Food Business Africa June/July 2014 by FW Africa

I N T H I S I SS U E : DA I RY I N D U ST RY I N U G A N DA AFRICA’S FOOD AND BEVERAGE

INDUSTRY

MAGAZINE

WHY FOOD MULTINATIONALS ARE

COMING TO

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VOLUME 2 ISSUE 3, NO. 7 • ISSN 2307-3535

A FOODWORLD MEDIA PUBLICATION

SENSORY EVALUATION OF FOODS PRACTICAL TRAINING Great food products delight many senses all at once. Understanding and being able to measure the sensory quality of food products is therefore the single most important factor influencing their success in the marketplace. Without appropriate sensory analysis, there is a high risk of market failure. From this program, you will learn the importance of sensory evaluation of food and how this can be applied to improve on your products and marketing strategies. You will learn different sensory tests, how to set up testing procedures, and evaluate real products. You will develop the practical skills necessary to set up your own discrimination tests and create testing protocol, apply real test procedures and interpret what the results mean for your product.

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This program is divided into two modules. Module 1: Sensory Evaluation of Foods - 3 days • Introduction to Sensory evaluation of foods • Sensory attributes of foods • Sensory analysis requirements • Selecting sensory evaluators • Preparing for a sensory test • Sensory evaluation program • Designing a sensory evaluation lab Module 2: Statistical Methods for Sensory Evaluation - 2 days • Sensory tests • Sensory scales • Sample treatment and presentation • Test errors • Data analysis Target Audience • Quality control and quality assurance specialists • Industry professionals who conduct consumer preference/acceptance tests • Lab technicians and managers • Marketing managers and market research support staff

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Contacts: Lois Ndiba - Food Safety International • +254 722 402089 l.ndiba@foodsafety.co.ke George Odongo - Food World Media • +254 725 343932 info@foodbusinessafrica.com Limited class, book early to avoid being closed out

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TRAININGS & EVENTS

SPECIAL REPORT:

AFRICA: It is increasingly becoming evident that the food and beverage industry in Africa is poised for tremendous transformation in the next 50 years.

Contents INGREDIENT APPLICATION:

Food Colours: We show the importance of food colours and the regulations that govern their use in US, EU and Kenya.

OPERATIONS:

Quality Assurance: The importance of water in cereals quality.

COUNTRY FOCUS:

Uganda: We profile the dairy industry in Uganda, one of the most promising on the continent.

FOOD SAFETY:

Labelling Regulations in the EU: Why your company needs to know what the new law says.

REGULARS 2 5 6 11 12

Editorial Power Talk International Insights Commodities Update Africa Insights

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33 Health & Safety 37 Calendar of Events 39 New Products on the Shelf 36 Quotes in the News

IN THE

NEXT ISSUE

AUGUST/ SEPTEMBER 2014

Special Report: Sorghum Production and Processing Opportunities in Africa Trends: Cookies and Biscuits Ingredient Applications: Starch in Foods Plant & Engineering: Energy Management in Compressed Air Systems PLUS Regulars on Food Safety, Operations and Quality Assurance FOOD BUSINESS AFRICA | JUNE/JULY 2014

EDITORIAL

Africa’s food scene beginning to stir As a person with a lot of time spent discerning the opportunities that continuously come out of Africa’s food and beverage processing sector for a number of years, I have been fortunate to visit a number of African countries in my travels over the years. From economies coming out of war and famine, to those that have had many years of peace and tranquillity but without much to show after five or so decades after independence, the story of Africa is a sad and interesting read at the same time The food and beverage processing industry plays a critical role in not only providing basic nutrition to Africa’s population, but also providing means to harness and add value to the continent’s agricultural produce and thereby contributing immensely to the economic well-being of the population and the continent’s economy. This issue of the magazine is focused on the emerging importance of the continent, out of South Africa, as a destination for investments by key food industry multinationals, as they look for new opportunities out of their established regions of Europe, Americas and Asia. It is encouraging to see that the focus

is beginning to turn towards this part of the world, which had over the years been neglected, save for a few die-hard companies like Coca Cola and Unilever. This can only be good news to the continent. This does not in any way negate the immense contribution by Indian origin and local companies in putting the food processing industry on the map. While investments in extractive industries, like oil and gas and mining, continue to increase in the continent, a report by EY has shown that the proportion of investments in other areas, including the food and beverage sector, continue to increase as a proportion of total investments. A good indicator as to the increased importance of the sub-Sahara Africa region is reflected in the number of food industry events and exhibitions that focus on Eastern and Central Africa. While

Proportion of foreign investments in food and beverage sector in Africa have increased

Food Business Africa Magazine Professional Network @Foodbizafrica Food Business Africa Magazine SUBSCRIPTION Contact: info@foodbusinessafrica.com 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)

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

still at the formative years, it is critical to note that while a few years back only the African Dairy Conference and Exhibition was the only major event on the calendar, this year Kenya is hosting four food processing industry specific industry events: Propak East Africa which was in April, East Afripak which is in September, 10th African dairy Conference & Exhibition which is slated for September and the Food Processing and Packaging Exposyum which is coming in November. This is in addition to other events that blend food processing and other product areas including agribusiness, plastics etc, and other food related symposia and conferences. In this issue we have also carried out a review of the Dairy Industry in Uganda, one of Africa’s upcoming dairy giants. In other matters, we have made some changes to the design and arrangement of the features of our magazine to make it more interactive and more useful to our readers. In order to have a more engaging magazine, we have added more ‘News’ stories to the magazine and included a ‘Supplier News’ segment, but which is towards the back of the magazine. We have moved some of our regular columns like the Events Calendar and New Products on the Shelf to new areas as well. Wish you a good read Editor

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

Food Business Africa (ISSN 2307-3535) is published 6 times a year by FoodWorld Media Ltd. Special event issues may also be published. The magazine is distributed for free to food and beverage processing companies in Eastern and Central Africa. The publishers reserve a right to determine the number of free copies to any company. 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 2014. Reproduction of the whole or any part of the contents without written permission from the editor is prohibited. All information is published in good faith. While care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of any action taken on the basis of information published.

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Is you African

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11% Africa is full of potential but is a tough place to do business, we agree. Food Busines Africa magazine can help you unlock the potential there is in Africaâ&#x20AC;&#x2122;s food and beverage sector. Advertise on our print and online resources. Contacts us on: Tel: +254 20 8155022; Cell: +254 725 343932 Email: info@foodbusinessafrica.com Food Business Africa is distributed to the following sectors: DAIRY & ICE CREAM | CEREALS, MILLING & BAKING | BEER, DISTILLED & WINE | SODA, WATER & JUICES | FATS & OILS | MEAT, POULTRY & FISH | TEA, COFFEE & COCOA | FRUITS & VEGETABLES | SUGAR | CONFECTIONERY

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POWER TALK

The current food safety legislation is shared between the standards body KEBS, through the Standards Act, and the MoH which enforces the Food Chemicals and Chemical Substances Act (Cap 254) with the mandate to ensure food safety in the country. The third party involved in this matter is the county (local) government that is involved in the licensing and inspection of food processing and handling facilities in the counties through their devolved health functions. There are other institutions that are mandated to handle specific food safety related matters: the National Biosafety Authority (NBA) handles matters GMO, the Kenya Plant Health Inspectorate Service (KEPHIS) provides mandatory inspection of plant materials during import and export. While the current system has served its purpose over the years, it is increasingly becoming clear that the institutions (especially KEBS and MoH) lack the focus, technology, skill and personnel to adequately research, design, implement and enforce food safety policies and legislations in the country, simply because times have changed – while these bodies are stuck with a mandate they have to enforce, without the tools to do so. The current systems and processes have blunted the ability of Kenya to ensure safe food for internal consumption and for he recent case of alcohol poisoning in Kenya as a result of export, and require a total overhaul if food safety is to be given consumption of methanol laced spirits is the latest high the focus it deserves. profile case that has bedevilled the food processing sector The total overhaul that Kenya needs doesn’t have to be in the country. While the loss of lives and businesses as a result invented at all. Several countries have come up with institutions of the poisoning is sad and will resonate for many years to come, that safeguard food safety around the world, including the US the country is, I might say, used to these cases of loss of lives if Food & Drugs Administration (FDA), European Food Safety the number of cases like this can be a pointer. The country has Authority (EFSA) etc. Even Tanzania has its own food and drugs lost many of its citizens to cases of maize laden with aflatoxins, authority, in our region. methanol-laced alcohol, and other food related poisonings over FDA plays its role by “setting science-based, preventionthe years. Cases of poisoning and senseless deaths will continue oriented standards and working to ensure high rates of industry if changes to the regulatory environment are not done. compliance with the standards”. It was telling that during this crisis, the interviews on local Finding that the legislation was weak, the American congress television and radios talk shows were focused on side shows, passed the Food Safety Modernisation Act in the year 2009 while the critical matter of how the alcohol industry is registered to give ‘teeth’ to the FDA, some of which include new powers and regulated was dumped on the door of the National to ensure the FDA could do its job with the right tools and Authority for the Campaign against Drugs and Alcohol Abuse legislative mandate – powers that the FDA never had before. (NACADA) – an advisory body that has no legal mandate We believe that what Kenya and other African countries to design, implement and enforce food safety in the alcohol need are laws that can protect public health and also inspire industry in the country. The Kenya Bureau of Standards (KEBS) consumer confidence in the food supply, whether for local or and the Ministry of Health (MoH), who have a shared mandate export market. on matters food safety, basically sat aside as NACADA used media pronouncements to try and enforce laws they had no A critical starting point for African countries is to rewrite the mandate or ability to enforce. legislations around food safety and hand over the mandate on The regulatory environment quagmire was again brought matters food safety to a single authority with the mandate to home when we were invited to a Food Additives and Food Safety research, design, implement and enforce food safety regulations conference in Nairobi recently. in the country. This body can also At this forum, one could sense a be created at the regional e.g. East FDA plays its role by “setting sciencefeeling of disillusionment with the African Community level, to make way the country regulates labelling, based, prevention-oriented standards better use of resources and to avoid advertising and quality of foods – duplication in a market that aims and working to ensure high rates with neither KEBS nor the MoH to be a single market in the near of industry compliance with the coming out strongly as to who future. standards”. should do what, to what extent.

Kenya in need of a strong food safety regulatory body

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FOOD BUSINESS AFRICA | JUNE/JULY 2014

Photo courtesy| businessdailyafrica.com

INTERNATIONAL INSIGHTS BRANDING

FOOD SAFETY

Nestlé to roll out a unified Nescafé look worldwide

Pesticide residue adherence rates above 97% for third year

SWITZERLAND - Nescafe, the world’s first instant coffee and best-selling coffee brand, has launched a unified, global look and feel across all its products in the 180 countries where the coffee is sold. The Nescafe brand spans soluble coffee, in-home machines and coffee mixes. It is the first time in the brand’s 75year history that each and every Nescafé product will share the same visual identity and use the same new slogan: “It all starts with a Nescafé”. “Nescafé is our largest single brand, aCHF10bn brand, and one of the cornerstones of our company. It is a symbol of Nestlé all around the world,” said Patrice Bula, Nestlé’s Global Head of Marketing.

“But we live in a more globalised, social world and we realised that we needed a more unified, powerful umbrella for a brand like Nescafé - a single personality that could also be expressed differently in each country,” he explained. The unified approach, christened REDvolution, incorporates packaging design, communication and digital strategy for Nescafé, and will feature several key design elements developed with new, younger consumers in mind. These include the Nescafé red accent, taken from the modernised Nescafé brand mark, the iconic red Nescafé mug and a stylised graphic device, the “hub” – an aerial view of a mug of coffee. – www.nestle.com

“Nescafé is our largest single brand, aCHF10bn brand, and one of the cornerstones of our company. It is a symbol of Nestlé all around the world,”

BELGIUM - Over 97% of samples tested in the latest Europe-wide monitoring programme of pesticides in food contain residue levels that fall within permissible limits, says the European Food Safety Authority (EFSA). These results are part of the fifth annual report on pesticide residues in food in 27 EU Member States, Norway and Iceland. EFSA’s role in this programme is a key part of its ongoing work in pesticides to safeguard the health of humans, animals and the environment. The national programmes found that 97.5% of the food samples analysed contained pesticide residues that were within EU legal limits – known as maximum residue levels (MRLs). Based on the findings of the monitoring programmes, EFSA concluded there was no long-term risk to consumer health through their diets from 99% of the 171 pesticides assessed. – www.efsa.org

Patrice Bula, Nestlé’s Global Head of Marketing

BRANDING

Heineken introduces ‘Star Can’ in new can design NETHERLANDS – Heineken, the world’s third largest beer company is launching a new global packaging design for its cans. The modern and progressive, ‘Star Can’ conveys ‘sophisticated simplicity’ and follows in the footsteps of the recent redesign of the brand’s iconic bottle. “Heineken’s packaging must stay true to the brand’s core values,” says Mark van Iterson, Manager Heineken Global Design & Concept. “It must be progressive and iconic and it must be clearly recognisable on the retailers’ shelf.” The new Star Can packaging follows the redesign and global rollout of Heineken’s icon6

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

ic bottle, which completed its journey last year. At the launch ceremony for the new Star Bottle in the Netherlands, Alexis Nasard, President of Western Europe & Chief Marketing Officer, commented: “The world is flat. People expect your brand to look the same everywhere. Success starts with good design.” The new design includes two immediately obvious features: the prominence of silver aluminium and the bold red star, which inspires the name Star Can will be launched across all Heineken markets throughout 2014 – www.heineken.com

NEW PLANT

Arla opens world’s largest fresh milk plant in UK UK – European dairy co-operative Arla Foods has opened the world’s largest and most technologically advanced dairy in Aylesbury, Buckinghamshire, UK. The dairy, with the potential to process up to 240,000 litres of milk per hour, will be supplied by around 900 British farmers. Arla is aiming for the dairy to be the first zero carbon milk processing facility in the world and, throughout the design stage, the potential impact of the dairy on the environment was evaluated. The dairy will process and package up to one billion litres of milk a year – www.arla. com foodbusinessafrica.com

INTERNATIONAL INSIGHTS

REGULATORY

CLOSURE

FDA approves Advantame sweetener in US

Danone to close plants in Italy, Germany and Hungary

USA - The U.S. Food and Drug Administration has approved Advantame, an innovative new sweetener, for general use in foods and beverages. Advantame is about 20,000 times sweeter than sucrose and has a clean sweet sugar-like taste, according to its manufacturer, Ajinomoto. Due to its excellent taste and functionality along with very low cost in use, advantame can be used to partially replace sugar, high fructose corn syrup or other high potency sweeteners. Since advantame blends well with caloric and non-caloric

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sweeteners, it provides food and beverage companies with an opportunity to reduce calories and manage their sweetness costs. Advantame is also FEMA GRAS approved in dairy, frozen desserts, beverages, and chewing Gum (FEMA #: 4716). Advantame can also be used to enhance many flavors such as dairy, fruit, citrus, mint, etc. and can be used to extend sweetness duration in chewing gum and improve the sweetness profile of many confections. â&#x20AC;&#x201C; www.advantame.com

EU - French dairy Danone has announced a plan to close its dairy facilities in Italy, Germany and Hungary due to a fall in sales. The affected sites, Cremasco, Italy; Hagenow, Germany; and Budapest, Hungary will be closed and a gradual shift in production volumes to Belgium, Poland, Germany and France will allow the companyâ&#x20AC;&#x2122;s Fresh Dairy Products division improve its production capacity and competitive edge in Europe. The company says that a lasting downturn in the European economy and consumer spending has led to a significant decline in sales in this region. The plan would lead to the loss of 100 positions in Italy, 70 positions in Germany and 155 positions in Hungary.

FOOD BUSINESS AFRICA | JUNE/JULY 2014

INTERNATIONAL INSIGHTS BRANDING

ACQUISITIONS

Mitsubishi buys 80% stake in Olam’s Australia grain unit

Chinese food giant on the lookout for acquisition targets

SINGAPORE: Singapore-based commodities trader Olam International Ltd has sold an 80 percent stake in its Australian grains business, Olam Grains Australia, to Japan’s Mitsubishi Corporation. The deal is valued at US$64 million. Olam Grains Australia’s (OGA) business comprises mainly origination, trading, logistics and marketing activities as well as a 32.5% stake in Newcastle Agri Terminal, which commenced operations in February 2014. Olam will continue to hold a 20.0% equity interest in OGA. In March, a shareholders group led by Singapore state investor Temasek offered $2.1 billion in cash for

shares in Olam they did not already own. As of May 26, Temasek controlled 58.5 percent of Olam. Olam’s President and Global Head of Grains Business, KC Suresh said: “Mitsubishi Corporation is our partner of choice in leveraging the growing Asian demand for grains and competing effectively in the Australian grain industry. Together, we plan to invest in upcountry procurement and logistics to scale up our local presence and further build a differentiated and competitive model in Australia.” The transaction is expected to be completed in early FY2015. - www.olamonline. com.

REGULATORY

Acrylamide in food is a public health concern, confirms EFSA EU – The European Food Safety Authority (EFSA) has confirmed previous evaluations that, based on animal studies, acrylamide in food potentially increases the risk of developing cancer for consumers in all age groups. EFSA has launched a public consultation on its draft scientific opinion on acrylamide in food. Scientists and other interested parties can comment on the draft opinion through an online public consultation Until 15 September. Acrylamide in food is produced by the Maillard reaction during every day high temperature (+150°C) cooking in the home, catering and food manufacturing. Coffee, fried potato products, biscuits, crackers and crisp breads, soft bread

and certain baby foods are important dietary sources of acrylamide. The Chair of the EU CONTAM Panel, Dr. Diane Benford, explained key aspects of the Panel’s draft: “Acrylamide consumed orally is absorbed from the gastrointestinal tract, distributed to all organs and extensively metabolised. Glycidamide, one of the main metabolites from this process, is the most likely cause of the gene mutations and tumours seen in animal studies.” Dr. Benford pointed out that “so far, human studies on occupational and dietary exposure to acrylamide have provided limited and inconsistent evidence of increased risk of developing cancer”. The deadline for final adoption of the opinion is June 2015.

CHINA - Bright Food Group Co., the Chinese owner of British cereal maker Weetabix Ltd., is seeking acquisitions and has the ability to pay as much as US$1.60 billion for a target. Bright Food has joined Chinese companies including WH Group Ltd., Fosun International Ltd. and Alibaba Group Holding Ltd. in pursuing assets overseas. The Shanghai-based company, which has interests that span food and beverages, farming and retailing, bought Israel’s Tnuva Food Industries Ltd. last month following Weetabix, as rising incomes in China spur demand for consumer goods. “Chinese food firms seek overseas deals to acquire product research capabilities and better resources,” said Todd Yang, Shenzhen-based analyst at Guosen Securities Co. “Imported foods are also growing in popularity in China and they may also be seeking foreign food brands to address the trend.” Bright Food, which controls Shanghai-listed Bright Dairy & Food Co., reached a preliminary agreement last month with private-equity firm Apax Partners LLP to buy its 56 percent in Tnuva for about $960 million, according to a person with knowledge of the matter. The Israeli company is the country’s largest food manufacturer and distributor. Bright Food, which aims to develop into an international company, would consider acquisition targets with goods that can be sold in China and which would allow it to expand its products in their home market, Lv said. Bloomberg News

CONSUMER PETITION

Coca-cola & Pepsi to remove ingredient on consumer concerns USA - The world’s two biggest soda makers Pepsi and Coca-Cola have committed to remove a controversial ingredient from their formulations following a consumer petition on Change.org. The chemical, brominated vegetable oil, or BVO in short, is a stabilizer used by these companies in some of their fruit flavoured drinks like Fanta, Mountain Dew and Powerade, according to the AP, but is banned in Japan 8

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

and the EU, with the US allowing its inclusion up to 15 parts per million. The controversy stems from the fact that BVO is used in flame retardants. Coca-Cola has said it plans to replace the BVO with sucrose acetate isobutyrate and glycerol ester of rosin by the end of 2014, while Pepsi removed it from Gatorade last year, and are “actively working to remove it from the rest of our product

portfolio". Both companies insist that the product is indeed safe. The petition “reflects the pressure companies are facing as people pay closer attention to ingredient labels and try to stick to diets they feel are natural. Several major food makers have recently changed their recipes to remove chemicals or dyes that people find objectionable” according to USA Today. foodbusinessafrica.com

NEW MARKETS

Pernod to take Indian whiskies to Africa INDIA - French alcoholic beverage maker Pernod Ricard plans to produce its Indian whisky brands Imperial Blue and Royal Stag in Africa. The world’s second largest drinks company is set to start bottling operations of its two blockbuster desi brands to accelerate growth in the African continent, with a billion people and the tenth largest economy, according to the Times of India. “At this point we plan on producing Imperial Blue locally in Africa. This will allow us to test the waters and we will take a decision on Royal Stag at a later date,” confirmed Sumeet Lamba, executive director at Pernod Ricard India. Pernod is yet to decide on whether to manufacture its products in Nigeria or Kenya In 2012, Pernod Ricard accelerated its presence in Africa setting up six subsidiaries in the key markets of Ghana, Angola, Kenya, Namibia, Nigeria and Morocco. Pernod has been export-

ing its local brands - Royal Stag, Imperial Blue, and Blender’s Pride - to East Asia, Middle East and Africa, with Imperial Blue being exported to over a dozen African markets. Royal Stag is the largest selling brand of Pernod Ricard globally, and Imperial Blue is set to take the second spot unseating the iconic Absolut vodka. “The key to doing this is to move away from primarily targeting the Indian diaspora to gaining acceptance amongst local populations,” Lamba told the Times. “The effort is being led by our affiliates in Africa wherein they are managing the process, including local production and marketing. We (at India) are involved in the launch from a technical perspective (blending) and to maintain consistency in key elements of the brand like packaging and positioning,” he added.

FOOD

Modi promises to lower prices, improve productivity INDIA: India’s newly elected Prime Minister, Narendra Modi, has promised to fulfil his party’s election promise to control inflation and to improve agriculture productivity through modern farm techniques as his government got into office after a huge electoral victory. “We have promised to control inflation. We are determined achieve this target,” Mr Modi said in reply to the motion of thanks to President’s address in the Lok Sabha (parliament). “We will do this (control inflation) not only because it is our election promise but we want every poor to have access to food,” he said, adding that “this is the collective responsibility of all of us”, he continued. No person should go to bed hungry, he said while stressing the government’s resolve to bring food prices under check, he was quoted by the Times of India. The prime minister’s party, Bharatiya Janata Party (BJP) had listed many steps in its manifesto to contain inflation, including a price stabilisation fund, setting up of special courts to deal with hoarding and black marketing, unbundling of foodbusinessafrica.com

the Food Corporation of India and establishment of national agriculture market. Emphasising the importance of increasing farm productivity, Modi said there is a need for use of modern technique in the agriculture sector because farm land is shrinking with rising population. - Times of India

“We have promised to control inflation. We are determined achieve this target,” Narendra Modi India’s Prime Minister

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INTERNATIONAL INSIGHTS

BRIEFS Mondelez, Master Blenders merger threatens Nestle USA - Mondelez International has combined its coffee business with its rival DE Master Blenders 1753 BV to make the world’s number two coffee company, after Nestle. The combined company, Jacobs Douwe Egberts, will control 16.3 percent of global coffee sales compared to Nestle’s 22.7 percent, according to Euromonitor in the US$81 billion coffee industry. It will have such brands like Jacobs, Douwe and Senseo under its stable.

Diageo and SABMiller to merge?

RUMOURS/UK – There is speculation that Diageo and SABMiller, two of the world’s biggest alcohol companies are talking of a merger, which would create a drinks group worth over £100 billion. SABMiller, manufacturer of Castle beer, is said to be contemplating a deal with Diageo, manufacturer of Guinness, to ward off AB Inbev which could be interested in using Diageo's beer business as a platform for further access to Africa, according to analysts.

FOOD SAFETY

FAO/WHO release “Top Ten” list of food-borne parasites ITALY - A "Top Ten" list identifying the food-borne parasites of greatest global concern has been released. The rankings, contained in a FAO/WHO report, Multicriteria-based ranking for risk management of food-borne parasites, are based on the parasites' burden on human health and other factors, and includes information on where they can be found. The parasites affect the health of millions of people every year, infecting muscle tissues and organs, causing epilepsy, anaphylactic shock, amoebic dysentery and other problems. Some can live on in our bodies for decades. Despite their huge social costs and global impacts, information is generally lacking regarding just where these parasites come from, how they live in the human body, and – most importantly – how they make us sick. According to the report, the ‘top ten’ parasites include the following, in

TOP FIVE PARASITES: 1. Taenia solium (pork tapeworm), in pork; 2. Echinococcus granulosus (hydatid worm or dog tapeworm), in fresh produce; 3. Echinococcus multilocularis (a type of tapeworm), in fresh produce; 4. Toxoplasma gondii (protozoa), in meat, pork, beef, game meat; 5. Cryptosporidium spp.(protozoa), in fresh produce, fruit juice and milk.

Syngenta and AB InBev enter malting barley collaboration AGRiBUSINESS/ARGENTINA - Syngenta and Anheuser-Busch InBev (AB InBev) have announced a partnership to secure the sourcing of high-quality malting barley, the key raw material for the beer industry. Under the agreement, growers will have access to the best Syngenta malting barley varieties and a tailored growing approach, which includes training and advice on agronomy and sustainable farming practices. By following the protocol, growers will achieve superior yields when compared with current market standards, enabling them to supply AB InBev with consistently high-quality grain to meet the exacting standards for beer production. The first phase of the partnership will take place in Argentina. It will involve 160 growers and cover 14,000 hectares. – www.syngenta. com, www.inbev.com

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

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JUNE/JULY 2014 | FOOD BUSINESS AFRICA

descending order: Taenia solium (pork tapeworm), in pork; Echinococcus granulosus (hydatid worm or dog tapeworm), in fresh produce; Echinococcus multilocularis (a type of tapeworm), in fresh produce; Toxoplasma gondii (protozoa), in meat from small ruminants, pork, beef, game meat; and Cryptosporidium spp.(protozoa), in fresh produce, fruit juice and milk. Others include Entamoeba histolytica (protozoa) in fresh produce; Trichinella spiralis (pork worm), in pork; Opisthorchiidae (family of flatworms), in freshwater fish; Ascaris spp. (small intestinal roundworms), in fresh produce; and Trypanosoma cruzi (protozoa), in fruit juices. The list of the most damaging parasites was based on the following criteria: 1) number of global illnesses, 2) global distribution 3) acute morbidity 4) chronic morbidity and 5) economic impact.

GMO

Controversial GM paper republished, skeptics remain FRANCE - The controversial Seralini paper that had linked GM maize to rats' tumor development has been republished by an open-access journal, Environmental Science Europe. The original article was published in Food and Chemical Toxicology (FCT) in 2012, to the chagrin of the scientific community, and was retracted in 2013 after post-publication review. The review had found that "the data were inconclusive, and therefore the conclusions described in the article were unreliable." The paper, authored by Gilles-Eric Seralini and colleagues, has been slight-

ly revised, particularly in the way the data were analyzed in the republished paper. The republication of the article gives critics no reason to change their mind about the issue, according to Richard Goodman, a food-allergy researcher at the University of Nebraska-Lincoln and biotechnology editor at FCT. The lab rats used in the study were Sprague Dawley rats, which are known to become prone to diseases when reaching 18 months of age. This makes the study of Seralini "uninterpretable". "The study was — and, I believe, remains — flawed." foodbusinessafrica.com

COMMODITIES UPDATE

IMPROVED GLOBAL AND REGIONAL PROSPECTS FOR MAIZE TO REDUCE PRICES

he FAO Food Price Index was down for a third consecutive month in June, a decline mostly influenced by lower wheat, maize and palm oil prices that reflected ample supplies and improved global production prospects for these commodities. According to the FAO’s Crop Prospects and Food Situation report, the outlook for global production of cereals improved further with upward revisions to coarse grains and wheat supply forecasts for 2014/15. FAO's latest forecast for world cereal production in 2014 now stands at 2,498 million tonnes, 18 million tonnes up from the previous figure in June, but 1% (23 million tonnes) below last year's record output, due to improved production prospects for coarse grains and wheat crops, particularly in the US, the EU and India The Food Price Index averaged 206.0 points in June 2014, down 3.8 points (1.8%) from May and nearly 6 points (2.8%) below the June 2013 level Crop production forecasts and utilisation Prospects for 2014 global cereal production have improve further with upward revisions to coarse grains and wheat forecasts, contributing to an enhanced cereal supply outlook for 2014/15. International prices of wheat and maize dropped in June, reflecting favourable production prospects, while rice export quotations increased slightly. Cereal export prices were overall lower than their year earlier levels. In North Africa, an average cereal crop is forecast, with larger harvests expected in Algeria and Tunisia, while a decline is anticipated in Morocco. World cereal consumption is anticipated to grow by 2.1% (50 million tonnes) above the 2013/14 level, reaching 2,462 million tonnes. Maize Outlook Maize yields in India are also expected to decrease 8% from their records in 2013, while the 2014 output in the United States, estimated at 354 million tonnes, is

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at a comparable level to the previous year’s Current forecasts point to a small production increase China. In Africa, the aggregate maize output is foreseen to increase by 3 percent, largely on account of sharp gains in Southern Africa from last year’s drought-reduced level. In Eastern Africa, Tanzania expects to have a bumper harvest of maize and other cereals due to this year’s adequate rains registered in many districts and regions. Total food production in 2013/14 totaled 13.4 million tons, out of which 7.44 million tons was cereals and 5.9m tons non cereal crops. Maize constituted 5.3-million bags of this total. Kenya is grappling with high maize prices and is planning to officially import 200,000 tonnes of maize from Tanzania to plug the deficit in stocks as the country awaits its main harvest season in OctoberDecember. In Southern Africa, cereal production is expected to recover significantly in 2014 compared to the drought-reduced crop of last year. Food prices have started to decline thus improving food access. South Africa expects to harvest the second biggest crop ever, with Africa’s biggest producer of maize, probably harvesting 13.9-million metric tonnes of the grain, according to a report in Bloomberg. White maize is expected to rise to 7.7-million tonnes while the yellow variety will go up to 6.2-million tonnes. The country’s biggest ever harvest, 14.1 million, was realised in 1981. In Zambia, maize production for the 2013/14 agricultural season reached a record 3.3 million metric tonnes, and is also expected to result in reduced prices of the cereal and mealie-meal, according to FEWNET. FAO’s latest forecasts indicate a 70

South Africa expects to harvest the second biggest maize crop ever

percent probability of an occurrence of El Nino during the Northern Hemisphere’s summer. Wheat Outlook FAO forecasts global wheat output at 707 million tonnes, 1.4% down from the previous year’s record. The reduction is largely driven by declines in the US, following a severe drought, and in Canada, where plantings were sharply reduced in response to low prices. Record wheat outputs are forecast in India and China, and moderate gains in the EU. where moderate gains are foreseen. In Ukraine, a return to average yields from last year’s record level may result in a 2 million tonne decline. Consumption of wheat is expected to gorow modestly at 1.8% to 699 million. Rice Outlook FAO has upgraded its June forecast for rice production in 2014 by about 800 000 tonnes to 755.4 million tonnes (503.6 million milled basis) due to improved prospects for Myanmar, Pakistan and Tanzania. World production is forecast to increase 1.2% (8.7 million tonnes) larger than in 2013. Consumption of rice is forecast to grow 2.4% to 502 million tonnes in 2014/15, while a more modest 1.8 percent gain to 699 million tonnes is predicted for wheat International prices FAO reports a considerable decline in wheat prices in June. The benchmark US wheat (No.2 Hard Red Winter) fell by 9% and averaged USD 314 per tonne, with export prices falling below the corresponding period in 2013, due to favourable crop prospects in 2014, currently being harvested in the Northern Hemisphere, and expectation of plentiful supplies in the 2014/15 season. Export prices of maize also decreased significantly in June, with the benchmark US maize (No.2, Yellow) averaging USD 202 per tonne, 7 percent lower than in the previous month and one-third below its level a year earlier. The drop in international prices in June reflects the positive outlook for this year’s maize production in the major producing countries, particularly in the US, China and in South America. International rice prices rebounded slightly in June 2014, sustained by a recovery in Thailand, after the Government suspended the sales of rice from public stocks Source: FAO, FBA FOOD BUSINESS AFRICA | JUNE/JULY 2014

AFRICA INSIGHTS EXPANSION

BIOTECH

PepsiCo opens new chips plant in South Africa SOUTH AFRICA - Simba, a part of PepsiCo South Africa, has officially opened a state-of-the-art chip manufacturing facility in Prospecton, KwaZulu-Natal. The facility is Simba’s third manufacturing facility in South Africa. The other two plants are located in Gauteng and Western Cape. The Prospecton plant will enable Simba to meet the increasing demand for its Lay’s and Simba potato chip products. The new plant is strategically positioned to ensure a strong regional presence while providing the opportunity for future ex-

pansion. “We have seen demand for our products grow for a number of years now and our new facility will help us meet this demand and better serve the needs of our valued retail partners,” said Andrew Havinga, Simba manufacturing director. PepsiCo South Africa sells a number of snack products in South Africa such as Simba, Lay’s, Doritos, NikNaks and Fritos as well as a number of wellknown global beverage brands including Pepsi Cola, 7UP, Mirinda and Mountain Dew. - www. pepsico.com

INVESTMENTS

Egypt attracts global giants with huge investments Coca-Cola, Pepsi and Nestle to invest millions, as the country recovers from turmoil EGYPT – Egypt, long in the news following the Arab Spring, the wind of change that swept through the Arab world from 2010, and the subsequent political chaos and economic turmoil, seems to be on the verge of returning to the fold of the world economy following recent announcements by multinational companies to invest in the country. The developments, coming soon after the inauguration of a new president, will boost investor confidence in the country. As part of a $500 million investment plan announced for Egypt in March, Coca-Cola will start constructing a new juice plant in 6th of October city near Cairo next year in a joint $100 million dollar project with Saudi Arabia’s Aujan Coca-Cola Beverages Company, according to Reuters. “Egypt is going to be one of our key anchor countries,” Curt Ferguson, the company’s Middle East and North Africa president told Reuters. The beverage group also plans to build a plant for sparkling drinks and water between Cairo and Alexandria which should go online next year, Ferguson added The rest of the investments will be used to “increase production at existing plants such as its concentrate factory in 12

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

Cairo” and sort out its distribution chains. The company also plans to invest in three factories in Pakistan, a $40 million plant in Qatar and another one in the Palestine territory of Gaza Strip. Meanwhile, Pepsi is partnering with Saudi Arabia’s Almarai, the Gulf region’s biggest dairy, to spend US$345 million in Egypt in the next three years to build a new juice factory, expanding existing facilities and create a new dairy farm for 5,000 cows. The investment will be carried out through Egyptian dairy and juice products firm International Company for Agro-Industrial Projects (Beyti), a subsidiary of International Dairy & Juice Ltd, which is owned 52 percent by Almarai and the remainder by Pepsico, according to Reuters. In other related news, Nestle has just opened its first chocolate plant in the country, valued at US$9 million. The new factory is an extension of the current dry goods factory that has been manufacturing products like Nescafe and Maggi. The factory will manufacture chocolate-based Crunch snack for the local and regional markets.

Bio-fortified bananas undergo human trials UGANDA - The fight against vitamin A deficiency in Africa could be getting a more potent weapon soon if the trials that are being done on the Highland or East African cooking bananas give satisfactory results. The bananas, which are usually very low in vitamin A and iron, are a common staple food diet in Eastern Africa. The bio-fortified bananas will go through the first human trial in the U.S. to test their ability to fight vitamin A deficiency. The bananas have orange flesh, as opposed to the cream or white colour of the non-fortified, because of the increased beta-carotene, which will be converted into vitamin A in the body. The biofortified banana was developed by Queensland University of Technology (QUT) in Australia. "Good science can make a massive difference here by enriching staple crops such as Ugandan bananas with pro-vitamin A and providing poor and subsistence-farming populations with nutritionally rewarding food," said project leader Professor James Dale. "The consequences of vitamin A deficiency are dire with 650,000-700,000 children world-wide dying ... each year and at least another 300,000 going blind," he said. The trials will last for 6 weeks with the support of Bill and Melinda Gates Foundation. Results will be available at the end of 2014, and commercialization is expected to start by 2020 in Uganda. The technology is also intended to be transferred to other African countries including Rwanda, Congo, Kenya, and Tanzania.

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AFRICA INSIGHTS

FOOD SAFETY

GMO ban lift delay keeps companies on the edge Unilever’s Aromat facing an uncertain future in Kenya KENYA – The food industry in Kenya is anxiously waiting for the lifting of the ban on the importation of GM products into the country by the country’s Ministry of Health. The ban of use and importation of genetically modified products was imposed two years ago by the Ministry as a result of the Seralini study, which was later withdrawn by the journal that originally published it. Several importers of maize-based raw materials including starches, flours and ingredient blends; and retail products including soups, cake mixes and flours have been subjected to a whole set of tests and documentation requirements that have made importation of such products a nightmare. The latest and most publicized case is that involving Unilever. The food giant has recently been in the news for its Aromat brand of ready-to-use spice mix, with the National Biosafety Authority asking the firm to withdraw the product from the market because of GM content. Aromat is manufactured by Unilever in South Africa.

Although Unilever has followed Kenya’s labelling law by indicating that its product is made from GM maize, which many companies have not bothered to do, the company’s court case will be a watershed moment for the country’s continued ban on GM products. Researchers, academicians and other industry players have asked the Ministry of Health to lift the ban on genetically modified (GM) products in Kenya, citing that the move was ill-conceived, while the country has adequate capacity to handle GM products through the National Biosafety Act. The report of the task-force was recently handed to the foodbusinessafrica.com

Cabinet Secretary of Health. Kenya is a signatory of several regional and international agreements, for example the Cartagena Protocol on Biosafety. The country is also facing food shortage, and researchers are concerned the continued ban will only make Kenya’s food insecurity worse, if GM crops are not allowed to be grown in the country However, the European Union, the country’s biggest fresh produce im-

porter has warned that Kenya will find it difficult to export their crops to the EU if they adopt GM crops, according to the head of the EU delegation to Kenya, Lodewjik Briet. “We have made this crystal clear to South Africans and I am telling the same to Kenyan farmers that it will be almost impossible to export GMOs to Europe,” Mr Briet told a TV station recently.

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AFRICA INSIGHTS

BRIEFS Uganda gets new dairy company UGANDA – A new dairy has been opened in Uganda’s south-western milk zone, increasing competition in the country’s dairy sector. Amos Dairy, an Indian owned operation, is targeting the country’s milk basket region to produce high end casein, whey, ghee and anhydrous milk fat for the export market. The US$ 22 million factory, according to reports in the media, is located in Kiruhura District near the western town of Mbarara. It has a capacity to receive 400,000 litres per day, according to Mr Punt Pruthi, the managing director.

Delta introduces yoghurt drink ZIMBABWE – Listed Zimbabwean beverage producer has introduced a range of flavoured yoghurt drinks into the market. The new product, under its newly introduced Super Sip brand joins the dairy juice product the company launched last year. Delta is the country’s biggest beverage producer with brands spanning beer and soft drinks for Coca-cola.

PACA launches website ETHIOPIA - As part of its transition to the African Union Commission, the Partnership for Aflatoxin Control in Africa has launched its new website. The PACA website serves as the main platform where PACA shares information on its past and upcoming work. The new website will be hosted within the African Union Commission, and will strive to serve as trusted source of content for aflatoxin and related issues in Africa. The website is: www. aflatoxinpartnership.org

Kenafric introduces chocolates line KENYA - Kenafric Industries the leading confectionery company in the region has commissioned a chocolate manufacturing line at its Baba Dogo, Nairobi factory. The company has been a leading manufacturer of confectionery, processed food stationery and footwear with regional reach for over 25 years. The company’s investment, quoted to be KSh1 billion, brings Kenafric to the premium confectionery market that has been dominated by Cadbury’s and other imported brands. It places Kenafric as the only local manufacturer of chocolates in Eastern and Central Africa after Cadbury’s pulled out of production in Kenya some years back. The chocolates come in various options: Fudgville, Moxie, Razzle and Be-Nutz. 14

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

EXPANSION

Bidco changes gear, targets 400% growth by 2018 KENYA - Kenya’s leading fats and oils refiner Bidco Oil Refineries plans to aggressively grow its business in the next 4 years with the firm expanding the product range and production capacity. The company has focused its target on the soft drinks market and other food and home care products, in a move that will undoubtedly change the manufacturing environment in the region. The company has also up scaled its animal feeds business, investing KSh500 million (US$5.8 million). Bidco is currently the leading manufacturer of edible oils and fats, soaps, baking powder, animal feeds and detergents in Kenya, Uganda and Tanzania. Its products are distributed in 14 African countries. In a report carried by the Business Daily, the firm has secured a piece of

million plastic bottles per year, according to the Business Daily. The company estimates annual production capacity of the soft drinks plant will be 50 million litres. It shall process a number of products including energy and sports drinks, smoothies, non-carbonated soft drinks with fruit as well as carbonated soft drinks, still drinks, iced tea and coffee and bottled water. Kenya’s soft beverage market has been under a tight grip of Coca-Cola, with the company having dominated especially the CSD market for a long time through its brands Coke, Fanta and Sprite. The company is also a player in the bottled water category, where its Dasani brand competes with other well established brands like Keringet (owned by SABMiller’s subsidiary Crown Beverages), Highlands water among others.

“The move is in line with our expansion plan to play in even more categories of fast-moving consumer goods other than those we are already in.” Vimal Shah CEO, BIDCO

land off the Thika-Garissa highway on which it plans to build a production and bottling facility for non-carbonated still drinks, carbonated soft drinks and water. It is investing Ksh1.7 billion (US$200 million) in the beverage plant, bringing the firm in direct competition with Coca-Cola, Pepsi and Kevian Kenya Ltd, among other players in the carbonated (CSD) and non-carbonated soft drinks (NCSD) categories. “The move is in line with our expansion plan to play in even more categories of fast-moving consumer goods other than those we are already in,” said the firm’s CEO, Mr Vimal Shah. The beverages factory will have two processing lines — each with a capacity to produce 24,000 bottles per hour, and a separate plant will produce about 100

The company is also involved in processing of NCSDs with fruit, through its Munite Maid brand. However the return of Pepsi two years ago, after many years away from the Kenyan market, and the emergence of other players in the NCSD market, especially Kevian Kenya Ltd, the manufacturers of Afia range of drinks and Pick n Peel juices has upped the stakes and competition in Kenya’s soft drinks market. Kenya National Bureau of Statistics (KNBS) shows that in 2013 the output of soft drinks, excluding juices rose by 8.1%, hitting 388,753 tonnes up to November. The key drivers to the growth of soft drinks are a growing urbanised population and rising disposable incomes among the population. foodbusinessafrica.com

AFRICA INSIGHTS

NEW PLANT

Distell builds bottling plant in Ghana GHANA - South African alcoholic beverages group Distell has entered Ghana in its quest to grow its African footprint. The venture, Distell Ghana, sees the South-African-based producer of wines, spirits and ready-to-drinks (RTDs) partnering with Finatrade Group to establish a bottling plant in Accra. Distell is following a similar model in Ghana to its ventures in other African markets such as Nigeria, Kenya and Angola. Finatrade is a leading West African agri-commodities and branded foods company which has well-established distribution strengths in Ghana and surrounding markets. Distell has identified Ghana as a growth market and as a potential springboard for further penetration of its brands in neighbouring Togo, Benin, Burkina Faso and Cote d'Ivoire. "Distell is combining its proven production and marketing expertise with the local marketing, sales and

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distribution knowledge of Finatrade, to bring top quality products at competitive prices to Ghana, " says Richard Rushton, Distell Group CEO. The new operation will bottle Distell's international cider brands; Hunter's and Savanna, as well as Knight’s Whisky and the Royal Reserve range of spirits. Distell is the third biggest producer of ciders worldwide. The GHC16 million (US$5 million) facility, located in Tema, outside Accra will provide more than one hundred direct and indirect employment opportunities. – www.distell.com

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AFRICA 2014

Brookside commissions milk powder plant

KENYA - East Africa’s biggest dairy Brookside has started operations in its milk powder plant which has been under construction since 2012. The project has been valued at US$23 billion, according to various press reports. This investment will place Brookside at a huge advantage in the company’s ability to manage milk supply demand and price fluctuations, which are common in the region, with a glut season followed shortly with biting milk shortage. The milk powder plant is part of an extensive capacity improvement exercise by the dairy which includes improving the processing scale of fresh milk and fermented products that will enable the dairy to increase the dairy’s production capacity to 1 million litres of milk per day from 500,000 litres per day in 2012 Brookside currently controls 44% of the milk market in Kenya, according to Business Daily, following the 2013 acquisition of Buzeki dairy, and earlier deals that enabled the dairy to buy Spin Knit, Delamere and Ilara dairies.

Kenya: 03 - 05 October, Nairobi Tanzania: 17-18 October, Dar-es-Salaam

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AFRICA INSIGHTS

BRIEFS KFC enters Uganda UGANDA - Kuku Foods Ltd, the franchise holder for the KFC fast food chain brand in Eastern Africa, has opened two branches of the chain in Uganda. Gavin Bell, the GM of Kuku Foods, who has been very much part of Kenya’s fast food scene for over 25 years, is upbeat about the region and the growth of KFC as a leading brand in the region. He sees a “major focus on Africa from a global perspective at the moment” according to African Outlook, and says that the major challenge will be meeting KFC’s exacting standards. The company is working wih Kenchic in Kenya and Kuku Poa in Tanzania The two outlets are located in malls in Entebbe town and in Bugolobi area of Kampala.

Bralirwa launches new soft drinks plant in Kigali RWANDA - Bralirwa, the leading brewer and soft drinks bottler has unveiled a hi-tech automated soft drinks production line worth Euro 25m in Kigali to serve its increasing customer base. The new production line has the capacity to make 42,000 bottles per hour compared to the old line that used to produce 24,000 bottles per hour, according to Jonathan Hall, the Bralirwa managing director. Bralirwa bottles Coca-cola, Fanta, Sprite and Krest tonic under licence from Coca-Cola, and its own brand, Vital’O, as well as beer brands – Primus, Mutzig, Amstel and Turbo King at the Gisenyi brewery. It also markets Heineken beer in Rwanda. The facility located in Gikondo, Kicukiro District also has supporting utilities for water purification, carbon dioxide, power generation and waste treatment.

Promasidor Tanzania closes down TANZANIA – Promasidor Tanzania Ltd, part of the Promasidor group has ceased manufacturing in Tanzania. The company has been processing a number of products in its Dar es Salaam plant including powder drinks and culinary powders of its Onga brand at the facility. The company said that a tough environment in Tanzania had made it make the decision to stop manufacturing but that it will continue supplying the its customers from other facilities in the region.

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JUNE/JULY 2014 | FOOD BUSINESS AFRICA

INVESTMENTS

Heineken plans $690 million annual investment in Africa HOLLAND – Dutch brewer Heineken has committed to invest in Africa, despite the challenges and headlines coming out of the continent. Heineken plans capital expenditure of US$ 690 million a year over the coming years to maintain sales growth, Siep Hiemstra, Heineken’s president for Africa and Middle East has told Reuters. The money will be used to upgrade production facilities and on training. Africa accounts for one-fifth of Heineken’s business and is growing fast, he said. “We are strong believers in the growth of Africa, the economies of Africa, the consumer base, the middle class. We continue to invest heavily …. We continuously invest about 500 million euros (US$ 690 million) annually and try to be ahead of the growth curve,” said Hiemstra. Heineken had 56 plants in 20 African countries, and Hiemstra said it was weighing acquisitions. Meanwhile, the brewer has merged its two Nigerian subsidiaries Nigerian

Breweries Plc and Consolidated Breweries, which it recently acquired. The proposed merger will enable the company to “fully capitalise on the future growth potential of the highly attractive Nigerian beer and malt drinks market. It is expected to drive benefits from increased economies of scale, enhance operating and administrative efficiencies, and increase the new company's speed and agility in response to market developments”, according to the company. It is intended that Nigerian Breweries plc as the remaining legal entity will remain listed on the Nigerian Stock Exchange after the completion of the merger. Heineken N.V. holds 54.1% of the shares in Nigerian Breweries plc and 53.8% of the shares in Consolidated Breweries plc. Both companies operate 11 breweries, 2 malting plants and market leading products like Heineken, Star, Turbo King, Malta Gold and “33” Export in Nigeria.

RETAIL

Ethiopia opens wholesale retailer, looking for managers ETHIOPIA – The Ethiopian government has introduced a wholesale supermarket chain to provide its citizens with shopping choice. The unique retail model has been introduced to provide relief to consumers from “inflated prices due to unfair business ties between few suppliers in the market”, according to the country’s Prime Minister Hailemariam Desalegn.

The supermarket chain, christened Alle Bejimla, also called Alle, has begun operations through a business-to-business model that focuses on providing goods to businesses like kiosks, cafes and hotels. The one billion-Birr project was initiated by the government over concerns of the lack of competition in the wholesale market of the country that caused runaway inflation, according to Addis Times. Alle’s introduction is expected to spur more competition into the market and ul-

timately bring prices down. The first outlet is located around Megnenagna, in Bole District of Addis Ababa. A second one is due to be opened in Akaki-Kaliti District, and a third one in Merkato, Addis Ketema District. The Ethiopian retail market is at the infancy stage. According to A.T. Kearney, a US based consultancy firm that designed the concept for the government, there are more than 40 supermarkets, 100 minimarkets and 18,000 Kiosks in Addis Ababa. While there is no lack of interest from foreign retailers to enter the country’s retail market, pulled in by a fast growing economy and a 90 million plus population, the government has maintained that outsiders are not allowed into the retail sector, among a list of other industries including banking and telecoms “It is a vibrant market. The population is huge, the income is there, and they have a lot to go around. Why are we not there?” Nakumatt’s managing director Atul Shah is quoted as saying. “Retail distribution is not competitive, it is archaic,” Finance Minister Sufian Ahmed told Reuters when asked about Ethiopia’s plans to shake up the retail industry. foodbusinessafrica.com

INVESTMENT

METL enters carbonated soda market

TANZANIA – Tanzanian conglomerate Mohammed Enterprises Ltd (METL) has entered the carbonated soft drinks (CSD) market by launching Mo Cola, a line of flavoured drinks in the country. The investment is worth US$15 million with a production capacity of 14.4 million crates per annum according to the company. The company is set to join a sector with several well established players including Coca-Cola, Pepsi and a recent entrant Azam Food Products, the bottlers of Azam Cola. According to the company’s Managing Director, Mohammed Dewji, the company will rely on its extensive network of distributors to gain market share in the highly competitive market. The drinks which will are available in PET bottles is available in a number of flavours: Cola, Orange, Mango, Lemon and Malt. Manufactured by the company’s subsidiary, A-One Ltd, the new line is an extension to the company’s products that include Masafi drinking water and non-carbonated flavoured drinks.

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NEW PRODUCT

AL Grain Foods introduces noodles to Nigeria NIGERIA - AL Grain Foods Limited has introduced instant noodles into the Nigerian market, to take advantage of the N64.4 billion ($400m) per year, according to Business Day. The noodles come in two variants – chicken/shrimps flavour and beef flavour. Speaking during the unveiling of the new products, Anthony Obidulu, chairman, AL Grain Foods Limited, urged the government to do more to attract investment into the country. “Manufacturing in Nigeria you will agree with me is no small feat, taking into cognisance the level of infrastructure deficiencies, like power and the recent security challenges we face in the country. Most companies now rely heavily on their own power generation with the use of generators for production. To meet its future needs the company is cultivating wheat in Anambra State, but currently sources wheat from a major noodle firm in Nigeria in order to augment their present needs The company currently produces 12,000 to 15,000 cartons of noodles daily, and hopes to increase capacity Al Grain Noodles are available in 90g packs and 120g packs. foodbusinessafrica.com

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AFRICA INSIGHTS M&A

ACQUISITION

Clover acquires Dairybelle’s business

Schweppes acquires Beitbridge Juicing Co.

SOUTH AFRICA - Clover Industries’ wholly owned subsidiary, Real Beverages Company, is set to acquire Dairybelle’s yoghurt and UHT milk business. “The transactions are in line with the company's stated strategy to expand its portfolio of value added and branded consumer products,” read Real Beverages’ statement “As announced in March 2014, the company made the decision to enter the attractive high margin yoghurt and custard markets in 2015. The acquisition of the assets comprising the yoghurt business will provide the company with access to the yoghurt market, in which Dairybelle has a meaningful presence.” Real Beverages says the location of the new acquisition is also of importance to the company’s

long term interests. “The location of Dairybelle's UHT production facilities in the Western Cape will allow the company, after it acquires the UHT Milk Business, to improve efficiencies through the more effective utilisation of its raw milk supply in the region.” Clover Industries Limited which owns Real Beverages company is a branded foods and beverages group specialising in the production of dairy products, distribution of chilled and ambient consumer products including sales and merchandising of consumer goods. The yoghurt business will cost Real Beverages an amount of 125 million rand while, the UHT Milk business will cost the company an amount of 30 million rand.

REGULATORY

Africa suffering from lack of harmonised standards RWANDA - Africa may need to harmonise frameworks and align with international standards if it hopes to increase market access and boost regional trade. This is due to over 1000 regulations emanating from 55 countries and standards organisations within the continent, according to a meeting of the 20th General Assembly of the African Organisation for Standardisation (ARSO) in Kigali, Rwanda recently. The stakeholders, who included standardisation bodies from 16 African countries and international agencies advocated a review of regulatory frameworks with a view to harmonise them while also adopting or adapting such regulations for different contexts. The African Union (AU) has also expressed readiness to increase stakeholder engagement in a bid to address informal cross-border trade. The stakeholders noted that standards in Africa have become both a tool for improving competitiveness of countries as well as creating barriers for regional trade in the continent. They emphasised the need for African standards to be benchmarked against international standards while exploring opportunities for regional cooperation and deeper integration of services 18

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in priority sectors of mutual interest with regional partners. ARSO President, Dr. Joseph Odumodu, explained that the body is reviewing strategies to aid the harmonisation of standards, especially among regional blocs. He noted that plans are already underway to ensure that membership of the body is increased to foster involvement of many regions while bilateral mutual agreements is expected to emanate in further increasing intra-African trade. “The investment climate in Africa’s economies is acquiring a magnified importance with an inward trend towards intra-African country cooperation through Regional Economic Communities. I wish to emphasize that global competition has become more intensified in terms of quality, price, supply chain management and dependability of delivery systems”, he said. He stressed that ARSO would be forging collaboration among National Standard Bodies, Regional blocs, Pan African Quality Infrastructure bodies, the African Union and the United Nations Economic Commission for Africa (UNECA) to facilitate the chances of Africa to become a major player within the global market, especially through its standards.

ZIMBABWE - Schweppes Zimbabwe has acquired 100 percent stake of Beitbridge Juicing Co, a processor of citrus fruits into juices and various by-products. The acquisition of Beitbridge, which supplies Schweppes Zimbabwe with 75 percent of the company’s orange juice requirements, will see the beverage company strengthen its supply chain by taking control of a key raw material – orange juice concentrate, according to The Herald. Details on the sum of the transaction were not available. Schweppes Zimbabwe chief executive Mr Charles Msipa commenting on the deal said, “This acquisition will enable us to secure a critical component in our supply chain. We will increase capacity utilisation at BBJ so that we can obtain 100 percent of our juice for Mazoe Orange Crush locally which is a key raw material for the business.” Prior to the acquisition, BBJ was a subsidiary of Rift Valley Holdings. Schweppes Zimbabwe Ltd which is 51% owned by indigenous consortium Whaterton Investments and the remaining 49 percent held by Delta Beverages (Private) Limited, having gone through the indigenisation programme in 2010. The BBJ plant processes 28 000 tonnes of oranges with plans to gradually increase output to 150 000 tonnes of fruit per annum. Schweppes Zimbabwe Limited is a manufacturer and distributor of non-carbonated still beverages under licence from The Coca-Cola Company. The product portfolio includes cordials, fruit juices, bottled water, and flavoured drinks. Its brands include Mazoe crushes and syrups, Minute Maid juices, Schweppes water, and Ripe 'n Ready flavoured drinks.

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INGREDIENT APPLICATION FOOD COLOURS

ood coloring, or color additive, is any dye, pigment or substance that imparts color when it is added to food or drink. They come in many forms - liquids, powders, gels and pastes. Food coloring is used both in commercial food production and in domestic cooking. Due general availability, food coloring is also used in a variety of non-food applications including cosmetics, pharmaceuticals, home craft projects and medical devices. Purpose of food colouring People associate certain colors with certain flavors, and the color of food can influence the perceived flavor in anything from candy to wine. Color additives are used in foods for many reasons including, to: • Offset color loss due to exposure to light, air, temperature extremes, moisture and processing and storage conditions • Correct natural variations in color in various foods • Enhance colors that occur naturally • Provide color to colorless foods and add fun aspect e.g in beverage drinks, juices, sodas, etc • To add colour to foods that would otherwise be coloured differently e.g milk products • Make food more attractive and appetizing, and informative e.g in chocolate coloured cakes • Allow consumers to identify products on sight, like candy Regulation history The addition of colorants to foods is thought to have occurred many years ago in Egyptian cities as early as 1500 BC, according to Wikipedia. The industrial revolution and urbanization in Europe brought about changes to lifestyles as thousands of people begun to move far away from home and they totally depended on foods produced and sold by others. In the absence of legal or administrative obstacles, food adulteration flourished with the use of heavy metal, and other inorganic element-containing compounds being used to “restore” the color of watered-down milk and other adulterated foodstuffs. By the turn of the century, unmonitored color additives had spread through Europe and the United States in all sorts of popular foods, including ketchup, mustard, jellies, and wine.

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But as their use grew, so did safety concerns. This led to numerous regulations throughout the world, with each country developing their own legislation. Current regulation in the US Food colorings are tested for safety by various bodies around the world and sometimes different bodies have different views on food color safety. In the US, FD&C numbers (which indicate that the FDA has approved the colorant for use in foods, drugs and cosmetics) are given to approved synthetic food dyes that do not exist in nature. Naturally derived colors are not required to be certified in the US, although they still need to be approved for use in that country. In the US, the following seven artificial colorings are permitted in food as of 2007: FD&C Blue No. 1 – Brilliant Blue FCF, E133 (blue shade); FD&C Blue No. 2 – Indigotine, E132 (indigo shade); FD&C Green No. 3 – Fast Green FCF, E143 (turquoise shade); FD&C Red No. 3 – Erythrosine, E127 (pink shade, commonly used in glacé cherries); FD&C Red No. 40 – Allura Red AC, E129 (red shade); FD&C Yellow No. 5 – Tartrazine, E102 (yellow shade); FD&C Yellow No. 6 – Sunset Yellow FCF, E110 (orange shade)

Kenyan regulations The regulation applicable in the use of food colours is the Food, Drugs and Chemical Substances Act, Cap 254. The implementation and monitoring of safety and allowable levels in food and drinks is under the mandate of Kenya Bureau of Standards as well as the Ministry of Health The natural colour advantage Food colorants can sometimes cause allergic reactions and anaphylactic shock in sensitive individuals. This has led to the push towards natural colours. Synthetic colours are thought to have a negative effect on the health of consumers. A scientific study by a research team at the University of Southampton in 2007 showed that a list of six synthetic colours increased hyperactivity in children. These were then banned from use in food and drinks within the EU. The list commonly referred to as the Southampton Six contained the following colours: Sunset yellow E110, Quinoline yellow E104; Carmoisine E122; Allura red E129; Tatrazine E102 and Ponceau 4R E124. Although some recent studies have shown that not all of these colours should have been summarily banned, the continued use of these colours in foods remains contentious. In view of the above, food manufacturers and traders must do due diligence and institute quality assurance programs in their food establishments to ensure food colours used are safe and may not harm consumers. Suppliers of these crucial food additives must ensure quality checks and certificates of analysis by a credible body are available. Product information sheets must also be available with all the necessary details. A good point of reference is the Codex Alimentarius standards that can act as a guideline for any concerned party on use and safety of food colours. FOOD BUSINESS AFRICA | JUNE/JULY 2014

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Regulation on the use of food colours

Current regulation in the EU In the European Union, E numbers are used for all additives, both synthetic and natural, that are approved in food applications. The food colors are known by E numbers. The safety of food colors and other food additives in the EU is evaluated by the European Food Safety Authority, EFSA. EFSA’s work involves carrying out safety evaluations/re-evaluation of new food colours before they can be authorised for use in the EU.

WHY FOOD INDUSTRY MULTINATIONALS ARE Coming To

Africa

It is increasingly becoming evident that the food and beverage industry in Africa is poised for tremendous transformation in the next 50 years, to 2060. The increased interest in Africa as a destination of investments due to the improvement in business environment and increasingly wealthy population has continued to attract food industry multinationals to the continent to tap into the US$300 billion industry, projected to hit US$ 1 trillion by 2030.

"Africa is the untold story, and could be the big story, of the next decade, like India and China were this past decade. The presence and the significance of our business in Africa is far greater than India and China even today. The relevance is much bigger."

Mukesh Kent, Chairman and CEO, Coca-Cola.

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Nairobi, Kenyaâ&#x20AC;&#x2122;s skyline foodbusinessafrica.com

SPECIAL REPORT AFRICA

apid economic growth, brought by the ‘Peace Dividend’ enjoyed in the last 10-20 years by many African countries following decades of bloody armed conflicts and civil strife, rapid population growth and improving incomes are providing major food industry multinationals with opportunities to invest more aggressively in African countries. Most African countries emerged from colonisation in the early 1960s, hoping to reap peace and prosperity, only to plunge into civil war, ethnic violence and famine. Although a few multinationals like Coca Cola, Unilever and Nestle have many decades of experience in manufacturing and trading in Africa, they have had to contend with red tape and corruption, infrastructural deficiencies and political uncertainty in the continent. It is telling that the number and variety of food industry multinationals including manufacturers, suppliers and distributors have well established operations in South Africa, with little or no operations in other African economies, save for some operations up in the northern part of the continent like Egypt, Morocco and Tunisia. However, it is encouraging that the stories coming out of Africa seem to have taken a new turn for the better recently. Long used to being associated with war and famine, the continent, even as it continues to go through its many unique challenges, has become a new frontier for investments. And food companies have not been left behind.

According to the World Bank, the food and agribusiness industry in Africa is worth about US$300 billion, with the Bank projecting it to grow to US$1 trillion by 2030. Taking a long look forward to the next 50 years, we see a continent that will have joined the rest of the world commerce, and where the food and beverage industry shall be bigger and playing a critical role in providing much needed nutrition and a major employer of the continent’s human resource. The emergence of Africa as an investment destination has many admirers, notably Ernst and Young, who have been releasing their own Ernst & Young Africa Attractiveness Survey every year since 2011. This year’s survey has revealed that Africa’s perceived attractiveness has improved dramatically in less than five years, with Africa having “risen to become the second most attractive investment destination in the world, tied with Asia”, having been number eight most attractive region in the 2011 survey. EY also notes that its surveys have noted three broad shifts: the growth of investments in sub-Sahara Africa, the expansion of intraAfrican investment and the shift of investment from extractive to consumer-facing sectors. One significant investment area in 2013 was the retail and consumer goods sector that attracted 17% of Africa’s total foreign direct investment (FDI), which was second only to telecoms and media sectors.

Photo courtesy| marhaba.com.qa

There was a window of opportunity to act before others woke up to the African opportunity. That window is now narrowing, and the cost of entering African markets is already beginning to rise. Companies with an already - established presence continue to expand and entrench their advantage EY

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SPECIAL REPORT AFRICA

WHY AFRICA WILL RISE Rising, youthful population With half of Africa’s population aged 17 or less presently, Africa is slated to gain the ‘demographic dividend’ in the decades to come, as its surging population meets increased prosperity. The continent’s population is forecasted to reach 2.7 billion from the current 1 billion by 2060. The active population aged 15 to 64 will triple between 2005 and 2060. This surge will accelerate urbanisation and increase national savings and improve economic growth, according to a report Africa in 50 Years, by the African Development Bank (AfDB). With nearly triple the current number of mouths to feed in 2060, the continent will be a major consumer of food and other resources. High economic growth rates The African continent has been home to some of the fastest growing economies in the world. In 2012 the region’s growth was estimated at 4.7%, and 5.8% if South Africa is excluded. Countries like Ethiopia, Ghana, Rwanda and Nigeria have averaged more than 7% per annum growth rates in the last decade. AfDB estimates suggest that Africa’s GDP could increase to over US$15 trillion in 2060 from US$1.7 trillion in 2010, increasing income per capita expressed in current US dollar terms from US$1,667 in 2010 to over US$5,600 by 2060 Urbanization Increased incomes and improvement in other social factors have and will continue to drive a huge number of Africans from subsistence agriculture to more productive sectors like manufacturing and service activities. The number of cities within Africa with more than 1 million people has doubled from 24 to 48 between 1990 and 2012, with

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Lagos and Cairo having more than 10 million inhabitants. AfDB estimates that the proportion of urban dwellers in Africa will rise to 50% by 2030, and will reach 65% by 2060 from 40 percent in 2010

(Riccardo Pravettoni, UNEP/GRID-Arendal. UNDESA. (2010). World Urbanisation Prospects. Rising middle class The demand for processed food and services will rise in Africa due to the expected rise in incomes and the middle class. According to the AfDB, the middle class will continue to grow, from 355 million, or 34% of Africa’s population in 2010 to 1.1 billion (42%) in 2060.

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SPECIAL REPORT AFRICA

Food Multinationals target growth in Africa Nestle Among the early entrants to Africa, Nestle has been present in Africa for more than 130 years, and is among the select few with huge experience in the continent, having opened its first factory in South Africa in 1927. The company produces a number of beverages including Nescafe, Ricoffy and Milo, soups, cereals ice creams and other food products in the continent. Nestlé aims to treble sales in Asia, Oceania and Africa to about US$53bn in constant currencies over the next decade, according to a report. According to Ian Donald, the Regional head and CEO, Nestle Equatorial Region, Nestle “expects African markets to offer additional economic opportunities as we expand our operations and introduce new products”. With manufacturing facilities in 29 countries on the continent, the first one opened over 86 years ago, Nestle produces its products in many sub-Sahara Africa countries, including Nigeria, Kenya, Zimbabwe, Ghana, Cameroon, and Senegal. The company also has sales offices in most African countries with its products being sold in all the 54 countries in the continent. The company has divided Africa into regional operations to better serve the needs of its customers, with the Equatorial Africa region African region where it has 4 factories, responsible for much of Eastern, Central Africa and Indian Ocean islands minus Southern Africa; Central & West Africa region, with 8 factories, covering much of west Africa; the Maghreb; North Eastern Africa; Southern Africa. The recent opening of factories in Angola (a CHF 10million) and in the Democratic Republic of Congo (a CHF 15million investment), two countries coming out of conflict, indicates the appetite the world’s largest food company has for the continent. The company had invested about USD 1.2 billion in Africa over the five years leading to 2012, to build up its local manufacturing capabilities, expand its distribution networks and develop more products catered to local tastes and needs, according to its website. foodbusinessafrica.com

The list is long, but we would like to provide examples of multinational food companies with operations in Africa and what they are doing to grow their businesses in Africa.

The company has just recently opened a confectionery line in its Egyptian factory, with the firm having “invested close to 1 billion EGP in Egypt and doubled local workforce to 6,300 employees”, according to Nandu Nandkishore, Executive Vice President Nestlé SA and Zone Director for Asia, Oceania, Africa and the Middle East Unilever The maker of Knorr and Royco soups, Hellman’s mayonnaise, ice cream, Flora and Blue Band margarine and Liptons tea, among other regional brands has traditionally been strong in emerging markets, generating 57% of its income from emerging markets of Africa, Asia, and Latin America. It started operations in Africa in 1887, in South Africa. The giant’s bold ambition to double the size of its business while reducing its environmental impact and increasing its social impact fits well with the African continent. Unilever is present has manufacturing operations in a number of African countries including South Africa, Kenya and Nigeria. The company recently announced a major investment plan for Kenya, with an investment worth KSh 17.4billion (US$ 200million) to establish a new manufacturing plant in Kenya. The company’s Nigeria CEO was recently quoted as saying that Nigeria is one of such countries that has been called out as a global priority “right on the same platform as India, China and Brazil”, with the company planning to spend more to expand and modernise, having already spent US$150million in the last two years in the country. Heineken The Dutch brewer’s presence in Africa is a long-standing one, with manufacturing operations in Tunisia, Algeria, Morocco, Sierra Leone, Ghana, Nigeria (11 plants), Ethiopia and Egypt (5 plants), South Africa, FOOD BUSINESS AFRICA | JUNE/JULY 2014

SPECIAL REPORT AFRICA

DRC (6 plants) , Namibia and Cameroon. The company is unique in producing beers in the most unlikely of countries in Africa, including in Rwanda, Burundi and Congo Republic. Africa is a significant contributor to Heineken’s bottom line, with the Africa and Middle East region’s over 70 breweries making up 14.5% of its total revenue, much higher than Asia Pacific region, with 11.3% The brewer’s iconic brand, Heineken has been introduced in key Africa including Kenya, Nigeria, Ghana and Tanzania, and other central African countries. These countries offer a great opportunity for the brewer for investment due to the popularity of its premium brand, in addition to its regional brands, Primus, Amstel, Star and Mutzig. Heineken is a dominant player in Nigeria, the continent’s most populated country, while maintaining a similar stance in Ethiopia, number two in the continent in population terms, where in addition to two breweries it currently owns, it is set to open a new green-field brewery in July 2014, set to brew 150 million litres of beer a year. The brewer has committed to continuously invest in Africa, investing over US$ 690million per year in the continent, according to Siep Hiemstra, Heineken’s president for Africa and Middle East. SABMiller With roots in Africa, South African breweries (SAB) became SABMiller in 2002 after buying Miller Brewing Company in the USA, becoming one of the few African brands to go international – which has also included forays into Europe, Latin America and

China. Africa contributed 13% of SABMiller’s group revenue in 2013 and is bound to contribute more to the company’s bottom line, as its recent investments in Nigeria and other markets begin to flourish. SABMiller has direct operations in Ghana, Nigeria and in the countries bordering the Indian Ocean all the way from Ethiopia to South Africa and inland into Botswana, Uganda and Zambia. The brewer was one of the first foreign firms to invest in South Sudan, an investment that has since been doubled in capacity, in the early days of its independence. The brewer also covers a chunk of French speaking Africa through its pan-African alliance with Castel Group indirectly. The company’s flagship Castle lager is however exported to a number of African countries. The company also manufactures sorghum based alcoholic beverages including Chibuku and bottled water as it expands its portfolio of non-alcoholic brands which now include Keringet in Kenya and Ruwenzori in Uganda. It also bottles carbonated beverages of Coca Cola around the continent. The brewer has invested aggressively in Africa, with significant investments and market share in Zambia, Uganda (with the recently commissioned Mbarara plant) and Tanzania (where it operates 4 lager plants and 1 sorghum beer plant, after coming into the country in 2004 in a venture with the government that has turned around the fortunes of the former wholly state owned brewery). It announced in 2011 a US$260m investment programme to fund capacity expansion in Uganda, Ghana, Zambia and Tanzania. This was on top of US$1.5 billion that had already been spent in the 5 years leading to 2011. It aims to improve the amount of materials it has to import for its brewing operations into the continent, with a goal of sourcing 60% of its requirements from within the continent by working with farmers to grow barley, sorghum and cassava. In deed SABMiller was the first company to introduce cassava beer 24

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on a commercial scale when it introduced Impala beer in Mozambique a few years ago. The beer has further been commercialised in Ghana and is slated for release in Zambia. The company has aggressively been growing in Africa, getting into Nigeria in 2009 and opening a second US$80 million brewery in western Ugandan town of Mbarara. Diageo Diageo, through its Guinness brand and well known spirits including Johnny Walker Scotch whisky, is one of the earliest pioneers in Africa; with the company reporting that the first recorded exports of Guinness to Africa was done to Sierra Leone in 1827. The first major overseas Guinness brewery was built in Nigeria in 1963, with Nigeria currently having the enviable reputation of the country with the highest consumption of Guinness in the world, overtaking the mother country of Ireland. The company’s brands, apart from Guinness, include regional brands Tusker, Bell, Serengeti, Harp and Senator; while its spirits brands include Smirnoff vodka and Baileys. According to the company, Africa represents Diageo’s largest group of emerging markets in terms of net sales and employs over 5,300 people (one in four of Diageo’s total workforce worldwide) in its businesses in Africa. Diageo in Africa is comprised of 13 breweries, one of which is with their joint venture in South Africa. These countries include Kenya, Uganda, Tanzania, Ethiopia, Nigeria, Ghana and Cameroon. In addition it brews beer with third party operators in 16 other African countries. PepsiCo The beverage maker has over the last two decades made a come-back to the continent, having exited South Africa in 1985 to protest Apartheid, made a return in 1994 as a new dawn emerged in South Africa with the end of Apartheid, only to pull out after 3 years in the market. The same kind of scenario played out in Kenya, when the company pulled out of the market in the 1970s, only to make a comeback with a US$28.5 million manufacturing facility in 2013, where it is facing up to the perennial rival, Coke, once again. The company has had a long presence in the other East African countries of Tanzania (since 2001) and Uganda (since 1965) The company is aggressively investing into Africa to tap into the opportunity that is unravelling in the world’s last frontier, through its beverage and snacks businesses. The group is also a major player in Nigeria, where its Pepsi, Mirinda, Aquafina and other brands are packaged in 9 bottling plants in the country. With the group amassing 13% of its net revenue from its Asia, Middle East and Africa region, “Africa is the new Asia,” Sanjeev Chadha, head of PepsiCo’s operations in the Middle East and Africa told travelpundit.com in 2012, showing the company is headed for more investment in the region. In sub-Sahara Africa the company is working closely with its bottler Varun Beverages International, a subsidiary of RJ Corp, to grow its market share in Zambia, Mozambique and Morocco. In Zambia Varun is building a US$15 million plant, in addition to its Lusaka plant which was opened just 4 years ago, in Kitwe. It has invested US$30 million in the Lusaka plant, says the head of the foodbusinessafrica.com

SPECIAL REPORT AFRICA

Zambian and Mozambican business, Krishnan Shankar, according to African Business review. The company has just announced a major US$345 million investment in Egypt, together with Almarai, entering the dairy sector in Africa, after its highly successful partnership with Muller Dairy in the USA.

RESOURCES

Coca-Cola For Coca-Cola, Africa feels like home. The beverage giant has been in Africa since 1929 and is the continent’s largest employer with over 160 plants. Its iconic Coke bottle is served in each country and territory in the continent, giving the company an excellent foundation on which to grow, as Africa unravels and becomes a major part of world trade. Business Monitor quoted Coca-Cola's South African unit head, William Egbe, in 2011 as saying that the proportion of Africa’s contribution to group revenue was expected to double from 6-7% in the next decade. Coke has spent US5 billion in the five years to 2012 and plans to spend $12 billion in the continent during the next 10 years, more than twice as much as in the previous decade”, significantly upping the stakes in the continent, to expand its sales and meet the above ambition, but also check the advance of Pepsi and other smaller emerging players in the continent. Specifically, the funding will be used to modernize equipment and expand existing capacity in order to meet the ever-growing consumer need and to increase the company’s presence in juice Africa’s growth is critical for Coca-Cola, considering “North Americans bought US$2.6 billion worth of Coke in 1989 and just $2.9 billion 20 years later, according to Bloomberg BusinessWeek, in a report titled Africa: Coke’s Last Frontier. The company’s footprint is enviable. The company is present in South Africa (15 facilities), Nigeria (13 plants), Kenya, Uganda, Ghana and many other countries. The company’s products are also bottled in Somaliland and Sudan. Danone The French dairy giant has had some experience in Africa, having formed an alliance with a local dairy in Morocco in 1953. The company is present in over 40 African countries either through their fresh dairy products or baby food. It is from the early 1990s that it has aggressively pursued the African market by entering Algeria and signing a joint venture with Clover Dairy in South Africa in 1998. Thereafter, it strengthened its reach by entering Egypt. The most critical move by Danone into the depth of sub-Sahara Africa was the 2013 acquisition of Fan Milk West Africa by the dairy group together with the Abraaj Group. In one fell swoop the company entered seven West African countries including Ghana, Nigeria, Togo, Burkina Faso, Benin and Ivory Coast. In the deal, Danone will over the years take a majority stake from its present 49% holding. The West African acquisition leaves the dairy group with a gaping hole in the east and central African side of the continent, which we do not expect to remain so for long. Source: www.afdb.org

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Suppliers follow their customers SOUTH AFRICAN FOOD GIANTS UP THEIR GAME The South African economy, the most developed in the continent provides a good platform from which to grow into Africa. The complications brought about by Apartheid meant that South African firms were excluded from trade with a majority of the world and within the continent, hence missing the opportunity to extend their reach into the continent. The end of Apartheid opened the door to a number of South African food companies to invest in the rest of Africa, starting with the country’s neghbouring countries, and the results have been impressive for many of these food giants. No company has taken advantage of this better than SABMiller, which we have highlighted above, which has operations in nearly all Eastern, Southern and Central African countries through its beer and beverage bottling operations Tiger Brands, another giant has distribution networks in 22 African countries including Nigeria (Deli Nigeria, UAC Foods, Dangote Flour Mills), Kenya (Haco Tiger Brands), Ethiopia (EATBI), Zimbabwe (Natfoods) and Chococam in Cameroon. A recent failed US$25 million bid for Rafiki Flour Mills and Magic Oven bakery in Kenya notwithstanding, the company’s strategy is to accelerate its expansion in the rest of Africa, according to its 2013 financial report. Sugar giants Illovo and Tongaat Hulett have major sugar plantations and refineries in a number of southern African countries. We expect them to push further up the continent as the economies improve in these territories Other companies with interests in the rest of Africa, and which we expect to grow into the continent, include Pioneer Foods, Astral, Clover Industries (planning to develop facilities in Nigeria, Mozambique and Angola) and Premier Foods. Retailers and fast food trickle up It is important to note that these are just a few multinational food corporations we have outlined, but the list of companies we expect to invest in Africa, especially Africa out of South Africa continues to grow. Not to be left behind are a number of fast food chains including McDonalds, KFC, Subway and Domino’s Pizza, most of which have well-entrenched operations in South Africa, but which are starting to make the journey up the continent. Major retailers including Walmart (through their Massmart operations), Carrefour and Tesco have either started operations in the rest of the continent or are at an advanced stage to get into Africa.

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As food and beverage manufacturers continue to expand into the rest of the continent, local supplies and support on equipment, ingredients, packaging and services become key. We have witnessed a number of suppliers increasingly getting interested and establishing some form of local representation or even a local office in a number of countries, including Kenya, Nigeria and Ghana, to bring their products and services closer to their customers In an interview we had with Friedbert Klefenz, President, Bosch Packaging last year, he indicated that the company is looking into setting up local capability to be ‘near our customers’. The same sentiment was raised by GEA, Buhler and other equipment manufacturers we talked to. Buhler, having had an office in Nairobi for some time, is investing in a milling school to serve the region, further cementing its ties with the region. GEA, the equipment supplier, has recently opened an office in Lagos Nigeria, the only such office in subSahara Africa.

When you think about it, this is an extraordinary statistic. People used to characterise Africa only in terms of poverty. Today, Africans are building strong economies and looking to companies like us to be their partners. Nandu Nandkishore, Nestle Zone Director, Asia, Oceania, Africa and Middle East

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SPECIAL REPORT AFRICA

Improve on governance and reduce red tape "You've got an incredibly young population, a dynamic population. Huge disposable incomes. I mean, $1.6 trillion of GDP, which is bigger than Russia, bigger than India. It's a big economy, and so rich underground. And whether the next decade becomes the decade of Africa or not, in my opinion, will depend upon one single thing—and everything is right there to have it happen—and that is better governance. And it is improving, there's no question." – CEO, Unilever talking to Bloomberg BusinessWeek Talk to any entrepreneur in the continent and the issue of corruption and red tape is a common complaint, be they local or international investors. The number of days it takes anything to get done in some countries can be days, if not months – from import documentation, business licencing and the like. But Africa is changing. A good example is Rwanda, where business registration now takes a matter of hours – providing an opportunity for other countries to match what this small country can do. On the East African side, Trade Mark East Africa, a donor funded agency has partnered with the EAC countries to ease port and inland border processes that has cut the number of days and cost of transport inland by more than half. Improve on infrastructure “The continent’s, road freight is about 4 times more expensive, power costs 14 US cents per kilowatt-hour against 5 – 10 US cents and mobile telephony costs USD 12 per month compared to USD 8 elsewhere.” AfDB Ports, airports, rails, water and sewerage, electricity, roads, ICT and other infrastructure are at best lacking in many African countries. Step out of the major cities and you get into a dark, potholed continent that lacks adequate infrastructure that is vital in harvesting the rich agricultural produce and to transport it into the local and international markets. It is estimated that the continent needs US$ 93 billion per year to fix its infrastructure by the African Development Bank. While the situation is still far from being perfect, many African countries have made significant strides in the last 10 years, building new roads, airports, improving on mobile telephony and even building railways. Ethiopia has commenced building a critical high speed railway line to connect its capital Addis Ababa with the sea port at Djibouti and road infrastructure is improving right across the continent from Ghana to Nigeria to Uganda. The use of mobile money, an innovation based in Africa that has gone global, has enabled many businesses and people to cut through the red tape, improving business and information flow in the continent. foodbusinessafrica.com

Ethiopia-Sudan highway

Improve regional linkages and trade Latin America is pretty much homogenous; same culture, same religion, only two languages. It’s not too fragmented, considering it’s made up of around 15 countries. Africa, however, is totally fragmented, with around 48 countries, you’ve got thousands of tribes with different languages, a lot of different religions. - Laurent Pillet, MD of Pernod Ricard SubSaharan Africa. Africa trades more with the rest of the world than it does with itself. According to the World Bank, intra-Africa trade accounts for less than 10% of the continent’s trade, as compared to 60% for western European countries. The continent is hampered by infrastructure, protective trade practices and red tape in its quest to enhance trade with itself. The future of Africa lies in becoming a more homogenous entity whose borders are diminished for the common good of all. Regional trade blocks, which include the Common market for Eastern and Southern Africa (COMESA), East African Community (EAC), Economic Community of West African States (ECOWAS), and the Southern African Development Community are at various stages of integration, with the smallest group the EAC is at the most advanced stage, hoping for a political union by 2020. Improve on education and skills “Although there are large numbers of unemployed young people and a constantly growing labour supply, many enterprises in Africa struggle to fill open positions. In Egypt, for example, about 1.5 million young people are unemployed , while at the same time private sector firms cannot fill 600 000 vacancies, according to a report in Africa Economic Outlook According to the report and UNESCO, sub-Sahara Africa currently trains, at the tertiary level, only 4% of its graduates in engineering, manufacturing and construction compared to Asia which has 20% of graduates in these courses. For the continent to measure up, it has to place more emphasis on these areas and in science training As the world comes to Africa to invest, the lack of people with the right qualifications, experience and skills put the continent at a disadvantage. With rising populations in need of jobs, it will be quite unfortunate for Africa to continue importing human resource to enable it grow, process and market its produce. The continent will have to expand its level of enrolment in secondary and tertiary education and provide resources that shall build the required skill sets that are needed by employers. FOOD BUSINESS AFRICA | JUNE/JULY 2014

Photo| www.meleszenawi.com

WHAT AFRICA NEEDS TO DO

DAIRY INDUSTRY IN UGANDA The dairy processing industry in Uganda is one of the most promising on the continent. Nearly non-existent a few years ago due to political turmoil, the sector has over the year’s taken advantage of good weather and rising population to post one of the fastest growth rates in Africa. By Foodworld Media Team The story of the dairy processing industry in Uganda is a recent one, but with a long history behind it. Having achieved its independence from the British in 1962, Uganda went through a long period of coups and counter-coups from the 1960s all the way to the mid-1980s, when the present regime swept to power in 1986 and started the job of rebuilding an economy that had been battered by decades of war. These decades of war ravaged Uganda’s 28

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

agriculture and economy, and the dairy industry was not spared. Dairy Corporation, once the country’s leading dairy collapsed in the middle of the war having been formed in 1967 with the aim of dairy development, dairy products marketing and dairy regulation in the country. Further, the country’s national cattle herd declined from 8 million in 1970 to 3.5 million by 1985, dealing a severe blow to the country’s dream of being a leader in milk and beef production and processing. With good tropical weather and adequate rainfall nearly throughout the year, Uganda is a dairy paradise. The process of rebuilding of the herd and the general dairy industry has taken nearly 30 years but the process has brought the dairy sector in this East African country immense benefits. It is important to note that less than 10 years ago, Uganda was a huge importer of dairy products from UHT milk and fermented products, mainly from Kenya, despite the abundance of milk in the country due to limited infrastructure to foodbusinessafrica.com

COUNTRY FOCUS UGANDA

collect and process the milk in the country. This has since changed, with the country becoming a net exporter not only of processed UHT milk but also of milk powder, ghee, butter and cream to Kenya and the region. Production “Total national milk production has grown from 365 million litres in 1991 to over 1.4 billion by the end of 2006 with per capital milk consumption growing from 16 litres in 1985 to 50 litres by end of 2007”, according to Dairy Investment Opportunities in Uganda, a report by SNV released in 2008. National milk production stood at 1.8 billion in July 2012, according to the Dairy Development Authority (DDA). Currently milk volumes stand at about 2.0-2.5 billion litres annually, according to our estimates. The dairy industry in Uganda contributes about 9% of the country’s Gross Domestic Product (GDP). The sector is a significant contributor to the nutritional, economic and employment opportunities of the rural communities, with dairy farming being a major activity in the south western, central and north eastern part of the country. Central (around Kampala) and south western (near the Rwanda border) milk sheds together contribute 50% of the total national production, and can be classified as milk secure. The rest of the country face a milk deficit at various times during the year, especially during the dry season, with yields plummeting accordingly during these lean times. The sector is dominated by traditional breeds of cattle, long used to the weather and husbandry practices as practiced by the herder communities, conditions that many exotic breeds would not manage to withstand. Exotic breeds have been introduced but their adoption is still limited to a few farms, with the majority having mixed breeds, thereby affecting the productivity of a majority of the farms. Challenges in the dairy value chain The dairy industry in Uganda faces a number of constraints that have affected and will continue to negatively affect the ability of the sector to reach its full potential. The sector is further beset by legacy issues: the dairy keepers are not keepers of animals for business, but are culturally bound to their animals as part of their culture and lifestyle. As long as the majority of the farmers continue to be ‘recreational’ farmers, the industry, despite the gains it has made in the last 30 years will struggle to find its place in world trade. These constraints however continue to be tackled as the country gears up to play a major role in the regional milk market. Infrastructural inadequacies – Uganda suffers from lack of adequate infrastructure capacity both at the farm and in processing. Most of the high producing areas lack good quality roads, electricity, cooling facilities and piped water that are critical in preserving milk quality at the farm. Post-milking loss at the farm is therefore high especially in high production areas during the flush period, leading to loss of farmer’s income. Lack of cooling facilities and electricity to keep the milk in cold conditions after milking negatively affects milk quality and farmer’s capacity to use milk as a source of income At the processing level, although installed capacity by dairy processors has been boosted by a number of key investments, dairy processors have to contend with lack of good adequate cooling facilities on the farms, with a majority having to construct their own cooling centers. Dairies are still grappling with high costs rising from inadequate and expensive electricity and costs of distribution of the processed milk: Seasonability of milk supply – The supply of milk can swing from a surplus to a drastic deficit in the space of one month, foodbusinessafrica.com

disrupting production plans and processor margin expectations, with milk prices more than doubling from the normal USh 450 per litre to USh 1200 per litre in the same period. The country experiences its low period during the months of June to August and also around December to February, with the rest of the year having adequate supplies. Milk quantities can fall by as much as 70% during the height of the lean period, seriously affecting factory operations. Poor milk quality – Poor husbandry and inadequate cooling facilities on the farm have contributed to milk of marginal quality getting to the dairies. Considering that dairies could be located 300 km away from the milk collection area, significant losses are experienced by processors and farmers alike when milk cannot be accepted by the dairy or the processor has to absorb losses that occur due to lack of storage once the milk has been received. To add to this is the proliferation of milk sellers and vendors in the villages and towns, who provide cash payments to farmers but whose skills and honesty cannot be guaranteed, risking consumer health and safety. Low productivity at the farm – Despite the abundance of water and green all round, the reliance of the dairy community on the weather is a huge impediment to the growth of the industry in Uganda. Farmers, long used to feeding their animals on pasture, have found it difficult to adopt intensive farming which can lead to higher production. The use of animal feed to supplement pasture is rare and will take time to be practiced by a majority of farmers. This is worrying, as the country has recently installed capacity that requires more milk to be sourced from the farms all year round,

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FOOD BUSINESS AFRICA | JUNE/JULY 2014

COUNTRY FOCUS UGANDA

so that the country can take advantage of the rising local and regional opportunities. This can stall the country’s progress, with some of the processors exiting or losing money from their investments. Regulatory environment The industry in Uganda is regulated by the Dairy Development Authority, a body tasked with the development of the dairy sector as well. Under an Executive Director DDA started its operations in 2000 having been created in 1998, following the enactment of the Dairy Industry Act. The Dairy Industry Act replaced the previous Dairy Master Plan of 1993. The Dairy Industry Act created the DDA and actualized the privatization of the Dairy Corporation, which was leased to the Sameer Agriculture & Livestock Ltd in 2006. According to the East African Agribusiness magazine liberalisation encouraged private sector investment in milk collection, transportation processing, milk distribution and marketing – with the result that from 1993 to 2006, fifteen medium to large scale processing plants were setup which increased the total national installed capacity to about 400,000 litres per day, even though, most of them were operating at 45% capacity utilisation.

IMPORTANT PLAYERS Sameer Agriculture & Livestock SALL is Uganda’s leading and the most diversified dairy company, producing extended shelf life and UHT liquid milk, yoghurt, butter, cream, milk powder while also distributing ice cream products from its Kenyan sister company. The dairy leased the former Dairy Corporation of Uganda plant in Kampala, following the liberalization of the sector in 1996 and has invested further in the milk powder and juice plants plus other facilities including cooling centers around the country. Jesa Dairy Farm Located on a farm in Busunju near Kampala, Jesa Dairy Farm belongs is part of the Mulwana Group. The dairy has been in existence since the 1980s. The dairy produces fresh milk, ESL milk and flavoured and fruit yoghurt. Pearl Dairy The dairy commenced operations in 2013, producing milk powder and butter milk mainly for export. The company has indicated on its website that they will produce Amos dairy The new kid on the block, Amos Dairy has an installed capacity of 400,000 litres per day according to press reports, with a goal of processing 2 million litres in a few years. The company is currently producing casein, and is planning to produce whey, anhydrous fat and ghee in future. Paramount dairy The company, located in Mbabara is the only major processor of cheese in Uganda.

DAIRY COMPANY

BRAND(S)

PRODUCTS

Sameer Livestock & Agriculture

Fresh Dairy, Daima

Fresh milk, UHT milk, ESL milk, butter, ghee, yoghurt, milk powder, juice Ice cream (distributed from Kenya affiliate)

Jesa Farm

Jesa

Fresh milk, ESL milk, yoghurt

GBK Dairy

Classic

UHT milk, yoghurt

Hillside

UHT milk, yoghurt

Rainbow Industries

Rainbow

UHT milk, ice cream, yoghurt

Pearl dairy

Lato

Milk powder, butter oil

Kookee Enterprises

Kooksy

Ice cream, yoghurt

Paramount

Cheese, cream

Amos Dairy

Casein

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

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OPERATIONS QUALITY ASSURANCE

Moisture Management in Cereals By Foodworld Media Team

oisture (water) is an important part of cereals composition, as cereals are basically living organisms, requiring the water within them to remain viable and to retain the ability to sprout and grow. To retain viability, and to retain shelf life of the grain, it is vital that the residual water in a grain or cereal like maize, rice, wheat, barley and other grains does not fall above a particular level. Moisture content is one of the most critical indicators of product quality and is also one of the most measured attributes of food. Moisture content also tends to be the most widely quoted parameter in the trading of grains because it is easy to measure, is well understood by the majority of those involved in the trade, and is often an indicator of the general quality of the cereal. While it is possible to sort out, say, the problems of dust in the cereal and still have a fairly good quality product, excess moisture tends to affect the product quality more adversely, that might require costly interventions or even result in total loss of the grain if left unchecked. Water content is critically important for any cereal grain for a number of reasons: Quality - Water takes part in many metabolic activities in the grain, including germination. Water also impacts the texture, taste, appearance and stability of grain products. Legal and labelling requirements Water is an important indicator of suitability of the grain for trade purposes, impacting its fitness of purpose. It has to be said that international trade in grain and any other

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

commodity is based on a minimum standard that the product has to conform to. Water content is one of the most important legal requirements Economy – Being an inexpensive ingredient, water is a critical contributor to cost of grains. Water impacts the weight of the produce and hence the amount of money made from the sale of the produce. Another critical parameter is water loss in storage, which can reduce the income of the farmer or the processor quite significantly if not checked properly. Moisture content of grain can in fact dictate if the miller makes money or not from the venture Shelf life and safety - Water content impacts the ability of the grain to resist pest and microbial attack, including the

Moisture content tends to be the most widely quoted parameter in the trading of grains

occurrence of aflatoxins Processing operations – The water content of grains is critical in how the grain will handle processing conditions including mixing, drying and flow during transport, conveyance or packaging It is important to note that most metabolic activities are greatly reduced when moisture content gets below 14%, with all metabolic activities stopped completely below 8%. It is therefore important to dry the grain to below 14%. However, excessive drying, while improving shelf life, impacts negatively on weight of the grain (an economic loss) and reduces the grain’s viability to germinate and its utilisation (qualitative loss). According to the East African Community (EAC) standard for grains, 13.5% has been set as the maximum moisture content for the most widely traded grain, maize. Most national and regional standards have also adopted comparative figures, depending on local climatic conditions, the type of grain and duration of transport and storage.

FROM FARM TO FORK It is imperative that the control of moisture is built into the whole supply chain of the grain, to ensure that the final product has the desired moisture content. Failure to do so has a great impact on the suitability, quality and safety of the maize at the end of the chain. Food companies should build supply chains that can, to a great degree, deliver for them grains that meet their standards on moisture and other quality parameters, for it is possible that the end product may meet moisture content standards but fail on aflatoxin content or any other parameter, from previous contamination. At the farm, the farmers should ensure that the grain is harvested at the right time, transported and handled in the right conditions, dried to the right moisture content, using the right method, and stored in the right storage bins During transport from the farm

into grain collection centres or to food companies, the right conditions should be maintained so as not to reverse the gains from good handling at the farm Once the produce arrives at the collection centres or at the milling company, it should be stored in the right bins or silos and processed in ideal conditions that will not interfere with the grain quality. This will also include the right conditions during transport to the markets and at the retail level Probably, the most critical lesson from this article is that everyone has a role to play to ensure the final product that lands at the consumer’s table is not only safe but also of the right quality. The milling company has a huge responsibility to ensure that the product that they have packed and branded doesn’t affect the final consumer; hence the need to ensure the whole supply chain is right.

foodbusinessafrica.com

OPERATIONS HEALTH & SAFETY

Why Corporate Wellness is Good for Business By Geraldine Ndua

n September 2011, the United Nations declared for the first time in history that Non-Communicable Diseases (NCDs) such as diabetes, heart disease and cancer pose a greater health burden globally. Today nearly 80% of deaths from NCDs occur in developing countries. Kenya, like most developing countries, is faced with an impending epidemic of chronic diseases, with non-communicable diseases contributing over 33 per cent of total mortality (MOH, 2007). However, the leading “actual” causes of death in Kenya are risk factors that can be modified. Many workplaces are now stressful, sedentary settings and often provide easy access to energy-dense food and beverages. As a result, workplaces are contributing to the poor health and lifestyle including obesity. Obesity has been linked to numerous chronic diseases including cardiovascular disease, hypertension, dyslipidemia, type 2 diabetes, stroke, osteoarthritis and some cancers. Current recommendations for employers include helping unhealthy employees become healthy while at the same time keep its healthy population from becoming sick. Employers are encouraged to implement population-based programs including health risk appraisals and health screenings in conjunction with targeted interventions. Work is a very powerful determinant of our overall health and well-being. Further to this we spend more hours at work than anywhere else, making it a prime avenue for promoting healthy habits. On average, people work for eight hours a day with an extra two to three hours every day commuting. This makes it hard to promote healthy lifestyle changes away from work. The workplace organizational culture and environment are powerful influences on behavior and these needs to be put to use as a means of assisting employees to adopt a healthier lifestyle. Workplaces are crucial to improving the health of workers. Benefits of corporate wellness programs to employees To the employee, wellness programs improve their personal health including improved physical fitness, lower levels of stress, increased self-image and self-esteem. The employee will also have increased stamina better productivity and a reduction in healthcare costs. Wellness options Classes are a popular means of trying to prevent injury, including exercise classes, smoking cessation courses, back-care programs and stress management lectures. More examples include health education

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classes, subsidized use of fitness facilities; internal policies that promote healthy behavior and any other activity, policy or environmental change that affect the health of an employee.

BENEFITS OF CORPORATE WELLNESS TO THE EMPLOYER They say that the most critical asset in any business is the human resource. A loss of one single employee due to ill health or otherwise can severely affect a company’s operations. There are many benefits to having a healthy workforce, including: Reduced absenteeism: It has been shown healthier employees spend fewer days away from work due to illness, saving the company millions of shillings on down time and temporary employment. Additionally, because good health typically carries over into better family choices, your employees could possibly miss less work caring for sick family members. Reduced healthcare costs: Today, employers have a vested interest in health-related issues and reducing unnecessary medical costs that consume corporate profits and employee pay cheques. Improved productivity: While it is not as easily measured as the increase in health care costs, improved employee morale and productivity plays a big role in the success of a company or business. Improved presenteeism: Presenteeism is a new phenomenon which occurs when employees are at work but do not feel as productive as usual due to stress, depression, injury or illness. Reduced injuries: Healthy employees with less risk factors are at a lower risk of injury than unhealthy ones with more risk factors. Improved employee morale and retention: Employee turnover is expensive and an employee wellness program is an added benefit to encourage employee retention. Company sponsored workplace wellness programs send a clear message to employees that management values their well-being.

Geraldine Ndua is a Director at Diabetes Care and Wellness Ltd. DCWL works with organizations to develop customized corporate wellness programs that fully integrate with other programs such as occupational health and safety. They can be reached on +254725306592, +254715913254 or diabetescareandwellness@yahoo.co.uk FOOD BUSINESS AFRICA | JUNE/JULY 2014

OPERATIONS FOOD SAFETY

FOOD LABELLING: NEW RULES IN THE EU

In East Africa, food labelling is minimally regulated, and the existing regulations are often circumvented. Not so in the EU, where a new regulation – which shall apply from December 13th this year – is set to further protect the consumer and to make food manufacturers in Europe as well as those exporting to Europe, toe the line.

By Liz Wawire

deally, the purpose of food labels is to give the consumer information about the contents and the properties of foodstuffs. Ideally, food labels should make it possible for consumers to make informed and – preferably – healthy choices when it comes to the food they consume. But when the information on food labels is misleading, when the fine print is too fine to read, when ingredient lists are incomplete, when nutrition

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

information is entirely absent, shopping becomes guesswork. Tightening the ropes in the EU In Europe, an ingredient list has been mandatory for prepacked foods for several years. The ingredients (including food additives) have to be listed in descending order of weight. There is also mandatory labelling of certain potential food allergens. Nutrition information is so far mandatory in Europe only if a nutrition or health claim is made on or

about the product (for example ‘lowfat’), although many food manufacturers display this information voluntarily, yet all in their own way. The use of nutrition claims and health claims on food labels and in publicity is also strictly regulated, to ensure that such claims are clear, not ambiguous or misleading, and are based on generally accepted scientific data. Even though there is currently already a lot of regulation on food labelling in Europe, the labels are often unclear, printed too small and difficult to understand, overwhelming the consumer with chemically-sounding terms. A new European regulation (Regulation No 1169/2011) concerning consumer information on foodstuffs has been introduced to improve and tighten the rules on the labelling of foodstuffs so that consumers have essential, legible, and comprehensible labelling at their disposal in order to make informed choices when buying products. The regulation applies to all foodstuffs intended for the final consumer and contains a number of new requirements with regard to legibility, nutrition information, the indication of allergens and simplification and uniformity of the information. For the consumer, this is good news. He will now be able to read and understand important information regarding the products that will or will not end up in his shopping basket. For the food manufacturer, this means a whole new set of rules and limitations to study and comply with. Transparent and uniform Following this regulation, just about every prepacked food intended for supply to the final consumer in the EU will have to be accompanied by food information, including the list of ingredients and a nutrition declaration. Substances or products causing allergies or intolerances (based on a predefined list) must always be listed – even for non-prepacked foods that are exempted from the mandatory food information – and must be emphasised through a typeset that clearly distinguishes it from the rest of the list of ingredients, which will greatly aid the consumer. The nutrition declaration becomes mandatory and is made uniform for all products involved (with certain exceptions for herbs, sweeteners, chewing gum and very small packaging, amongst foodbusinessafrica.com

others) with a standard expression of the energy value, the amounts of fat, saturates, carbohydrate, sugars, protein and salt (in that order) per 100 g or 100 ml. This is a more simple and honest way of rendering the numbers, and makes comparing products easy. Food manufacturers that used to like hiding the total amount of sugars in their products by spreading several types of sugars (for example saccharose, dextrose, etc.) in the ingredient list will no longer be able to pull the wool over the consumer’s eyes. The consumer will now need no more than a single glance to see how many sugars are found in a certain product. The data will have to be displayed in a single table or linear format, and may – providing certain conditions – in addition also be presented using graphical forms or symbols. This mandatory information may be supplemented with the amounts of monounsaturates, polyunsaturates, polyols, starch, fibre, vitamins and minerals. An

The new regulations cover legibility, nutrition information, allergen declaration and uniformity of information

additional indication of the quantities as a percentage of the fixed reference intakes (of an average adult, 8 400 kJ/2 000 kcal ) and/or of the quantities per portion is also allowed. Where a nutrition and/or health claim is made for a nutrient that is not part of the mandatory nutrition declaration (for example fibre), the amount of that nutrient must be declared. When vitamins and minerals have been added to a product, their quantity must also be declared. And when a food contains sweeteners, or added caffeine or has high caffeine content, this must be indicated with certain particulars and sometimes warnings. No more fine print Studies have shown that illegible product information is one of the main causes of consumer dissatisfaction with food labels. The legibility of the label, an aspect that foodbusinessafrica.com

has not been specifically defined in the previous regulations and directives (and has as such been shamelessly circumvented by some food manufacturers), is obviously one of the factors that determine to what extent the information can influence consumers’ food choices. This is why the new regulation states that the information needs to be easily visible, clearly legible and indelible. Furthermore, it contains a detailed definition of legibility, underlining the importance of font size, type colour and contrast, among other aspects. The legibility is strictly defined with a minimum x-height of 1,2 mm (0,9 mm in case the largest surface of the packaging is less than 80 cm2), which is

just a tad smaller than Times New Roman font size 8. The food information must also be accurate and clear, in a language easily understood by the consumer. A remarkable reform is that the term ‘salt’ must be used instead of ‘sodium’. This is an important decision because the consumer is much less familiar with the latter and the numbers may be confusing with regard to the dietary advice of no more than 6 g of salt per day (salt = sodium × 2,5). And for refined oils and fats of vegetable origin, for example, the grouped designation is no longer sufficient and has to be followed immediately by a list of the specific names, e.g.: “Vegetable oils (palm oil, sunflower oil)”. Food information that is provided on a voluntary basis shall also not be misleading, ambiguous or confusing and must be based on relevant scientific data, and shall not be displayed to the detriment of the space available for mandatory food information. The above is but a summary of the most important reforms. Food manufacturers interested in exporting to the EU will be wise to consult the entire regulation.

Some of the most often used nutrition claims, and the conditions applying to them in the EU: Low energy: not more than 40 kcal (170 kJ) per 100 g for solids, not more than 20 kcal (80 kJ) per 100 ml for liquids; not more than 4 kcal (17 kJ) per portion (equivalent to 6 g of sucrose) for table-top sweeteners. Energy-reduced: reduced by at least 30 %. Energy-free: not more than 4 kcal (17 kJ) per 100 ml, and not more than 0.4 kcal (1.7 kJ) per portion (equivalent to 6 g of sucrose) for table-top sweeteners. Low-fat: not more than 3 g of fat per 100 g for solids, not more than 1.5 g per 100 ml for liquids (1.8 g per 100 ml for semi-skimmed milk). Fat-free: not more than 0.5 g of fat per 100 g or 0.5 g per 100 ml. Low-saturated fat: the sum of saturated fatty acids and trans-fatty acids does not exceed 1.5 g per 100 g for solids and 0.75 g per 100 ml for liquids, AND the sum of saturated fatty acids and trans-fatty acids must not provide more than 10 % of energy. Low sugar: not more than 5 g per 100 g for solids or 2.5 g per 100 ml for liquids. Sugar-free: not more than 0.5 g of sugar per 100 g or 0.5 g per 100 ml. With no added sugar: the product does not contain any added mono- or disaccharides or any other food used for its sweetening properties. If sugars are naturally present in the food, the indication ‘contains naturally occurring sugars’ should appear on the label. Low sodium/salt: not more than 0.12 g sodium (or the equivalent value for salt) per 100 g or 100 ml. Sodium-free or salt-free: not more than 0.005 g sodium (or the equivalent value for salt) per 100 g. Source of fibre: at least 3 g of fibre per 100 g or 1.5 g per 100 kcal. High fibre: at least 6 g of fibre per 100 g or 3 g per 100 kcal.

FOOD BUSINESS AFRICA | JUNE/JULY 2014

OPERATIONS

OPERATIONAL EXCELLENCE

IMPROVING PRODUCTIVITY By Philip-Martin Mugo In any manufacturing set-up, 80% of the Capital expenses (Capex) are machine installations. Often times these machines are imported and their cost may run into millions of shillings. It therefore goes without saying that the owners of such machines will want the machines utilized to their maximum potential in order for them to recoup their Return on Investment (ROI) in the shortest time possible. Usually, the owners will determine to purchase a machine of a certain capacity based on demand of the product they want to produce which will probably have been determined through a market survey. The machine will then be installed and commissioned by the suppliers/manufacturers. During commissioning, the manufacturers of this machinery will want to show that the machine they made is able, on a short run, to meet its rated capacity (rate/hr). Capacity utilization: Then the real work begins. The Factory staff setup must now consistently strive to meet this rated capacity of the plant. The extent to which an enterprise uses its installed capacity is referred to as Capacity Utilization. This is the relationship between actual output produced with the installed equipment and the potential output which can be produced with it, if capacity is fully utilized. Capacity utilization is best applied to companies that produce physical goods rather than services, as the capacity measurements are much easier to quantify. This measurement can also be used to determine rates at which costs of production will rise/ fall especially during low and high seasons. Overall Equipment Effectiveness (O.E.E.): Now, the equipment is not expected to run 24/7. There will be periods of low demand, preventive maintenance, breakdowns etc. So how does the plant manager ensure that his/ her plant runs efficiently whenever it’s in operation? Seiichi Nakajima, the founder of Total Productive Maintenance

ABOUT 36

(TPM) developed the Overall Equipment Effectiveness (O.E.E) metric, which quantifies how well a manufacturing unit performs relative to its designed capacity, during the periods when it is scheduled to run. Manufacturing a product is a complex process and it is important to ensure all value and non-value adding activities within the factory floor are measured and guidelines/ targets issued to supervisory staff. Without metrics and guidelines it is very easy to lose control and have your business managed by your production. OEE is a tool that combines multiple manufacturing issues and data points to provide information about the process. By analyzing and calculating data, it also functions as a framework for root cause analysis (RCA). Through a documented process of combining the underlying data, OEE provides specific process information. All members of the manufacturing team, from assembly technicians to financial personnel can use the data to understand the current state of the manufacturing process. By having a predetermined framework of the impact of machine availability, performance and quality, OEE provides a framework to track underlying issues and root causes. OEE also provides a framework for improvements in the manufacturing process. By using key OEE concepts such as The Six Big Losses, waste exposed by tracking OEE can be understood and efficiencies can be improved. The components of the OEE framework are: • Availability • Performance • Quality OEE is a very simple metric to immediately indicate the current status of a manufacturing process and also a complex tool allowing you to understand the effect of the various issues in the manufacturing process and how they affect the entire process. OEE=Availability x Performance x Quality

Availability refers to the machine being available for production when scheduled. At the most basic level, when a process is running it is creating value for the end user. When a process is stopped, it's creating a cost with no associated value to the organization. Whether it's due to mechanical failure, raw materials or operator issues, the machine is either producing or not producing. By comparing scheduled run time to actual run time, the availability component of OEE allows for a determination of lost production due to down time. Performance is determined by how much waste (waste is any non-value adding activity) is created through running at less than optimal speed. By comparing the actual cycle times against ideal cycle times (designed speed of the machine), OEE allows for a determination of how much production was lost by cycles that did not meet the ideal cycle time. Quality focuses on identifying time that was wasted by producing a product that does not meet quality standards. By comparing the quantity of good parts to reject parts, the percentage of time used adding value by producing good product is exposed. How Can OEE Help My Organization? By itself, OEE only provides data about your manufacturing process. Companies that use OEE as a metric have found success when combining it with general lean manufacturing programs and also as part of TPM systems. When using OEE with these systems the benefits become significant: • Directly tie production efficiencies to fiscal reporting. • Reduce investigation time for root cause analysis. • Shorten equipment ROI through increased utilization. • Decrease costs through waste elimination. • Increase customer satisfaction through quality improvement.

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

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

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EVENTS

Free entry only by pre-registration on www.eastafripack.com

CALENDAR

September 7-9: 7th International Whey Conference 2014, Rotterdam, Netherlands. Conference on whey processing, functionality and its impact on health www.iwc2014.com September 9-12: East Afripack, Nairobi, Kenya The exhibition dedicated to processing, packaging and converting in the East Africa region. www.eastafripack.com September 24-26: Africa Dairy Conference & Exhibition, Nairobi, Kenya African Dairy Conference and Exhibition is the largest dairy event in Africa. www.dairyafrica.com October 3-5: FoodAgro, Nairobi, Kenya The place to learn more about what’s new on the food, hotel, kitchen & agriculture scene. www.expogr.com/kenyafood October 3-5: FoodAgro, Dar es Salaam, Tanzania The place to learn more about what’s new on the food, hotel, kitchen & agriculture scene. www.expogr.com/tanzania/foodexpo October 10-14: ANUGA, Cologne, Germany The world´s leading food fair for the retail trade and the food service and catering market www.anuga.com October 21-23: Propak Cape Town, Cape Town, South Africa The event for the packaging, food processing, printing, labelling and plastics industries. www.propakcape.co.za

Business packed with technology. www.eastafripack.com

September 9 - 12, 2014 East Afripack 2014 is the not to miss event in the EAC area (Burundi, Kenya, Rwanda, Tanzania, Uganda). A unique opportunity to get in touch with companies seeking technological upgrade in a rapidly expanding region. World market leaders are exhibiting here. East Afripack 2014: explore new opportunities! POWERED BY:

October 27-31: IDF World Dairy Summit, Tel Aviv, Israel A forum to discuss challenges of the dairy sector while allowing for active discussion regarding industrial technology and basic research results. www.idfwds2014.com November 9-11: Gulfood Manufacturing, Dubai, UAE The biggest food and beverage process industry event for the Middle East & Africa www.gulfoodmanufacturing.com

In joint venture with:

In partnership with:

United Nations Industrial Development Organization

November 14-16: FoodTec India, Bombay India India’s one stop trade fair for Food, Beverage & Packaging Technology, Equipment & Supplies www.foodtecindia.com November 18-20: Food Processing & Packaging Exposyum, Nairobi Kenya East Africa’s major event for the food processing and packaging industry www.fppe-kenya.com October 13-14 – 3rd: Palm Oil, Rubber & Cocoa Africa, Accra Ghana The 3rd Palm Oil Africa incorporates rubber and cocoa, both exciting crops for Africa with growth potential. www.cmtevents.com/main.aspx?ev=140936& foodbusinessafrica.com

East African Community

Ministry of Industrialization and Enterprise Development Government of Kenya

Worldwide supporters

China Light Industry Machinery Association

U.S. Commercial Service United States of America Department of Commerce

China Food & Packaging Machinery Industry Association

Food Processing Suppliers Associations - USA

Indian Flexible Packaging and Carton Manufacturers Association

African Packaging Organisation

Institute of Packaging Machinery Manufacturers of India

World Packaging Organisation

For your local agent - Ipack-Ima Spa Headquarter: Corso Sempione 4, 20154 Milan (Italy) – Tel + 39 02 3191091 – ipackima@ipackima.it East Africa Ipack-Ima Rep. Office Rickshaw Travels Kenya Ltd: Mrs. Eva Mirie, Mobile: +254 (0) 788 805532 – ipackima-ea@rickshawtravels.com FOOD BUSINESS AFRICA | JUNE/JULY 2014

SUPPLIER NEWS BRIEFS ADM acquires of WILD Flavors USA - Archer Daniels Midland Company (ADM) has announced that it is acquiring flavour and specialty ingredients company WILD Flavors GmbH. The acquisition gives ADM the ability to offer food and beverage companies a comprehensive suite of systems to enhance and improve their products. WILD Flavors offers food and beverage companies flavor systems and fruit juice concentrates and blends, plus other ingredients, including natural flavors and extracts, natural colors, sweetening systems, seasonings, specialty ingredients, taste modifiers, and fermentation technologies. The company had an estimated 2014 net revenues of about €1 billion. The transaction value is approximately €2.3 billion (about US$3 billion) and is subject to regulatory approvals.

DSM to produce stevia USA - DSM, the global life sciences and materials sciences company, has announced that it is building a high intensity sweetener platform based on fermentation. The company has stated that as the global consumption of Stevia as a sweetener is rapidly growing, it’s time for the introduction of steviol glycosides produced through fermentation, a sustainable, efficient and cost effective process to meet market growth. The total value of the low or reduced sugar food market accounted for almost 52 billion dollar last year – www.dsm. com

Tetra Pak in €60 million Turkish plant upgrade TURKEY - Tetra Pak has announced an investment of €36 million in its packaging material plant in Izmir, Turkey to complete a €60 million technology upgrade project that started in 2012. The upgrade more than double the plant’s capacity to 10 billion packs and broadens its capability to produce a bigger range of packages from the Tetra Pak portfolio. – www.tetrapak.com

NEW OFFICE

GEA opens office in Lagos, Nigeria NIGERIA - Leading process engineering company GEA has opened a permanent office in Lagos, Nigeria. The new office, the first one in West Africa, is set to serve the brewing, beverage and food market in the region. Dirk Hämling, Chairman of GEA West Africa Ltd, commented, "For the food and beverage activities of GEA, West Africa and Nigeria in particular is an important new market to support our growth strategy. We are proud to expand our global network in these growth markets."

The company opens the West African office after several years in South Africa. The new office will “ensure not only great flexibility but also close proximity to our customers from Nigeria and the neighboring countries”. The newly office will be under Andreas Krüger, General Manager of GEA West Africa Ltd, who has many years of experience in brewing, food and beverages, both in Africa and in Europe. – www. gea.com.

PACKAGING

Sidel launches innovative new PET bottle for beer GERMANY - PET liquid packaging solutions specialist Sidel has launched the world's first-ever pasteurisable lightweight PET bottle for beer with a non-petaloid base. The innovative bottle also supports a crown cap, which together with the non-petaloid base gives the bottle the appearance of glass, but with all the advantages of PET. Most notably, the new bottle weighs only 28 grams, which is up to 86% less than an average equivalent glass bottle. The beer bottle can protect beer qualities for up to a six-month shelf life and can be used for

flash or tunnel pasteurised beer, and also micro-filtrated beer. The company’s tests show that the bottle retains temperature and taste of beer as its glass equivalent "We want to help beer producers take advantage of the flexibility, lighter weight, sustainability and lower costs offered by PET, by producing a bottle that was more attractive to the next generation of beer consumers who want their drinks packaging to be more sustainable, convenient and user-friendly," explains Christophe Bunel, Head of Packaging Care at Sidel. – www.sidel.com

5 good reasons to advertise in the

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

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JUNE/JULY 2014 | FOOD BUSINESS AFRICA

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TRENDS

NEW PRODUCTS ON THE SHELF

AFIA MALT DRINKS Kevian Kenya has added a range of flavoured malt drinks to its portfolio of non-carbonated soft drinks. Available in 500 ml PET packs, the drinks are in vanilla, dark malt, lemon, orange and plain flavours. PROCTOR ‘N ALLAN NEW PACKS Proctor ‘n Allan has redone their range of porridge flours. The company’s entire range, including Family Porridge, Baby Porridge and Cereals has been redesigned. The Family Porridge has been reformulated to include amaranth

Ki CHOCOLATES Kenafric Industries has introduced its line of chocolate products to the market. The products include Fudgville (fudge with brown chocolate), Razzle (brown chocolate with crisped rice), Moxie (fudge with white chocolate) and Be-Nutz

ILARA 1 LITRE PACK Brookside Dairy Ltd has expanded its plastic pouch packaging options by introducing its ILARA brand fresh milk in a 1 litre value pack

KETEPA FLAVOURED TEAS Kenya Tea Packers has introduced new packs of flavoured teas to its product portfolio. Available as loose tea and in tea bags, the products include Caramel, Lemon, Orange, Forest Fruit, Ginger and Masala varieties.

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FOOD BUSINESS AFRICA | JUNE/JULY 2014

QUOTABLE QUOTES IN THE NEWS

"Ethiopia has a great consumer story. It is growing so quickly but there is still so little that is manufactured locally. One of the industries that people are really excited about is beverages." Brooks Washington, principal, business development at Roha Ventures, on why the company is putting up a glass manufacturing factory in Ethiopia. AllAfrica.com

"Part of why we are doing this is in trying to bring people into Nigeria so that after 91 years in Nigeria we consider ourselves part of the community. Yaw Nsarkoh, Managing Director, Unilever Nigeria, affirming the importance of working together with communities in Nigeria for the common good of the company and the community. This Day

“We maintain a binding agreement is in place with Domino’s Pizza regarding an exclusive master franchise for, among others, South Africa, and that implementation thereof started in November 2013 with the knowledge and support of Domino’s.” International Foodservice Concepts comments on a court case which pits it against Taste Holdings, as to which firm has been given a licence for Domino’s Pizza chain in Africa

“We are seeking growth through new brands to strengthen our market presence in the region.” Kimani Rugendo, Managing Director, Kevian Kenya commenting on the company’s moves to introduce new products. Business Daily

“We expect this work [research] to help inform future decisions about how the government can further improve its regulation of the maize sector so as to sustain good market-led growth while also protecting food security”. The Centre for Trade Policy and Development Executive Director Isabel Mukelabai on why Zambian Government should develop a regulatory mechanism for maize exports that is transparent and accountable.

JUNE/JULY 2014 | FOOD BUSINESS AFRICA

“I have to emphasise that for us to lift the ban, it has to go through the Cabinet. No ministry or department has the mandate to make comments contrary to what was agreed,” Kenya’s Health Cabinet Secretary James Macharia on why he cannot lift the GMO ban, currently in force in Kenya. Business Daily

"Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 per cent”. World Bank Group President, Jim Yong Kim, commenting on the world’s economic growth prospects in 2014

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