Food Business Africa July 2016 by FW Africa

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In the News: Obama signs mandatory GMO labelling bill South Africa’s salt limit bill starts to bite Uganda Breweries celebrates 70 years

AFMASS

2016 Review

The best of the 2016 edition

Inside: VOLUME 4 • ISSUE 3, NO. 19 • ISSN 2307-3535

A FOODWORLD MEDIA PUBLICATION

CONTENTS

www.foodbusinessafrica.com Volume 4 Issue 3, No.19 • ISSN 2307-3535

FOUNDER & PUBLISHER Francis Juma CONTRIBUTORS: Loretta Mugo

Photo courtesy SABMiller

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EDITORIAL

The time to change is now as consumer focused legislation could be on the way in Africa Consumer pressure and disease burden may lead to tighter regulation by regulators in the continent as younger, informed consumers become of age

hree key issues that seem unrelated happened in July this year: the US passed a mandatory law to have all food and beverage products with genetically engineered ingredients, commonly called GMO ingredients, to be so labeled. Also in the US, brewers committed to provide nutrition labeling information on their drinks. The last one was the coming into law a new salt reduction law in South Africa that compels the industry to reduce salt in various food products. These three key issues may seem far from the rest of Africa, but are worth taking note of by the industry in the continent, considering the growing demand by younger consumers who seek to know more about the food they are eating, be it at home or at the restaurant. “The food and beverage industry in Africa must take urgent measures to reduce sugar in their products before the Government comes in to enforce mandatory measures on the industry.” That was the key message that Bimal Shah, the CEO of Broadway Group, which consists of the bakery Broadway Bakery and the wheat miller Bakex Millers, told the delegates at this year’s African Food Manufacturing & Safety (AFMASS) Conference that took place in Nairobi, Kenya. Many observers may be of the view that Africa is a food insecure region and is therefore more prone to malnutrition, than problems of abundance in food. But, as Mr Bimal demonstrated during his presentation with hard data, a steady rise in lifestyle

diseases that are mostly associated with the rich are no longer a rarity in Africa. “In developing economies, in which the bulk of African countries lie, dietary diseases are now ranked the highest health risk factor according to the World Health Organization. This has been a far-reaching change in rank from barely 4th position in the 1990’s to the number one health risk factor in low and middle-income countries currently,” he said, noting that in Kenya, lifestyle diseases account for 27% of all deaths, according to the Ministry of Health data. Sobering reading, indeed. It has to be said that industry leaders like Bimal who would agree that there is a problem that requires urgent attention are still rare in Africa. But one thing is for sure: the regulatory environment could be set for a change, with the possibility that the usage of sugar, salt, fat and various additives in the food and beverage industry could be on the path to being regulated in a number of African countries. South Africa, the most influential economy in the continent, is already leading the way in placing mandatory legislations that seek to force the hand of the food and beverage industry in producing healthier food. Beginning July, the country has implemented salt reduction initiatives in the most salt-laden food products, including baked, meat, savoury and snack products; while a new legislation has been proposed to tax fizzy drinks with added sugar in a two years. We believe that the move by South Africa could soon reverberate across the

key economies in the rest of Africa, with a number of these economies taking a leaf from South Africa’s actions, seeking to deal with the rise in deaths due to food and lifestyle choices. We think that the biggest challenge remains the industry’s lack of awareness of the deleterious effects of food choices on the consumers, or of the lack of leadership or communication by the industry about the things that consumers worry about everyday, like the food or drink to buy for their families. A discussion I had early this year with Gladys Mugambi, the Head of Nutrition at Kenya’s Ministry of Health, fits into this debate. Gladys is concerned that the industry hasn’t taken the lead in advocating for healthy food and beverage options despite the evidence that lifestyle diseases are taking their toll on the population. We think that despite the fact that the majority of consumers being of low incomes in Africa, there is a big opportunity for the food industry to take the lead and be seen to provide healthier alternatives of their products to gradually take advantage of changing consumer-eating habits, before the regulators like Gladys step in. It is worth noting that the US food and beverage industry has been forced to accept to label products with GM content, after many years of refusing to do so. And that the brewers have seen the importance of labelling their beers with nutritional information in the US. The battle for transparency in the food chain is just beginning. With the rise in consumers who demand more transparency, even in Africa, the industry must take the lead in providing the consumers with the right information that can impact on the choice of foods they buy. In the near future, with the likes of Bimal Shah coming out to advocate for healthy eating, the companies that take the lead towards healthy eating will be vindicated, and spoken of as the leaders who made the smart move that made the difference before they were forced to do so by consumer pressure or by regulators. Have a good read Francis Juma

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Big Thank you TO THE FOLLOWING PARTNERS FOR SUPPORTING AFMASS EASTERN & CENTRAL AFRICA 2016 - YOU MADE IT ALL POSSIBLE COCKTAIL SPONSOR

Vision Scientific & Engineering EXHIBITORS & PARTNERS

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Ingredion Holding LLC

SCE Belgium

Vision Scientific & Engineering

Unga Limited

Sheffield Steel Systems

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Ministry of Health

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EVENTS CALENDAR

August 22-24: New Delhi, India Fi India www.figlobal.com/india August 31- Sept 2: Kigali, Rwanda African Dairy Conference & Exhibition www.dairyafrica.com Sept 14-15: Johannesburg, South Africa Food & Drink Technology Africa www.fdt-africa.com October 8-11: Las Vegas, Nevada International Baking Industry Exposition www.ibie2016.com October 24-27: Addis Ababa, Ethiopia IAOM Middle East & Africa Conference & Expo www.iaom-mea/iaom-ethiopia-2016 Nover 7-9: Dubai, UAE Gulfood Manufacturing www.gulfoodmanufacturing.com December 5-7: Nairobi, Kenya Food Processing & Packaging Exposyum www.fppe-ke.com

QUOTABLE QUOTES

“The Government is backing us up. And you will see the Government cheque come soon,” Uchumi Supermarkets Chief Executive Julius Kipng’etich, talking of plans by the Government of Kenya to bail out the retailer as it continues to face hard times “We have a target to provide up to 30,000 tonnes of sorghum in 2017, against the less than 10,000 tonnes that we currently get. This is why the drive to get smaller holder farmers, especially in arid and semi-arid regions is crucial for us” Lawrence Maina, the General Manager of East African Maltings, a subsidiary of East African Breweries Ltd (EABL) on the increased demand for sorghum due to the booming sales of their Senator Lager, a low cost beer brand that utilizes sorghum. “Innovation in our portfolio is a key avenue for growth within the Ndovu family. This in turn allows us to also meet our evolving consumer preferences.” Vimal Vaghmaria, Tanzania Breweries Ltd’s Marketing Manager for Premiums and Alcoholic Fruit Beverages talking at the launch of a new beer brand, Ndovu Red Malt “We want the government to start a managed subsidy programme for direct ‘make-up’ payments to farmers on differential between import price and targeted local price.” Kenya’s Cereal Millers Association chairman Nick Hutchinson as millers urged the Government to support local farmers in the face of lower import prices of wheat grain “I am glad to see that a Nigerian company is taking over this very important project, and is championing the indigenous development of agribusiness . . . We are carrying on as we now produce what we call the green alternative: that alternative being agriculture, since oil and gas are unstable sources of income.” Nigeria’s Minister of Agriculture and Rural Development, Chief Audu Ogbeh at the official unveiling ceremony where Union Dicon Salt replaced Cargill, the American agribusiness giant as the developer of the Alape Staple Crop Processing Zone (SCPZ) in Kogi State.

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“By any metric, this is the best time to be in Africa. You can’t hope to control Africa or anything that happens in it, but what you can do is learn to adapt.” Richard Brashe, the CEO of Pick n Pay, speaking at the Consumer Goods Forum in Cape Town South Africa talks about why every serious investor has to focus on investing in Africa now.

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Big Thank you

TO THE FOLLOWING SPEAKERS & PANELISTS AT AFMASS EASTERN & CENTRAL AFRICA 2016 - THE INDUSTRYâ&#x20AC;&#x2122;S MOST OUTSTANDING EVENT THIS YEAR

Bimal Shah, CEO, Broadway Group

Duncan Kimani, Country Manufacturing Manager, Nairobi Bottlers Ltd

Rajan Shah, CEO, Capwell Industries

Josephat Kilungu, Manufacturing Manager, Nairobi Bottlers Ltd

David Kamau, CEO, Proctor & Allan

Amir Parpia, Finance Director Alpha Fine Foods, KAM Food Sector Chairman

Wayne Glenn Kleynhans, Technical Training Manager, Krones

Charity Magwenzi, Group R&D Manager, Dairibord Holdings, Zimbabwe

Oliver Schoenmakers, Account Manager, Middle East & Africa, SCE Belgium

Benard Otundo, Energy Manager, Brookside Dairy

Brian Milton, Senior Adviser, Global Food Safety Partnership, World Bank

Ioan Marcu, Product Manager, Analytik Jena AG

Prof. Dorington Ogoyi, Technical Director, National Biosafety Authority

Dr. Moses Gathura Gichia, Coordinator: FAO/WHO Africa Region Codex Committee

Lois Ndiba, CEO, Food Safety International

Richard Oduor (Dr.), Senior Lecturer, Kenyatta University

Lawrence Mbithi, Technical Sales Manager, Ingredion

Samwel Oduor, Technical Sales, Vision Scientific & Engineering

Ali Hassan, Director, Livestock, Kenya Markets Trust

Cyprian Kabbis, Food Business Manager, SGS

AFMASS Eastern & Central Africa 2017 edition enables industry leaders, academicians and researchers, technology suppliers and other stakeholders to shape the industry in Africa through presentations and panel discussion participation. Talk to the organisers on Tel: +254 725 343 932; +254 20 81 55 022 or email: info@foodworldmedia.net to be considered as a speaker or panel participant. Tom Ouma, Techinical Sales Manager, ESTEC

NEWS | INTERNATIONAL

Obama signs mandatory GMO labelling bill as key hurdle to consumer transparency is cleared Mandatory labelling heralds a new era of transparency, as the food industry also embraces labelling but say GM foods are safe for consumers

USA – The labelling of food and beverage products that contain genetically modified ingredients has become mandatory in the US after President Obama finally signed a bill, after the House of Representatives and the Senate passed it last month. Signing of the bill into law forestalls what a number of American states have tried over the last few years to do - enacting their own legislations to force mandatory labelling of GM products, in which the state of Vermont succeeded. Vermont’s law came into force on July 1, but with this bill, its effect will be lost. In a move that is seen as a win for farmer groups, the food and beverage industry and the biotech industry, Obama’s action strikes down the ability of states to write their own patchy legislations that could have forced companies to meet separate legislations in each of the states in the country. After many years of intense and many a times ugly debate about the need to inform consumers of the presence of GM ingredients in food products by pressure groups and health advocates, consumers across the US enter a new era of transparency concerning the type of food products they are eating. The subject of GMOs remains one of the most divisive in the country. 6

JULY 2016 | FOOD BUSINESS AFRICA

Under the bill, all food products with GM ingredients will have the fact stated on the packaging through text or sign, on a website or using a QR code – the latter of which has brought controversy, with critics saying that it discriminates those without smartphones. The debate on whether to label GM or not has and continues to divide the food and beverage industry, with the Grocery Manufacturers Association (GMA), a grouping of major players in the food sector, saying that “GM ingredients (are) not only safe for people and our planet, but also (have) a number of important benefits.” The US Food and Drugs Administration also maintain that GM products are safe. GMA estimates that 70-80% of food products in the US have GM content. Supporting the signing of the bill, Pamela G. Bailey, president and CEO of GMA, said “This legislation will open a new era for transparency in ingredient information for consumers, by requiring disclosure of genetically engineered ingredients for families in every state across the nation. Its consistent national standard is far better than a costly and confusing patchwork of different state labeling”. “Food and beverage companies fully embrace the importance of making

available to consumers the information they want about their products, and are already doing something about it. Our innovative SmartLabel technology initiative puts detailed information about thousands of products right at the fingertips of consumers – more information than could ever fit on a package,” Pamela added, saying that the GMA expects over 34,000 products will use the technology by end of 2017. With a rising tide from consumers for the labelling of products with GM content, a number of food companies including ConAgra, Campbell Soup and General Mills decided to voluntarily label their products with GM content, in time to meet Vermont’s law, as they pushed for a national law to enforce mandatory labelling of food products with GM content. An increasing number, including Dannon USA, have recently announced new product lines that eliminate the use of GM ingredients in order to placate consumers who are increasingly gravitating towards more natural, minimally processed products. The US Department of Agriculture has two years within which to put the rules to implement the legislation.

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NEWS | INTERNATIONAL

Food and drink association seeks assurance after Brexit from Govt. as effect of Leave vote sinks in With majority of food and beverage industry supporting ‘Remain’, ‘Leave’ vote leaves industry in a state of disillusionment, uncertainty. Industry association releases memo with demands on Govt.

UK – Stung by the shocking Brexit vote, the Food and Drinks Federation (FDF), has urged the government in a manifesto to pursue discussions with the EU that will lead to the trade conditions that reflect the pre-Brexit situation, to reduce the chances of disruptions in labour and markets, considering the disproportionate reliance of the food and drink industry to imported labour and foreign EU markets. “The overwhelming majority of UK trade in food and non-alcoholic drink is with the EU – more than 70% of both exports and imports. 94% of exports and 97% of imports of food and non-alcoholic drink are with the EU or with countries that the EU has signed or is negotiating a trade agreement,” notes the FDF in the manifesto that was released in July. FDF is a membership organisation, which represents the UK food and drink industry, the largest manufacturing sector in the country. According to a survey by the FDF that was done in March, 70% of the members preferred remaining in the EU. While the majority wanted to remain and urged their employees to vote to remain in the EU, considering important trade relations with the EU, others believed the EU was the cause of the problems facing the UK industry. Uncertain aftermath As the dust of the referendum settles, however anxiety is beginning to set in. According to a recent survey by FoodNavigator dubbed ‘Brexit and our business’ targeted at beverage producers, a majority (57%) of respondents believe 8

JULY 2016 | FOOD BUSINESS AFRICA

that the vote to leave the EU will negatively impact their businesses; 32% don’t think it will affect their businesses,foodbev.com while 11% still have no idea how it will affect their businesses.

IN NUMBERS

130,000 PROJECTED DEMAND OF SKILLED WORKERS BY UK FOOD & DRINK INDUSTRY BY 2024 - FDF According to the survey, although Brexit could open new opportunities for beverage companies outside the EU, it could result in complications, uncertainty and slowed growth for the beverage sector. 72% of the respondents think that food prices will rise in the country post-Brexit, while 51% believe it will cause supply chain disruptions. Meanwhile, in terms of tariffs, 43% expect a rise in tariffs by the EU against UK goods, while 28% don’t think the tariffs will rise. Industry demands action In the manifesto, the federation has

highlighted four key areas: continued access to labour from the EU; continued access to the EU market; continuation of regulatory framework with EU and support to the local industry post-Brexit. On labour access, the FDF notes that with 27%, or over 100,000, of the workforce coming from EU countries, the federation is asking the government to confirm that EU nationals in the country be assured of remaining in the country, considering the valuable skills they bring into the industry. It has also asked the government to “develop a new migration policy that ensures manufacturers have continued access to the workers we need to address a looming skills gap and the drive for future innovation”, noting that the industry requires 130,000 skilled workers by 2024, with the EU a significant contributor to these numbers. The federation has also asked for tariff-free market access to the EU market through a comprehensive UK-EU trade; access to tariff-free imports from the EU of ingredients and other supplies; and continued access to the 53 free-trade agreements that the EU has with a umber of countries, without negotiation. All these are targeted at securing the critical EU market, where more than 70% of food and nonalcoholic drinks are exported and imported from by the UK. On regulations, FDF is seeking the Government’s focus on ensuring the public and markets of the confidence in the UK’s food industry, and the development of the future of food legislation in the country to be fast-tracked to ensure a smooth process at the final Brexit stage. It is also seeking that a mutual regulatory landscape that ensures access to the EU market to remain, without new legislative hurdles being developed. “Industry needs to be assured that mechanisms will be put in place to ensure mutual recognition of potentially different regulatory systems, without the need for Export Health Certificates or burdensome customs barriers,” FDF says in its manifesto. On support to the industry, the company has asked the government to increase the competitiveness of the UK industry and reduce regulatory hurdles to ensure the industry thrives post-Brexit. It has called for the scrapping or rescheduling of the sugar tax and the apprenticeship tax, that are set to come into force in 2018 and 2017 respectively. FOODBUSINESSAFRICA.COM

Australia raises 2016/17 wheat production forecast after better autumn rains

AUSTRALIA - Australia has raised its forecast for wheat production during the 2016/17 season as favourable weather in key growing regions drive production to a four-year high in the world’s fourth largest exporter, according to Reuters. Production of wheat, Australia’s largest winter crop, for the season ending July 1, 2017 is now expected at 25.4 million tonnes, said the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). The previous estimate in March

was 24.5 million tonnes. If achieved, 2016/17 would see Australia’s biggest annual production since 2012/13. Higher wheat output from Australia will add pressure on global prices. Australia has seen near ideal crop weather in its biggest grain-producing region of Western Australia in the period to July, while the end of the strongest El Nino in nearly 20 years has aided crops on the country’s east coast. “The latest report forecasts a 7% rise

in total winter crop production, which is expected to reach 42.3 million tonnes, largely as a result of an increase in average crop yields,” said Karen Schneider, an executive director at ABARES. Australia’s wheat production will also be aided if la Nina weather, predicted by Australia’s Bureau of Meteorology at a 50% chance event materializes, boosting yields Reuters

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NEWS | INTERNATIONAL

AB InBev-SABMIller deal faces Brexit anxiety as US, China clear deal to pave way for merger to complete Falling Sterling pound reduces final value to majority of SABMiller shareholders, but Board says deal should go ahead

UK – A precipitous fall in the value of the pound to a 30-year low after the vote by the UK electorate to leave the European Union almost derailed the AB InBev-SABMiller, even as key regulatory nods in the US and China came through in July. With shareholders concerned about the final value of the deal following the pound’s fall, AB InBev in July raised its offer for the brewer from about US$58 per share to US$60 per share to prop us the value of the deal after the value of the deal went below US$100 billion.

However, a number of shareholder groups are still concerned that even with the increased offer, the final offer is still only about US$104billion from the previous US$108 billion at the announcement of the merger in late 2015. With the pound’s fall, the 50% premium on the share price offered by AB InBev to the SABMiller shareholders at the announcement of the deal withered to below 10%. In the US, the Department of Justice gave clearance with conditions to the merger that seeks to make the World’s biggest brewery,

also called the Megabrew by the media. The US clearance is subject to the divestiture of SABMiller’s interest in MillerCoors, which has already been proactively negotiated by AB InBev, to Molson Coors. Miller Coors will buy the 58% that the brewer holds in the brewer at US$12 billion, if the entire AB Inbev-SABMiller deal goes through. In China, the Ministry of Commerce has given conditional approval for the deal, chief of which is the sale of SABMiller’s 49% stake in China Resources Snow Breweries Ltd (CR Snow) to the government-backed China Resources Beer (Holdings) Co. Ltd, which currently owns 51% of the company. The latest US and China clearance and the May approval of the deal by the Competition Tribunal of South Africa paves the way for the creation of the World’s biggest brewery, although with significant chunks of the former company, especially SABMiller’s operations in China, US, UK and Europe planned to be sold off to placate regulators, as AB InBev focuses its attention on emerging economies in Africa and Latin America. Despite the changed final value of the deal, the SABMiller Board has recommended to the shareholders to take the revised offer which was “at the lower end of the range of values considered recommendable”, with Altria and BEVCO who control 40% of SABMiller shares being treated separately the rest of the shareholders.

Global packaging machinery market to approach US$50 billion in 2020 WORLD - The global packaging machinery market accounted for US$31.5 billion in 2015 and is expected to reach US$48.15 billion by 2022, growing at a compounded annual growth rate (CAGR) of 6.25% from 2015 to 2022, according to Statistics MRC. Factors such as rising advancements in modular packaging machines, growing accessibility of packaged foods, multipacks and increasing adoption of automatic machines in multiple sectors are some of the drivers favoring the market growth. However, lack of awareness among consumers will change the growth of innovative packaging methods. Furthermore, a number of technological advancements should attract consumers and intensify competition from small vendors. The labelling and coding machine segment is expected to grow at the highest CAGR in terms of revenue due to the 10

JULY 2016 | FOOD BUSINESS AFRICA

growing demand for pharmaceutical, food and beverage manufacturers to guarantee the safety of their products throughout the supply chain. However, form fill seal machinery will remain as the most widely used type of packaging equipment due to their extensive use in the large food processing market. Asia Pacific leads the global market during the forecast period owing to increasing shares for global sales and growing innovations in technologically complicated equipment, notes the report.

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Coca-Cola introduces new packaging

USA – Worldwide beverage producer Coca-Cola has launched new graphics for its range of Coca-Cola brand range of products as part of the company’s “One Brand” global marketing strategy to packaging. The new packaging design use one visual identity system featuring Coca-Cola Red as the unifying color across the trademark, enabling consumers to choose the Coca-Cola that best suits their taste, lifestyle and diet. The Red Disc, the signature element of the new “Taste the Feeling” global creative campaign launched in January this year, will now appear prominently on all the packaging. To clearly identify each product, the signature color is featured throughout the packs – black for Coke Zero, silver for Coke Light/Diet and green for Coke Life. The new graphics also include the unique product name and benefits on front of pack to help consumers make an informed choice: Coca-Cola Original Taste; Coca-Cola Light/Diet: Crisp Taste, No Calories; Coca-Cola Zero: Zero Sugar; and Coca-Cola Life: Less Sugar, With Stevia Leaf Extract “Packaging is our most visible and valuable asset,” said Marcos de Quinto, Chief Marketing Officer at the time of the announcement. “The Coca-Cola Red Disc has become a signature element of the brand, synonymous with great taste, uplift and refreshment. By applying it to our packaging in such a bold way, we are taking the next step towards full adoption of the “One Brand” strategy.” The new packaging is already rolled out in Mexico from May, with the company planning to roll out into additional markets around the world throughout 2016 and 2017. “The unification of the brands through design, marks the first time in our 130-year history that the iconic Coca-Cola visual identity has been shared across products in such a prominent way,” said James Sommerville, Vice President Global Design. “When applied across packaging, retail, equipment and experiential, this new approach becomes a global design language that utilizes a historical brand icon to present the range of Coca-Cola products available today in a contemporary and simple way.”

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NEWS | INTERNATIONAL INTERNATIONAL BRIEFS

UK bans diabetic-specific labelling of foods UK – A new regulation has kicked in in the United Kingdom that bans manufacturers from labelling foods as ‘diabetic’ or ‘suitable for diabetics’. Such labelling, common in many food products in a number of countries including UK, are considered to be misleading, according to Diabetes UK, a leading charity focused on diabetes that has lobbied for over 30 years for an end to such labels that imply a health benefit on consumption of such foods by diabetics. Commenting on the change, Natasha Marsland, Senior Clinical Advisor at Diabetes UK, said, “It is great news that this label has gone from our shelves. For too long, people with diabetes and wellmeaning friends and relatives have been misled into buying products they think would benefit diabetes management. People with diabetes can meet their nutritional needs from everyday foods, just like people without diabetes. “However, while the ‘suitable for diabetic’ label is now gone, there are still some products on sale which contain polyols. People should be aware that some of these products are higher in calories, can cost more, and can also have a laxative effect if you eat lots of them. People who are taking insulin and carbohydrate counting should be mindful that they might need less insulin, as not all the carbohydrate from polyols is absorbed. As ever, it pays to check the label.”

Cargill partners Philippine company to build poultry processing facility PHILIPPINES - Jollibee Foods Corporation (JFC) the largest Asian food service company and Cargill Philippines, a wholly owned subsidiary of Cargill Inc. have entered into an agreement to build and operate a poultry processing plant in the Philippines. The facility, to be located at Santo Tomas, Batangas, will be 70% owned by Cargill, with JFC having a 30% stake in the joint venture called Cargill Joy Poultry Meats Production, Inc. The facility will provide JFC with dressed and marinated chicken to augment the chicken supply requirements of the growing needs of JFC brands, according to JFC CEO, Ernesto Tanmantiong. Cargill will oversee the setting up, management and operations of the facility. 12

JULY 2016 | FOOD BUSINESS AFRICA

Nestlé appoints new CEO as top executive changes take shape with focus on future Appointment of former medical company CEO points to company’s focus on its health and wellness business lines

SWITZERLAND – The world’s biggest food company, Nestlé, has appointed a medical industry veteran, Ulf Mark Schneider, CEO of the medical supplies company Frenesius, as its new CEO beginning January 1, 2017, as the company apparently indicates its focus on the health and wellness portfolio of its business into the future. In broad changes at the company’s top level, the company also announced that Peter Brabeck-Letmathe, its Chairman, would retire at the company’s next Annual General Meeting in April 2017, having reached the mandatory retirement age, according to a company statement. Brabeck-Letmathe has served the company for 50 years, of which 14 years were on the Executive Board, 11 years as CEO and 12 years as Chairman. Paul Bulcke, the current CEO, has been proposed to stand for election as Chairman to replace Brabeck-Letmathe next year, continuing a company tradition of promoting former CEOs to the Chairman’s role, with the last four CEOs with a total of 40 years as CEO, ascending to the role. Bulcke will resign from his position as CEO on 31 December 2016, to ‘cool off’ the company says, with Schneider taking over the following day, having been at the company from September 1, 2016 “to ensure a smooth hand-over phase’. With the company celebrating its 150 year anniversary this year, the company has recently faced market changes in the food and beverage industry, brought by the likes of JAB Holdings (who now own Jacobs Douwe Egberts and Keurig Mountain Coffee) in its coffee business line, where the company’s Nescafe brand still leads worldwide, to the likes of 3G Capital, who have recently put together the Kraft-Heinz company, creating the third-largest food

and beverage company in North America and the fifth-largest food and beverage company in the world. The company has also faced increasing battles to maintain performance in key markets where consumers are increasingly gravitating towards healthier and natural food products. The appointment of Ulf Mark Schneider, who has been the CEO of Fresenius for 13 years, lends credence to the company’s recent investments in its healthcare businesses. Schneider is a 50 year-old German and US citizen. Fresenius is one of the leading diversified healthcare companies, producing essential dialysis products, running hospital facilities and providing care to sick patients in over 100 countries, with the company clocking €25 billion in sales last year. However, it remains to be seen how Schneider’s reign will change the company with the Board having ‘reconfirmed the longterm orientation for Nestlé as a Nutrition, Health and Wellness company’, according to a company statement that announced the top management changes. The Board’s intention of ‘fully integrating both Nestlé Health Science S.A. and Nestlé Skin Health S.A. into the Nestlé organization, reporting directly to the CEO from 1 January 2017”, could provide the healthcare-focused business lines with the energy required to drive the company’s next growth engine. The two units have been operating as fully owned subsidiaries of the company since their formation a few years back, with their own Board of Directors. “With the proposed appointments . . . Nestlé is well prepared to face the increasingly difficult external environment and deliver on both its long-term and short-term performance goals,” said Nestlé Chairman Peter Brabeck-Letmathe. “With consumers around the world taking a deeper interest in their personal health and wellbeing, Nestlé’s industryleading global food and beverage business positions it well for advancing the vision of Nutrition, Health and Wellness. I very much look forward to working with the Nestlé team and all Nestlé stakeholders as we continue to pursue this vision,” said Schneider of his appointment.

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FAO forecasts production rebound in 2016, huge imports increase into Africa WORLD - World production of coarse grains in 2016 is anticipated to reach almost 1,325 million tonnes, a 1.6%, or 21 million tonnes, higher than the previous year, as drought conditions force major African countries to spend millions to import maize this year. Global maize production in 2016 is forecast at 1,026 million tonnes, 2.3% or 22.6 million tonnes, above 2015. The bulk of the increase is attributed to a significant year-on-year rise in the United States, the world’s largest maize producer, where production is forecast to reach a record 366.5 million tonnes, due to good weather conditions. Early indications in Europe, point to a recovery in the EU’s maize production, which is forecast to rebound to 66 million tonnes from the reduced 2015 level, due to higher plantings and yield increase in Russia (13.8 million tonnes) and Ukraine (25.6 million tonnes), according to projections. Production of maize in China is foreseen to fall by 2% to 220 million tonnes due to low-price incentives while in India production is foreseen to rebound to reach 23 million tonnes, on expectations of a return to more normal weather following the 2015 droughtreduced harvest. In South America, Brazil is forecast to garner 81.2 million tonnes, about 5 percent down from the previous year, as the harvest season ends in the Southern hemisphere. Production in Argentina may reach 37.9 million tonnes, 12.1% more than in 2015. World sorghum production in 2016 is set to decline to 61 million tonnes, almost 5%, or 3.2 million tonnes, down from 2015, due to projected contraction in the US, which would more than outweigh foreseen increases in Sudan and Nigeria.

IN NUMBERS

29.8 M

FORECASTED TONNAGE OF COARSE GRAIN IMPORTS INTO AFRICA IN 2016/17 SEASON

Imports increase into Africa In Africa, a lingering and extensive drought has resulted in sharply lower production expectations in Southern African countries, with South Africa’s 2016 maize crop forecast to shrink by 31% to 7.1 million tonnes by the country’s Crop Estimates Committee, from an already below-average level in 2015. Malawi and Zimbabwe are also forecast to harvest significantly smaller crops, while improved rains in Zambia since January are behind expectations of a production gain in 2016. In Africa, total coarse grain imports are forecast to reach 29.8 million tonnes in 2016/17, up by as much as 4 million tonnes, or 16% from the 2015/16 estimates, underpinned by an expected surge in imports by Morocco and South Africa. In South Africa, maize imports could double from an already high level in 2015/16 and reach 3.6 million tonnes on reduced drought-affected crops. Maize shipments to Malawi and Zimbabwe are also anticipated to surge as both countries have suffered from a second consecutive year of drought. Egypt may import close to the 2015/16 estimate of 8.5 million tonnes. FOODBUSINESSAFRICA.COM

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Investments in Kenya’s milling sector rises VOLUME 2 • ISSUE 2, NO. 3 • ISSN 2412-3366

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

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Milling & Baking Africa is the region’s first publication focused on providing up-to-date information to the region’s grains, milling, baking and related industries. The magazine covers local and international news, commodity markets, nutrition essentials, processing and packaging, market trends, food and feed safety and the latest technologies in the use and utilization of raw and processed grains. Milling & Baking Africa will also highlight the major projects and the change making individuals and companies in Africa’s grains, milling, baking industry A must have publication for all investors, managers and professionals in Africa and beyond SEPTEMBER 2016 FOCUS: MILLING INDUSTRY IN NIGERIA To place your adverts or contribute to the article, please contact the publishers on: Milling & Baking Africa originally appears as an insert in Food Business Africa magazine in September, January and May. The publisher may spin it out as a stand-alone magazine in future.

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NEWS | INTERNATIONAL

Unilever to sell AdeS soy beverage business in Latin America to Coca Cola

LATIN AMERICA – Unilever has signed an agreement with Coca Cola FEMSA and The Coca Cola Company to sell the AdeS soy beverage business in Latin America for an aggregate amount of US$575 million. The acquisition of the soy beverage business comes at a time that Coca-Cola is actively entering the nutritious beverages

business in a number of countries around the World. “The acquisition of AdeS marks another milestone for the Coca-Cola system in providing increased choice of nutritious and delicious products to our consumers. AdeS is a leading brand in its category and we are very excited to add it to our stills portfolio. This continues the successful

joint venture partnerships with our Latin American bottling partners and brings more innovative offerings to our markets,” said Brian Smith, President, Latin America Group, the Coca-Cola Company. “AdeS complements and reinforces our non-carbonated beverage portfolio offer, providing our consumers with a wider range of choices. Together with our partner, The Coca-Cola Company, we will leverage the leading position of the AdeS brand, integrating it into our robust routeto-market model to drive value and further innovation on this new beverage platform,” said John Santa Maria, Chief Executive Officer of Coca-Cola FEMSA. The AdeS brand currently has a presence in Brazil, Mexico, Argentina, Uruguay, Paraguay, Bolivia, Chile and Colombia.

Millennials snack regularly; avoid three regular meals a day - report WORLD – Changing consumer consumption habits will have a huge impact in the way foods and beverages will be sold in the future with over a third of consumers globally saying they snack regularly. According to a consumer insight report by Canadean, a leading research company, just over 40% of young people aged 18-34 snack regularly, as the practice of modular eating becomes more accepted as an alternative to eating three main meals a day. The company’s latest report finds that consumers snack for a variety of reasons such as the functional need for an energy or nutritional boost, the psychological need to de-stress or indulge, and needs dictated by occasion, such as watching a movie, attending a sporting event, or socializing

with friends. As more consumers turn to snacks to fulfill a wide range of needs and occasions every day, the potential opportunities for snacking food and beverage brands are enormous right across the healthindulgence and sweet-savory spectrums, the report adds. “While it is important for brands to acknowledge and address the snacking needs of all consumers, it is particularly crucial to understand the motivations of younger consumers. Not only are they more frequent snackers, but their purchase behaviors and preferences will strongly influence other current consumers and also subsequent generations as they pass on these traits to their children,” explains

Katrina Diamonon, Principal Consumer Insight at Canadean. Canadean advises that since millennials tend to prioritize meat in their diets more highly than their older counterparts due to its perceived health benefits, manufacturers should capitalize on the meat snack segment and explore new opportunities. “Manufacturers are increasingly experimenting with a range of proteins, formats, and gourmet flavors to elevate consumption from convenience-store snacks to an exciting taste experience and even credible meal replacement. Improved sourcing transparency and ethical production of such offerings is also enhancing premium credentials,” Diamonon adds.

Dow and DuPont shareholders approve “merger of equals”

US – Shareholders of The DuPont and The Dow Chemical companies have voted to approve all the proposals necessary to complete the so called “merger of equals” that brings centuries old agrochemical giants together, as the agrochemical industry goes through unprecedented 14

JULY 2016 | FOOD BUSINESS AFRICA

consolidation brought by low commodity prices. The process of the creation of the new company, called DowDuPont, is to close in the second half of 2016, subject to regulatory approvals. “The overwhelming support of Dow and DuPont stockholders to approve this historic merger transaction is a clear testament to the compelling value proposition and enhanced shareholder value that DowDuPont represents,” said Andrew N. Liveris, Dow’s chairman and chief executive officer, and incoming executive chairman of the combined entity. At the end of the merger process, the combined company will pursue the separation of the combined company’s Agriculture, Material Science and Specialty Products businesses into three independent,

publicly traded companies. DowDupont’s creation heralds a consolidation of the agrochemical industry that has not been seen over the last few decades as low commodity prices eat into the incomes of the industry. Currently, Syngenta, another agro giant is in the process of being acquired by Chinese owned ChemChina, while Bayer, the German firm has expressed interest to acquire American leader in GM technology, Monsanto.

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Aussies worry about health, go for healthy product innovations

AUSTRALIA – High rates of obesity and overweight in the population has led consumers to seek out health and wellness food and beverages across all health and wellness categories in the country. These products, which include organic, fortified/functional (FF), naturally healthy (NH), better-for-you (BFY) and food intolerance focused products have continued to rise, with the Australian population seeking less processed food

products. Whilst BFY recorded gradual growth over the last five years, it has been other health and wellness categories such as organic, NH and food intolerance that have captured consumers’ attention and recorded high growth. As consumers have health and wellness in mind, Australians are increasingly interested in less-processed foods and have a growing preference for NH foods. NH

high fibre pasta is one example, delivering double-digit current value growth each year for a decade and growing by an additional 27% in 2015. These variants are not typically marketed as being high in fibre, but as wholemeal pasta. A similar trend is occurring in rice, where NH rice – specifically brown rice, or increasingly red rice or wild rice – grew by 3% in current terms in 2015, as consumers searched for intriguing new alternatives to white rice. The Health Star Rating system was voluntarily introduced in the country in 2014, primarily for packaged food, but 2015 saw many brand owners in beverages adopting this system. Packaged food and beverages are rated on a scale of five stars according to an algorithm that takes into account quantities of both “negatives” such as sugar and fat, and “positives” such as protein and fibre. The new regime has already had an impact on BFY packaged food, an impact that is likely to intensify. Through this system, consumers now have an easy to understand means of determining the nutritional value of packaged food and drinks.

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Bimal Shah launched his company Broadways Group’s #BeSugarSmart campaign at AFMASS 2016. The campaign urges the food and beverage industry in Africa to reduce added sugar in their products. You can also be like Bimal Shah. Sign up today to speak or participate in a discussion panel at AFMASS Eastern and Central Africa 2017 today.

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NEWS | INTERNATIONAL INTERNATIONAL BRIEFS

Heineken signs JV in the Philippines to distribute, brew its brands in the country

PHILIPPINES - Heineken has signed a joint venture agreement with Asia Brewery Inc., a large beverage producer in the Philippines that will distribute and brew its brands in the country Under the deal, a new joint venture company, AB Heineken Philippines Inc., will be formed to start with distribution of Heineken and Tiger in the country. The two Asia Brewery breweries in Cabuyao and El Salvador will also be upgraded so that they can brew Heineken brands. The terms of the deal were not disclosed. “This joint venture with Asia Brewery represents a good business opportunity for Heineken. It increases our exposure to another market in the region with strong growth potential,” Frans Eusman, President of Heineken Asia Pacific said.

Yildiz consolidates its food units, forms pladis TURKEY - Turkish food group Yildiz Holding has consolidated its biscuit, chocolate, and confectionery businesses Godiva Chocolatier, United Biscuits, Ulker and DeMet’s Candy Company, to form a new global company, pladis. The new entity unites Godiva, a leading premium chocolate brand, McVitie’s, a biscuit brand with a heritage in the UK and Europe, and Ulker, a biscuits and confectionery brand in Turkey and Middle East to form a $US5.2 billion business, positioning pladis as a global leader in the category. With 36 factories in 13 countries, pladis will employ 26,000 people. A senior leadership team comprised of Cem Karakas, CEO, and Ali Ulker, Vice Chairman, who will be focused on innovation and quality, will lead the new company. It will operate on a regional basis, with each region responsible for the manufacturing and commercial activities of the full pladis brand portfolio. Yildiz Holding has grown from a family owned company to be a player with global ambitions following a number of acquisitions: Godiva Chocolatier in 2008, DeMet’s Candy Company in 2014 and United Biscuits in 2014. 16

JULY 2016 | FOOD BUSINESS AFRICA

Nestlé opens new innovation hub for startups to solve malnutrition, packaging concerns SWITZERLAND - Nestlé has opened a new open innovation platform that aims to increase the quality and speed of innovative solutions that respond to social and business challenges. The Henri@Nestlé platform, open to startups worldwide, enables entrepreneurs to work as collaborative partners alongside dedicated Nestlé teams, to tackle projects that matter both to Nestlé and the company’s customers. “With the ingenuity and innovative spirit of startups, Henri@Nestlé can help address some of the world’s biggest nutrition, health and wellness challenges, creating funded opportunities to drive real impact at scale,” says the company’s Global Innovation Director, Gerardo Mazzeo. The Henri@Nestlé team has posted four new projects on the platform for startups to

review and offer their solutions to, within 45 days. Among the projects posted on the Henri@Nestlé include one that seeks to develop a tool that can test micronutrient deficiency, a huge problem in poor communities; and another project that is exploring ways to “find new complementary alternatives and additional ways to make quality drinking water available to the consumers.” In this project, the company is looking at innovations that can replace PET plastic and which will be “see-through, allow for branding, protect water quality and not require any municipal works. The solution “also needs to be credible in the eyes of eco-conscious consumers if we’re going to make a genuine difference to how we access water,” the company says.

PureCircle announces U$100m investment in its stevia capacity US - PureCircle, the leading producer of stevia ingredients, has announced an additional investment of US$100 million in its PureCircle Agronomy Program to support its goal of creating the world’s largest, natural stevia supply. The investment will focus on expansion efforts to more than 15 growing regions around the world and further development of the company’s farming footprint outside of China, which will result in a 10,000

hectare pipeline. “This investment highlights our commitment to providing our customers with the largest, natural supply of stevia leaf extract,” said Jordi Ferre, PureCircle’s Chief Operating Officer. “We are diversifying the countries we grow in to meet the needs of the food and beverage industry as the demand for naturally grown stevia continues to rise,” he added.

Beer industry adopts voluntary nutrition labelling

US - The beer industry in the US has agreed to provide critical information on the labels of their products as consumer interest in transparency catches up with the sector. According to a statement by the Beer Institute, the companies will voluntarily include a serving facts statement on their products, as well as disclose ingredients on either the label or secondary packaging via a list of ingredients, a reference to a website with the information or through a QR code.

Through the initiative dubbed ‘Brewers’ Voluntary Disclosure Initiative’, participating brewers and importers will voluntarily list calories, carbohydrates, protein, fat, and alcohol by volume and freshness dating on their beer products by including a serving facts statement. Beer Institute member companies including Anheuser-Busch, MillerCoors, HeinekenUSA, Constellation Brands Beer Division, North American Breweries and Craft Brew Alliance, have agreed to follow these standards. These companies together produce more than 81% of the volume of beer sold in the US. Consumers are increasingly interested in knowing more about the products they purchase. According to a recent survey conducted by the Harris Poll on behalf of Nielsen, 72% of beer drinkers think it’s important to read nutritional labels when buying foods and beverages. FOODBUSINESSAFRICA.COM

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REVIEW | AFMASS EAST & CENTRAL AFRICA 2016

Eastern Africa retail and food industry is transforming, but industry must build new capabilities to take advantage With entry of new supermarkets and fast food chains in the region, panelists say they have invested in capabilities, and ask for local sourcing and localization of requirements

KENYA – The food and beverage industry in Eastern Africa has invested aggressively in the last few years, but the rising investments in retail by multinationals have unraveled new requirements on the sector that the industry must meet to take advantage of the new opportunities. These were the sentiments of the industry leaders from the region that they aired at the African Food Manufacturing Conference at the last edition of AFMASS Eastern & Central Africa, which was held at the Kenya School of Monetary Studies in Nairobi, Kenya. The discussion was at the Industry Business Leaders’ Forum session at the event that targets C-level executive leaders from various sectors from the industry to discuss the past, present and future trends in the region. The industry panelists were positive about the future of the industry, and their companies have invested heavily to meet the rising demand for their products in new projects, expanded their product portfolio and have improved their supply chain and finance capabilities. The industry leaders included Bimal Shah who is the CEO of Broadways Group (a baking (Broadway Bakery) and wheat milling concern (Bakex Millers) and Rajan Shah the CEO of Capwell Industries who are packers and millers of cereal products. Others were Amir Parpia who is the Finance Manager at meat processor Alpha Fine Foods and Chairman, Food & Beverage Sector at the Kenya Association of Manufacturers (KAM), the industry association; Duncan Kimani, the Country Manufacturing Manager at Nairobi Bottlers, now part of the recently formed CocaCola Beverages Africa; and Wayne Glen Kleynhans, the Training Manager at Krones East Africa, a leading supplier of packaging solutions to the beverage industry.

people skills. “The market is growing in the region, which is good for all of us. Whenever one sector of the industry is growing, it certainly impacts the rest of the sectors in the industry. At KAM we see more interest in the food and beverage industry, with increased investments by local and international players also coming in to invest. This is a welcome development, as the region has been neglected for a long time,” says Amir Parpia. “We have expanded the range of products into the convenient ready to eat meals with our Al’s Kitchen brand to take advantage of the rise in formal retail outlets and the need for convenience,” he added. For Nairobi Bottlers, investment in the people side of its business has been a critical achievement in the past year. “We have set up a technical training centre in partnership with Krones and Centurion Systems at our factory to build capacity not just for ourselves, but for the entire industry in the region. Getting the right employees with the right skill set remains a huge challenge for our company and the industry. It takes 8-12 months to get new employees up to speed once we recruit them from the technical colleges or universities. We are teaching basic technical skills that are increasingly being required by ourselves and the industry,” commented Duncan Kimani. “Our partnership with Coca-Cola, through Nairobi Bottlers, in the technical centre project is geared towards getting technical personnel with the right skill sets into the industry. The project borrows quite a lot from the South African and German apprentice system. We believe that this

example can be replicated at the national level to boost technical training for the industry, and we are happy that the Kenyan government has taken a keen interest and is on the way to implementing a similar scheme,” Wayne commented. Nairobi Bottlers has also recently invested in innovations in packaging and formulations to improve customer choice and sustainability of their processes. For example, it introduced a new bottle design for Dasani drinking water, which is lighter by 5 grams. It also reduced the sugar content of its Stoney and Krest Bitter Lemon sodas by almost half to respond to health concerns of its consumers. The company is also currently expanding its capacity for water and soda bottling. “We have invested in more capability in our brands and quality and finance systems. With the entry of the multinationals, we need to be global players. We believe that with the multinationals coming into the market place - bringing with them better practices and systems – if we need do not rise to the occasion, we shall be left behind. So we have invested in HACCP and ISO systems and an improvement in our ERP system,” said Rajan Shah, the CEO of Capwell Industries who is also a Board member of KAM. One of the company’s plans is to open an innovation centre to drive the company’s leadership in product development, he

Investment focus in the last two years According to the panelists, the state of the food and beverage industry in the region is vibrant. The panelists were universal in their view in the future prospects of the industry, with all of them having invested aggressively in the last one year to build their capacity in their production capacities, supply chain and 18

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From left: Amir Parpia, Finance Director, Alpha Fine Foods; Duncan Kimani, Country Manufacturing Manager, Coca-Cola Sabco; Rajan Shah, CEO, Capwell Industries; Francis Juma, CEO, FoodWorld Media, the event organisers; Bimal Shah, CEO, Broadways Group; and Wayne Kleynhans, Training Manager, Krones East Africa at the end of the Panel Discussion by Industry Business Leaders at AFMASS Eastern & Central Africa 2016 in Nairobi, Kenya

added. For Broadway Group, Bimal Shah said that the company is boosting its brand awareness and production capacity that will also introduce a new product line for the region. “We have since last year invested aggressively in building our brand to take

“We have invested in a new pasta semolina mill which shall meet the local demand for pasta semolina without the need for imports into the region” Bimal Shah, CEO, Broadways Group cognizance of the young generation. We have ensured that every household is aware of what our Broadway brand is about by advertising the brand and what it stands for. “Secondly, we have made huge investments in new technology since late last year. At the end of this process in early 2017, we shall have new a new bread plant, new mixing technology and new packaging systems that will boost our operations and productivity significantly. “On the wheat milling side, we have invested in a new mill beside our current plant that will mill pasta semolina. Once this is done, we shall be able to meet the local demand for pasta semolina without the need FOODBUSINESSAFRICA.COM

for imports into the country and the region,” he added. Bimal explained that with the local wheat milling capacity rising by over 2000 tonnes per day in the last few years to 9000 tonnes per day, the future of the sector is bright, but there is need to improve on operations, reduce costs and be innovative. Multinationals are welcome but have to be careful how to approach the market The food and beverage sector in Africa has seen a resurgence of new international players in the last two years. These investments by the big giants will provide extra incentive for local players to up their game, noted the panelists, but it will not be a smooth ride for them in Africa, they cautioned. “Competition is a welcome move as it will keep us on our toes. We are happy that multinationals have trained their sights on the region. There will be challenges but with growth, we believe everyone will take their fair share,” said Amir Parpia. However, it will not be rosy for the multinationals in Africa, considering that local companies have the experience of doing business in Africa. “Yes, a number of multinationals are considering getting into Africa, but Africa is a different ball game. They have to learn to work hard to succeed because local players have a lot of muscle and deep knowledge of the market. It will be good to have more multinationals come into the region, as it will be a challenge to them and us to grow

together,” said Bimal Shah. “We have seen a lot of interest in the industry from majorly the South African companies but it will be hard for them to enter unless they come and set up their own plants here to compete with the local players,” he added, explaining why it has been difficult for new entrants to enter the milling and baking industry in Africa. Rising retail - new opportunities, new challenges The panelists were unanimous that the recent developments in the retail and fast food/ restaurant space bodes well for the sector, but they also challenged the new multinational entrants to focus on local sourcing of materials and to help boost the capacity of local manufacturers. Kenya has seen a beehive of activity, with the entry of several new international retailers including Walmart (in the form of Game, a subsidiary of South Africa’s Massmart) and Carrefour, the French retailer. On the food service side, KFC, Pizza Hut, Subway and Dominos have continued to grow their footprints in Kenya and into the region from the Nairobi base. Burger King is expected to open soon in Nairobi, with its eye on the regional market. The panelists expect that many of the brands to use Kenya as the base to enter the rest of Eastern and Central Africa “The fast food wave is in response to the young population, considering that the region’s median age is in the teens. As more of these fast food retailers come, it will also open JULY 2016 | FOOD BUSINESS AFRICA

REVIEW | AFMASS EAST & CENTRAL AFRICA 2016

for the greater good of the consumer and the industry,” Bimal Shah of Broadways Group advised.

up Eastern Africa,” noted Amir. On the rising fast food investments in the country, businesses have been forced to consider making some considerable changes that may affect the local businesses.

“The new players have made us to invest in our supply chain and extra capacity to meet new requirements” Duncan Kimani, Coca-Cola Beverages Africa

“The entry of the big international retailers is a good move. In the retail sector, we cannot afford to have a concentration of players. While the traditional trade is still the bigger portion, the formal trade is increasing aggressively. There is a whole transformation happening and for that we need a whole sort of new players, who will bring in a fresh approach to the retail space,” said Rajan. “The new entrants are asking us to up our game. For example, with Carrefour, we have a supplier agreement that guarantees availability of supply, with penalties included if we don’t meet our side of the bargain. These new players have made us to invest in our supply chain and extra capacity to meet new requirements; which we believe will improve our competitiveness in the long term,” Duncan Kimani added. “We have been seen growth of formal trade from 5% to 15% currently, with the medium scale supermarkets sales growing 30% per annum, further squeezing out the dukas and kiosks. The new entrants have forced us to be more adaptive to technology and reconfigure our route to market, providing more opportunities for jobs as we have had to expand our fleet and personnel,” added Duncan 20

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However, some challenges have emerged. “Some of these chains have global agreements with key suppliers like our company. We do have some challenges locally since some of these agreements have to be enforced locally. These include, for example, credit terms and packaging (some don’t receive glass or are asking for fountain machines, which we must work on to upscale that capacity). We have had to make changes to up our standards for these chains to match their international expectations,” said Duncan. Buy local, support local businesses But the region can learn from India to ensure that as these international brands expand into Africa, they must source supplies locally to build the capacity of the local industry. “With the international brands coming in, and despite their insistence on their standards, we have to insist that they must buy as much of local supplies as they can. We cannot afford to let say, McDonalds whenever it opens in Eastern Africa, to import their buns from another country. We have to put our foot down and ensure we achieve this the way India did, building local capacity of the local players in the process,” cautioned Rajan. But challenges are ahead in achieving this goal, considering the specific requirements that some of the big chains have in terms of equipment to use and other requirements. “Yes, specific requirements are there. For example, if you have to supply McDonalds you have to have equipment supplied by AMF to produce their products. But the question remains, who will invest in such equipment if you shall then be supplying immaterial quantities to a few McDonalds’ restaurants? The market demand will determine the kind of investments that can be made by the industry to meet the unique needs of these multinationals. That’s why we insist that both parties must work together

Ease of business deteriorates in Kenya The business leaders are apprehensive as Kenya gears for its next election cycle in 2017, and are asking for the politicians to play their part to ensure Kenya remains peaceful during and after the elections. “People are skeptical in the Kenyan situation as we approach 2017 due to post-election violence after the 1997 polls that led to massive losses by the food and beverage industry and the economy. We are seeking for a peaceful electioneering period and a fair result that will lead to a peaceful outcome, no matter who wins,” advised Amir. However, the devolved system of Government has placed new burdens on the industry. The industry leaders are asking for a reduction in the bureaucracy that has come up after devolution. “The new constitution that brought the devolved system of governance was a good move but, as businesses, we hope we do not create 47 enclaves in the country from the new system, which unfortunately is the direction we are heading to. Inter-county trade is being stifled by regulations and levies that are affecting businesses. We hope we can have some sanity in this matter since Kenya is still one country,” added Rajan.

“With the international brands coming in, we have to insist that they must buy as much of local supplies as they can” Rajan Shah, CEO, Capwell Industries

“In the food and beverage industry we have also seen a proliferation of bodies that seek to regulate the industry, while we should be going towards self-regulation,” he added. Another issue of concern is the increased taxation in the country that has affected businesses and reduced consumer demand. “Last year we were hit with a rise in excise duty in January this year and had to pass these to the consumers, making them unaffordable to the majority of our target consumers. We hope the Government can spend more cautiously to reduce the tax burden and where possible harmonise the taxation regime,” concluded Duncan.

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Innovation our secret to success during tough economic times – Group R&D Exec, Dairibord Zimbabwe

ZIMBABWE - A focus on delivering new products to the market and increased investment in research and development (R&D) have enabled Dairibord Holdings to weather the tough economic environment in Zimbabwe, says the Group R&D Executive of the company, Charity Magwenzi. “A food company cannot achieve its full potential without R&D. R&D pays for itself. At time of crisis like we have had in our country, I would advice food companies to invest more in R&D. Some say that R&D is a cost centre, but this is not the case if done right,” Charity said. Charity made the comments at the recently concluded AFMASS Eastern & Central Africa Conference & Expo in Nairobi, Kenya. Charity believes that the company’s focus

on R&D by the listed food manufacturer has been a major contributor to the company’s capacity to weather the storm and retain oand grow market share. The level at which R&D is located in the organisation’s hierarchy is critical in making R&D successful in any company, she adviced. “R&D is a strategic decision by the company. It can’t be left to a low level employee. For this function to succeed, it must be placed high up the chain in the company structure. If the Managing Director can take charge of R&D, so be it,” advices Charity, who reports directly to the Managing Director, and is part of the core management team at Dairibord Holdings. “Our strategic focus as a department is on revenue growth, cost leadership, formulations and packaging. We talk about cost leadership, not cost reduction since we must be the lowest cost producer in the market,” she said. “R&D costs money but our company has realized that the cost of R&D has been nearly balanced with the savings in costs, not including the increased sales coming out of the new products that we have launched over the years. “We have saved over US$1 million in the last 4 years, delivering real and measurable value to the company,” she revealed. The revenue from new products has also grown to 15% of total company revenue, from 5% just

some few years back. “The company has over the year’s appreciated the contribution we have made to the bottom line because the management can measure our success; goals have been clearly defined and tracked by the company to ensure we are on track,” she adds. Apart from developing higher value products like premium ice creams and beverages including bottled water, the company has also introduced a range of traditional products that have been well received by the market. “Our R&D has taken a deep look at traditional African food products in our innovation approach. For example, our Pfuko sorghum beverage is a traditional Zimbabwean product that we introduced recently, and has done extremely well in the market. “When it comes to the development traditional food products in Africa, local companies like Dairibord have an edge over foreign competitors. We have been trailblazers in our market due to our focus on some of these products,” she adviced, noting that the nostalgic nature of these traditional products provide a great opportunity to food and beverage processors. The company has also gained a lot from working with suppliers who have been of great support in delivering their goals.

Continuous improvement has saved us US$4m – Manufacturing Head, Nairobi Bottlers KENYA – Nairobi Bottlers has so far saved KSh 439 million (US$4.39 million) in five years on their journey towards a World Class Manufacturing facility, says the company’s Manufacturing Manager, Josephat Kilungu. The company has been implementing continuous improvement tools as it seeks to reduce waste, improve compliance and drive down costs of production since late 2010. “We operate in a highly volatile, uncertain, complex and ambiguous (VUCA) environment in our market in Kenya. The recent entry of new supermarket players in the country and the region is an indicator of how unpredictable the market can be. Just ask the major retailers like Nakumatt and Tuskys, and they will tell you that the entry of Game and Carrefour will surely change their way of doing business. “We chose continuous development as one of our strategies to deliver on our promise FOODBUSINESSAFRICA.COM

to our shareholders and to our customers, and survive in this VUCA environment,” Kilungu said. “Our company has a blend of Operational Excellence (OE) and TPM that work together in sync to deliver our set goals,” he explains. Kilungu was one of the key industry speakers at the just concluded AFMASS Eastern & central Africa Conference & Expo, which took place in Nairobi, Kenya in early June, 2016. “On our TPM journey, we have gone through a number of milestones, including the preparation stage, where the company did a TPM roadshow and selected a pilot line that we used to fine tune the TPM journey, and from where the learning could be replicated to the rest of the lines,” he adds. “We have since then gone through the foundation and preparation stages. Right now we are at the implementation stage. We

plan to meet our goal of being a World Class Manufacturing facility in 2018,” he informed the delegates. “We have realized bankable savings worth KSh 439 million (US$4.39 million) in our TPM journey at Nairobi Bottlers through our continuous improvement activities, showing the management that this was indeed a good decision and worth the investment that the company has put forward towards the implementation of these programs,” Kilungu says. Through TPM, company is aiming to a process that eliminates wastes, defects and accidents; develop the technical skills of operators; empower operators to take charge of their stations and improve trouble shooting, he informed the forum. Nairobi Bottlers is part of the former Coca-Cola Sabco group of bottlers, now Coca-Cola Beverages Africa group. JULY 2016 | FOOD BUSINESS AFRICA

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Coca-Cola Beverages Africa commences operations as Africa’s biggest bottler takes shape The company also opens new plant in Mozambique, growing its regional footprint

AFRICA – The newly formed Coca-Cola Beverages Africa (CCBA) has began operations as SABMiller, the Coca-Cola Company and Gutsche Family Investments join forces to create a behemoth that covers from South Africa to Ethiopia, Kenya to Nigeria and Ghana. CCBA brings together the African nonalcoholic ready-to-drink bottling interests of SABMiller, the Coca-Cola Company, and Gutsche Family Investments, owners of the Coca-Cola Sabco franchise. This follows merger approval in all the 11 countries that the new company will initially serve, with plans to increase the number to 14 countries by the end of 2017. The merger brings Coke’s Dasani together with water brands from SABMiller across the region, bringing to an end SABMiller’s encroachment into the water category in the last decade through buyouts of established brands including the

Keringet in Kenya, Ambo in Ethiopia and Ruwenzori brand in Uganda. SABMiller has also been the largest bottling partner of Coca-Cola beverages in Africa, with the merger expected to give the new unit significant benefits. The new company, the largest Coca-Cola bottling company in Africa, will produce and distribute about 40% of all Coca-Cola beverage volumes in Africa and is the 10th largest Coca-Cola bottler worldwide. CCBA is headquartered in South Africa and it will manufacture and sell 40 brands from more than 30 African bottling plants. With the end of the merger process, CCBA has operations in a number of key countries in the East, West and South African regions: South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte, Comoros and Nigeria. Botswana, Swaziland and Zambia are scheduled to join CCBA by end

of 2017, according to the company. Coca-Cola Beverages Africa CEO, Doug Jackson, said: “The creation of CCBA will provide a stronger, more successful CocaCola system in Africa. As one operation, CCBA will better serve our consumers and communities in Africa, offering consumers greater choice, broader availability and better value.” Meanwhile, Coca-Cola has opened a new US$130 million bottling plant in Matola Gare in Mozambique as it continues to fill its US$17 billion investment pledge in Africa. “We have continued to increase investment in our business in Africa and are proud to be one of the largest employers across Africa as well as Mozambique,” said Coca-Cola Chairman and CEO Muhtar Kent at the launch. “This facility is the latest example of our continued commitment to refresh African consumers, while at the same time creating opportunities for enterprise and employment along our supply chain.” The new plant is the largest green-field facility by Coca-Cola Sabco, now part of the recently-launched Coca-Cola Beverages Africa, has developed across its sevencountry market in Southern and East Africa. It is equipped with fully computerized operations including energy, wastewater recycling and building management systems, the company says. The new plant employs 400 full-time employees with two bottling lines – one for glass bottles and one for PET plastic bottles. A third line for glass bottles could be added in the future.

Union Dicon Salt on US$100m transformation, to focus on starch processing NIGERIA - Union Dicon Salt (UDS) Plc has initiated a 48-month, US$100 million strategy that is aimed at transforming the company into an integrated fast moving consumer goods (FCMG) and agri-business player with an initial focus on food and agriculture. According to the Managing Director Chuka Mordi, the models for the plan are farming (build production capacity in key food areas); processing (become a national manufacturer and distributor of FMCG in foods); logistics (build an integrated supply chain and to be a processor of agricultural products and food ingredients. He disclosed that core investors have INTO AFRICA injected a total of N3.3 billion (US$11 24

million) into the company to revitalise it, while corporate restructuring and business transformation of cassava farming and starch processing for the next to two years is between N5billion (US$17 million) and N10billion (US$ 34 million), while rice farm development and fruit juices is N5billion (US$17 million). To revive the business, he said the company will raise 40% equity and 60% debt. He added that cassava and starch production is the immediate focus of the business to achieve near-term profitability and drive the company’s growth and success. “Leveraging on 2015’s success and announcing the return of the UDS, we want

to finalise the acquisition of cassava and rice farms, acquire 7,900 hectares in Delta State and finalise agreement for land in Ebonyi State,” he added. UDS recently replaced the Cargil, a US based agro-industrial as core investor in the Alape Staple Crop Processing Zone (SCPZ) in Kogi State – ThisDay

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Astral Foods decries feed costs and imports, to reduce operations

SOUTH AFRICA – South African poultry producer Astral has alerted shareholders that the impact of high feed costs, poultry imports and the weak consumer market could have a negative effect on the results of the group. In a filing to the Johannesburg Stock Exchange where the company is listed, Astral said that the impact of the above negative effects were more severe than originally anticipated, as the company closed its third quarter. “Feed costs have continued to escalate

following the impact that the drought had on the local maize crop. This is expected to continue into 2017 until projections of a better maize crop for the new 2016/2017 planting season materialize,” it said in its statement. El Nino induced drought in 2015 season has affected the maize crop in South Africa, with the Crop Estimate Committee predicting that the country will harvest the smallest crop this year since 2007 of 7,161 million tonnes from 9,955 million tonnes in 2015, with imports of the commodity continuing into the second year, from a previous surplus. The company has implemented a program to import maize to mitigate the risk of physical shortages of maize in the country. The company also blamed high levels of imports for its predicament. “During this period there were also record levels of

poultry imports which added to the existing surplus of poultry stock in the country. This, together with a consumer market that is under pressure, resulted in downward pressure on selling prices in order to sell the ongoing production of chicken.” The company says that several independent poultry producers have faced severe financial distress and are either currently in the process of closing down their businesses, or are going into business rescue. The group has introduced or enhanced more severe cut backs in its poultry production chain to reduce stock to manageable levels. It says that if the situation continues and if the company receives no relief, it will be forced to downsize production permanently, impacting on labour numbers.

EABL gets new CEO as Ireland takes London role KENYA – East Africa’s biggest beverage operator East African Breweries has a new CEO after Charles Ireland who has been leading the company leaves for a new role in London. Andrew Cowan, a British national, who has been the Country Director for Diageo

Great Britain, has taken over as the new Managing Director with effect from 28th July 2016. He has also been serving as an alternate director to Nick Blazquez at the EABL Board. Andrew joined Diageo in 2008 as Commercial Director for Northern Ireland,

with earlier roles in the FMCG industry, including positions held at GlaxoSmithKline and Boots Plc. The former MD, Charles Ireland, has been appointed to the new role of General Manager, Great Britain, Ireland and France, based in London.

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South Africa salt limit legislation comes into force as Minister proposed new sugar tax looms

SOUTH AFRICA – Legislation that seeks to reduce salt content in processed foods has come into force in South Africa as the country strives to contain rising cases of hypertension and other ills caused by excessive salt intake. Meanwhile, the country is due to implement a 20% tax on sugar-sweetened beverages from April 2017, as the country’s

diseases like stroke and heart disease. And with statistics showing that about 130 heart attacks and 240 strokes occur daily in South Africa there is an urgent need to reduce salt intake in the country, according to the lobby. Bread is the highest contributor to salt intake in South Africa. While the World Health Organisation recommends that adults eat less than 5g of salt (a teaspoon) a day, experts estimate that salt intake by some South Africans could be as high as 40g of salt a day. “The problem is that up to 60% of this salt is hidden in products and consumed by people probably unaware of the high salt content in their food,” says Dr Vash Mungal-Singh, CEO of the Heart and Stroke Foundation SA. The legislation has set limits for each product type with an emphasis on products with high salt content including bread, snacks, meat and savoury products (Table 1). With the country proposing to tax sugar beginning next year, it remains to be seen if any of the countries in the rest of Africa will follow South Africa’s lead in the future.

health authorities take a hard stance on ill health brought by unregulated food and beverage products. According to the lobby group Heart and Stroke Foundation South Africa 6.3 million people live with high blood pressure, with South Africa having one of the highest rates of hypertension worldwide which increases the susceptibility to life-threatening

Table 1: South Africa’s new salt requirements by product as set by the Ministry of Health Maximum Total Sodium (Na) per 100g of foodstuff

Foodstuff category

Deadline 1: June 30, 2016

Deadline 2: June 30, 2019

Bread

400 mg Na

380 mg Na

All breakfast cereals and porridges, whether ready to eat, instant or cook up, hot or cold

500 mg Na

400 mg Na

All fat spreads and butter spreads

550 mg Na

450 mg Na

Ready to eat savoury snacks, excluding salt and vinegar snacks

800 mg Na

700 mg Na

Flavoured potato crisps, excluding salt and vinegar snacks

650 mg Na

550 mg Na

Flavoured ready-to-eat, savory snacks and potato crisps – salt and vinegar variety only

1000 mg Na

850 mg Na

Processed meat – non cured – classes 6, 12 or 14 of the South African Bureau of Standards SANS 885: 2011

850 mg Na

650 mg Na

Processed meat – cured – classes 7, 10 or 11 of the South African Bureau of Standards SANS 885: 2011

950 mg Na

850 mg Na

Raw processed meat sausages (all types) and similar products

800 mg Na

600 mg Na

Dry soup powder (not the instant type)

5500 mg Na

3500 mg Na

Dry gravy powders and dry instant savoury sauces

3500 mg Na

1500 mg Na

Dry savoury powders, to be mixed with noodles to be mixed with a liquid

1500 mg Na

800 mg Na

Stock cubes, stock powders, stock granules, stock emulsions, stock pastes or stock jellies

18000 mg Na

13000 mg Na

Meikles Africa to boost its investments in agriculture ZIMBABWE – Meikles Africa, a diversified conglomerate that co-owns TM Supermarket chain with South Africa’s Pick n Pay is set to boost investments in its agribusiness wing. In an update to the Zimbabwe Stock Exchange, the company plans to expand 26

JULY 2016 | FOOD BUSINESS AFRICA

its agribusiness unit, Tenganga Tea Estates, which is located in Chipinge District of Manicaland. In the company’s ambitious goals, it will add an extra 700 hectares of macadamia, 500 hectares under avocado and 400 hectares under coffee on top of its 2,600 hectares of tea.

Meanwhile, the company is back to positive territory after releasing its end year financial results, which revealed after-tax profit of US$6.5 million for the year ended in March, from a loss of US$3.4 million in the previous year. FOODBUSINESSAFRICA.COM

Coca-Cola announces EMEA structure and leadership team changes to align with bottling operations

AFRICA - The Coca-Cola Company has announced a new streamlined international structure to better align its operating units against its global bottling footprint and to promote and develop key Coca-Cola leaders. The company believes that these changes to its international operating structure better supports its evolving bottler footprint, says Muhtar Kent, Chairman and Chief Executive Officer. The company will form a Europe, Middle East and Africa (EMEA) Group, consisting of the business units that currently make

up the Europe and the Eurasia and Africa Groups. In Europe, the Central and Southern Europe and Russia, Ukraine and Belarus business units will be combined into a new business unit called Central and Eastern Europe to better support the bottling footprint in that region. In Africa, two business units will be reconfigured to more closely align operations with bottling operations on the continent, with the formation of a new South and East Africa business unit and a West Africa business unit. The South and East Africa business unit will take care of

the zone largely taken up by the new CocaCola Beverages Africa company. Therese Gearhart, currently President, Southern Africa, becomes President, Latin Center; Kelvin Balogun, currently President Central, East and West Africa (CEWA), will become President, South and East Africa; Zoran Vucinic, currently President, Russia, Ukraine and Belarus, who will become President, Middle East and North Africa; Galya Molinas, who will continue in her role as President, Turkey, Caucasus and Central Asia; and Peter Njonjo, currently General Manager of the East Africa Franchise in CEWA, who will become president of the new West Africa Business Unit. Meanwhile Nathan Kalumbu, currently President, Eurasia and Africa Group, will focus on key initiatives across the Africa business, including the Africa bottler consolidation, as well as serve on a number of boards, until he retires from the company at the end of 2016, says the company. The changes to the operating structure and leadership changes will be effective August 1, 2016 in most of the cases.

NETWORK #TPM=MoneySaving Josephat Kilungu, Manufacturing Manager at Nairobi Bottlers, part of Coca-Cola Beverages Africa, shared with delegates how implementing Total Productive Management continues to save his company millions of dollars. It is this spirit of sharing that makes AFMASS Eastern & Central Africa a great place for industry professionals and managers Take up your place at AFMASS Eastern & Central Africa 2017.

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Beverage firms in East Africa to outperform peers in SSA - report

AFRICA - Beverage companies operating in the markets of East Africa stand a better chance of surprising on the upside in the short term and showing superior performance in the long run according to a research report released by Arqaam Capital, an emerging markets investment bank. Resilient economic growth, benign fiscal positions, favorable demographic trends and structurally low consumption levels

suggest that companies operating in East African markets should enjoy better growth over time and as a result stronger investor interest. “We prefer companies with leading market shares that operate in economically resilient markets in East Africa such as Kenya and Tanzania; have leading brands in key segments with a particularly strong presence in the value/economy segments enabling them take advantage of consumer down-trading and maintain a lean cost structure; and a higher share of local sourcing because imports and weak currencies put pressure on margins,’ said Victor Dima, Executive Director of Equity Research at Arqaam Capital. “We believe that South Africa consumers will come under increasing pressure in the short term, which adds risks to the performance of beverage companies which

are discretionary in nature. At the same time, South African companies are worldclass diversified beverage companies, which increasingly benefit from international, including Sub Saharan, growth, which will be a differentiating factor,” Victor added. According to the research report, premiumization will continue to play a significant role, but the economy segment is set to see much stronger growth in the short term. Longer-term consumer preferences are expected to continue moving sideways. This is expected to favor high-end brands, as African consumers will remain aspirational in nature, as affordability will remain the central issue of the brewing industry in SSA. In the short term, however, the reports expects much stronger growth in value/economy brands as economically constrained consumers in SSA trade downward.

ICRISAT develops portable low-cost device for Aflatoxins detection

MALAWI - The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) has developed a new technology that detects Aflatoxins on location, potentially saving lives and opening export markets for African and Asian countries.

The rapid test kit device which, which costs under US$2, is combined with a mobile extraction kit that will be ready by October this year, and will be the first portable cost-effective way for farmers and others to detect Aflatoxins instantly. It is a simple non-laboratory based kit that can be used directly by non-technical people such as farmers, agro-dealers and food processors. Currently, the test can be applied to detect Aflatoxins in groundnuts. Traders can use the kit to check for contamination before concluding a sale while public health authorities can also utilize it to help identify suspected samples in cases of an outbreak of Aflatoxins poisoning, says ICRISAT.

The compact portable device is based on the lateral flow immunoassay test (popularly known as the strip test like that used to detect glucose in human blood). If Aflatoxins are present in the sample, then one pink line appears on the strip, whereas if the sample doesn’t have any aflatoxin, two pink lines will appear. “The device will contribute to manage and reduce the entry of aflatoxins in the food value chains, improve diagnosis for local and export trade and support the food processing industry to maintain low exposure levels in food products in our local markets as well as for export markets,” said Dr Anitha Seetha, Scientist, ICRISAT, Malawi.

Flour Mills defers rights issue on investor apathy, economic headwinds NIGERIA - The current economic headwinds and investor apathy have compelled the directors of Flour Mills of Nigeria (FMN) Plc to defer its plans to raise equity capital of N40 billion (US$125 million) through a Rights Issue. Given the huge bank charges FMN is paying on borrowings, which has driven costs of finance upwards for many years, shareholders of the company last year authorised the directors to raise up to N40billion of additional equity via a Rights Issue. However, the directors have decided to put the right issue on hold for now and will later raise the funds in three tranches. According to the directors, given the economic headwinds, they decided to undertake the Rights Issue through a shelf programme (a situation whereby securities 28

JULY 2016 | FOOD BUSINESS AFRICA

are sold over a period of time) to enable the company raise the required funds in several transactions over a three-year period. The directors said they have already registered a shelf programme with the Securities and Exchange Commission (SEC), adding that they will continue to assess the economic climate to determine the most appropriate time to launch the first tranche. The company’s bottom-line has been affected by huge interest charges paid on bank borrowings. The Chairman of FMN, Mr. John Coumantaros, had last year said the proceeds from the Rights Issue would help the company reduce its debt burden, lower its interest charges as well as to augment its working capital – ThisDay FOODBUSINESSAFRICA.COM

Uganda Breweries celebrates 70 years, names Ocitti the MD

UGANDA - Mark Ocitti Ongom has taken over as the Managing Director at leading brewer Uganda Breweries Limited (UBL) with effect from 1st August 2016. Mark takes over from Nyimpini Mabunda, who has been the MD of UBL for the last 3 years. Mark Ocitti becomes the second Ugandan national joined EABL in August 2014, as Managing Director for EABL International (EABLi), which is responsible for EABL’s business in South Sudan, Rwanda, Burundi and DRC. According to the company, during his tenure at EABLi, Mark’s strength in

commercial and operational experience enabled him to successfully develop a robust distribution network in South Sudan and Rwanda, growing the Tusker brand into the number one preferred beer brand in South Sudan; as well as achieving and maintaining market leadership in premium spirits in both Rwanda and South Sudan. Meanwhile, the company has celebrated 70 years of existence at the end of July 2016, since it was registered after the World War II in 1946. “In the early 1990s our capacity was at 650,000 hectolitres and by 2001 we were at 750,000 hectolitres. In 2010 we invested in a new state-of-the art bottling line, which doubled the brewery’s capacity and improved bottling versatility. In 2012, we invested in installing a mash filter to support the use of local raw material sourced from within the country thus significantly improving our brewing capacity to over 1.2 million hectoliters a year,” the outgoing MD said during the ceremony.

Zambia Sugar opens expanded sugar refinery, to focus on regional and export market

ZAMBIA – Zambia’s largest sugar producer Zambia Sugar, part of the Illovo Group, has boosted its investments in the country with a US$80 million expansion project. The project expands the company’s sugar production capacity through the construction of a modern, high-specification refinery that more than doubled its annual refined sugar production capacity to about 100,000 metric tons and increased annual sugar production capacity from 420,000 to 450,000 metric tons through a range of smaller factory improvements According to the company, the project “consolidates Zambia Sugar’s position as Africa’s single-biggest cane sugar producer and is an investment for the future.” It FOODBUSINESSAFRICA.COM

also underlines the company’s strategy of focusing on growth within its domestic and regional markets and downstream opportunities to diversify its product mix. The project has also allowed Illovo to align Zambia Sugar’s manufacturing assets behind the post-EU export sales mix and higher food safety standards for its domestic and industrial customers. Illovo Group, Africa’s largest sugar miller with operations in majority of Southern African countries, is a wholly owned subsidiary of Associated British Foods (ABF). ABF early this year acquired the minority shareholding it was not holding in the group, taking its stake to 100%.

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Ethiopia imports 140,000 MT sugar to fill shortfall as local production lags behind ETHIOPIA - The Ethiopian Sugar Corporation is importing 140,000 metric tonnes of sugar at a cost of 71 million dollars from India, reports Addis Fortune The purchase has come after the closure of all the sugar factories in the country, following the start of the rainy season. The Corporation has managed to meet only 44% of the annual production target of 535,693 tonnes from domestic production as per the nine-month performance report presented to Parliament, with only four of the Corporation’s operating factories contributing to this production. Other factories are either under development, or are delayed, according to the newspaper.

Presco’s turnover surges despite forex challenge NIGERIA – Agribusiness and agro processing company Presco Plc reported a profitable year despite the harsh business environment crippling investments in the country, reports ThisDay. Despite the scarcity of forex during the year, the company’s Chairman Pierre Vandebeeck says the company recorded a turnover of N10.448 billion (US$32.8 million) up from N9.138 billion (US$28.6 million), resulting in profit after tax of N2.231billion (US$7 million), noting that the company continues to reap the dividend of “her expansion programme of the previous years”. “The performance of the year 2015 was very good. We achieved a total of fresh fruit bunches (FFB) production of 176,477 tonnes as against 162,076 tonnes in the previous year, crude palm oil produced was 39,328 tonnes compared with 27,586 tonnes of the year 2014 and refined, bleached, deodorised oil of 29.159 tons compared with 25,279 tonnes of the year 2014.”

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Carrefour opens first sub-Sahara Africa retail store, as report shows region will take priority from South Africa

KENYA – French retail group Carrefour has opened its first store in sub-Sahara Africa in Nairobi, Kenya as the big retail chains target the growing urban population and rising incomes in the region. Located in the leafy suburbs of Karen, the store which is the anchor tenant at the Karen Hub mall, Kenya’s newest mall, the store has been described as a breath of fresh air in the country, considering its excellent design and variety of local and imported brands on its shelves. With more than 5,000 square feet of shopping space, the new supermarket has a number of innovations in the local market: a butchery and fish market which are operated at chilled temperatures and high levels of hygiene; and bakery and fruits and vegetable market with a wide variety of options. The opening of the retailer’s first unit in Nairobi, even before it opens in South Africa, where the majority of consumer goods

players frequently use to enter the rest of Africa, is an indication of the continued importance of the continent as a growth driver, according to a report by Euromonitor, a research company. “Even though South African cities are some of the region’s most developed consumer markets, future growth potential will increase elsewhere,” says The Doing Business Beyond South Africa – Growth Opportunity in sub-Sahara African Cities report. The report states that despite short-term challenges, formal retailing in countries such as Kenya, Nigeria and Cameroon offer substantial investment and business opportunities in the medium- to long-term for retailers. “In addition, South Africa is struggling to maintain its reputation globally as the best place for multinational companies to establish themselves in Sub-Saharan Africa. The lack of talent and relatively high cost of retention alongside political instability

during the 2010s represents major shortcomings in the country’s business environment.” It says that companies will increasingly be attracted to enter the rest of the continent through other cities because of changing conditions and better prospects. “Top corporations are already recognising the importance of having a broader mindset and are choosing business locations that align with their priorities.” According to the report, while between 2015 and 2030, Lagos, Johannesburg, Pretoria, Cape Town and Durban will together account for 53%, or US$88 billion in constant value terms, other cities in Africa will post higher forecast consumer expenditure real growth in the period 2015 to 2030, with cities in Kenya and Cameroon posting impressive increases. Of the surveyed cities Kisumu (280%), Mombasa (230%) and Nairobi (220%) in Kenya will post the highest growth in consumer expenditure. Abuja (170%) and Cameroonian city of Yaounde (170%) will also be hot spots of growth in the continent. However, challenges remain in the quest of multinationals to take over in Africa, especially the fact that local companies have also upped their game, and are making it harder for the big giants to enter the market unchallenged. “Africa-based companies are strengthening their competitive muscles as local providers by capitalising on their local knowledge of consumers, suppliers and distribution networks,” notes the report. It gives an example of the Walmart-owned Massmart that has only grown its footprint in the rest of Africa from 10 to 25 during the 2010-15 period, while Shoprite, a South African retailer, has doubled its footprint in the region to 300 during the same time.

Innscor Africa gets new CEO as Toni Fourie leaves

ZIMBABWE – Toni Fourie, who has been the Group Chief Executive for Innscor Africa, the Zimbabwean conglomerate, has resigned effective August 21, leaving the Group that has undergone drastic changes in the short time he was at the helm. 30

JULY 2016 | FOOD BUSINESS AFRICA

Zimbabwean Julian Schonken who has been the director light manufacturing business at the company will replace Toni from September 1, who is South African and joined the company in 2014. Under Toni’s watch, which was punctuated with work permit issues, with the CEO forced to commute in and out of the country, the company has closed several integrations, acquisitions and disposals to align its strategic direction and unravel value for the shareholders. But the most critical was the two

unbundling transactions – one of Simbisa Brands, its quick-service restaurant business and the other of Axia, its retail, logistics and distribution business, which were listed separately on the ZSE – with the aim of making the company to focus on its “light manufacturing of food and other FMCG products” business line. The company has also announced the appointment of John Koumides as the to manage its Axia Corp unit, from his current role as the Director Corporate Finance Innscor Africa. FOODBUSINESSAFRICA.COM

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Danone buys plant protein maker WhiteWave

Top Dairy producers in the World report Arla opens Senegal milk powder packaging plant DAIRYBUSINESSAFRICA.COM

VOLUME 2 • ISSUE 2, NO. 3 • ISSN 2412-3366

DAIRY INDUSTRY IN UGANDA SHOWS GREAT PROMISE Review | AFMASS East & Central Africa 2016 JULY 2016 | DAIRY BUSINESS AFRICA

A FOODWORLD MEDIA PUBLICATION

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Danone acquires WhiteWave, as plant-based products take off in developed countries

US – In a deal that lends credence to the fast growing plant-based beverages market in developed countries, Danone, the French food and beverage company, has acquired WhiteWave Foods Company, the producer of leading brands including Silk beverage brands. The deal, expected to close by the end of the year, at US$56.25 per share, values Whitewave at US$12.5 billionn, including debt and liabilities. According to Danone, the transaction is a “perfect match of vision, culture and businesses” and “creates a truly unique global leader strongly aligned with consumer trends for healthier and more sustainable eating and drinking options.” The deal nearly doubles contribution of Danone’s US business, Dannon, from 12 to 22% of Danone’s total portfolio. WhiteWave is a Colorado-based US company with US$4 billion in sales in 2015. It has a portfolio of large and leading branded platforms in North America and Europe in

high-growth, on-trend food and beverage categories. The company’s products focus on the premium organic dairy, non-GMO, plant-based alternatives to milk and yogurt, fresh foods, and coffee creamers. The company has been the fastest growing food and beverage company in the US and one of the fastest growing in Europe for the past four years. It has several strong brands including highly recognized, category leading brands such as Silk So Delicious dairy free products; Vega, Alpro, Provamel, Horizon Organic, Wallaby Organic, Earthbound Farm and International Delight. The acquisition of Whitewave comes as the market for dairy alternative products continues to rise due to consumer concerns with dairy products and a rise in gastrointestinal problems. Soymilk, almond milk, coconut milk and cashew milk and milks and beverages based on plant sources (hazelnut, oat and rice); and premium,

organis dairy products and coffee products are Whitewave’s key product focus areas. “This unique combination positions us better to address tomorrow’s consumer trends and represents a great opportunity to step change the ambition of our plan for an Alimentation revolution and to accelerate our path towards strong sustainable and profitable growth by 2020. It will allow us to enhance Danone’s growth profile and reinforce our resilience through a broader platform in North America,” said Emmanuel Faber, Danone Chief Executive Officer. The company will seek to appointment Gregg Engles, WhiteWave Chairman and Chief Executive Officer, as a member of the Board at closing of the deal. The market for dairy alternatives is projected to reach about US$19.5 billion by 2020 according to MarketsandMarkets, a research firm, with the Asia-Pacific region the largest market for dairy alternatives and projected to be the fastest-growing market for dairy alternatives to 2020. Europe and US follow, due to increasing consumer attraction to alternative beverage products, including organic versions. Ressponding to these consumer concerns, Danone’s US subsidiary Dannon recently announced that it is introducing Dannon and Oikos brands with more natural and non-GMO ingredients into the US market. “Transparency is the key word for this shift. To show to our consumers that in order to make a real choice, we need clear labels, we are making a bold change and candidly discussing how transparency from brands is essential for shoppers to make real choices,” said Mariano Lozano, CEO, Dannon at the launch of the new products and initiative.

Dairy companies seek expansion into North East region of India

INDIA - Domestic dairy producers are rolling out plans to widen their footprints in the northeastern states of the country, encouraged by the region’s wet climate, which is considered favourable for setting DAIRYBUSINESSAFRICA.COM

up dairy farms and processing units, according to the Economic Times of India. Some dairy majors and cooperatives are looking to forge alliances with local players for procuring milk and selling their branded products in the region, which has been skewed towards skimmed milk powder but are now seeking to expand the offering to include value-added dairy products, notes ET. These include Gujarat Cooperative Milk Marketing Federation (Amul), Hyderabadbased private dairy firm Dodla Dairy, Mother Dairy and the consumer goods giant ITC. “North Eastern India is a potential

market for us and we will be sourcing our milk requirements locally to connect the farmers to the market,” said RS Sodhi, MD, GCMMF. “If required, we will be sourcing our milk requirements from our existing channels.” GCMMF said it will invest Rs 3,000 crore on expansion and proposes to enter Assam’s market through third-party manufacturing arrangements, where the partner will supply milk to processors in Assam and it will market it. Dharampal Satyapal Group (DS Group), is also ramping up its dairy business in the region with a Rs 30-crore dairy facility in Assam. JULY 2016 | DAIRY BUSINESS AFRICA

NEWS | INTERNATIONAL

Top 20 processors collect 25% of milk produced worldwide – IFCN report

WORLD - The top 20 milk processors collect a total of 200 million tonnes of milk equivalent (ME), equivalent to 25.4% of milk produced worldwide, according to a report by the Dairy Research Network (IFCN). The report that lists the top milk processors by volume ranks Dairy Farmers of America as the leading dairy processor with a milk intake of 28.1 million tonnes ME in 2015, collecting about 3.6% of all the milk

processed in the World. It is followed by New Zealand dairy cooperative Fonterra (22.1 million), France origin Groupe Lactalis (15.1 million), European cooperative Arla Foods (14.2) and Swiss based Nestle’ (14 million). Other companies in the top 10 include Dutch FrieslandCampina, US based Dean Foods, German company DMK, US/ Canadian Saputo, and Califormian Dairies. Danone came in at position 11 with 7.5

million tonnes ME. According to the report, there are new entries in the top 20 list including North American groups Agropur (number 16) and Schreiber Foods (number 20). Dairy processors from the developing World have also moved into the top 20. Amul from India and Yili and Mengniu from China, together collecting 19.1 million tonnes ME, or nearly 10% of the top 20 processors, came in at number 13, 12 and 18 in the chart. Acording to the report, turn over per kg of processed milk ranged between US$0.50-2.40 per kg in 2015, with Nestlé and Danone ranked highest and Dairy Farmers of America and California Dairies registering the lowest figures. Meanwhile, IFCN researchers estimate that milk supply will grow by 1.5% in 2016, substantially lower than 2015 (+1.8%) and 2014 (+3.2%). On the other side, the demand is estimated to grow by the IFCN at 2%, lower than the long-term average of 2.4% per year from 2006 -2015. IFCN estimates that in 2016 milk demand will exceed milk supply, especially in the second half of the year.

Table 1 - World’s Top 20 Milk Processors by Milk Uptake Rank

Company Name

Origin/Main operating countries

Milk intake/year, million tonnes milk equivalent (ME)

Estimated turnover Market share, as a % per kg milk, in US$ of world production

Dairy Farmers of America

USA

28.1

0.5

3.6%

Fonterra

New Zealand

22.1

0.6

2.8%

Groupe Lactalis

France

15.1

1.3

1.9%

Arla Foods

Denmark/Sweden/ UK

14.2

0.8

1.8%

Nestlé

Switzerland

14.0

1.9

1.8%

FrieslandCampina

Netherlands

12.6

1.0

1.6%

Dean Foods

USA

10.3

0.8

1.3%

DMK

Germany/ Netherlands

7.8

0.9

1.0%

Saputo

Canada/USA

7.7

1.1

1.0%

10.

Californian Dairies

USA

7.7

0.5

1.0%

11.

Danone

France

7.5

2.4

1.0%

12.

Yili Group

China

6.8

1.4

0.9%

13.

Amul (GCMMF)

India

6.5

0.8

0.8%

14.

Müller

Germany/UK

6.3

1.2

0.8%

15.

Glanbia Group

Ireland/US

6.1

0.7

0.8%

16.

Agropur

Canada/US

5.8

1.0

0.7%

17.

Land O’Lakes

USA

5.8

0.7

0.7%

18.

Mengniu

China

5.8

1.4

0.7%

19.

Groupe Sodiaal

France

5.2

1.1

0.7%

20.

Schreiber Foods

4.5

1.1

0.6%

1.0

25.4%

Sum total 200

Source: IFCN. Data mainly based on 2015 figures 34

JULY 2016 | DAIRY BUSINESS AFRICA

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Cultural beliefs, market conditions could hinder global dairy players entry into India

INDIA - Restrictions and controversies over cow slaughter could be a hurdle for the policy initiative to attract foreign investment to the dairy sector, industry insiders say. According to areport in the Economic Times, while the government this year allowed 100% foreign direct investment (FDI) industry executives feel global dairy giants may be reluctant to come in because of the blanket ban on cow slaughter. “Globally, non-milking cattle goes to slaughter house, which is not the case in India. So it’s a big challenge for global dairy companies that want to enter the Indian market,” said Kuldeep Saluja, managing director at Sterling Agro Industries Ltd,

maker of Nova brand of dairy products. “Not being allowed to slaughter certain cattle is a huge drawback in India for global dairies,” he said. Saluja said 95% of the cattle used in commercial dairy farming globally are cows and not buffaloes, unlike India. Hence, he said, the country is not lucrative for companies to attract FDI in the dairy sector. In the past few years, global dairy firms such as Fonterra of New Zealand, French cheese maker Fromageries Bel, Denmark’s Arla, Dutch dairy cooperative FrieslandCampina, Mexico’s Grupo Lala, and Germany’s Hochland Group have scouted the Indian market for opportunities

to set up own units or to partner with local players. Another reason why foreign players may be reluctant to enter the country, private dairies feel, is that they may find it hard to compete with dairy cooperatives that get favourable treatment from state and central governments. However, some dairy companies in private and cooperative sectors, said FDI in dairy sector will help Indian dairy companies looking for funds, and lead to new dairy products and better farm practices. “Any investment beneficial to Indian farmers and dairy industry will be good,” said RS Sodhi, managing director at Gujarat Cooperative Milk Marketing Federation (GCMMF) that owns the country’s top dairy brand Amul. Pritam Shah, MD at Parag Milk Food that sells ‘Go Cheese’ cheese brand, said 100 per cent FDI in the sector will boost investment flow in the sector. “There will be expansion in dairy products category and we might see more varieties of baby food or cheese products,” he said. Significant investments have already been made by global dairy players in India including Schreiber (Dynamix Dairy in Maharashtra), Lactalis (Tirumala Dairy), Britannia, Nestle and Danone among others in India. As per FDI Policy 2016, the government has done away with the requirement of ‘controlled conditions’ for 100 per cent FDI in animal husbandry/dairy industry - ET

FrieslandCampina enters Pakistan as it invests in Engro Foods

PAKISTAN – FrieslandCampina, the leading Dutch dairy group has entered Pakistan, the third largest milk producer by taking an initial 51% in the Engro Foods. With less than 10% of milk reaching the processor, FrieslandCampina hopes to increase the consumption of milk in the country as rising incomes enable more consumers to take processed milk in the country. Pakistan is the number 3-milk producer in the world, producing 38 billion litres of milk per year. “The cooperation with Engro Foods will accelerate FrieslandCampina’s route2020 DAIRYBUSINESSAFRICA.COM

strategy. Through this company we will obtain a significant presence in the Pakistani dairy market in which a growing middle class is switching to buying more processed and packaged milk. This acquisition will contribute to the value creation for our member farmers. We will also contribute to Pakistan’s agricultural sector through knowledge transfer of dairy production and our established dairy development programme,” Roelof Joosten, CEO Royal FrieslandCampina N.V. said. Engro Foods was established in 2006 and has since built a leading position in the Pakistani overall UHT milk segment, including the specialized tea-creaming segment. The company is a subsidiary of Engro Corporation, which owns about 87% of the total share capital while the remaining 13% listed at the Pakistani Stock Exchange. Engro Foods employs about 1,600

people and had annual revenues of about €450 million (US$495 million) in 2015. It has a vast network of 1,635 milk collection centres, which collect about 300 million litres of milk from about 150,000 farmers. The company has processing plants in Sahiwal and Sukkur. In addition, Engro Foods runs its own dairy farm in Nara that produces over 35,000 litres per day with a total herd size of 5,429 animals in 2015, according to the company.

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European Commission unveils support package US$560 million for EU dairy farmers

EU – The European Commission has unveiled a support package of measures which include measures to reduce milk production worth €500 million (US$560 million) to support farmers in the Union to offset market difficulties, particularly on the dairy market. With Russian sanctions still in place and depressed dairy commodity markets,

the Commission’s latest support package follows another one of a similar value in late 2015, bringing the total support to €1 billion (US$1.12 billion). “Coming at a time of significant budgetary pressures, this package provides a further robust response . . . to support hard-pressed farmers. Our ultimate goal is to see the much needed recovery of prices

paid to farmers, so that they may make a living from their work and continue to provide safe, high quality food for citizens, as well as their contribution to rural areas and rural jobs and the provision of public goods,” said the Commissioner for Agriculture and Rural Development, Phil Hogan at the presentation of the package to the Council of EU Agriculture Ministers. The package contains three main elements: a EU-wide scheme to incentivise a reduction in milk production worth €150 million (US$167 million); a €350 million (US$390 million) fund conditional adjustment aid to be defined and implemented at Member State, and which Member States will be allowed to match with national funds; and a range of technical measures aimed at farmers. According to the Commission, a recent study showed that a correction on the support side of the dairy market is still necessary with Commission planning to will put forward an EU-wide measure aimed at incentivising a voluntary reduction in production. The commission will also extend the public intervention for skim milk powder to the end of February 2017

Amul records aggressive growth, jumps to number 13 slot in the World

INDIA – Famous Indian dairy cooperative Gujarat Co-operative Milk Marketing Federation (GCMMF) which markets the popular Amul brand of milk and other food products registered growth of 187% in the last six years, growing to the Number 13 slot on the list of biggest dairies in the World. According to the company, the group turnover of all the products sold under Amul brand was Rs. 33,000 crores (US$5 billion) in 2015, catapulting the company up the list of the biggest dairy companies, according to data released by the International Farm Comparison Network (IFCN). The company has aggressively grown the volume of milk processed in its facilities, even as it continues to invest in new facilities and processing plants. “In line with our 36

JULY 2016 | DAIRY BUSINESS AFRICA

expansion plans, we have already achieved expansion in our milk processing capacity to 28 million litres per day (280 lakh litres per day), said Shri R S Sodhi, the Managing Director. The company is proud of the fact that despite the general turmoil in the dairy commodities market worldwide, the Indian farmer was largely unscathed. “In the last two years, when dairy farmers across the world have witnessed sharp decline in farm-gate prices of milk, members of Amul cooperative family have witnessed growth in milk procurement price,” said Shri Jethabhai Patel, the Chairman of the company. During 2015, several major expansion projects were successfully completed, notes the MD, with the company commissioning a new dairy plant at Faridabad with capacity of 1 million litres per day, expandable to 2 million. Its new plant at Rohtak, also started operations with current capacity of 600,000L expandable to 1 million litres per day. In Gujarat, the company’s new dairy plant at Amreli commenced operations with capacity of 2 million litres and the plant in Kutch expanded capacity from 50,000 litres

200,000 litres per day with new production facilities for buttermilk and dahi. During the year, the company inaugurated a new cattle feed plant in central Gujarat, with capacity of 800 tonnes expandable to 2000 tonnes per day. The company also commissioned its new cheese plant at Palanpur and expanded capacity at the cheese factory at Khatraj, as it plans to treble its cheese volume. To further build its capacity in ice cream, the company inaugurated a 100,000 litres per day ice cream manufacturing capacity at the Rohtak facility, taking its total ice cream capacity in the country to 700,000 litres per day. The company enjoys a 40% a market share in the ice creams market, which it claims is three times that of its nearest competitor. According to the Economic Times, the new plant will mainly cater to the ice cream demand of consumers of North India market like New Delhi, Haryana, Punjab, Jammu and Kashmir. The plant shall manufacture the entire range of Amul ice creams including Tricone, Sticks, Sundaes, Tubs and Take Home range. DAIRYBUSINESSAFRICA.COM

NEWS | AFRICAN

Arla boosts West African plans, opens new milk powder packaging facility in Senegal

SENEGAL – Danish dairy cooperative Arla has opened a new milk powder packaging facility in Dakar, capital of Senegal as it seeks to cement its market share in the key West African market. The new plant, which packages the company’s popular Dano brand, has the capacity to handle 5,000 tonnes of milk powder per year and is part of the 2020 strategy, with Senegal being set up as an important market and gateway to further expansion in the West African region, according to the company. West Africa fits well into Arla’s 2020 Strategy, that focuses the company’s resources in eight global dairy categories

and six key regions, which was launched this year, with Nigeria being one of the key region’s for the company. The Senegal facility follows the company’s signing of a joint venture in the country called Arla Senegal S.A., which is owned 75% by Arla Foods and 25% by the local company, Attieh Group. It adds to the company’s foray into Nigeria through a jpint venture company, TG Arla Dairy Products LFTZ Entreprise, which is owned 50% by Arla Foods and 50% by the Tolaram Group conglomerate. “The facility is the latest milestone in Arla’s ambition to actively take part in developing the dairy market in West Africa

and providing affordable nutrition of high quality to consumers in the region. It will also contribute with jobs as we will initially employ 20 people in the production and more as we grow the sales and thereby also the production volume,” says Steen Hadsbjerg, head of Arla in Sub Saharan Africa. The 1,400 square meters plant will repackage fat filled milk powder and instant whole milk powder into various retail-sized packaging, mainly sachets. The products will originally be distributed in Senegal by Arla’s partner, Dakar-based partner Agroline S.A. and later extended to neighboring countries. “Senegal will be our hub for expanding into Mali and also Mauritania with our products. Depending on capacity we expect to launch in Mali later this year,” said Steen Hadsbjerg. With a population of about 14 million people, Arla believes that its investment is secure, considering it’s already selling long life milk in the country and has a deal with a local pizza chain for its cheese. It estimates Senegal’s dairy market has an estimated value of €250 million, with the fastest growing categories being flavored milk powder, evaporated milk and yogurt.

SA dairy company Coega Dairy completes expansion project

SOUTH AFRICA - Coega Dairy, one of the top UHT milk producers in South Africa, has

completed the expansion of its warehouse and office facilities at its dairy located in the Eastern Cape region. The new facilities include a UHT warehouse, a cold room for cheese products and a new office block. This expansion accommodates the growth and future needs of the business, according to the company, adding extra space for 12,000 pallets. The project was done in collaboration with Coega Development Corporation who invested more than R70m (US$5m) in the project. This is the second large capital expansion the company has made

to accommodate its growth. In 2013 R50m (US$3.6m) was spent on increasing production and packaging capacity, the company says in a statement. Coega Dairy started production in 2011. In 2012 the dairy formed a joint venture with the food service operator Famous Brands to manufacture cheese products for the different brands in the Famous Brands stable of restaurants. The Coega Dairy structure allows dairy producers, factory workers and farm workers to hold shares in the business

Clover clinches first place in globally recognised reputation index

SOUTH AFRICA – Leading branded consumer goods and beverages group DAIRYBUSINESSAFRICA.COM

has claimed top spot in the Reputation Institute’s study of the most reputable companies in South Africa in 2016. The study, which is conducted by Reputation House, measures reputation according to four key themes namely, esteem, admire, trust and feeling as well as seven reputation dimensions: product/services, innovation, workplace, governance, citizenship, leadership and performance. Johann Vorster, Clover Chief Executive,

commented: “We are proud to have achieved this prestigious accolade especially considering that we are a newcomer to the study following the addition of the FMCG industry category this year. “Our trade marked ‘Way Better’ approach to quality, governance and innovation is proving successful. We are pleased that the general public recognises our efforts and we hope to continue in this light for years to come,” he added. JULY 2016 | DAIRY BUSINESS AFRICA

NEWS | COMMODITY

Milk production slows in EU, imports increase in China while US exports decrease Australia dairy exports in April increased 13% compared to the same month last year, driven by whey powder (113%), fluid and fresh dairy up 49% and whole milk powder (WMP) up 17%. Exports for the 12 months to April increased 6%, or 42,000 MT, compared to the same period the previous year, due to fluid and fresh dairy (13%), cheese (2%) and skim milk powder (SMP) (5%).

WORLD â&#x20AC;&#x201C; Milk production in the EU in April increased by 1%, with half the top eight producers decreasing production compared to the same month the previous year, according to the July issue of the Global Dairy Update by New Zealand dairy company, Fonterra. Production for the 12 months to April increased 4% compared to the same period the previous year, with the major contributors Ireland up 16%, the Netherlands up 13%, Poland up 5% and Germany up 4%. Despite this growth, the EU Commission is forecasting 2016 milk deliveries to increase only 1.4%. US production in May increased 2% compared to the same month last year. Milk production for the 12 months to May has increased 1% compared to the same period the previous year, while the US Department of Agriculture has reviewed its forecast milk production to increase 1.9% in 2016. Total New Zealand milk production increased 4% in May compared to the same month last year. For the 12 months to May, milk production was down 2% compared to the same period the previous year. Australia production in May decreased 6% compared to the same month last year. The low milk price environment has impacted production, with production for the 12 months to May decreasing 1% compared to the same period the previous year, according to the report. 38

JULY 2016 | DAIRY BUSINESS AFRICA

Dairy exports EU dairy exports increased 10% in March compared to the same month the previous year, largely due to fluid and fresh dairy increasing 34% and cheese up by 16%. Exports increased 11%, or 487,000 MT, for the 12 months to March compared to the same period last year, driven by fluid and fresh dairy (27%), or 296,000 MT, whey powder (12%), or 49,000 MT, and cheese up (7%), or 50,000 MT. US dairy exports in April decreased 20%, or 42,000 MT, compared to the same month the previous year, with significant decreases in all the major dairy categories including cheese, whey powder, lactose and SMP all decreasing by over 20%. Exports for the 12 months to April decreased 8%, or 170,000 MT, compared to the same period last year, driven by whey powder, which decreased by 20% and cheese (18%), due to strong domestic demand, particularly for butter, cheese and whey powder. Total New Zealand dairy exports in May increased 9% compared to the same month last year. Exports for the 12 months to May increased 4%, or 111,000 MT, compared to the same period the previous year, largely driven by anhydrous milk fat (AMF) (11%), cheese (10%) and butter (2%). Infant formula and fluid and fresh dairy grew aggressively, registering 59% and 34% growth respectively.

Dairy imports Latin America dairy import volumes increased 13% in March compared to the same month the previous year, with the most significant increase being WMP, up 89%. Cheese imports went up 8%, SMP 6% and infant formula, 5%. Imports for the 12 months to March remained strong, up 11%, or 167,000 MT compared to the same period last year. Increases were seen across all major dairy categories, in particular milk powders, with WMP up 31% and SMP up 19%. Cheese also increased 15% over the same period. Asia (excluding China) dairy import volumes decreased 8% in March compared to the same month the previous year. This was due to WMP volumes falling 24%, SMP 23% and whey powder 16%. However, fluid and fresh dairy and cheese went up 16% and 9% respectively. Imports for the 12 months to March are up 4%, or 148,000 MT, compared to the same period the previous year. This is a result of cheese (8%), fluid and fresh dairy (7%) and SMP (4%). Middle East and Africa dairy imports decreased 17% in March compared to the same month the previous year, due to a fall in milk powder imports, with SMP down 32%, or 14,000 MT and WMP down 28%, or 24,000 MT. For the 12 months to March, imports were down 4%, or 146,000 MT, compared to the same period last year. During the year, SMP imports dropped 20%, WMP 8% and cheese 3%. However, fluid and fresh dairy imports were up 7%, while infant formula grew 2%. Chinese dairy imports increased 30%, or 47,000 MT, in May compared to the same month last year. All the major dairy categories registered increases, with fluid and fresh dairy up 110%, infant formula up 33% and WMP up 17%. Imports for the 12 months to May were up 23%, or 410,000 MT, compared to the same period last year with fluid and fresh dairy up 68%, infant formula up 47% and whey powder up 18%.

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REVIEW | AFMASS EAST & CENTRAL AFRICA 2016

Dairy industry in Uganda has vast potential, must focus on production and export markets in the short term

From left: Charity Magwenzi, Group Research & Development (R&D) Manager, Dairibord Zimbabwe; Brian Milton, Senior Adviser, Global Food Safety Partnerships, an initiative of the World Bank; and Lawrence Mbithi, Technical Service Manager, Ingredion Inc. at the Dairy Industry in Uganda Panel Discussion at the AFMASS Eastern & Central Africa 2016 in June 2016 in Nairobi, Kenya

UGANDA – The dairy industry in Uganda offers great opportunities for investors in the dairy sector, but the sector must invest in boosting production and to take advantage of high milk demand in the region. This was the outcome of the recent panel discussion at the recently convened AFMASS Eastern & Central Africa Conference and Exhibition that was held in Nairobi, Kenya in June. Low milk prices, rising milk production, increasing incomes and high demand for milk in the regional market offer Uganda’s industry a headway in the region’s milk market that the sector must take advantage of, and should continue to be a magnet to investors in the country. The discussion was at the Investment Destination of Choice discussion at the event, providing the delegates with an opportunity to be appraised of where to place their investments in Africa. The panelists included Charity Magwenzi, Group Research & Development (R&D) Manager, Dairibord Zimbabwe; Brian Milton, Senior Adviser, Global Food Safety Partnerships, an initiative of the World DAIRYBUSINESSAFRICA.COM

Bank; and Lawrence Mbithi, Technical Service Manager, Ingredion, a supplier of ingredients into the dairy industry. “The dairy industry in Uganda has gone through a fairly short period of rapid transition in its development. There was very little activity in industrial processing milk at the end of the 1990s. But if you look at the sector 15 or so years later, the number of players and the types of products being produced in the country is just amazing,” says Lawrence. “The dairy sector in Uganda has attracted the highest number of new dairy projects in Eastern Africa over the last five years. Uganda already produces cheese, packaged milk, yoghurt and even casein – which is not even produced in Kenya,” he added. “I think it is possible to achieve a lot in the dairy industry in Uganda. As the Irish say “If you have got grass, you can grow milk”. And Uganda has a lot going for it in that respect. The region here operates in a different environment from the international dairy market, which has been in the doldrums.

Here the issue is the focus on local – local product and local markets. You just have to be careful about imports since milk powder and UHT milk travel the world, and can destroy an industry with huge potential,” says Brian Milton. “Our company Dairibord was actually an investor in the dairy sector in Uganda in the 1990s before Sameer Agriculture & Livestock came in after we pulled out of the market. We were attracted by the very low milk prices and abundant milk quantities and potential in Uganda. But we had our fingers burnt, but with a few vital lessons, which we hope has changed,” said Charity. “Yes, there was a lot of milk in Uganda but the consumption of value-added products was lagging way behind the supply of raw milk. So you have low cost milk but the number of those with the incomes and the palettes to consume value added milk was quite low, as the communities had their own ways to consume unprocessed milk locally in their homes. “We learnt that instead of having value added dairy products, we should have concentrated our efforts and investment in JULY 2016 | DAIRY BUSINESS AFRICA

REVIEW | AFMASS EAST & CENTRAL AFRICA 2016

putting up a milk powder plant to dry the milk for export to our facilities in Zimbabwe where milk is currently at US$63 cents versus the US$18 cents in Uganda,” she added. Last year’s the entry of Brookside Dairy into Uganda, taking over from Sameer Agriculture and Livestock, is a significant development for the industry, and is bound to improve the sector significantly. As number one milk producer in the region, Brookside has the capacity to get the best out of its strategic investment in the country with the best potential for milk production in Eastern Africa. “Brookside’s investment in Uganda lends credence to the ‘Uganda as a source market for milk’ narrative. Looking at the differences in milk prices in Uganda, which sometimes during the year could be nearly half Kenya’s prices, Brookside must have seen the potential for further increase in milk production in Uganda and the low prices to decide to invest in the country,” says Lawrence. “What I see is that Brookside will rely more heavily on Uganda to feed the milk demand in Kenya and other regional export markets in the Great Lakes region in to the future, which they would not be certain to fulfill from their Kenyan operations,” he added. Way forward So how does the dairy industry in Uganda move forward? What are the key building blocks to the sector’s growth in to the future? Uganda still has to build more capacity to produce more milk, despite the lower milk demand, the panelists agreed. The potential of the Western-Central zone is still not yet fully developed, but also the northern and eastern zones of the country should be focused on to boost production in these regions.

A tanker on the way to delivering milk to a dairy in Kampala on the Masaka-Mbarara Road.

“The productivity gains must be pursued to get the best out of dairy to feed the rising demand in Uganda and the region as well. Despite the tough dairy markets internationally, I don’t see the downside of any production increase in the country, but challenges remain,” advised Brian. One of the key initiatives is the critical role played by cooperatives in building the capacity of milk producers and processors. The other one is the fine-tuning of the regulatory framework that facilitates the growth in production by the authorities putting in measures that can support the farmer and the processor with a focus on using dairy as a major export product in a few years. “Quality and food safety are the basis for a successful dairy enterprise. There has to be good relationship between the sector players. Between the milk producers and the processors, processors and retailers, and between the retailers and the consumers – its all about building relationships if the industry has to grow to be a critical player in

Packaged milk and cheese on a shelf in Kampala. Demand for value added products is rising 40

JULY 2016 | DAIRY BUSINESS AFRICA

the regional, and probably the international, market in the long run,” advices Brian. This can be achieved quite easily through a well-structured cooperative system. He gave the example of the Irish dairy company Kerry Ingredients, which grew from a small dairy of 1200 farmers to a multibillion enterprise. However, building the local demand for value added dairy in the country must be an area of focus, to build a more resilient market for dairy products. “The demand for value added products is influenced by many factors, including income, education and historical diet patterns. In Zimbabwe, the consumption of dairy products was already ingrained in the diet of most families, which is not the case in Uganda, where although the demand is lower, will increase with the rise in economic prospects and exposure of consumers to these products,” explained Charity. Products of the future Uganda is still a mass-market country. Although yoghurt, flavoured milk and cheese are being produced in the country, the demand is still way below Kenya’s demand, but with huge potential. As a potential investor in the region, Uganda’s dairy sector provides a huge potential for investment especially in yoghurt, flavoured milk and long life milk, noted the panelists. The next edition of AFMASS Eastern & Central Africa Conference & Exhibition is slated for March 21-23, 2017 in Nairobi, Kenya. With delegates coming in from Africa and the World, the event has become the most critical meeting of technical industry managers, investors, suppliers, Government and NGO managers and other stakeholders from the food and feed industry. DAIRYBUSINESSAFRICA.COM

Is your African

Strategy

Developing economies to drive growth in global dairy and soy food market by 2020 - report WORLD - The global dairy and soy food market will rise from US$617.9 billion in 2015 to US$773.4 billion by 2020, representing a compound annual growth rate of 4.6%, according to consumer insight firm Canadean. The company’s latest report states that primarily emerging and developing markets in Asia-Pacific (APAC), Middle East and Africa (MEA) and East European regions will drive this cautious growth. “Changing consumer preferences and purchase patterns due to socio-economic and demographic changes have created new market dynamics. While the key markets of Western Europe and North America have witnessed stagnancy in liquid milk consumption paired with fast growth in processed and soy products, developing countries have recorded steep growth in demand for dairy products owing to their fairly low per capita consumption,” says Kiran Akkineni, an analyst for Canadean. Consumption of milk in North America is currently declining as consumers opt for alternative beverages such as juices and vitamininfused water. By contrast, the rise in per capita consumption of dairy by the growing middle-class population in developing markets in the APAC, MEA and Eastern Europe regions will drive growth in the dairy and soy foods market. Canadean’s analysis reveals that consumers in developed markets tend to base their beverage choices on their level of personalization, whether they can be consumed on-the-go, and whether they can provide a novel experience. Consumers in emerging countries including Brazil, China and India, on the other hand, place a greater emphasis on nutritional value, following health and wellness trends. According to Akkineni, “Despite these regional differences in beverage consumption, value-for-money remains an important differentiating factor globally, as consumers opt for products perceived to provide this. Consequently, there is considerable rise in demand for discount brands and private label products.” The global dairy and soy food market is highly fragmented with the top 5 brands holding less than 6% market share. Mengniu, Activia, Amul, Kraft and Yili were the leading brands by market share in 2015, the report says. DAIRYBUSINESSAFRICA.COM

taking longer to deliver than you planned? 11% Africa is full of potential but is a tough place to do business, we agree. Our magazines can help you unlock the potential there is in Africa’s food and agro sector. Advertise on our print and online resources.

Contacts us on: Tel: +254 20 8155022; Cell: +254 725 343932 Email: info@foodworldmedia.net JULY 2016 | DAIRY BUSINESS AFRICA

NEWS | SUPPLIER INNOVATIONS & NEWS

Firmenich invests in new facility in Nigeria to target African markets

NIGERIA - Confirming its commitment to Sub-Saharan Africa, Firmenich is proud to announce the opening of a new, state-ofthe-art Flavors facility in Lagos, Nigeria. Designed to successfully expand the company’s market reach for Flavors across the region, this new facility features labs for Sweet Goods, Beverages, and Savory product development, as well as offices. Through this strengthened presence in Nigeria, Firmenich aims to accelerate its innovation to meet the needs of its customers across the 30 countries in SubSaharan Africa.

“This significant investment reflects the strategic importance of Sub-Saharan Africa to Firmenich, with its population of 800 million and strong growth potential,” says Gilbert Ghostine, CEO, Firmenich. “We aim to further expand our reach across this high-growth region by developing winning technology solutions for our customers.” “Nigeria will serve as a critical business and innovation hub for Firmenich to strategically serve our customers across the wider Sub-Saharan Africa region,” said Chris Millington, President of Firmenich Flavors. “Our investment in this state-of-

the-art facility will enable us deliver the most innovative, consumer-focused flavor solutions and best-in-class services to our customers and their consumers.” “By increasing our proximity to Nigerian consumers, we will focus on creating flavors that appeal to the rich and diverse culture of Nigeria and its neighbouring countries,” said Oddvar Bjorge, VP Flavors, Sub Saharan Africa, Firmenich. “For instance we look forward to expanding our industry-leading seafood flavor range and exploring other iconic tonalities.” Building on Firmenich’s partnership with the Yaba Institute of Technology in Nigeria to drive technology solutions adapted to the Sub-Saharan market, this expanded presence will enable the company to accelerate its innovation capability. The leading Flavor house will focus on health and nutrition, unique tonalities reflecting local preferences and competitive costin-use flavors for all segments of the food industry across this strategic market.

IMCD to acquire the business of Chemicals and Solvents (EA) Ltd in Kenya

KENYA - IMCD N.V., a global leader in the sales, marketing and distribution of

speciality chemicals and food ingredients, announces that it has agreed to acquire the business of Chemicals and Solvents (EA) Ltd. (C&S) based in Nairobi, Kenya to expand IMCD’s existing operations in Africa. C&S, founded by Abdul Farrah in 1989, is a distributor of ingredients to the food, cosmetics, detergents and pharmaceutical industries. Apart from Kenya the company also serves regional markets, including Uganda and Tanzania. In 2015 C&S generated revenue of EUR 5 million with 26 staff. After completion of the transaction, expected in Q3 2016, the business will continue with its present management and

staff. Abdul Farrah, founder of C&S, comments on the acquisition: “IMCD’s culture and strategy is an excellent fit with C&S and we are in no doubt that this agreement will create new opportunities for future development and will enhance our service and technical support to our partners.” Otto Brinkmann, Managing Director IMCD South Africa, adds: “We are very pleased to complete this acquisition. A local position in Kenya will offer us the opportunity to further grow in the African market and expand our partnerships and services beyond Southern Africa.”

press@foodworldmedia.net 42

JULY 2016 | FOOD BUSINESS AFRICA

FOODBUSINESSAFRICA.COM

EXECUTIVE INTERVIEW | PIETER DU TOIT, FILMATIC PACKAGING

they wouldn’t want to buy from Europe because the European suppliers want to sell equipment but always have an excuse as to why their technicians can’t travel to the country when required.

As equipment evolves, are you seeing better capability for local support?

What is the trend with packaging in Africa? What we see as a big trend in packaging is tamper-proof packaging, which is actually more prominent in other African countries than South Africa. In South Africa, we believe that once you have a product and the seal ring hasn’t been broken, the customer won’t query or worry that it has been tampered with. However, in other parts of Africa, the manufacturer may also add a sleeve as well, just to be sure that the consumer will know it has not been tampered with, which is probably a good thing.

As a supplier, what are the critical points for succeeding in Africa? One thing every supplier who seeks to get into Africa must note, is that it is very difficult to have traction in Africa. A proper game plan must be in place before getting into the game in the continent. The company must also be committed in the long haul to succeed in the continent as well. What we have learnt over the past 20 years we have operated in Africa is that for you to succeed in Africa, you need to have companionship with people in the specific country that you work with. The second important thing is that for African customers, support is extremely important. We have had a recent discussion with a customer in Nigeria, and the first question they asked us was “Are you going to support us, in this country?” This question came even before the customer asked us for a quotation. So I asked them, “Why don’t you buy from a European supplier, since you could actually be nearer to Europe?” Their answer was that 44

JULY 2016 | FOOD BUSINESS AFRICA

Things are beginning to change in the after sales service and support space in the continent. Machines have changed in Africa, with machines with PLCs and touch screens and fully automated now common in Africa – this was not the case a few years ago. There is now a willingness by food and beverage companies themselves to better train their staff in Africa, with a good number willing to send their staff for further training with suppliers like ourselves, where we train them in essentials of service and trouble shooting to ensure they can do some of the services themselves.

What line of product could be a good choice for growth in Africa, from your experience? I see a lot of potential in Maheu, a starch based beverage that is quite big in the Southern parts of Africa. I see Maheu as one of the fastest growing products by far in the rest of the continent in the coming years. Taking the standard Maheu product, this is food for Africa especially in countries where energy and protein is lacking. Maheu, which is a variation of regular maize meal that is well appreciated in Africa, but which is a liquid that is hot-filled and packed into nice, trendy convenient containers, I believe the Maheu product is going to take the market by storm in several African countries in the future. A company like Trade Kings in Zambia provides a good example of a company that has taken the Maheu route to great success, with its main operations in Zambia. The company is looking into expanding its production facilities into several African countries including Zimbabwe, Malawi and maybe even South Africa – this shows the enormous potential of this product in Africa.

What opportunities do you see in West Africa’s food and beverage industry? I see extremely big developments coming out of West Africa. I believe that fresh product is still the best product, and consumers

in Southern and Eastern Africa know and appreciate these kinds of products. I believe that West Africa will increasingly move towards producing food and beverage products locally, turning the tide on imported products into that market, as the consumers there will continue to ask for fresh, local products. Why import products when the countries in West Africa can produce locally?

How do you see the packaging space changing? I think that packaging material and the way of presenting it is changing fast. People are more likely to look at doy packs with good tamper-proof and acceptable shelf life. That is an area that is growing very fast. Increasingly, convenience is driving the market, with consumers wanting to buy what they can consume at one sitting or as they go on with their chores, and which are well presented to them. The other line is the family pack size for dairy products, especially looking at the costs side. This pack is not common in Africa, but is quite common in South Africa. Because smaller packaging cost more to the consumer, it is important to have a bigger family pack, say a 1 kg pack, that can fit in the fridge and the consumer can use, close and return it the fridge. I think the 1 kg pack will come in very soon, and will be a big driver for volume for the dairies.

What is your take on the dairy industry in Africa? I have to say that the quality of dairy products, like yoghurt, is extremely high in Africa, with a lot of improvements in the last few years. Some of the local yoghurt in Kenya or Zimbabwe can be winners in any part of the world. Led by some of the smaller players that have focused on quality instead of quantity, these products really stand out in the eye of the consumer. Drinking yoghurt is becoming a big product throughout the whole continent. It is tasty, healthy and easy to consume and is growing in many African countries in a very aggressive manner. The convenient pack that has also been adopted by a number of dairies has also been a big contributor to this growth. There is still a lot of scope for new products in Africa, and I think the dairies in the region are working aggressively towards locally produced, quality products and packaging that appeals to the local consumers. FOODBUSINESSAFRICA.COM

2016 REPORT & 2017 BROCHURE

DATE: MARCH 21-23, 2017 VENUE: KENYA SCHOOL OF MONETARY STUDIES, NAIROBI, KENYA

AFMASS EASTERN & CENTRAL AFRICA 2016 REPORT & 2017 BROCHURE

www.afmass.com CONFERENCES

AFMASS EASTERN & CENTRAL AFRICA

INTRODUCTION packaging and services; Government regulators; NGO/development agency managers congregated to discuss ways to improve processing, packaging, retail, storage, distribution and food safety in the continent.

Dear Partners,

OVER 300 INDUSTRY INVESTORS, MANAGERS AND PROFESSIONALS; SUPPLIERS; GOVERNMENT REGULATORS AND NGO/ DEVELOPMENT PARTNER MANAGERS ATTENDED AFMASS EASTERN & CENTRAL AFRICA 2016

First of all, I would like to thank everyone – sponsors, exhibitors, speakers, panelists, delegates and visitors – who took time from their busy schedules to be at AFMASS Eastern & Central Africa 2016, which was held at the Kenya School of Monetary Studies from June 8-10, 2016 Your presence, support, presentation, and views made AFMASS Eastern & Central Africa 2016 one of the most critically acclaimed industry events in the region for the food and beverage industry. This year marked the continuation of our belief in the future of Africa’s industry. All the members of our team at FoodWorld Media believe that our industry-focused magazines and events that we do organize will eventually lead to the realization of world-class operations and practices, that will help to unearth the vast potential in the continent. Now in its second year, the 2016 edition of AFMASS Eastern & Central Africa focused on food and beverage processing, packaging and food safety. Significant improvements are in store for the 2017 edition of the event, chief of which is the addition of a second conference stream that covers the grains, milling and feed sector in the region. At AFMASS Eastern & Central Africa 2016, over 300 food and beverage industry investors, managers, professionals; suppliers of equipment, ingredients/chemicals,

Some of the industry’s CEOs and high-level executive leaders were at hand to share their aspirations, achievements and their thoughts on the industry’s challenges, trends and opportunities through presentations and panel discussions that added an extra punch to the event. To the event speakers and panelists, we are sincerely thankful for taking time away from your busy schedule to We are also grateful to the Vision Scientific & Engineering Africa, our main Cocktail Sponsor, plus our exhibitors, partners and product partners who made the event to be a huge success. We cannot also fail to appreciate our hosts, Kenya School of Monetary Studies for excellent food and facilities and serene atmosphere that our delegates and visitors enjoyed to be at. We also appreciate the effort and commitment taken by delegates from Africa, Asia, Europe and the Americas who made it to the 2016 event. We know it costs money and time to attend, but we are hopeful you achieved your goal of coming to AFMASS Eastern & Central Africa. We look forward to seeing more delegates and partnering with more sponsors and exhibitors at future AFMASS events, as we expand our scope of the events from 2017 to cover food, milling and animal feed processing, packaging and food safety in the continent. Yours sincerely,

Francis Juma Founder & CEO, FoodWorld Media

2016 REPORT & 2017 BROCHURE

ABOUT AFMASS INDUSTRY EVENTS

The AFMASS range of events commenced in 2015, when the first Food Safety Summit Africa Conference & Exhibition was held at Strathmore University in Nairobi, Kenya. The Food Safety Summit Africa Conference & Exhibition was the first event focused solely on food safety in food and agricultural produce in the region. The event was changed into the African Food Manufacturing & Safety Summit Conference & Exhibition (AFMASS Eastern & Central Africa) in 2016 to provide a broader scope covering food processing, food packaging and food safety.

of international, regional and local players in the industry including Unilever, Brookside, Coca-Cola, Nestle, Promasidor, Unga Holdings, Proctor & Allan, Mombasa Maize Millers, University of Nairobi, among many others. Beginning 2017, AFMASS Eastern & Central Africa will transition to cover Food, Milling & Feed processing, packaging and food safety; providing an opportunity to have a conference stream that focuses on the fast-growing milling and feed processing industry in Africa, separately from the other food and beverage sectors, for the first time in the region. The 2017 edition will have two conference streams:

With a broader scope, the 2016 event was able to meet the unique needs of the delegates, considering that food safety exists in a matrix with other deliverables in any facility. AFMASS Eastern & Central Africa 2016 therefore covered such important subject matter areas including costs and formulations management, sustainability, process and engineering management, food safety, packaging, quality and systems management, product and market trends, among other topics. The event has created a niche in the industry: it is the only forum where investors, C-suite executives, managers and professionals in the industry meet suppliers, Government regulators and NGO/development organisation managers to network, learn and seek opportunities on trends, technology, innovations and solutions to challenges that bedevil the industry in Africa. The event continues to attract key people from a number

a) African Food Manufacturing & Safety Conference (AFMASS) â&#x20AC;&#x201C; covering the processing, packaging, retail, storage and distribution and food safety in the dairy, beverages, fruits and vegetables, meat, and other food products, including food service industries. b) African Grains, Milling & Feed Conference (AFGRAINS) - covering the processing, packaging, retail, storage and distribution of dairy and food safety in the grains, milling, baked and extruded products and animal feed industries AFMASS Eastern & Central Africa is part of the AFMASS conferences and exhibitions, that FoodWorld Media plans to establish in Africa over the next few years. FoodWorld Media is the publisher of industry publications including Food Business Africa, Dairy Business Africa, Milling & Baking Africa and Agri-Business Africa and Industry Business Africa. 3

AFMASS EASTERN & CENTRAL AFRICA

AFMASS EASTERN & CENTRAL AFRICA SPONSORS, EXHIBITORS & PARTNERS 2016 COCKTAIL SPONSOR

Vision Scientific & Engineering EXHIBITORS & PARTNERS

Packaging Industries Ltd

Krones East Africa

Ingredion Holding LLC

SCE Belgium

Vision Scientific & Engineering

Unga Limited

Sheffield Steel Systems

Food Science & Technology Platform Kenya

Ministry of Industrialisation

National Biosafety Authority

Kenya Bureau of Standards

Ministry of Health

BBM Magazine

PRODUCT SPONSORS

Coca-Cola Sabco

Kenafric Industries Ltd

Bio-Food Products

www.foodbusinessafrica.com

www.agribusinessafrica.net

www.dairybusinessafrica.com

www.industrybusinessafrica.com

AFMASS Eastern & Central Africa 2017 edition offers great Sponsorship, Exhibiting & Partnership opportunities. Talk to the organisers on Tel: +254 725 343 932; Cell: +254 20 81 55 022 or email: info@foodworldmedia.net on how your company can stand out from the crowd at this event. 4

2016 REPORT & 2017 BROCHURE

AFMASS EASTERN & CENTRAL AFRICA SPEAKERS & PANELISTS 2016

Bimal Shah, CEO, Broadway Group

Duncan Kimani, Country Manufacturing Manager, Nairobi Bottlers Ltd

Rajan Shah, CEO, Capwell Industries

Josephat Kilungu, Manufacturing Manager, Nairobi Bottlers Ltd

David Kamau, CEO, Proctor & Allan

Amir Parpia, Finance Director Alpha Fine Foods, KAM Food Sector Chairman

Wayne Glenn Kleynhans, Technical Training Manager, Krones

Charity Magwenzi, Group R&D Manager, Dairibord Holdings, Zimbabwe

Oliver Schoenmakers, Account Manager, Middle East & Africa, SCE Belgium

Benard Otundo, Energy Manager, Brookside Dairy

Brian Milton, Senior Adviser, Global Food Safety Partnership, World Bank

Ioan Marcu, Product Manager, Analytik Jena AG

Prof. Dorington Ogoyi, Technical Director, National Biosafety Authority

Dr. Moses Gathura Gichia, Coordinator: FAO/WHO Africa Region Codex Committee

Lois Ndiba, CEO, Food Safety International

Richard Oduor (Dr.), Senior Lecturer, Kenyatta University

Lawrence Mbithi, Technical Sales Manager, Ingredion

Samwel Oduor, Technical Sales, Vision Scientific & Engineering

Ali Hassan, Director, Livestock, Kenya Markets Trust

Cyprian Kabbis, Food Business Manager, SGS

Tom Ouma, Techinical Sales Manager, ESTEC

AFMASS EASTERN & CENTRAL AFRICA

DELEGATES PROFILE AT PAST AFMASS EVENTS A. By Job Title • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Managing Director Chief Executive Officer Director Regulatory Affairs Manager Division Manager Eastern & Southern Africa Quality Assurance Manager Business Manager Product Development Manager Food Safety Consultant Business Development Director Purchasing Manager Director - Testing & Calibration Technical Manager Quality Improvement Leader General Manager Business Development Manager Administration Manager Technical Sales Executive/Rep Customer Support Engineer Marketing Manager R&D Researcher Chemical Engineer Livestock Director Head, Food Safety/Food Safety Team Leader Technical Training Manager Training Coordinator Finance Director QA & Logistics Coordinator Business Manager - East & West Africa Systems Coordinator Director, Technical Services Energy Manager Applications Specialist

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Sales Administrator Key Accounts Manager Laboratory Technician Sales executive Head of Retail Business Advisor Procurement Manager Group Research & Development Manager Manufacturing Unit Manager Product Development Manager Business Manager, Consumer Testing Sales Coordinator - Food Safety Chef Regional Manager Regional Operations Executive Regional Sales Director - East Africa Senior Consultant Trade Analyst QA Specialist Consultant Brand Ambassador Quality Control Officer Factory Manager Public Relations Manager Agribusiness Manager Head of Quality Assurance Dairy Technologist Student Supply Chain Officer Account Manager, Middle East & Africa Regulatory Affairs Director Account Manager Supply Chain Manager

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Operations Manager Quality Systems Supervisor Director - Quality Management Regional Quality & Food Safety Manager Sales & Marketing Manager SHEQ Team Leader Continuous Improvement Coordinator Manufacturing Manager Lead, Dairy Sector Food Safety Systems Manager Technical Manager Associate Director, Marketing Production Manager Laboratory Manager Manufacturing Services Manager Nutritionist Researcher Food Technologist Program Manager Milling Manager Lecturer Aquaculture Project Coordinator Regional Director - Eastern, Central & Southern Africa Associate Operations Officer Professor Head of Production Regional Business Director - EMEA, Turkey & Middle East Commercial Manager Brewer Country Manufacturing Manager

B. By Geography

Type of delegate MD/GM Production/Manufacturing QA/QC/R&D Supply Chain Engineering Govt/ResearchMarketing & STotal ales Number of delegates 35 90 90 10 10 20 45

Delegates by category, 2016 edi5on

MarkeMng & Sales 15%

C. By Job Function

MD/GM 12%

Govt/Research 7% Engineering 3% Supply Chain 3%

ProducMon/ Manufacturing 30%

QA/QC/R&D 30%

MD/GM

Produc5on/Manufacturing QA/QC/R&D

Supply Chain

Engineering

Marke5ng & Sales

Govt/Research

300

WELCOME TO AFMASS EASTERN & CENTRAL AFRICA 2017

DATE: MARCH 21-23, 2017 VENUE: KENYA SCHOOL OF MONETARY STUDIES, NAIROBI, KENYA

ONE INDUSTRY EVENT, TWO CONFERENCE STREAMS

www.afmass.com

The region’s event for the formulation, processing, packaging and safety of dairy, beverages, meat, fruits and vegetables, processed food, sugar & confectionery and food service

The region’s event for the post-harvest, formulation, processing, packaging and safety of grains, milled products, snacks, baked goods and animal feed

AFRICA’S LEADING FOOD, BEVERAGES, MILLING AND FEED INDUSTRY EVENT AFMASS showcases: • Processing equipment and technologies • Packaging equipment and supplies • Ingredients and chemicals • Energy, water and waste management solutions • Laboratory equipment, testing and services • Food service and retail equipment and solutions • Food safety solutions

AFGRAINS showcases: • Milling and baking equipment and processing technologies • Packaging equipment and supplies • Post-harvest and sorting equipment and solutions • Milling and baking ingredients and additives • Feed processing equipment and ingredients • Food safety solutions

AFMASS Eastern & Central Africa 2017 offers excellent sponsorship, exhibition and product partnership opportunities. Contact the organisers for more information and rates. FoodWorld Media • P.O. Box 1874-00621 – Village Market, Nairobi, Kenya Tel: +254 20 8155022; +254 725 343932 | info@foodworldmedia.net Please log onto the event website for more information:

www.afmass.com

2016 REPORT & 2017 BROCHURE

WHATâ&#x20AC;&#x2122;S NEW IN 2017? AFMASS Eastern & Central Africa 2017 has a number of improvements over the 2016 edition. With a focus on delivering a better show profile, better experience to delegates and visitors, and better trade prospects to sponsors, exhibitors and partners, the 2017 is expected to be bigger, bolder and more engaging for all. Below are some of the key additions/improvements to the event:

5. Poster Sessions The poster sessions provide researchers and students the platform to display current research outcomes to the industry, bridging the gap that continues to widen between the industry and the universities/research institutions A number of universities and research institutes from the region have been invited to present posters at the event.

1. One Show, 2 Conference Streams To cater for the unique needs of the milling, baking and feed industry in the region, AFMASS Eastern & Central Africa 2017 has a conference stream, the African Grains, Milling & Feed Conference, that is focused on the fast-growing and vitally critical sector, in addition to the African Food Manufacturing & Safety Conference that will henceforth be focused on the dairy, beverages, meat, fruits and veg, sugar and confectionery and food service sectors 2. Bench Marking Factory visits To meet increasing calls for the opportunity to benchmark operations in the region, the 2017 event plans to arrange to bench marking factory visits to two companies near Nairobi, Kenya. One of the visits will be to a milling/feed operator and the other to a food/beverage operator 3. Food Safety Exhibition Area The Food Safety Exhibition Area will showcase the latest innovations and technologies in the management and testing of food and feed products, providing exhibitors with an opportunity to zero in on their food safety related technologies and solutions in this specific area. 4. New Products/Innovation Showcase The food and beverage manufacturers have an opportunity to showcase new products that have been released into the market recently at the New Products/Innovation Showcase area at the Exhibition. The new product development space in the region is increasingly becoming vibrant, with packaging changes, formulation improvements and entirely new product categories being developed by a number of players in the sector. The New Products/Innovation Showcase area provides manufacturers with a platform to showcase these innovations to the stakeholders, explain the ideas and benefits behind the innovations and to have consumer-tasting sessions for these new products 9

AFMASS EASTERN & CENTRAL AFRICA

ABOUT AFMASS CONFERENCE

ABOUT AFGRAINS CONFERENCE

The AFMASS conference will focus on current and emerging issues in Africa’s food and beverage storage, distribution, manufacturing, packaging, food service, marketing, retailing and consumer safety in Africa.

The African Grains, Milling & Feed Conference (AFGRAINS) is a new addition in the 2017 event, and is a first in the region.

By attending the Conference, stakeholders shall learn new technologies, regulations and practices that will ensure that the industry in Africa can adopt to an new consumer environment; where a more aware consumer in Africa continues to ask for better quality, safer, lower cost and better packaged products. They will also learn the trends and future prospects of the manufacturing, packaging and food safety of food and beverages in Africa

The AFGRAINS conference will focus on current and emerging issues in Africa’s grain, milling and animal feed post-harvest, storage, distribution, manufacturing, packaging, food service, marketing, retailing and food safety in Africa, with a focus on the Eastern & Central Africa. The AFGRAINS conference will also cover the grains commodity markets and trade issues around grains in Africa, with a focus on Eastern & Central Africa.

The Conference will involve presentations by a number of industry leaders, experts, Government regulators and managers from the NGO space with special skills in various facets of food processing, packaging and safety related topics covering the entire value chain.

The Conference will involve presentations by a number of industry leaders from the milling and feed industry, experts, Government regulators and managers from the NGO space with special skills in various facets of grains trade, post-harvest, grain processing and food security.

Several Panel Discussions, networking sessions, plus a number of evening activities will ensure attendees get to network and trade during the Conference and at the exhibition, which will be set next to the Conference Hall.

Conference Topics

AFMASS Conference shall cover the following subject matter areas: • Equipment and plant design in the food and beverage industry • Packaging technologies and their applications in food and beverage products • Manufacturing excellence and efficiency improvement systems and • Food safety and risk management technologies • Engineering technologies and facilities management • Post-harvest, food waste and food security management • Costs, formulation and new product development strategies • Sustainability, energy, water and environment in food and beverage industry • People and systems management and marketing • Technologies in the retail, distribution and marketing of food and beverage products • Emerging technologies in the processing, packaging, marketing, retail and distribution of food and agro produce The conference sessions will comprise presentations and panel discussions by key industry leaders and subject matter experts.

The AFGRAINS Conference shall cover the following subject matter areas: • Equipment, plant design and engineering technologies in the industry • Packaging technologies and their applications in grain, milling and feed products • Manufacturing excellence and efficiency improvement systems • Grain commodity markets and their effects on the industry in Africa • Food security status and management in the region • Post-harvest and food waste management • Costs, formulation and new product development strategies • Sustainability, energy, water and environmental management • People and systems management in the grain, milling and feed industry • Food safety and risk management systems • Techologies in the retail, distribution and marketing of feed and milling products • Standards and regional and external trade matters • Sanitation and hygiene management in grain post harvest, processing and distribution • Emerging technologies in the processing, packaging, marketing, retail and distribution.

2016 REPORT & 2017 BROCHURE

SPONSORSHIP AFMASS Eastern & Central Africa provides excellent opportunities to showcase your products or serviecs to the industry in the region Sponsor AFMASS Eastern & Central Africa to: •

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Show your leadership credentials - Promote your company as the leading player in the industry to partner with by the region’s food and beverage, milling and feed companies, research and academic institutions and Government agencies from the region. Identify business opportunities in Africa - Your company shall lead and share forums and discussions where challenges and business opportunities in Africa shall be discussed by key decision makers. Get your message through during conference sessions - We have unique benefits specific to premium sponsors, including opportunity to lead specific conference sessions/topics that resonate with their brands; participation in Panel Discussions; prominent branding of conference and exhibition areas and a chance to contribute to the conference topics areas of focus. More free extras - Sponsors receive extra delegate passes; demonstration and speaking positions during prime sessions; premium booth positions; free advertising in our magazine(s) and more . . .

We are seeking sponsors for the following types of sponsorship options: 1. Premium Sponsors - These are the most outstanding sponsorship options, and with the most visibility at the event. They include Platinum, Gold and Silver Sponsorship opportunities. 2. Session Sponsors - Sponsors can decide to sponsor specific conference session(s), leading discussions during these specific session(s) only. Sessions last between 2-3 hours. The sponsor’s brands will get prominent positioning during these particular session(s). 3. Meals and breaks sponsors - Opportunities are available to sponsor breakfast, lunch, cocktail, dinner and other breaks. The sponsor’s brands will get prominent positioning during these particular breaks and activities. 4. Give-away sponsors - Sponsors can take up sponsorship of conference bags, note-books, pens and other stationery used at the conference. The giveaways will have prominent branding of the sponsor’s company name. 5. Product sponsors - Have the conference delegates and visitors have a taste of your products at AFMASS Eastern & Central Africa.

EXHIBIT AT AFMASS EASTERN & CENTRAL AFRICA The AFMASS Eastern & Central Africa Conference & Expo provides your company with the right forum to showcase your products and services - be they storage, post-harvest management, processing and food service equipment, packaging, chemicals and ingredients, and services to the key decision makers from the food and beverage, milling and animal feed industry in the region. Exhibitors’ Profile The following suppliers of products and services shall find the Event especially relevant to their business goals: • • • • • • • • • • • • • • • • • • • •

Storage, post-harvest, processing and packaging equipment and supplies Packaging materials – aseptic, glass, corrugated, paper, labels and sleeves Laboratory equipment, chemicals, supplies, infrastructure and suftware Laboratory testing (micro, physical and chemical) and calibration services Consultancy services on systems management, testing and other services Management systems, standards development and management Financial and insurance companies Chemicals, detergents and other fine chemicals suppliers Cleaning and sanitation systems and services suppliers Security, personnel protection and safety equipment suppliers Pest control and environmental management providers Metal detection, X-ray, sorting and vision system suppliers Vessels, tanks and storage solutions providers Pumps, motors, compressors and conveyors suppliers Instrumentation and control software and hardware system providers Training and capacity building companies NGOs involved in the food supply chain Warehousing, distribution and transport companies Cooling, refrigeration and heating system providers Engineering services and systems suppliers 11

Food, Beverages, Milling & Feed Processing, Packaging & Safety Conferences & Exhibition March 21-23, 2017. Nairobi, Kenya

PRELIMINARY CONFERENCES PROGRAMME DAY ONE – March 21, 2017 AFMASS CONFERENCE

AFGRAINS CONFERENCE

Session 1 - 09.00 – 11.00 - Nutrition In this session, presentations will centre on recent research in nutritional aspects of food and beverage products. This year’s focus will be on sorghum and insects in human food and beverages

Session 1 - 09.00 – 11.00 - Commodity markets, standards and regional trade In this session, industry and Government stakeholders will presentations focused on the commodities’ situation in the region and highlight some of the current issues and barriers to regional trade

Session 2 – 11.30 – 12.30 - Panel Discussion: Pesticide and antibiotics residues in foods: Developing sector-wide strategies to control the menace in Africa Industry and Government stakeholders discuss the challenges and chart way forward to managing the rising risk of pesticide and antibiotics residues in the food value chain in Africa

Session 2 – 11.30 – 12.30 - Panel Discussion: Fortification: The challenges, opportunities and future trends in Africa Industry and Government stakeholders discuss the gains in fortification of cereals and the challenges that remain in region’s milling industry to ensure safe, fortified flours are availed to all consumers in the region

Session 3 – 14.00 – 15.30 - Food Safety & Systems Management This session showcases how improvement tools, technologies, regulations and practices can ensure safe products and facilities in the food, beverage and food service industry

Session 3 – 14.00 – 15.30 - Packaging, Processing & Formulations This session will highlight technologies and practices to improve packaging, productivity, processing and formulations in the baking, milling and feed industry

Session 3b – 16.00 – 17.00 - Joint Session - Panel Discussion Sorghum: Unlocking the value of sorghum for use in the food and feed industry in Africa – how technology, Government policy and industry initiatives can make sorghum the next cash crop for Africa 17.30 – 20.00 - Cocktail DAY TWO – March 22, 2017 AFMASS CONFERENCE

AFGRAINS CONFERENCE

Session 1- 08.30 – 10.30 - Packaging, Processing & Formulations This session will highlight technologies and practices to improve packaging, productivity, processing and formulations in the dairy, beverages, savoury, meat and fruit and vegetable industry

Session 1 - 08.30 – 10.30 - Sustainability The session will focus on how manufacturers, retailers and other stakeholders can implement initiatives that save on energy, water, waste and other resources. This year’s focus is on green energy solutions

Session 2 - 11.00 – 12.30 - Sustainability The session will focus on how manufacturers, retailers and other stakeholders can implement initiatives that save on energy, water, waste and other resources. This year’s focus is on green energy solutions

Session 2 - 11.00 – 12.30 - Nutrition In this session, presentations will centre on recent research on grains and their applications in milled, baked and animal feed products. This year’s focus will be on sorghum and insects in human food and feed

Session 3 – 14.00 – 17.00 - Benchmarking factory visit Delegates will make a visit to a food or beverage manufacturer to benchmark and learn how the company runs its operations

Session 3 – 14.00 – 17.00 - Benchmarking factory visit Delegates will make a visit to a baking, milling or animal feed manufacturer to benchmark and learn how the company runs its operations

DAY THREE – March 23, 2017 AFMASS CONFERENCE

AFGRAINS CONFERENCE

Session 1 – 08.30 – 10.30 - Packaging, Processing & Formulations This session will highlight technologies and practices to improve packaging, productivity, processing and formulations in the dairy, beverages, savoury, meat and fruit and vegetable industry

Session 1 – 08.30 – 10.30 - Food Safety & Systems Management This session showcases how improvement tools, technologies, regulations and practices can ensure safe products and facilities in the grains, milling, baking and feed industry

Session 2 - 11.00 – 12.30 - Food Safety & Systems Management This session showcases how improvement tools, technologies, regulations and practices can ensure safe products and facilities in the food, beverage and food service industry

Session 2 - 11.00 – 12.30 - Packaging, Processing & Formulations This session will highlight technologies and practices to improve packaging, productivity, processing and formulations in the baking, milling and feed industry

Session 3 – 14.00 – 15.30 - Industry Leaders Presentations Industry leaders share their views on the opportunities, challenges and future prospects of their companies and industries

Session 3b – 16.00 – 17.00 - Joint Session - Industry Business Leaders’ Panel Discussion Industry leaders from various sectors of the food, beverage, milling and feed industry reflect on the key happenings in the last year (investments, people, regulations etc) and how their business were affected; and discuss the short and long term opportunities and challenges in the industry and the region 17.30 – 20.00 - Dinner Speakers and Panel participants are welcome. Please send your enquiries to info@foodworldmedia.net. Schedule subject to change Interested in sponsoring, exhibiting or attending AFMASS Eastern & Central Africa 2017? Contact the organisers on: FOODWORLD MEDIA LTD • T: +254 20 8155022 • C: +254 725 343932 Email: info@foodworldmedia.net • www.afmass.com

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

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

Nigeria

Africaâ&#x20AC;&#x2122;s largest alcohol consumer (annual growth rate of 5.6%) FDI with 6 investment projects

Kenya

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

y1 l n O The ent Ev F&B ica r in Af

20+

Exhibitors

South Africa FDI 48 investment projects The largest source market for Africa F&B (annual growth rate of 10% )

25+

Speeches

6 Sessions

30+

Medias

50+

Food and Beverage Processors

250+

Attendees

Africa Food and Beverage Marketâ&#x20AC;&#x2122;s Economics and Policies Overview: Challenges and Opportunities Africa Food and Beverage Sector Integration and Cooperation New Products Development Trend and Technology Innovations Food& Beverage Packaging and Manufacturing Technology Trends Development Trend of Food and Beverage Retail Marketing and Strategy Roadmap to the Safety and Security Supply Chain Management World Leading Food & Beverage Event Organizer

DATE: MARCH 21-23, 2017 VENUE: KENYA SCHOOL OF MONETARY STUDIES, NAIROBI, KENYA

The region’s event for the formulation, processing, packaging and safety of dairy, beverages, meat, fruits and vegetables, processed food, sugar & confectionery and food service

The region’s event for the post-harvest, formulation, processing, packaging and safety of grains, milled products, snacks, baked goods and animal feed