Food Business Africa Aug-Sept 2014

IN T H I S I SS UE : T RAC EABILITY IN THE FOOD CHA I N AFRICA’S FOOD AND BEVERAGE

INDUSTRY

MAGAZINE

A L O C A …

A C C I O R F C A N O G I B BETS

ALSO INSIDE ... AS SMALLER PLAYERS CREEP IN WHY DANONE’S BROOKSIDE DEAL IS A WINNER NAMPAK PLANS AFRICAN EXPANSION GRAIN CORP INVESTS IN EGYPTIAN MILLER FRIESLANDCAMPINA BUYS IVORY COAST DAIRY

WWW.FOODBUSINESSAFRICA.COM

VOLUME 2 ISSUE 4, NO. 8 • ISSN 2307-3535

A FOODWORLD MEDIA PUBLICATION

WHAT CAN SGS DO FOR YOU? We carry out comprehensive high end pesticides residues analysis at our ISO 17025 Accredited Laboratories which use the state of the art analytical equipment and technology including: Gas Chromatograph – Mass Spectrometry – Mass Spectrometry (GC-MS/MS) High-Performance Liquid Chromatograph (HPLC) Liquid Chromatograph-Mass Spectrometry-Mass Spectrometry (LC-MS/MS) Our laboratories are FDA and GAFTA recommended.

The SGS Kenya Limited Laboratory has over 450 validated actives according to SANCO criteria. They have been carefully selected amongst the chemicals routinely used in modern agriculture and those that have been banned for toxicological reasons.

Importers in the EU, the United States, Japan, Taiwan, Korea, Australia an many others are now using stringent pesticides residues tests to target specific compounds not detected in most multi residue screening. Many times, this has been the reason for shipments being rejected. Our equipment and test methodologies measure below 5 parts per billion (PPB) Our turn around time (TAT) is as low as is 24 hours.

SGS OFFERS THE MOST COMPERHENSIVE PESTICIDE TESTING SERVICES IN SUB-SAHARA AFRICA The services provided includes full consultancy, pre and post analysis.

NAIROBI OFFICE: Victoria Towers, Kilimanjaro Ave Upper Hill, Nairobi, Kenya Tel: +254 20 273 3690 • Fax: +254 20 273 3664 • Email: enquiries.kenya@sgs.com UGANDA OFFICE: 2nd Floor Media Plaza, Plot 78, Kira Road, Kamwokya, Kampala, Uganda Tel: +256 392 739 966 • Fax: +256 312 266 966 • Email: enquiries.kenya@sgs.com

REGULARS

Contents

5 6 10 34

AUGUST/SEPTEMBER 2014

Calendar of Events International Industry News African Industry News Supplier News

OPERATIONS

2

EDITORIAL

We urge African governments to allow GM crops to

30

Plant and Engineering Energy Management in Compressors Compressors are major energy consumption units in factories. We advise on ways to reduce energy consumption in these vital components in your factory

19

Process Management OEE Tracking through Short Interval Control

alleviate food insecurity in Africa

FOOD SAFETY

4

MARKET PLACE DIALOGUES

32

We provide reasons why your company can be small but successful

22 COVER STORY

Coca-Cola in Africa

Coca-cola ups African investments as competition

TRENDS 35

creeps in

26 SPECIAL REPORT

Sorghum: Africa’s Next Cash Crop?

We unravel why sorghum is important for Africa’s food security and industrial take-off

foodbusinessafrica.com

Traceability: We show why it is important to build traceability into your food and beverage sourcing, processing, handling and distribution chain

New Products on the shelf Highland’s Beverages Club soda / Tropical Heat’s Rice Cakes / EABL’s Double Smirnoff Guarana / Alpha Grain’s wheat flour / Eldoville’s Whey Cool / Skol beer / Numi Noodles / New KCC drink yoghurt

FORMULATIONS 28

Ingredient Applications Starch The importance of starches in food processing FOOD BUSINESS AFRICA | AUG/SEP 2014

1

EDITORIAL

Give GMOs a chance for food security in Africa A recent report released by the Londonbased think tank Royal Institute of International Affairs (also known as the Chatham House) in July this year elicited some interesting, though serious, debate within and without Africa on the way the continent needs to go to ensure food security. The report, titled On Trial: Agricultural Biotechnology in Africa, made some sober reading to both proponents and opponents of biotechnology in Africa.

The report argues that increased productivity that closes the income gaps and increases farm incomes are very critical in achieving this goal – and that ‘biotechnology offers an important opportunity to improve crops . . . especially in the case of African staples that have narrow gene pools or are slow-growing or difficult to cross’. These crops include varieties of staples such as sorghum, cassava, matoke (bananas) and cowpea. These crops are increasingly looked upon as the source of Africa’s source of nutrition and industrial transformation.

But the report was not all pretty reading.

The authors are saddened by the fact that in Africa, “opponents have waged effective campaigns against GM technology based on misinformation and scaremongering” and as a result “no GM trait developed for African farmers has been cleared for release by a government” despite huge investments by the very own Governments, donors and philanthropic foundations.

The report points at African Governments’ lack of focus and “reluctance to progress biosafety legislation or take

decisions towards the release of GM varieties”. It also maintains that “regulatory decisions may be unpredictable and subject to political interference”.

The report urges Governments in Africa to put aside political expediency and lead the debate and remove the ‘bottlenecks’ that stand in Africa’s adoption of technology that is critical in reducing poverty and hunger, and which can also be critical as climate change continues to ravage the continent.

“Would I rather die today from hunger or die 40 years now from an unknown disease brought by GMOs?”

We cannot agree more with this line of thought. For we have attended a number of fora that discuss GMO issues in Kenya, and every time what we come out with from such meetings is a stalemate between those who are for the adoption and regulation of GMOs and those who live in the ‘what if ’ world of ‘we fear what might happen in future’. And the Government is always a bystander and moderator somewhat of this mudslinging.

One of the attendees had the cheeky way of looking at this debate thus: Would I rather die today from hunger or die 40 years now from an unknown disease brought by GMOs? He wondered loudly in one of the

Food Business Africa Magazine Professional Network @Foodbizafrica

fora we attended recently.

Indeed, Africa requires a well-regulated GMO environment, while protecting the environment and the small scale farmer from exploitation. But what we have seen is senseless dithering on the side of Government to guide its population on the best way to introduce and regulate GMOs in Africa.

In this regard, many countries come to mind. From Ghana, Nigeria, Kenya, Uganda, and Tanzania all the way to Zambia and Zimbabwe, Governments are waiting for things to sort themselves out, hopefully in favour of GM crops!! Only South Africa has made significant progress in Africa in utilisation of GMOs and is a major exporter of maize to the world currently.

Recently, the Government of Zimbabwe is reported by the Herald newspaper to have imported GM maize from South Africa in the face of imminent hunger in the country, while maintaining a ban on GM imports into the country. Kenya’s Vice President, a botanist by training to boot, has called for the country to adopt GM crops to forestall hunger, as Kenya faces reduced maize yields. Uganda continues to debate its own version of the GM Bill, with no end in sight.

The country, known for its banana crop, is staring at loses caused by pests and diseases, even as researchers continue with human trials in the US of a vitamin-enhanced ‘Super Banana’ that was unveiled recently.

We urge African Governments to gather courage and give their citizens the right message that will ensure that the right technology is adopted, as the continent faces mounting pressure to feed its population and the threat of climate change rises.

Editor

Foodworld Media P.O Box 1874-00621, Village Market, Nairobi Kenya Tel: +254 20 8155022 Cell: +254 725 343932 info@foodbusinessafrica.com www.foodbusinessafrica.com

SUBSCRIPTION Contact: info@foodbusinessafrica.com

PUBLISHERS: Foodworld Media EDITOR: TJ Kwach CONTRIBUTORS: Philip Mugo • Liz Wawire DESIGN & PRODUCTION: Centrepress Media ADVERTISING & SUBSCRIPTION: Dorothy Chao

ANNUAL SUBSCRIPTION: Kenya: KSh 2,900 (VAT inclusive); Africa: US$ 70; Rest of World: US$ 90 (including postage)

Food Business Africa (ISSN 2307-3535) is published 6 times a year by FoodWorld Media Ltd. Special event issues may also be published. The magazine is distributed for free to food and beverage processing companies in Eastern and Central Africa.

TWO YEARS: Kenya: KSh 5,600 (VAT inclusive); Africa: US$ 130; Rest of World: US$ 170 (including postage)

Copyright 2014. 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.

Food Business Africa Magazine

2

AUG/SEP 2014 | FOOD BUSINESS AFRICA

foodbusinessafrica.com

O

A H EA

ING

HUMAN IT

from

Y

with low MCPD / DCP

BU

ILD

HVP for food products

L

Y

BL

K

FOR

TH

C

S

Premium Quality Ingredients for

Food Industry

Food Industry Groundnut Hydrolysate, Milk Protein,

Hydrolyzed Vegetable Protein (H.V.P. ), Inactivated Yeast, Soya hydrolysate, Vegetable Protein Hydrolysate & Wheat Protein Hydrolysate (HVP)

Warkem Biotech Pvt. Limited

-

Vegetable Peptones Casein Peptones and Tryptones Meat Peptones and Extracts Gelatine Peptones Yeast and Malt Extracts Bile Products Bulk raw materials for Fermentation Industries

A-508, Swastik Disha Business Park, Via Vadhani Indl. Est. LBS Marg, Mumbai - 400 086, India Tel : 00-91-22-6147 1919, 2500 3747 Fax : 6147 1920

www.warkembiotech.com

ISO 9001:2008 CERTIFIED

ISO 22000:2005 CERTIFIED

Call : 6147 1919

MARKETPLACE DIALOGUES

Your company can be small and successful too Rwanda provides a great example of how to achieve greatness in the face of great odds

I

took a short visit to Rwanda sometime early this year. seem to work in Nairobi, despite having the biggest roads in The visit took me to quite a bit of the country – from the East Africa), Rwanda believes in achieving small steps but bustling Kigali to Gisenyi town on the border with Congo, which have the greatest impact on its people. and to the south near the border with Burundi. And I have to This is a strategy that any business big or small can take, but say that I was pleasantly surprised by what I saw, having been which can work wonders for the small player. Are you the there some years back. leader in your industry in new products innovation? Can Then recently I had a discussion with some colleagues who you streamline your process to have the least cost? Can you were quite worried about the power of big multinational have the most ambitious, happiest and hard-working brand brands coming to Africa and ‘gobbling’ African companies as ambassadors, otherwise known as employees? Then you these multinationals expand into the continent. This followed can be the Rwanda of your industry. the reports that Danone had taken a significant 40% stake in • Know your strengths and take advantage of them – The Brookside Dairy, East Africa’s biggest dairy. This discussion month of July is important for Rwanda’s tourism industry. took my mind back to Rwanda.

For this is when the country’s baby gorilla naming ceremony, The story of Rwanda is a sad and inspiring story at the same known as Kwita Izina, takes place in a bid to conserve one of time. On the map of Africa, you have to know where Rwanda the rare gems of Rwanda – mountain gorillas. Though spread is to point it out to anyone. Disadvantaged in size and with no into Congo and Uganda, Rwanda has taken advantage of resources to mine or harvest, but packed with 12 million people, its mountain gorillas to attract the Rwanda has gone through decades high and mighty into its tourism of war, which had its climax in industry that revolves around the only war people seem to have “Your company can not be everything these prime assets to rake in some noticed – the 1994 genocide. But to everyone. You have to look deep good money. Your company can Rwanda has risen from these inside your company and its people not be everything to everyone. long-drawn wars and apparent and define what your company is good You have to look deep inside your disadvantages to be among the at.” company and its people and define most admired countries in Africa what your company is good at, and the world. and therein lies the and after doing so, sharpen this message to smaller companies. attribute to your advantage. The The challenges of smaller players in Africa are legion. It is market will notice this strength and will follow you into the increasingly difficult to survive in the food processing area if future. you are a small player in the market. Smaller players lack power • Turn every one into your brand’s ambassador – Brand to dictate prices received from suppliers and payment terms ambassadors are a great asset. And it starts with you and with increasingly bigger retailers. Add to this is lack of financial your employees. Talking to the Rwandese guy on the muscle and adequate knowledge to harness the opportunities street in Kigali, you do not find the almost apparent sense that lay in the country or region. They share these problems of anger or disillusionment as you would in say, Nairobi. with Rwanda.

What you find is people with a deep sense of pride for their But should smaller players fold up their businesses and achievements and possibilities, and where everybody has a leave the field to the bigger, better resourced rivals? Not really. common goal and destiny.

Borrowing from Rwanda, none of these smaller processors

What Rwanda has also done is to have brand ambassadors should actually fold up. What they need to do is to do business from without its own borders including Bill Gates, Bill the Rwanda way.

Clinton and Tony Blair. These ambassadors are important in helping the country to spread the word out there of the The Rwanda way of doing business possibilities in Rwanda.

To survive in these tough times, I reckon smaller and medium It would be critical to ask yourself if your company has players can learn the basics of how Rwanda does its business. employees who would ‘die’ for your brand and if truly they feel Here are a few we would like to share with you: part of the company. Further, are your consumers your brand • Aim for excellence every time, in whatever you do – Charles ambassadors, do you engage or interact with them?

Onyango-Obbo, the editor of Mail & Guardian Africa, notes Africa needs to grow its local brands that will one day that Rwanda’s “strategy is to overcome the disadvantage by be major international brands. Are you ready to join this leading in speed of execution, pushing first mover advantage transformation? Think and act like Rwanda and you may and edging the competition in policy”. From clean streets and working street lights (I wonder why street lights never achieve this in your lifetime.

4

AUG/SEP 2014 | FOOD BUSINESS AFRICA

foodbusinessafrica.com

EVENTS CALENDAR

October 21-23: Propak Cape Town, Cape Town, South Africa The event for the packaging, food processing, printing, labelling and plastics industries. www.propakcape.co.za October 27-31: IDF World Dairy Summit, Tel Aviv, Israel A forum to discuss challenges of the dairy sector while allowing for active discussion regarding industrial technology and basic research results. www.idfwds2014.com

2014

November 2-5: Pack Expo International, Chicago, IL, USA PACK EXPO focuses on processing and packaging solutions while at the same time introducing you to technologies and ideas from all different industries www.packexpointernational.com November 9-11: Gulfood Manufacturing, Dubai, UAE The biggest food and beverage process industry event for the Middle East & Africa www.gulfoodmanufacturing.com/ November 14-16: FoodTec India, Bombay India India’s one stop trade fair for Food, Beverage & Packaging Technology, Equipment & Supplies www.foodtecindia.com November 18-20: Food Processing & Packaging Exposyum East Africa’s major event for the food processing and packaging industry www.fppe-kenya.com November 19-21: 2nd International Conference on Nutrition The Second International Conference on Nutrition (ICN2) is an inclusive inter-governmental meeting on nutrition jointly organized by the Food and Agriculture Organization (FAO) and the World Health Organization (WHO) www.fao.org/about/meetings/icn2/en/ December 2-4: West Africa Food & Bev Tec, Accra, Ghana The second international food, beverage & packaging technology expo. Co-located with West Africa Agro and West Africa food & hospitality www.agrofood-westafrica.com December 2-4: Health Ingredients (Hi) and Natural Ingredients (Ni) Expo, Amsterdam, The Netherlands Europe’s leading health, natural and nutritional food and beverage event www.figlobal.com/hieurope/home December 3-6: IAOM Mideast & Africa District Conference & Expo, Cape Town, South Africa A meeting of operative millers from the Middle East and Africa region. www.iaom-mea.com foodbusinessafrica.com

Dr Wilson Songa, Principal Secretary, Ministry of Industrialisation and Enterprise Development speaks at the kick-off presentation of FPPE 2014 in Nairobi in June this year.

REGISTER FOR FPPE 2014

18-20 November, Nairobi, Kenya, Daily 9 am - 5 pm Welcome to the second Food Processing & Packaging Exposyum (FPPE), taking place from 18-20 November 2014 at the Kenyatta International Convention Center in Nairobi, Kenya.

FPPE is the top B2B meeting and conference of the food processing and packaging industry in Africa. Make contacts with the world's leading companies in this field, all of them with a strong interest in doing business in Africa.

Enjoy three days filled with business and networking opportunities. See live demonstrations of service providers and manufacturers of specialized machinery. Follow our extensive conference programme with top industry speakers around the world.

The key sectors showcased at FPPE 2014 are: • Food and drinks manufacturing • Process technologies and industrial automation • Packaging and packaging technology • Quality control, laboratory and analytical technology • Industrial refrigeration, drying and air conditioning • Logistics and warehousing To take part in FPPE, register for your free online ticket. With one ticket you can visit the conference and exhibition on all days. Please print your ticket and bring it with you to FPPE 2014!

Please notice that only the online registration is free. On site it will cost KES 1,000 per person.

For more information visit the FPPE website and register today. FPPE 2014 is an event not to be missed.

www.fppe-ke.com FOOD BUSINESS AFRICA | AUG/SEP 2014

5

INTERNATIONAL INSIGHTS M&A

Coca-Cola swallows Monster in deal US-After a number of years of speculation and intrigues, Coca-Cola has made its move for Monster Beverages by buying a 16.7% equity stake in the energy drinks maker for US$2.15 billion.

The deal, which enables both parties to concentrate on their core strengths, will combine the strength of Coke’s worldwide bottling system with Monster’s dedicated focus and expertise as a leading energy player globally, according to Coke. It is expected to accelerate growth for both companies in the fast-growing, global energy drink category.

In the deal, Coke will transfer ownership of its energy drink brands including NOS, Full Throttle, Burn, Mother, Play and Power Play, and Relentless, to Monster; and Monster will transfer its non-energy business, including Hansen’s Natural Sodas, Peace Tea and Hansen’s Juice Products to Coke.

The companies, which have had a distribution agreement since 2008, will amend their current distribution agreement in the U.S. and Canada by expanding into additional territories and enter-

ing into long-term agreements, with Coke becoming Monster’s preferred distribution partner globally, accelerating Monster’s opportunity to grow internationally.

“Our equity investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category. This long-term partnership aligns us with a leading energy player globally, brings financial benefit to our Company and our bottling partners, and supports broader commercial strategies with our customers to bring total beverage growth opportunities that will also benefit our core business”, said Muhtar Kent, Chairman and CEO of The Coca-Cola Company.

Analysts have pointed out that the beverage giant has made a good deal out of the transaction to buy into Monster. The energy drinks business has been booming in the US and around the world, while Coke has been facing

stagnant sales in the US, a key market for its drinks The investment in Monster follows a recent 10% stake investment in Keurig Green Mountain Coffee, a maker of K-Cup, a single-serving coffee brewing system.

REGULATORY

MARKET

Manufacturers Association announces Industry initiative on food ingredients

India’s baby food market to cross US$520m

US-The food industry in the US has committed to bring more transparency into the way it manages the introduction of food additives into food products to improve on food safety.

The Grocery Manufacturers Association (GMA), the industry body that represents a majority of the major food and beverage processors in the country, has committed that it will create a database of food additives and avail scientific findings that companies have used to classify ingredients as GRAS. Generally Accepted as Safe (GRAS) is a US Food and Drug Administration (FDA) designation that a chemical or substance added to food is considered safe by experts, and so is exempted from the usual Federal Food, Drug, and Cosmetic Act (FFDCA) food additive tolerance requirements. It is used widely worldwide.

“Our industry is committed to providing consumers with safe, quality, affordable and innovative products,” said Dr. Leon Bruner, Chief Science Officer for

INDIA - Increasing disposable income, rapid urbanization and growing number of women workforce continue to drive India baby food market, with the sub-continent’s baby food market expected to reach US$520 million this year.

The entry of a large number of international and domestic players in the country’s baby food market has also remarkably improved the availability of good quality and nutritious baby food – feeding into rising disposable incomes, rising trend of nuclear families and a growing number of urban households.

According to a recently published report by TechSci Research “India Baby Food Market Forecast & Opportunities, 2019”, India’s baby food market is projected to cross the US$520 million mark in 2014.

Major players operating in the country’s baby food market include Nestle, Abbott Nutrition, Nutricia, Raptakos, Amul, Pristine Organics, British Life Sciences, Mead Johnson, Babyvita and Manna Foods.

6

AUG/SEP 2014 | FOOD BUSINESS AFRICA

GMA. The process of GRAS determination has been done by food companies, with the companies carrying out their own scientific assessments, determining that an ingredient is safe, and going ahead to introduce it into food products without informing the FDA. However concerns have been raised by the increased number of ingredients that are added into foods that have jumped to over 9000, with the FDA lacking data on many recently introduced ingredients This will now change, with the GMA committing that it will “take the lead in defining a standard that will provide clear guidance on how to conduct transparent ingredient safety assessments” in addition to “establishing a program to ensure the FDA has increased visibility to the ingredients that are assessed as GRAS by members of the food industry” through the sharing of a database of all safety assessments by the industry.

foodbusinessafrica.com

INTERNATIONAL INSIGHTS

M&A

Olam International in partnership to grow food business in sub-Saharan Africa SINGAPORE - Japan’s third largest instant noodles maker Sanyo Foods Co. Ltd has bought a 25% stake in Singapore-based Olam International’ packaged foods business as the firms target growth in sub-Sahara Africa.

Sanyo Foods will take the stake for a price consideration of US$187.5 million, valuing the company at US$750 million.

The existing joint venture for Olam’s instant noodles, in which Sanyo took a direct 25.5% stake for US$20 million in 2013, will be folded into a Singapore incorporated holding company set up to house all of Olam’s Packaged Foods businesses. Olam will have management control of the Singapore incorporated holding company.

Olam expects to record a net cash inflow of US$167.5 million and an addition to reserves of US$80.8 million after the transaction is completed.

Olam’s President and Global Head of Packaged Foods, M Ramanarayanan said: “This strategic partnership … will

foodbusinessafrica.com

help us build on our current market leadership in five out of nine categories, expand the extensive distribution network in all of our key markets in Sub-Saharan Africa and further develop the deep consumer insights that we have gained over the past few years.”

Sanyo Foods’ President Junichiro Ida said: “We are excited by the strong prospects in Sub-Saharan Africa with its growing middle class and rising as-

Olam’s Packaged Foods business currently serves consumers in Nigeria, Ghana, Mali, Burkina Faso, Benin, Togo and South Africa.

pirations. As we strengthen our strategic alliance with Olam by investing beyond the noodles business into their entire range of packaged food categories, I believe that the synergy created by the two companies will lead to a larger share of Sub-Saharan Africa’s consumer market than would otherwise be possible.”

Olam’s Packaged Foods business currently participates in nine categories – tomato paste, seasonings, biscuits, candies, juices, dairy beverages, milk powder, coffee mixes and instant noodles, and serves consumers in Nigeria, Ghana, Mali, Burkina Faso, Benin, Togo and South Africa. The business achieved sales turnover of US$350.0 million in FY2013.

Sanyo Foods through its joint ventures is a leader in instant noodles, ready-to-drink teas, bottled water and juices in the respective markets.

The transaction is subject to the conclusion of a definitive agreement and customary closing conditions and is expected to be completed by mid-2015.

FOOD BUSINESS AFRICA | AUG/SEP 2014

7

INTERNATIONAL INSIGHTS M&A

M&A

Cargill buys ADM’s global chocolate business

Fonterra in partnership with Beingmate to enter China baby formula market

US – Commodities giant Archer Daniels Midland Company (ADM) has bought the global chocolate business of Cargill for $440 million.

The deal adds to Cargill’s existing chocolate business, making the company to jump to number 2, after Barry Callebaut in worldwide industrial chocolate business. The company will also add to its portfolio ADM’s Ambrosia, Merckens and Schokinag brands. Cargill will also gain about 700 new employees.

“This acquisition is a major milestone

in Cargill’s chocolate growth strategy and will help us better serve our customers in North America and Europe. Our customers will benefit from a broader product portfolio, greater access to innovation and product development support.” said Bryan Wurscher, president Cargill Cocoa and Chocolate North America.

Cargill will acquire six chocolate plants in the deal: three North American chocolate plants, located in Wisconsin, Pennsylvania and Ontario, Canada and three in Europe: U.K, Belgium and Germany; and which will complement Cargill’s existing chocolate plants in North America, Europe, Asia and Brazil.

The transaction is subject to regulatory approval in the US and the EU and is expected to close in the first half of 2015.

TRENDS

‘On the go’ drinks drive yoghurt rise in China CHINA - A recent report has shown that drinking yoghurt will become the third most consumed dairy drink in China by 2016, as the volume consumption of drinking yoghurt will exceed that of flavoured milk as well as grain, nut, rice and seed milk alternative drinks.

This is mainly due to significant and sustained investments taking place in the Chinese yoghurt market, according to Canadean.

“With insufficient supply of raw milk and rising raw milk prices in 2013, Chinese dairy producers devoted resources to maintaining steady milk supplies by investing more in milk sources and cattle ranches. These investments are now bearing fruit, with the drinking yoghurt category expected to experience steady growth well into 2019”, says Michael Loubser, beverage analyst at Canadean.

The report notes that major dairy production companies have been building up alliances and working together with dairy farmers to boost growth in the Chinese dairy industry. For example, Mengniu and Danone signed a framework agreement to establish a joint venture for the production and supply of chilled yoghurt products in May last year, while Mengniu also increased its stake in China Modern Dairy to 28%. Yili Group also

8

AUG/SEP 2014 | FOOD BUSINESS AFRICA

formed an alliance with the Italian dairy firm, Sterilgarda Alimenti, and signed an MOU with Dairy Farmers of America regarding strategic purchasing and farming service cooperation.

Increasing disposable income and exposure to the benefits of drinking yoghurt, added to that fact that more consumers demand healthier, nutritious dairy drinks in China has also fuelled the growth.

According to Canadean, the ambient drinking yoghurt segment is doing particularly well, growing by an impressive 110% in 2013. This is expected to grow further in 2014, to take a 70% of the drinking yoghurt market.

“Consumption habits have shifted, and a significant portion of the market is now ‘on the go’ which makes yoghurt drinks, especially ambient variants, very convenient for busy consumers.”, Loubser says.

110%

Growth in China drinking yoghurt in 2013

CHINA - New Zealand dairy co-operative Fonterra and a leading Chinese infant food manufacturer Beingmate are forming a global partnership enable the dairy giant enter China’s growing infant formula market.

The partnership is intended to increase the volume and value of Fonterra’s ingredients and branded products exported to China, while creating a fully integrated global supply chain from the farm gate direct to China’s consumers, using Fonterra’s milk pools and manufacturing sites in New Zealand, Australia, and Europe In the deal, Fonterra will issue a partial tender offer to gain up to a 20 per cent stake in Beingmate, after which Fonterra and Beingmate will set up a joint venture to purchase Fonterra’s Darnum plant in Australia and establish a distribution agreement to sell Fonterra’s Anmum brand of infant formula in China.

Fonterra will also work with Beingmate to evaluate mutual investments in dairy farms in China.

Fonterra Chief Executive Theo Spierings said the partnership between two leading dairy nutrition companies will be a game changer that will provide a direct line into the infant formula market in China, which is the biggest growth story in paediatric nutrition in the world.

“The infant formula market in China is worth about NZ$18 billion today and is expected to be worth NZ$33 billion by 2017.

This growth is driven by increasing urbanisation, higher disposable incomes, a preference for premium brands, and relaxation of the one child policy,” he said. foodbusinessafrica.com

PEOPLE

COMMODITIES

Danone’s CEO retires in management changes

World wheat production prospects for 2014/15 break record

FRANCE - Danone, the French leading food group, has appointed Emmanuel Faber as the new Chief Executive Officer (CEO) to replace the long serving Franck Riboud, who has been Chairman and CEO since 1996.

In the changes announced by the Board, the Chairman and CEO functions have been separated, with the Chairman’s duties strengthened. Franck Riboud will remain Chairman of the Board.

The changes take effect October 1, 2014.

Mr Riboud will however continue to play a critical role in the organisation “to ensure that Danone continues to benefit from Franck Riboud’s insights and indepth knowledge of its markets, corporate culture and business environment” with an expanded Chairman’s role, according to the company. The Chairman and the CEO will “work in concertation on major issues in Danone’s corporate life, which allow the Chairman to repre-

sent Danone in his contacts with leading stakeholders” the statement said.

Franck Riboud leaves behind a rich legacy, with the company he took over from his father in 1996 having gone through a transformation over the years.

In 1996, the company had nine key business units – including beer, sauces, biscuits, sauces, glass and pasta – which have been narrowed down to four – fresh dairy products, baby nutrition, waters and medical nutrition. The business had gross sales of US$28 billion in 2013.

“I joined Danone 33 years ago and have managed our day-to-day operations for over 18 years. During that time, our company has undergone incredible change and we have achieved the goals we set back in 1996. Today Danone is a truly global company, oriented toward emerging markets, realigned around a select number of promising businesses in which we are market leaders, and focused on pursuing growth”, Riboud said.

“Today Danone is a truly global company, oriented toward emerging markets, realigned around a select number of promising businesses in which we are market leaders, and focused on pursuing growth” Franck Riboud, Danone’s outgoing CEO

MARKETS

China to be second most valuable bakery and cereals market by 2018 CHINA - A new report by Canadean finds that the Chinese bakery and cereals market is not only the largest in volume, but is also set to become the second most valuable, expected to reach $47 billion by 2018. With only the US market worth more, China will be one of the most attractive bakery and cereals markets worldwide.

With the vast Chinese population, currently estimated at 1.35 billion, it is no surprise that China is such a huge foodbusinessafrica.com

market for bakery and cereals. However, the per capita consumption is still low and indicates room for further growth.

According to Canadean, the average Chinese only has 92 bakery and cereals occasions per year which is far lower than in Europe. The average German, for example, has 731 bakery and cereals occasions a year. Canadean further found that the Chinese prefer cakes, pastries and sweet pies, instead of bread and bread rolls which are popular in Europe.

US – The world’s wheat production prospects for 2014/15 is expected to break the 2013/14 records, rising 10.9 million tons this month to 716.1 million tons, according to the US Department of Agriculture estimates. Production outside the US is also expected to increase by 9.9 million tons.

Russia is projected to significantly its production by 6 million tons to 59.0 million, with wheat yields at the highest ever, 2008 being the previous record. Ukraine’s wheat production prospects have increased by 1 million tons this month to 22 million tons, driven by good weather conditions throughout the wheat-growing period.

Chinese wheat production has increased by 2 million tons to 126 million following the latest Government data, record figures in the crop and the yield. Chinese wheat yields have been growing steadily since 2002, increasing by 39 percent since, and are approaching the high level of the EU – USDA. LAUNCH

Coca-Cola Life debuts in Britain UK - Coca-Cola Britain has launched a new type of soda into the UK market. Coca-Cola Life contains a third less sugar and a third fewer calories than regular cola due to its blend of sugar and stevia leaf extract. The new cola has 36% fewer calories vs full calorie colas due to a sugar reduction of 37% and the use of stevia extract.

The new cola variant adds to other low calorie products sold by Coke in the UK which include Coca-Cola Zero and Diet Coke, providing consumers with an option of a mid-calorie product.

The stevia leaf extract used in the product is sourced from the stevia plant, which is native to South America. The sweetener is already being used by Coke Great Britain to sweeten Sprite (30% calorie reduction) and Glaceau vitaminwater.

The company has also undertaken calorie reductions in other brands, including Lilt, Oasis, Fanta and Dr Pepper which have been reduced by 56%, 35%, 30% and 30% respectively.

FOOD BUSINESS AFRICA | AUG/SEP 2014

9

AFRICA INSIGHTS GMO

POPULATION

GM’s potential in Africa impeded by ‘dysfunctional debate’

Africa to account for quarter of world population by 2050

AFRICA - Opportunities to enhance crop yields and reduce poverty in Africa are being lost because of a “polarised public debate” on the continent, according to a report released by international policy institute Chatham House.

Genetic modification (GM) research projects remain stuck at the field trial stage due to governments’ fears keeping the technology from African farmers, it says.

This “deadlock” of continual field trials has allowed African governments to appease both sides of the GM debate: proponents are pleased research is done, whereas opponents are satisfied that research has not led to products on the market, the report says.

“Part of the problem is that it is a very one-sided debate. Governments are not doing a good job of providing reliable information and data that contradicts the misinformation campaigns about GM. Politicians and policymakers are wary of stepping into the debate,” says author Rob Bailey, from Chatham House.

The report cites evidence from a survey of ongoing GM research and development projects in selected African countries by networking organisation the Forum for Agricultural Research in Africa: from 2010 to 2013 none of the surveyed projects had progressed from field trials.

“Many of the opponents of GM crops are not interested in engagement or understanding. They want to eliminate the technology altogether,” says Calestous Juma, an international development expert at Harvard Kennedy

10

AUG/SEP 2014 | FOOD BUSINESS AFRICA

School, United States.

“It is because they do not want to see any evidence that might lead to the adoption of the technology. They have made up their minds that biotechnology should be eliminated. The situation is more like war than it is like debate.”

In many African countries, the report says, governments face political damage for being perceived to be too pro-GM. Policymakers are reluctant to release biotechnologies due to fears of media campaigns or a backlash from civil society, it adds.

“Africa cannot afford to lose sight of the opportunity GM crops offer for feeding its people,” says Margaret Karembu, the director of ISAAA (the International Service for the Acquisition of Agri-Biotech Applications) AfriCenter, one of the three regional centres run by the knowledge transfer network.

“The risks of not adopting GM crops in Africa are much higher than [those on] other continents. One fundamental - and perhaps the most important - difference is the fact that Africa, unlike Europe or America, is faced by chronic food insecurity and malnutrition.”

Those interviewed in the report, including policymakers, scientists and farmers, argued that the “prohibitive politics of biotechnology in Africa are largely rooted in Europe” as the absence of a European consumer market for GM has discouraged African farmers, and NGOs campaigning against GM in Africa often have European links through affiliation or funding relationships.

AFRICA - Africans will count for a quarter of the world population in 35 years from now, a United Nations agency report has revealed.

The United Nations Children’s Fund (UNICEF) demographics report states that Africa will be home to two out of five children in the world by 2050 which will translate to 25 out of 100 people living in the world being Africans.

The global population projections indicate that by mid-century, Africa will be home to around 41 per cent of all the world’s births, 40 per cent of all global under-fives, 37 per cent of all children under-18 and 35 per cent of all adolescents.

The UNICEF report dubbed Generation 2030/Africa Report states that the future of humanity is increasingly African as today, 16 among 100 of the world’s inhabitants are African and based on current trends, within 35 years, 25 in 100 people will be African with this likely to continue to rise to almost 40 in 100 people by the end of the century.

Worldwide, Africa is the only region where the population is projected to keep increasing throughout the 21st century. Currently there are 1.2 billion people in Africa, more than five times the population in 1950. By 2050, Africa’s population will double, to 2.4 billion and eventually reaching 4.2 billion by the end of the century.

According to the Generation 2030/ Africa Report, high fertility rates and rising numbers of women of reproductive age mean that over the next 35 years, almost two billion babies will be born in Africa; the continent’s population will double in size; and its under-18 population will increase by two-thirds to reach almost a billion children.

Among the report’s most important findings is a massive shift in the world’s child population towards Africa.

Projections indicate that by 2050, around 40 per cent of all births, and about 40 per cent of all children, will be in Africa, up from about 10 per cent in 1950 – The Standard foodbusinessafrica.com

AFRICA INSIGHTS

MARKETING

Diageo launches bold new Guinness campaign for Africa AFRICA – Guinness maker Diageo has unveiled a bold new pan African campaign to bolster its marketing campaign in Africa. Dubbed #madeofblack, it is part of the global GUINNESS® Made of More platform, and shines a light on a movement being created by a new generation of Africans whose boldness cannot be contained and who are fuelling a new, progressive spirit of Africa. The campaign was launched via a five hour take over on MTV Base.

The commercial, conceived by AMVBBDO London with BBDO offices in Africa, and directed by Sam Brown, features a powerful compilation of African performers, artists and creatives who are filmed expressing their own #madeofblack story and attitude in their own individual way.

“Guinness is an iconic brand, famous for its extraordinary and inimitable marketing and #madeofblack is no different. This campaign is a celebration of an attitude that epitomises individuals

who aren’t afraid to truly express themselves. Through #madeofblack we will provide a stage for those who are an inspiration to others as they carve their own path with confidence, flair and boldness,” commented Mark Sandys, Global Brand Director, Guinness, The new campaign follows the

recent successful global launch of the new look Guinness Foreign Extra Stout bottle and will be supported by strategic digital, outdoor, radio and print advertising, which comprises a series of hand painted, impactful designs of key #madeofblack ambassadors sharing how they are #madeofblack.

EXPANSION

Nampak plans African expansion SOUTH AFRICA — Nampak, Africa’s biggest manufacturer of beverage cans, plans to expand in Nigeria through acquisitions that may exceed its largest takeover deal to counter slowing growth in its main South African market.

“The growth opportunity to take us to the next level of size can only come from Africa. There are sizable opportunities in Nigeria. I am bullish on Ethiopia. Ghana we need to look at quite closely.” CEO Andre de Ruyter was quoted by Bloomberg.

Ethiopia is a target for expansion in East Africa due to its population of about 92-million, while Ghana is the most prominent untapped market in the west, CEO Andre de Ruyter added.

In South Africa, which accounts for 70 percent of sales, the strategy is to protect dominant market share and reduce costs.

Nampak, which supplies firms from Coca-Cola to SABMiller, is expanding its plants in sub-Saharan Africa to benefit from a consumer market of 900-million people that spends at least 20 percent of their earnings on food and beverages.

The firm bought Alucan, a Nigerian packaging company, for R3.3bn in its biggest deal yet last year and is studying an option to buy a plastics maker in the continent’s largest economy.

Companies in Africa are using the advertising potential of cans to market products and promotions, while the growing popularity of beer is also driving growth, Mr de Ruyter said.

The company already has operations from Angola and Botswana to Kenya and Zimbabwe.

The company reported first-half sales growth of 12 percent this year, including a 9 percent increase in South Africa and a 24 percent rise in the rest of the continent. foodbusinessafrica.com

FOOD BUSINESS AFRICA | AUG/SEP 2014

11

WESTERN/NORTHERN AFRICA INSIGHTS FOOD SAFETY

Fast food industry in Nigeria fetches N230bn in 2013 NIGERIA - Following growing purchasing power in the country and increased private equity investments, the Nigerian fast food industry experienced a spike in growth in 2013, grossing a total of N230 billion (US$1.4 billion) in turn over. This was up from the N200 billion (US$1.2 billion) the sector grossed in 2012, according to a report by Agusto & Co. The report projects a 15 per cent growth for the fast food industry in 2014.

“We expect the fast food industry’s revenue to grow by about 15 per cent to N265 billion (US$1.6 billion) in 2014 as new restaurants are opening (both local and indigenous) to meet the demand of the growing population of the fast food target market which include individuals within the 25-45 years bracket,” said the report.

Dubbed, “2014 Industry Reports,” the report revealed that one of the problems facing the fast food industry is over reliance on imported goods.

“Most fast food raw materials with the exception of perishables such as vegetables are imported. However, the supply of these food items in Nigeria is restricted due to the ban on importation on some of these items as well as high tariffs/duties on others in a bid to develop local markets,” the report stated.

It added: “In 2012, the Federal Government announced a ban on rice imports effective 2015, in addition a levy on rice (brown, semi and wholly milled rice) was set at 100% effective 31 December 2012, whilst others have import bans such as pork, beef, fruit juice in retail packs, live or dead birds

including frozen poultry.”

This, the report added, has led to high prices for the Industry’s raw materials.

“We estimate that raw materials (food & beverage) made up about 45% of the industry’s costs, followed by property (rent, maintenance & depreciation) at 18 per cent and energy at 15%.

In spite of these challenges, it stressed that the industry remains resilient with operational efficiency and service delivery as key to the fast food restaurants’ ability to generate revenue in a highly competitive business. – This Day

MARKET

FINANCIALS

Foreign whiskey brands eye Nigeria’s $2.84bn alcohol market

Cadbury Nigeria profit drops 50%

NIGERIA - As Nigerian elites develop increasing taste for alcoholic beverages, more foreign alcohol brands are eyeing the market valued at $2.84 billion, according to an International Wine and Spirit Research (IWSR) report.

Ashok Capoor, president, strategy, United Spirits Limited (USL), manufacturers of McDowell Scottish whiskey, a new entrant into the Nigerian market, says about 13 million cases of whiskey are sold in the Nigerian alcoholic beverages market, which is growing at 6 to 10 percent per annum.

The spirits market, comprising whiskey, brandy and vodka, was estimated at $2 billion in 2007 and has increased by 6 percent every year since 2007. Imported brands account for $500 million of the spirits market.

The premium spirits segment holds 5 to 10 percent of the total alcoholic beverages market, with a growth of 18 to 20 percent. Research indicates that 12

AUG/SEP 2014 | FOOD BUSINESS AFRICA

premium spirits are on the rise with a steady retention and trial rate.

Growing purchasing power of upper class consumers and the aspirational spending habits of the growing middle class, whose premium drink has been beer and champagne, explain the increase in demand for more expensive foreign brands.

Industry analysts say the burgeoning Nigerian market has been the attraction for foreign labels which are flocking the country.

In the entire Nigerian alcoholic beverages market, Diageo has the largest market share of imported alcoholic beverages with its product line which includes Johnnie Walker, Smirnoff vodka and Bailey’s Irish Cream.

According to Capoor, McDowell’s No.1 whisky has already clocked nearly half a million cases of sales in a single year in Nigeria, making it the largest whisky brand in the country. – Business Day

NIGERIA - Cadbury Nigeria Plc recorded a 50 percent profit drop in half year 2014 results, as top-line performance dwindled, according to a report in Business Day. The company’s revenue fell by 12 percent to N15.25 billion (US$93m) from N17.43 billion (US$107m) in the same period of the corresponding year 2013.

Profit before tax reduced by 50 percent to N1.79 billion (US$11m), versus N3.58 billion (US$22m) in 2013.

Analysts had envisaged lower half year performance for firms in the FMCG space. They based their predictions on the insurgency in the North, has been hampering distribution network of firms in the sector; and bad roads, which culminate in high distribution costs for firms like Cadbury; and erratic power supply Net margin, a measure of efficiency and profitability, shrank to 8.22 percent in half year 2014, compared with 14.41 percent as of HY 2013. foodbusinessafrica.com

WESTERN/NORTHERN AFRICA INSIGHTS

INVESTMENT

Top Egyptian miller receives GrainCorp investment EGYPT - Leading Australian grain miller GrainCorp has expanded its relationship in Africa by buying into one of its key international customer, Five Star Flour Mills. The deal worth nearly US$10 million, gives GrainCorp a 10% stake in Egypt’s biggest miller.

Executive Chairman and Interim CEO of GrainCorp, Mr Don Taylor, said there was a strong strategic rationale for building upon GrainCorp’s relationship with one of its largest international customers. “We have been working in close partnership with the Management team at Five Star Flour Mills over a number of years, and have been in discussions for some time about how we can strengthen our relationship for the

benefit of both our companies and the growers who use our network,” Mr Taylor said.

The stake provides GrainCorp the right to appoint a director to Five Star’s Board.

“Five Star is Egypt’s leading private flour miller and one of our longeststanding customers. GrainCorp’s stake in Five Star is in line with our stated strategy of providing a direct connection between Australian grain growers and the processor of that grain. It also maintains GrainCorp’s firm focus on playing to its strengths, the storage & handling, marketing and processing of wheat.”

Chairman & Managing Director of Five Star Flour Mills, Mr Mahmoud el

FINANCIALS

Dangote Sugar refinery records US$63m halfyear profit NIGERIA - Dangote Sugar Refinery Plc has reported a profit before tax of N10.3 billion (US$63m) for the half year ended June 30, 2014, showing a decline of 5.5 per cent compared to N10.9 billion ((US$67m) recorded in the corresponding period of 2013.

Details of the results made available by the Nigerian Stock Exchange showed that the company ended the period with revenue of N49.6 billion (US$305m), indicating a decline of 9.8 per cent from the N55 billion (US$338m) recorded in 2013.

The decline in revenue was attributed to a two-week plant upgrade which took place in May and gas supply disruptions for a couple of weeks in June.

The company improved on its operational efficiency as cost of sales, distribution and other expenses declined as well.

Consequently, profit before tax fell to N10.263 billion (US$63m) in 2014, as against N10.859 billion in 2013 (US$67m).

Profit after tax witnessed a lower decline of 2.6 per cent, falling from N7 billion (US$43m) to N6.83 billion (US$42m) – This Day foodbusinessafrica.com

Shorbagi said: “We are very pleased to consolidate our positive relationship with GrainCorp and to have our supplier of choice firmly on board. We have proudly built our business around Australian wheat in particular and are a major buyer of the high quality hard, white wheat grown in eastern Australia.”

Five Star Flour Mills is Egypt’s leading flour miller and one of the most recognised names in the milling world.

It also owns a dedicated berth at Adabiya port in Suez, fitted with a grain unloader capable of processing 600 tons/hour from Panamax size vessels and grain silos with storage capacity of 125,000 metric tons.

Giving new life to fruit...

Suppliers of: h Fruit concentrates & pulps h Blends & compounds h Technical assistance h Clear fruit juice concentrates & NFC h Canned fruit h Fruit sweets h Citrus cells h Dried fruits h Citrus oils

Factory Locations: • Paarl: Western Cape • Malelane: Mpumalanga • Hoedspruit: Limpopo • Kirkwood: Eastern Cape • Citrusdal: Western Cape • Nelspruit: Mpumalanga

Enquiries: FOOD BUSINESS AFRICA | AUG/SEP 2014

13

Tel: +27 (0)13 790 3015 • Cell: 27 79 577 8941 email: sales@capefruits.co.za • website: www.capefruits.co.za

WESTERN/NORTHERN AFRICA INSIGHTS M&A

FINANCIALS

FrieslandCampina takes over Olam dairy in Ivory Coast

International Breweries Q1 profit surges 32%

IVORY COAST - Dutch farming cooperative Royal FrieslandCampina, one of the five largest dairy companies in the world, is in the process of buying the Ivory Coast dairy businesses of Singapore’s Olam International.

The acquisition fits into the dairy plan to boost activities in emerging markets in Africa and Asia, and counterbalance more limited long-term growth in developed markets.

The dairy business and production facility will become part of the FrieslandCampina Europe, Middle East & Africa business group In a separate statement, Olam said FrieslandCampina was paying $18.7 million cash for the business and $6.3 million for the right to use Olam’s “Pearl” trademark in certain African countries.

The acquisition includes a dairy production facility in the Ivorian commercial capital Abidjan that employs 80 people. - Reuters

NIGERIA – SABMiIler-owned Nigerian brewery International Brewery Nigeria, saw its profit surge by 32.46 percent, for the first quarter ended June 2014.

Net income surged to N708.20 million (US$4.3m) from N534.0 million (US$3.3m) in the same period of 2013, while revenues for the period were up 20 percent to N5.21 billion (US$ (US$32m).

SABMiller the world’s second largest brewer by volume owns 72.9 percent of the Nigerian brewer.

“Compared with other Nigerian brewers, International Breweries appears to be continuing to gain market share,” said Olajumoke Okeowo, analyst with FBN Capital, a research and investment firm in an email note.

Net margin moved to 20.09 percent in 2014, from 18.20 percent last year.

Earnings per share (EPS) moved to 22 kobo in Q1 2014, from 16 kobo as of Q1 2013.

The industry has been hit by high operating costs from unstable power supply and bad roads culminating in spiralling distribution costs. Furthermore, barley, a major material used in the

manufacturer of beer, is imported, which makes it susceptible to foreign exchange volatility and thus spiking input cost.

International Breweries is aggressively swooping on the brewery industry with its market penetrating product “Hero” Lager beer. Hero is called Oh Mpa, meaning “Oh Father” among the Igbo speaking people of the country, because the bottles bear the rising sun of the Biafra flag, which brings memories of the civil war.

“The figures appear to confirm the view that the mid- to low-end segments of the market is faring much better,” said Okeowo – Business Day

MARKETS

Dairy leads Nigerian food sector with US$2.1 billion revenue NIGERIA - The dairy sector has emerged the second largest segment in the food and beverage industry in Nigeria with estimated revenue of N347 billion (US$2.1 billion) in 2013 and an estimated compounded annual growth rate (CAGR) of 8 per cent over the last three years.

A report by Agusto & Co. revealed that the milk segment is the largest in the industry and accounts for an estimated 61 per cent of the industry’s turnover.

The report showed that the dairy industry – which consists of six major market segments: milk, yoghurt, cheese, ice Cream, butter and infant formula has consistently exhibited oligopolistic characteristics with only a few dominant firms.

“FrieslandCampina remains the market leader with an estimated 30 per cent share of the Industry’s revenue; almost double that of its closest competitor.

14

AUG/SEP 2014 | FOOD BUSINESS AFRICA

Other dominant firms include Promasidor Nigeria Limited, Nestlé Nigeria Plc and PZ Nutricima. Operators in the industry have extensive distribution channels, strong foreign partnerships and enjoy strong product demand”, the report added.

Agusto & Co however noted that the industry is susceptible to the volatility in the price of raw milk powder, adverse movements in exchange rates, poor infrastructure and inconsistencies in government policies.

The report further revealed there is a wide gap between the harvested milk (local supply) in Nigeria and demand, which has resulted in a substantial importation of milk.

The report added that in 2013, demand for milk was estimated at 1.7 million tonnes, about 1.2 million tonnes in excess of domestic supply, which was estimated at 591,470 tonnes. Imported milk powder accounts for over 75 per

cent of the industry’s input.

The short shelf-life of milk and the absence of the required infrastructure to operate cold supply chain make it difficult to distribute fresh milk in commercial quantities, thus, limiting the development of local dairy farming.

“We expect the Industry to remain dependent on imported milk powder in the medium to long term as domestic milk production capacity continues to remain lower than demand,” it stated.

The agency said the industry recorded a marginal decline of 1.3 per cent and 1.7 per cent in gross profit and operating profit margins respectively during the year.

It however stated that the dependence on imported raw milk powders will continue to expose industry operators to volatility in global milk prices and considerable exchange rate risks - This Day foodbusinessafrica.com

EASTERN AFRICA

INSIGHTS

PRIVATE LABLE

INVESTMENT

Nakumatt branded sales hit US 22.5m in first year of in-house packaging

Pearl Capital Partners invests US2.4 m in Meru Greens

KENYA - Nakumatt Supermarkets generated about Sh2 billion (US22.5m) in sales fom its private label brands “Nakumatt Blue Label”, pointing to a potentially lucrative growth opportunity for the retailer.

About one year since launch of the Nakumatt-labelled brands that include sugar, wheat flour, maize flour, detergents and selected grains, sales made up about five per cent of the total Sh52.2 billion ($600 million) revenue generated in the financial year ended February 2014, the retailer said in an interview.

Nakumatt attributed the performance of the self-packaged goods to their relatively cheaper price compared to producer-branded goods, which makes them a favourite with Kenya’s pricesensitive shoppers.

“Our private brands Nakumatt Blue Label and Nakumatt Select are still edging

up the chain. We shall significantly expand the scope of our private brands,” said Nakumatt managing director Atul Shah in a trading update covering the last financial year.

The supermarket chain plans to increase the range of goods under the Nakumatt Blue Label as a strategy to win a bigger market share and fend off competition from rival retailers Tuskys, Naivas and Uchumi.

A survey of shopping behaviour carried out last year by research firm Consumer Insight found that the market share of in-store repackaged sugar in Kenyan supermarkets more than doubled from 7% to 18% as consumers became more price-sensitive.

A study by consulting firm Deloitte & Touché also notes that private label goods are the next frontier in the retail industry due to their price points – Business Daily

FOOD SAFETY

Minister sends meat firm bosses packing KENYA – Kenya’s Agriculture Cabinet Secretary Felix Koskei has sent home the entire board of the Kenya Meat Commission in a move aimed at restructuring the debt-ridden meat processor.

Over ten commissioners of Kenya Meat Commission and other officials have been sent home, leaving only the processor’s chairman on the board.

The only senior ranking official left on the board is KMC chairman, Mr Josiah Taraiya Ole Kores.

KMC has been going through a rough patch, with mounting debts owed to farmers and suppliers. The firm has seen foodbusinessafrica.com

frequent change in management, which have not seemed to change the fortunes of the meat processor.

The ministry has also advertised for international firms with experience in the design and construction of abattoirs to modernise its plant and machinery.

The revamping targets slaughter facilities to raise efficiency and output, upgrade the value addition units and the canning infrastructure.

The restructuring will also affect the enterprise resource planning system for meat and meat products with a view to improve accountability and traceability of products.

KENYA – A private equity fund Pearl Capital Partners has invested KSh 210 million (US2.4 m) in equity and debt that will enable Meru Greens establish a vegetable processing and canning factory in Machakos. The deal is meant to create a complete value-chain for their produce, in particular French beans, for the export market. It will also further enable Meru Greens to expand value addition operations of its fruit business, diversifying product lines and serving a wider market.

Meru Greens Horticulture Ltd is a supplier of fruit and vegetables to distributors and major retailers in Kenya.

At the official signing of the investment agreement, Wanjohi Ndagu, Partner with Pearl Capital Partners, remarked: “Meru Greens is a company providing a complete value-chain for French bean produce in Kenya. The success of this business model is fully anchored in providing a route to market for smallholder farmer horticulture produce. This investment clearly speaks to the growing demand for food globally and not only presents a compelling investment opportunity but also a generator of employment opportunities for the local community.”

Pearl’s investment in Meru Greens Horticulture Ltd is its seventh investment through the African Agricultural Capital Fund. The Fund aims to invest in a further 2-4 East African businesses operating in the agriculture sector within the next year. Since it was founded in 2005, the Pearl Group has made investments in more than 20 agriculturerelated businesses in East Africa with a total value exceeding US$ 25 million.

FOOD BUSINESS AFRICA | AUG/SEP 2014

15

EASTERN AFRICA INSIGHTS

BRIEFS Highlands water ventures into soda business KENYA - The makers of Highlands bottled water have diversified into production of soda, in what is set to raise competition in the industry currently dominated by Coca-Cola and PespiCo. The Nyeri-based Highlands Mineral Water Company is the latest firm to venture into manufacturing of soda, following in the footsteps of Bidco and Kevian Kenya who have also recently joined the lucrative sector.

Highlands, one of Kenya’s pioneers of bottled water, is now manufacturing three brands of soda — Cola, Lemon and lime, and Orange — which are available in 300ml, 500ml and 1.25 litre plastic bottles.

PEOPLE

Nestle Equatorial Africa region gets new CEO KENYA - Food maker Nestlé has hired Swiss national Cornel Krummenacher as chief executive for its Nairobi hub, which oversees the Equatorial Africa market.

Mr Krummenacher, a specialist in marketing and sales, succeeds Ian Donald who served a two-year term in Nairobi and has been posted as chief executive for Nestlé South Africa.

The incoming boss will be tasked with driving sales in the Equatorial African region (EAR) made up of 21 countries where Nestlé has four factories in Kenya, Zimbabwe, Angola and the DR Congo and more than 1,000 employees.

Mr Krummenacher, who took office on September 1, has been with Nestlé for more than 20 years and previously served in senior management positions

in Hong Kong, Switzerland and China. Nation

M&A

Nakumatt takes over Shoprite Tanzania

Kakira Sugar Works plans to produce ethanol fuel by 2016 UGANDA - Kakira Sugar Works Ltd., Uganda’s biggest sugar processor, plans to build an ethanol plant by the end of 2016 after it spent $75 million expanding cane-crushing and power operations over the past two years, according to the Daily Monitor.

The ethanol from the facility that will have capacity to produce 20 million liters annually, according to Kenneth Musinga, an assistant to the company’s general manager “Directors are discussing the design, possible equipment suppliers and costs, with plans for production to start by mid-December 2015,” he said. Officials visited India and China for advice on feasibility studies, Barungi said.

For the latest food industry news in Sub-Saharan Africa go to

www.foodbusinessafrica.com

16

AUG/SEP 2014 | FOOD BUSINESS AFRICA

TANZANIA – Kenyan retailer Nakumatt Holdings has completed the acquisition of South African retailer Shoprite’s Tanzania stores.

Nakumatt, the biggest retailer in the region acquired Shoprite’s stores in Dar es Salaam and Arusha in a KSh 3 billion buy-out.

“The opening of Nakumatt Mlimani

is a long held dream come true as we have been considering various avenues to establish our presence in Dar es Salaam and other parts of Tanzania since 2010,” said Nakumatt managing director Atul Shah in a statement, as the retailer opened its first store in Dar es Salaam.

EXPANSION

Weetabix to double Nairobi capacity KENYA - Weetabix East Africa Ltd is set to invest over Sh200 million in the expansion of its Nairobi factory, the UKowned cereal maker has said, reports the Business Daily.

The investment will increase the factory’s production capacity from the current 1,800 tonnes per annum to 3,600 tonnes.

Weetabix currently employs 165 people in its Nairobi operation, but the

management said the expected increase in staff count will be announced after completion of the expansion plans.

“We have embarked on expansion plan to double our production capacity by next year April as we look at extending our market share to other regional countries,” said chief executive officer of Weetabix Food Company UK, Giles Turrell. foodbusinessafrica.com

CENTRAL/SOUTHERN AFRICA INSIGHTS

CLOSURE

BIO-ETHANOL

Cadbury to close Botswana chewing gum plant

Mahtani Group to build $150m ethanol plant

BOTSWANA Chewing gum manufacturing company Cadbury Botswana has left 134 people jobless as the parent company, Mondelez International closed its manufacturing facility in Gaborone, reports Mmegi.

Mondelez said it had to focus its resources on larger scale manufacturing facilities where it can generate greater efficiencies to reinvest in growth. In the press statement, the company said the exercise is part of the company’s global transformation strategy to focus their snacking portfolio and reinvent its supply chain.

“The decision was taken as demand for pellet gum produced in Botswana has dropped over the years as there has been a shift in the gum consumer market towards a preference in slab gum,” reads the statement.

The Manager for corporate and government affairs Southern, Central and Eastern Africa at Mondelez International, Navisha Bechan-Sewkuran, said globally,

the business is focusing its portfolio and reinventing its supply chain. The products will be moved to the company’s facility in Poland, according to reports In April, Mondelez announced the closure of a small specialty chocolate manufacturing facility in Namibia.

Bechan Sewkuran However the company’s products will continue to be availbale in Botswana.

“We recently renewed our contract with a long standing local distributor to grow the commercial business in the country. As part of this relationship, we will explore opportunities to transform the environment from a predominately chocolate and gum retail environment to a total snacking retail environment,” said Bechan-Sewkuran.

Cadbury acquired South Africa’s leading chewing gum business from Botswana-based Dan Products in 2006, which was producing and selling Stimorol, Dirol Brands and Chappies.

PEOPLE

Nestle Zimbabwe Katsande bows out ZIMBABWE - Nestle Zimbabwe managing director Kumbirai Katsande is set to step down from the helm of the local unit at the end of September after a four-year stint.

The renowned business executive who was in his second spell with the company from horticultural group Ariston, presided over the company during its most challenging periods and is widely expected to retain his chairmanship role.

They said an expatriate has already been identified to take over from the outspoken Katsande.

During his tenure, Katsande presided over a $20 million investment into the refurbishment and upgrading of its cereals plant and the introduction of new products.

Nestlé operates a factory in Harare, producing milk powder and cereals for the local market. It has been present in Zimbabwe for over 50 years – Daily News

INVESTMENT

United Refineries gets $15m boost ZIMBABWE - Bulawayo-based fast moving consumer goods company United Refineries Ltd, says capacity utilisation has increased to 65 percent on cooking oils from as low as 30 percent boosted by a $15 million capital injection from a new investor.

Grindrod has invested more than $15 million into the business so far which has been channelled towards raw materials mobilisation and plant maintenance.

United Refineries is targeting to foodbusinessafrica.com

reach 80 percent capacity by year end.

“As for our production levels we are looking at 6000 tonnes per month of either cotton or soya that we are crushing,” said Mr Handisen Charumbira, UR sales and marketing manager.

New machinery has been acquired following the capital injection from Grindrod. Cooking oil has been the mainstay of the company and contributes about 70 percent of the company’s annual turnover – The Herald

ZAMBIA - Mahtani Group of Companies has partnered with Sunbird Group of the United Kingdom to develop a US$150 million bio-ethanol plant in Luapula Province.

Mahtani Group of Companies group chairperson Rajan Mahtani said the plant that will use cassava as its by-product in the production of bio-ethanol.

“Construction of the bio-ethanol plant is expected to start in November this year and the project is expected to create over 2,000 direct job opportunities and 5,000 indirect jobs comprising outgrower farmers,” he said.

“The significance of this project is that it is going to be the first project that will be using cassava to extract bio-ethanol for fuel and that will help in going green,” he said – Daily Mail M&A

Montana takes over Carswell Meats ZIMBABWE - Montana Meats has acquired a controlling stake in Masvingobased Carswell Meats in a deal expected to close once it clears the Competition and Tariff Commission.

Montana Meats will acquire 65 percent of Carswell Meats.

“I can confirm that Montana Meats and Carswell Meats filed a proposal before the Competition and Tariff Commission seeking authority for the merger, filed on Wednesday August 13, (as is required per the legislation),” Montana Meats managing director Mr Rob Duncan said.

Mr Duncan said both companies have not been trading profitably due to lower consumer purchasing power, rising operational costs and increased competition from both the informal sector and new players in the market.

He also cited low capacity utilisation as the other reason for the low performance.

“The merger would seek to make more efficient use of facilities, lower the operational costs, and improve profitability to acceptable levels,” said Mr Dun- can.

Formed in 1997, Montana Meats initially operated as a subsidiary of a live cattle auctioning company, Zimstock Sales – The Herald FOOD BUSINESS AFRICA | AUG/SEP 2014

17

WESTERN/NORTHERN AFRICA INSIGHTS EXPANSION

EXPANSION

GIL to expand Ndola edible oil plant

Alpha Omega Dairy to double milk production

ZAMBIA - A Ndola-based food-processing company is expanding its edible oil facility with an additional US$40-million multioilseed-crushing plant.

Global Industries Limited (GIL), which has been operational in Zambia since 2010, will set up the 1,000-metric-tonneper-day plant in Ndola to process edible oil from soybean, sunflower and cotton seed.

GIL supervisor Devender Kumar said the machinery for the processing facility will be coming into the country soon and the plant will be operational in April 2015.

Mr Kumar said the oilseed-crushing plant is expected to create 300 jobs to add to the existing 500 workers at its factory in Ndola which produces Rena and Champion edible oil brands from imported palm oil.

According to Mr Kumar, the board of directors have also decided to complete the backward integration by getting in the oil seed farming project, Global Plantation Limited (GPL) in Lufwanyama district.

NEW PRODUCT

Parmalat unveils K5 billion milk powder plant ZAMBIA - Parmalat Zambia Limited has commissioned a new five billion kwacha milk powder plant at its Mungwi road premises in Lusaka.

Speaking during the commissioning of the plant in Lusaka Parmalat Zambia Managing Director Mike Mallet says the investment in the new milk powder plant will see the company grow its business and help create jobs.

Mr. Mallet explains that the decision to set up the milk powder factory plant is aimed at producing for the region under bonded facility for exports.

He says this will include the production of milk powdered sachets with identified markets in the Democratic Republic of Congo, Zimbabwe, Ethiopia and Mozambique. – Lusaka Voice

For the latest food industry news in Sub-Saharan Africa go to

www.foodbusinessafrica.com

18

AUG/SEP 2014 | FOOD BUSINESS AFRICA

ZIMBABWE - Alpha Omega Dairy will in the next few months double milk production from the current 22 000 litres a day, an official said on Friday.

“We are expecting to double milk production in two ways; one we are breeding the current herd that we have and additionally we are going to import in calf heifers from across the borders of Zimbabwe,” group general manager

Stanley Nhari has said.

Currently Alpha Omega Dairy is producing raw milk on a daily basis of around 22 000 litres from 1 000 cows.

“But that is not sufficient for us. We need more milk because our products are in big demand countrywide. We were contemplating exporting our products but we would like to satisfy the local market first,” Mr Nhari said - New Ziana

M&A

Nampak acquires Hunyani, merges Zim units ZIMBABWE – South Africa-based packaging supplier Nampak has wholly acquire Zimbabwe Stock Exchangelisted packaging firm Hunyani Holdings (Hunyani) and merged it with two other local units in a share swap deal.

The Johannesburg Securities Exchange-listed group – already holding a 38.6% stake in Hunyani – has merged the unit with dormant CarnaudMetalbox Zimbabwe Limited (CarnaudMetalbox) and MegaPak Zimbabwe (Private) Limited (MegaPak), in which it has a 49 percent shareholding. Delta Corporation – about 22 percent owned by SABMiller – holds the other 51 percent in MegaPak. The new unit is has been named Nampak Zimbabwe Limited.

The deal is based on the acquisition

of the entire issued share capital of CarnaudMetalbox and MegaPak in exchange for the issue of new shares in Hunyani to both companies’ respective shareholders.

Incorporated in Zimbabwe in 1951, Hunyani’s diverse range of products includes folding and corrugated cartons, flexible packaging, sacks, bags and labels.

According to Nampak, the three companies were deconsolidated in 2007 as Nampak had lost control over the companies due to the threat of indigenisation, price controls and restrictions on the repatriation of funds from these entities to their holding companies outside Zimbabwe – Daily News.

EXPANSION

Distell’s stake in Kenyan business signals accelerated path in Africa SOUTH AFRICA – Africa’s largest producer of wines, spirits and ciders and ready to drinks, The Distell Group, has acquired a 26% stake in KWA Holding East Africa Limited (KHEAL), Kenya’s foremost spirits manufacturer, bottler and distributor.

According to the CEO of Distel, Richard Rushton, the KSH 860 million deal would give Distell access to the market for several leading brands.

“We are thrilled with our latest investment which comes at a time when the economic prospects across East Africa are highly promising,” said Rushton.

The acquisition is Distell’s latest in

a series of strategic direct investments on the African continent. Last month, the company unveiled a bottling plant in Accra, Ghana. It has also secured land in Nigeria and Angola for manufacturing plants, scheduled to come on stream next year.

Distell’s relationship with the Nairobi-based KHEAL dates back to 1998. Since then KHEAL has been producing, bottling and distributing several Distell spirits brands. The company produces and bottles Viceroy Brandy, Clubman Punch, Castle Brand Aperitif and distributes these along with Amarula, Drostdy-Hof and Cellar Cask, amongst others. foodbusinessafrica.com

PROCESS MANAGEMENT

OEE

Tracking OEE: Improving Productivity Through Short Interval Control In a typical day, a plant will produce a product according to a set plan in order to meet customer demand. In order to meet the customer demand while still ensuring that the plant produces cost effectively, a measurement system must be established to check performance and ensure that the plant runs within set targets. So what data do you check, and how do you do this tracking of data?

Tracking OEE Overall Equipment Effectiveness (O.E.E.) evaluates how effectively a manufacturing operation is utilized in regard to availability of the machines, the performance of the machines and quality of the product.

Perhaps the best method of tracking OEE ever designed is the Short Interval Control (SIC).

This is a factory-floor process for driving production improvements during the shift. Each shift is split into short intervals of time (about four hours), within which factory-floor employees use data collected during plant runtime to identify and implement improvement actions.

These improvement actions may be countermeasures to ongoing or emerging problems, or they may be actions to improve existing production.

Since SIC encourages teams to work together to achieve regular, incremental improvements to the manufacturing process, it can be described as a type of Kaizen process.

Implementing SIC Meetings SIC is implemented as a series of short (five to ten minute meetings), focused line-based reviews carried out every two to four hours by front-line teams to review losses and to identify actions that will improve performance in the next interval. SIC is intended to accelerate the pace of improvement and places responsibility and ownership of the production process on the hands of operators and factory floor employees. It also provides them with greater autonomy and responsibility for how the equipment runs as it provides instant feedback through visible and measurable results.

Prerequisites of a Successful SIC Meeting: • Focused team of three or four persons – Operator, technician, supervisor.

• Time specific meeting – Must never be longer than 10 minutes.

This ensures the team quickly gets back to operations and their absence therefore does not affect productivity.

• Participants must be empowered to take action where necessary.

• Must be on the factory floor and carried out as a stand-up meeting.

• Visualized actions in the format of an SIC board.

SIC Meeting Agenda SIC meetings are focused on identifying one or more actions that will make the biggest difference to production during the next interval.

They consist of three parts; Look Back In the first part of the SIC meeting, look back at the previous interval for insights that can be applied to the next interval. In practical terms, identify losses from the previous interval and brainstorm countermeasures.

ABOUT foodbusinessafrica.com

Look Forward In the second part of the SIC meeting, look ahead to the next interval to identify events that may adversely affect production. In practical terms, look for changing conditions such as changeovers, shift handovers, or material changes, and brainstorm preventative countermeasures (typically ways to prepare in advance).

Action In the third part of the SIC meeting, prioritize ideas and select a small set of specific actions to implement during the next interval. Think of actions as something that will fix, stabilize, prepare, or improve productivity.

SIC Actions Actions are implemented by the factory floor team during the SIC interval, with the goal of maximizing production. Actions that cannot be completed within the interval or that require additional resources are escalated for review outside of the SIC process (to supervisory or managerial level).

Benefits of Short Interval Control In the short term, Short Interval Control is an effective tool for improving OEE with minimal capital investment. It does require an investment in training though.

In the long term, Short Interval Control helps to create a culture of continuous improvement, where operators are actively engaged in suggesting and implementing improvements on an ongoing basis.

Sustaining SIC Progress: In order to create a sustainable process there’s need for the management to periodically audit the review meetings to help guarantee the success of a program that will continually drive improvements in production performance, and also help ensure that the program remains effective.

The writer, Philip Martin Mugo, is a Productivity and Lean Management Consultant.

You can reach him at mugophilip@yahoo.com FOOD BUSINESS AFRICA | AUG/SEP 2014

19

NEWS ANALYSIS

Why Danone’s buy of Brookside will change the dairy sector in Africa The news of Danone’s recent buy out of a 40% stake in Brookside Dairy, the biggest dairy in Eastern and Central Africa, must have come as a surprise to many.

For a number of industry watchers the writing was on the wall, for the region’s food and beverage industry is increasingly standing out as a good pick for investment, either by private equity firms or by bigger multinational corporates, as outlined in our cover story, Why Food Multinationals are Coming to Africa, in our June/July issue of this magazine.

In order to appreciate the effect the Brookside buy will have on the dairy industry in the region, it would be critical to know the kind of company Danone is and their business around the world.

Danone – the giant Danone is a French conglomerate with a rich history. Started in Spain in 1919, the group is present in over 140 countries with sales of Euro 21 billion (about US$27.5 billion) in 2013.

Danone employs about 100,000 people and serves over 900 million customers around the world, according to its website. It is critical to note that the company already generates over 60% of its turnover outside Europe. The group operates four main business divisions: fresh dairy, baby nutrition, waters, and medical nutrition. The company owns some of the world’s leading brands including Evian water, Activia yoghurt and Actimel custard, brands that are quite common in a number of African countries, in addition to its baby food products including Cow & Gate infant nutrition products.

The company prides itself in its research and development activities, spending over Euro 275 million (US$360 million) in R&D in 2013, and is a pioneer in driving nutrition research through its 2 development centres and over 1455 scientists. The company notes in one of its websites that together with independent labs it has ‘conducted research on the beneficial effects of probiotics, including those of Bifidus Regularis® (Bifidobacterium lactis DN173 010), the exclusive probiotic yogurt culture found in Activia’, the company’s brand of probiotic yoghurt that is famous around the world.

Emerging markets take precedence in growth Emerging markets are vital for Danone’s present and future business prospects. Infact, the group derives 60% of its revenue outside its EU home market, with11% coming from Russia, its number one country in terms of sales. The company has also 20

AUG/SEP 2014 | FOOD BUSINESS AFRICA

invested heavily in China in recent years through their joint venture with Mengniu in a deal where they combine their yoghurt assets in the country.

The company axed some 900 jobs in February 2013 in Europe in a bid to improve its performance in the region. In June this year the company announced that it is planning to close three dairies in Europe due to stagnant sales.

According to its website, “the Group plans to focus on India and Africa in the next decade. They have a lot of potential”.

Danone in Africa As growth in Europe falters and even in some cases declines, the company has over the years trained its eye on growing markets outside the EU, with Africa receiving a fair share of its investments.

With the investment in Brookside, Danone has achieved a feat that no other dairy has done so far: presence in the key northern, southern, western and eastern regions of Africa.

The company is a major player in South Africa where it owns 100% of a fresh dairy products and desserts business. The company also owns 70% of Mayo, a local yoghurt drinks company. In West Africa it co-owns Fan Milk West Africa with the Abraaj Group, the stand-out deal in the dairy industry in Africa for 2013. The Fan Milk deal enables the dairy giant to cover almost the entire West African market from Nigeria to Ghana and other countries.

In North Africa the company owns the majority of the shares in the Moroccan dairy Centrale Laitière, with the company celebrating its 60th year in the country this year; in Egypt the company bought into a local dairy dairy in 2005; and the group has strong business partnerships in Algeria and Tunisia. foodbusinessafrica.com

AFRICA YOUR FOOD INDUSTRY EMPLOYEE RECRUITMENT PORTAL

Brookside: which way forward for Danone?

The Brookside buy provides Danone with the opportunity to achieve regional domination of the eastern and central regions of Africa. It is a known fact that Brookside has had regional growth ambitions outside its key Kenyan market into Uganda, Tanzania and Ethiopia – bigger than the occasional delivery into these markets.

The deal can enable both partners to achieve the regional growth plan, with Danone providing the financial muscle and scale for Brookside not only to enter new markets through greenfield investments but also direct buyouts of existing players in these key growth markets.

It is expected that some changes in strategy might have to be done at Brookside as Danone places the business in the Danone way of doing things. These could involve direction on new products, marketing strategy and policies on compliance etc.

With the addition of Brookside and the eastern African market under its wings, we are confident that the dairy industry is looking into a period of major realignment in the next five to ten years.

The Danone deal shall also awaken its competitors to move in and grab the opportunities in African dairy sector before it becomes too late.

foodbusinessafrica.com

Sourcing for the right staff with the requisite qualification and experience can be a daunting task to a number of small to medium scale manufacturers. Even the bigger companies struggle sometimes to get the right people.

At FoodWorld Media Ltd, we provide an unrivalled reach to the professionals in the food and beverage industry in Eastern and Central Africa. Be they entry level professionals or managers with several years’ experience, we can shorten your path to getting the right person, at a fraction of the cost and time We recruit for the following: • Production and process management • Quality assurance and control • Research & Development • Engineering • Quality systems/Food Safety/Auditing • Supply chain • Other related professions

Powered by:

Contact us with your requirements and let’s discuss how we can help you FoodWorld Media Limited.

P.O. Box 1874-00621, Village Market, Nairobi, KENYA Tel: +254 20 8155022; Cell: +254 725 343932 Email: info@foodbusinessafrica.com; FOOD BUSINESS AFRICA | AUG/SEP 2014 21 Web: www.foodbusinessafrica.com.

COCA-COLA UPS AFRICAN INVESTMENTS AS COMPETITION CREEPS IN

22

AUG/SEP 2014 | FOOD BUSINESS AFRICA

foodbusinessafrica.com

SPECIAL REPORT

T

he African continent provides probably one of the best opportunities for the packers and processors of soft beverages in the world. From Coke to Pepsi, the two beverage giants, to local players, the region is poised for aggressive growth in the near and long term.

Commenting on the performance of the soft drinks in Nigeria in 2013, Euromonitor, a research company, noted that “improved performance was largely due to positive population growth, with younger consumers in particular demanding novel products, as well as rising disposable incomes, an increase in formalised employment and urbanisation”. These factors are the main drivers of consumption of soft drinks in the rest of Africa as well.

According to a report by UNICEF, by 2050, a quarter of the world’s population will be living in Africa, providing manufacturers of beverages with the growth potential they do not have in other parts of the world.

COKE BUILDS WAR CHEST An announcement by Coke during the U.S.-Africa Leaders’ Summit in the US in August this year that the beverage giant was planning to invest US$5 billion in Africa by 2020 is a further boost to the African Rising story.

Coke announced that the company, together with its bottling partners, would add a further US5 billion on top of the earlier commitment to invest US$12 billion in the continent, making its total investment commitment to Africa to reach US$17 billion by 2020.

The investment will “fund new manufacturing lines, cooling and distribution equipment and production; and support key sustainability initiatives and programs focused on safe water access, sustainable sourcing, women’s economic empowerment, community well-being and operational efficiency improvements” according to Coke.

“As an organization that has been part of the economic and social

AFRICA

fabric of Africa since 1928, we and our local bottling partners have seen, first hand, the great promise and potential of this dynamic, growing and vibrant continent,” said Muhtar Kent, Chairman and CEO of Coke.

“Consumer spending, already rising is expected to boom between now and 2030, reaching $2.2 trillion per year. That’s more than three times the $680 billion spent by Africa’s consumers in 2008”, added Kent.

The company intends to launch Source Africa, an initiative to secure more consistent and sustainable local ingredient sourcing for its products from within Africa. This will be done in partnership with the New Alliance for Food Security and Nutrition and Grow Africa.

Source Africa will initially focus on sustainable mango and tea production in Kenya; citrus, mango and pineapple production in Nigeria; and mango in Malawi, and could be expanded in future to Ethiopia, Senegal, Tanzania and Mozambique.

“Even as we see tremendous growth potential in Africa, we know that the strength and sustainability of our business are tied directly to the strength and sustainability of the African communities we proudly serve.”, added Mr Kent, as he also announced that The CocaCola Africa Foundation will expand its Replenish Africa Initiative (RAIN) through 2020 to support pan-African safe water access and sanitation programs for an additional 4 million African people.

AFRICAN GROWTH BRINGS IN COMPETITION The African continent is important to Coca Cola as it grapples with stagnant sales in North America and other parts of the world. Africa, which contributes 6-7% of the group’s revenue, is expected to double its contribution to the bottom line in the next decade, according to William Egbe, the head of the South African unit.

The company’s presence in nearly all the 53 countries of the continent, including Somalia is enviable According to an article in Bloomberg BusinessWeek titled Africa:

EY

foodbusinessafrica.com

FOOD BUSINESS AFRICA | AUG/SEP 2014

23

Photo courtesy| marhaba.com.qa

Image Courtesy: www.thedrum.com

CONTINUED ON PAGE 24

SPECIAL REPORT AFRICA

LOCAL PLAYERS CASH IN AS WELL It was quite inconceivable just a few years ago to imagine facing up to Coke in many African countries. This is beginning to change in many African countries.

From Nigeria, Uganda to Kenya, local players are beginning to be noticed.

Beginning with Tanzania, the last few years has seen the introduction of the Azam brand of carbonated soft drinks (CSDs), in addition to their Azam brand of juices and water.

A new entrant in the CSD market is METL Group’s A-One Products and Bottlers Ltd with their Mo brand following a reported US$48 million investment.

In Nigeria, “innovation in the Nigerian soft drinks industry has been led by local companies, who seem to be teaching the established players, such as Coca-Cola, how to adapt to local Nigerian conditions”, according to Euromonitor. “The La Casera Co. Ltd’s La Casera brand has rapidly established a name for itself in carbonates”, adds Euromonitor, with its newly-launched apple flavour proving popular. Other players include Chi Nigeria Ltd, which strongly leads the juice category and Cway Food & Beverages Co Nig Ltd, it notes.

In South Africa, “smaller manufacturers continue to put pressure on dominant companies” while private label development continues to influence competition in the country, according to Euromonitor.

Soda King, a South African beverages company that operates a franchising model in Africa, has also made some in roads in the continent, introducing its Soda King, King Cola and Aqua King brands into a number of African

24

AUG/SEP 2014 | FOOD BUSINESS AFRICA

countries. South Africa, Senegal, Madagascar, Malawi, Zambia and Somalia are listed by the company as countries where they have introduced their products.

In Uganda, over the last few years, the number of entrants into the CSD category has grown with Riham brand, owned by Hariss International, the most prominent soda after Coke and Pepsi. Another new entrant in the Uganda market is Fizzy Soda.

The Kenyan market that has been Coca-Cola territory for decades is beginning to stir with expected entry of new entrants into the CSD market. Bidco Oil Refineries, the region’s biggest oil refiner, has just announced a KSh1.7 billion (USD19 million) investment in a new factory it is building in Thika, Kenya that will produce a range of CSDs, non-carbonated drinks and water.

Kevian Kenya Ltd’s foray into the CSD and juice market in Kenya has been outstanding, riding on its popular Afia and Pick n Peel brand juices. The company has recently announced a KSh3 billion (USD34 million) investment in its factory, which enabled it to introduce its Afia branded CSD products which include Afia Cola, Afia Malt and Afia Orange.

Highlands Mineral Water Company has also recently joined the CSD race with its Club soda brand. The company, best known for its Highlands brands of water and drinks, has entered the market with its CSD brands having a recommended retail price of KSh40 (US45 cents) compared to Coke’s KSh55 (US62 cents) for the 500 ml pack.

foodbusinessafrica.com

SPECIAL REPORT AFRICA

Pepsi makes a return to Africa Coke’s main rival in the soda business Pepsi has been making a comeback into the continent in the last 20 years including entries into South Africa, Kenya, Uganda, and Zambia and is also present in Nigeria and Ghana. Through its partnership with Varun Beverages Pepsi intends to grow into a number of southern and northern African territories in Africa, facing off with Coke, who have probably been in these territories for decades. In Zambia Varun is building a US$15 million plant, in addition to its Lusaka plant which was opened just 4 years ago, in Kitwe. It has invested US$30 million in the Lusaka plant, says the head of the Zambian and Mozambican business, Krishnan Shankar, according to African Business review.

Despite having faced off in many territories around the world, the return of Pepsi will be fought using different strategies as both giants try to emerge victorious in Africa. For now Pepsi seems to use the pricing strategy as its market entry arsenal.

The company pulled out of the Kenyan market in the 1970s, only to make a comeback with a US$28.5 million manufacturing facility in 2013. This time round it seems Pepsi will ensure it remains in the Kenyan market in the long haul, as it has done in Uganda and Tanzania, chipping away at Coke’s market dominance, if its performance in the two foodbusinessafrica.com

Image Courtesy: coca-cola

Coke’s Last Frontier, Africa offers the best opportunity for Coke to grow into the future due to the company’s already dominant position (it holds 29% of market share in Africa and Middle East) and due to the fact that other growth markets like China and India, are already crowded with local brands like Wahaha in China or competition from its rival, Pepsi.

While Coke takes the lion share of the continent’s soda consumption, it is beginning to emerge that there is a resurgence of Pepsi in the continent and the rise of smaller players in the market, eating into the pie that Coke would very much like to have on its own.

countries can be replicated in Kenya. The company hopes that its pricing strategy, selling an extra 50ml of soda at the same price as Coke, will lead to consumers switching from Coke to its brands.

Pepsi is also a significant player in Ethiopia through Moha Soft Drinks Industry, where it is building a new bottling plant 780 km north of Addis Ababa, to add to its seven plants.

The group is also a major player in Nigeria, where it’s Pepsi, Mirinda, Aquafina and other brands are packaged in 9 bottling plants in the country.

With the group amassing 13% of its net revenue from its Asia, Middle East and Africa region, “Africa is the new Asia,” Sanjeev Chadha, head of PepsiCo’s operations in the Middle East and Africa.

Coke not taking the heat lying down The US$17 billion investment announcement

by Coke in Africa is a big indicator that Coke is not willing to cede ground on its dominant position in the continent. Having spent US$5 billion in the five years to 2012 in Africa, Coke is ramping up the dollars to build extra capacity and increase its local sourcing component of raw materials from the continent through the Source Africa initiative, which will boost the programs it has had in some African countries.

Coke’s recent and planned investment is spread across the breadth of the continent, much more than any other player. The company continues to invest in capacity, route-to-market and supply chain initiatives to ensure that even as other players come into the market, its position is maintained.

The beverages market in Ethiopia is “growing insanely”, according to Brooks Washington, principal of business development fund Roha Ventures, who are building a glass manufacturing plant in Addis.

This is where Coke last year commissioned a US$20 million refurbishment and the installation of a returnable glass bottling line at its Dire Dawa plant to serve its growing consumer base.

According to Curt Ferguson, CocaCola’s Middle East and North Africa President, Egypt one of Coca-Cola’s key anchor market given the country’s attractive population size.

Coke has announced its intention to spend $500 million in investment in Egypt over the next three years including building a $100 million fruit juice plant and a new plant to bottle sparkling drinks and water.

The company has recently invested KSh 1.2 billion (US$14 million) in Kenya in a PTE bottles production plant as it leverages on on-the-go packs to drive volume and margins.

And the company is not taking new entrants lightly. In Uganda, where the entry of Riham soda almost upset the giant’s plans, Coke has been forced to match prices offered by the local player, while also launching a 350ml pack to compete with the 320 ml pack offered by Riham.

In Rwanda, the giant has just commissioned a new bottling plant that nearly doubles its capacity. These and many more investments will ensure that Coca Cola maintains its lead in Africa even as other players jostle for space.

FOOD BUSINESS AFRICA | AUG/SEP 2014

25

SORGHUM ANCIENT GRAIN WITH GREAT POTENTIAL IN AFRICA

S

orghum is the fifth most important cereal grain after rice, maize wheat, and barley, which are the world’s most important grains. Though its production falls much lower than the ‘Big Five’, with the world producing 60 million tonnes annually, it is still the world’s leading minor grain crop, according to the UN Food and Agriculture Organisation (FAO).

It is important to note that even in the US, sorghum is the third most important cereal crop.

Africa produces about 20 million tonnes of sorghum per annum, about one-third of the world crop. Sorghum is Africa’s second most important cereal in terms of tonnage. It is the only viable food grain for many of the world’s most food insecure people. In deed 60% of total sorghum production is produced in developing countries, with Nigeria having the reputation of the biggest producer of sorghum in the world.

Sorghum, having originated in Africa, has great potential in Africa because it performs well in arid and semi-arid areas and requires less moisture than maize. The crop is uniquely adapted to Africa’s climate, being both drought resistant and able to withstand periods of water-logging.

Sorghum has been an important staple crop in Africa, Central America and South Asia where it remains a principal source of energy, protein, vitamins and minerals.

Nutritional Benefits of Sorghum Sorghum is about 70% starch, hence is a good energy source.

Sorghum starch does not contain gluten. This makes it a possible grain for those who are gluten sensitive.

Proteins are the next main constituent of sorghum after starch. However, the essential amino acid profile of sorghum protein is claimed to depend on the sorghum variety, soil and growing conditions.

Sorghum’s nutritional profile includes several minerals.

Sorghum is a good source of B-complex vitamins. Some varieties of sorghum contain β-carotene which can be converted to vitamin A by the human body. Some fat-soluble vitamins, namely D, E and K, have also been found in sorghum

26

AUG/SEP 2014 | FOOD BUSINESS AFRICA

grain in detectable quantities. The specific quantities of some of these nutrients in 100g of sorghum are shown in Table 1 below: Several studies are available on improving the nutritional value of sorghum (especially protein content ad digestibility), according to Dr Calvin Onyango of the Kenya Industrial and Research and Development Institute (KIRDI).

TABLE 1: WORLD’S SORGHUM PRODUCTION BY COUNTRY, IN MT, 2010 RANK COUNTRY PRODUCTION (METRIC TONNES) 1 USA 9,144,000 2 Mexico 7,000,000 3 Nigeria 6,500,000 4 India 6,000,000 5 Argentina 4,800,000 6 Ethiopia 4,000,000 7 Sudan 3,800,000 8 China 2,800,000 9 Brazil 2,400,000 10 Australia 2,050,000 Source: US Department of Agriculture: 2014 Estimate figures

Utilisation Most of the sorghum that is produced in Africa is used as food.

Traditionally, products made from the grain include various types of gruel, meals and beer. The products are made using technologies such as drying, malting, roasting, milling, and fermentation.

Various African communities have traditional foods made of sorghum. Sorghum meal is widely eaten in Central to Eastern and Southern Africa in the form of a stiff porridge and is called pap, ugali or posho. It is also used widely in preparation of porridge for the whole family.

In Ethiopia, sorghum is fermented to make injera, a flatbread, and in Sudan it is fermented to make kisra.

Traditionally, sorghum has been used to make various types of alcoholic and non-alcoholic beverages. Obushera is foodbusinessafrica.com

SPECIAL REPORT SORGHUM

a common non-alcoholic Ugandan gruel made from malted finger millet and/or sorghum.

In southern Africa, sorghum is used to produce traditional beer. This is also widely practiced in other parts of Africa.

Sorghum beer is known by many different names in various countries across Africa, including burukuto (Nigeria), pombe (East Africa) and bil-bil (Cameroon).

TABLE 2: NUTRIENT PROFILE OF 100G OF SORGHUM NUTRIENT AMOUNT Energy (kJ) 1419 Protein (g) 11.3 Fat (g) 3.3 Carbohydrates (g) 75 Fiber (g) 6.3 Sugar (g) 0 Calcium (mg) 28 Iron (mg) 4.4 Magnesium (mg) 0 Phosphorus (mg) 287 Potassium (mg) 350 Sodium (mg) 6 Sorghum in industrial processing Sorghum is one of the key grains as Africa seeks to industrialise.

The fact that the crop fits so well in Africa’s often harsh environment is a pointer to the food processing sector and the governments in Africa to exploit the potential provided by sorghum.

Sorghum is an important ingredient in food and beverage processing in Africa. The industry should take advantage of the grain’s nutritional and technical properties to improve the continent’s nutritional and economic well-being.

It is encouraging that the road to turning sorghum into an industrial crop is already beginning to emerge. Through such initiatives like the recently launched Sorghum Value-Chain Development Consortium (SVCDC) the grain is starting to receive the attention it deserves, as Africa strives to reap more benefits from this crop.

SVCDC is an initiative of the Forum of Agricultural Research in Africa (FARA) and the government of Denmark.

The program focuses on agribusiness incubation to enhance the commercialization of sorghum and its value added through innovative scientific and technological approaches The SVCDC Agribusiness Incubator is a public-private partnership formed by participating institutions including the Jomo Kenyatta University of Agriculture & Technology (JKUAT), Kenya Agricultural Research Institute (KARI), Agritrace and Farming Support International (FASI). The consortium brings together experience in agribusiness incubation, agricultural research, technology development & commercialization, and entrepreneurship development.

It is through such initiatives that the value addition element will be inculcated into research and the adoption of novel ways foodbusinessafrica.com

to utilise the crop in the continent.

The following are some of the ways sorghum is already being used and can be utilised in Africa. i) Brewing and distilling One of the oldest ways that sorghum has been utilised in the continent, the application of sorghum in beers provides the continent with the scale to exploit this grain to its advantage. Its use as an adjunct in beer making provides economic benefits to the brewer.

The production of formerly traditional Chibuku sorghum beer in southern parts of Africa has gradually moved north, and is now available in eastern African countries like Uganda and Tanzania.

In Zimbabwe, Delta Breweries utilises 12,000 tonnes of sorghum every year, the bulk of which is sourced from small scale farmers.

Senator, the lager beer from East African Breweries has been largely successful because of its sorghum content. Although recent tax incentive withdrawals have dented the future of sorghum farmers and the brewery, the application of sorghum in alcoholic beverages has shown the governments and that the right incentives to the agricultural sector and the industry can improve the local sourcing component of products that have largely relied on imported ingredients.

Sorghum is used extensively in West Africa to produce lager beer. ii) Milling and baking According to Dr Onyango, sorghum has been used extensively in Africa in milled form for various meals. It can also be popped into grains and served as instant breakfast cereal, while the white varieties can be boiled and eaten as sorghum rice. Sorghum flour has been used to blend porridge flours in many countries in the continent.

Perhaps one use that has taken sorghum into the international arena is its use in gluten free bread and other baked goods.

FOOD BUSINESS AFRICA | AUG/SEP 2014

27

STARCH

NATURE’S FOOD WITH NUMEROUS BENEFITS Starch is one of the most used ingredients in processed foods. From beverages, baked goods to dairy products, starch is a versatile ingredient.

S

tarch is one of the most widely distributed substances in nature. It occurs in most plants in fruits, bulbs and tubers to various levels of abundance.

Starch constitutes about 70-80% of the calories taken in by humans. These products are either consumed as flours or converted into end products including bread, meals, porridge and hundreds of other drinks, pastes and powders in many communities around the world.

However, our interest is the commercially extracted starch by industry that is of interest here. A number of methods are used to separate starch from the rest of the fibres, proteins and fat by a number of starch producers around the world.

Commercially, starch is extracted from various cereals including maize/corn, waxy

28

AUG/SEP 2014 | FOOD BUSINESS AFRICA

corn, high amylose corn, wheat, various rices, potato, cassava/tapioca, sweet potato and sago. Pure starch is a white, odourless powder with a characteristic taste and is insoluble in water.

Starch functionality Few natural products have the versatility and scope of use as starch. In the food and beverage industry, starch is found in a majority of processed foods.

Starches are used for their functionality in a number of food products including stabilizing, texturizing, thickening, adhesion, anti-staling, gelling, glazing, moisture retention, binding, fat sparing, fibre enriching, clouding, film formation and as a source of fermentables among other functions.

These food products include alcoholic drinks like beer; soft beverages like drinks, juices and enhanced water; to dairy products like yoghurt, ice cream, fermented products and flavoured milk; to soups, marinades and rubs; to confectionery products like candies; canned foods; to ketchups, sauces and mayonnaise; to meat products like sausages and reformed meats; to baked goods and many more food products. foodbusinessafrica.com

FOMULATIONS INGREDIENTS APPLICATION

Table 1. Amylose and amylopectin content of common food starches Starch type

Amylose/Amylopectin Content (%)

Gel texture

Gelatinisation temp (C)

Solution clarity

Stability to retrogradation

Corn/Maize

25/75

Short

62-74

Opaque

Poor

Waxy corn

<1/>99

Cohesive

63-72

Clear

Good

Tapioca (Cassava, Manioc)

17/83

Soft

60-72

Clear

Fair

Potato

20/80

Very cohesive

56-69

Clear

Fair

Wheat

25/75

Short

52-64

Opaque

Poor

Rice

19/81

Short

61-78

Opaque

Poor

Table 2. Characteristics of amylose and amylopectin Characteristic

Amylose

Amylopectin

Shape

Essentially linear

Branched

Linkage

Alpha-1,4

Alpha-1,4 and Alpha-1,6

Molecular weight

<0.5 million

50-500 million

Films

Strong

Weak

Gel formation

Firm

Non-gelling to soft

Colour with iodine

Blue

Reddish brown

Source: Starches: Practical Guides for the Food Industry Amylose and amylopectin Starch is basically a polymer of glucose which either exists in either of two polymers: amylose or amylopectin. Amylose is essentially a linear polymer of starch whereas amylopectin is branched and can be quite large.

Various sources of botanical sources of starch have differing amount of amylose to amylopectin contents, resulting to differences in functionality of these starches (Table 1).

The structural differences between amylose and amylopectin contribute to significant differences in starch properties and functionality (Table 2).

Pastes and slurries made from starch from these various sources exhibit characteristic viscosity and gel profiles, for example while corn starch tends to form a firm gel, tapioca starch tends to form a soft gel that remains so for a longer time.

Amylose plays a critical role in starch identification, for it forms a helix whose interior contains hydrogen atoms that are hydrophobic, which forms a complex with iodine â&#x20AC;&#x201C; hence the blue colour that is used to identify starch containing compounds.

Amylose also plays a key role in the starchâ&#x20AC;&#x2122;s ability to form gels after the starch slurry has been cooked and cooled, a process referred to as retrogradation.

Retrogradation, also called setback, is important in a number of food products, not least in the manifestation of quality defects, where the loss of viscosity in soups and sauces and bread staling can be blamed partly on retrogradation.

Amylopectin has properties that differ from those of amylose as it exists in a largely branched pattern. This branching delays or even prevents retrogradation, with starches that contain essentially all amylopectin (e.g. waxy starches) having a cohesive and gummy texture, with no gelling exhibited.

The lack of retrogradation of amylopectin is important in a number of liquid food systems including yoghurts and other fermented products, soups and dressings, beverages and canned foods where adequate shelf life and textural integrity are critical attributes. foodbusinessafrica.com

The Modified starch advantage Starches are used widely in the food and beverage industry.

And with the multitude of applications comes the problem of matching the starch with the appropriate application.

The starch processing industry over time realised that the original or native starches were required to increasingly do more for food manufacturers.

Native starches have inherent weaknesses as far as performance is concerned. They generally tend to form cohesive gels that are too thick at high concentrations and break down due to high temperature, acid and shear.

They also are insoluble in cold aqueous liquids and lack the versatility that the food industry, as it modernised and became more complicated, required of the starch and other ingredients. Processing techniques, distribution, storage and final preparation conditions have changed over the years that native starches cannot match.

Enter the modified starches Modified starches are made through physical and or chemical reactions that build on the weakness of the native starches.

Modified starches are usually manufactured with the end use in mind, ensuring that the end product is stable to acid, temperature and shear and can meet shelf life requirements by the processor. They also tend to improve viscosity, have better viscosity profile during processing and improved film forming properties in addition to the fact that they can be used to improve the visual appeal of end products.

The variety of modified starches is quite wide now, with some allowing the food developer to add or replace fat, sugar, fibre, weighting agents, hydrocolloids etc with ease in many food products.

FOOD BUSINESS AFRICA | AUG/SEP 2014

29

ENERGY EFFICIENCY IN COMPRESSED AIR SYSTEMS

I

n many industrial plants, Compressed air is extensively used. In numerous cases, the compressed air system is so essential that the facility cannot function without it.

Contrary to common belief that air is a free resource, in several industrial facilities, air compressors utilize more electrical energy than any other piece of equipment. This therefore means that inefficiencies within the compressed air systems can be quite substantial and as such energy savings from system improvements may vary from around 20% to 50% or more of electricity expenditure.

In order to improve and maintain high compressed air system performance, you need to address not only the individual system components, but also to analyze both the supply and demand sides of the system and how they interrelate.

In the following sections we examine the seven essential steps to attaining Efficiency in your compressed Air system: Analyse your Compressed Air Needs: Compressed air requirements are defined by the air quality, volume, and operating pressure required by the end uses in your facility. A careful analysis of the needs will ensure that your compressed air system is planned and configured correctly.

There are varying compressed air

30

AUG/SEP 2014 | FOOD BUSINESS AFRICA

quality requirements based on use and these include: • Plant Air-Air tools, general plant air • Instrument Air-Laboratories, paint spraying, powder coating, climate control • Process Air-Food and pharmaceutical process air, electronics • Breathing Air-Hospital air systems, diving tank refill stations, respirators for cleaning and/or grit blasting Applications in an industrial set up normally fall within the first three air quality levels. Quality is determined by the moisture and impurity level required by the end uses and this is accomplished through filtering and drying. The higher your quality requirement, the higher your cost of air production as higher quality air generally requires additional equipment.

The required compressed air system capacity can be arrived at by adding up the requirements of the equipment foodbusinessafrica.com

PLANT & EQUIPMENT ENERGY MANAGEMENT

and processes at the site. The total air requirement however is not the sum of the maximum requirements for each equipment and process, but the summation of the average air utilization level of each.

Eliminate Inappropriate Uses of Compressed Air As already discussed, compressed air is doubtless the most costly form of energy available in a plant, nevertheless it is clean, readily available, and simple to use and because of this, compressed air is time and again selected for applications for which other energy sources are more cost-effective. You need to consider more cost-effective forms of power before taking into consideration compressed air as several operations can be carried out effectively and more economically using alternative energy sources.

Some of the inappropriate uses of compressed air in many facilities include the following: open blowing, sparging, aspirating, atomizing, padding, dilutephase transport, dense-phase transport, vacuum generation, personnel cooling; open hand-held blowguns or lances, diaphragm pumps, cabinet cooling and vacuum venturis.

Find and Fix Compressed Air System Leaks Compressed air leaks can be a major cause of inefficiency in your compressed air system, occasionally wasting 20% to 30% of a compressor’s yield. Establishing and implementing a proactive leak management program can decrease leaks to below 10% of compressor output. Over and above being a source of energy loss, leaks do bring about operating losses such as system pressure drop, shorten the life of all system equipment due to longer running hours, additional maintenance requirements and increased unscheduled downtime and can lead to adding unnecessary compressor capacity.

While leakage can come from any

ABOUT foodbusinessafrica.com

part of the system, the most common problem areas are: • Couplings, hoses, tubes, and fittings • Pressure regulators • Open condensate traps and shut-off valves • Pipe joints, disconnects, and thread sealants.

Reduce system pressure drop Pressure drop is defined as the decline in air pressure from the compressor discharge point to the actual point-ofuse. This happens as the compressed air travels through the treatment and distribution system. In a welldesigned system however, the pressure loss should be much less than 10% of the compressor’s discharge pressure, calculated from the receiver output to the point-of-use. Too much pressure drop brings about poor system performance and excessive energy consumption.

How to minimize pressure drop This requires that you take a systems approach in design and maintenance of the system. Select Air treatment components, such as after-coolers, moisture separators, dryers, and filters, with the lowest possible pressure drop at the specified maximum operating conditions and when installed, ensure the recommended maintenance procedures are adhered to. Other ways to help you minimize pressure drop include: • Ensuring proper design the distribution system.

• Operating and maintaining air filtering and drying equipment to reduce the effects of moisture, such as pipe corrosion.

• When making a choice of after coolers, water separators, air dryers and filters select those with the lowest possible pressure drop.

• Ensure short distribution system distances through the plant.

• Use only best performance air fittings ensuring their sizing is based on the actual flow rate.

Maintain the Compressed Air System Just like any other equipment, compressed air systems require scheduled maintenance to operate at top efficiency and reduce unnecessary downtime. Insufficient maintenance can have far reaching effects on energy consumption as result of lower compression efficiency, air leakage, or pressure variations. It could also lead to elevated operating temperatures, poor moisture control, and excessive contamination. All components of the compressed air system have to be maintained in accordance with manufacturers’ specifications so as to achieve high performance.

Recover Useful Heat Up to 90% of the electrical energy used in air compressor is converted into heat and as such a well-designed heat recovery unit can recover between 50% and 90% of this thermal energy and utilize it in heating air or water. Common uses for recovered heat include additional room heating, process heating, water heating, makeup air heating, and boiler makeup water preheating.

Carry out a Compressed Air System Audit A compressed air system Audit will bring to light the true costs of compressed air and aid in identifying opportunities for improvement. You must therefore consider using an auditor to analyze your compressed air system.

A complete compressed air system audit must include an assessment of both air supply and usage and the interaction between the supply and demand. Auditors in general assess the output of a compressed air system, determine energy use in kilowatt-hours, and verify the annual cost of running the system. The auditor can also assess total air losses resulting from leaks and locate the major ones so you can have them fixed.

The writer, Bernard Maonga, is a Mechanical Engineer.

FOOD BUSINESS AFRICA | AUG/SEP 2014

31

TRACEABILITY OF FOOD IN THE VALUE CHAIN The recent EU threat to ban Kenyan produce shows the importance of traceability NEWS RELEASE: WASHINGTON FIRM RECALLS PORK SAUSAGE PRODUCT DUE TO MISBRANDING AND UNDECLARED ALLERGEN WASHINGTON, September 12, 2014 – Interbay Food Company, LLC, a Woodinville, Wash., establishment, is recalling approximately 4,820 pounds of pork Banger-style sausage products due to misbranding and an undeclared allergen, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) announced today. The products contain milk, a known allergen, which is not declared on the products’ label.

The products were cooked in a Redmond, Wash., restaurant and sold to the general public. The products were produced using bread crumbs that came from a vendor who listed wheat, soy and milk on the label. Although the label for the bangers listed wheat and soy, it did not list milk as an ingredient.

The products were produced on March 17, 2014, March 24, 2014, May 5, 2014, June 2, 2014, June 30, 2014, July 15, 2014, July 29, 2014, August 26, 2014 and September 8, 2014. The products’ package codes are also its production dates.

The products bear the establishment number “Est. 6267” inside the USDA mark of inspection, and have a 6-month shelf life.

The problem was discovered by an FSIS inspector who saw that the products were incorrectly labelled.

Source: USDA Food Inspection & Safety Service

A

ccording to the US Department of Health and Human Services, traceability as applied in the food industry is the ability to follow through the movement of a food product through the stages of production, processing and distribution. This simple definition has profound effect on the food and beverage industry and is an important attribute to product safety and economy.

“Food safety has been a growing concern among EU citizens over the last decades. Outbreaks of disease in animals that could be transmitted to humans, or the presence of chemicals above acceptable limits in feed and food, can threaten both the quality and safety of products. Traceability is a risk-management tool which allows food business operators or authorities to withdraw or recall products which have been identified as unsafe. It is a cornerstone of the EU’s food safety policy”, states the EU Health & Consumer Protection agency.

How does traceability work?

Traceability relates to the unique identification of food and food products as they move through the food value chain. It involves both trace back and trace forward. Trace back is the ability to trace a food product from the retail shelf back to the farm, while trace forward is the ability to trace a food product from

32

AUG/SEP 2014 | FOOD BUSINESS AFRICA

the farm forward to the retail shelf.

Traceability finds great application in cases of customer complaints, food contamination and recalls and seizures by authorities.

It is necessary to identify lots of food or batches of food products and relate them to specific conditions of handling and storage as food moves from one step of value addition to another. It is important that a batch with all its ingredients be identified with unique numbers that can help relate the end product with its constituent ingredients.

In the current global market where imports and exports and far flung markets are a day to day reality, identification of foods and relating the identifier to conditions of processing becomes of prime importance. Currently food trade in Africa can be as complex as shipping baby food products from Europe or consuming dairy products from New Zealand or even drinking a beer made in the Netherlands.

Traceability is a key consideration of assuring quality and aiding in food safety concerns. It is a critical quality assurance aspects that must be well implemented to give information internally and externally; to producers themselves, government agencies, trading agencies, customers alike.

Achieving product traceability Food labeling is a great aid or tool to

achieving a certain minimum level of traceability. While companies are at liberty to include other pertinent details on their labels and product identifications, most legal agencies have set out food product labelling regulations such as the requirements set out by the Kenyan standard for labeling prepackaged foods KS 05 – 40. These include: • Product name and category • Batch code: combination of letters and alphabets • Date of manufacture, processing • Facility or area of manufacture/ processing/packaging/ • Country of origin • Ingredients declaration • Expiry/Use by date foodbusinessafrica.com

FOOD SAFETY TRACEABILITY

Food companies can implement a traceability system by implementing a detailed Identification code printed or embossed on the product (primary packaging and secondary packaging).

The code will be a combination of numerals and letters that have a meaning to the manufacturer and should accompany the transactional documents where possible. This makes it easier for reference and also in case of feedback issues.

Food product recalls are increasingly gaining importance and recognition in view of food safety concerns. It would be practically impossible for a food company to recall batches of defective food products from market areas if there is no coding and traceability system.

In the well re-known food management system standards such as BRC, HACCP, ISO 220000, and FSSC 22000 there is a vital requirement to establish a coding and traceability system across the food chain. Relevant record and documentation must be established that support the traceability system.

A good method is to write down the traceability procedure or methods for a given company, to publish it and make it well known to internal staff and to audit it regularly to ensure it is effectively implemented.

Ingredients declaration important One of the most common causes of product recall by the U.S. Department of Agricultureâ&#x20AC;&#x2122;s Food Safety and Inspection Service (FSIS) involves cases of undeclared ingredients or allergens. As shown in our illustration of the recalled pork sausage above, it is of utmost important to track the ingredients used in the product manufacture right through the chain. If an product is used as an ingredient in the manufacture of another product, it is important to maintain the ingredients trace, including pertinent information like batch numbers etc. Any loss of such information can be a potential economic or public health hazard at the end of the chain Legal requirements While food establishments have had liberty to decide on what and how to put in place a traceability system, several jurisdictions are increasingly drawing the extent and nature of traceability systems to put in place, and which are enforceable by the law.

The US Food and Drugs Authority (FDA), beginning 2005 mandated certain food facilities to maintain specific records identifying the sources, recipients and transporters of food products. FDA is required under section 204(d)(2) of the recently enacted Food Safety Modernization Act (FSMA) to designate high-risk foods for which additional recordkeeping requirements are appropriate and necessary in order to rapidly and effectively track and trace such foods during a foodborne illness outbreak or other event.

These additional recordkeeping requirements will make it easier to rapidly and effectively identify recipients of a food to prevent or mitigate a foodborne illness outbreak. Designation of high risk foods will be based on the historical public foodbusinessafrica.com

health significance of the food with respect to outbreaks and cases of foodborne disease, as well as a number of food- and processing-related factors.

The EUâ&#x20AC;&#x2122;s General Food Law entered into force in 2002 and makes traceability compulsory for all food and feed businesses. It requires that all food and feed operators implement special traceability systems. The EU has published guidelines which require business operators to document the names and addresses of the supplier and customer in each case, as well as the nature of the product and date of delivery.

In addition to the general requirements, sector-specific legislation applies to certain categories of food products (fruit and vegetables, beef, fish, honey, olive oil) so that consumers can identify their origin and authenticity. Traceability initiatives and legislation is enforced at the EU level, ensuring that the industry meets the requirements as required by law in the whole Union.

In Africa, several countries lack legally enforceable traceability requirements, due to outdated legislation, or in many cases, traceability requirements are spread across a number of legislations, making it difficult to enforce at the national or regional level any meaningful traceability systems.

Perhaps, the regional bodies like COMESA, EAC, SADC and ECOWAS can be used as launching pad to a continental body that enforces traceability and other food safety concerns. The recent EU threat to ban agricultural produce from Kenya due to pesticide residues could be a good initiator of this process.

WHEAT MILLING PLANT ON SALE!!

BRAND: AWILA Type: Double Roller Mill FMO-3A Year of Manufacture: 1996 Country of Manufacture: Germany Production capacity: 30 tonnes/12hours Production efficiency: 85% Condition: Plant has been operated for only one year since it was installed and is in prime condition.

System: Both manual and automated system Price: US$480,000, negotiable Site visit can be arranged for interested buyers.

Contact person: Edward Byamukama.

Telephone No. +256 772 491 645 or +256 704 402 405 FOOD BUSINESS AFRICA | AUG/SEP 2014

33

SUPPLIER NEWS BRIEFS Tetra Pak launches Tetra Alsafe for ESL Tetra Pak has announced the launch of Tetra Alsafe for ESL production, an automated tank with constant temperature control that preserves product quality between processing and packaging.

Tetra Alsafe for ESL production provides a solution to the challenge of quality control between processing and packaging – by adding a continuous circular configuration to the filling line, enabling products to continue to circulate under refrigerated conditions in the event of an unplanned stoppage. This eliminates the risk of bacteria growth that can arise when the temperature of the product increases as it remains stationary during an unplanned stoppage.

“ESL products open up a major growth opportunity for customers across the entire food and drinks industry. With the innovation of Tetra Alsafe for ESL, we are pleased to be the first company to support our customers with an integrated ESL production solution and full line quality assurance,” says Kresten Hjortsballe, Global Category Director Dairy at Tetra Pak – www.tetrapak.com

NEW OFFICE

ADM moves global headquarters to Chicago The Archer Daniels Midland Company (ADM) has opened its new global headquarters and customer center in downtown Chicago, USA. The company’s headquarters were previously in Decatur, also in Illinois, USA. The company’s North American headquarters however will remain in Decatur.

“As we continue to grow our company, this location allows us to more easily reach global markets, while keeping us

in close contact with U.S. farmers, customers and operations,” said Chairman and CEO Patricia Woertz.

About 70 employees are based in the two-floor space, which also includes a culinary facility for ADM to showcase its broad portfolio of food ingredients.

ADM employs around 31,000 people around the globe. It has more than 270 processing plants and is present in more than 140 countries. www.adm.com.

PACKAGING

Sidel to install new lines at Riham Uganda UGANDA - Hariss International Limited, the leading producer of Riham brand mineral water and soft drinks has added two new complete PET lines from Sidel, a global provider of liquid packaging solutions.

The two lines will be operational by November 2014 and January 2015 respectively and are expected to increase the company’s market share as well as reduce its cost of production.

The PET lines comes complete with Combi14 machines, as well as Starblend mixers, Alfa roll fed labeling, GeboCermex packers, Twin Pack handle applicators, GeboCermex bottle conveyors, accumulation tables, and bottle aligners.

“High levels of quality and consistency are the keys to success in the beverage industry,” said Andrews Ruben, Managing Director of Hariss International Ltd. “Sidel’s extensive knowledge and support on bottle and preform designing and optimization has allowed us to further implement these qualities into our products and maintain the position of a leading player in the Ugandan market”, he added “As one of the leading companies in liquid packaging solutions, we are proud to assist Hariss International Ltd with their expansion in production,” said Georgios Diakakis, Regional Commercial Manager at Sidel – www.sidel.com

Novozymes expands in South Africa Novozymes has bought the remaining 51% of Enzymes S.A. (Pty) Ltd. which is the company that runs Novozymes’ business activities in South Africa. Enzymes S.A. which was a joint venture in which Novozymes owned 49% has been acquired 100% by Novozymes effective July 1, 2004.

“The purchase supports Novozymes’ business strategy of owning and operating its own affiliates in important markets. Both the South African and the sub-Saharan African are markets with very interesting potential going forward”, says Peder Holk Nielsen, Executive Vice President for Novozymes’ Sales & Marketing.

The deal enables Novozymes to increase its focus on the growing sub-Saharan and South African market. www.novozymes.com 34

AUG/SEP 2014 | FOOD BUSINESS AFRICA

5 good reasons to advertise in the

food business AfricA mAgAzine • • • • •

The only technical food & beverage industry magazine in subSahara Africa, outside of South Africa Provides well researched industry information and analysis written by professionals in the sector Read by key decision makers with direct responsibility for purchasing of equipment, ingredients, chemicals, packaging and other services Focused solely on the food and beverage sector in sub-Sahara Africa, like no other magazine Available in both print and as an e-reader that is available online, a first in the region

If you have been struggling to get your products or services noticed in the food and beverage processing sector in the region, your worry has come to an end.

info@foodbusinessafrica.com foodbusinessafrica.com

TRENDS

NEW PRODUCTS ON THE SHELF

HIGHLAND’S BEVERAGES CLUB SODA Company: Highlands Mineral Water Co., Nyeri, Kenya Product description: Carbonated soft drink, available in lime/ lemon, orange and cola.

Product category: Beverages Pack size available: 500 ml; 300 ml, 1.25 L Nutritional Claims: None

EABL’S SMIRNOFF DOUBLE BLACK ICE WITH GUARANA Company: East African Breweries Ltd, Nairobi, Kenya Product description: Alcoholic ready to drink beverage made of a blend of Smirnoff vodka with soda and Guarana; contains alcohol by volume of 5.5%.

Product category: Beverages Pack size available: 330 ml Nutritional Claims: None

ELDOVILLE’S WHEY COOL Company: Eldoville Dairy, Nairobi, Kenya Product description: Dairy drink based on whey, with fruit concentrate. Available in various flavour options including mango and pineapple.

Product category: Dairy, Juice & Ice cream Pack size available: 100 ml Nutritional Claims: None

LA YOGHURT YOGHURT DRINK Company: New KCC Ltd, Nairobi, Kenya Product description: Drinking yoghurt with fruits, in an on-thego bottle packaging. Available in strawberry and vanilla variants Product category: Dairy, Juice & Ice cream Pack size available: 500 ml; 250 ml Nutritional Claims: None

KIFARU WHEAT FLOUR Company: Alpha Grain Millers, Nairobi, Kenya Product description: Milled wheat flour Product category: Cereals, Milling & Baking Pack size available: 1 kg, 2 kg, 5kg, and 10 kg Nutritional Claims: Fortified with vitamins and minerals

GATANU 5 BEER Company: Skol Breweries, Kigali, Rwanda Product description: Lager beer, with 5.1% alcohol by volume Product category: Beverages Pack size available: 650 ml; 300 ml Nutritional Claims: None

foodbusinessafrica.com

TROPICAL HEAT’S RICE CAKES Company: Tropical Heat Ltd, Nairobi, Kenya Product description: Rice Cakes.

Available in salted and unsalted options Product category: Cereals, Milling & Baking Pack size available: 100 g Nutritional Claims: Gluten free, low sodium, no artificial additives, trans-fat and cholesterol free.

NUMI INSTANT NOODLES Company: Kapa Oil Refineries, Nairobi, Kenya Product description: Instant Noodles, available in Peri peri Chicken, Bbq Chicken, and Veg Mchuzi Mix variants.

Product category: Cereals, Milling & Baking Pack size available: 120 g Nutritional Claims: None

FOOD BUSINESS AFRICA | AUG/SEP 2014

35

QUOTABLE QUOTES IN THE NEWS

“We have been forced to rationalise as part of intervention measures in the wake of the massive losses.”

Mumias Sugar CEO, Coutts Otolo speaking of the need to reduce work force at the sugar miller after the company announced a Sh2.7 billion loss

“Our investment in this factory and the continuous upgrading of equipment and expansion of production facilities is a vote of confidence in the Nigerian economy.”

Subramanian Murugesan, Sona Agro Allied Foods managing director, at the unveiling of the new production lines at their factory in Ota, Ogun State, Nigeria

“We cannot justify the huge amount of rice we import each year, when we have the potential to produce rice locally. If we like to eat rice, then we must have to produce more. That is why we have placed total selfsufficiency in rice production as a priority for our country.”

Nigeria’s President, Goodluck Jonathan, as he inaugurated Olam Nigeria’s 105,000 metric tonnes integrated rice processing mill in Nasarawa State.

“Cold Stone Creamery will be the first of its kind in the Kenya market. We are extremely excited about expanding into East Africa.”

Eddy Jimenez, senior vice president of international operations and development at Kahala Brands, Cold Stone’s parent company, on their plan to open a store in Nairobi, Kenya.

“I think they have now gone into phase two of that programme and the two countries they have identified are Angola and Nigeria — so you see them going very aggressively to double the number of stores in those countries to reach critical mass, to build a distribution centre so that they can have a complete loop the way they have in South Africa.

When that’s set up they will go to the next country.”

Alec Abraham Sasfin Securities senior equity analyst, on Shoprite’s strategy in Africa.

36

AUG/SEP 2014 | FOOD BUSINESS AFRICA

“The violation of the requirement is complicating our relations with the EU.” suspended Managing Director of the Kenya Plant Health Inspectorate (KEPHIS) James Onsando, on the latest threat from the EU to ban produce from Kenya due to pesticide residues

“I applaud Coca Cola Kwanza’s decision to invest in the Southern Highlands, a region where there is abundance of fruits. I believe this project will make the fruit farming business more profitable and modern.”

Minister of State in the Prime Minister’s Office, Mary Nagu, commenting Coca Cola’s plan to start producing juices in southern Tanzania

foodbusinessafrica.com

www.foodbusinessafrica.com

www.agribusinessafrica.net

AFRICA IS OUR HOME. WE CAN HELP YOU FIND THE RIGHT CUSTOMERS FOR YOUR EQUIPMENT, CHEMICALS, INGREDIENTS, PACKAGING & SERVICES IN AFRICA. PARTNER WITH US AND SEE HOW OUR PRINT AND ONLINE RESOURCES CAN TAKE YOU PLACES IN AFRICA.

FoodWorld Media is the leading publisher of technical and commercial magazines targeted at the African manufacturer, farmer, retailer, investor, distributor, academician, policy maker, supplier and other stakeholders. Our magazines, Food Business Africa and Agri-Business Africa, provide well-researched articles and features that resonate with Africa, providing suppliers to the industry in Africa with the right tool to reach their customers.

info@foodbusinessafrica.com

Your partner for winning food products Ingredion is a leading supplier of nature-based speciality starches, texturising ingredients and sweeteners to the global food industry. Combining high quality ingredient solutions with the latest market, consumer and applications insight, Ingredion has the expertise and the tools to help you get differentiated food products to market first.

Our promise to you: We deliver an ever-expanding range of clean label ingredient solutions to help you simplify your ingredient lists We provide and develop innovative starch-based ingredients that help customers reduce costs

Our teams are committed to developing pioneering solutions that enhance the textural and nutritional appeal of food products the latest trends across EMEA, we ensure our customers are always one step ahead.

Formulation advice Ingredion is the ideal partner for manufacturers of food products Offering established food formulation expertise Providing a dedicated team of technologists that work closely with customers, even after the development period Employing sensory capabilities optimising texture.

Our dedication to problem solving the partner of choice.

Find out more Ingredion.com/emea CONTACT US AT: Ingredion Kenya (0) 20 20362 3628000 8000 +254 (0) o you to decide whether and how to use this information.

Ingredion Incorporated and the Ingredion group of companies make no warranty about the accuracy or completeness of the information contained above or the suitability of any of their Ingredion Incorporated and the Ingredion group of companies assume no responsibility for any liability or damages arising out f ororelating to any of the foregoing.