chavda, Head of Business

Obadiah Gitiye Human Resources & Administration Head

Margaret Kamaru Marketing & Communications Head

Roni Painter Production Manufacturing Head 42

using polyethylene packaging.

“In process innovation space, we realized early on that consumers of rice took a lot of time before cooking the product due to the presence of a lot of foreign matter in the rice. We introduced new cleaning equipment that did away with sorting by the user before cooking the rice, saving our customers valuable time, and delivering a safer, more convenient product.

“Our innovations have also enabled us to make our processes more efficient and to deliver better food safety, including improving testing methodologies that reduce Aflatoxins and other contaminants,” Mahesh Chavda, the Head of Business added.

“The introduction of clean rice that mothers out there would only need to wash and cook can be considered one of our key milestones as a company. We believe that it is through some of these actions, which we have initiated over the years after listening to the customer, that continues to place us at a good standing with the customers, and are critical of the success we enjoy currently,” comments Chetan Shah, Sales & Marketing Director.

Markets and products

The company, in operation for less than 20 years, is proud of its range of products and the markets it serves.

The company has over the years managed to provide its products to the majority of locations in Kenya, with the product available in major supermarkets, medium level supermarkets and kiosks.

With strong partnerships with leading distributors all over the country, the company appreciates the great contribution its distribution partners have played in its success. The company’s products are also to be found in neighbouring countries in East Africa, especially in certain outlets in Uganda and Rwanda.

“It is our intention as a company to expand our coverage into the wider Eastern and Central African region, in line with the vision of Kenya by expanding our exports markets in a major way,” Margaret Kamaru, the Marketing Head informs us.

According to Margaret, the company is a customer-focused organisation. The company values its customers and is committed to providing quality service and being responsive to customer needs and wants. “Our brand promise has been to offer consistent quality to our customers,”

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she says.

CIL is the leading producer of maize meal in the Central Kenya and Nairobi region. “Our Soko brand has a strong lead in this particular region, driven by our focus on this area,” states Margaret. The brand also has strong brand awareness across the country.

In the rice product category, the company has a number of rice varieties and brands: Pearl Kenya Pishori Rice, the flagship Pishori brand, has gained over the years popularity in Kenyan homes, credited with delivering the brand promise and commanding a leadership position in the

“We have invested in our quality control process, be it in equipment and people to ensure that the raw materials that we are receiving are safe, the process of milling is safe and the end products are safe” Roni Painter, Production Manufacturing Manager

Pishori segment.

The company’s CIL Long Grain rice and the Ranee Family rice range (Ranee Premium Basmati, Ranee Classic, Ranee Chef Special Basmati, Ranee Every Day and Ranee Biryani Long Grain rice) offer great cooking presentation properties. The company also has an extension line to spaghetti and pasta products under Ranee FOODBUSINESSAFRICA.COM

“It is our intention as a company to expand our coverage into the wider Eastern and Central African region, in line with the vision of Kenya by expanding our exports markets in a major way,” Margaret Kamaru - Marketing & Communications Head

brand packaged in 400gram packs.

The company is proud of its leadership position in the Pishori rice category in Kenya. The rice products are available in white and brown options, and various packaging sizes, from 1kg, 2kg, 5kg and 10kg offering choice and variety to consumers.

The company also has a growing list of packaged pulses packaged in 500g and 1kg packs. These pulses include green grams, locally known as Ndengu, masoor dal (Kamande), cowpeas, black beans (Njahi), red beans, pigeon peas, popcorns among others under the Pearl Brand.

During processing, the pulses are sorted and cleaned through the latest SORTEX technology that delivers clean, wholesome and nutritious grains that meet rising consumer needs in the region.

The porridge line consists of two varieties, Pure Wimbi and Wimbi Mix under the Soko brand name, offering wholesome nutrition & goodness to the whole family anytime.

People focus

The company presently employs about 400 people, a feat that the company is very proud of, impacting a total of 2,000 people through its supply chain, from the farmers from whom it sources the raw materials to the factory employees, to those involved in

FOODBUSINESSAFRICA.COM

the distribution of its products.

“Our Chairman, who has been working in the food industry since 1956, started the company and has been vital to its growth.

Over the years, we have made great strides in growing the company, and are very proud of our most important asset: the people we work with here. However, we have recently made moves to professionalize the management of the company,” the CEO, Rajan Shah informs us.

“The shareholders are beginning to give the day-to-day management of the company to those who are good at what they are trained to do. We recently brought in a new role into the business, introducing the Head of Business function, which is headed by Mahesh Chavda, who is the overall head of the company’s operations.

Below the Head of Business, there is the senior management team that heads various functions: Human Resources, Finance, Production & Manufacturing and Sales and Marketing. At the operational level, we have middle level, line management and supervisory staff. The team headed by Mahesh Chavda will run the operations and report to the executive Board, improving the management strength of the company,” the CEO adds.

Community involvement

CIL is well involved with community

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Capwell Industries’ future is to process and package grain after grain...

“We have future plans to grow our capacities and also venture into milling of wheat flour, which will complete our portfolio in the overall grains sector. We are also considering listing the company at the stock exchange” Rajan Shah, CEO

initiatives. The company has always supported and contributed towards the annual Shah Free Eye and ENT camps across Kenya for many years. They have also initiated a feeding program with its Soko porridges to primary schools in the locality.

The company is also involved in sports partnership and education sponsorship through bursaries to a number of children.

“We are looking at opportunities to train the under-privileged members of the society to find jobs. Further, we are looking at working together with other partners to start an apprentice program that will enable new employees that we take up to improve their skills, sorting out the mismatch of skill sets that we do have presently in the industry,” the CEO adds.

The future and changing consumer needs

The company is looking up to a bright future. “We are excited for the future, but we also cognizant of the fact that the consumers are more knowledgeable and asking for more. The consumers are asking 44

more of manufacturers like us in terms of better, more convenient, safer, nutritious and healthier products.

“We have future plans to grow our capacities and to also venture into milling of wheat flour, which will complete our portfolio in the overall grains sector. We plan to cover the entire range of the major cereals consumed in the country,” says the CEO. “We are also considering listing of the company at the stock exchange to expand the ownership of the company. We have no definite timeline for now, but we have key goals to deliver, and in 5-10 years, we could list the firm. Of importance is that we need to be of a certain critical mass to list the company,” he says.

The company, in line with its mission and vision, will continue to deliver wholesome, nutritious and convenient products. “We are looking at further value addition of our raw materials, where our present products serve as raw materials for extra value addition, by using better technologies to deliver better value to our customers.

For example, we have seen in some countries an improvement to the processing of maize flour to deliver ugali (a local staple, made from maize meal, that takes about ten

minutes to prepare) that takes less than a minute to prepare. This could deliver a more convenient and more value to customers,” notes the CEO. “All our questions of the future will be answered by how the consumer needs will be addressed. Vitality, health and time are of essence to every consumer. If we can deliver for example, ready-cooked rice that can go directly into a microwave, the consumer will find more value.

If we can provide more variety of food products, people these days are also looking for choice. With growing consumer needs, our questions will be answered,” advises Chetan Shah.

CIL is planning to be in the business for many more years to come, and is willing to work with other stakeholders to improve the local community and the country, beyond meeting its corporate goals, says the CEO. “We are proud of our vision and will ensure that we shall continue to drive more value for our customers, grow to greater heights, while sharing the enhanced prosperity with our suppliers, the community and other stakeholders,” concluded the Sales & Marketing Director

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Global Food and Beverage Congress Africa 2016 November 3-4, 2016 | Cape Town, South Africa Egypt

One of the fastest growing in Africa food sector(12% growth rate annually)

Nigeria

Africa’s largest alcohol consumer (annual growth rate of 5.6%) FDI with 6 investment projects

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The fastest growing economy in East Africa(6.2% growth rate annually)

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