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EABL: Brewer innovates to grow, fend off competition

Mukhtar Kent:

What I have learnt as CEO of Coca-Cola

AFMASS Conference & Expo 2017 Preview

VOLUME 5 • ISSUE 1 • NO. 22 • ISSN 2307-3535

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CONTENTS

EABL:

Brewer innovates to grow, fend off competition

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FOUNDER & PUBLISHER Francis Juma ADVERTISING & SUBSCRIPTION: Mary Nzioka • Elly Okutoyi DESIGN & LAYOUT Cynthia Odero

EDITORIAL

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8 Africa must seek to produce more grain; not close borders

RELATED PUBLICATIONS

MY PERSPECTIVE 12 Muhtar Kent, CEO Coca-Cola: What I’ve learned as CEO of Coca-Cola

www.foodbusinessafrica.com EVENT PREVIEW 15

AFMASS Conference & Expo 2017

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INTERNATIONAL NEWS 11

Reckitt Benckiser acquires infant nutrition company Mead Johnson

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Coca-Cola India reorganizes Indian franchise business

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DSM links with varsity for food innovation

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McDonald’s China sells majority shares in China business

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AFRICAN NEWS 22 PE funds seek to buy Java House 22 Nestlé acquires Egyptian instant coffee company

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23 AB InBev begins reducing head count in South Africa

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East African Breweries Ltd.

SUPPLIER INNOVATIONS & NEWS 28 Ishida introduces foreign body detectors for food producers 28 Spanish flavor manufacturer Scentium opens Ghana office 28 Frutarom buys South African flavor company

COVER PHOTO: Some of East African Breweries beer and spirits products 2

JAN/FEB 2017 | FOOD BUSINESS AFRICA

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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CONTENTS

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INTERNATIONAL NEWS 31 31

BÜHLER JOINS INSECTS RACE, FORMS JV WITH DUTCH FIRM NESTLÉ OPENS US$86 M PET FOOD PLANT IN BRAZIL

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BARILLA EXPANDS INTO SAUDI ARABIA

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PICTORIAL 35

AFRICAN MILLING SCHOOL GRADUATION CEREMONY 2017

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GLOBAL FEED PRODUCTION PASSES 1 BILLION TONNES

AFRICAN NEWS 38

FLY FARM VENTURE SIGNS DEAL FOR 25 FLY FARMS A YEAR

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ARDENT MILLS JOINS PARTNERSHIP TO STRENGTHEN AFRICA’S FOOD INDUSTRY

FORMULATIONS 40

ENZYMES IN BAKING & MILLING

EVENT REVIEW 40

IAOM ETHIOPIA 2016

SUPPLIER NEWS 44

OMAS INDUSTRIES TO SET UP ADVANCED MILLING PLANT IN UGANDA / ALAPALA COMPLETES NEW MILLING PLANT IN SUDAN / BILLERUDKORSNÄS INVESTMENTS IN NEW MACHINE

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JAN/FEB 2017 | FOOD BUSINESS AFRICA

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EDITORIAL

Africa must seek to produce more grain; not close borders As the after effects of El Nino continue to ravage Africa, sources of grain imports dwindle due to low production in continent

BARELY A FRACTION OF FERTILE AGRICULTURAL LAND IN AFRICA IS BEING CULTIVATED - AND JUST 10% OF THE 400 MILLION HA. OF GUINEA SAVANNAH

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he contribution of grains to Africa’s nutritional and economic situation is huge. With its reliant on grain for food and economic stability, Africa has continued to be one of the World’s most food, and specifically, grain insecure regions in the World. And yet, with food consumption expected to nearly double in the continent by 2020, from just a decade earlier, the opportunity for Africa to use grain and food exports as a major driver of the economy keeps sliding away from the region’s leaders’ minds. This month, there has been a report that the East African Grain Council (EAGC) and the USAiD trade hub have been engaging the government of Ethiopia to allow the country to export maize to Kenya, its southern neighbor. Ethiopia was engaged to sell 1.5 million bags of maize to Kenya, because of the existence of drought in the region, despite the fact that the farmers in Ethiopia could actually gain if they had not been stopped by their government from selling the maize across the border into Kenya. Tanzania, another neighbouring country, has continued to close its borders whenever Kenya is in need of maize. The narrative that seems lost in this importation debate is the low volume of grain that actually cross borders within the continent. According to the World Bank, Africa imports 95% of its grains from outside the continent, with only a paltry 5% sourced from other African countries. Governments, in their quest to keep others out of their markets tend to protect their farmers from external markets, where, as the World Bank said in a report, Africa can help feed Africa: Removing barriers to regional trade in staples, “often the nearest source of demand are across a border.”

JAN/FEB 2017 | FOOD BUSINESS AFRICA

Although policies that discourage trade across borders have an important role of reducing inflation, what they have done is to make the African farmer to think of farming as a basic, subsistence activity devoid of any direct monetary gain. Grain exports give African countries the real opportunity to diversify their exports and boost foreign exchange, away from focus on crops that are mainly sold through longestablished international chains like coffee, sugar, cotton and horticultural crops. And the opportunity is huge. Countries including Zambia, Tanzania, Uganda, Ethiopia, the two Congos, Central African Republic, Mozambique, Malawi, South Sudan, Nigeria, among others have a huge opportunity to ramp up grain production that can change their fortunes because of vast quantities of arable, unutilized land. The World Bank notes that barely a fraction of the fertile agricultural land in Africa is being cultivated – and just 10% of the 400 million hectares of agricultural land in the Guinea Savannah zone that covers a large part of Africa. If there is an investment opportunity, then Africa’s agriculture sector provides tremendous opportunity for communities and the private sector to put in their money with handsome returns. But governments in Africa seem to be stuck with policies that have continued to drive barriers between countries. The thought that exports are only of value if they are being shipped to European, Asian or North American countries must change for Africa to rise. From where I sit, I think it is the mindset that needs to change. Fast!! FOODBUSINESSAFRICA.COM


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INCORPORATING


MY PERSPECTIVE | MUHTAR KENT, CEO OF COCA-COLA

What I’ve learned as CEO of Coca-Cola bottling system, transformed our business in North America, and achieved some of the strongest revenue growth among consumer packaged goods companies. But getting better remains a never-ending journey. Over nearly 40 years in business, I’ve

No matter how far you go as a leader, you have to keep seeking advice and good counsel. At every career stage, I’ve picked up new leadership insights

Muhtar Kent, CEO of Coca-Cola

Over the years, I’ve given a lot of thought to the topic of leadership and doing what I can to build a culture of leadership that gives The Coca-Cola Company a sustainable, long-term advantage. To me, leadership is all about creating value in whatever you do - and whatever role you are in - and leaving something better than you found it. The best leaders keep learning, too. They learn from their mistakes and their successes—not only when they’re young, but throughout their careers. I’ve certainly tried to do this. And listening to others has been absolutely essential to this process. No matter how far you go as a leader, you have to keep seeking advice and good counsel. At every career stage, I’ve picked up new leadership insights. Early on, I learned vital lessons about developing empathy and respecting cash. Later, I worked on collaborating with others and building networks of trust. More recently, it has been about setting a vision for the future, communicating priorities, and leveraging credibility and relationships to help our company and bottling system work together as one united team. It has also been important for me to maintain a long-term perspective on 10

JAN/FEB 2017 | FOOD BUSINESS AFRICA

creating value for stakeholders, something many might think would come naturally in a business with 130 years of history. But nothing is automatic. When I spoke during our shareowners meeting last year, I explained that we’re building this business not only for the next quarter, but also for the next quarter of a century. To me, making such a statement really comes down to doing what’s right and necessary now so that our future prospects are not harmed, but enhanced. At its heart, Coca-Cola is a brand business, and our brands are nothing more than promises. If a good brand is a promise, then a great brand is a promise kept. Keeping our promises means never falling into the traps of complacency and arrogance while always being open to change and improvement. In the last few years, we’ve taken a step back to look at our business and examine how we can become faster, more entrepreneurial, and more efficient. And we’ve made progress. We’ve broadened our portfolio and packaging choices to serve evolving consumer tastes, revitalized our marketing, facilitated the improvement of our global

often said that doing an excellent job is only the starting point - the foundation. It’s about creating the conditions to sustainably repeat success. And, in this case, success is connected to making a promise into the future without a pre-determined outcome—and then taking action to deliver on that promise. In May, I’ll pass the baton of Coca-Cola CEO to James Quincey, the right leader at the right time to take our business forward. I’ll continue to serve as chairman of our board, and James will have my full and vigorous support. James and his team will write the next chapter in Coca-Cola’s story - one that not only addresses the challenges we face, but also further unlocks the potential in our brands, our people, and our system. Ultimately, leaders are judged by what they leave behind. And I feel very good about Coca-Cola’s prospects to flourish as never before during the balance of this decade and beyond. For me, this will be the ultimate measure of my career - and my leadership of this great business of refreshing the world. Muhtar Kent is chairman and CEO of The Coca-Cola Company. Mukhtar Kent has been CEO of the Coca-Cola Company since 2008 and Chairman from 2009. On May 1, 2017, Kent will relinquish the CEO role to James Quincey, currently the Chief Operating Officer, and retain the role of Chairman of the Board of Directors.

FOODBUSINESSAFRICA.COM


NEWS | INTERNATIONAL M&A

Heineken acquires Kirin Holdings Brazilian operations

BRAZIL – Japan-based beer company, Kirin Holdings has exited the Brazilian beer market citing tough operating environment, selling its stagnant business to Heineken Breweries for US$705 million. The deal will make Heineken the second largest beer company after the dominant AB InBev in a market that is the third largest beer market in the world, brewing 139 million hectoliters, catering to a total population of over 200 million people. The move will provide Heineken “with a stronger commercial platform from which to capture future profitable growth

in an exciting beer market,” despite poor macroeconomic fundamentals in the last few years. It also strengthens Heineken’s hand to compete with AB InBev in Brazil, which has taken the battle to Heineken in some key markets after AB InBev bought SABMiller last year. Heineken plans to add the acquired business to its existing business in Brazil, by “extending its footprint, increasing scale and further strengthening its brand portfolio.” The company expanded its footprint in Brazil by acquiring the beer operations of FEMSA brewery in 2010 and has increased its market share to about 10%, led by its Heineken brand in the outperforming premium segment. It currently operates 5 breweries in Brazil and has a strategic distribution partnership with the Coca-Cola bottlers. “Considering various risks associated with Brazilian economy and stagnant and competitive situation in Brazilian beer and soft drink markets, Kirin has come

to the conclusion that there are certain limitations in transforming Brasil Kirin into a sustainable and high-profitable business on its own,” said Kirin in a statement. Kirin Holdings operates 12 breweries in the country with a share of about 9%. It also has a soft drinks business comprised of carbonated drinks, bottled water and other beverages. The company entered Brazil in 2011, but with declining market share, rising raw material costs and a recession in the country, forced the company to take a loss to exit the Brazilian market. “The longer term fundamentals of the Brazilian beer market are highly attractive supported by a growing population and a positive GDP outlook. In addition, the premium segment of the beer market, which has outperformed the broader beer market in recent years, has a relatively low share compared to many other markets, providing a compelling and attractive opportunity for future growth,” said Heineken, providing the reason for its grabbing of Kirin.

M&A

Reckitt Benckiser to acquire No. 3 infant nutrition company, Mead Johnson UK - Consumer goods manufacturer Reckitt Benckiser has acquired the leading infant nutrition company Mead Johnson Nutrition as it seeks to take advantage of the company’s Asian market strength. Known more for its range of healthcare, hygiene and homecare brands, including Dettol, Gaviscon and Strepsils, the entry of Reckitt Benckiser to the infant nutrition business is a game changer for the company as it adds the Enfa line of infant nutrition products to its business line, with an eye on the young and mothers, and on China. The deal values Mead Johnson at US$ 17.9 billion including debt, or US$ 90 per share in cash. “The acquisition of Mead Johnson is a significant step forward in RB’s journey as a leader in consumer health. With the Enfa family of brands, the world’s leading franchise in infant and children’s nutrition, we will provide families with vital nutritional support. This is a natural extension to RB’s consumer health portfolio of Powerbrands, which are already trusted by millions of mothers, reinforcing the importance of health and hygiene for their families,” Rakesh Kapoor, Chief Executive Officer of Reckitt Benckiser said at the announcement of the acquisition. FOODBUSINESSAFRICA.COM

“Mead Johnson’s geographic footprint significantly strengthens our position in developing markets, which will account for approximately 40% of the combined group’s sales, with China becoming our second largest Powermarket,” he continued. Mead Johnson, based in the US a leader in the infant and children’s nutrition products category through its Enfa line of products, has been an independent public company. At some point, it used to be an operating division of Bristol-Myers Squibb, a pharmaceutical company. The global infant nutrition category is worth about US$46 billion in annual sales, and is expected to grow 3-5% per annum in the medium to long term. “The acquisition of Mead Johnson complements Reckitt Benckiser’s geographic presence, increasing its developing markets scale by approximately 65%. Developing markets will account

for approximately 40% of the combined group’s sales, with a critical mass in key geographies, notably China,” says Reckitt Benckiser in a statement. In the year ended 31 December 2016, Mead Johnson reported net sales of US$3.743 billion, of which 50% were generated in Asia, 17% in Latin America and 33% in North America. Mead Johnson has a strong presence in Asia and Latin America, from where it derives 67% of its net sales. In 2015, Mead Johnson had net sales of $1.2 billion in China. The new business is expected to deliver cost savings of £200 million (US$ 250 million) per annum by the end of the third full year following completion, with one-off costs to achieve the savings expected to be about £450 million (US$560 million). Reckitt Benckiser will establish an infant and children’s nutrition division, which will report directly to the CEO, post the merger. The transaction is subject to approval be regulators and shareholders of Mead Johnson. The acquisition of Mead Johnson catapults Reckitt Benckiser to the No.3 slot, after Nestle and Danone, the two leading companies. FOOD BUSINESS AFRICA | JAN/FEB 2016

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NEWS | INTERNATIONAL TRADE

Trump worries sweep agriculture and food companies as he cancels TPP, targets NAFTA Trade and industry associations, food companies reject immigration ban, plan to face administration, hire refugees

USA – The food and agriculture industry in the United States is bracing for hard and unpredictable times ahead as President Trump’s administration settles in, and is set to cancel and re-negotiate long-standing trade deals and reduce immigration into the country. To begin with, Trump abandoned the Trans Pacific Partnership (TPP) that had been negotiated by the Obama Administration on his first day in office, throwing the deal that was touted by US agriculture to be a key initiative to increase exports of food products into the Asian region. The TPP, bringing together 12 countries on the Pacific Rim, consisted of 40% of total world trade and a total population of 800 million, double that of the European Union (EU). The TPP sought to reduce import taxes on poultry, dairy, rice, wine, sugar, meat and other US food products into the Asian market, but the new administration, which had campaigned against the trade deal, prefers smaller bilateral trade deals between countries in the region and the US. Over 130 food and agro industry companies wrote an open letter to Trump in January to argue the case for the North Atlantic Free Trade Agreement (NAFTA) even as Trump threatened to trash the deal that brings together Mexico, USA and Canada. “With the productivity of U.S. agriculture growing faster than domestic demand, the U.S. food and agriculture industry - and the 12

JAN/FEB 2017 | FOOD BUSINESS AFRICA

rural communities that depend on it - relies heavily on export markets to sustain prices and revenues,” the group said in the letter. Some of the food and agro industry companies and associations, under the U.S. Food and Agriculture Dialogue for Trade, included Cargill, Tyson Foods, American Feed Industry Association, Corn Refiners Association, US Wheat Associates, US Soybean Export Council, among others. “Increased market access under NAFTA has been a windfall for U.S. farmers, ranchers and food processors. U.S. food and agriculture exports to (Mexico and Canada) have more than quadrupled, growing from US$8.9 billion in 1993 to US$38.6 billion in 2015,” they added. Mexico is expected to import 4% of US’s maize crop in 2016/17 and is a significant buyer of US pork, amounting to 7.8% of US pork production. The importance of Mexico as a source of labour, agricultural products and an important export market for the US’s food and agriculture industry has been complicated further by Trump’s insistence on building a wall between Mexico and the US to stop illegal immigration, and the administration’s plan to impose a 20% tax on Mexican products into the US, to get funding for the wall. The contribution of Mexican labour to the agro sector in the US, especially in California is also huge, and with threats of throwing out undocumented labourers, said to be 70% of the work force, will have a devastating effect on agriculture in the state. “If you only have legal labor, certain parts of this industry and this region will not exist,” Harold McClarty, a fourth-generation farmer in California whose operation grows, packs and ships peaches, plums and grapes throughout the country told New York Times. “If we sent all these people back, it would be a total disaster.” In February, the U.S. Food and Agriculture Dialogue for Trade industry group followed their earlier letter that supported the NAFTA trade deal, writing another letter to President Trump in support of stronger trade ties with the important Asia-Pacific region. “Reducing and eliminating tariffs

and other restrictive agricultural policies in this region will help American workers in our sector compete, creating an opportunity to supply Asian markets with high-quality food and agricultural goods,” the coalition, made up of 87 companies and associations said in the letter. “While many in our sector strongly supported the Trans-Pacific Partnership, we hope future agreements build upon the valuable aspects of that agreement to increase our market access in the AsiaPacific,” the letter, signed by the likes Cargill, Campbell Soup, Corn Refiners Association among others said.

Food companies say no to Trump’s immigration policies

The Trump administration’s immigration policies, especially the signing of an Executive Order to temporarily stop citizens from a number of Muslim countries, and which as we went to press had been quashed by the courts, continued to bring out the food and agro industry to protest. Leading coffee chain Starbuck’s CEO Howard Schultz, “in deep concern, a heavy heart” told his employees in a letter that they were “living in an unprecedented time, one in which we are witness to the conscience of our country, and the promise of the American Dream, being called into question,” promised to hire 10,000 refugees in the 75 countries where they operate and to provide “opportunities for those fleeing war, violence, persecution and discrimination.” The company has also committed to donate 4 million coffee trees into Mexico to support families where it sources its coffee, as it promised to ‘build bridges, not walls, with Mexico.’ Trump supporters have called for a boycott of Starbucks stores following this action. But Starbucks is not alone. Chobani, the leading Greek yoghurt producer, has faced a backlash for his policies to hire refugees and continues to draw the ire of people who do not like his employ of about 300 refugees from Africa and Middle East, according to New York Times. FOODBUSINESSAFRICA.COM


EVENT PREVIEW

4 Reasons to be at AFMASS 2017 Reason #1

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. With a new venue at the business friendly Visa Oshwal Centre in the Weslands suburb, AFMASS Conference & Expo 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 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

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FROM FOOD TO FEED INDUSTRY AND EVERYTHING IN BETWEEN . . . The Africa Food Manufacturing & Safety Summit (AFMASS) Conference & Expo is the only regional event that brings together the food, beverages, milling, baking foodservice and feed industry from Africa and beyond. With one exhibition floor and two conference streams, AFMASS Conference and Exhibition gives a 360 degree view of the industry in Africa like no other. AFMASS is the ultimate industry focused event in the growing food, beverages, milling, baking and feed industry in Africa. Sign up today on the website to sponsor, exhibit, visit and attend the conferences today.

www.afmass.com FOOD BUSINESS AFRICA | JAN/FEB 2016

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NEWS | INTERNATIONAL INTERNATIONAL BRIEFS

Yum China launches Taco Bell Brand in China

CHINA - Taco Bell Corp, the Mexicaninspired restaurant chain, has opened its first Taco Bell restaurant in China, joining the Yum Brand’s KFC and Pizza Hut franchises in the country. The inaugural restaurant, located near Shanghai’s Oriental Pearl Tower in the city’s central business district, is Taco Bell’s latest international market entry as it aims to reach 1,000 restaurants internationally by 2022. “Building restaurants in new international markets is a key component to the overall growth and evolution of Taco Bell and we’ve just scratched the surface of our global unit expansion potential,” said Brian Niccol, CEO of Taco Bell Corp. “The opening of this Taco Bell restaurant in China is an exciting milestone for the brand as this market holds tremendous growth potential. We look forward to supporting Yum China as it builds Taco Bell’s presence in the country.” The menu features the brand’s favorites that have been adapted to local tastes. The company has created new sauces used in new products like the Shrimp and Avocado Burrito, which is unique to Taco Bell restaurants in China. Customers can also order shared plates featuring seasoned nacho chips, spicy fried chicken, and Mexican fries. The meals are made-to-order in a transparent, open kitchen where fans can see their food being handmade, driving the point of a company committed to openness to beat lingering food safety issues that have hit other US stores in the country. 14

JAN/FEB 2017 | FOOD BUSINESS AFRICA

PEOPLE

Coca-Cola India reorganizes its franchise business structures, appoints Gill boss

INDIA – Coca-Cola India has announced a new organization structureCourtesy: in the AB-InBev country that have the potential to convert India into a “single” national market, in line with the economic reforms in the country. “Under the new operating structure effective January 2017, the franchise management function of Coca-Cola India has been organized for geographical synergies instead of bottling territories,” said Venkatesh Kini, President, Coca-Cola India and South West Asia as he announced the new structure. “We are ready to embrace India as one national market with common commercial metrics, marketing calendars and market execution standards. This will drive productivity, reduce duplication, leverage technology, enable digitization and capitalize on our distribution scale,” he added. According to the company, the new structure will also enable the business to be a growth engine by capitalizing on emerging

opportunities like e-commerce, modern trade, new beverages and digitization, while continuing to build on its wide reach in traditional trade. Coca-Cola India operates with 14 bottlers of The Coca-Cola Company in India, one of which is a Company owned bottling entity, Hindustan Coca-Cola Beverages Pvt Ltd. The new structure is only applicable to Coca-Cola India. Shehnaz Gill, a 12-year veteran of Coca-Cola has been appointed to the newly created role of Senior Vice President Operations for India. He will serve as the Franchise Head for all the 14 bottlers operating in India and will report to Venkatesh. Shehnaz will be assisted in his operational duties by Ravinder Singh Bhatia, Region Director North; Ashish Jain, Region Director, Delhi NCR; Alka Shukla, Region Director, Uttar Pradesh; Arpita Maitra, Region Director, East; Alok Kohli, Region Director, Central and West and Vikas Sunkad, Region Director, South. The company owned Hindustan CocaCola Beverages Pvt Ltd will continue to operate through its five Zonal Vice Presidents and Executive Director, Operations. Shehnaz joins the Indian operations from Coca-Cola Refreshments, USA where he led Upstate New York & Pennsylvania Market Unit as General Manager and Vice President.

M&A PEOP

Bega Cheese acquires Vegemite and other Mondelēz brands AUSTRALIA - Mondelēz International, Inc. has reached an agreement to sell most of its grocery business in Australia and New Zealand to Bega Cheese Limited for $460 million AUD, returning the iconic Vegemite brand, found in majority of homes in the country, back to Australian hands. According to Mondelēz International, the move enables it to further focus its portfolio and drive profitable growth by investing in its core snacks categories and Power Brands, including Cadbury Dairy Milk chocolate and Oreo biscuits. Included in the sale are Mondelēz International owned brands - Vegemite, ZoOsh, Bonox - and other products that use the Kraft brand under license, such

as peanut butter, nut spreads, processed cheese slices, ambient cheese spread, mayonnaise, parmesan cheese, Kraft Easy Mac and Kraft Mac & Cheese. The Philadelphia brand, one of Mondelēz’s Power Brands, however remains under the ownership of the company

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INVESTMENTS

Coca-Cola to set up new plants in India and Pakistan INDIA - Hindustan Coca-Cola Beverages (HCCBL), the bottling arm of Coca-Cola in India, is setting up two greenfield plants at Ahmedabad and Nellore with an investment of Rs1,000 crores (US$146.82m), a top official said. Meanwhile, Coca Cola Beverages Pakistan Limited Group Director Public Affairs Atilla Yerlikaya has expressed interest in investing $200 million in two plants in Faisalabad and Islamabad in a bid to expand the company’s production. HCCBL, which currently operates 26 bottling plants and covers about 65% of bottling operations for Coca-Cola in the country, plans to spend about Rs1,000 crore ($146.82m), increasing its production capacity in the country by 4-5%. It will invest Rs750 crore ($110.11m) to set up another plant at Hoshangabad. “We are setting up two greenfield plants at Ahmedabad and Nellore. Sanand (Ahmedabad) will be commissioned this year and Nellore next year,” HCCBL chairman and chief executive officer T. Krishnakumar said. The greenfield plants would house multiple bottling lines for carbonated beverages such as Coca-Cola, Sprite, Fanta, Thums Up and Limca, juices and juice-based drinks like Minute Maid and Maaza, packaged water, as well as Kinley soda. In 2012, the Atlanta-based beverages major Coca-Cola announced investment of $5 billion along with its partners in India by 2020 on various activities, including setting up of new bottling plants. In Pakistan, Coca-Cola intends to set up its units at the Special Economic Zones (SEZs). “The company has already invested $500 million during this year on upgrading existing plants in the country,” said Yerlikaya. INVESTMENTS PEOPLE

Brazilian meat giant launches halal meat company in United Arab Emirates UAE - Brazil-based agribusiness company BRF has announced the formation of what it describes as “the world’s largest halal animalprotein company.” With its headquarters in Dubai, United Arab Emirates (UAE), the new entity is to be known as OneFoods. It will be entirely focused on the halal market, replacing BRF’s previous business in that area known as Sadia Halal. BRF Global CEO Pedro Faria, in a press release, said that, already covering 1.8 billion people, the halal market is growing faster in terms of population and wealth than the global average. “By creating a local company to consolidate our operations in Islamic markets, we moved further up the production chain to get closer to our consumers, which should support the accelerated growth of OneFoods,” he said. OneFoods estimates its market share in the Middle Eastern countries at around 45 percent, and that Sadia is the top halal food brand. With around 15,000 employees, OneFoods operates a fully integrated production chain, which includes 10 processing plants with eight in Brazil, one in the UAE and one in Malaysia). Patricio Rohner, BRF’s general manager in the Middle East and North Africa, will lead the new company. The investment adds to BRF’s acquisition of part of the frozen foods distribution business of Qatar National Import and Export Co. last year. FOODBUSINESSAFRICA.COM

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NETWORK WITH PEERS & INDUSTRY KEY DECISION MAKERS Hundreds of industry experts, Government officials, technology suppliers and other industry stakeholders from Africa and the World will gather in Nairobi, Kenya at AFMASS Conference & Expo 2017. Gain industry insights, meet new and old industry acquintances and interact with industry leaders from the region for your personal growth while boosting your company’s prospects in the region. Sign up today on the website to sponsor, exhibit, visit and attend the conferences today.

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NEWS | INTERNATIONAL INTERNATIONAL BRIEFS PARTNERSHIP

DSM links with varsity for food innovation SINGAPORE - Agreement sealed Royal DSM has signed an agreement with an independent university Singapore Institute of Technology (SIT) to develop commercial and scientific opportunities for undergraduate students in the food technology sector. The global sciencebased company active in health, nutrition and materials has partnered with the university to provide its students with industry experience as part of a holistic learning approach. “With the growing focus on health and well-being through food consumption, the demands for qualified, well-trained food technologists are increasing,” Professor Loh Han Tong, Deputy President (Academic) & Provost, SIT, said at the signing ceremony. The three-year collaboration will grant SIT’s Food Technology students and staff access to DSM’s Nutrition Innovation Centre (NIC) in Singapore and its state-of-the-art industry facilities and expertise during their course of study. Students will have the chance to use the latest technology in real-life applications for the food and nutrition sector, including dietary supplements, dairy, food and beverage segments. They will also be exposed to the prototyping and product development process at the facility. This includes time with a UHT pilot plant for food fortification, a sensory lab to create desired flavor profiles, and climate-controlled chambers to establish stability under different environments. The agreement is a continuation of on-going collaborative efforts that DSM has with local academic institutions in the country. “Early exposure to this collaborative approach in action will provide SIT students with a competitive advantage to get their career in the food technology industry off to the best possible start,” said Pieter Nuboer, Vice President, Human Nutrition and Health, Asia Pacific, DSM The government of Singapore has ambitious plans to develop the country into the leading food and nutrition hub in Asia. 16

JAN/FEB 2017 | FOOD BUSINESS AFRICA

REGULATIONS

FSSAI to licence e-commerce food companies to control food safety INDIA - Food Safety and Standards Authority of India (FSSAI) has announced new regulations that bring e-commerce food companies under its control, asking them to obtain licences for their entire supply chain besides ensuring that delivery of products is done by ‘trained personnel’ in order to maintain food safety. “E-commerce FBOs shall be covered under Schedule-I of the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulation, 2011. These e-commerce FBOs have to obtain license from the Central Licensing Authority for the entire supply chain,” the FSSAI said in its guidelines for ‘Operations of e-commerce Food Business Operators’. According to the regulations, the companies will be expected to meet regulations in their entire operations, from the registered office, manufacture, transportation, storage and distribution. The FSSAI’s guidelines come in the wake

of series of consumer complaints against e-commerce companies offering poor quality products and services, according to the ET. With a view to ensure food safety, the FSSAI further said: “It shall be ensured by the e-commerce FBOs that the last mile delivery is undertaken by trained delivery personnel and the safety of food product is not compromised at the time of delivery.” However, e-commerce entities providing listing/directory services to the final seller of the food product may not be required to obtain license/registration under the Act.

SUSTAINABILITY

Unilever pledges to use 100% recyclable packaging by 2025

UK – Dutch and British conglomerate Unilever has committed to ensuring that all of its plastic packaging is fully reusable, recyclable or compostable by 2025 as it called on the entire fast-moving consumer goods industry to accelerate progress towards the circular economy. “Our plastic packaging plays a critical role in making our products appealing, safe and enjoyable for our consumers. Yet it is clear that if we want to continue to reap the benefits of this versatile material, we need to do much more as an industry to help ensure it is managed responsibly and efficiently post-consumer-use,” said Paul Polman, Unilever CEO.

To help transform global plastic packaging material flows, Unilever has committed to ensure all of its plastic packaging is designed to be reusable, recyclable or compostable by 2025. It has also committed to invest in proving, and then sharing with the industry, a technical solution to recycle multi-layered sachets, particularly for coastal areas, which are most at risk of plastics leaking into the ocean. The company has already committed to reduce the weight of the packaging it uses this decade by one third by 2020, and increase its use of recycled plastic content in its packaging to at least 25% by 2025 against a 2015 baseline. In 2015, it achieved its commitment of sending zero non-hazardous waste to landfill across its manufacturing operations. According to the Ellen MacArthur Foundation, just 14% of the plastic packaging used globally is recycled, while 40% ends up in landfill and a third in fragile ecosystems. By 2050, it is estimated there will be more plastic than fish in the world’s oceans.

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SUSTAINABILITY

Chipotle announces changes in its animal welfare practices

4 Reasons to be at AFMASS 2017 Reason #3

USA - Chipotle Mexican Grill, a leading restaurant chain with operations mainly in the US, has announced significant to its commitment to animal welfare in partnership with its suppliers of chicken to the chain. The commitment includes welfare outcomes resulting from fast-growing chickens, environments in the facilities that house chicken, the space allotted to each chicken, and the manner in which chickens are slaughtered, due to growing concerns about how chickens are raised and processed. Together with Compassion in World Farming USA and The Humane Society of the United States, Chipotle has committed to use standards aligned with the new requirements of the Global Animal Partnership’s Standard for broiler chickens with the aim of improving bird welfare, with the aim of achieving its goals by 2024. These include improved breeding practices by transitioning to strains of birds bred for measurably improved welfare outcomes; providing animals with more space by reducing maximum stocking density to 6 lbs. per square foot; and providing chickens with housing that includes improved lighting, litter and floor enrichments that allow chickens to express natural behaviors. They also include processing chickens in a manner that utilizes a multistep controlled-atmosphere processing system working closely with suppliers who will be required to demonstrate compliance with these standards through regular audits by Chipotle’s internal Animal Welfare team as well as third party auditors. REGULATIONS

FDA concludes consultation on pink flesh pineapple USA - The U.S. Food and Drug Administration (FDA) has announced it has completed its evaluation of a variety of pineapple genetically engineered by Del Monte Fresh Produce (DMFP) to have pink flesh, concluding that there are no unresolved safety or regulatory questions about the pineapple. DMFP’s new pineapple has been genetically engineered to produce lower levels of the enzymes already in conventional pineapple that convert the pink pigment lycopene to the yellow pigment beta carotene. The company submitted information to the FDA to demonstrate that the pink flesh pineapple is as safe and nutritious as its conventional counterparts. DMPF plans to identify the food as “extra sweet pink flesh pineapple” on tags attached to the crown of the fruit. This will distinguish the pink flesh pineapple from DMFPs golden” extra sweet pineapple” which was introduced in the 1990s. FOODBUSINESSAFRICA.COM

TECHNOLOGY & INNOVATION MARKET PLACE Top regional and international suppliers of post-harvest management solutions, equipment, chemicals, ingredients, laboratory systems, packaging, services and food and beverage products will showcase their innovations at AFMASS Conference & Exhibition. Looking for supplies for your next project? Seeking partners or distribution opportunities with international or regional brands? For any industry leader, AFMASS is the event not miss in 2017. Sign up today on the website to sponsor, exhibit, visit and attend the conferences today

www.afmass.com FOOD BUSINESS AFRICA | JAN/FEB 2016

17


NEWS | INTERNATIONAL INTERNATIONAL BRIEFS M&A

McDonald’s China sells majority shares in China business

CHINA – McDonald’s Corporation has announced the sale of an 80% stake in its China and Hong Kong business to Chinese state-backed conglomerate CITIC Ltd and the Carlyle Group for about US$2.1 billion. The deal will create a new company that will be the master franchisee responsible for McDonald’s businesses in Mainland China and Hong Kong for a term of 20 years, taking over the running of over 2,600 restaurants in the region. The company plans to add 1,500 over the next five years. McDonald’s, which is playing catch up with the other American fast food retailer KFC, which has over 5,000 stores in China, believes that the local partners will help speed up growth in the world’s second largest economy through new restaurant openings, particularly in smaller cities that are expected to benefit from increased urbanization and income growth. At the same time, local Chinese brands have made their presence felt, as they strive to match the big American behemoths that have recently been beset by food safety scares. At the completion of the transaction, CITIC group will have a controlling stake of 52%, while Carlyle and McDonald’s will have interests of 28% and 20%, respectively. “McDonald’s globally overall is struggling and didn’t have the money or intellectual resources to focus on China,” said Shaun Rein, managing director at China Market Research Group. The total consideration US$2.08 billion will be settled by cash and by new shares in the company issued to McDonald’s. The chain has an ambition to hand over 95% the ownership of its restaurants around the World to franchisees. 18

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M&A

Heineken to acquire UK pub portfolio, become No.3 pub chain in country UK – Brewing company Heineken N.V. has announced the buy-out of leading British pub group Punch Securitisation A (‘Punch A’), which runs about 1,900 pubs across the UK, becoming the the 3rd largest pub business in the country. Heineken entered the UK pub market as part of its acquisition of Scottish & Newcastle’s operations in the UK in 2008, believes that there is “compelling strategic rationale for enlarging its existing pub business through the acquisition of Punch A,” and will add to its current ownership of the Star Pubs & Bars business. The acquisision will cost an aggregate consideration of £305 million (US$380 million). “Heineken considers pubs to be an integral part of British culture and that highquality, well invested pubs run by skilled and motivated operators will continue to prosper. Heineken UK believes that it can realise increased potential from Punch A

through investment, as well as attracting and retaining the best licensees.” It said in a statement. The portfolio of Punch pubs are located across the UK and are highly complementary to Star. The Star franchise consists of 1,049 leased and tenanted pubs, where the company has invested over £20m (US$25 million) per year since 2014 to grow the business. On completion of the transaction HEINEKEN UK intends to fully integrate these pubs into Star, becoming the third-largest pub business, in what it says, remains a highly fragmented pub market.

Pizza Hut plans to double outlets in India to over 700 by 2022 INDIA - Pizza Hut considers India to be one of its most important markets and plans to double its store count to over 700 in the next five years, riding the wave of growing popularity of western fast-food in the country, a senior company executive said. “In the long-term, India is one of our most important markets. In the medium term, we plan to double the number of outlets. We currently have 360 restaurants across 100 cities. We will double that to over 700 in the next five years,” Unnat Varma, Managing Director, Pizza Hut (India Subcontinent), Yum! Restaurants told PTI. “In 2014, we had ramped up aggressively and opened over 80 restaurants. Now, we are in a consolidation phase for our business. Once you had this kind of growth, you need to stabilize the business. Let’s not grow ahead of the curve,” he added. Varma said the economy is also looking to turn around and consumer sentiment is picking up, giving confidence to the firm to

gradually ramp its presence in the country. He said that a recent study undertaken by the company showed that pizza had become the biggest food category in the country, giving impetus to the company’s growth. “Five to six years ago, the western food format stood third in preferences after Indian and Chinese, and within that pizza was the highest. Recent studies show pizza is the biggest category, and has become the most accepted food across all consumer categories,” he said.

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INNOVATIONS

Arla Foods Ingredients launch whey hydrolysates

4 Reasons to be at AFMASS 2017 Reason #4

TWO HOT, COMPLEMENTARY CONFERENCES UK - Arla Foods Ingredients has unveiled a new generation of whey hydrolysates that are set to take these premium grade proteins into the mainstream sports nutrition market. Whey hydrolysates are premium proteins that have been finely chopped – or ‘pre-digested’ – so they are absorbed more quickly by the body than standard proteins. This ensures they get to work faster on helping the muscles recover after exercise, says Arla. Targeting casual and fitness lifestyle users of sports nutrition, the products in the new range include Lacprodan Hydro.clear, a mildly hydrolyzed and acidified whey protein specially developed for crystal-clear beverages; Lacprodan Hydro.milk, a mildly hydrolyzed whey protein specifically designed for producing 100% whey-based milky, high protein drinks; Lacprodan Hydro.gel, a mildly hydrolyzed whey protein tailored for use in protein gels; and Lacprodan Hydro. power, a mildly hydrolyzed whey protein perfected for use in powder shake applications. With these next-generation whey protein hydrolysates, it is now much easier for companies to create sports nutrition products that are highly effective, convenient to consume, competitively priced, and which taste good. “More and more active consumers are discovering the benefits of using sports nutrition products to help them optimize their workout programmes. This means the category is quickly becoming mainstream. Our new range of whey protein hydrolysates offers a straightforward way for brands to create differentiated products that deliver the benefits these consumers want,” Arla Foods Ingredients head of science and sales Peter Schouw said. According to Euro monitor, a research company, the global sports nutrition market will be worth US$17.5 billion in 2020, up from US$10.8 billion 2015.

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The conferences at AFMASS 2017 are designed to connect professionals, manufacturers and business owners with suppliers, regulators and other stakeholders with the latest innovations, policies and technologies. The AFGRAINS conference is the only regional conference that focuses on the vital grains, milling, baking and feed industry. The AFMASS Conference covers the dairy, beverages, meat, fruit and veg, food service, sugar and candy, and other processed food products sectors. Sign up today on the website to sponsor, exhibit, visit and attend the conferences today

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19


NEWS | AFRICAN REGULATION

WHO supports proposed sugar-sweetened beverages tax in South Africa World health body says it has no ‘veto’ on sugar tax regulations, despite reports from media outlets

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US$1 B REDUCTION IN GDP A PROPOSED SODA TAX MAY HAVE ON SOUTH AFRICA’S ECONOMY - BEVSA SOUTH AFRICA - The World Health Organization (WHO) has thrown its supports to the plans by the Government of South Africa to introduce a tax on sugarsweetened beverages (SSB) to help reduce excessive sugar intake. According to the WHO, the sugar tax is one of the interventions proposed in its strategy for the prevention and control of obesity in South Africa 2015-2020. It has supported the introduction of the tax since the National Treasury proposed it in August 2016. “WHO stands ready to support the Republic of South Africa, and as well as other countries, in protecting and improving the health their citizens and offering effective, technically sound and feasible measures to promote health for all people, no matter age, gender or background,” WHO’s Representative to South Africa, Dr Rufaro Chatora, said during a parliamentary hearing held on 31 January to discuss the proposed SSB tax. During his presentation, Dr Chatora highlighted the evidence and the impact of SSB tax. Experience from other countries, which implemented the same tax, demonstrates its potential to reduce consumption of sugar and raise

revenues that can be used to prevent and control diabetes, obesity and other noncommunicable diseases (NCDs), he said. The world health body says there has been no “veto” of such interventions proposed by its Executive Board, including SSBs, despite industry statements and media reporting based on such statements, despite the flood of queries for more information on a range of policy options and cost-effective interventions proposed by WHO to prevent and control NCDs, including the use of taxation on SSBs. The WHO says that taxation of SSBs is just one of a range of cost-effective measures to curb the threat of NCDs, responsible for the deaths of 16 million people every year before the age of 70. Other interventions targeting obesity include nutrition labelling; marketing restrictions of unhealthy foods and beverages to kids; fruit and vegetable subsidies; physical activity policies and social marketing campaigns. Meanwhile, the Beverages Association of South Africa (BevSA) has warned that the proposed tax on sugar sweetened beverages (SSBs) that comes into force in April this year has the potential to reduce the soda industry’s contribution to South

Africa’s Gross Domestic Product (GDP) by R14 billion (US$1 billion), the equivalent of 0.4% of GDP growth in 2016. Mapula Ncanywa, executive director BevSA, the proposed SSB tax could trigger 62,000 to 72,000 job losses, hurt the economy, increase the burden on consumers with 25% price increases and damage the competitiveness of the non-alcoholic beverage industry. Additionally, 10,000 small businesses may close. The resulting job loss will also reduce government’s tax revenue collection pool the association warned. “The tax will force many smaller producers to exit the market, thereby reducing industry competition,” said the association. “The tax is anti-competitive,” added the CEO. “As the proposed tax is levied per gram of sugar, smaller players who compete with lower prices and larger pack sizes will be most severely impacted. The SSB tax would represent a higher mark-up on their relative prices. Price increases could be as high as 80% on some 2 litre packages.” Ncanywa explained that in South Africa 2.29c per gram of sugar would be taxed. For a two litre Coke bottle, the tax will push the retailer margin up to 26%, excluding VAT.

M&A

Clover expands product offering through stake in olive oil manufacturer SOUTH AFRICA – South African dairy company Clover has acquired the Olive Pride business from Southern Canned Products (SCP), expanding its product offering into the healthy oils sector. SCP which is a wholly-owned subsidiary of explosives and specialty chemicals company AECI will dispose of Olive Pride to the newly formed Clover Pride, in which Clover South Africa holds 51% and AECI the balance. Clover will provide all services to the new entity, including merchandising, 20

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sales, marketing and distribution. Clover CEO Johann Vorster says that the company was excited about the acquisition, which provided further momentum to the company’s objective of expanding its value-added product offering. “The Olive Pride brand shares many touch points with Clover, such as consistent high quality, great taste and continued innovation and development. We believe these synergies, coupled with our extensive distribution network and merchandising capability, will

have a positive impact on both companies.” Olive Pride imports, bottles and distributes olive and seed oils, including premium extra virgin olive oils, balsamic vinegars, seed and extra virgin olive oil blends, pitted and pimiento-stuffed green olives, and pitted green and black olives. Clover Pride will continue to distribute, market and sell products under the Olive Pride brand, which holds a 37.5% market share in the olive oil category – Engineering News FOODBUSINESSAFRICA.COM


PEOPLE

Whitey Basson retires, as Shoprite seeks merger with Steinhoff

SOUTH AFRICA – Whitey Basson, the 45-year retail veteran who transformed an 8-store retailer Shoprite into Africa’s largest supermarket chain has retired from his position. The retailer’s Chief Operating Officer 47-year old Pieter Engelbrecht, a 20year veteran of the Shoprite group, has succeeded the 70-year old Basson at Shoprite since January 1. “Basson’s decision to retire will bring to a close a remarkable career of nearly 45 years‚ virtually all of which was spent with Shoprite‚ in which the business grew from a small eight-store chain with a value of R1million to a globally respected retailer with

a market capitalisation of R114-billion‚ and over 140‚000 employees today‚“ Shoprite said in a statement. “Throughout Basson’s leadership of the Group spanning 37 years, he persisted with his dream to expand even further on the African continent,” continued the statement, stressing Basson’s drive to expand into the rest of Africa immediately after the fall of Apartheid in 1994. From the store’s first outlet in Lusaka, Zambia, the company is currently in tens of countries in Africa, from Ghana, Nigeria, DRC, Angola, Malawi to Mozambique. In the early days, he also successfully acquired and integrated local retailers in South Africa including

Grand Bazaars‚ Checkers and OK Bazaars, thereby making Shoprite the largest supermarket chain in the country. Basson will remain with Shoprite as nonexecutive vice-chairman‚ available to management to ensure an orderly leadership transition. Meanwhile, Shoprite and leading South African company Steinhoff are in talks to merge the operations of the two companies that will form a new retail behemoth called Retail Africa. In a statement released in December, the two companies said the vision to create Retail Africa - “which will be a formidable entity that has its roots firmly entrenched in Africa” - is shared by Shoprite’s largest shareholders the Public Investment Corporation and Titan, a family trust owned by Shoprite chairperson Christo Wiese. “Accordingly, both shareholders have indicated that they are fully supportive of an initiative which could lead to the creation of Retail Africa,” the statement said. In the deal, its is expected that Shoprite will acquire Steinhoff’s African retail operations which consist of a number of brands in the retail space, including Pepkor Africa, Pep SA, Ackermans, Speciality Group, and others. Shoprite will issue new ordinary shares to Steinhoff in consideration, pursuant to which Steinhoff will receive a significant equity interest in Shoprite, according to the statement. Christo Wiese, one of the richest men in South Africa, is the largest shareholder of both Shoprite (16%) and Steinhoff (18%).

UberEATS extends to Cape Town, trials food delivery in Kenya

SOUTH AFRICA - Food delivery app UberEATS has launched in Cape Town after the Internet ride-sharing company first debuted its service in the northern suburbs of Johannesburg, reports Fin24. The app, an on-demand service that taps Uber’s network of partner-drivers to deliver meals from restaurants to customers, promises an average delivery time of 30 minutes from order to drop-off, FOODBUSINESSAFRICA.COM

company officials said at an event for the Johannesburg launch last year. Deliveries can be tracked in real-time with a range of top restaurant chains partnering with the service. “We received such a fantastic response to the launch of UberEATS in Johannesburg we couldn’t wait to launch in food-conscious Cape Town. Our app shows immense interest in this area and we are so looking

forward to offering Capetonians meals from their favorite eateries, without the time and hassle of going to get it themselves,” said Dave Kitley, operations manager of UberEATS. In a previous interview with Fin24, Uber general manager for Sub-Saharan Africa Alon Lits said that UberEATS had the potential to change people’s eating habits. “UberEATS has the ability to change the way restaurants operate. Through partnerships given the scale, smaller businesses could expand to a wider customer base through UberEATS,” Lits said. Meanwhile, the company trialed its food delivery app on February 10, in which it partnered with Roast by Carnivore through its UberChoma app deliver to deliver a local Kenyan delicacy, nyama choma, for free to its clients who tapped on the app on their phone. FOOD BUSINESS AFRICA | JAN/FEB 2016

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NEWS | AFRICAN M&A

PE funds line up for coffee giant Java House as it opens Rwanda branch KENYA - Java House, One of the leading coffee shops in East Africa, could be acquired by either of two American private equity funds in a transaction estimated to be worth US$100 million (KSh10 billion). According to Business Daily, sources familiar with the deal said Washingtonbased Carlyle Group and San Franciscobased TPG are among the firms seeking to acquire Java House. Java is currently owned 90 per cent by Washington-based Emerging Capital Partners (ECP), which bought the stake in 2012 from the coffee chain’s founders, Kevin Ashley and John Wagner, who are Americans. It was not immediately clear whether the intended acquisition is a complete takeover or a partial one precipitated by ECP’s exit in line with the medium-term investment plans of PE funds. If the deal goes through, this will be Kenya’s largest restaurant industry transaction that should leave ECP with a handsome return on its investment, notes the newspaper. Java House, renamed from Nairobi Java

Coffee last year, has continued to grow and has huge ambitions to grow into Eastern, central and Western Africa. It recently opened its first restaurant in Kigali, Rwanda, growing its regional coverage to the three East African countries of Kenya, Uganda and Rwanda, as its pan-African ambition grows. “We are super excited to be in Rwanda, really thrilled,” Ken Kuguru, the Group Chief

Executive Officer of Java House told The New Times in an interview. “We are in three countries now, nine cities, 56 branches with 2000 employees. And soon we will open in Tanzania,” Kuguru added Kuguru said that the coffee chain plans to open other branches around the Kigali in the next 12 months, but would judge from the performance of the first outlet.

M&A

Nestlé to acquire Egyptian instant coffee company

EGYPT – Nestlé SA, the leading food and beverage company, has signed an agreement to acquire Egyptian instant coffee company, Caravan Marketing Company SAE. “We are pleased to conclude the signature of this agreement. Our investments and expansion plans in Egypt reflect the importance of this market to us. In the last 5 years Nestlé has made investments close to 1 billion Egyptian pounds in manufacturing and distribution facilties as well as skill development. We will continue to invest in the Egyptian market and this acquisition 22

JAN/FEB 2017 | FOOD BUSINESS AFRICA

comes as a reaffirmation of that,” says Yasser Abdulmalak, Chairman and CEO of Nestlé Egypt. Nestlé’s acquisition of Caravan reflects the company’s ambition to invest in Egypt and the Middle East and “foster the development of the rapidly growing soluble coffee segment which has been gaining popularity among Egyptians,” according to the company. Caravan Marketing was established in 2003 as a marketing and distribution company. The company serves the Egyptian

market with a range of soluble coffee products sold under the brand Bonjorno Café, using its own factory. Terms of the transaction were not disclosed. Nestlé Egypt operates two factories in the country, employing more than 3,000 people. The company has recently added significant investments in Egypt, driven by increasing demand for food products. In 2014, the company opened a new US$9 million extension to its 6th of October City factory. In the company’s EMENA (Europe Middle East and North Africa Region) Zone that straddles the North Africa and Middle East, Nestlé operates 10 factories and provides direct employment to almost 8,000 people.

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PEOPE

AB InBev reduces head count in South Africa, sells stake in Distell

SOUTH AFRICA - Anheuser Busch InBev (AB InBev) has sent out a voluntary severance offer to more than 1,000 of its management employees in South Africa, as it settles in after the acquisition of SAB Miller. According to reports in a number of newspapers, the redundancy is the first time in recent history that South African Breweries has undertaken a retrenchment exercise on any scale, the last time being after plant modernizations in the 1980s. “The group’s been in expansion mode since

then so retrenchment was never on the cards,” said a former executive told Business Live. A memo was issued on December 12, which had a January 20 deadline to accept what one recipient said was a “very generous offer”. “The voluntary severance offer, which is entirely voluntary, has been made available only to mid-level employees and above,” said Robyn Chalmers, head of media and communications. “We understand that during this period of change some employees may wish to voluntarily exit the business, which is why we have introduced a voluntary severance offer.” Chalmers explained that some changes were being introduced to processes, ways of working and the structure of the business as well as roles. She said it was too early to say how many people might opt for the offer or what the effect in terms of cost savings might be.

Known for their drive to eliminate costs at businesses that they have acquired, AB InBev’s parent company, known for its aggressive management style and cost cutting, plans to cut its global work force by 5,500 after the SAB Miller acquisition, saving US$1.4 billion in the process, one of the key deliverables that they promised their shareholders as they bid to buy SAB Miller. It remains to be seen how the company will handle its employees in other African countries. Meanwhile, AB InBev has sold its 26.4% stake in leading liquor and cider brands company, Distell, the makers of Amarula cream liquor, to the state-owned Public Investments Corporation (PIC) for an undisclosed fee, meeting one of the key requirements by the South African government, to allow the acquisition of SAB Miller last year.

FINANCIALS

Guinness Nigeria reports improved financial performance, approves rights issue

NIGERIA - Guinness Nigeria, manufacturers of Guinness Foreign Extra Stout, grew its topline by 19% year on year for the halfyear ended 31 December 2016, even as it reported a tough business environment in the country. “We now have both International Premium Spirits (IPS) and locally manufactured, mainstream spirits within our portfolio and these contributed to revenue

growth for the half year. Our accessible beer brands also continue to grow strongly,” Peter Ndegwa, Managing Director/CEO, Guinness Nigeria Plc, saying that there are many bright spots for the company but that the challenging economic environment and high finance charges impacted results. “Our productivity agenda continues to gain momentum enabling us to keep our administrative and distribution costs under control while optimizing our investments to support our brands. The unrealised foreign exchange losses during the half year meant that our net finance cost grew by 166%. As a result of the high input costs and the forex impact on financing costs, we recorded a Loss Before Tax of N4.6 billion,” he added. However, according to Babatunde Savage, Chairman of the Board, the company remains optimistic about the future of the company despite the prevailing challenging operating environment. “We are confident that the steps we are taking

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N40 B

VALUE OF MONEY GUINNESS NIGERIA SEEKS TO RAISE IN THROUGH A RIGHTS ISSUE to steer the business through these difficult times - including a comprehensive review of our capital structure, the expansion of our brand portfolio and our continued focus on reducing operating costs, will sustain the momentum we have in top-line growth and bottom line recovery,” he said. The company’s shareholders have also approved the issuance of a rights issue to raise up to N40 billion, to optimise its balance sheet to improve its financial and operational flexibility.

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FOOD BUSINESS AFRICA | JAN/FEB 2016

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COMPANY FOCUS | EAST AFRICAN BREWERIES LTD

EABL: 95-year veteran brewery learns how to dance again Brewer bets on innovation to meet changing consumer needs and win in an unpredictable regulatory environment. FoodWorld Media reviews the brewer’s challenges, opportuntities and future plans after taking a glimpse at the company’s recent 2017 half-year results presentation and activities in the marketplace

IN NUMBERS

US$350m NET SALES REPORTED BY EABL IN 2017 HALF-YEAR FINANCIAL RESULTS Charles Ireland, Cowan has his work cut out, considering the major competitors of EABL are now owned by the world’s biggest brewer, AB InBev. Cowan who has been with Diageo, the majority shareholder in EABL since 2008, has joined EABL from being head of Diageo Great Britain.

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ot many companies in the food and beverage space in Africa can boast of nearly 100 years of existence. Not so East African Breweries Ltd. Having started operations at the end of the First World War in 1922, the brewer has been a constant in Kenya’s beer scene and a pioneer in many ways in the brewing industry in Eastern Africa over the decades. However, if you are to attend a meeting at any of the offices of East Africa’s largest brewing company, be it in Nairobi, Kampala or Dar es Salaam, you will most likely hear two words: innovation and regulation.

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For the brewer of the famous Tusker lager, the fact that it has been operating since 1922 counts for little if the company’s struggle with an unpredictable tax and policy environment, changing consumer tastes, and increasing competition stand on its way to continue being the leading brewer in the region – and innovation sits at the top of its priorities to remain ahead of these challenges. With a new Group Managing Director, Andrew Cowan, joining in July 2016, to steer the company forward after the end of the 3-year term of former Group MD,

Stagnant growth in bottled beer business With brewing operations in the three key East African countries, Kenya, Uganda and Tanzania, and operations in Rwanda, South Sudan and Eastern Democratic Republic of Congo (DRC), EABL has been resilient in its quest to hold onto the beer market in its biggest market, Kenya, and continue to grab market share from its largest competitors in the region, former SABMiller-owned breweries, now owned by AB InBev. In its latest results for the half-year ended 31 December 2016, volume increased to 6.1 million to 5.8 million equivalent units. Net sales was reported at KSH 35.2 billion (approx. US$350 m), roughly ahead of its full year 2016 financial results, where the brewer reported net sales of KSH 63.3 billion (US$633 m) and a massive 25% growth in volume, following a remission of excise duty on its Senator keg brand by the government of Kenya. But the brewer’s brilliant volume growth were shadowed by foreign exchange losses from its regional operations that shaved off the 16% increase in turnover in Kenya, to reflect a flat year-on-year net sales performance for 2016. However, profit after tax (PAT) rose by 7% to KSH 10.3 billion (US$100m), on the back of profits from its sale of its stake in Central Glass Industries FOODBUSINESSAFRICA.COM


“We need to sustainably expand our tax revenue collection by widening the tax bracket rather than overburdening certain sectors such as alcohol” Jane Karuku, CEO, Kenya Breweries, the Kenyan subsidiary of EABL

to Consol of South Africa, with PAT from continuing operations down 16%. Declining regional business Regional conflicts in Eastern Africa and the larger Great Lakes region continue to impact the performance of EABL. EABLi, the subsidiary responsible for the brewer’s business into the regional market away from the mainstream Kenya, Uganda and Tanzania businesses, has seen its contribution to the group fall from as much as 11% a few years to 0% in the half-year to 31 December, 2016, mainly driven by the conflict-torn Southern Sudan, where the company has been forced to scale down operations and sales, maintaining a small, strategic position in the country. The effect of the decline in regional operations has increased Kenya’s contribution to the company’s performance to 74% as at the end of 2016, from 61% at the end of the 2015 financial year, a huge increase. In 2015, Uganda contributed 18%, Tanzania 11% and EABLi 10%. By 31 December 2016, the ratios had Uganda’s contribution declining slightly to 17%, Tanzania to 9%, with EABLi reporting an insignificant figure. The company has therefore relied on Kenya, where it faces regulatory headwinds to grow its business. Kenya reported zero growth in net sales in the latest financial report mainly due to a decline in premium and mainstream beers, which was offset by positive growth along the entire spirits business. Beyond Kenya, headwinds brought by declining consumer demand in the region, especially in Tanzania, despite general economic growth above 5% have impacted the brewery in its quest to meet its aggressive growth targets, especially in its mainstream beer market, where Tusker (Kenya), Bell (Uganda) and Serengeti (Tanzania) brands seek to maintain their positions in the respective countries. Uganda has of late been a shining light, growing its net sales 7% in constant terms FOODBUSINESSAFRICA.COM

in the six months to end of December 2016, mainly driven by good performance from emerging beer and spirits. Regulations strain EABL’s business From the famous Mututho Law that regulated drinking hours in local beer joints among other measures, to the banning of packaging of spirits in plastic packaging, restricting packaging to at least 200 ml, to a country-wide exercise to rid the country of illegal drinks in 2016, to abrupt increases in excise duty, the brewer has been forced to contend with changes to its operations over the years, many times impacting its operations and performance. Recently, a legislator event suggested that the brewer should be compelled to take insurance cover for all the final consumers of its beer! Writing in a local newspaper in October 2016, Jane Karuku, the CEO of Kenya Breweries Ltd, the Kenyan operations of the brewer, lamented the lack of predictability in the taxation environment in Kenya. Jane asked the government to have a more balanced tax system, instead of relying on ‘sin tax’ to meet ambitious tax collection targets. “There is a lot to be done to ensure the Gross Domestic Product (GDP) achieves double digit growth by 2030 as is targeted. We need to sustainably expand our tax revenue collection by widening the tax bracket rather than overburdening certain sectors such as alcohol,” she said. “There has been four major excise duty increases affecting bottled beer volumes in the last five years, with the most aggressive one taking effect in December 2015 – a 43 percent rise in duty. This was the highest excise duty increase in Africa and considering the prevailing inflationary pressure in the economy, we still experienced a 5 percent increase in volume,” the new CEO, Andrew Cowan, said at his first financial results presentation for the halfyear ending 31 December, 2016. The effect of this latest increase especially caused a strain to the business, as beer prices went up by KSh 20 per bottle, instead of the regular KSh 10, hitting consumer demand quite drastically, and even providing retailers with an opportunity to overcharge customers way beyond the new recommended prices, said Cowan. In the half-year of 2016, premium (including Guinness and Tusker Malt) and mainstream (Tusker) beers continued to decline as a result of the excise tax increase, registering 13% and 7% reduction respectively. Emerging brands Senator and Balozi reported a 10% increase.

Premixed flavoured drinks seek to tap into a growing Millenials market

Innovation pipeline boosts performance The brewer, which is set to celebrate 100 years in some 5 years, has of late relied on innovation – be it packaging changes or improvements, reformulations, flavor extensions, and entirely new products – to meet the challenges of a tough regulatory environment, changing consumers needs driven by millennials and to face off its competitors. “We are committed to innovation and we are glad that all the three business units are showing up in that regard,” says the MD. Packaging improvements have been initiated in the last few years in the mainstream Tusker, Pilsner, Serengeti, Bell and other brands to improve visibility on the shelves, dropping the short-neck ‘Euro’ bottles for long-neck bottles. In Kenya, the brewer has recently launched Tusker Cider, a cider brand that comes in a 500 ml clear glass pack, seeking to meet both the discerning and valueconscious drinker. It has also extended its range of ready-to-drink (RTD) spirit blends with the addition of Smirnoff Ice Guarana, Smirnoff Ice Electric Ginseng and Smirnoff Electric Guarana spirit drink, a potent 35% alcohol by volume product, but which is easy to drink, despite the high alcohol content. In the spirits business, the company has a slew of new flavors on its Jebel and Kenya Cane spirits, and has even brought in a West African brand to the East Coast of Africa, In Uganda, Ngule, an entry-level brand that seeks to identify itself with the populous Buganda Kingdom was introduced last year, delivering a 6% market share in the first six months of release. Bell Black, a modern version of the mainstream Bell Lager has FOOD BUSINESS AFRICA | JAN/FEB 2016

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Courtesy: Financial Age

COMPANY PROFILE | EAST AFRICAN BREWERIES LTD

Andrew Cowan, Group MD, has joined EABL from managing the Diageo Great Britain business

also been unveiled to meet rising demand by Millenials, with a higher level of alcohol. In Tanzania, Serengeti Lager has been given a new lease of life, while a reformulated Pilsner has been introduced at a 20% lower

The new Tusker Cider opens a new avenue for EABL to reach new consumers 26

JAN/FEB 2017 | FOOD BUSINESS AFRICA

price point, taking 6.8% of the market share in the market in about six months. New product innovations continue to drive the company’s performance. In the half year to 31 December 2016, new products including Kenya Cane and Tusker Cider grew by 20% in Kenya, new Bell Black and Ngule grew 31% in Uganda and in Tanzania Pilsner and a rejuvenated Serengeti grew 35% according to EABL. According to Cowan, there is further room for innovation to play a much bigger role in the company’s performance. Taking the case of Tusker, he says that the brand is well developed (various packaging options, price points, liquid formats) and is a jewel in the crown of EABL. However, Bell and Serengeti are strong in their markets, but haven’t had brand development like Tusker to tap a broader footprint of consumers in their respective markets. In spirits, innovation is fairly undeveloped in East Africa, Cowan says. Spirits stand up to be counted Apart from Senator keg, the brewer has managed to offset the fall in bottled beer volumes due to the increasing importance of spirits to its bottom line. “There is a

trend towards consumers enjoying a wider repertoire of products. While historically, consumers would have a beer or a glass of wine, we see that consumers are interested in drinking different drinks on different occasions, for different reasons. That has really accelerated our spirits business,” notes Cowan. With a double-digit growth in spirits business in Kenya during the 2016 financial year, Cowan is convinced that more investments and innovations in the category will accelerate the brewer’s ambitions to grow, even in a tough environment. In Uganda, a Scotch whisky variety VAT 69 doubled in sales in the half year. “The kind of growth we are seeing in whisky has made us think that the whisky trend is more than a Kenyan thing but at a minimum, an Eastern African thing and probably even an African continent trend.” “Our marketing team has done a bit more work in recognizing that whisky is way more on trend, way hotter and way more aspirational, so you can be sure that we shall be doubling down on our whisky ambition in H2 and into the future,” the CEO reveals. Reserve brands like Ciroc and premium brands Johnny Walker and Smirnoff both grew 7% during H1, while mainstream spirits led by Kenya Cane and Uganda Waragi grew a massive 31%. Kenya Cane, the biggest spirits brand in Kenya, continues to grow in the country, while Johnnie Walker Red had a fantastic half-year, growing 27%. In Tanzania, reserve brands grew well, from low volumes. “The growth in our spirits business is just phenomenal but when we compare East Africa with other markets in Africa, say South Africa, or other markets where spirits are far better developed, it’s just the tip of an iceberg.” According to Cowan, spirits have the potential of being 2 or 3 times the current volumes without much innovation, just making it available at the right price points. Investing into the future Going into the second half of its financial year and into the near future, the company has its eyes set on a number of priority areas: accelerate spirits volume momentum; bringing more consumers to its bottled beer; driving price advocacy; improving productivity; fast-tracking capacity investments and developing its commercial capabilities. Having spent KSh 1.8 billion (US$18m) on capital expenditure in H1 to increase capacity, improve efficiency, quality and FOODBUSINESSAFRICA.COM


IN NUMBERS

US$35m INVESTMENTS IN CAPEX BY EABL IN THE REMAINING PART OF THE YEAR 2017 safety of its operations, the business will double the figure to KSH 3.5 billion (US$35m). Even with the large beer (both bottled and keg) business, spirits is at the top of the priorities at EABL. The company will be doubling up on its spirits ambitions in H2, considering that all the three business units have little capacity to spare and are running behind market demand, says Cowan. Significant investments in capacity are planned for the three business units to increase their spirits capacity. The company will install a new spirits line at its Nairobi brewery, and transfer the older line to Tanzania to improve capacity. Capacity improvements are also planned in Uganda.

The growth of our spirits business is just phenomenal but when we compare with other markets where spirits are far better developed, it’s just the tip of an iceberg Andrew Cowan, Group MD

In the beer market, EABL is investing to improve the Senator keg capacity by an extra 1 million hectoliters (100 million litres), equivalent to 300 million mugs, by improving the capacity of keg rackers that have over the years limited the brewer’s capacity to deliver more Senator to the market, despite having packaging capacity. As the tough year of the excise tax increase in Kenya comes to an end, Cowan says that they will be looking to rejuvenate their mainstream beer brands by recruiting and retaining old consumers, and are positive bottled beer will grow into the year, having grown 1% in December 2016. “In H2, expect to see a much more vibrant, progressive representation of Tusker, innovations on Bell and innovations and new media on Serengeti brands,” he says. In Tanzania, beer capacity is all taken up at the Dar es Salaam plant, so the company plans to install a Mash Tun at the facility to FOODBUSINESSAFRICA.COM

The brewer has introduced a number of low cost spirits to meet rising demand from consumers

improve brewing capacity. In Kenya, brewing capacity is also full, with investments planned to build more brewing capacity. One challenge that EABL will continue to work on, especially in Kenya, is how to work with retailers to get the best price to charge consumers so as to deliver the best margin and volume, to make beer more affordable to consumers. Getting back to business in the regional market The regional business is an important driver into the future for EABL. With the challenges in the Great Lakes region, Uganda and Tanzania have become the critical markets to grab market share and grow. “Uganda has done exceptionally well. We have a new MD in Uganda making an enormous difference. He has shifted the business away to a more visceral measurement of focus and score carding on execution of the strategy. So we have more products, being distributed to more outlets with more visible pricing that have made a lot more difference. There is a lot more to come from Uganda, the team has a lot of ideas on how to build the portfolio going forward,” Cowan says. In Tanzania, the company has faced challenges with consumer spending, despite taking a 20% market share. “We have seen some good GDP growth of 6-7% but its not just getting through to consumer spending. We have had to be agile in how we reach consumers. For example, we released a more value beer offering, Pilsner, which took a significant 6% market share in six months in

2016 in the country.” The key to succeeding in Tanzania is to have the consumer insight, have the idea and quickly get to execution before the competition can respond, Cowan reveals. The company has also finished a trade census across the country and carried out a profitability exercise for the three breweries it operates with the intention of formulating different investment strategies for each region. Meet competitors through agility and innovation As Cowan settles into the Eastern African business, he is quite aware of the competitive environment that EABL faces. With the number of outlets stocking competing brands from AB InBev, Heineken, Carslberg, Skol and other brands increasing in the region, the brewer is aware that they have to up their game to continue growing. AB InBev, which owns Tanzania Breweries, the biggest brewery in Tanzania and Nile Breweries in Uganda, provides EABL with the biggest threat in its Kenyan and regional operations. “The way to deal with competitors is to be fiercely obsessed and deeply understand your consumers, and try to offer them products that cover every single price point, every single liquid type and every single format. If you do these things well, the consumer will vote with their feet,” Cowan advices, saying that EABL is well structured to meet the changing needs of consumers, who want both beer and spirits, and shall meet the challenges brought by the its rivals in the market now and into the future. FOOD BUSINESS AFRICA | JAN/FEB 2016

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SUPPLIER NEWS & INNOVATIONS NEW PRODUCTS

Ishida leads the way in foreign body detection for food producers

UK - Ishida Europe has launched a range of X-ray inspection systems to help food manufacturers and processors comply with global safety standards and meet the demands of quality and safety-conscious retailers. Their new X-ray (IX) series raises the bar in performance and usability with a global range that meets all local territory standards. Offering customers easy maintenance and stress-free operation, the

range includes a robust fail safe system that prevents a contaminated product reaching the consumer in the event of a power outage or breakdown, helping to minimise the potential for costly recalls. Ciaran Murphy, Quality Control Business Manager at Ishida Europe comments: “With the IX range, we have harnessed the latest advances in imaging technology to create industry-leading X-ray inspection systems that meet the specific needs of our

customers across all markets and sectors, offering unrivalled detection of foreign body contaminants. We are confident that the IX series offers the most comprehensive range of high-performance X-ray products on the market.” The machines offer exceptionally sensitive foreign body contaminant detection and additional benefits such as the ability to identify damaged and missing products or components, helping customers to achieve a rapid return on investment. Quick commercial returns are also achieved by ensuring that high quality product leaves the factory gate, safeguarding reputations while securing existing business and gaining new contracts through competitive advantage

INVESTMENTS

Spanish flavor manufacturer Scentium opens Ghana office GHANA –Spanish flavor manufacturer Scentium has opened its new facility in Ghana, in order to ensure proximity and reliability to its customer experience in the West African region. Located in the capital of Accra, the new hub will initially accommodate a sales team as well as technical installations, providing a closer collaboration with the clients of the area. “Our new office in Ghana is set to reinforce the long-term relation of the company with our clients from West Africa,” said José Manuel Mateos, General Manager of Scentium. “This announcement consolidates our commitment to local

customers and to the ones from neighboring countries.” Speaking to FoodIngredientsFirst, Mateos said: “Through this expansion, our customers will of course benefit from a more dedicated service reinforced by the proximity of our local team. Scentium will be closer than ever to its clients from Western Africa.” “The new facility will include an office for the sales team and all the necessary technical resources to assist, for example, any samples requested by our clients. It is important for a flavor company to truly understand all particularities of a given market,” notes Mateos. “To do so, there

isn’t a better way than establishing yourself in this market and witness daily all the new trends and what customers really want. Trends are local: they emerge locally to later spread globally and as a flavor manufacturer, it is important for us to be at the origin.” – www.scentium.com

M&A

Frutarom buys South African flavor company in growth drive

SOUTH AFRICA - Israeli flavor company Frutarom has announced the acquisition of the entire shares in South African companies Unique Flavors Proprietary Limited and Unique Food Solutions Proprietary Limited for US$6.7 million, including debt. 28

JAN/FEB 2017 | FOOD BUSINESS AFRICA

Unique, which was founded in 2001, engages in the development, production and marketing of flavors, with emphasis on savory flavors and on sweet taste solutions, has grown in recent years at a rapid pace. The company has an R&D, production and marketing site in Pretoria, South Africa, near Frutarom’s new South African site, and a wide customer base in South Africa and other important emerging markets of the Sub-Saharan region like Ghana, Malawi, Zimbabwe and Mozambique. It employs 64 people. In a statement, Unique’s activity is synergetic to Frutarom’s flavors activity in Africa, which has grown in recent years

aggressively. The company has built its capability in the region in recent years, opening sales offices in a number of countries, including Kenya. The purchase agreement includes a mechanism for future consideration contingent on Unique’s future business performance. The transaction was completed upon the signing of the agreement and was financed through bank debt. According to Tali Mirsky, Global VP Legal Affairs & Corporate Secretary for Frutarom, Unique’s sales volume in the 12 months ending January 31, 2017 amounted to about US$ 9 million. FOODBUSINESSAFRICA.COM


African Milling School: Pictorial of the first graduation ceremony

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IAOM Ethiopia 2016 pictorials

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Enzymes: Benefits in baking and milling industry FOOD BUSINESS AFRICA | JAN/FEB 2016

A FOODWORLD MEDIA PUBLICATION

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NEWS | INTERNATIONAL M&A

Bühler throws its weight into insects nutrition space, forms JV with Dutch firm SWITZERLAND – Swiss equipment solutions provider Bühler has formed a joint venture with a leading Dutch company that specializes in growing and processing of insects as it seeks to tap into the rising demand for alternative proteins in food and feed industry. The joint venture, Bühler Insect Technology Solutions, will develop scalable, industrial solutions for the rearing, and processing of insects to provide protein primarily for animal feed and food industry. It brings together Bühler and Protix, a leading insect production company. It is located Liyang, China and has already begun operations. “By combining the knowledge and experience of our two companies, we can provide industrial insect processing solutions to address the alternative protein market. Protix is the most advanced insect company that has demonstrated industrialscale production in a way that is scalable and multipliable. They have proven how to create a market in insect protein,” explains

Ian Roberts, CTO of Bühler. Protix, founded in 2009 and based in the Netherlands, has developed proprietary equipment and solutions and gained extensive operational expertise in the breeding and rearing and also in the separation and extraction of proteins and lipids from insects. The company processes 1,600 tonnes of insect larvae per year and produces high quality, insect-based ingredients at its pilot plant. The joint venture seeks to solve one of humanity’s challenges as the World population is projected to reach 9 billion by 2050: how to feed the growing population’s demand for protein in a sustainable way. According to Bühler, the market for insect processing solutions has huge potential. It estimates that by 2050, insects could account for 15% of global protein production. In the JV, Bühler will provide its experience in “developing scalable, cost effective, hygienic plants and processes for food and feed products” and provide its

technology in milling, which is one of the key process steps for extracting protein from insects. The goal of the joint venture is to develop industrial scale solutions for feedstock processing, larvae rearing and larvae processing, and to produce high-quality insect ingredients – covering the whole value chain from rearing to separation and extraction of proteins and lipids. The insect proteins will be used primarily for the production of sustainable animal feed, for example in aquaculture, which is the fastest growing agricultural segment in the world.

M&A

Nestlé opens US$86 m Brazilian pet food plant to tap dog-food demand BRAZIL - Nestlé SA has opened a 270 million-real (US$86 million) pet-food plant in Brazil, betting that higher-income Brazilians who love their pets will help it expand sales in Latin America’s largest economy. The plant in Sao Paulo state, will produce Purina wet food for dogs and cats, said Laurent Freixe, the head for Nestlé’s Americas business. The Vevey, Switzerlandbased food maker sees huge growth potential in the market, he said. “The entire growth in pet-care area is in premium products,’’ Freixe said in an interview in Sao Paulo. “Today the largest part of value creation is from premium products,’’ among Nestlé products in general, he said. Worldwide, pet care has been one of Nestlé’s biggest sources of growth, climbing 5.5% in the first nine months of 2016,

excluding acquisitions, divestments and currency shifts. The business represents about 13% of total global sales. The Purina factory will produce 30,000 tonnes of wet pet food per year. About 75% of the output will be sold in Brazil, and the rest will be exported to surrounding countries such as Argentina, Peru, Chile and Colombia, said Fernando Merce, Purina’s head for Latin America. Brazilians have more than 132 million pets, according to the National Statistics Agency, compared with a human population of more than 200 million. The Brazilian market for pet care grew 5.7% to 19 billion reais (US$6 billion) last year, according to Abinpet, the Brazilian Association for the Pet Products Industry. While the growth was the slowest in the last six years, the sector has held up well considering the country’s economy contracted 3.5% in

2016, according to economists’ forecasts. Pet food accounted for 68% of the sales tracked by Abinpet. Only 15% of pet food sales in Brazil today are of pricier wet food, compared with 70% in more mature markets such as the US and Japan, Merce said. “We have a very ambitious target in terms of where we want to get to,’’ Merce said. Annual production from the new plant will provide about 50% of what Brazil’s market needs, he said. Brazil is Nestlé’s top priority in Latin America, followed by Mexico, Freixe said. He expects Brazil to resume growth “gradually.” The International Monetary Fund last month cut Brazil’s 2017 growth outlook to near stagnation, citing weaker-thanexpected activity in the country.

YOUR COMPANY PROFILE We profile African-based companies through well-written features that add value to food and feed industry in the Continent, highlighting company history, products/services, achievements and more.... Contact us today so we can tell your story: info@foodworldmedia.net FOODBUSINESSAFRICA.COM

AFRICAN GRAINS, MILLING & FEED | JAN/FEB 2017

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NEWS | INTERNATIONAL INVESTMENTS

Roquette bets on plant proteins, to build the largest pea protein factory

FRANCE – Leading food ingredients company Roquette has thrown its weight into the emerging plant protein ingredients trend, announcing a 400 million CAD (US$305 million) to build a new pea-protein manufacturing site in Manitoba Canada. The investment - the world’s largest dedicated to pea-protein in the food, nutrition and health industry to date, according to the company - will reinforce the Group’s leadership in plant protein. It will expand Roquette’s pea-protein production capacity and help address the growing customer demand for plant-based proteins in North America and globally. Roquette says that the new site’s

strategic location in Canada, the world’s largest producer of peas, with around 30% of the total global production, places the company at the centre of raw materials and access to a growing demand in North America. Construction is expected to start in the second half of 2017, with production expected to begin in 2019. Research on the consumption of plant proteins point to a rise, and Roquette is riding on this wave. “Consumer notions of what constitutes a good protein source are expanding to include a wider variety of plant protein ingredients. Subsequently interest in plant protein ingredients among food manufacturers and foodservice operators is intensifying,” said David Sprinkle, research director at research firm, Packaged Facts last year. The pea protein market is very attractive and demand for plant proteins for human nutrition is growing tremendously, driven by health consciousness, consumer concerns and sustainability, the company says. “This investment confirms our

IN NUMBERS

US$305m INVESTMENT BY ROQUETTE IN ITS CANADIAN PEA FACTORY, WORLD’S LARGEST commitment to the highly promising pea protein market. We have been pioneer in plant-based protein specialties with more than 40 years’ experience in research and production. This new site, together with our existing plant in France, confirms Roquette as the long-term leader in the plant protein specialties market worldwide, and it is a great example of how we are helping to meet customer and consumer expectations for innovative and sustainable plant-based solutions,” said Jean-Marc Gilson, CEO of Roquette.

NUTRITION

Sorghum’s super-food credentials could see it become ingrained in our diet - Mintel GLOBAL – Rising adoption of sorghum due to its super-food credentials could boost the utilization of sorghum and make it a regular grain on diets, notes a recent research by leading research company, Mintel. “Although it’s little known in the west it has all the makings of a super food from the nutrient profile to its heritage tradition with perceptions of joining chia or quinoa ranks,” says Marcia Mogelonsky, Director of Insight, Food and Drink at Mintel. “While typically used as a grain and a sweetener - in the form of sorghum syrup or molasses - sorghum also is used in alcoholic beverages, animal fodder and biofuels, demonstrating the ingredient’s importance on a global basis. One of the top five cereal grains globally, new product launches including sorghum continue to rise, with India and the US driving the utilization of sorghum for its gluten free, GM free alternative to other grains, notes,” explains Mintel. Sorghum has been gaining in popularity as an ingredient in the salty snacks category over the past two years, mainly as a glutenfree grain alternative for popular snacks such as pretzels. It’s also a popular snack

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food in its own right as a popped product similar to popcorn, says Mintel. In India, where sorghum is an established food source, accounts for one quarter of global launches of products containing sorghum between 2014 and 2016, according to Mintel Global New Products Database (GNPD). It is commonly used in foods ranging from baking ingredients, biscuits and cereals to hot beverages and bread products throughout the region. In the USA, just 10% of global sorghumbased food and drink products have been launched in the last three years, used primarily in snack/cereal/energy bars, bread, cereal and snacks. China ranks third in global food and drink launches of

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

sorghum-based snacks, where sorghum is found in dressings, biscuits, meat products, cereals and prepared meals. In Europe, the product is rarely in use but the trend is subject to change in the future, Mintel predicts. “Like Quinoa, sorghum’s versatility as an ingredient in snack or snack food in its popped formed will give it room to grow in the category. What’s more, sorghum’s “heritage’ will help it gain popularity as more consumers seek artisan, handmade, ‘clean’ ingredients.”

Sorghum is used as a grain and sweetener and also in alcoholic beverages, animal fodder and biofuels, demonstrating the ingredient’s importance on a global basis

FOODBUSINESSAFRICA.COM


ADVERTORIAL PEOPLE

COFCO CEO steps down, sets back its grain-trading plan Geneva,

Neogen’s AccuPoint® Advanced receives AOAC approval Neogen Corporation has announced that it has received approval from the AOAC Research Institute for its rapid and accurate AccuPoint® Advanced ATP Hygiene Monitoring System. Neogen’s AccuPoint Advanced is the first hygiene monitoring system to receive an AOAC approval, and this approval follows a recent study by NSF International that showed AccuPoint Advanced exceeded the performance of competitive systems.

SWITZERLAND - Cofco Corp.’s Matt Jansen quit as the head of its international commodity-trading unit, the latest setback to the ambitions of China’s biggest food company to create an agriculture merchant to rival the world’s largest. The firm named Cofco Vice President Jingtao Chi as his replacement. Jansen, who became chief executive officer of Cofco Agri Ltd. less than two years ago, left for personal reasons, the company said in a statement. Jingtao Chi, known as Johnny, has worked at Cofco for 14 years and led its import and export business for the past seven years. “Johnny successfully merged and consolidated three Cofco agriculture entities into a single platform that has produced a total turnaround in performance,” said Cofco Corp. President Patrick Yu. “We are confident that Johnny will lead Cofco International to our next stage of growth.” The resignation of Jansen, an American who rose through the ranks at Archer-Daniels-Midland Co. (ADM) to head oilseeds trading before joining Cofco in 2015, could lead to a significant shift in trading strategy for the Chinese state-owned group. Cofco had been trying to create a global giant that can compete with companies including ADM, Bunge Ltd., Cargill Inc. and Louis Dreyfus Co., the world’s largest grain traders by volume, known collectively as the “ABCDs.” “The Chinese are now taking over and Cofco Agri will remain a sourcing arm of agricultural commodities, but will not have international trading ambitions,” said Jean-Francois Lambert, an industry consultant and former commodity trade-finance banker at HSBC Holdings Plc. Cofco tried to establish its own trading business over the past two years by buying the grain unit of Hong Kong-based rival Noble Group Ltd. and Dutch grains trader Nidera BV as part of a series of deals valued at about US$4 billion. The Chinese plans suffered several setbacks. Nidera was rocked by scandal, first losing about US$200 million due to the actions of a rogue trader and then discovering a US$150 million hole in the accounts of its Brazilian unit. Cofco Agri. has suffered several high-profile departures over the past year, with top traders in wheat and corn leaving the firm. Agricultural commodity trading companies have seen their profitability decline sharply over the last two years, as top producers harvested record crops, following almost a decade of booming profits.

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Adenosine triphosphate (ATP) sanitation monitoring systems are used extensively in the food industry to instantly assess the effectiveness of hygiene programs. “Each time we receive a validation from an independent third party on any of our tests, it provides further assurance to the food production and processing industry that our tests perform as expected,” said Ed Bradley, Neogen’s vice president of Food Safety. “The performance of our AccuPoint Advanced system in recent independent evaluations by AOAC and NSF is very gratifying. We developed the product with the goal of creating a new hygiene monitoring system that is superior to anything else on the market.” The results in the AOAC validation report (Performance Tested MethodSM 091601) provided evidence that AccuPoint Advanced produces consistent and reliable data for evaluating sanitation program effectiveness in food processing and food services facilities. AccuPoint Advanced is an enhanced version of its earlier AccuPoint test system. Improvements with AccuPoint Advanced include: improved sampler chemistry to produce more consistent results with even greater sensitivity; an enhanced instrument to produce even faster results (less than 20 seconds); and advanced Data Manager software to easily streamline the testing process by creating test plans and syncing important data, while keeping a permanent record of hygiene test results. AOAC International is a globally recognised, independent forum for finding appropriate science-based solutions through the development of microbiological and chemical standards. The Applied Research Center at NSF International is a not-forprofit global research group that provides product development support to manufacturers and developers of products in the food safety, agriculture, clinical and life science markets. For more information on our AccuPoint Advanced AOAC approval contact us by phone: +44 (0) 1292 525 093 or by email: info_ emea@neogeneurope.com Neogen Corporation develops and markets products dedicated to food and animal safety. The company’s Food Safety Division markets dehydrated culture media, and diagnostic test kits to detect foodborne bacteria, natural toxins, food allergens, drug residues, plant diseases and hygiene concerns. Neogen’s Animal Safety Division is a leader in the development of animal genomics along with the manufacturing and distribution of a variety of animal healthcare products, including diagnostics, pharmaceuticals, veterinary instruments, wound care and disinfectants. AFRICAN GRAINS, MILLING & FEED | JAN/FEB 2017

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NEWS | INTERNATIONAL RESEARCH

Barilla announces regional expansion into Saudi Arabia

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UAE - Barilla, the world’s leading pasta brand, has announced regional expansion into Saudi Arabia in through a partnership with a local company. The deal with Mayar Foods will help the Italian company to distribute of its products through retailers across the Kingdom, after opening its Middle East & Africa (MEA) headquarters in Dubai in 2014. It has since expanded into North Africa and opened its first restaurant, part of the Barilla Restaurant Group in the region in Dubai with plans for further expansion in 2017. “Our expansion into Saudi Arabia marks a major milestone for Barilla as we continue to experience increased demand from the region for Barilla’s Italian pasta products. Since opening our Dubai MEA head office we have also expanded in North Africa and continue to focus on the company’s Italian rooted culture of providing delicious and nutritious food that is healthy, convenient and good for the planet,” said Loay Elkhouly, Managing Director, Barilla – MEA. The pasta market size in Saudi Arabia is 55,000 metric tonnes

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www.foodbusinessafricacom with nearly 2kg consumption per capita per year and the numbers continue to grow, according to Barilla. It is expected to grow 5% in the next five years. The company’s regional expansion comes as a result to a shift in dietary preferences in the region, where the Mediterranean diet is becoming more popular and people are keen to try authentic Italian food.

RESEARCH

Cargill survey finds millennials say pig diets influence pork purchasing decisions USA - As consumer demand for pork remains high, millennial consumers say that what pigs eat has a strong influence on their pork-buying habits, according to a Cargill Feed4Thought consumer survey. The survey, which polled more than 2,000 people in the U.S. and Spain, found that 43% of American millennials say that a pig’s diet influences their purchasing decisions. In Spain, the secondlargest pork-producing country in Europe, the number was about 65% of millennials. “Many consumers, millennials in particular, are speaking loudly about the importance of knowing what is on the dinner table and where it came from,” said Patrick Duerksen, Cargill global marketing director, pork. “It is important for Cargill and others in the agricultural supply chain to help consumers understand that the pork they eat was produced in a healthy and responsible manner.” The survey found that, overall, one-third of all U.S. consumers (32%) say a pig’s diet influences their purchasing decisions, as opposed to 60%of Spanish consumers. American Baby Boomers and Gen Xers place less importance on the diets of the pigs they consume. 34

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

In both countries, millennials place the highest importance on pigs’ diets, but also have the lowest trust that the pigs they eat are raised on what they consider a healthy diet. 42% of American millennials don’t trust that their pork is raised on a healthy diet, significantly more than Baby Boomers (32%). In Spain, the number jumps to 67% of millennials who don’t trust diets fed to pigs are healthy. FOODBUSINESSAFRICA.COM


AFRICAN MILLING SCHOOL | GRADUATION CEREMONY 2017

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AFRICAN GRAINS, MILLING & FEED | JAN/FEB 2017

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NEWS | INTERNATIONAL RESEARCH

Global feed production surpasses 1 billion tonnes for first time, but number of feed mills reduces Kenya crosses the 1 million tonnes production volume as Nigeria reports huge increase in feed millers. Several countries in Africa grow more than 30%; aqua rises

WORLD - The global feed continues to grow, registering a 3.7% aggregate growth in 2016 on the back of a reduced number of feed millers in the key Asia-Pacific region, the world’s largest regional producer. According to the latest annual Alltech Global Feed Survey, the number of animal feed millers globally reduced by 7% but produced over 1 billion metric tonnes (MT) of feed in 2016, a historic fete, considering the poor economic conditions around the world. The value of animal feed produced totaled US$460 billion. The annual figure recorded, 1,032.2 million MT (m MT) is the fifth year of growth in feed production volumes, since the company commenced the annual survey (Figure 1). The number of feed mills in 2016 was 30,090 in the world according to the survey. According to the survey, the top 10 countries have 56% of the world’s feed mills and account for 60% of total feed production, while the top 30 countries ranked by production output possess 82% of the world’s feed mills and produce 86% of the total feed.

IN NUMBERS

1B Tons AMOUNT OF ANIMAL FEED PRODUCED IN 2016 IN THE WORLD, A RECORD FIGURE

China and US still dominate the feed industry, producing 35%of the world’s total feed production, with China’s 6,000 mills producing 187.2 m MT last year, followed by USA, which produced 169.7 m MT from 5970 mills. The survey points to significant consolidation in the animal feed sector, especially in the Asia-Pacific region, the world’s largest producer and which also has the most number of mills. Drastic reduction in feed mill numbers was realised in the region, with China (-30%), India (-39%), South Korea (-18%) and Vietnam (-13%) dragging the region’s figures. However, production volumes still grew its by 4.9% in the region, with phenomenal growth reported in Vietnam, growing 21% in 2016, 36

moving into the top 15 PRODUCTION FIGURES OF KEY AFRICAN COUNTRIES countries list for the first (IN METRIC TONNES) time, driven by its pig and Country No. of mills Production in No. of Production in broiler industries which in 2016 2016 mills 2015 in 2015 increased by more than 1 million tons of feed in the South Africa 72 11,736,000 75 11,658,000 year.

Poultry feed production slackens

Egypt

80

6,500,000

80

6,000,000

Nigeria

787

5,300,000

20

3,800,000

Algeria

430

4,015,000

330

3,100,000

Tunisia

350

2,865,000

350

1,900,000

120

1,008,000

115

700,000

“The poultry industry showed a very slight Kenya decrease in its feed Zambia production this year,” Tanzania reversing the upward Uganda trend of previous years, Source: Alltech notes the report, probably due to the Avian influenza, but also due to more efficient feed conversion and industry consolidation, according to Aidan. The poultry sector still has the largest share, representing 44% of the total global feed tonnage. Broiler feed production declined about 1%. The pig industry’s growth was positive in 2016, particularly in Asia, where it was supported by Vietnam and Thailand, both now top 10 pig-producing countries, even in China, where sow numbers have decreased by almost 40% over the past three years, indicating a move to more intensive production from fewer farms. With the exception of the Middle East, all regions showed an increase in beef consumption in 2016. Feed production for dairy has remained flat overall, but U.S. and India increased production by 12 and 14 percent, respectively.

Africa has been the fastest growing region. Half the contries grew strongly. Nigeria, Algeria, Tunisia, Kenya and Zambia grew more than 30% in 2016 Aquaculture has continued its growth trend, with an estimated 12 percent production increase in 2016. Europe was the standout, with increased numbers from Turkey, Germany, the U.K. and France.

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

7

630,000

4

340,000

50

420,000

44

350,000

35

210,000

28

470,000

Africa is a rising star

Africa continues to be a leading light in the future of feed milling, recording a 13.2% increase in feed production volumes to 39.5 m MT, on the back of 2,081 feed mills, shows the survey. “Over the last five years, Africa has been the fastest-growing region. Half of the countries grew strongly, and only a handful actually had lower reduction in production. Shining stars for the region include Nigeria, Algeria, Tunisia, Kenya and Zambia, all of which saw growth of at least 30%,” according to Aidan Connolly, Alltech’s chief innovation officer and the author of the survey. “Africa presents the greatest growth opportunity for the feed industry,” he added, even though it lags in feed per capita, than any other region. Production costs stand in the way of Africa delivering higher feed per capita, and 2016 was especially tough in the continent, due to the El Nino induced drought in southern Africa. “Africa has some of the highest finishing prices of any region. Nigeria and Cameroon rank in the top five and tied for first in pig finisher diet costs of an estimated US$730,” reports the survey. For the first time, Kenya surpassed the 1 MT volume, growing from 700,000 MT to just above 1 million. Other shining stars include Nigeria, where a 39.5% growth in volume on the back of a huge surge of feed mills, from 20 to a mind boggling 787 mills in a year show the potential in the country’s feed sector. South Africa, despite maintaining the production figures at 11 million tonnes, lost three millers to end the year at 72 mills.

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AGRO

New wheat rust races found in Europe, Africa and Central Asia as spread continues WORLD - Wheat rust disease is making further advances in Europe, Africa and Asia, according to two new studies produced by scientists in collaboration with FAO, hitting regions of the world which account for 37% of global wheat production. The reports, highlighted in the journal Nature following their publication by Aarhus University and the International Maize and Wheat Improvement Center (CIMMYT), show the emergence of new races of both yellow rust and stem rust in various regions of the world in 2016. At the same time, well-known existing rust races have spread to new countries, the studies confirm, underlining the need for early detection and action to limit major damage to wheat production, particularly in the Mediterranean basin. Wheat rust can cause crop losses of up to 100% in untreated susceptible wheats. “These new, aggressive rust races have emerged at the same time that we’re working with international partners to help countries combat the existing ones, so we

have to be swift and thorough in the way we approach this,” said FAO Plant Pathologist Fazil Dusunceli. “It’s more important than ever that specialists from international institutions and wheat producing countries work together to stop these diseases in their tracks - that involves continuous surveillance, sharing data and building emergency response plans to protect their farmers and those in neighboring countries.” On the Italian island of Sicily, a new race of the stem rust pathogen called TTTTF hit several thousands of hectares of durum wheat in 2016, causing the largest stem rust outbreak that Europe has seen in decades. Various countries across Africa, Central Asia and Europe, meanwhile, have been battling new strains of yellow rust never before been seen in their fields. Wheat farmers in Ethiopia and Uzbekistan have been fighting outbreaks of yellow rust AF2012 in 2016, previously only found in Afghanistan, which dealt a blow to Ethiopian wheat production in particular. “Preliminary assessments are

It is important that specialists from international institutions and wheat producing countries work together to stop wheat rust in their tracks FAO worrisome, but it is still unclear what the full impact of these new races will be on different wheat varieties in the affected regions. That’s what research institutions across these regions will need to further investigate in the coming months,” said Dusunceli. Other races, including Warrior, which appeared in Northern Europe and Turkey a few years ago has spread to Europe and West Asia, while the well-known and highly potent Ug99 race of stem rust is now present in 13 countries.

GRAINCORP

Cargill sell Allied Mills to Pacific Equity Partners AUSTRALIA - Australian agribusiness firm GrainCorp and Cargill Australia have agreed to divest their respective stakes in the joint venture Allied Mills Australia to funds advised by Pacific Equity Partners (PEP). In this deal, GrainCorp will sell 60% of its stake in the joint venture for US$190m, the remaining stake of 40% will be sold by Cargill Australia. GrainCorp managing director Mark Palmquist says the sale of its

stake in the nation’s biggest flour supplier, Allied Mills, allows the grains handler to eye possible deals it would have found difficult to do as its balance sheet felt the strain of huge capital investments in the past few years. Allied Mills is Australia’s largest supplier of flour and bakery pre-mixes to hot bread shops, in-store supermarket bakeries and the industrial food service sector. It buys

and processes 800,000 tonnes of wheat and specialty grains a year, mostly from GrainCorp. According to GrainCorp, the enterprise value of Allied Mills is $455m Both Cargill Australia and GrainCorp have been joint investors in Allied Mills for more than 15 years. Early this year, Archer Daniels Midland (ADM) sold 19.9% ownership stake in GrainCorp for A$387m(US$286m).

NUTRITION

Amaranth leaf protein can replace fishmeal in fish diet - study KENYA – A recent study by a university in Kenya and the US has provided evidence that it is possible to replace up to 80% of the fish meal in Nile tilapia feeds with amaranth leaf protein concentrates (ALPC) without negative effect on fish performance. According to the study by Ngugi et al. showed that it is not possible to completely replace the fishmeal (FM) with the ALPC, but that with 80% of the FM possible to be replaced shows the opportunity that plant based proteins have in aquaculture in Africa. “This study evaluated the nutritional characteristics and suitability of replacing FOODBUSINESSAFRICA.COM

FM with the amaranth (Amaranthus hybridus) leaf protein concentrates (ALPC) as a protein ingredient in the diet of Nile tilapia (Oreochromis niloticus). Experimental diets were formulated, where 100%, 75%, 50%, 40%, 20% and 0% FM protein was substituted by protein from ALPC. The substitution effects were compared in terms of fish growth performance, nutrient utilization, whole body composition and apparent nutrient digestibility for 160 days. “We demonstrate that it is possible to replace up to 80% of fishmeal with ALPC without compromising the performance of

O. niloticus. These results demonstrate that although it is possible to replace large part of fish meal with ALPC, it is not possible to eliminate it in Nile tilapia diet as alternative protein ingredient,” said the researchers. A number of leafy vegetables, their protein concentrates and hydrolysates are under evaluation as alternative protein ingredients to fishmeal in aquafeeds, especially in Africa where the cost of feed is high, hindering increase in production to feed rising populations.

AFRICAN GRAINS, MILLING & FEED | JAN/FEB 2017

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NEWS | INTERNATIONAL INVESTMENTS

Fly farm venture AgriProtein signs deal for 25 fly farms a year with Aussie firm AgriProtein plans to set up 100 factories by 2014 and a further 100 by 2027 in Asia, Middle EAst, Europe and Americas

A worker holds up fly larvae waiting to be harvested at the AgriProtein project farm near Cape Town, in 2014. Courtesy: Time

SOUTH AFRICA – South African alternative protein processor, AgriProtein has partnered with Austria-based engineering group Christof Industries to build up to 25 fly farms a year around the world to tap into the rising demand. AgriProtein utilizes waste food as raw materials and generates valuable feed components: an insect based protein meal

- MagMeal, an extracted fat - MagOil and a nutrient rich soil conditioner – MagSoil. It rears fly larvae on an industrial scale on the organic waste and harvests the larvae to make natural, high-protein animal feed products using its developed and tested large scale processes. The company believes insect meal presents a more sustainable alternative to fishmeal, with the production process

diverting large volumes of organic waste from landfills to feed the larvae. Using a high-tech blueprint developed with Christof Industries that has been installed at the company’s facility in Cape Town, South Africa, in which it enhanced existing automation to more than double the facility’s waste-processing capability, AgriProtein plans to set up 100 factories by 2024, and a further 100 by 2027, reports Engineering News. The US$10-million partnership with Christof Industries will help bring insect protein into the mainstream of feeds used in aquaculture, poultry farming and pet food, according to the company. Christof Industries will deliver the factories on a turnkey basis as AgriProtein’s engineering, procurement & construction (EPC) partner. The fly farms will be operated by local licensees of AgriProtein technology in Asia, the Middle East, Europe and the Americas.

INVESTMENTS

Olam puts sustainability ahead at two African coffee plantations AFRICA - Two of Olam International’s coffee plantations in Africa have achieved Rainforest Alliance and UTZ certification, making the company to be a major producer of sustainable coffee in the continent. Olam’s subsidiaries, Aviv in Tanzania, and the Northern Coffee Corporation Ltd (“NCCL”) in Zambia, now meet the growing demand from international specialty coffee customers for single-estate, certified, traceable volumes, covering over 2,500 hectares (ha) of planted Arabica coffee, according to Olam. “Tanzania and Zambia have exceptional growing conditions to produce fine Arabica coffee, but historically both countries suffered from limited investment, leading to lower volumes,” Varun Mahajan, Vice President and Commercial Head of Olam Coffee Plantations in East Africa argues. “By committing from the start to develop our plantations responsibly, and support surrounding smallholders to 38

improve yields and income, we have been able to enhance the coffee production of both countries, putting them firmly on the coffee connoisseur map. “The Rainforest Alliance and UTZ certification now gives our specialty coffee customers that extra layer of reassurance of third party verification on top of our consistent quality,” he explains. Aviv is a 2,000-hectare plantation in the Songea Rural District of Southern Tanzania with 1,025 hectares of planted Arabica coffee and a wet mill processing facility. It also has an outgrower scheme. It expects to produce 1,600 metric tonnes of coffee from Rainforest Alliance Certified farms in 2017, which is a significant contribution to Tanzania’s total production of Arabica of 38,500 tonnes per year. NCCL, one of Africa’s largest Arabica plantations has over 1,500 hectares, with a target of 2,700 hectares. Situated at Kasama, in Zambia’s Northern Province, it

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

has wet and dry mill processing facilities and an out grower programme supported by Olam. It is already the largest producer and exporter of coffee in Zambia, and expects to produce 2,500MT of Rainforest Alliance Certified coffee in 2017, accounting for 88% of the country’s 900 tonnes of total certified production. FOODBUSINESSAFRICA.COM


NEWS | AFRICAN PARTNERSHIP

Ardent Mills joins partnership to strengthen Africa’s food industry AFRICA - Ardent Mills, the US-based flour milling, has joined Partners in Food Solutions, a nonprofit with a focus on improving food security, nutrition and economic development in Africa. Partners in Food Solutions connects corporate volunteers with small and growing food businesses in eight African countries, where the population is expected to double by 2050. Ardent Mills becomes the latest corporate partner in the Partners in Food Solutions group, joining General Mills, Cargill, Royal DSM, Bühler and The Hershey Company. “By joining hands with Partners in Food Solutions, we are expanding our reach with these efforts on a truly international scale. We are all about nourishing what’s next and engaging our team members in helping others,” said Dan Dye, Ardent Mills CEO. The company’s volunteer experts, through a model of remote consulting pioneered by Partners in Food Solutions, will connect with African client businesses to provide technical and business expertise. Through this program, the company seeks to “strengthen the

middle of the local food system – the processing sector (to) create a ripple effect of stable markets for smallholder farmers, job growth and more nutritious food available to consumers” in the Continent. “We believe that supporting the development of a robust local food industry in Africa is at the heart of building stable and thriving communities. Africa is home to more than 1.2 billion people and that population is expected to double to 2.4 billion by 2050. Harnessing the power of the private sector can have a significant impact on increasing food security across the continent for a rapidly growing population.,” said Partners in Food Solutions CEO Jeff Dykstra,” Dye said. Partners in Food Solutions has already helped more than 700 food companies through training or consulting projects, and has gone from working in four countries in 2011 to eight in 2017. It works together with TechnoServe, Root Capital, USAID and the Bill and Melinda Gates Foundation.

AGRI-BUSINESS

Dangote Rice launches 25,000 Ha rice out grower scheme in Nigeria NIGERIA - Dangote Rice, a subsidiary of Dangote Group, have launched rice out grower scheme in Nigeria to increase local production in the country, with plans to harvest 1 million tonnes in five years. Dangote Rice plans to operate the out grower scheme to empower local farmers, create job opportunities, diversify Nigeria’s economy and reduce the nation’s food import bill. The project aims to cover 25,000 hectares (Ha) in 14 states over a number of years, according to Aliko Dangote, the CEO of Dangote Group. The project has been planned to start with a 500 hectares project in the Goronyo community in the state. “By year-end 2017, Dangote Rice plans to produce 225,000 metric tonnes (MT) of parboiled, milled white rice. This will allow us to satisfy 4% of the total market demand within one year. Our model can then be successfully scaled to produce 1 million MT of milled rice in order to satisfy 16% of the domestic market demand for rice over the next 5 years,” says Aliko Dangote. Estimates by the Federal Ministry of Agriculture and Rural Development show that rice demand in Nigeria reached 6.3 million MT in 2015, with only 2.3 million MT of that demand satisfied by local production, notes Dangote. This local production shortfall leaves a gap of 4 million MT that is currently being filled through formal importation of rice or illegal imports over land borders, the company adds. “Through the Dangote Rice Outgrower Scheme, Dangote Rice will partner with out growers to cultivate and grow rice paddy. Specifically, the company will provide inputs, technical assistance, extension services and land preparation services and equipment directly to farmers. At harvest, DRL will recoup the costs of inputs and services inkind and will act as a guaranteed off taker for paddy that meets certain pre-agreed quality standards. Smallholder farmers will provide land and labour,” the company explains. The company will establish raw material reception, drying, hulling, parboiling units and silos in strategic areas throughout the country near the out grower communities. Each site will store dried, hulled, parboiled bran rice. It will then transport this bran rice to a mill, where finished rice will be FOODBUSINESSAFRICA.COM

produced. According to the company, the centralized out grower model enables a high level of control over product quality and quantity. The purchasing price given to farmers will reflect each season’s market price and will be set after an extensive market price survey and consultation with all stakeholders. The company plans to have 25,000 Ha by the end of 2017 under rice cultivation across 3 sites in Northern Nigeria: Jigawa State (5,000 Ha), Sokoto State (10,000 Ha) and Zamfara State (10,000 Ha). It plans to produce one million MT of rice from 150,000 Ha over by scaling the business out grower scheme model to more sites and rice growing communities in the country over the next 5 years.

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39


FORMULATIONS | ENZYMES

Driving innovation and sales with enzymes in baking and milling industry Enzymes have been used in the preparation of food for thousands of years, for example in the making of bread, beer, cheese, yoghurt, juice and wine. Today, enzymes are used in a wide range of food industries to improve the processing or quality of the final products, often reducing costs while improving efficiency. They are highly relevant for players in the African baking, milling, brewing, and agricultural markets who want to improve competitiveness.

I

n the food industry, enzymes are frequently used to drive innovation and ultimately sales growth. For example, in the milling industry, enzymes can be used to achieve a consistent, measurable Falling Number, thus ensuring baking performance in every bag of flour, despite wide variations in raw materials. Bakeries and bread-improver companies use enzymes to meet the latest consumer trends. For example, they use enzymes to produce a wide variety of packaged breads (everything from French baguettes to tortillas) that remain soft and elastic throughout storage. They also produce premium breads with improved eating qualities and appearance, despite the fact they are baked with gluten-free flours, reduced salt or sugar, or flours from rye or other ancient grains. Enzymes are also useful in production of packaged biscuits, where a strong gluten network is actually a negative factor, by weakening the gluten to ensure uniform

40

appearance. Grain and starch processors use enzymes to increase the efficiency of starch refining, or improve liquefaction, halving their need for expensive chemicals. They are also used in wet milling process to improve starch and gluten yields, smoothness of operations, and increase starch capacity. In the brewing industry, brewers use enzymes to save on raw materials by boosting extract yields, even with wide variation in the quality of local grains, or to produce beer from cassava. The use of cassava and other grains, including sorghum have of late been a critical driver to breweries in their quest to source more raw materials in Africa, with a significant boost to the local economy. Finally, agricultural producers of grain use enzymes and microorganisms to improve the productivity of farmland, reduce the need for phosphate fertilizer or pesticides, and create new value chains by for example using corn or corn stover to make ethanol.

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

Opportunities in baked goods in Africa According to Euromonitor, the Middle East and Africa region is showing rising consumer interest in highly processed, convenient and sophisticated foods, driven by population growth, increased urbanization and rising incomes. This is leading to a growing demand for all types of food ingredients, including commodities, but with a steady move towards more added-value and specialty products as the markets continue to evolve. This includes rising interest in more natural and health and wellness ingredients, as well as convenience. Growth in packaged bread is rising in a number of markets as more women enter the work force. More specifically, the market for packaged foods in the Middle East and Africa grew at a compounded average growth rate (CAGR) of 3.3% in 2010-2016, and is expected to grow faster from 20162020 – 4.6% CAGR. Of all categories of processed food, baked goods is the second largest, predicted to grow globally at 1.7% CAGR globally in 2016-2020, according to Euromonitor. Because enzymes can be used to reduce costs, improve efficiency or quality of packaged foods, they are useful to producers who are willing to adopt technology to achieve business advantage. But what are enzymes? Enzymes are proteins that are found in all living organisms. Being proteins, they are composed of amino acids. They act as highly specific catalysts, involved in almost all biochemical pathways within cells. To date, scientists have identified over 10,000 different enzymes, and it is estimated that many more are yet to be discovered. Benefits of enzymes Baking enzymes offer many benefits, including significantly improved eating FOODBUSINESSAFRICA.COM


Courtesy: Novozymes

The Middle East & Africa region has increasing demand for added value convinient products. Enzymes play a huge role in improving quality, shelflife, process tolerance and crumb and crust quality in a sustainable way qualities throughout shelf life, improved dough fermentation, improved dough machinability and improved mixing tolerance. They also improve the dough’s fermentation stability, improve volume, crumb structure and whiteness of baked goods and impart a more intense crust color which is preferred by consumers. Because enzymes are natural processing aids not made from chemicals, they enable cleaner labels in baked goods that respond to increasing consumer need for more minimally processed foods and beverages, with minimal use of chemicals. Enzymes can be used to support new FOODBUSINESSAFRICA.COM

marketing claims, by improving eating quality and appearance in many ways, also throughout storage. With enzymes, bakers can stay ahead of changing consumer trends. An example is use of flours like rye and spelt – perceived by consumers to be healthier – and still achieve reliable baking performance In a world that is more aware and ask for environmentally safe and sustainable ways of production, enzymes are a natural solution, are biodegradable and are used to replace often harsh chemicals. They also create no unwanted by-products and require no harsh or hazardous process conditions to function. Greater efficiency, flexibility and costsavings Enzymes can provide bakeries with greater flexibility in the raw materials they use in their process, reducing costs while still achieving high-quality results. They can also be used to reduce the chance of problems with bakery line stoppages and drive cost reduction at the bakery. Enzymes can typically replace a chemical ingredient at a proportion of 1 to 100-1,000 by weight, saving costs in storage, transportation and handling.

The most scientific way to understand the enzymes used in baking is to categorize them by the substrates that each class of enzyme works on. For example, amylases work on starch and are one of the most widely used breadmaking enzymes today. Lipases work on lipids (fats) and are also widely used. Xylanases and oxidases improve volume and crumb structure, while ensuring a dry, stable dough that is easy to work with and can be easily handled by machines. By Erick Omollo Juma, The writer is the Account Manager, Food and Beverage: Middle East & Africa Region at Novozymes A/S

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EVENT PICTORIAL | IAOM ETHIOPIA 2016

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JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

FOODBUSINESSAFRICA.COM


04-07 MAY 2017 Istanbul Expo Center (CNR Expo), Halls 1-2-3 YESILKOY - ISTANBUL - TURKEY

Milling MIllIng

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Pulses & Rice RIce

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Supplier SupplIer Industry

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International Flour, Semolina, Rice, Corn, Bulghur, Feed Milling

Machinery & Pulse, Pasta, Biscuit Technologies Exhibition

Parantez International Fair

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SUPPLIER NEWS INVESTMENT

Omas Industries to set up advanced milling plant in Uganda

UGANDA - Omas Industries is in the process of installing an extension to leading Ugandan miller, Master Grain Milling

Located in Jinja town in the eastern part of Uganda, the new mill, with a production capacity of 300 TPD, will be built alongside the old Golfetto mill, which was completed in 2000, and it will be equipped with all of the most leading-edge technologies that will reduce the number of levels, construction volume, and total building and foundation weight by 20%. The new plant will be supplied from 2 cone-bottom silos with mixer and a capacity of 500 tons each, equipped with grain flow metering devices. The grain cleaning line will include a Giotto wheat sterilizer to provide optimum management of the wheat, as it removes the waterproof cellulose outer

layers, according to Omas Industries. Through this system, the conditioning water can penetrate up to 30% more quickly and with a much lower water evaporation resulting in “higher yields and reduced cleaning for plansifter channels and filter bags” and lower ash content, resulting in higher extract, with whiter flour extracted. The milling section will be equipped with the new Leonardo roller mill that uses cutting-edge KERS technology, patented by Omas. According to the company, the KERS technology offers a 50% reduction in power input to the rollers and lower noise levels in the mill.

INVESTMENT

Alapala completes new milling plant in Sudan SUDAN – Leading supplier of milling equipment Alapala has completed the erection of a new turnkey mill for ElHamama Flour Mills in Sudan. Ahmed Eltigani A. Musa and Mohammed Yousif Musa, the owners of the company, contracted Alapala to supply the plant machinery and technology for the new 700 ton per day flour mill. The new plant is one of the largest single mills in the Sudan, and is located in Khartoum, the country’s capital city. The project involved the design of the concrete building and that of the milling section, engineering of the milling plant, assembly and start-up of the mill. The mill is completely automated with the installation of new generation milling equipment has a substantial reduced need for staff.

“Our brief was to build not only one of the most modern mill in Sudan but also one of the most flexible,” Bora Gökdeniz, Alapala’s Sales Director commented on the project.

The commissioned plant has been operational and is able to deliver a continuous supply of top quality flour for the Sudan market.

INVESTMENT

BillerudKorsnäs makes strategic investment in new machine SWEDEN – Swedish paper packaging manufacturer BillerudKorsnäs has announced the largest investment in its history in a new board machine at its Gruvön site. According to the company, the investment is being made in view of growing demand for sustainable packaging solutions for food and beverages globally. The investment of SEK 5.7 billion (US$640 million) includes the construction of a new board machine at the Gruvön production site and rebuilding the existing pulp mill. The board machine will have an annual capacity of 550,000 tonnes of board, making it one of the largest of its kind in the 44

positioned to satisfy global demand. Access to renewable raw materials from sustainably managed forests in the Nordic region was a key factor when evaluating different alternatives,” says Per Lindberg, President and CEO of BillerudKorsnäs. world. The machine will produce liquid packaging board, carton board, food service board and liner. The investment project will start immediately and production is expected to start in the first quarter of 2019. “This is a historical decision for BillerudKorsnäs. The stable market growth in liquid packaging board and other carton boards, together with our unique expertise in this area, mean that we are perfectly

JAN/FEB 2017 | AFRICAN GRAINS, MILLING & FEED

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HELLO TOMORROW Leonardo: the OMAS roller mill that is changing milling

Revolutionary. Unique. Extraordinary.

omasindustries.com

RESEARCH & DEVELOPMENT MADE IN ITALY

Food Business Africa incorporating African Grains, Milling & Feed Jan/Feb 2017  
Food Business Africa incorporating African Grains, Milling & Feed Jan/Feb 2017  

Africa's leading food, beverages, milling, food service and feed industry magazine