Society: Business
Milking the Demand
Fonterra Anchors its Ship in the Ethiopian Market ‘Since 1886’. That is the tag line on the packaging of the Anchor powdered milk brand, which hit Ethiopian stores in recent months. It is meant to underscore the manufacturer Fonterra’s experience of over a century in the milk manufacturing business. With this head start, Fonterra is making its mark globally. By agreeing to set up a blending plant in Faffa Foods S.C., Ethiopia became one of the 100 plus countries where Fonterra opened up shop. As part of its brand visibility strategy Fonterra gave a tour of its new factory inside Faffa Foods S.C. to Ethiopian Journalists. By Elleni Araya Eminence Staff
I
t has been nearly two months since powdered milk from the international brand Anchor entered the Ethiopian market. Blue and red Anchor Milk billboards and posters are already plenty in Addis. So too are the 32 gms Anchor sachet, the 300 gms Anchor cans and the 900 gms Anchor box that sell affordably for 5 ETB, 50 ETB and 160 ETB respectively. With 18 distributors in major towns like Assossa, Bahir Dar, Dessie, Hawassa, Logia, Mekelle, and Nekempt, and 150 Tons of powdered milk distributed, the manufacturers want to make it clear that Anchor is officially in the local dairy business. Demand for this business is good. Despite having the largest cattle population in Africa at 50 million, 20pct of which are cows, Ethiopia has an under-supply of milk and other dairy products due to low production and poor collection mechanisms. Thus, urban consumers turn to powdered milk as a substitute. With no local powdered milk manufactures, the price of imports is high. In 2014 alone Ethiopia spent $10 million in powdered milk imports according to various reports. This gap was noticed by Faffa Foods S.C., a company established by the government in 1962 to manufacture affordable food items that lessen malnutrition. After Faffa was transferred in 2009 to Petram, a private import and distribution company, it engaged in the packaging and distribution of a powdered crème milk product, Abay. The raw materials were supplied by New Zealand Dairy Manufacturing giant, Fonterra Co-operative group, which owns the Anchor brand. The company itself is owned by farmer cooperatives and controls 95pct of the dairy industry in New Zealand in addition to being the second largest milk manufacturing company globally. Though the raw materials were imported, it was the first step towards import substitution for Ethiopia. The second step came when Fonterra signed a $10 million joint venture deal with Faffa to set up a blending factory
32
Anchor factory workers are in the final stage of the packaging the powder milk for distribution.
for its flagship Anchor brand in December 2014, which it has been producing since 1886. In the deal Fonterra would have controlling shares of 70pct. The blending machinery was set up in a 1,200sqm factory within the Faffa compound in Akaki Kaliti district. According to this new arrangement, Anchor powdered milk is still being imported. This is because the machinery to spray dry liquid milk is costly and there is not enough milk production in the country to produce powdered milk, according to Fonterra general manager Zeco Ibo Kassim. However, blending is done locally with over 30 vitamins and minerals added to the powder before it is packaged and sold.
The Eminence Nov Issue 14