d r r a e e u y ss i
3
I n t h i s I s s u e : p r i va t e l a b e l p r o d u c t s i n a f r i c a
A F R I C A ’ S f o o d an d b e v e ra g e
in d u s t r y
MAGAZINE
buhler
opens African milling school
Inside Nutty nutrition
p.22
acrylamide in foods
p.20
heineken in ethiopia
p.12
www.foodbusinessafrica.com
Volume 3 • ISSUE 1, No. 11 • ISSN 2307-3535
a foodworld media publication
Nurtition & Health
Nutrition: The 22 Nutty health benefits of nuts is explored.
SPECIAL REPORT:
24
Private Labels: Emergence of store brands in Africa.
food safety:
20
Acrylamide: Acrylamide in foods is a serious food safety concern In the
Packaging:
26
Labelling: The quality or benefits of a food are only as good as the labelling info
event preview
15
Food Safety Summit Africa Conference & Expo
Interview
14
Martin Schlauri: Managing Director, African Milling School
formulations
19
Salt Reduction: Importance of reducing salt in foods
Next issue
April/may 2015
Industry Focus: Maize Milling Industry in Kenya Packaging: Modified atmosphere packaging Processing: Equipment Lubrication
Regulars 2 Editorial 4 International Insights 10 African Insights
Formulation: Wheat flour
27 Supplier News 28 Quotable Quotes 28 Calendar of Events
PLUS Regular News, Nutrition & Health and Food Safety
Cover Photo: Trainees at the Buhler African Milling School in Nairobi, Kenya with their trainers, Stefan Lutz & Martin Schlauri. foodbusinessafrica.com
Food Business Africa | Feb - March 2015
1
editorial
We must all pray for Nigeria
W
e profess to a number of religious faiths on the continent of Africa. The Continent has a myriad of religions and sects, and is arguably one of the most religious parts of the world. Okay, before you wander away, I would just like to ask you for one minute of your time to pray for our beloved Nigeria. You may wonder where Nigeria and prayers come together, but let me explain. The West African country, Africa’s largest economy, clocked a whooping US$ 520 billion in Gross Domestic Product (GDP) after the rebasing exercise by the Government in 2013. The economy of Nigeria has been a darling on the continent, growing at a staggering average of 9.9 per cent per annum for the last 15 years. And with a population up of 170 million, growing urbanisation and a democratically elected Government of Goodluck Jonathan in place, we were all set for the country to lead the rest of the continent towards the Promised Land.
“ It is in our best interest to ensure that Nigeria remains an ideal and peaceful investment destination and a growing and viable economy” However, things have not gone well for Nigeria in the last six months to one year. With presidential elections having been postponed in mid-February to end of March and an unravelling economy, Nigeria is teetering on the edge. Analysts are worried that the close nature of the presidential election contest could plunge Nigeria into the deep that Kenya almost got itself in after the 2007 elections. Kenya is still smarting from the chaos and violence after that election fiasco. It’s not only the election that we have to worry about. The Nigerian economy has taken a hit from falling oil prices and the negative effects of the insurgency by the Boko Haram rebel group in the North-East is taking a toll on the most productive sectors of the economy. A number of food and beverage companies including Dangote Flour Mills and Flour Mills of Nigeria have partly blamed the insurgency in the north and the economy for their poor performance this year. 2
Feb - March 2015 | Food Business Africa
The International Monetary Fund has cut the country’s growth prospects to below 5% for 2015, on the back of falling oil prices, which have fallen by more than half, even as the rest of the continent worries about the gridlocks on their roads caused by the lower oil prices. The Central Bank of Nigeria (CBN) has been forced to devalue the Naira, with the currency falling below the 200 Naira to the US dollar mark in more than six years. So why should we pray? I believe that Nigeria is an indicator of Africa’s readiness to join the world’s economic stage. It is in our best interest to ensure that Nigeria remains an ideal and peaceful investment destination and a growing and viable economy. Just like the Ebola epidemic that ravaged western African nations of Sierra Leone, Liberia and Guinea from 2014 had tremendous negative effects on travel, tourism and trade thousands of kilometres in Africa, any breakdown in the rule of law or a collapse of the economic fundamentals in Nigeria will have a huge effect on other parts of the continent. The world is becoming a global village, and Africa increasingly is looked upon as one (despite the 53 countries, thousands of languages and our failure to integrate our economies). For the food and beverage industry, Nigeria remains the place to be, hence the more reason we need to not only pray for Nigeria, but also keep checking out Nigeria as an investment destination. Miles Dally, chief executive officer of RCL Foods Ltd., a South African conglomerate, quoted by Bloomberg said “Nigeria is a very challenging place to do business” but it’s also “the big prize” in Africa”. His company is looking for opportunities to expand in Nigeria after its bigger rival Tiger Brands Ltd. bought Dangote Flour Mills in 2012. In this issue, we bring you an analysis of the emergence of private label brands in the continent. Whether you support or are against this trend, it is expected to grow exponentially in the continent. We also have our regulars on Nutrition & Health (Nuts), Packaging (ESL packaging) and in our Formulations section, look at Salt Reduction, among other regular articles Wish you a good read. Editor
www.foodbusinessafrica.com Volume 3 Issue 1, No.11 • ISSN 2307-3535 Publishers: Foodworld Media Editor: TJ Kwach Contributors: Liz Wawire • Loretta Mugo Design & Production: Centrepress Media Advertising & Subscription: Selina Wangusi
Foodworld Media P.O Box 1874-00621, Village Market, Nairobi Kenya Tel: +254 20 8155022, Cell: +254 725 343932 info@foodworldmedia.net www.foodbusinessafrica.com
Food Business Africa Magazine Professional Network @Foodbizafrica Food Business Africa Magazine RELATED PUBLICATIONS
industry event
SUBSCRIPTION Contact: info@foodworldmedia.net Annual Subscription: Kenya: KSh 2900 (VAT inclusive); Africa: US$ 70; Rest of World: US$ 90 (including postage) Two Years: Kenya: KSh 5600 (VAT inclusive); Africa: US$ 130; Rest of World: US$ 170 (including postage) Food Business Africa (ISSN 2307-3535) is published 6 times a year by FoodWorld Media Ltd. The magazine is distributed for free to food and beverage processing companies in Africa. The magazine is available through subscription for the other stakeholders in the food chain, including suppliers to the sector. Postage is paid at Nairobi, Kenya. Send address changes to FoodWorld Media Ltd by phone or email. Copyright 2015. Reproduction of the whole or any part of the contents without written permission from the editor is prohibited. All information is published in good faith. While care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of any action taken on the basis of information published.
foodbusinessafrica.com
Powered by
may 28-29 2015, Strathmore Business School, Nairobi kenya network
LEARN
Network with industry peers and leaders
Learn about the latest technology, trends, regulation and practices in the industry
TRADE Showcase your products and services to the industry and Government
Early Bird Rate Usd 150/ Ksh 13,500 Normal Rate Usd 200/ Ksh 18,000
e v sa % by 2g5isterril
Re Ap th 15
The Food Safety Summit Africa Conference & Expo is the food, feed and agro industry event not to miss this year!! Brought to you in partnership with regional regulatory authorities and universities from the region. Hot Topics in 2015: Mycotoxins and other contaminants; GMOs; processing, sanitation and hygiene; and pesticide residues in fresh produce. Presentations by key industry, Government and academic thought leaders from the region and beyond. Attendance by key decision makers with direct responsibility for executive management, product quality, production, engineering, supply chain, training and consultancy, consumer health policy and management, trade and agribusiness from the region.
Register Today
www.FoodSafetySummitAfrica.com Food Business Africa | Feb - March 2015 3 Contact us on: +254 725 343932, +254 20 8155022 • info@foodworldmedia.net
foodbusinessafrica.com
INTERNATIONAL Insights FOOD SAFETY
WHO focuses on food safety on World Health day
WORLD - The World Health Organisation (WHO) has chosen food safety to be topic for this year’s World Health Day celebrations. As our food supply becomes increasingly globalized, the need to strengthen food safety systems in and between all
countries is becoming more and more evident. That is why the WHO is promoting efforts to improve food safety, from farm to plate, and everywhere in between. The day will be celebrated on 7 April 2015. According to the WHO, unsafe food is linked to the deaths of an estimated 2 million people annually – with food containing harmful bacteria, viruses, parasites or chemical substances responsible for more than 200 diseases, ranging from diarrhoea to cancers. New threats to food safety are constantly emerging. Changes in food production, distribution and consumption; changes to the environment; new and emerging pathogens; and antimicrobial
resistance -pose challenges to national food safety systems. Increases in travel and trade enhance the likelihood that contamination can spread internationally. WHO helps countries prevent, detect and respond to foodborne disease outbreaks - in line with the Codex Alimentarius, a collection of international food standards, guidelines and codes of practice covering all the main foods and processes. Together with the UN Food and Agriculture Organization (FAO), WHO alerts countries to food safety emergencies through an international information network.
FOOD SAFETY
US debates a stand-alone Food Safety authority the United States undercuts the ability of the United States to exert food safety leadership internationally, the Bill states, and is detrimental to the public health and the international trade interests of the US. The US food safety system is fragmented, with at least 15 Federal agencies sharing responsibility for food safety. The Bill seeks to establish a single agency to be known as the Food Safety Administration to regulate food safety and related labelling to strengthen the protection of the public health; ensure food facilities fulfil their responsibility to produce food US – The US Senate is debating a Bill brought that seeks to in a manner that protects the public’s health; provide a single establish a one-stop Food Safety Administration body to handle focal point for food safety leadership, and provide an integrated food safety matters in the country. food safety raesearch capability. The Bill, introduced by Senator Durbin, if passed, will drasThe functions of this single unit shall be transferred from tically change the way food safety is regulated in the country for a number of agencies, including the Food Safety and Inspecthe first time in decades. tion Service (FSIS) of the Department of Agriculture (USDA); The Bill, which has been read twice and referred to the parts of the Center for Food Safety and Applied Nutrition of Committee on Agriculture, Nutrition, and Forestry, seeks to the Food and Drug Administration (FDA); part of the Office of establish the Food Safety Administration Regulatory Affairs of the FDA that admin“to protect the public health by preventing ister and conduct inspections of food and foodborne illness, ensuring the safety of feed facilities and imports; and the part “The functions of this single food, improving research on contaminants of the Animal and Plant Inspection Health unit shall be transferred leading to foodborne illness, and improvService of the USDA related to the manfrom a number of agencies, ing security of food from intentional conagement of animals going into the food tamination, and for other purposes”. including USDA, parts of the supply, among other bodies. According to the movers of the Bill, The Administration shall be an indeFDA and other agencies” emerging threats, increasingly ageing and pendent establishment headed by the Adimmune-compromised population, food ministrator of Food Safety, who shall be fraud and increase in imported food are appointed by the President, by and with the advice and consent some of the reasons “the safety and security of the food supof the Senate. ply requires an integrated, system-wide approach to preventing “If we can pass this bill, we will be making the most importfoodborne illness, a thorough and broad-based approach to baant change to our food safety systems since Teddy Roosevelt sic and applied research, and intensive, effective, and efficient signed the Federal Meat Inspection Act of 1906,” Sen. Kirsten management of the Nation’s food safety program. Gillibrand of New York has been quoted as saying. The lack of a single focal point for food safety leadership in 4
Feb - March 2015 | Food Business Africa
foodbusinessafrica.com
INTERNATIONAL Insights
foodbusinessafrica.com
Food Business Africa | Feb - March 2015
5
INTERNATIONAL Insights
COMMODITES
expansion
Acreage expands as wheat harvest seen rising
Zenith International opens office in Dubai
AUSTRALIA- Wheat production in Australia, the fifth-biggest exporter, will increase as acreage expands and yields recover, helping the country to boost shipments while the global harvest contracts, according to the nation’s agricultural commodities forecaster. Output may total 24.4 million metric tons in 2015-2016 from 23.6 million tons a year earlier, the Australian Bureau of Agricultural & Resource Economics & Sciences said in a report. Exports may rise to 17.95 million tons in the year starting July 1 from 16.9 million tons, the bureau said. Global output will drop 1.8 percent, it said. Wheat lost 15 percent this year, extending a back-to-back annual slump, as global supplies expanded. Record global grain output will boost inventories at the end of 2014-2015 to the high-
est in about 30 years, the International Grains Council estimated. While the ample stockpiles will cap rallies in coming months, possible challenges to new-crop supply may support prices through the fourth quarter, Rabobank International has said. Australian farmers may plant 13.89 million hectares, up 0.6% from a year earlier, the bureau estimated. Global output may fall to 707 million tons in 2015-2016 from 720 million tons a year earlier as a drop in yields offsets a rise in area, according to Abares. World output reached a record 725.03 million tons in 2014-2015, according to the U.S. Department of Agriculture. The price at U.S. Gulf ports of hardred winter wheat may average $265 a ton in the year starting July 1 from $270 a ton a year earlier, according to Abares. Uncertainty about the condition of Northern Hemisphere winter-wheat crops is a risk to the price outlook, the bureau said. Global grain production, including wheat and coarse grains, will climb to a record 2.006 billion tons in 2014-2015, the IGC estimated. Reserves at the end of the season will be the biggest since the mid-1980s, it said Feb. 26. Bloomberg
UAE - Leading specialist food and drink consultancy Zenith International has opened a new regional head office in Dubai to meet increased demand for its technical and commercial advice in the UAE and Gulf region. Based in the Freezone area of Jumeirah Lakes Towers, the 33rd floor office will be managed by Zenith’s Regional Director – Middle East and Africa, Gordon Robinson. “We have undertaken business expansion projects for a growing number of companies in the region for over ten years,” commented Zenith Chairman Richard Hall. “So it is absolutely time for us to establish a more permanent presence,” he concluded.
FOOD SAFETY
Chinese authorities to install videos to monitor food safety CHINA – Authorities in Shanghai, China plan to expand a pilot program to monitor key food producers through video surveillance, after a major scandal devastated fast-food giants including McDonald’s and Yum Brands as well as consumer confidence in food safety, reports China Retail News. Starting this year, the city will ask “high-risk” food manufacturing companies or organizations to install more surveillance cameras in their key departments, such as those producing or processing meat, infant products, dairy, school canteens and large-scale food delivery services, according to the Shanghai Food and Drug Administration. The measure comes after Shanghai Husi Food, owned by the Chinese arm of US food giant OSI Group, was found to have supplied expired meat to fast-food companies in Shanghai and restaurants 6
Feb - March 2015 | Food Business Africa
in Beijing and other Chinese cities. “Because there is a gap between the limited number of supervising officers and the mountain of tasks, we are trying to come up with new measures,” Gu Zhenhua, deputy director of the administration Since April last year, the city has helped install video surveillance at four formula producers and at all fast-food companies with a daily delivery capability of 300,000 portions at their warehouses and workshops where feeding, cooking or cleaning are undertaken. “The companies are willing to enhance their management levels and are supportive of the measure,” Gu said. “It’s not only for the sake of food safety, but also for security and anti-theft purposes.” This measure comes at a point when a recent survey found food safety has be-
come the public’s top concern. According to a poll published by China Youth Daily, 77.3 percent of respondents said the issue of food safety is the most important quality of life issue to focus on during the annual two sessions of China’s top legislative body and top national advisory body, which occurred during the first week of February.
Subscribe to our bi-weekly e-newsletters. Keep abreast of the happenings in Africa’s food and beverage industry. Sign up on our website www.foodbusinessafrica.com foodbusinessafrica.com
INTERNATIONAL Insights
anniversary
Coke celebrates 100 years of its iconic bottle
US – The Coca-Cola Company is celebrating a century since it introduced its iconic ‘contour bottle’ to package its distinctive Coke drink. The bottle, launched in 1915 as the company “attempted to fend off a host of copycat brands by strengthening its trademark” was developed by an Indiana glass company after Coca-Cola and its bottling partners issued a challenge to U.S.
glass companies to develop a “bottle so distinct that you would recognize if by feel in the dark or lying broken on the ground.” The Root Glass Company of Indiana, developed the winning design, mimicking the elongated contour shape and distinct ribs of a cocoa bean. Before this new design Coke’s bottlers used straight-sided bottles in a wide variety of shapes, sizes and colours. The bottle was patented on Nov. 16, 1915, and has remained one of the most distinct packaging designs in the world. The contour bottle was trademarked in 1977 in the US. Originally available only in soda fountains, the company has been responsible for a number of innovations including launching the six-pack in 1923 to encourage home consumption following an increase in home refrigeration in the US. Bottled soda overtook that sold through soda fountains for the first time in 1928. “Since its creation in 1915, the Coca-Cola bottle has achieved iconic status as a symbol of refreshment and uplift and it remains an important asset for our business today,” said Marcos de Quinto, Chief Marketing Officer. Coca-Cola is celebrating the centennial of its proprietary package in 2015 with a year-long campaign that includes new advertising, a music anthem and a series of art exhibits “The campaign, which will be executed in over 130 countries, is our invitation to consumers around the world to share in the specialness of an ice-cold Coca-Cola.”
Your automation partner in Africa For more than 50 years Omron has been the preferred supplier of automation solutions in Africa. Well-known for the quality and reliability of our products, we have also built a solid reputation as an innovator of advanced automation systems.
Whatever your automation need – we have the solution. If you are interested in becoming an African Distributor Partner - please email: euston.ferreira@eu.omron.com For support in Kenya, Tanzania, Uganda, Ethiopia, Sudan and Madagascar, please contact: Gabriel Wamiti, Factory Automation Systems Limited Tel: 254-20-651012 Email: fas@iconnect.co.ke
industrial.omron.co.za
foodbusinessafrica.com
Food Business Africa | Feb - March 2015
7
INTERNATIONAL Insights markets
Brazil dairy group takes aim at Gulf market GULF - B dairy, the consortium that represents nearly 40% of Brazilian dairy products exporters, has revealed that exports of their dairy products to Arab countries totalled US$ 82.7 million in 2014, representing 24% of Brazil’s total amount of export which is US$ 345.3 million. In the Arab World, B dairy’s priority countries for export are Saudi Arabia, Algeria and Egypt. Saudi Arabia is the ma-
jor consumer market for Brazilian sweetened condensed milk, with export value to the country increasing from US$ 1.1 million in 2011 to US$ 11.9 million in 2014. Meanwhile, Bahrain is currently the main importer of Brazilian butter in the region, totalizing US$ 1.25 million in 2014. B dairy has a strong strategy to increase its foothold in the dairy exports, as exemplified by the group participating
at the just concluded Gulfood 2015 in Dubai. Brazil is the fourth largest milk producer in the world with more than 100 years of experience in manufacturing dairy products. Milk production represents 58 per cent of the Brazilian agricultural production, according to Bernhard J. Smid, International Trade Promotional Manager of B dairy.
FOOD SAFETY
Nestlé USA commits to removing artificial flavors and colors by 2016 US - Nestlé USA has announced plans to remove artificial flavors and FDA-certified colors, like Red 40 and Yellow 5, from all of its chocolate candy products by the end of this year. According to the company, more than 250 products and 10 brands will be free of artificial flavors and certified colors beginning mid-2015, and will be identiTRANSITION
Michele Ferrero, owner of Nutella empire, dies at 89
ITALY - Michele Ferrero, Italy’s richest man and the owner of a global chocolate and confectionery empire, has died aged 89. Ferrero dreamt up the chocolate-hazelnut Nutella spread, Ferrero Rocher pralines, Kinder eggs and Tic Tac sweets, turning a provincial chocolate factory into what is widely seen as Italy’s most valuable privately-owned company. The family-controlled Ferrero group started by Ferrero had sales of around 8 billion euros ($9 billion) last year. The group, which his father set up in 1946 is present in 53 countries. Forbes magazine described Ferrero as “the richest candyman on the planet”, putting him and his family in 30th place on their list of the world’s wealthiest people, with a net worth of $23.4 billion. Ferrero’s son Giovanni became chief executive of the chocolate empire after his older brother Pietro, the chosen heir, died of a heart attack in 2011 while cycling in South Africa. Reuters 8
Feb - March 2015 | Food Business Africa
fied by a “No Artificial Flavors or Colors” claim featured on-pack. Going forward, all newly launched chocolate and non-chocolate candy products introduced by Nestlé USA will be made without artificial flavors or colors. The company is also actively pursuing the removal of caramel coloring from its chocolate products. PEOPLE
Royal FrieslandCampina CEO to head Carlsberg DENMARK - Cees ‘t Hart, currently CEO of the Dutch dairy company Royal FrieslandCampina has been appointed President and CEO of Carlsberg, one of the leading beer companies. This follows Carlsberg’s announcement that its current President and CEO, Jørgen Buhl Rasmussen, is to retire from the Carlsberg Group at the end of May. Dutch citizen Cees ‘t Hart, has been CEO of Royal FrieslandCampina since 2008 where he led the integration of two former competitors Friesland Foods and Campina. Prior to joining Royal FrieslandCampina, Cees had a 25 year impressive international career at Unilever. Commenting on the change, Chairman of the Supervisory Board Flemming Besenbacher said: “I am delighted that Cees ‘t Hart will be joining the Carslberg Group. He has great international experience and a strong track record, and will propose the next phase strategy for Carlsberg Group’s long-term profitable and sustainable growth. foodbusinessafrica.com
briefs
international The packaging industry in India, currently valued at $24.6 billion is expected to grow to $32 billion by 2025, on the back of a rising middle class, increasing the demand for qualified workforce.
Fast-food giant McDonald’s has announced that, within two years, all of the chicken served at its 14,000 U.S. restaurants will come from farms which raised the birds without medically important antibiotics.
Private equity firm Onex Corporation is granted final approval by the European Commission, ending the process of acquisition of SIG Combibloc, the packaging maker
Anheuser-Busch InBev, the maker of Budweiser, exits its joint venture with RJ Corp group in India; plans to consolidate its position in the country through investment and capacity expansion, according to reports
In the US, a settlement linked to cantaloupe contaminated with Listeria monocytogenes that occurred in 2011 and which sickened 147 people resulting in the deaths of 43 people, was recently reached between 66 victims and some of the 20 defendants. Fonterra, the New Zealand dairy company opens its first wholly-owned ingredients manufacturing factory in Europe. The Netherlands plant will produce 5,000 tonnes of whey protein and 25,000 tonnes of lactose annually Danone and Mars, Inc, have become founding investors behind Livelihoods Fund for Family Farming, a new fund that plans to invest 120 million euros (US$ 130 million) in the next 10 years to implement projects in Africa, Asia and Latin America, helping more than 200,000 smallholder farmers and 2 million people and boosting the sustainability of their crops.
Aujan Coca-Cola Beverages Company plans regional expansion investment of US$500m till end of 2018 in the Middle East and North Africa Polish cheese production equipment provider Obram is acquired by Tetra Pak, as the packaging materials maker seeks to boosts its capability in the cheese segment Israeli flavour house Frutarom acquires Spanish company Ingrenat and UK-based FoodBlenders for a combined sum in excess of US$10m Brewing giant Carlsberg closes two of its ten breweries in Russia as the economic woes in the country weigh on the brewer, losing about 15 percent of its capacity in the country.
5 good reasons to advertise in the food business AfricA mAgAzine • The only technical food & beverage industry magazine in sub- Sahara Africa, outside of South Africa. • Available as a hard copy in 10 African Eastern, Central and Southern African countries, getting into Nigeria and Ghana this year. • Provides well researched industry information and analysis written by professionals in the sector. • Read by key decision makers with direct responsibility for purchasing of equipment, ingredients, chemicals, packaging and other services. • Available in both print and as an e-reader that is available online. Talk to us on how we can partner to enable your company reach into Africa. foodbusinessafrica.com
info@foodworldmedia.net
Food Business Africa | Feb - March 2015
9
Africa Insights
Buhler opens African Milling School KENYA – Swiss milling equipment manufacturer Buhler has opened a milling school in the outskirts of Nairobi, as it seeks to expand its service offering to the sub-Sahara African region. The opening of the milling school and a local service centre is aimed at providing support for the company’s customers in the region. The opening was graced by Mr Calvin Grieder, the CEO of Buhler AG and Mr Andreas Fluckiger President Buhler Middle East & Africa and several industry leaders from Kenya, including Mr Vimal Shah of Bidco Africa Limited among others. According to Martin Schlauri, the Managing Director of the school, the latest investment is “a milestone for our future” and will provide the company with an opportunity to ‘be close to the market’ and also ‘to understand the needs of the region better’, which are key to the company’s strategy. The company has placed a great emphasis on Africa, Asia and Latin America in the last few years and has seen tremendous growth in these regions according to Mr Schlauri. “We believe in Africa’s future”, said Mr Calvin Grieder, the CEO of Buhler AG, who added that it has actually taken them a “long time to understand Africa”. “We have a lot of grains that we do not understand. It is important that we are here to develop our knowledge on these grains” he added. Some of these grains 10
Feb - March 2015 | Food Business Africa
include teff, a major grain in Ethiopia. The milling school has a state of the art mill that can mill both wheat and maize, and also other grains like sorghum and millet. It also has the latest testing equipment for flour and grains analysis. The inaugural class joined in February this year and had a total of 27 students drawn from nine countries in Africa, including Nigeria and Egypt. The trainees in this inaugural class have been drawn from a number of medium and large scale mills in Africa including Alpha Grain Millers in Nairobi, Mombasa Maize Millers, Flour Mills of Nigeria, Bakhresa Flour Mills in Uganda, Flour Mills of Nigeria, Five Star Milling in Egypt and several flour mills in Tanzania, Mozambique among other countries. The latest investment by Buhler adds on to the increased interest in sub-Sahara Africa by major international brands as growing economies, rising population and rising incomes make Africa the next destination for investors. Just next door to the Buhler facility, located just before Ruiru town, some 20 kms from Nairobi, is the regional office for Krones, the German provider of equipment and services to the beverage bottling companies. The milling sector in Africa is poised for growth in tandem with rise in population and rural-urban migration. With a majority of African countries having population growth rates above 2% per
annum, the continent’s population is expected to quadruple in 90 years, according to World Population Review, providing millers with more mouths to feed each and every day. Buhler is proud of its education and training tradition, as the company opened its first milling school in Switzerland in 1955, according to Mr Grieder. “Technology works with good people. Without the right people, technology will not work well, efficiently or to its optimum level. We want to train the operators who will be able to use Buhler’s high technology to the best of the machine’s ability while gaining efficiency, yield and energy saving in the mill” he added Martin Schlauri, who is the inaugural Managing Director of the School, was happy with the location of the plant in Nairobi.Mr Schlauri is a veteran in milling, having joined Buhler some 35 years ago. The Buhler African Milling School is the only facility of its type in Africa. Although there are other milling schools in Moroco and Egypt, they operate at a different level. Even South Africa has in place only a correspondence course in milling. Food technologist Stefan Lutz, who has 14 years’ experience in the grain industry, is a teacher and technical instructor at the school together with Mr Schlauri.
foodbusinessafrica.com
Africa Insights
M&A
INNOVATION
Kellogg’s plans Kenyan plant as it takes majority stake in Egypt’s Bisco Misr
Bralirwa introduces stout beer brand
The moves come as the cereal maker boosts interest in Africa
EGYPT – American cereals processor Kellogg’s has acquired an 86% majority stake in Cairo-based Bisco Misr, the largest biscuits producer in Egypt in a deal valued at US$ 125 million. Meanwhile, the company has announced that it has plans to open a production plant to serve the East African market in Kenya. The acquisition of Bisco Misr, was a long protracted battle between Kellogg’s and the Abraaj Investment Management, part of the UAE based Abraaj Group, with the cereal conglomerate holding its own before edging out the private equity investor. Commenting on the acquisition, John Bryant, Chairman and CEO, Kellogg Company said, “Bisco Misr is an excellent strategic fit for Kellogg, and Egypt is a growing market with a strong economy. A number of Kellogg’s cereals and snacks are already offered in the market and the combination of the powerful Bisco Misr brands with Kellogg’s iconic brands provides a tremendous opportunity for growth.” Named among the Top 500 Companies in the Middle East by Forbes Magazine Bisco Misr has a market share of 22% in the country. The firm has publicly traded since 1998 and has 3,300 employees and three manufacturing facilities and annual sales of about $46m in 2013. It produces some of the country’s most recognisable brands, including foodbusinessafrica.com
popular biscuits Bisco Luxe, Chico Chico and Bisco Wafers. Kellogg’s acquisition of one of Egypt’s most recognised baked goods companies will enable the global food company to expand its global snacks business in key emerging markets, including Egypt. “Kellogg’s acquisition of Bisco Misr is a strong vote of confidence in Egypt’s consumer market and the role Egyptian companies can play in helping multinational firms reach emerging markets with quality products,” said Minister of Investment, Ashraf Salman. These investments come at a very important time for Egypt, as the country seeks to increase foreign investment and aims for economic growth of at least 4% in 2015 and at least 7% for the next decade. On the Kenyan investment plans, Business Daily quoted people familiar with Kellog’s planned entry into the market that it is finalising regulatory approvals before making a formal announcement. It is also exploring opportunities of entering through a joint venture with a local investor. “The focus is to tap opportunities in the East African market and use Kenya as the central avenue to deepen its products’ penetration in the region. The operations are set to start early this year given the company has made good progress in terms of regulatory aspects,” said the source.
RWANDA – Bralirwa, the largest beer company in Rwanda, has introduced Legend, a stout beer that is targeted towards capturing lost market after it lost the rights to produce and distribute Guinness in Rwanda. Bralirwa, which had been in a deal with East African Breweries Ltd (EABL), the Diageo affiliate, lost the contract with EABL in 2013. “We were sad that Guinness left our beer brands, but we promised (then) to replace it”, Jonathan Hall, the company’s managing director said during the launch. The Rwanda Stock Exchange listed Bralirwa, produces market leading beer brands including Primus, Mutzig and Turbo King and distributes Heineken in Rwanda and the Great Lakes region production
Zambia Sugar invests, plans to double production ZAMBIA – Zambia Sugar Plc has invested US$ 100 million (K 520 million) as the company seeks to double its sugar production. The investment has been driven by increased demand for refined sugar from both the domestic and regional markets. Zambia Sugar managing director Rebecca Katowahas said the project will also increase annual sugar production capacity from the current 420,000 tonnes to 450,000 tonnes through a range of smaller factory improvements. Food Business Africa | Feb - March 2015
11
Africa Insights M&A
Pioneer beats Lactalis to Arab Dairy buy EGYPT - Egyptian financial services firm Pioneers Holding has won the race to buy Egypt’s Arab Dairy for 255 million Egyptian pounds ($33.4 million), beating a rival offer from Al Nour, reports Reuters. Pioneers CEO Walid Zaky said the acquisition was part of his company’s efforts to expand in the food sector, a fast-growing industry in the most populous Arab nation of 87 million people. investment
Heineken inaugurates its largest Ethiopian plant
ETHIOPIA - Heineken has opened its largest factory in Ethiopia worth 110 million euros (US$ 120 million), as the company seeks to grow its capacity in the country. The factory, with a capacity of producing 150 million litres a year is located in the outskirts of Addis Ababa. The new investment, which comes following the acquisition of Harar and Bedele breweries in 2011, raises the total investment of the company in the country to 310 million euros (US$ 335 million). “We are planning to source our malt barley from local farmers through the integration of smallholder farmers in the CREATE project that the company launched in 2013,” said Jean-François van Boxmeer, the CEO of Heineken NV. The company brews seven brands in the country: Bedele Regular, Bedele Special, Walia Beer, Harar Beer, Hakim Stout, Harar Sofi, and Sofi Lemon. The new plant will also produce Heineken beer in the country. “The major strategic purpose of opening this factory is the need to address the 1,000km distance between the Bedele and Harar factories, which is difficult for logistics,” stated Johan Doyer, the managing director of Heineken Ethiopia. Heineken plans to export products from Ethiopia to African and the Middle Eastern markets. 12
Feb - March 2015 | Food Business Africa
“We will pump new investments into Arab Dairy and increase production plans. We will not remove its shares from the bourse,” Zaky said. Pioneers, which already owns 25 percent of Arab Dairy, is set to start buying up the shares it does not own. In a long and protracted bid, Pioneers came tops, beating Al Nour, a subsidiary of Europe’s biggest dairy group,
Lactalis after bids from Saudi Arabia’s Arrow Food Distribution and Denmark’s Arla Foods Amba also fell through. The battle for control of the Egyptian cheese maker is part of a recent flurry of activity on the Cairo bourse, which has struggled to revive investor confidence in the turmoil that has followed the 2011 Arab Spring uprisings.
PEOPLE
Govt to restructure Mumias as COMESA deal renewed KENYA - The Kenyan Government plans to disband Mumias Sugar Company board of directors and send home more than 300 staff members in a Sh5 billion (US$ 55 million) deal with lenders aimed at reviving the ailing company. It will also involve weeding out of “sugar brokers” from the company’s distributors. The decision came a few days after Kenya received yet another reprieve from COMESA, with the regional group giving Kenya another year extension to reform its sugar sector that is surrounded by lower cost producers. “During its meeting, the committee considered the request from the government of Kenya and recommended that the Kenyan sugar sector should be given a one year extension of their existing safeguard subject to review and renewal for another one year,” COMESA said in a statement. Failure to extend the reprieve could
have seen Kenyan producers face off with cheaper sugar from Uganda and other Southern African countries where production is rising at lower costs than Kenya, to the detriment of the sector in Kenya. It remains to be seen if the latest extension will save the sector, whose planned privatisation is filled with political jostling and high costs and debts. Kenya’s sugar requirement is approximately 800,000 metric tonnes, consisting of 650,000 metric tonnes of table sugar and 150,000 metric tonnes for industrial use. Audit firm KPMG has been appointed to oversee the restructuring that will involve a rights issue which is expected to inject Sh4 billion into the cash-strapped firm. Mumias Sugar has faced increasing pressures, failing to pay farmers for cane and sinking deeper into loss, reporting a first-half loss of KSh2.08 billion (US$ 29 million).
GMOs
Ghana inaugurates Biosafety Authority directors GHANA– Ghana has inaugurated a thirteen-member Board of Directors of the National Biosafety Authority. The Board’s inauguration brings to an end a 16 year “effort by the government to put in place appropriate and transparent decision-making mechanisms for modern biotechnology for the benefit of all Ghanaians’ according to the Minister of Environment, Science, Technology and Innovation (MESTI), Mr Akwasi Opong-Fosu The authority, which was mandated to oversee the regulation of modern biotechnology in Ghana, was established by
the Biosafety Act 2011 (Act 831). The new board is expected to approve the development, transfer, handling and use of GMOs in the country. “The government has taken this line of action because it sees great potential in modern biotechnology and has, therefore, cited it in the National Science Technology and Innovation Policy as one of the precision technologies to be adopted to enhance the socio-economic development of the country”, the minister said.
foodbusinessafrica.com
Africa Insights
EXPANSION
sales
Guinness launches bottling plant in Ethiopia brewer
Tiger Brands records low sales as Nigerian unit struggles
ETHIOPIA – Guinness-owned Meta Abo Brewery has completed latest phase of expansion with the launch of a US$ 119m bottling line Meta Abo Brewery’s new US $119m bottling line expansion in Sebeta marks the culmination of $344 million investment by Diageo. The investment triples the annual capacity of the brewery to 170 m litres after acquisition, ensuring that the brewery can meet future consumer demand and support the introduction of new product innovations to the Ethiopian market such as Zemen Lager Beer launched by Meta Abo in December 2014.
Ivan Menezes CEO of Diageo said of Diageo’s investment in Meta Abo, “We are now celebrating three years since the acquisition of Meta Abo and are proud to have arrived at another significant milestone in our brewery’s growth with the commissioning of the new production line. Ethiopia is a country of enormous opportunity. Our commitment here, and to Africa as a whole, is absolute. We will continue to invest in the long-term growth of our brands, the Meta business, our people and the communities in which we operate, for the benefit of all.”
MARKETS
Africa set to become ‘fastest growing beer market’ by 2017 AFRICA - Average growth in the African beer market could reach 5% by 2017, making it a faster growing market than Asia and Latin America, according to new research. Market research group Canadean has said that it expects more Africans to enter the market from the home brew sector, while commercial beer and premium brands continue to be particularly successful. The nature of the market presents further opportunities to commercial brewers, Canadean claimed, with 90% of the African market already being controlled by brewing giants SABMiller, Heineken, Castel and Diageo. Premium beer brands have grown faster than mainstream brands on the continent, having an average annual growth rate of almost 12% between 2008 and 2013, compared to 6% for mainstream beer and 6% for African beer overall. This bodes well for brewers looking at improving value of their sales. foodbusinessafrica.com
“The growth of premium beers is a result of the growing middle class In Africa, who drink premium beer as a display of social status.” The top three markets on the continent are South Africa followed by Nigeria and Angola. Canadean account director Kevin Baker said: “Africa has seen inflation fall, foreign debt shrink and GDP rise in the last few years. Moreover, population growth – once feared as a major contributor to poverty – is now perceived as an asset, with the working age population set to outgrow that of China and India.” “At the moment homemade alcohol products still dominate the African market, but they pose a significant health risk. This is an incentive for consumers to move away from ‘home brews’ and instead turn to commercial beer” he added.
SOUTH AFRICA - South Africa’s biggest consumer foods maker Tiger Brands Ltd reported a slowdown in quarterly sales growth due to weak demand at home and poor performance at its Nigerian unit. Sales rose 7 percent to 8.2 billion rand ($707.83 million) in the three months to end-December, slower than a 10 percent growth during the same quarter a year earlier. Consumer demand in Africa’s biggest economy remains tepid due to tentative economic growth while the weaker rand currency fuels inflation and pushes up the price of imported goods. Tiger Brands has been trying to turn profit from Dangote Flour since paying nearly $200 million for a controlling stake two years ago as part of broader plan to expand into the rest of Africa to offset slow growth at home. The performance of Dangote Flour was affected by the devaluation of the naira currency, which resulted in higher input costs that could not be fully recovered in product pricing due to the competitive environment, the firm said. “The short term prospects for the Nigerian businesses remain extremely challenging,” it said. Tiger Brands, which competes with Nestle Nigeria Plc in Africa’s biggest economy, wrote down the value of Dangote Flour for the second time in less than a year in November following a review of utilisation levels. BD Live
Food Business Africa | Feb - March 2015
13
interview executive talk
Martin Schlauri is the Managing Director of the Buhler African Milling School. He is also a trainer at the milling school, training on technology and quality control. Martin is a milling engineer with over 35 years’ experience with Buhler, having joined the company after having graduated at the Swiss School of Milling. The six modules follow the process of the wheat processing value chain from grain intake, storage, cleaning, wheat and maize milling, finished products and quality control. This gives the students a good understanding of the process and the value chain. This is the basic apprentice training. After going through this apprentice program and with a further two years of work experience, we have an advanced training. This training is for a head miller or a supervisor who can manage a mill. The program is designed to give the trainees more knowledge on management of quality control and bring in the aspect of preventive maintenance of a mill as well.
How important is the opening of the African Milling School to Buhler? The opening of this school is a milestone. It is Buhler’s contribution to the development of the grain industry, which is so vital in people’s lives. The facility we have inaugurated will provide our customers in the region with a learning opportunity. That is why our training is for young millers for two years apprentice program, to provide the apprentice millers with time also to learn. How does the school fit into your sub-Saharan African strategy? It perfectly fits with our African strategy because Buhler is closer to the market. We have developed a strong regional organization with competences in technology, project management and automation. But more to that our local service station with fully equipped workshops for roll reconditioning and fluting as well as spare parts availability, we support our customers in their daily operations. In addition with a team of qualified and experienced engineers and technologists we provide service at customers’ site.
Africa has its own unique grains. How does this fit in with your school’s capability? The mill we have here is designed to be flexible. It can grind maize and wheat but can also run on other grains including millet and sorghum. We have special flow-sheets that can be adjusted to enable the mill handle all these grains. The mill also allows us to look deeper into the different regional demands with respect to the finished product. For example, the type of maize flour in Kenya is different from the one in Tanzania and this requires the right technology behind it. Tanzanian maize flour is very fine. What is the future of Buhler in sub-Sahara Africa and the school? If we look at the school aspect, we plan to consolidate the training in the school. But we also plan to introduce a number of short courses to meet the needs of the milling sector. There are many milling staff with plenty of experience in the region and we want these short, one week intensive courses to build their knowledge in current technology and practice. In this regard this year we have four short courses in mechanical maintenance, electrical maintenance, advanced milling, and baking and grain analytics. These courses are targeted towards experienced staff in the industry.
What is the goal of this training school? Our mission is to build the next generation of millers and head millers in Africa. Our goal is to reach operational milling excellence level with a focus on efficient operations and preventive maintenance focus that improves flour yield, quality and energy usage.
What is the capability of your laboratory? Our laboratory covers the entire spectrum of analysis required by a miller. We have equipment that test basics like moisture and impurity that needs to be done by every miller. The next level of equipment measure flour properties like gluten, falling number and enzymatic activity. I see more and more millers in the region equipping their laboratories with these equipment. The third level measure flour rheology, like Brabender farinographs and extensographs. We need all these equipment for the industry to develop. As we see the model, there shall be a need for some specific type of flour from customers, and such laboratories need to be available to meet those customers’ needs.
What are the details of your training program in Kenya? We have a number of training programs designed for millers and maintenance staff with different work experience. Our apprentice programme for millers is a two year dual milling credential program. This means that the apprentice millers come in for residential training three times a year for four weeks at a time. They then go back to their work locations to practice what they have learnt at their work places. After going through the first year’s program, students will be admitted into the second year and repeat the same process.
What is your take on lack of differentiation of flour in the region? The market will eventually push the millers to improve and differentiate their flour. Currently, we have seen a lot of interest from the big fast food chains coming into the region. Some of these companies need some very specific flour for their products. The market will demand specific flour in future. Multi-purpose flour was good but it will no longer be for all applications. So the millers need to learn to buy different wheat types and quality that they can grind and blend in specific ways to meet the customer’s needs
14
Feb - March 2015 | Food Business Africa
foodbusinessafrica.com
EVENT PREVIEW
food safety summit africa
may 28-29 2015, Nairobi kenya
Strathmore Business School to host Food Safety Summit Africa Conference & Expo 2015
A
ttendees at the upcoming Food Safety Summit Africa Conference & Expo have an opportunity to interact, learn and trade at one of the most relaxing and engaging event locations in Kenya. Strathmore Business School, the leading business and leadership training institutions in the region, has agreed to not only host the event at the 400-seater Auditorium but is also providing important logistical support for the event. The Strathmore Business School venue has come in handy – considering that the organisers had always wanted a venue that provided ease of interaction during the conference and also during networking breaks, lunch and evening activities. At this location, participants will get the right atmosphere to interact with exhibitors, regulatory agencies and delegates from the region, without ever leaving the exhibition and conference area. “One benefit of the kind of venue we have at Strathmore Business School is that our delegates and exhibitors will have two days of interaction with each other better than any other events that have been organised for the food and agro industry in the region”, said the event organisers, FoodWorld Media, publishers of the industry leading technical publications Food Business Africa and AgriBusiness Africa. “We have seen a lot of disappointments before when organisers and exhibitors targeting this industry have come from Europe or South Africa, only to be disappointed at the quality of those who come into the exhibition. That is why we have made a very deliberate attempt to ensure that every single delegate will be of value to our event, the exhibitors and to the industry as a whole”, added the organisers. With key decision makers expected to come from the Eastern, Southern and Central African food and beverage industry and the feed and agro industry, Government and regulatory authorities, researchers, retailers, and other stakeholders, this event promises
foodbusinessafrica.com
to be a defining opportunity for the industry in Africa to place food safety where it belongs – top of the agenda. The organisers expect the event to have good attendance considering the cross-cutting role food safety plays in the economy and consumer health in the region. Already several Government regulatory agencies including Ministry of Health and National Biosafety Authority, several universities, organisations including the Fresh Produce Exporters Association of Kenya (FPEAK) had committed to partner with the organisers. The organisers are awaiting formal confirmations from other organisations including Kenya Bureau of Standards (KEBS), Uganda National Bureau of Standards (UNBS), Tanzania Bureau of Standards, Tanzania Food and Drugs Authority (TFDA), Kenya Plant Health Inspection Service (KEPHIS) and Rwanda Standards Board (RSB). The two day event is planned for May 28-29, 2015 in Nairobi, Kenya – the centre of sub-Sahara Africa’s economy. Hot topics during this year’s event include aflatoxins and other contaminants, GMOs regulation in the continent, pesticide residues in fresh produce, and case studies in meat, dairy, beverages processing and handling. Speaker information is being finalised and will be available on the website by April 1, 2015. The food safety landscape in Africa faces a number of challenges, one of which is capacity of farmers, processors, retailers, and Governments to ensure that the industry grows, produces and sells safe food. Increasingly, the continent faces the challenge of meeting export market requirements imposed by key export markets like the European Union. Early-bird registration is open till April 15, 2015. More information about registering and attending the event are available at the event website: www.FoodSafetySummitAfrica.com
Food Business Africa | Feb - March 2015
15
Africa Insights M&A
M&A
Pioneer Foods enters Nigeria cereals market
Rhodes Food Group to buy two companies as it looks to diversify
NIGERIA – South African cereals producer Pioneer Foods, the maker of ProNutro and Weet-Bix breakfast cereals, has entered the Nigerian market through a partnership with a local firm. Pioneer has plans to take a majority stake valued at US$ 7 million in a of newly formed company Food Concepts Pioneer (FCPL), with Lagos-based company, Food Concepts Plc, its partner in the venture. Pioneer Foods CEO Phil Roux said Nigeria was a key market for any food company in search of growth. “This is a fairly priced asset with good upside potential,” he was quoted by BD Live. The venture, FCPL, has a running business, Butterfield Bakeries, a baked goods business specialising in bread and sausage roll production. It is believed by analysts that this is a lower risk way to get into Nigeria by the South African firm, after Tiger Brands acquired Dangote Flour Mills in 2012, an investment that has forced Tiger Brands to write down its investment in the deal following
tough market conditions and devaluation of the Naira Pioneer Foods already has a significant export footprint in several African countries, and trades with a number of its brands in Nigeria, but has no assets in the country. FCPL has bakery operations in the capital Abuja, Ibadan, Lagos and Benin City. Following the investment by Pioneer, operations will be scaled up. Pioneer Foods will hold 50.1% of the shares in FCPL and the current Food Concepts plc shareholders’ interest will be diluted to 49.9%. Food Concepts was founded by Deji Akinyanju in 2001. Other shareholders include the International Finance Corporation, and Development Partners International, a UK-based private equity firm focused on African investments. Food Concepts’ portfolio includes quick-service restaurant brands Chicken Republic, Pizza Republic, Reeds (a Thai fusion concept) and Free Range Farms — an integrated poultry farm and processing plant. – BD Live
Financials
EABL’s half year profit rise 12%, exports major drivers KENYA – Leading brewing group East African Breweries Limited (EABL) has announced an increase in net sales growth of 9% and 12% growth in profit before tax for its half year ending 31st December 2014, driven by growth in premium beers and spirits and export markets. The company realized double digit growth in spirits, premium beer and ready-to-drink and improved performance in Tanzania and the export markets, despite facing several challenges in the market and changes in the regulatory environment in its key market, Kenya. “ We are pleased to have delivered these results despite the tough and unpredictable business environment. Our response to these challenges, through innovation; focus on cost and increased efficiencies has paid off during this period,” said Group Managing Director, Charles Ireland. Export markets, where the company has faced head winds in the last few years, seem to have performed much better for the brewery. “Despite currency
16
Feb - March 2015 | Food Business Africa
challenges, our export markets, supported by the establishment of the local depot in Juba, delivered over 100 percent growth.” noted Mr. Ireland. In Tanzania, where the company has been striving to build capacity and improve performance after taking over Serengeti Breweries, delivered a robust net sales growth at 17% with particularly strong performance from premium beer brand Kibo Gold Lager and an increased focus on spirits and innovation, where the company introduced Jebel Coconut and Serengeti Platinum brands. Net sales in Uganda grew by 7%. Kenya delivered a headline net sales growth of 3%, a clear indicator that the recent changes in alcohol consumption regulations are taking a toll in the beer market in the country. The company reorganised its operations in 2014, retrenching a number of staff in Kenya
SOUTH AFRICA - Recently listed Rhodes Food Group has agreed to buy Boland Pulp, a purée maker, and Deemster, a company that focuses on pickled foods, as it looks to diversify its business. Rhodes will pay R101.58m for Boland Pulp, which is based in Wellington in the Western Cape, and R25m for Deemster, which is based in Bethlehem in the Free State. Rhodes listed on the JSE in October last year. It produces convenience foods for distribution in southern African and global markets. The group’s product range already includes canned fruit, jam, vegetable and meat products, fresh ready-made meals, pies, pastries and dairy products. Some of the group’s brands are Magpie, Bull Brand, Hazeldene, Portobello and Trout Hall. Rhodes CEO Bruce Henderson said Boland Pulp and Deemster were acquisitions which would complement Rhodes’s current product range. “The acquisitions of Boland Pulp and Deemster are aligned with our strategy of expanding into new product categories which are complementary to our current product ranges,” he said. Boland Pulp produces bulk fruit and vegetable juices and purées for the domestic and regional markets. It exports to more than 30 countries internationally. PRODUCTION
Multi-Pro to start local production of Indomie GHANA - The leading distributors of Indomie instant noodles, Multi-Pro Private Limited, plans to start mass production of the noodles in Ghana as part of its 2015 objective. “As part of our company’s 2015 objective, we have acquired a vast land at Prampram to establish our own manufacturing factory to produce the noodles locally other than importing them from Nigeria,” the company’s National Sales and Marketing Manager has been quoted.
foodbusinessafrica.com
Africa Insights
COMMODITIES
South Africa’s maize harvest to fall Low harvest in Africa’s largest producer could affect region
SOUTH AFRICA – South Africa looks set to harvest its smallest maize crop in eight years because of severe drought conditions in large production areas, which could lead to white maize shortages. South African farmers are expected to harvest about 9.665-million tons this year, a third less than last year. This will be the smallest harvest since 2007, when the yield was 7.1-million tons. White maize production is expected to fall as much as 39% to 4.696-million tons while yellow maize is expected to fall by 24% to 4.968-million tons compared with the final estimate of last year’s crop. Dry and hot weather conditions in the main maize and oilseeds production ar-
eas — especially in the North West and Free State — has triggered large price swings in maize contracts on the South African Futures Exchange. “Millers could run out of white maize this year,” Grain SA CE Jannie de Villiers said. “White maize is not as widely available (as) the yellow type.” The only other country that produces sufficient white maize for export is Mexico and Mr de Villiers said it was unlikely the Central American producer would have a large enough crop to supply South Africa. The most actively traded white maize contract for July delivery has shot up 30% to R2,595 a ton over the past month while yellow maize has gained 18% to R2,376 a ton.
“Grain SA estimates SA will have to import about 1.65-million tons of yellow maize this year as a result of the expected shortage” Maize exports will also be halted, Mr de Villiers said, except to countries traditionally supplied by SA such as Botswana, Lesotho, Swaziland and Namibia. SA, which accounts for the bulk of Africa’s maize production, consumes about 10-million tons a year. Other countries in southern Africa
affected by severe weather such as Mozambique, Zimbabwe and Malawi will probably have to source maize elsewhere in case of shortages this year. “The first is the problem that importers will face to buy white maize on the international market as just about all the maize that is produced internationally is yellow,” Mr Brink said. Grain SA estimates SA will have to import about 1.65-million tons of yellow maize this year as a result of the expected shortage. Without improved rainfall, the outlook for this year’s crop could deteriorate further.,” Mr de Villiers said. “If we receive no rain or very little rain, the situation could worsen further. The current year, as well as the next year, will be a very difficult season for the country. The expected poor summer crops will impact negatively on the agricultural sector and basic food products are going to be very expensive for consumers,” he said. Last year SA had its largest crop since 1982, when 14.3-million tons of maize were produced.- BD Live
Subscribe to our bi-weekly e-newsletters. Keep abreast of the happenings in Africa’s food and beverage industry. Sign up on our website
www.foodbusinessafrica.com
EXPANSION
SABMiller expands Ghana operations
GHANA - SABMiller’s Ghanaian subsidiary, Accra Brewery Limited (ABL), has upgraded its brewery in a project worth US$ 100 million at its existing site in foodbusinessafrica.com
Accra. The opening marks completion of the first phase of the expansion project, which will see ABL double its brewing capacity and allow it to continue to grow production and sales in the country. Mark Bowman, Managing Director of SABMiller Africa, said: “We have made significant investments in our West African operations over the last three years, including our new and expanded brewery in Onitsha, Nigeria, and the expansion of our site in Accra. The long-term growth potential for the African beer market is enormous and the investments we are making today will ensure that we are pre-
pared to capture the growth tomorrow.” This phase of the project included installation of new packaging-lines, ten beer storage vessels, warehouse and storage facilities and two new autonomous power generators. The second phase of the project will include installation of a new effluent treatment plant, new brewing equipment and upgrading the municipal water supply, as well as other upgrades on the site to be completed before the end of 2015. ABL currently sources locally grown brewing materials such as maize, cassava, sorghum and rice from approximately 3,500 local farmers. Food Business Africa | Feb - March 2015
17
briefs African
Bidco Oil Refineries has rebranded to Bidco Africa, a move that emphasises its African ambitions and its plans to diversify into other categories including soft drinks SABMiller appoints former South Africa finance minister Trevor Manuel as Independent Non-Executive Director. In Zambia, Zambeef Products Plc has increased its milk production capacity from last year’s 6 million litres to 6.5 million litres this year. The Kenyan government has approved $10.7 million from the national treasury to fight aflatoxins in the country. Tanzania Bureau of Standards announces that it is constructing a new six-storey building which will house modern and well equipped laboratories to enhance the bureau’s operations. In Rwanda, Skol Brewery has launched a new production line that will enable it to more than double its capacity to 200,000 hectolitres annually, up from 80,000 hectolitres presently In Zimbawe, a Mauritian investor has taken a 16% shareholding in Surface Investments, the leading cooking oil processor, joining the Industrial Development Corporation and India’s Midex Group. Japan-based international fast-food restaurant chain Teriyaki
opens in Nairobi, adding to a growing list of global eateries that have established a presence in Nairobi over the past two years. Algeria’s imports of cereals reached US$ 3.54 billion in 2014, rising from US$3.16 billion in 2013 In South Africa, Rhodes Food Group has bought Boland Pulp, a purée maker, and Deemster, a company that focuses on pickled foods, as it looks to diversify its business. Guinness Nigeria appoints Ronald Plumridge as new Finance Director A new crown cork factory has begun production in Ethiopia bringing the total of such factories in Ethiopia to six. In Zimbabwe, meat processor Bellevue Abattoir has secured a $10 million facility to finance the launch of its fast food venture. Zimbabwean brewer Delta Corporation has recorded a slump in volumes in the third quarter to December 2014 due to depressed consumer spending. In Nigeria, Seven-Up Bottling Company Plc third quarter profits surged by 16%, maintaining its growth momentum for the third consecutive period in 2014
Karirana Estates Limited P.O.BOX 39, LIMURU, 00217 Kenya. Tel: +254(0)20 2458752/4 Fax +254(0)2458751 Switchboard: +254733333529 / +254722203323 www.kariranatea.com
The Eden Tea brand is a high quality tea packed and distributed by Karirana Estates Limited, a company with a strong heritage in tea processing and packing since 1956. The brand is made exclusively of high quality Kenyan tea from carefully selected gardens. Eden Tea provides consumers with an authentic garden tea whose freshness is guaranteed at all times. Eden Tea has been recognized during the Annual Awards for Excellence in the Tea Sector Packers Competition over the years by the Tea Directorate in conjunction with Marketing Society of Kenya from 2009 to 2014. Eden Tea was voted the best brand in 2009, 2010, 2011 & 2012, while in 2013 and 2014 it took up the overall Marketing awards.
18
Feb - March 2015 | Food Business Africa
foodbusinessafrica.com
FORMULATIONS Sodium reduction
Sodium reduction
Common salt is a great ingredient in many food applications. While many foods lose their identity without salt, it is important for the food industry to find ways to reduce the amount of sodium present in common salt in their formulations to stave off consumer health concerns, advices Liz Wawire
I
ntake of dietary sodium has been linked to hypertension and consequently increased risk of cardiovascular disease (CVD). Worldwide, the average daily intake of salt is almost double the recommended level, with an increasingly negative impact on cardiovascular health. The food industry has the responsibility and the opportunity to make a change. New technologies make it possible. The good and the bad Sodium, one of the two molecules of salt, is an essential mineral that plays an important role in the fluid balance in our body. It also assists muscle contraction and the transmission of nerve impulses. Salt is not in itself a bad thing, the problem is the excess intake. Too much sodium increases blood pressure and may lead to hypertension. Patients with long-term hypertension have a significantly higher risk of cardiovascular disease and stroke. The WHO recommends a consumption of less than 5 g salt per day, which according to their estimations would prevent 2.5 million deaths each year. Hidden salts The recommended maximum amount of salt per day is equivalent to just under one teaspoon. The amount of sodium naturally
foodbusinessafrica.com
found in our foods (e.g. raw vegetables, water and fish) is more than enough for our bodies to function well. But many people in the region have the habit of making generous use of the salt shaker even before tasting the food on their plate. Even so, depending on one’s eating habits, a considerable amount of the total salt intake may not even come from the salt shaker. Salt is often hidden in processed foods such as canned products, biscuits, bread, breakfast cereals, pizza, cheese, spice-mixes, stock cubes and readymade sauces and dips. Salt remains an outstanding preservative, very popular in the food industry: it inhibits the growth of bacteria in food and is an inexpensive flavour enhancer. It is also used as a binding agent and texture aid. Salt replacement options and technologies Health organizations around the world advocate that the industry should make a concerted effort toward sodium reduction. Salt reduction was the theme of last year’s World Heart Day and WHO member states have agreed to reduce the global population’s intake of salt by 30% by 2025. Several governments have already taken steps towards encouraging and enforcing a reduction of sodium in processed foods. A first option to achieve lower sodium
levels is the gradual reduction of total salt content. The consumer may not perceive the difference. In this case, the amount of salt is reduced gradually, with the consumer Another approach is to use salt replacements such as potassium chloride. Potassium is an essential and generally under-consumed nutrient which can effectively replace salt and function as a taste enhancer, processing agent, stabilizer, gelling agent and preservative. Potassium chloride in combination with masking agents, the use of flavour enhancers which enhance the saltiness of products when used with salt and finally optimising the physical form of salt so that it becomes more functional and taste bioavailable. Food manufacturers can purchase a blend of sodium chloride and potassium chloride offering similar saltiness and functionality but with far less sodium. Masking agents may be used to counter the bitterness and metallic sensation of potassium. Finally, there is the option of exploring other flavour enhancers or salt-enhancing additives such as yeast extracts, soy sauce, high nucleotide enhancers, monosodium glutamate and various spices. Product quality is key There is however a limit to salt reduction using these methods without compromising the food product. Reducing the salt content too much may affect consumer behaviour but also shelf-life, stability, production yield, flavour, texture and moisture retention. The multiple functions of salt in each application need to be considered, and the challenges are different for each product category. A number of technological solutions have been explored and are already put into practice. For example, where salt is used a solid, using smaller particle size salt enhances the initial perception of saltiness, even with a lower overall salt level. Research on crystal shape density and surface area has led to the creation of a crystalline form of salt with free-flowing, microscopic hollow shapes that deliver an intense salty hit on the taste buds. Hollowing out the particles leads to a reduction of sodium content by at least 25% with a positive effect on shelf life and without changes in flavour, structure, texture, weight and volume
Food Business Africa | Feb - March 2015
19
FOOD SAFETY Acrylamide
Acrylamide Acrylamide levels in foods is a concern to food safety authorities worldwide. The consumer has also become aware of the potential health risk with many people taking steps to cut down on acrylamide. The food industry has innovative options to reduce the levels of acrylamide in processed foods, writes Liz Wawire.
U
ntil April 2002, acrylamide was only known as a highly reactive industrial chemical, used primarily for industrial purposes and also present in tobacco smoke. And then, Swedish research surprisingly showed that a wide range of heatprocessed starchy food products contained significant levels of this substance: bread, coffee, fried potatoes, potato crisps, biscuits and chocolate for example. Acrylamide is formed when reducing sugars react with free asparagine, an amino acid: it is a natural by-product of the Maillard reaction, the chemical reaction that occurs when reducing sugars react with amino acids on heating giving browned foods their characteristic flavour and taste. The amino acid asparagine and sugars are naturally present in many plant-based foods. Cooking methods such as frying, baking, roasting, toasting and grilling have been found to produce acrylamide. The three product categories with the highest risk of acrylamide formation are potatoes, cereals and coffee. Acrylamide levels found in food vary depending on the
20
Feb - March 2015 | Food Business Africa
manufacturer, the cooking time, the method and the temperature used. Most researchers have found acrylamide in foods that were heated to a temperature above 120째C (248째F). The special case of potato chips Oxidation of fat in fatty foods, in the process that forms unique 3-carbon molecules (including acrylic acid and acrolein) which react with asparagine in the presence of heat, can form acrylamide even in the absence of sugars in foods. Even though potatoes have low levels of asparagine, this oxidation reaction and the fact that starch can be converted to sugars gives the potato chips a unique characteristic with acrylamide levels above 1000 ppb being common, higher than any other food products. Why worry about acrylamide? Acrylamide is a potentially toxic and potentially cancer-causing substance that can be naturally present in uncooked, raw foods in very small amounts. Apart from the prepared foods, acrylamide is also found in cigarette smoke, cosmetics and in industrial processes foodbusinessafrica.com
PACKAGING Glass
FoodDrinkEurope also published pamphlets covering five specific food sectors: biscuits, crackers and crisp breads; bread products; breakfast cereals; fried potato crisps; and fried potato products/ French fries. You can download the Toolbox here (suggested interventions are found from page 17): http://www.fooddrinkeurope.eu/S=0/ news/press-release/fooddrinkeuropeupdates-industry-wide-acrylamide-toolbox/ like paper, petroleum and dyes. Studies on laboratory animals have found that high levels of acrylamide greatly increase the risk for several types of cancer. Acrylamide is considered a genotoxic carcinogen, and while it is not yet clear which level of dietary exposure would actually increase the risk of cancer, food safety authorities around the world agree that the current levels of acrylamide in food are a human health concern. Children are considered to be the most exposed age group. Acrylamide has also been shown to be a neurotoxin that can damage nervous system function. Reduce exposure to ALARP It is likely that acrylamide has been present in human foods ever since man started cooking with fire. Eliminating acrylamide from our foods will be practically impossible, but dietary exposure should be as low as reasonably practicable (ALARP). A safe or ‘tolerable’ intake has so far not been established by many countries. However, the US Environment Protection Agency established in 2010 a reference dose for acrylamide at 0.002 milligrams of acrylamide per kilogram of body weight per day, with a normal 68 kg foodbusinessafrica.com
person having a maximum daily exposure of 140 mg of acrylamide. The average American, who consumes about 27 mg per day is quite safe from this threat. Technical reduction strategies The food industry around the world has been making considerable efforts (and progress) to reduce the levels of acrylamide in food and is also carrying out research to find new ways of doing this. One mitigation effort that has been implemented worldwide is to add asparaginase, a commercial foodgrade enzyme, to certain foods to reduce asparagine levels before high-temperature cooking. This method reduces acrylamide levels, especially in dough-based products such as biscuits and bread, but recently also in fabricated potato-based products. The Acrylamide Toolbox by FoodDrinkEurope (a trade body representing the interests of the food industry at the EU level), last updated in January 2014, builds on over 10 years of research and testing of various possible interventions to reduce exposure. The toolbox offers manufacturers some intervention steps, most of which have been evaluated in the industrial, food processing context, to prevent or reduce the formation of acrylamide in specific manufacturing processes and products.
Less recent, in 2009, the Codex Alimentarius Commission (FAO and WHO) released a Code of Practice providing guidance to prevent and reduce formation of acrylamide in potato products and cereal products. This resource can be downloaded here (practical guidance is found from page 3): www.codexalimentarius.net/input/ download/standards/.../CXP_067e.pdf There is of course a complexity of factors to be considered in food processing. Food manufacturers will have to consider the possible impact of any proposed intervention on the organoleptic properties, nutritional quality and safety of their products (for example decreased nutrient bioavailability or decomposition of natural toxins) and assess the suitability of the intervention based on the actual composition of their products, their manufacturing equipment and factory setting
Subscribe to our bi-weekly e-newsletters. Keep abreast of the happenings in Africa’s food and beverage industry. Sign up on our website
www.foodbusinessafrica.com Food Business Africa | Feb - March 2015
21
NUTRITION & HEALTH Nuts
Nutty
Nutrition
In the evolution of man’s dietary patterns, nuts are among the most ancient foods, with historic traces going back to our earliest human ancestors, a few million years ago. And indeed, these little bites still deserve a spot in a healthy diet, explains Liz Wawire.
I
n terms of nutrition, nuts tend to punch above their weight and size. Though high in oil, nuts have seen a revival in fortunes with the change in perception of healthy fats over the years. Be it pea, macadamia, walnuts, almond, hazel or thousands of other varieties around the world, these small foods are now part of daily healthy eating options. Nutty nutrition Nuts are high in energy – largely from healthy unsaturated fats – and rich in antioxidants, fibre, protein, vitamins and minerals. Nuts are especially good for cardiovascular health. They contain L-arginine, an amino acid that protects arteries and improves blood circulation. They also tend to lower bad (LDL) cholesterol and protect against coronary heart disease. Nuts have a very low glycaemic index, making them excellent food for patients with insulin resistance. In addition, 22
Feb - March 2015 | Food Business Africa
they reduce the risk of gallstone disease, diabetes type 2 and some cancers such as colon cancer. Weight-conscious consumers tend to steer clear of nuts for fear of packing on too many calories. And yet nuts can have the opposite effect: research shows that the oil in nuts increases satiety and stimulates the burning of energy. Also, about 7 to 15% of the energy in nuts is not absorbed by the body. Studies done in fact show that those who eat nuts regularly do not weigh more or add more weight. But the danger is of course in party packs and (heavily) salted nuts (often roasted in extra oil) that entice us to just keep on munching. And then one can worry about the calories, but also the very high intake of sodium. That’s bad news for blood pressure. The happy medium is to not overindulge in nuts as an unlimited snack, but rather include them in meals, as is done in many Moroccan stew recipes for example. Nuts combine well with chicken, lamb, pork foodbusinessafrica.com
NUTRITION & HEALTH Nuts
and even fish and seafood. You probably haven’t tried out nuts in the common East African food, githeri!! Nut pastes, quite common in central and west African delicacies, and peanut butter can be used to add flavour and thickness to a sauce. In a salad, nuts bring a great crunch and extra protein. Crushed nuts can even be used as a much more nutritious alternative to breadcrumbs, to coat meat for example. Grinding together some nuts, herbs and oil, and maybe some cheese and garlic makes for a great DIY pesto. Home-made crumble of nuts can be mixed with yoghurt or baked in the oven over some fruit. Eating nuts as part of a healthy, balanced diet and using them as a substitute for unhealthy sources of saturated fats, makes it possible to enjoy the nutrition they offer, without taking in too much energy. Which nut to crack? Nuts come in great variety, sweet or bitter, crunchy or soft. Easily found on our continent are macadamia, cashew and groundnuts. Many other nuts are imported from around the world. Almonds are very high in fibre and vitamin E, and a good source of protein, vitamin B2 and minerals such as copper, magnesium and manganese. The almond’s skin is packed with flavonoids. Walnuts are often considered the healthiest nuts. They are very high in omega-3 fatty acids to boost heart health. Hazelnuts are rich in vitamin E and a good source of other antioxidants and monounsaturated fats. Peanuts or groundnuts are very nutritious and especially high in phyto-sterols, protein, folate and vitamin B3. They are not technically nuts but pulses, belonging to the family of beans. Pistachios are particularly high in phyto-sterols, fibre, protein and vitamin B1 and B6. Cashew nuts are packed with magnesium, phosphorus and copper, and also provide a good amount of vitamin K. Pecan nuts are quite high in calories but also packed with arteryprotecting antioxidants and a good mix of vitamins and minerals. Brazil nuts are the highest in saturated fats (over 20%) but also extremely high in selenium. They provide a lot of magnesium, phosphorus and copper. Macadamia nuts have the highest amount of calories from fat (about 15% of which are the not so healthy saturated fats). They also contain a lot of vitamin B1. Allergic concern Hazelnuts, peanuts and walnuts are the nuts that most commonly cause allergies. The reactions can be mild (itching) but also very serious (swelling that affects breathing) and even life threatening (anaphylactic shock). New European food labelling laws stipulate that allergens such as nuts must always be listed and must be emphasised in the ingredient list, for example in bold font. Even within the continent where allergen information is rarely enforced, many legislations have a requirement for allergen information on packages. But wait!! One recent development that could enable many more to enjoy nuts is that a new study published in the New England Journal of Medicine suggests that eating peanut products as a baby significantly reduces the risk of developing the allergy by 80% in high-risk infants!! foodbusinessafrica.com
Is your African
Strategy
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 Food Business Africa | Feb - March 2015
23
special report
Private label
EMERGENCE OF PRIVATE LABEL BRANDS IN AFRICA
Private label products, also called store brands have been recently introduced in Africa by major retailers, to a mixed reaction from food companies and consumers. Is there a reason to worry? Loretta Mugo provides an analysis.
I
n the world today, it’s no surprise to walk into the local supermarket chain and find the shelves saddled with food stuff with the store’s personalized brand names. Leave alone food, we’re talking about batteries, drugs, detergents, toiletries, name it - where the product has little differentiation, private labels (PL) have taken over. Previously, the function of private label was simple. It started off as strategy to trim the bills for the consumer on a budget. Then, it was the cheaper alternative, or rather, the generic “no name” brand that was only sold at specific chains. Over the years retailers have been liberating themselves from this traditional view point of being the “poor relative” and in doing so opening up a world of opportunity in private branding. Around the world the private-label appeal has gone well beyond price and unfavorable consumer perceptions. PL shares are the strongest globally among the commodity-driven, high purchase categories of goods such as cereals and grains, sugar, coffee, tea, snacks such as biscuits, mineral water and even wines. The Private label is premised on the concept of having products owned by the specific retail chain that distributes them. Case in point: “Nakumatt Blue Label Mineral water” or “Woolworths Greek Yoghurt” sold at Nakumatt in Kenya, Tanzania, Uganda and Rwanda and Woolworths in South Africa. These supermarket chains use 24
Feb - March 2015 | Food Business Africa
contract manufacturers and packagers to produce these products. The state of private label in the world In foreign markets, private label is not a novelty. It has been in existence for more than half a century in the US and Europe. Western Europe has the most developed PL market in the world with sales attributed to private label accounting for about 50% of the overall, as opposed to a meagre 10% in emerging PL markets such as Eastern Africa. According to Nielsen, every 1 dollar in 3 is spent on private label consumer packaged goods. Switzerland for instance has the highest PL market share at 45%, followed closely by the UK and Spain at 41%. In the less developed parts of Eastern and Central Europe, shares range between 24% in Poland and as low as 10% in Ukraine. However, the Northern America and Canada markets have exhibited stagnant growth in the PL markets. With dollar shares of 17.5% and 18.4% in US and Canada respectively, they are just above the average global share of 16.5%. In the USA, PL shares have grown only 1.3% between 2009 and 2013. In Canada, the situation is just as bad with consumers turning to national name brands due to promotions that help them save, as well as savvy pricing from name brand owners. Despite this poor competitive scenario, consumers in these
markets still think highly of private label products, calling them good alternatives to name brands, a good value and at parity to name brands on quality. In developing countries such as in Asia and the Middle East, changing consumers’ attitudes to favor private label has been a daunting task. Private label growth has therefore been slow in these regions and even regressing in some because the consumers are strongly brand loyal. More than 50% of the consumers in Thailand, Indonesia and the Philippines believe buying PL is a money wasting risk and prefer to buy trusted brands advertised on TV every day, so to speak. India has been the most successful PL market in Asia with growth of 27% between 2012 and September 2014. This is largely due to a new generation of shoppers, younger, less brand loyal and more willing to take the risk of buying a new brand. Bigger retailers lead the way Some of the biggest retailers lead the private label revolution in the world. Even within the private label space retailers such as Walmart have gone all out to out-compete other retailers. Walmart, the world’s biggest retailer that promises low prices always, has a number of private label brands including Great Value and its recent introduction Price List that is targeted at lower priced competitors like Dollar General or Aldi. Walmart also recently launched an app, Savings Catcher, which compares merchandise against the prices competitors in the immediate area, to deepen its hold on the price-sensitive customers in the private label space. The company’s CEO Doug McMillon, in a conference call had this to say, “In an environment where customers have so many choices about where to shop and how to buy, and many of them are feeling pressure on their budgets, we have to be at our best. That’s why it’s so important for us to deliver a compelling customer proposition of low prices and quality service for every transaction.” The state of private label in Africa As a way of transferring this novel business practice into Africa, leading retailers introduced the private label concept into our markets and are boasting overwhelming foodbusinessafrica.com
special report Private label
growth in this area. Some of the well-known in-store brands are ‘Nakumatt Blue Label’ and ‘Tusky’s Choice’ brands in Kenya. Perhaps the most developed PL market in Africa is South Africa with PL sales being 18% of total value of sales. Here we have retailers such as Shoprite offering Ritebrand, Checkers offering Housebrand, Woolworths offering a diverse catalogue of premium private label foods among others. With the exception South Africa, the concept is still at its infancy in other parts of Africa. But since its inception in Kenya about 2 years ago the response has been exceptionally positive according to Mr. Alfred Ng’ang’a, PR Manager Nakumatt Holdings, the leading retailer in the region. “Our private brands Nakumatt Blue Label and Nakumatt Select are still edging up the chain. We shall significantly expand the scope of our private brands,” said Nakumatt managing director Atul Shah last year. The retailer reported that it had sold goods worth KSh 2 billion (US$ 22 million) or five percent of its gross sales after one year of launching its private label brands. Consumer Perception Through the private label retailers found grounds to leverage their customer loyalty and connection. However, the adoption of Private label in the region wasn’t just a “me too” reaction says Mr. Ng’ang’a. A feasibility study conducted by the retail chain ascertained the need for such a variety of products in the region. 60% of consumers in the survey were willing to change from a name brand to a private label brand endorsed by Nakumatt while 58% quoted price as the key consideration to switching and a whopping 96% cited quality and packaging as their main concern. With this in mind Nakumatt does not compromise on quality says Mr. Ng’ang’a. They use trusted local and international food manufacturers with a long standing reputation in quality food production to produce their store branded products. On the flip side, fierce controversy arose from the Consumer Federation of Kenya (COFEK), a body committed to consumer protection in Kenya. This body is opposed to the practice of private labelling in Kenya. They believe that the consumer rights are violated by causing what they term as psychological doubt and confusion. “If a consumer experiences a problem with the product, who are they supposed to contact? Is it the retail chain that owns the brand or the contract manufacturer?” says Mr. Stephen Mutoro, Secretary General COFEK. While some of the retailers use licensed foodbusinessafrica.com
food manufacturers and may be ensuring that their products are produced according to national food quality standards, the majority are not, argues Mr. Mutoro. Every retailer in every corner wants to join the private label bandwagon but they do not understand the business ethics that go with it. For instance, they buy bulk and break into smaller stock keeping units within their stores, most of which are premises that often do not meet food quality standards. They are often not licensed by food safety authorities to handle food in this manner and neither is their staff, thus putting the consumer at risk. COFEK is not opposed to the idea behind private label but to ensure the consumer is protected, there has to be some regulations governing the whole process. Does all this represent the demise of name brands? The retailers and manufacturers who are playing a part in private labelling don’t think so. Mr. Ng’ang’a believes that both name brands and store brands complement well and they ensure the market is a level playing ground for both. One would argue that the retail stores give more visibility in the form of more shelf space to their products but Mr. Ng’ang’a says that the retailer ascertains that shelf space allocated according to a product’s demand. Mr. Jinit Shah, Director at McNeel Millers – a contract manufacturer for Nakumatt Blue Label flour, sees it a business growth rather than unfair competition. The emergence of private label to them has been a way to utilize their excess capacity and promote their business. “If it were not us producing for Nakumatt it could have been another miller” he adds. It has not dented the sales for their “210” flour brand either. In the end, name brands are far from dead. They still continue to take the big chunk of value share in the retail market, but without a doubt private labels have raised the bar for them. We may want to call it a level playing ground but in essence PL products have a cost benefit that name brands may find a challenge to compete with. However, brand names have a solid foundation on which they have built customers equities over decades of advertising and consistent quality. Because consumers call the shots, brand names will continue to exist for the consumer who still requires an assurance of quality when they do not have the time, opportunity or ability to inspect alternatives at the point of sale. Retailers cannot also afford to cast off name brands from their stores as consumers expect to find them widely distributed.
The way forward In summary, the private label market in Africa is only looking up with global retailers like Walmart and Carrefour moving into SubSaharan Africa with their own brands. This is a threat to FMCG brands, thus marketers need to re-examine their strategies, work extra hard to differentiate their product and communicate this difference very strongly if they are to compete effectively. Retailers on the other hand, should also move away from branding cheap and common products to more unique categories. They should focus on unique differentiators such as “certified organic” products and healthier alternatives of foods for instance, just like Woolworths has done in South Africa, in order for them to create their own niche market. Focus on sustainability (sourcing, packaging) and other green initiatives can also work in favour of the retailers. Pick n Pay, a South African based retailer with operations in Africa, has been quoted as saying that it is “committed to transforming its fresh, frozen and canned seafood operation so that it sold only products that were sustainable or those from fisheries or fish farms that were working towards sustainability”. Retailers have a great opportunities to drive the industry towards value added and unique propositions including sustainability to drive discerning consumers into the private label aisles Subscribe to our bi-weekly e-newsletters. Keep abreast of the happenings in Africa’s food and beverage industry. Sign up on our website
www.foodbusinessafrica.com Food Business Africa | Feb - March 2015
25
packaging labelling
THE POWER OF A FOOD LABEL
Food and beverage manufacturers must use product labels to convey more than the basic labelling requirements. The label can be used to pass on vital information to today’s discerning consumer, argues Loretta Mugo
G
ood food labelling is a balance of marketing goals, branding, shelf impact, consistent presentation, adhering to food labelling laws and most importantly effective communication to the consumer. It may be tempting to go strong in either one of these directions but it will always be to the detriment of the other. By following the best strategies and learning your market, as a food manufacturer you can succeed in every direction. Fortunately, when you look at the supermarket shelves in the region you can agree that food producers are getting these food labelling requirements absolutely right except for one, the role of the label as a medium of effective communication. We are living in a world where eating habits are gradually shifting to healthier alternatives as consumers are getting more aware of the health implication of what they eat. Food manufactures as well as other key stakeholders in the industry have definitely realized this and made good progress towards making food healthier, i.e. fortification, reducing fats, reducing sugars etc. However, these claims are not 26
Feb - March 2015 | Food Business Africa
adequately declared on majority of the food labels for the consumer to see. Food producers are working hard to improve the nutritional value of their products but they don’t flaunt this prized information out there for consumers to see at first glance. More often than not this data is put at the back of the pack in the form of a boring monotonous table that consumers hardly give time of day. Over the years food has become increasingly complex and even though one in every five shoppers may look at these finer details, there’s a huge chance that they might not decipher the jargon nutritionists have there. Moreover, it might be distinctly indicated that your product has added fiber but how much more fiber? Okay, it has 50% more fiber, but what would be even more interesting to the consumer and have a “pick-me-up” effect would be to tell them what percentage this particular nutrient caters for in their recommended daily intake. Basically, use the label to shout the benefits of your product and in a manner that the consumer can easily understand. Knowing this, it is imperative that the manufacturers take advantage of this powerful marketing tool that is the food label. One such way that food producers can emphasize on their nutritional labelling is by use of “front of pack labelling or traffic light system of labelling.” This is a method that combines color coding and percentage reference intakes in line with a particular region’s ministry of health’s recommendations to explain nutritional data to the consumer. This presents a clear, simple and easy to use format for bringing nutritional facts up-front to help the consumer make informed decisions. This concept involves four icons for: calories, saturated fats, sodium and sugars, key nutrients for which dietary guides recommend an intake limitation for a balanced diet. However, on smaller food packages a one icon policy can be adopted to represent for instance the calorie intake due to limited space on the label. Another option would be to include “nutrients to encourage”. A particular food could have a high percentage of a particular nutrient such as calcium or omega 3 hence it would be smart to highlight on the front of pack especially for the busy shopper who has no time to scrutinize the details. Essentially, they’re two main types of Front of pack labelling: The traffic light system whereby the four key icons involved are ranked according to color where red represents high, amber- medium and green represents low based on recommended nutrient cut-points. The second method is the percentage daily intake (DI) system, where it shows the percentage contribution of each nutrient (sugar, carbs, energy etc.) provided by each serving of that food. In most countries in the developing markets of sub-Saharan Africa, the front of pack (FOP) labelling is still a voluntary practice or a work in progress of adopting some form of FOP labelling regulations. For the sake of the health of its people, it is important for African governments to make nutritional labelling that speaks clearly to consumers a mandatory practice. It is also a step in the right direction for local food producers in Africa to adopt labelling techniques such as this, which effectively communicate to the consumer. A label that a health conscious shopper in a fast paced world can easily understand equals a powerful marketing tool in this highly competitive consumer goods market and consequently higher sales of your product
foodbusinessafrica.com
SUPPLIER NEWS
news from suppliers to the industry Private equity buys ‘significant’ stake in General Plastics
KENYA/INVESTMENT - The African Agriculture Fund (AAF), managed by Phatisa, has invested in General Plastics Limited (GPL), a leading manufacturer of packaging products servicing well-known brands mainly in the food, beverage and agro - chemical sectors in Kenya and the broader East Africa region. GPL is a family business that was founded in 1977 and specialises in four production processes: extrusion blow moulding; injection moulding; thin-wall injection moulding; and PET injection stretch blow moulding. Rashik Shah, Founder and Managing Director, commented, ‘the partnership with Phatisa will allow us to reinforce our plans to expand into the region. Local and regional consumer demand is increasing for functional packaging that is affordable, convenient and suitably branded. With a growing population and rising incomes, the Eastern African region is forecasted to have increased demand for packaging materials, and such type of investments are expected to increase in the next few years. This is the eighth AAF portfolio company and affirms Phatisa’s standing as the foremost African private equity agriculture and food investor.
Givaudan opens Dubai office
DUBAI/OFFICE - Givaudan, the world’s leading flavour and fragrance company, has officially opened its new, expanded Technical Centre and regional offices in Dubai, United Arab Emirates. The company notes that the expansion of Givaudan’s facilities in Dubai will bring closer collaboration with customers in creating and applying flavours for the Middle Eastern markets, providing tham with local access to Givaudan’s world class savoury and snacks flavour creation and application capabilities. The new technical centre in Dubai is part of the Company’s overall strategy of increasing its sales in developing markets.
Sidel and Nestle celebrate 50 years together
FRANCE/CELEBRATION – Sidel, the leading global provider of PET solutions for liquid packaging and Nestlé Waters, the number one bottled water company worldwide have marked 50 years of sucfoodbusinessafrica.com
cessful partnership. Representatives from Nestlé Waters and parent company Nestlé joined Sidel for the commemorative event at Sidel’s plant in Octeville, France. It provided an opportunity to see many of the latest developments from Sidel as part of a tour of the facility. Much of the success of the relationship is attributed to a partnership approach rather than operating on a simple customer-supplier basis. “This year marks 50 years of partnership, collaboration and numerous successes in the field of bottled water. For half a century, teams at Nestlé Waters and Sidel have worked together to support the development of the international brand portfolio of Nestlé Waters and ensure operational excellence. And we intend to continue.” Henri Attias, VP Global Key Accounts at Sidel said.
Tetra Pak launches industry’s first plant based package
SWEDEN/GREEN TECH - Tetra Pak has launched the industry’s first carton made entirely from plant based, renewable packaging materials. According to the company, the Tetra Rex carton will be the first in the market to have bio-based low-density polyethylene (LDPE) films and bio-based high-density polyethylene (HDPE) caps, both derived from sugar cane, in addition to paperboard. “Environment excellence is one of Tetra Pak’s strategic priorities and a driver of our product development activities,” said Charles Brand, VP Marketing & Product Management at Tetra Pak. “We are leading the industry towards 100% renewable packaging. We believe that increasing the renewable content of our packages is not only good for the environment, but also offers our customers a competitive advantage in the overall environmental profile of their products.” The pack has been developed in partnership with Braskem, one of the world’s leading biopolymers producers.
Carlsberg to develop biodegradable wood-fibre bottle
DENMARK/GREEN TECH - Carlsberg has announced a ground-breaking agreement with with packaging company ecoXpac to develop the world’s first fully biodegradable wood-fiber bottle for beverages. The three-year project, with the collaboration of Innovation Fund Denmark
and the Technical University of Denmark, aims to develop a biodegradable and bio-based bottle made from sustainably sourced wood-fiber, to be known as the “Green Fiber Bottle”. All materials used in the bottle, including the cap, will be developed using bio-based and biodegradable materials – primarily, sustainably sourced wood-fibers – allowing the bottle to be responsibly degraded. This latest initiative forms part of the Carlsberg Circular Community (CCC), a cooperation between Carlsberg and selected partners whose aim is to pursue a circular, zero-waste economy by using the Cradle to Cradle® (C2C®) framework when developing and marketing new products.
Tate & Lyle launches DOLCIA PRIMA low-calorie sugar
US/LOW CAL - Tate & Lyle, a leading global provider of food ingredients and solutions has announced the launch of DOLCIA PRIMA, the company’s brand name for allulose low-calorie sugar. Allulose is a low-calorie sugar that exists in nature and can be found in small quantities in some fruits and other foods. The sugar was first identified in wheat in the 1930s. The new ingredient is set to transform the way the food and beverage industry develops low- or reduced-calorie products, according to the company. DOLCIA PRIMA delivers the satisfying mouthfeel and sweetness of table sugar, but contains 90% fewer calories ‘One of the biggest challenges our industry faces is reducing calories while maintaining the taste experience consumers expect from their favourite foods and beverages’, said Abigail Storms, Vice President, Platform Management, Sweeteners, at Tate & Lyle. ‘In taste trials, consumers ranked low-calorie versions of foods made with DOLCIA PRIMA equally with the full-calorie versions’. DOLCIA PRIMA can be used in a range of applications including beverages, yoghurt, ice cream and baked products. Unlike high-potency sweeteners, DOLCIA PRIMA is 70% as sweet as sucrose and provides a clean, sweet taste as well as the functionality of sugar. Tate & Lyle has developed a unique, patent-protected process to produce allulose from basic agricultural raw materials (currently corn in the US)
Food Business Africa | Feb - March 2015
27
EVENTS calendar
QUOTES IN THE NEWS
March 24-27: Anuga FoodTec, Cologne, Germany The leading global trade fair for the international food and beverage industry www.anugafoodtec.com
“The short term prospects for the Nigerian businesses remain extremely challenging”, Tiger Brands in financial
April 1-3: Food Ingredients China, Shanghai, China FIC China is the most important international exhibition show on food ingredients and additives in Asia www.chinafoodadditives.com
“Guinness performed well in Africa regional markets (Ghana, Cameroon and Angola) and Kenya where net sales grew by double-digit driven by an increased focus on trade visibility”, Diageo Plc commenting on its performance in Africa,
April 20-23: Djazagro, Algiers, Algeria The show for raw materials to finished products, as well as baking, pastry-making, catering, processes and packing and packaging for the agro-food sector www.djazagro.com/en/market/discover-djazagro April 28-30: Agrofood Nigeria, Lagos, Nigeria The first international trade show on agriculture and livestock, food, beverage and packaging technology and food, beverage and hospitality www.agrofood-nigeria.com May 7-9: FoodAgro 2015, Nairobi, Kenya East Africa’s premier international food, hotel and agriculture exhibition www.expogroup.com/kenyafood May 19-23: Ipack-Ima 2015, Milan, Italy Ipack-Ima is among the most attractive global exhibitions for suppliers of technology and materials for processing and packaging www.ipack-ima.it/eng/home
statements in the quarter to end-December, on the challenges of it’s facing in its Dangote Flour Mills operations
where Guinness is increasingly being pushed into the market
“Some makers of juice pack coloured water and claim it is natural juice as others use packaging materials that may not be the recommended ones, let alone working in a dirty environment. In our estimation, we believe that 60 per cent of the manufacturers are not compliant.” Uganda National Bureau of Standards (UNBS) executive director Ben Manyindo, on some challenges Uganda faces on food safety
“The region needs investments to upgrade the technology in sugar production and become competitive globally, saving the industry from global shocks while checking on smuggling,” Dan Ameyo, chairman of Kenyan sugar company, Mumias Sugar on the need for investments in the country
“We have invested about Sh100 million (about US$ 1.1 million) in the first store and we plan to open late next month or the first week of March. The store shall have around 40 employees,” Toridoll Kenya managing director Nobuto Tsutsui, on the company’s plan for Teriyaki, the Japanese fast food chain, which plans to open 10 stores in Kenya plus more in Uganda and Tanzania.
May 28-29: Food Safety Summit Africa Conference & Expo, Nairobi, Kenya The Summit brings together Government regulatory agencies and the food, feed and agro industries in Africa to discuss policy, regulation and consumer concerns on food safety www.FoodSafetySummitAfrica.com
“The current business model within our region is not responsive to our current or anticipated business expectations. As such, we are actively reviewing our structure to ensure that we can provide sustainable and profitable growth across the region,” Alistair McDonald, head
June 18-22: Ethiopia Print and Pack Expo, Addis Ababa, Ethiopia Trade exhibition for the printing & packaging equipment, printing & packaging machinery, flexible packaging, corrugated packaging, paper & paper products, bottling & PET www.africantradefairs.com/inexpo/ethiopia-print-pack-expo/
“Even if the rain comes now, unfortunately for an optimal sugar crop, I think it would be a bit late. Sugar farmers are expecting a poor crop because of the drought.” Durban
June 28-29: Africa’s Big Seven, Midrand, South Africa The continent’s largest food and beverage industry trade expo covering fresh produce and ingredients to manufacturing technologies, processing and packaging equipment, retail ready products, hospitality, retail and international catering and much more. www.exhibitionsafrica.com/ems/exhibition-schedule.html#abseven
Have an Event you would like to see here? Contact us on info@foodworldmedia.net 28
Feb - March 2015 | Food Business Africa
of human resource at Nestlé Equatorial region, on the reason why the company was forced to restructure, send some employees home.
Chamber of Commerce CEO Andrew Layman on the effect of drought on sugar production in South Africa.
Subscribe to our bi-weekly e-newsletters. Keep abreast of the happenings in Africa’s food and beverage industry. Sign up on our website www.foodbusinessafrica.com foodbusinessafrica.com
celebrating years Food Business Africa magazine is celebrating 3 years, in which the food and beverage sector in Africa has changed a great deal. Currently distributed to food and beverage manufacturers in 10 African countries in hard copy and in digital format to the rest of the world, Food Business Africa and our website, www.FoodBusinessAfrica.com have become the leading sources of information and analysis to those with interest in the food and beverage industry in Africa. We applaud our advertisers over the years who have played a part in ensuring we continue to serve the industry in Africa.
Protea
kioo limited
Polymers
A member of the Omnia Group