Food Business AFRICA’S NO.1 FOOD, BEVERAGE & MILLING INDUSTRY MAGAZINE
COVER STORY
COVID-19
ITS IMPACT, HOW TO MANAGE & HOW THE FOOD INDUSTRY HAS RESPONDED IN AFRICA COUNTRY FOCUS
FOOD INDUSTRY IN UGANDA
COVER STORY
MAKERERE UNIVERSITY FOOD TECHNOLOGY & BUSINESS INCUBATION CENTRE INNOVATION CENTRE TO NURTURE UGANDA’S NEXT FOOD ENTREPRENEURS
A FOCUS ON UGANDA’S FOOD, BEVERAGE AND MILLING INDUSTRY WWW.FOODBUSINESSAFRICA.COM
YEAR 8 | NO. 40 | MARCH/APRIL 2020
The Art of European Meat
artofmeat.eu Picture this: Quality Meat from the heart of Europe − bringing together Craftsmanship, Food Safety and Tailor-Made Service. That is what the Belgian meat suppliers proudly present to you. As one of Europe’s leading meat producers and exporters, they have turned their expertise into an art form. Up to you to savor it.
THE CONTENT OF THIS PROMOTION CAMPAIGN REPRESENTS THE VIEWS OF THE AUTHOR ONLY AND IS HIS/HER SOLE RESPONSIBILITY. THE EUROPEAN COMMISSION DOES NOT ACCEPT ANY RESPONSIBILITY FOR ANY USE THAT MAY BE MADE OF THE INFORMATION IT CONTAINS.
EVENTS PREVIEW
Event: AFMASS FoodTech Uganda edition When: November 12-14, 2020 Where: UMA Multi-Purpose Hall, Kampala, Uganda Timings: 09.00 am to 06.00 pm daily
AFMASS Food Expo Uganda postponed to November 2020 in face of Covid-19 outbreak
T
he inaugural edition of AFMASS Food Expo Uganda edition which was prevously slated for March 2020 has been postponed again to November 12-14, 2020 in Kampala, Uganda due to the Corona virus pandeimic that continues to hit not only Africa but other leading economies across the world. The event is set to showcase the rise and sophistication in Uganda and Great Lakes region's growing food, beverage and milling industry and open the way for entrepreneurs, industrialists, academicians, researchers and Government agencies meet and network with peers, industry leaders, suppliers, financiers and more from across Africa and the World. The region's vast agricultural potential in grains, coffee, tea, meat, milk, fish and fruits and vegetables are increasingly being turned into value added processed and packaged goods for local, regional and international markets, attracting small and medium enterprises and multinationals to invest in the region - including beer giants AB InBev, Heineken and Diageo; soft beverages majors Coca-Cola and Pepsi; plus thousands of local and regional investors. This trade event, which marks the first time an all-encompassing food, beverage and milling industry event has been held
in this region, will showcase the vast array of locally manufactured food, beverage and milled products plus the latest processing, packaging, supply chain and food safety technologies.
when we had made all the plans. However, we believe that the postponement has also given us time to engage with more stakeholders with a view to make the upcoming event a memorable one for all concerned. But for now we have to join every one to ensure Covid-19 is contained and that normal life returns, for us to hold the event," says Francis Juma, the team leader at FW Africa Conferences & Events, the organisers of the event. AFMASS Food Expo Uganda is supported by a number of industry of Government agencies and industry associations, including the Uganda Manufacturers Association, Uganda Small Scale Industries Association, Makerere University, Uganda Industrial Research Institute and Kyambogo University.
Excellent venue in Kampala Set to be held at the perfectly-located UMA Multi-Purpose Hall in Lugogo, Kampala, it will showcase technologies from more than 50 local, regional and international companies from Kenya, South Africa, Europe and Asia. At the Expo Hall, delegates will have the unique opportunity to network and trade with some of the region's key decision makers in the private sector, Government, NGOs and other stakeholders. More than 3,000 delegates and visitors from across Uganda and the Great Lakes region - comprising of Rwanda, Burundi, Strong speaker and panelist profiles DRC, South Sudan and northern Tanzania A number of industry leaders, Government and beyong - are expected to grace the policy makers and other vital contributors event, where there will also be a high-level to the growth of the food industry in conference addressed by some of the most Uganda and the Great Lakes Region, important industry leaders, consultants and consultants and suppliers have confirmed academicians. their participation as speakers and panelists "We have always wanted to host this at this year's event, to contribute to the event in Uganda, where we have witnessed growth of the food industry in the region. the fantastic growth of the food industry in general over the years. The Covid-19 outbreak, sadly, stopped us in our tracks, You can sign up to attend this edition of the event at www.afmass.com/uganda2020
AFMASS
FOOD EXPO UGANDA EDITION
NOVEMBER 12-14, 2020
UMA MULTI-PURPOSE HALL, LUGOGO, KAMPALA, UGANDA
Uganda & Great Lakes Region’s Largest Food, Beverage & Milling Industry Conference & Expo
REGISTRATION OPEN.
FOR REGISTRATION, SPONSORSHIP EXHIBITION OPPORTUNITIES,
CONTACT: INFO@FWAFRICA.NET OR CALL: +254 725 34 39 32
WWW.AFMASS.COM/UGANDA2020
NEW DATES
CONTENTS ON THE COVER
Food Business
COUNTRY FOCUS: FOOD INDUSTRY IN UGANDA
COVER STORY - COVID-19 PANDEMIC
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AFRICA’S NO.1 FOOD, BEVERAGE & MILLING INDUSTRY MAGAZINE
COVER STORY
COVID-19 ITS IMPACT, HOW TO MANAGE & HOW THE FOOD INDUSTRY HAS RESPONDED IN AFRICA
COUNTRY FOCUS
FOOD INDUSTRY IN UGANDA
COVER STORY
MAKERERE UNIVERSITY FOOD TECHNOLOGY & BUSINESS INCUBATION CENTRE INNOVATION CENTRE TO NURTURE UGANDA’S NEXT FOOD ENTREPRENEURS
A FOCUS ON UGANDA’S FOOD, BEVERAGE AND MILLING INDUSTRY WWW.FOODBUSINESSAFRICA.COM
The Covid-19 makes it to the cover of the magazine as we feature a number of articles on how it has impacted the food industry and to manage during and after the crisis.
YEAR 8 | NO. 40 | MARCH/APRIL 2020
www.foodbusinessafrica.com
COVER STORY: MAKERERE UNIVERSITY FOOD TECHNOLOGY & BUSINESS INCUBATION CENTRE 43
REGULARS 6 Editorial 8 What they said 8 Events Calendar 16 African & International News 29 Sustainability Business Africa News 78 Supplier news & Innovations
DAIRY BUSINESS AFRICA 33 Health and pleasure focus for dairy as ice cream goes guilt free COVER STORY: COVID-19 AND FOOD SAFETY GUIDANCE FOR FOOD BUSINESSES 66
BEVERAGE TECH AFRICA 35 Hard Seltzer take US by storm, set for global growth MILLING & BAKING AFRICA 37 Fortification of industrially milled cereal grains FOOD NUTRITION AND HEALTH 39 Nutty nutrition with abundant benefits to human health 42 10 reasons why you should include pulses in your diet HOW CONSUMER GOODS COMPANIES CAN PREPARE FOR THE NEXT NORMAL AFTER COVID-19 PANDEMIC
THE EMERGENCE OF PLANT-BASED FOOD AND BEVERAGE INDUSTRY 48
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EDITORIAL
Covid-19 outbreak brings hygiene and food safety to the fore in Africa
It is unprecedented.
T
he Corona virus pandemic has changed the world in many ways. From disruption of farming operations, to closure of markets and retail shops to impacting the operations of the food industry in many African countries. This is not only unprecedented. It is beyond anybody’s comprehension or belief. No one saw that coming . . . and in the scale it did! The food industry supply chains are disrupted in ways that will take a long time to recover from, especially in the export markets that we have so gotten used to. One aspect of the industry which will change considerably is the way hygiene and food safety practices are adopted and enforced by the food industry supply chain players – manufacturers, farmers, transporters, hoteliers/food service operators or retailers. It is fair to say that the food industry in Africa
FWAfrica
FOODBUSINESSAFRICA.COM Year 8 | Issue 2 | No.40 • ISSN 2307-3535 FOUNDER & PUBLISHER Francis Juma EDITORIAL Clement Muriuki I Catherine Wanjiku ADVERTISING & SUBSCRIPTION Jonah Sambai | Hellen Mucheru CONTRIBUTORS Ronald Onsare | Virginia Nyoro DESIGN & LAYOUT Frank Bett
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MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
has had its fair share of poor hygiene and not-upto-par food safety practices that can barely pass an audit. The Covid-19 pandemic has shown that the industry must up its game in these two key related areas. After this pandemic, the industry must find ways to enforce hygiene and food safety throughout the supply chain to ensure that in case another one comes along in future, we are better prepared than we were this time round. With the food manufacturing sector coming into the limelight because of crowding, which has made social distancing measures impossible to enforce, and with cases rising in some of the world’s leading food companies – especially the meat industry in the US – the food industry post COVID-19 must look at better design of plants, improve employee welfare and facilities within the plants and put in place the right systems to manage such a pandemic in the future. There is a serious need to start thinking of the food industry of the future, considering the glaring gaps that have been exposed by this pandemic. The food industry is not alone. The airline industry is already talking about the changes that will be required to ensure safe flying post Covid-19. The food industry must prepare now or be caught unawares next time! In this issue, we review the investments opportunities in Uganda’s food, beverage and milling industry, in one of the most exciting countries in Africa. We also have a number of articles related to the Corona outbreak and how to manage after the crisis, plus articles on nuts, plant-based food and market trends in the industry. FBA
INFORMING AFRICA’S BUSINESS GROWTH
FW Africa P.O Box 1874-00621, Nairobi Kenya Tel: +254 20 8155022, +254725 343932 Email: info@fwafrica.net Company Website: www.fwafrica.net RELATED PUBLICATION
AFRICA Inc.
Have a good read Food Business Africa (ISSN 2307-3535) is published 6 times a year by FoodWorld Media Ltd. The magazine is distributed for free to food, beverage, milling and foodservice companies and Government regulatory agencies in Africa. The magazine is available through paid subscription for the other stakeholders in the food chain, including suppliers to the sector. Copyright 2020. 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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WHAT THEY SAID “This investment affirms Tomra Food’s wholehearted and long-term commitment to South Africa, Kenya and Tanzania. These are growing markets that we take very seriously.” Albert du Preez, Senior Vice-President at Norwegian multinational corporation and provider of equipment to the food industry Tomra, indicated during the launch of new regional headquarters in Johannesburg, South Africa. “Our system is committed to contributing more than $100 million and is focused on community relief programs, medical supplies, and equipment during the outbreak phase, as well as on developing other actions for the recovery phase in markets hit hardest by the pandemic.” James Quincey, Chairman and CEO of The Coca-Cola Company highlighting the beverage giant’s commitments to support relief efforts in markets impacted by the Covid-19 across the globe. “Now, more than ever, we need to support African agrifood entrepreneurs and the small and medium agribusinesses on the continent. They are the people who produce food and get it to the people who need it. They will be the people who help to rebuild our economies after the pandemic is over.” Svein Tore Holsether, President and CEO of Yara International, during the launch of the second annual US$100,000 GoGettaz Agripreneur Prize to strengthen the ecosystem for youth entrepreneurs in the agri-food sector in Africa. “The typical customer wants to meet all their basket requirements in a single location and in order to facilitate customers so that they do not feel they have to move elsewhere for these purchases. We took the decision to set up and run the shops ourselves.” Willy Kimani, the Chief Commercial Officer of Naivas remarks on the retailer’s diversification into selling alcohol, joining French giant, Carrefour and South African retailer Shoprite who sell beer, whisky and wines in their outlets. “We believe in developing robust, sustainable and inclusive value chains and are positive about our partnership with FtMA and WFP, the farmers will get production support in the form of seeds, training materials and agronomic extension services which will in turn help to raise sorghum production.” Philip Redman, the managing Director of Tanzania Breweries commenting on the partnership with the Farm to Market Alliance (FtMA) and the World Food Programme (WFP) to support smallholder sorghum farming in Tanzania. “Our food supply system will remain functional during this period. Agricultural production in all its forms will remain uncompromised.” South Africa’s Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza announcing a US$68.4 million financial package to address effects of the coronavirus and ensure sustainable food production after the pandemic
“Our new partnership with IDH will increase the capacity of farmers to produce high-quality crops that will enhance local supply and help develop local economies – this is all part of our commitment to improving 30 million livelihoods in communities directly connected to our business activities.” Rémy Ejel, CEO of Nestlé Central and West Africa on Nestlé’s partnership with IDH Sustainable Trade Initiative to support farming communities and local sourcing practices in West and Central Africa. “FES is a world-class operation in a developing country. This investment is fully in line with Norfund’s mandate to support economic growth and development impact in these countries.” Said Olav Akrawi, Senior Associate – Scalable Enterprises at Norfund after acquiring Southern African integrated agricultural solutions provider, Farming and Engineering Services Limited (FES). “We are encouraged by the growth factors that we see in the food brand sector in Asia, which we believe offers attractive and defensive qualities in the current environment with consumers increasingly seeking access to trusted quality food products.” Mohammed Alardhi, Executive Chairman of Investcorp after raising US$275 million for its Asia food brands private equity platform that the investment firm jointly runs with its Chinese partners. “Maxim Agri Limited with the help of Cargill will provide Kenyan’s farmers with the highest-quality animal nutrition products which are specially formulated to meet the local market needs.” Pakistan-based Maxim Agri said in a statement following a partnership with Cargill to distribute in animal products in Kenya. Maxim has agreed put up an animal feed plant worth US$10 million in Kenya. "This pandemic is threatening the gains we have made in reducing poverty over the past years. To avoid serious disruption to rural economies, it is essential to ensure agriculture, food chains, markets and trade continue to function.” Gilbert F. Houngbo, President of IFAD during the launch of the COVID-19 Rural Poor Stimulus Facility targeting seeking raise at least US$200 million to avert rural food crisis in the wake of COVID-19. “We have so far acquired a 100-hectare land in Missenyi District. The project would include rearing dairy cows and fish farming. It will also create employment for youths. We are doing this basically to support the government efforts in building an industrial economy.” Kaderes Managing Director, Leonard Kachebonaho, on the company’s plan to invest US$10 million in a diary and aquaculture project in Missenyi Ditsrict, North Tanzania.
EVENTS CALENDAR May 16-19, 2020
November 3-5, 2020
American Food Fair Chicago, USA Focus: Food & Beverages www.tradefairdates.com
Gulfood Manufacturing Dubai, UAE Focus: Food & Beverage www.gulffoodmanufacturing.com
June 28-30, 2020
November 8-11, 2020
Food Ingredients China Shanghai, China Focus: Food & Beverages en.fic.cfaa.cn
Pack Expo International Chicago, USA Focus: Food & Beverage packaging www.packexpointernational.com
September 22-24, 2020 PackTech & FoodTech Auckland, New Zealand Focus: Food processing tech www.foodtechpacktech.co.nz
September 15-18, 2020 Seoul Food Kintex, South Korea Focus: Food & Beverage www.seoulfood.or.kr
October 25-28, 2020 IOAM MEA Conference & Expo Oman Focus: Milling www.iaom-mea.com
October 11-13, 2020 Africa Food Manufacturing Cairo, Egypt Focus: Food Processing & Packaging www.africa-foodmanufacturing.com
Focus: Food & Beverage www.fhafnb.com
November 12-14, 2020 AFMASS FOOD EXPO Uganda Kampala, Uganda Focus: Food, Beverage & Milling www.afmass.com
February 25-March 3, 2021 Interpack Expo Düsseldorf, Germany Focus: Processing & Packaging www.interpack.com
March 2-5, 2021 FHA Singapore Expo Singapore, Asia
October 7-9, 2020 Africa Dairy & Drinks Innovation Summit & Expo Nairobi, Kenya Focus: Dairy & Beverages www.afmass.com/dairydrink Africa Food Safety & Quality Summit
Africa Food Industry Excellence Awards Kampala, Uganda Focus: Food, Beverage & Milling www.awards.foodbusinessafrica.com
Gulfood Dubai, UAE Focus: Food & Beverage www.gulfood.com
Food Expo Greece Athens, Greece Focus: Food & Beverage www.foodexpo.gr/en
March 24-26, 2021
November 13, 2020
February 21-25, 2021
March 6-8, 2021
Nairobi, Kenya Focus: Food Safety www.foodsafetyafrica.net
March 9-21, 2020 Foodex Japan Chiba, Japan Focus: Food & Beverage www.jma.or.jp/foodex
April 13–15, 2021 ProFoodTech Chicago, USA Focus: Food & Beverage www.profoodtech.com
May 24-27, 2021 Sweets & Snacks Expo Chicago, USA Focus: Confectioneries & Snacks www.sweetsandsnacks.com
Advertise in Food Business Africa magazine and website. Reach the Key Decision Makers in Africa’s Food, Beverage & Milling Industry. Build confidence in your company and brand, and stand tall in a crowded market place. Be associated with the premier industry magazine read by those who keep the wheels of Africa’s food industry moving.
Talk to us at info@fwafrica.net today.
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JOIN US AT AFRICA'S FOOD, BEVERAGE & MILLING INDUSTRY START-UPS HUB
Start-ups and young businesses in sub-Saharan Africa face a myriad of challenges, including lack of access to technology, expertise and networks to grow. At The Nest Africa, we are creating a collaborative facility with new product development labs, production and packaging kitchens and office space for use by young companies in the region to facilitate their innovations and growth towards becoming the next big thing. SIGN UP TO SPONSOR OR BE A MEMBER ON OUR JOURNEY TO REVOLUTIONISE AFRICA'S FOOD, BEVERAGE & MILLING INDUSTRY! Visit the website today.
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EVENTS PREVIEW
Africa’s industryfocused food safety and quality summit posponed to March 2021 and stakeholders to discover the latest trends in science and technology, regulatory policy, standards, compliance, operations and sustainable adoption of safe and efficient safety, quality and management practices in the entire agriculture and food value chain in Africa. Food safety challenges weigh heavily on Africa, negatively impacting consumer health, business performance and regional and international trade. From incidents related to Aflatoxins frica’s first industry- contamination, food poisoning, focused, regular food safety heavy metals contamination, to Summit is slated for March emerging issues including new 2021, as African countries grapple bacteria, toxins and antibiotic with food safety challenges and resistance, the Continent is consumer interest in the subject disproportionately affected by rises exponentially. food safety challenges. The Africa Food Safety & There is an urgent need to Quality Summit is planned to find new ways and technologies be the Africa’s only regular food to protect Africa’s consumer due safety, regulatory policy, quality to changes in consumer habits, and laboratory management a rapidly globalising food supply conference and exhibition. chain, changes in testing protocols It will be held at the Nairobi for diagnosing food borne illnesses Hospital Conference Centre in and challenges with regulating Nairobi, Kenya with delegates and policing food systems in the already signed up from across region. Africa, indicating the growing importance Africa has taken food Attendees from food companies, safety matters. Govt. agencies and more The Summit brings together Over 1,000 delegates from regional and global experts Africa and across the World
A
are expected to grace the 2021 edition of the Summit to discover the latest trends, opportunities and challenges and learn how to improve systems and reduce risks. With delegates from the food, animal feed and pharmaceutical manufacturing, retailing and distribution; hospitality, restaurants and catering; healthcare and other institutions managers; Government ministries and regulatory agencies; agriculture and agribusiness; academicians and researchers, the high-level conference is the best platform for you discover the latest trends and technologies that resonate with the growing industry in Africa. Excellent venue The 2021 edition of the Summit takes will take place at the magnificent Nairobi Hospital Conference Centre, with plans to have the Summit hosted across Africa in subsequent years. Located in the Upper Hill district of Nairobi, Kenya, this is an outstanding venue with some of the most modern conference facilities, with easy access to the rest of the city and within reach to shopping and leisure locations, which are located within walking distance from the venue.
HOW TO SIGN UP
Registrations are open for the Africa Food Safety & Quality Summit, with Early Bird rate of US$250 per delegate (university students US$149 per delegate), for payments received by February 1, 2021. The registration fee covers 3 days of conference attendance, drinks and meals, a cocktail, a dinner, a certificate of attendance and other unique benefits. More information about the event and registration details can be found at
www.foodsafetyafrica.net
12 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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EARLY BIRD /Person $400
$250
Regular Delegate Rate $400
$149/
Person
Student Delegate Rate Group Rates Available >3 delegates = 10% off >5 delegates = 15% off
Today’s Challenges . Tomorrow’s Solutions . One Safe Africa NEW DATES
MARCH 24-26, 2021 • NAIROBI HOSPITAL CONFERENCE CENTRE, NAIROBI, KENYA
Africa's Food Safety, Regulatory, Quality & Laboratory Management Conference & Expo
Join over 1000 food and agro industry leaders, Government regulators, NGOs and development organisations at this Africa-wide, industry-focused food safety, quality, regulatory and laboratory management conference and expo. Meet and network with delegates from the food, animal feed and pharmaceutical manufacturing; hospitality, restaurants and catering; healthcare and other institutions; Government ministries and regulatory agencies; agriculture and agribusiness; academics and research institutions as you discover the latest trends, opportunities and challenges and learn how to improve systems and reduce risks in the food safety landscape in Africa. For more info on participation, exhibition and sponsorship: +254 725 343 932 Email: info@fwafrica.net FOODBUSINESSAFRICA.COM
www.foodsafetyafrica.net MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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EVENTS PREVIEW
AFRICA
Dairy&Drink INNOVATIONS SUMMIT & EXPO
SUSTAINABILITY • TECHNOLOGY • INNOVATIONS
and innovative industry in the Continent.
T
he dairy, soft and alcoholic beverages sectors in SubSaharan Africa has a new high-level event to look forward to, with the planned Africa Dairy & Drinks Innovations Summit, which is set to take place in Kenya this year. The regional Summit, which is scheduled to take place on March 10-12, 2021 at Safari Park Hotel in Nairobi, Kenya will bring together the key decision makers in the dairy and drink sector in Africa to discover new ways towards a more sustainable, efficient
High level platform The Summit is a high level platform for world-class education, capacity building and networking with a focus on the technical/scientific, nutrition/health, new product development and marketing aspects of the dairy, soft drinks and alcoholic beverage sectors. At the base of all discussions, will be how sustainability, be it in sourcing of raw materials; processing and packaging technology; and utilization of resources can be mainstreamed across the industry in Africa. Leading decision makers from big multinationals, medium scale processors and start-ups from across the processing, packaging, engineering, sustainability, QA/R&D, marketing/brand management functions of the industry are expected to attend, with registrations already received from delegates in Nigeria, Zambia, Kenya and Uganda. More registrations from across Africa are expected in the coming months. The Summit will consist of two days of high-impact conference sessions, where the latest sustainability, market trends, investment opportunities,
First regional sustainable dairy and drink innovations forum postponed to October this year technology and quality management fundamentals will be discussed. On the third day, the delegates will take the opportunity to see first-hand the applications of various technologies and ideas when they shall take a tour of a number of companies near Nairobi. A number of leading providers of processing and filling equipment, ingredients, engineering and automation, food safety and supply chain solutions will be showcased – enabling the delegates to have first-hand networking and discovery opportunities for the latest technologies they can utilize in their own operations. “The dairy and drink industries in Africa are some of the most vibrant, with a surge in investments and new product innovations. But, they are also the sectors where the opportunity for disruption, new investments and new ways of innovation lie. This Summit will bring experts and industry veterans who will dissect some of the new technologies and ideas that will propel the dairy and drink industry to meet the ever changing needs of the consumer in Africa – who are yearning for more trendy but sustainable solutions from the industry,” explains Francis Juma, the team leader for FW Africa Conferences & Events, the organisers of the Forum.
HOW TO REGISTER Delegates from the manufacturing and retail sector in Africa have been offered a discounted rate of KSH 9900 (inclusive of VAT) or US$99 per delegate (Early Bird rate ends February 1, 2020) to attend the Summit & Expo, with further savings being passed on for more than 3 delegates (10% off) and above 5 delegates (15% off). Delegates from non-exhibiting supplier companies will part with US$599 to access the Summit.
More information about the event and registration details can be found at
www.afmass.com/dairydrink 14 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
FOODBUSINESSAFRICA.COM
AFRICA
Dairy&Drink INNOVATIONS SUMMIT & EXPO
EARLY BIRD
Regular Delegate Rate $149
$99/
Person
Supplier Delegate Rate
$599/
Person
Group Rates Available >3 delegates = 10% off >5 delegates = 15% off
SUSTAINABILITY • TECHNOLOGY • INNOVATIONS
OCTOBER 7-9, 2020 | NAIROBI, KENYA
NEW DATES
HOW CAN AFRICA’S DAIRY, SOFT & ALCOHOLIC DRINK INDUSTRIES BE MORE SUSTAINABLE, EFFICIENT AND MORE INNOVATIVE?
INNOVATIONS MANAGEMENT
MAINSTREAMING SUSTAINABILITY
LATEST TECHNOLOGIES
SIGN UP TODAY TO SPONSOR, EXHIBIT OR ATTEND:
Contact: +254 725 343 932 ; info@fwafrica.net
www.afmass.com/dairydrink
QUALITY & FOOD SAFETY
UPDATES INVESTMENT
M&A
Tanzanian company to Ingredion to acquire controlling stake in stevia sweeteners undertake US$10.3m dairy producer PureCircle and aquaculture project USA – American-based ingredient innovation and manufacturing
TANZANIA – Karagwe Development Public Company Limited in Tanzania is set to establish a dairy and aquaculture project in Missenyi Ditsrict, North Tanzania by investing up to TZS24 billion (US$10.3m). The company’s Managing Director, Leonard Kachebonaho revealed that the company is in discussions with experts from Israel for the implementation of the project, which is expected to kick off next year. “We have so far acquired a 100-hectare land in Missenyi District. The project would include rearing dairy cows and fish farming. It will also create employment for youths. We are doing this basically to support the government efforts in building an industrial economy,” he said. In other related news, a stateof-the-art cassava processing factory is set to be established in Dodoma by Indian investor, Dr Ramani Veerappan of the KAK High Tech Agricultural Limited Company. Targeted to produce cassava starch and animal feeds, the projected will occupy a total of 100 acres of land in addition to the establishment of a major cassava plantation to the tune of 1000 acres. The investment is expected to play a major role in stimulating cultivation of cassava in the region as farmers will have an assured market for their produced by enter into contract farming with the company.
solutions provider, Ingredion has reached an agreement to acquire a controlling 75% stake in PureCircle, one of the leading producers and innovators of stevia sweeteners for the global food and beverage industries. The deal is expected to boost Ingredion’s investments in the sweeteners industry. Sugar reduction is one of Ingredion’s five specialties growth platforms that the company has committed to invest in its growth, of which stevia is a core product for the sugar reduction portfolio. Ingredion said that it has followed the development of PureCircle for several years and believes that it is a fundamentally strong and attractive business that will be a great fit with Ingredion’s long-term strategy, given PureCircle’s leadership position in this space. Beyond its leadership in the market, the company said that PureCircle brings unrivalled
16 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
expertise related to stevia. PureCircle has significantly invested in advanced plant breeding as well as R&D and innovation, which has seen the company obtain over 214 steviarelated patents with more than 300 applied for patents pending. The company has also made expansions and investments in new manufacturing technologies, including the latest expansion of its Malaysian stevia extract facility in 2017. Upon completion of the transaction, both companies are expected to build on these strengths while leveraging on Ingredion’s global go to market network and capabilities to drive growth synergies. The companies did not reveal the financial details of the proposed acquisition but said that the deal has been approved by the boards of both companies. The transaction is expected to close during the second half of 2020.
M&A
Nampak finalizes sale of its glass business to Isanti Glass 1 SOUTH AFRICA – Africa’s largest diversified packaging manufacturer, Nampak has announced the completion of sale of its glass packaging business, Nampak Glass, after having announced its intention to sell in September 2019 Nampak Glass, which manufactures beer, spirit and wine, water and juice bottles, as well as food jars to is being sold to Isanti Glass 1, a local subsidiary of beer maker AB InBev for about R1.5 billion (US$81.3m). “The proceeds were received in cash on 31 March 2020,” the company said in an update to shareholders. Nampak previously said the payment would consist of R992 million (US$53.7m) for the
property, plant and equipment of Nampak glass, plus the value attributable to the agreed levels of net working capital of the business at the closing date, which was estimated to be R500 million (US$27.1m). The Competition Tribunal of South Africa approved the sale of the business in February. For Nampak, the sale was earmarked to improve the company’s gearing by reducing its debt levels and enable it to focus on the metals business, which generates more than 60% of the company’s trading profit. The glass business is one of two primary glass container manufacturers in South Africa, servicing beverage and food manufacturers, with an estimated market share of 25%. FOODBUSINESSAFRICA.COM
M&A
Pernod Ricard acquires full ownership of dry gin brand Monkey 47
FRANCE – Wines and spirits giant, Pernod Ricard has acquired the remaining stake in dry gin brand Monkey 47 in a transaction that makes the French beverage company the exclusive owner of the brand. Pernod Ricard initially acquired a majority stake in Monkey 47 in 2016. The French wine and spirits company made its initial investment in the brand through an agreement with German company, Black Forest Distillers as part of the company’s expansion plan into the fast growing super premium gin category. Monkey 47 gin, which was created more than 60 years ago, has enjoyed growth at a global scale and is currently available in over 50 countries on four continents. The company said that the brand’s founder Alexander Stein will remain involved in the brand’s ongoing development “The agreement is the logical consequence of the brand´s progress following the partnership with Pernod Ricard,” Stein said. “I would like to thank Pernod Ricard for walking the talk. It has been a fantastic journey and I look forward to personally contributing to Monkey 47’s future trajectory.” The deal further enables the Seagram’s and Beefeater brands owner, to augment its position in the global gin market, which is poised to grow by US$3.71 billion during 2020-2024, progressing at a CAGR of 5% during the forecast period, according to a Research and Markets projections. Pernod Ricard is already a major competitor in the category which counts of other globally renowned distillers such as Asahi Group, Bacardi, Berry Bros. & Rudd, Davide Campari – Milano Spa, Diageo, Remy Cointreau, San Miguel, Suntory and William Grant & Sons among others.
INVESTMENT
Kaap Agri invests US$8.62m in plastics subsidiary to bolster its manufacturing capabilities SOUTH AFRICA – Kaap Agri, a South African group trading in agricultural, fuel and related retail markets, has made its first major investment of more than R150million (US$8.62m) to further bolster its manufacturing capabilities. The investment entails the establishment of Tego Plastics, a new subsidiary of the Kaap Agri Group, based in Brackenfell, Cape Town, which will be making large format, injection-moulded plastic products. Set to provide 33 new job opportunities at the facility, Tego Plastics will initially produce food grade bulk bins for the agricultural market, with the opportunity to manufacture additional solid form
products at a later stage. The Tego Bulk Bin is used in the harvesting and post-harvesting processes of fresh fruit and vegetables and are essential to the pome, citrus and stone fruit sectors. Kaap Agri chief executive Sean Walsh said the launch of Tego Plastics was in line with the group’s strategy to diversify its manufactured product range and to offer more value to its agricultural customer base. “With limited availability of new bins and product options it was clear to us that we could help address challenges that producers face with the storage and transportation of fresh produce,” he said.
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REGULATORY
Kenya imposes 10% import levy on dairy products to boost local industry
KENYA – Kenya has imposed a 10% import levy on dairy products, a move that seeks to cushion the local dairy farmers from unfair competition brought about by unregulated imports. Earlier this year, a mini trade war erupted between Kenya and Uganda, after milk imports from the latter were impounded at the border on claims that the products
had been illegally imported in the country, leading to a temporary ban on the importation. This was followed by the Kenyan government resolving to impose 16% value added tax (VAT) on milk imports from Uganda in January after a bilateral meeting between trade officials from the two countries. To further protect the
local industry, the Ministry of Agriculture has published the dairy industry regulations that have introduced other stringent conditions where milk processors in Kenya will no longer set and adjust farm gate prices at will. The regulations are a departure from the controversial draft published last year, which was shelved after farmers termed it punitive and draconian. According to the new regulations, the Agriculture cabinet secretary in consultation with the Kenya Dairy Board will determine the minimum farmgate prices based on factors such as cost of production, transport and statutory deductions. Even though Kenya has about 40 milk processors, the top three—Brookside, New KCC and Githunguri Dairy—control about 80 per cent of the formal milk industry.
PARTNERSHIP
Danone partner impact fund manager to invest in water businesses across Africa, Asia investors to invest in innovative water businesses that provide affordable and safe drinking water to underserved populations to catalyse further growth for the entire water sector. Some of the targeted water businesses include decentralized solutions such as water kiosks, which deliver safely treated drinking water in gallons to the home or to the local store. The investments will also be made in water pipes and water technologies. Loïc De Cannière, Founder AFRICA – Danone, the French and Managing Partner Incofin multinational food-products IM stated that, “We see a vast corporation has partnered with amount of young emerging water Incofin IM, leading international companies in Africa and Asia. impact fund manager to jointly But the capital needs of these invest in businesses providing companies are relatively high.” access to clean water in Africa By investing in these companies and Asia. and offering technical assistance, The partnership will entail Danone and Incofin are pioneering pooling capital from major an investment approach in 18 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
the water sector – building on Danone Communities’ experience investing in safe water enterprises since 2007. “We are convinced that our participations in the young water sector will allow us to build a strong, overarching partnership. Just as with the investments in our microfinance portfolio, we want to be a co-pilot for the entrepreneurs in which we invest,” Loïc De Cannière. The investment initiative is expected to help social entrepreneurs scale their impact with all necessary resources. The joint initiative comes at an opportune time. According to the UN, 3 out of 10 people do not have access to safe drinking water, while inadequate or unreliable access to safe water is a harsh reality, especially in large parts of Africa and Asia. FOODBUSINESSAFRICA.COM
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PEOPLE
TECHNOLOGY
Nestlé expands blockchain technology to Zoégas coffee brand
PZ Cussons Nigeria appoints new CEO, sells its Nigerian dairy business to FrieslandCampina NIGERIA – PZ Cussons Nigeria Plc, a subsidiary of UK-based PZ Cussons Holdings has announced the appointment of Panagiotis Katsis as the company’s new CEO, effective July 1, 2020. Panagiotis will replace the current CEO, Christos Giannopoulos who will be retiring from the company with effect from June 30, 2020 after serving in the position for about 11 years. Katsis, joined the PZ Cussons Group in 1998 and has worked in a variety of senior roles at the company which includes but not limited to General Manager Commercial and Deputy Managing Director, PZ Cussons Nigeria Plc. He has been the Managing Director, HPZ/TEC since 2018. The appointment comes at a time when the consumer goods manufacturer has reached an agreement to divest its Nigerian dairy business, Nutricima to Holland’s Royal FrieslandCampina Nigerian subsidiary, for an undisclosed sum. Nutricima manufactures and distributes beverages in Africa. Its product portfolio includes milk and yoghurt-based drinks such as Nunu, Yo, and Olympic. Under Nunu brand, the company offers a wide range of powdered, evaporated and ready-to-drink (RTD) milk beverages, while under Yo brand the company offers yoghurt drinks, as well as an RTD yoghurt range. PZ Cussons executive chair Caroline Silver said that the proposed sale of Nutricima is a further step towards the company’s ‘Focus, Scale and Accelerate’ strategy, which seeks to streamline the Group to focus its investments to core personal care and beauty brands. “This will enable us to deliver highermargin earnings, in geographies which can scale, and support the return of the Group to sustainable, profitable growth.”
SWITZERLAND – Nestlé has expanded the use of the IBM Food Trust blockchain technology platform to its Zoégas coffee brand, enabling consumers to trace the coffee back to the different origins. The expansion follows the launch of select editions of Zoégas whole beans and roast & ground coffee in Sweden tagged the ‘Summer 2020’ range, which the Nestle says is a 100% Rainforest Alliance certified blend of Arabica coffee beans from three origins – Brazil, Rwanda and Colombia, and consumers can are now able to trace the coffee back to the origin, thanks to the blockchain technology. To effect the traceability technology, Nestlé has partnered
with The Rainforest Alliance to independently provide reliable data beyond what is usually disclosed by the company. “The Rainforest Alliance provides their own certification information, guarantying the traceability of the coffee. This information is directly accessible to everyone with the IBM Food Trust blockchain platform. Through blockchainrecorded data, coffee lovers will now be able to trace their coffee back to the different origins,” the company explains. By scanning the QR code on the packaging, Nestlé said that consumers can follow the coffee journey from the growing locations to the Zoégas factory in Helsingborg where the beans are roasted, grounded and packed. The data includes information about farmers, time of harvest, transaction certificate for the specific shipments, as well as roasting period. Nestlé started using blockchain in 2017 when it joined the IBM Food Trust as a founding member. The IBM Food Trust aims at reinforcing traceability of food products.
OPERATIONAL EXCELLENCE
Chinese brewing giant Tsingtao Brewery taps software firm to drive its innovations CHINA – Tsingtao Brewery, China’s second-largest brewer has partnered with Nutanix to help streamline its management operations and increase its focus on infrastructure modernization to evolve customer experience. Through the partnership, Tsingtao Brewery will leverage Nutanix’s cloud software and hyperconverged infrastructure solutions to enhance reliability of mission critical systems for the company’s more than 60 breweries across the country. China is home to the world’s largest beer market by volume and is the center of intense competition locally and globally. Xu Haiqing,
20 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
Head of Information Management Department at Tsingtao Brewery says that to face this competition, companies should focus on innovation to meet consumer demands. “As a global leader in the beer industry, we have placed great emphasis on modern IT infrastructure. We now have an advanced IT platform that provides the confidence and assurance to match our ambitions,” he said. In an on-going effort to improve product quality, service and management, and create more value for consumers, Tsingtao launched an initiative to upgrade its core business operations and support an intelligent retail model. FOODBUSINESSAFRICA.COM
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FUNDING
Twiga Foods secures US$5m financing from American development bank
KENYA – Twiga Foods, a Kenyan online B2B food distribution platform has received a US$5 million loan from the United States International Development Finance Corporation (DFC) to improve food security in Kenya. The investment from DFC seeks to empower smallholder farmers and urban produce vendors, especially women to have access to markets and also to improve the agricultural supply chain with cold storage, by enabling Twiga Foods
to buy additional transportation and cold storage equipment. DFC’s investment in Twiga supports its 2X Women’s Initiative by empowering a network of mostly female produce vendors to increase sales and profits. The initiative has already catalyzed more than US$1 billion to economically empower women across the developing world. “Twiga is advancing an innovative solution to create economic opportunity particularly for women, while ensuring dependable and affordable sources of food across Kenya,” said DFC Managing Director of Global Women’s Issues Charity Wallace. “DFC is proud to support this project, which will help strengthen food security and unlock untapped economic potential across Kenya,” she added.
Twiga operates collection centres across Kenya, and also a central packhouse with cold storage facilities. It owns a fleet of mobilized trucks and vans for collection and distribution of produce, thus creating an efficient logistics system that limits its postharvest losses to 5%, compared to 30% at informal markets. It’s main objective is to link farmers and vendors to fair, trusted, modern markets by providing a complete supply chain in Kenya for quality produce in urban areas. The financing comes months after Goldman Sachs, American multinational investment bank acquired a stake in the food distribution platform in October last year, following a KSh 2.44 billion (US$23.75 million) deal aimed to widen its footprint in Kenya and Africa.
AGRICULTURE
Zimbabwe’s winter wheat production receives US$7.57m financial boost tonnes is expected, surpassing the required 400,000 metric tonnes achieved annually. The government plans to increase the planted area to 80,000 ha (from last year’s 74,184 ha) with CBZ farming 65,000 ha whilst the private sector 15,000 ha. The country is also expected to record wheat reserves for the first time in decades if the programme is well undertaken. Zimbabwe has had to import wheat from neighbouring countries following almost two decades of poor yields due to several challenges ZIMBABWE – The Commercial that included lack of funding by Bank of Zimbabwe (CBZ) and commercial banks and electricity private partners in the country will shortages among others. this year fund the winter wheat However, the sector has production under contract farming received some relief. Chiwenga, by the government to the tune of who chairs the Food and Nutrition ZWD 2.74 billion (US$7.57m). Committee, revealed that the According to Vice President Cabinet has approved a preConstantino Chiwenga, an planting winter wheat producer increased yield of 415,000 metric price pegged at ZWD14, 143 22 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
(US$39) per metric tonne. Despite the producer price being subject to review in line with changes in input prices using a cost plus 20% margin price, the move is aimed at ensuring prices remain attractive. Chiwenga added that electricity would be uninterrupted at wheat clusters from April to September, with an added 55% tariff of commercial rates. The farming season will not be affected by the poor rains as all winter wheat cluster dams are almost full at 68%, Lands minister Perrance Shiri highlighted. Other initiatives by CBZ aimed at boosting agricultural production includes the rolling out a US$50 million bond to finance the 2019/20 agriculture season to finance the importation of farming inputs specifically for maize and soya beans as part of efforts to improve production of the two essential food crops. FOODBUSINESSAFRICA.COM
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M&A
East African Breweries to raise stake in Serengeti Breweries by 30% million (US$2.9m) last July to acquire 4% additional stake in Serengeti. “EABL intends to enter into a conditional transaction to purchase an additional 30 percent shareholding in Serengeti Breweries. Completion of the transaction is subject to various regulatory approvals in Kenya and Tanzania,” EABL said in a cautionary statement to shareholders. In the year ended June 2018, EABL announced the conversation of Sh15.3 billion (US$147.2m) loans receivable from Serengeti EAST AFRICA – East African into equity sought to ease the Breweries Limited (EABL) is set to Tanzanian brewer’s debt burden. acquire an additional 30 percent This transaction increased stake in its Tanzanian subsidiary, EABL effective interest in Serengeti Serengeti Breweries Limited, in from 51% to 72.5%. However, a deal that will deepen its grip, Tanzanian authorities previously shortly after the firm spent Sh313 opposed EABL’s acquisition and
forced it to pay an unspecified fine to settle alleged flouting of takeover rules. This led to the agreement that the legal shareholding remains unchanged and that minority shareholders be using 50% of dividends declared to gradually pay off the EABL debt. The agreement was that upon repayment of the debt by Serengeti through dividends, the effective economic interest of EABL would revert back to the original 51% status. According to the brewer’s half year ended December financials, Serengeti is the group’s fastest growing business, expanded by 19%, it accounted for 12% of the total sales. Net sales from this unit rose 26% during this period, the fastest among the three units, driven by growing interest in Serengeti Lite among consumers.
M&A
Coca-Cola venture fund invests in Indonesian logistics startup Kargo Technologies
INDONESIA – Amatil X, the corporate venture capital platform of Coca-Cola Amatil Indonesia has made a strategic investment in Indonesian logistics startup, Kargo Technologies as part of the bottler’s broader strategy to digitize its operations. Kargo Technologies is a freight logistics startup that integrates shippers and logistics providers onto a single marketplace, aiming at digitizing Indonesia’s freight logistics industry by leveraging technology to drive efficiency, transparency and accountability. The startup has developed a platform that enables shippers, transporters and truckers to connect, transact and track shipments in real time through its website or app. The deal makes this Amatil X’s first startup 24 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
investment in Indonesia. The Coca-Cola bottler revealed that Kargo is currently fulfilling two of its key land transportation routes and expects this to increase over time as Kargo’s network expands. It said that investing in Kargo Technologies will enable the company to optimise its logistics capability by increasing productivity and efficiency on some of its key trucking routes. “Our investment in Kargo Technologies supports our ambition to be a leading player in the digital ecosystem here in Indonesia,” Coca-Cola Amatil Indonesia President Director, Kadir Gunduz said. He maintains that technology plays a crucial role in the company’s transformation journey, and especially so in the last decade. In achieving its commitment and targets, CocaCola Amatil Indonesia has invested heavily in state-of-the-art systems and technology to support its nation-wide operations and partnered with Indonesia’s leading technology providers. Gunduz said that the company is focusing on developing its people and embedding disruptive and breakthrough problem-solving culture, for example, through introducing Artificial Intelligence and Virtual Reality experience. “The new partnership will help us to extend our competitive advantage by improving the way we do business or the way we service our customers,” Gunduz added. FOODBUSINESSAFRICA.COM
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INVESTMENT
Alapala completes installation of a new flour mill in Morocco
MOROCCO – Alapala, one of the leading brands in flour milling equipment and mill projects has completed the installation of the newest flour mill reference at Flour Mills company in Morocco. Flour Mills is a family-owned company that is in a long time business partnership with Alapala. Currently it has a processing
capacity of 900-tonnes of wheat in two locations, with the new mill located in the El Jadida region. The new plant has a processing capacity of 300 tonnes per day, processing local semi-hard wheat and three different variants of bakery flour mainly for domestic consumption. Making it Alapala’s third turnkey flour mill project in Morocco, the new mill is installed in a sixfloor concrete building, which also is designed and constructed in conformity with high sanitation standards. It is equipped with the latest Alapala technology consisting of Similago II roller mills (DAVG), Quadro Plansifters with larger sieve boxes (GPAK) and control sifters (RKEM). An optical sorter
is also used in the plant for very fine cleaning of wheat before milling, to ensure the highest level of food safety is achieved. Alapala says that the plant operates efficiently with an advanced automation system, that allows the centralized monitoring and management of the complete cleaning, milling and packaging processes. The system enables generating detailed production reports, with also real-time error diagnosis and long-distance connection functions. The new project adds to Alapala’s over 650 references worldwide in 100 countries including Senegal, Zambia, Angola, Kenya, Tanzania, Mozambique and Ghana.
TRADE
COVID-19 crisis devastates African farmers as export markets shutter
AFRICA – Millions of family farmers across Africa are facing economic devastation as COVID-19 pandemic disrupts exports and global food supply chains. This is according to the Impact of Coronavirus on Africa’s Agriculture April 2020 report released by Selina Wamucii that gives a most-recent and groundup perspective on how the pandemic is affecting African farmers. Notably, the COVID-19 pandemic has unfortunately come at a time when farmers depend largely on exports to markets outside the continent and also before the commencement of trading under the African Continental Free Trade Area (AfCFTA)
that was scheduled to commence on July 1, 2020. According to John Oroko, CEO of Selina Wamucii, intra-Africa trade is around 2% while exports from Africa to the rest of the world range from 80% to 90% of total exports, of which a huge share is made up of agricultural produce. “COVID–19 is severely disrupting trade in key markets for Africa’s agricultural produce and African farmers are bound to experience a nightmare in export market access,” says Oroko. Morocco tops the list of African countries whose agricultural exports face the highest risk largely due to the country’s over-reliance on the European market given its close proximity and well-established traditional trading ties. Kenya’s agricultural exports also face a great risk mainly due to the over-reliance on fresh-cut flower exports, the bulk of which end up in the European Union and a substantial portion to China, which are markets that have already been shaken up. While the agricultural production in South Africa has not been adversely affected by the Coronavirus pandemic, logistics and border restrictions are likely to affect South Africa’s agricultural exports. Other African countries that will experience significant drops in the FFV, fish and seafood exports are, in order of the projected severity: Tunisia, Senegal, Cameroon, Uganda, Mauritania, Tanzania, and Egypt.
BUSINESS STRATEGY
Distell to consolidate core wine brands, offload some assets to balance books
SOUTH AFRICA – Africa’s leading spirits maker Distell has announced that it will consolidate its core wine brands and capabilities to focus on growth in mainstream and accessible premium segments and offload its struggling wine farms in a bid to improve financial performance. According to its five-year strategy, presented at its recent interim results presentation, the company plans a further focus on sustainable growth and returns, “leveraging core strengths and capabilities to drive, defend, and expand its markets on the African continent and select International markets.”
Distell has decided, after careful analysis that the Libertas Vineyards and Estates (LVE) business entity will reintegrate back into the company. It said that it foresees the Nederburg, Durbanville Hills and Pongrácz brands continuing to play a significant role in its wine portfolio, as will the Fleur du Cap, Zonnebloem and Chateau Libertas brands. Distell said it will also continue the process of selling certain assets. To utilise its strengths in the mainstream and accessible premium wine segments, the company says it will unlock value from certain assets on the balance sheet with Alto and Plaisir de Merle being put on the market. “These iconic, ultrapremium brands compete and focus in the superpremium categories and would be sold to owners more focussed in this segment, to make them thrive,” said Richard Rushton. The company says that managing its wine brands collectively will bring significant synergy to the business locally and internationally, further enhancing its ability to meet customer’s needs. Distell says it will continue to focus on scaling accessible premium and mainstream wines, which are key to profitability and returns. Therefore, it will continue to support and investment in the industry to ensure local and global success.
M&A
Tongaat Hulett offloads starch business for US$342.6m in debt recovery efforts
Tongaat Hulett is offloading its 100-year-old starch business to the subsidiary of logistics company Barloworld for R5.35billion (US$342.6m) in an effort to reduce its debt and cover on-going operations. This comes as the group resumed trading its shares in the JSE in February with the restatement of the group’s September 2018 results. Tongaat has issued a notice to shareholders indicating that the starch business would be sold to KLL Group, a wholly owned subsidiary of Barloworld. “Tongaat has undertaken to its funders to reduce its debt levels by R8.1bn (US$543.2m) by March 2021 in line with the debt reduction plan,” it said in a stock exchange announcement. “Management and
SOUTH AFRICA –
the board have initiated various processes, including implementing greater operational efficiencies to improve the group’s cash flow considering potential non-core and core asset disposals and considering potential equity capital raising initiatives.” The starch business, established in 1919, is one of the largest wet millers in sub-Saharan Africa and operates four plants in SA, producing modified and unmodified starch, as well as a powdered glucose and agri-products and a total installed capacity to process more than 850,000 tons of maize a year. Group chief executive Gavin Hudson said Tongaat had already met and exceeded the first debt repayment milestone agreed with its lenders. He said the group is considering a number of options for reducing its debt, apart from selling non-core and core assets. The other options include accelerating operational efficiencies, and a potential strategic equity capital raising initiative. “The sale of the starch business will allow us to make excellent progress on paying down our debt, and that in turn will give us breathing room and free us up to put measures in place to grow the business. The sale positions us for longer-term sustainability and value creation for our shareholders,” Hudson said.
M&A
Cairo Poultry approves sale of its stake in Egyptian Starch and Glucose Company to Cairo 3A EGYPT – The board of directors of Cairo Poultry Company, a subsidiary of the Americana Group, have approved the final offer submitted by Cairo 3A to acquire its stake in the Egyptian Starch and Glucose Company (ESGC). ESGC is a public traded company, whose major shareholders are the Americana Group, leading Restaurants & Foods Company in MENA and its subsidiaries. Cairo 3A, an integrated agri-commodity trader and manufacturer, had submitted its initial offer in February to the three major shareholders of ESCS to acquire the company’s 91.5% stake valued at between LE 450510 mn (US$28m – US$32m). The offer included acquiring Americana Egypt’s 11.6 million shares in the company, amounting to a 23.2% stake, Cairo Poultry’s 13.65 million shares amounting to 27.3% stake and Americana Group’s 41% stake in the company. Cairo Poultry has accepted to sell its 13.65 million shares and has further clarified that the final decision is still pending the approval of the ordinary general meeting (OGM) set to be held on May 5. ESGC provides a broad portfolio of products for customers in the confectionary, dairy, meat, and beverage industries, as well as non-food markets such as paper, textile, and board manufacturing, in addition to the ruminant feed market. They specialize in producing and marketing corn starch, glucose syrup, corn oil, gluten feed and meal.
28 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
M&A
Diageo injects US$48.7m for additional stake in India’s United Spirits Limited INDIA – Diageo has acquired additional shareholding in India’s leading liquor company United Spirits Limited (USL), in a transaction that increases Diageo’s stake in the company to 55.9%. Diageo paid US$48.72m to acquire additional 5,075,000 shares (approximately 0.70% shareholding) in the National Stock Exchange of India listed company at a per share price of INR693.25 (US$9.6). While Diageo first acquired a controlling stake in United Spirits in 2014 through a US$1.4 billion tender offer, the company has progressively increased its shareholding in United spirits over the years. In August last year, Diageo purchased a further 3,310,515 shares (approx. 0.46% shareholding) in United Spirits for about US$27 million. The London-based brewer says that United Spirits is a highly strategic asset for Diageo and positions the company well to
capitalise on opportunities within India, one of the most exciting growth markets in the world for total beverage alcohol, where during the first half of fiscal 2020, the “Prestige and Above” segment in India grew by 5%, driven by Johnnie Walker and Black & White. “India remains one of the most exciting growth markets in the world for total beverage alcohol. This transaction forms part of Diageo’s long-term strategy of premiumisation within the market,” Diageo said in a statement. The transaction comes at a time when United Spirits has reportedly proposed a merger with its majority owned and listed subsidiary Pioneer Distillers Limited. Headquartered in Bengaluru, USL employs more than 6,000 people and is represented in 81,000 outlets across India. It has over 88 manufacturing facilities across 23 states and three union territories in India, and exports its products to over 37 countries.
PRIVATE EQUITY
Investcorp closes US$275m Asia food brands private equity joint venture vehicle ASIA – Bahrain-headquartered global alternative investment manager, Investcorp has announced the first closing at US$275 million, of its Asia food brands private equity platform that the investment firm jointly runs with its Chinese partners. The platform, which was established in November last year by Investcorp, China Resources, one of the world’s largest owners and distributors of food brands in Greater China and Fung Strategic Holdings Limited, a member of Fung Investments, aims to invest US$500m in food brands and manufacturing sites in Asia. In the past several months,
Investcorp has seen strong interest in platforms of this type given the food sector’s traditionally defensive and resilient qualities especially in the current market landscape. With a potential of 120 million Chinese households set to become middle class consumers over the next decade, the investment firm believes that China can provide a significant surge in domestic consumption growth. China counts as the world’s largest and fastest-growing consumer market and it is poised for further growth as Chinese millennials spend more on premium and healthier brands. FOODBUSINESSAFRICA.COM
Sustainability
BUSINESS AFRICA
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RECYCLING PLANT
Global packaging giant DS Smith opens its first US recycling plant
USA – DS Smith has opened its first recycling facility in the United States located in Reading, Pennsylvania aimed at driving a circular economy and designed to eliminate waste and encourage sustainability. According to the company, the new 43,000-squarefoot plant utilizes the innovation and processes that have enabled DS Smith to globally manage more than 5.5 million tons of material for recycling annually. In addition to material from DS Smith’s Reading corrugated packaging plant, the local team will work
with others in the region to recover paper for recycling from local distribution centers, packaging facilities, retailers and print shops. DS Smith said that the facility, which is the latest expansion of its business operations in North America, creates a closed loop manufacturing model that enhances its customers’ sustainable packaging credentials. “This new plant can recycle over 36,000 tons of old corrugated cardboard each year, creating new fully recyclable packaging for our customers in this region,” said Toby Earnest, head of recycling for DS Smith in North America. “Our goal is to achieve zero cardboard and paper going to landfill after packaging is used.” The recycling plant has the capability to segregate other materials, such as plastic, glass and metal, compressing the remaining recyclable cardboard and paper into large bundled bales, as heavy as a ton each. DS Smith explains that the process allows for corrugated packaging to be made, used, collected and recycled into corrugated boxes again within just 14 days while at the same time reducing the amount of fiber in its boxes by up to 30%. The company added that the facility is well positioned to service the paper mill and sell recycled packaging products to its partners and others.
CLIMATE GOALS
Givaudan commits to global initiative addressing water challenges across six key areas including the use of water in direct operations, supply chain and watershed management, and community engagement. The endorsement of the mandate builds on Givaudan’s commitment to water stewardship, which earned a CDP A grade in January this year. The ingredient supplier views water as an essential element both in its manufacturing activities and SWITZERLAND – The global in its entire value chain, and the flavor and fragrance company, company is “looking to consume Givaudan has endorsed the CEO and discharge this increasingly Water Mandate, a UN Global precious natural resource in a Compact initiative which brings socially equitable, environmentally together major business leaders to sustainable and economically address global water challenges. beneficial manner.” As the latest company to “Water stewardship is a global endorse the mandate, the Swiss challenge which requires a global company has committed to action response,” said Gilles Andrier, the FOODBUSINESSAFRICA.COM
chief executive officer, Givaudan. “Driven by our purpose, we must lead the way by delivering on our own ambitious commitments to protect this precious natural resource, while harnessing the power of collaboration across sectors to drive change.” The company has already surpassed its 2020 target for reducing global water consumption per tonne of production by 15% against a 2009 baseline three years ahead of schedule. Givaudan now joins over 170 companies including Ferrero, The Coca-Cola Company, Danone Ambev, Bunge, Firmenich, AB InBev, Bayer, Braskem, Heineken, Keurig Dr Pepper, Diageo, PepsiCo, Mondi, Neste, Olam and Cargill that have endorsed the mandate.
MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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INNOVATIONS PARTNERSHIP
CLIMATE GOALS
Unilever joins Greentown Labs to support advancements in sustainability
Huhtamaki renews its 2030 sustainability ambitions
USA – Global consumer goods company, Unilever, has joined Greentown Labs, one of the largest cleantech start-up incubators in North America, as a Terawatt-level Partner. The partnership seeks to support the advancement of sustainable products and supply chains. Greentown Labs’ network of early-stage startups will now have the unique opportunity to connect and potentially collaborate with one of the world’s largest consumer goods companies. “Unilever has been a pioneer in deploying science-based sustainability goals and incorporating them into the DNA of the organization,” said Emily Reichert, CEO of Greentown Labs. “We’re thrilled to partner with them and eager to see how our organizations will collaborate this year and, in many years, to come!” Key elements of Unilever’s partnership include: a Startup Pitch Day, Sector Pitch Days and a Corporate Innovation Day. Wendy Herrick, Vice President of Digital Supply Chain, will join also Greentown Labs’ Advisory Board which provides strategic guidance and input to the incubator on growth planning, partnership development, and other areas. Unilever executives will also host office hours and informational sessions with Greentown Labs’ startup community to showcase their areas of expertise, innovation priorities, and engagement opportunities for startups to connect with the company. Greentown Labs operates a 100,000 sq. ft. campus which provides startups with a robust network of strategic partners, prototyping lab space, a wet lab, a machine and electronics shop, office space for more than 500 entrepreneurs, a 600-person event space, and a variety of flexible membership options. Located in Somerville, Massachusetts, Greentown Labs is home to more than 100 startups and has supported more than 250 startups since its inception in 2011. According to Greentown Labs, these startups have collectively created more than 6,500 direct jobs and have raised more than US$750 million in funding. 30 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
FINLAND – Food packaging solutions provider, Huhtamaki has unveiled its renewed long-term 2030 strategy and sustainability ambitions as part of the company’s strategy to maintain a growth trajectory and meet future transformative trends. Going forward, Huhtamaki said that it will focus on growth, competitiveness, talent and sustainability as the company seeks to become the first choice in sustainable food packaging. As part of it’s new 2030 sustainability ambitions, the Finish packaging supplier has set a goal to become carbon neutral in its production and adopted science-based targets. Huhtamaki also plans to make 100% of its products recyclable, compostable or reusable and further source 100% of fiber from recycled or certified sources by 2030. Within the next ten years, the company also intends to make more than 80% of its raw materials either renewable or recyclable, ensure that over 90% of non-hazardous waste generated is recyclable or compostable as well as source 100% of electricity from renewable sources. While acknowledging that packaging has a significant role to play industry in addressing the global challenges of circularity and climate change, Huhtamaki said that the commitments will ensure the company plays a leading role within the food packaging industry. Charles Héaulmé, President and CEO of Huhtamaki pointed out that the company’s 2030 strategy will emphasize on strong various core values: Care, Dare, Deliver, as paramount in driving this successful journey. Charles added that the company will continue to grow through a relentless focus on innovation, scaling up in growth markets and developing new businesses to meet changing consumer needs. “We have set very high sustainability ambitions, amongst them a commitment to achieving carbon neutrality in our production and Science Based Targets by 2030. We want to become world-class in all three areas of sustainability: environmental, social and governance. We will also strengthen and focus our innovation, designing all our products to be recyclable, compostable or re-usable,” he said.
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MB PLC INTERVIEW
INDUSTRY INITIATIVES
UK dairy industry reinforces sustainability commitments, joins global initiative
UK – The UK dairy industry, under the banner of the Dairy Roadmap has signed up to a global sustainability initiative, becoming an aggregating member of the Dairy Sustainability Framework, pledging its commitment to global indicators of sustainability. The global initiative represents a commitment from signatories to monitor and report data on sustainability in a globally aligned and consistent way. As aggregating members, The Dairy Roadmap, comprised of Dairy UK, The National Farmers Union (NFU) and the Agriculture and Horticulture Development Board have joined an aligned global network for sustainable dairy. The UK will therefore begin reporting across the Dairy Sustainability Frameworks, on up to eleven sustainability indicators and strategic intents. This commitment builds on the achievements made by the UK dairy sector over more than a decade through The Dairy Roadmap, and reaffirms the sector’s commitment to reporting sustainability both nationally and globally. “Joining the Dairy Sustainability Framework will ensure that the UK is at the forefront of sustainability reporting globally,” Policy and Sustainability Director of Dairy UK Peter Dawson said. NFU dairy board chairman Michael Oakes added that signing up to the Dairy Sustainability Framework would enable British dairy farmers to better understand how to compare environmentally on a global scale. “It’s also important that we work together with dairy farmers in other parts of the world to actively improve the dairy industry’s commitment to environmental sustainability,” Dawson said. The UK dairy sector, through the Dairy Roadmap, has made significant progress in its efforts to reduce its environmental footprint through commitments to reduce greenhouse gas emissions, improving energy efficiency, water usage and waste management on farm. Over the coming year, the Dairy Roadmap will implement a process of materiality and priority setting, to deliver a new vision for UK Sustainable Dairy. FOODBUSINESSAFRICA.COM
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Contacts us on: Tel: +254 20 8155022; Cell: +254 725 343932 Email: info@fwafrica.net MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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INDUSTRY INITIATIVES
Mondelez International accelerates transition to a circular economy for plastic USA – Mondelez International has joined the Ellen MacArthur Foundation’s New Plastics Economy Global Commitment and the UK Plastics Pact and has additionally become a participant of the New Plastics Economy Initiative, as the chocolate and confectionery maker accelerates its efforts to reduce its impact on people and the planet. The initiatives share a collective ambition to address plastic waste and pollution at its source, by moving toward a circular economy where plastic stays in the economy and out of the environment. Christine Montenegro McGrath, VP of Sustainability at the confectionery giant said that the announcement advances the company’s leadership role in calling for and participating in sector-wide collaboration to identify and scale up innovation, harmonize packaging formats to make recycling easier and improve waste management infrastructure. “We believe that sectorwide initiatives, in collaboration with government, are key to reducing the impact of packaging on our planet,” Christine said.
The New Plastics Economy Global Commitment has set ambitious 2025 targets which Mondelez International, along with signatories from government, business and other organizations, have formally endorsed. The company will work towards taking action to eliminate problematic or unnecessary plastic packaging by 2025 and ensuring that 100% of its plastic packaging is reusable or recyclable. The initiative also requires the Oreo, Milka and Cadbury brands owner to use 5% recycled content (by weight) across all plastic packaging used and further take action to move from single-use towards reuse models where relevant. The company has also committed to ensuring all plastic packaging is recyclable in practice and to using recycled plastic in its packaging wherever possible. The company said that the initiatives support its ambition to create zero net waste packaging and furthers reinforces the company’s 2025 sustainability goals.
SOLAR ENERGY
CLIMATE GOALS
Greenfields secures solar energy deal for its Indonesian milk processing plant
ADM unveils new plan to cut greenhouse gas emissions, energy consumption
SINGAPORE – Greenfields, the largest dairy company in Southeast Asia has partnered with Total Solar Distributed Generation (DG) to supply solar power for its biggest milk processing plant in Palaan, East Java, Indonesia. The Indonesian plant, which processes 70 million litres of milk annually will be equipped with a 1,300kWp solar power system by Total Solar DG, a wholly-owned subsidiary of French energy group, Total S.A. The solar system will have a capacity to generate 1,770MWh of electricity annually, covering around 20% of the plant’s power needs. With 3,750 modules, the dairy processors said that the system will reduce carbon dioxide emissions by around 1,482 tons every year, in line with Greenfields’ commitment to sustainable farming. “Greenfields is pleased to partner with Total Solar DG on this project, which will not only broaden our energy sources and improve our resource’s efficiency, but also reduce our environmental footprint and help build a more sustainable future,” said Edgar Collins, CEO of AustAsia Food. Greenfields said that the system is expected to be running in the third quarter of 2020.
USA – Multinational agricultural trader and food processor, ADM has advanced its sustainability commitments with a new ambitious plan to reduce its absolute global greenhouse gas emissions by 25% and energy intensity by 15% by 2035. The Chicago-based company noted that the new goals follow on its original 2011 sustainability plan, in which the company committed to perunit improvements in energy use, greenhouse gas emissions, water and waste to landfill by 2020. Among ADM’s goal was to reduce emissions intensity by 15% over the 2010 baseline by 2020. After meeting those goals ahead of schedule, the company says that it engaged WSP Global, one of the world’s leading engineering professional services firms, to conduct an in-depth feasibility study to help shape a new set of commitments to combat climate change. According to a statement issued by the company, WSP’s study identified several pathways toward success, including purchasing renewable electricity, increasing use of biomass fuels, transportation fleet changes and equipment changes in some locations. ADM’s Chairman and CEO Juan Luciano said that the greenhouse gas emissions reduction targets will enable the company to save the equivalent of those from charging every single smart phone on the planet 250 times. Luciano believes that this is going to have a real impact adding that it is a key way in which ADM is going to continue to give its customers an edge in meeting the market challenges of today and tomorrow.
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FOODBUSINESSAFRICA.COM
Dairy
BUSINESS
TRENDS IN FORMULATING, PROCESSING, PACKAGING & CONSUMPTION OF DAIRY PRODUCTS
Health and pleasure focus for dairy as ice cream goes guilt free
T
he dairy category is facing key challenges in remaining viable amid changing consumer tastes in the US market, which could impact the rest of the world in due course mainly due to the strong growth in interest in plant-based alternatives, according to a new report by Innova Market Insights. However, the sector has remained resilient even as the ‘the plant based revolution’ upsets the sector, with the dairy industry responding with innovations focusing on other 2020 top trends, including ‘the right bite’, ‘macronutrient makeover’, ‘tapping into texture’ and ‘hello hybrids’, further developing its emphasis on health and pleasure. Meanwhile, in the ice cream aisle, the balance between health and indulgence is increasingly important according to a new report from Innova Market Insights which highlights the ice cream category’s growing focus on delivering pleasure without the guilt. ‘The right bite’ describes the quest of busy consumers to maintain healthy lifestyles, both physically and mentally, raising the demand for FOODBUSINESSAFRICA.COM
nutritious foods that are easy to prepare, convenient and portable. Indulgent, treats also play a role in relaxation and enjoyment, adds Innova. ‘Macronutrient makeover’ highlights attention being paid to changing perceptions of macronutrient content and balance, not only in dairy, but in food and drinks as a whole. Innova reveals that typically one macronutrient at a time is the focus of consumer concern, with low-/no-sugar currently leading from low fat and low calorie as the claim most influencing purchasing decisions in the 2019 Innova Consumer Survey that was carried out in the UK, the US, Spain, France, Brazil, Germany, Mexico and China. As a result, the search for natural sugar reducing solutions goes on in dairy, with the use of cultures and enzymes, which also have clean label benefits, being an area of particular interest. Texture and hybrids rise The ‘tapping into texture’ trend focuses on consumers’ increasing recognition of the influence of texture on dairy, allowing a heightened sensory experience and often a greater feeling of indulgence. MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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DAIRY TRENDS | DAIRY & ICE CREAM According to the research, an average 45% of US and UK consumers are influenced by texture when buying food and drinks, while 68% share the opinion that textures contribute to a more interesting food and beverage experience. Terms such as ‘thick & creamy’, ‘smooth’, ‘crispy’ and ‘crunchy’ are increasingly in evidence in products as varied as milk drinks, yogurt and cheese. Products such as milk and milk drinks, for example, are being given added indulgence through texture and mouthfeel claims, which were previously not in widespread use in the subcategory. The ‘hello hybrids’ trend recognizes the growing interest in products that combine two different features. Increasingly adventurous consumers tend to be highly receptive to hybrid concepts, with interest in blending ingredients, combining food types and mixing flavor profiles. According to Innova Market Insights research, 70% US and 50% UK consumers like products that mix flavors, such as sweet and salty. The report notes that hybrid concepts in dairy products are taking a variety of formats, including category fusion, such as ice cream flavored yogurts; mixed taste profiles, such as drinks with sweet and savory flavor blends; and blended ingredients, such as dairy and non-dairy milk combinations, featuring options such as oat and almond. Ice cream shifts to greater pleasure and less guilt In the ice cream space, Innova reveals that leasure is still the driving force behind ice cream purchases, with consumers naming ice cream’s taste, the fact that it’s a treat and that it makes people feel happy as the top three reasons for splurging on this old time favourite. However, the balance between health and indulgence is increasingly important for the contemporary consumer environment, Innova Market Insights reveals and a new report, which highlights the ice cream category’s growing focus on delivering pleasure without the guilt. As far as the key macronutrients are concerned, for example, the focus within ice cream development is clearly shifting from fat to sugar. Through 2015-2019, global launches of low sugar ice creams increased at a CAGR of 48%, while launches of low/no/reduced fat ice creams dropped at a CAGR of 12% over the same period. The report adds that the non-dairy movement is also impacting on ice cream innovation as significantly growing numbers of consumers explore plant-based eating. “Non-dairy ice creams tripled their share of total ice cream launches in North America between 2015 and 2019, reaching a significant figure of 18% penetration,” reports Lu Ann Williams, Director of Innovation at Innova Market Insights. “Meanwhile, Australasia and West Europe are other important 34 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
stamping grounds with 15% and 9% non-dairy penetration, respectively.” Even within these healthier ice cream categories, however, indulgence is never far away and the idea of ‘permissible indulgence’ is leading to the combination of healthier formulations with decadent tastes. For example, salted caramel is an indulgent flavor that has exploded into the mainstream in recent years. It was ranked as the fifth most popular taste within launch activity in 2019, up 10 places since 2015. However, it is even more popular in helping to deliver an indulgent image to guilt-free products, taking fourth place in non-dairy ice cream launches, third place in low fat ice cream and second place in low sugar new product development. Adults influence baby foods innovation Meanwhile, the influence of adults on the innovation pipeline for baby foods and snacks is strong, according to a report by Innova. The report reveals that while early stage infant nutrition is firmly focused on the developmental needs of babies, it is evident that parents’ interests shift as their children grow and that adult themes become increasingly important in post-weaning categories, adding that prepared foods categories are leading growth in infant nutrition new product development, with segmentation continuing. The innovation in the baby snacks are leading the charge, with innovation rising at a CAGR of 33% over 2015-2019 in the category, while fruit, desserts and yogurts introductions grew at 21% CAGR. The average annual growth in the baby formula/milks category is 13%, reveals Innova, adding that the activity in baby snacks, desserts and meals is firmly centered on natural and unadulterated formulations. “Additive free claims appeared on around two-thirds of new products in these areas of infant nutrition in 2019,” said Lu Ann Williams, Director of Innovation at Innova Market Insights, “While around one half also carried organic claims.” In line with adult interests, there is also growing attention being paid to “super” ingredients from the plant world, protein and fiber claims, and “free from” positionings. Innova adds that no added sugar claims are also growing and, although they remain relatively niche, ethical claims are gaining ground rapidly. Meanwhile, in baby snacks – which are generally aimed at older infants and toddlers – there is even 12% penetration for vegan claims, compared with 4% in infant nutrition as a whole. In contrast, early-stage nutrition is firmly focused on the science of nutrition, with ongoing development in the push towards ever closer mimicry of breast milk. At the same time, personalization is important so parents can choose milk formulas suited to their babies’ specific needs, the report concludes. FBA FOODBUSINESSAFRICA.COM
Beverage TECH TRENDS IN FORMULATING, PROCESSING, PACKAGING & CONSUMPTION OF BEVERAGE PRODUCTS
Hard Seltzer take US by storm, set for global growth
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t may be one of those trends that will remain a largely US trend, but the rise of the hard seltzer drinks category is creating waves that may make it a category of note around the world in a few short years. Hard seltzer, which is basically sparkling water spiked with alcohol, usually with about 5% alcohol by volume, has had a meteoric rise across the US beverage alcohol industry that has been nothing short of phenomenal. Already a US$550 million category, it is slated to grow to US$2.5 billion, an annual growth rate of 66% per year, led by the US, according to an analysis by UBS. The phenomenon has also seen recent spate of introductions in the UK, with research from a comprehensive new Hard Seltzer Report from IWSR Drinks Market Analysis forecasting that consumer interest in the will continue to grow, with the category crossing borders into new countries and regions – and on the way overtaking other drinks categories. Led by the brands White Claw and Truly, according to the IWSR, the hard seltzer volume in the US at the end of 2019 was about 82.5 million nine-liter cases - which is already larger by volume than the leading spirits category in the US – vodka – with forecasts that by 2023, the category will more than triple, to reach over 281 million cases. The report adds that hard seltzer and other “seltzer-like” products commanded a market share of 2.6% of all beverage alcohol in the US, up from only FOODBUSINESSAFRICA.COM
0.85% at the end of 2018, with ecommerce sales of the category set to increase from 0.8% to nearly 2% by 2023 as more consumers realize they can purchase these products online. The category includes malt-based products and those produced from wine and spirits. Seltzer-like products, with similar product attributes as leading malt-based brands, add another 7m cases to the total seltzer universe in the US. “Hard seltzers are far from a fad, they’re growing at a spectacular rate, and increasingly, hard seltzer producers are pulling consumers from other beverage alcohol categories, not just beer. Combined, hard seltzers and other canned seltzer-like products (vodka soda, as an example) will drive the total readyto-drink category, making it the fastest-growing beverage alcohol category in the US over the next five years,” says Brandy Rand, COO of the Americas at IWSR Drinks Market Analysis. A consumer opinion and attitude study done by IWSR about hard seltzers found that over half (55%) of US alcohol consumers surveyed drink them regularly, at least once a week, and while hard seltzers appeal to younger generations of consumers, the category spans all ages and demographics, reaching a broader segment of the population. Consumers cited ‘refreshment’ as the top hard seltzer attribute that appeals to them. “The rise of hard seltzers shows there was a segment of consumers underserved by the current MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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BEVERAGE TRENDS | HARD SELTZER beverage alcohol market who were looking for alternatives that were refreshing and flavorful, but also low-calorie and low-sugar,” adds Rand. “These products also meet the growing consumer demand for convenience, and appeal to people that enjoy popular cocktails like the vodka soda, and wine spritzers. We definitely expect to see more brands taking advantage of this fast-growing trend.” Research suggests drinkers are still picking their way through the segment, and opportunities exist for brands outside of the category leaders to grow, says Danielle Rappoport, marketing director of ciders, Mexican imports and flavored malt beverages at MillerCoors, adding that the new category is taking advantage of consumers’ preference for flavour exploration. Consumers jump into the craze According to Mintel, although many beer drinkers are reducing their alcohol consumption entirely, some are trading beer for drinks they perceived as more healthful than beer. Hard seltzers are a small but rapidly growing segment of the alcohol market due to health-conscious consumers latching onto these low-carb, low-calorie, easy-drinking flavored malt beverages. Younger adults are particularly trading beer for hard seltzers, with those aged 25-34 twice as likely to drink hard seltzers, according to Mintel research on ready to-drink beverages. Molson Coors reveals that the rise of hard seltzers follows the rapid growth of the non-alcohol variety led by the rise of sparkling water brand LaCroix, and comes as more drinkers are gravitating toward light, lower-calorie alcohol beverages, typically with subtle fruit flavors. It also adds that it follows the explosion of Tito’s Vodka, which grabbed a group of healthconscious drinkers with its “hand-crafted” neutral spirit that undercut the industry with lower prices. Kate Bernot, managing editor of The Takeout, a food-and-beverage focused publication says that hard seltzers offer a similar proposition with an added benefit: the convenience of being packaged in a can. “Just lower-calorie doesn’t explain why it’s popular. It’s not just fruit flavors. It’s not just the popularity of sparkling water. It’s not just that they’ve created lifestyle brands that are all about having fun. It’s all of them happening at the same time. If you combine all of those (attributes) in 2019, somehow it all makes sense.” Big beer joins the queue The leading companies that have defined the category have so far been small players in the US brewing sector. White Claw, the leading brand in the category with a 50% market share is owned by Mark Anthony Group, a private company that also makes Mike's Hard Lemonade. The second biggest brand Truly is owned by the Boston Brewing Company, the number 36 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
two craft brewery in the US. As the hard seltzer converts beer, wine and spirits drinkers to its side, the category has become a hot item for some of the world’s largest brewers who are jumping into the queue to quench the thirst of drinkers who have been swept off their feet with the new craze. AB InBev may be the king of beers, but recent surge in craft beer and a preference for more wine and spirits in the US, amid changing consumer preferences have dealt the beer leader significant blows. However, the phenomenal growth of the hard seltzer segment has provided an opportunity for the company to take a slice early on, before the market becomes saturated by announcing a US$100 million investment drive to introduce its ‘beyond beer’ categories, of which the hard seltzer line is a key area of focus. The company has early this year introduced its Bud Light Seltzer brand on top of its earlier brands Bon & Viv and Natty Light. “Our overall investment in innovation next year will grow by 20% in the U.S. Just behind seltzers we will be investing more than US$100 million. We really want to make this category fly,” the company’s US business CEO Michel Doukeris told CNBC, adding that the financial infusion fits perfectly within AB InBev’s forward-looking growth strategy in the U.S. “The market is ever-changing; consumers are always evolving. Change is an unbelievable opportunity for companies that embrace it. If we continue to take care of our own brands and add an innovation capability, where we understand what consumers want, then we can have the best of two worlds. It’s not a choice between established brands and innovation. The combination will make the company stronger.” Other beer giants have also joined the game. Molson Coors, the Canadian beer giant has recently launched its Vizzy Hard Seltzer, the first hard seltzer made with antioxidant vitamin C from acerola superfruit in four flavors: pineapple mango, black cherry lime, blueberry pomegranate and strawberry kiwi. Each 340 ml can serving containing 100 calories, 1 gram of sugar and 5% alcohol by volume. “The thing we have seen consistently with this category is that all of the big hard seltzers are following the same playbook: same flavors, low calorie count, low sugar,” says Elizabeth Hitch, director of hard seltzers for Molson Coors. “When we created Vizzy, we knew we needed to come to the segment with a distinct point of difference that consumers actually care about, and antioxidant vitamin C consistently rose to the top.” The company also has Henry’s Hard Sparkling Water in its product portfolio. Diageo, the UK based spirits major has also joined the craze, introducing its Smirnoff Spiked brand, while Constellation Brands Inc. plans to bring its Corona Seltzer to market in 2020. FBA
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Fortification of industrially milled cereal grains By Milan Shah
A
s supplier of cerealbased foods products, flour millers have a responsibility to help feeding the world in healthy and enriched ways. In addition, they can have a role in prevention of chronic diseases such as iron deficiency anemia and birth defects. globally only 82 countries have legislation to mandate fortification of at least one industrially milled cereal grain while there are about 195 countries in the world today. In addition, eight countries fortify more than half of their industrially milled wheat flour through voluntary efforts and these countries include Afghanistan, Democratic Republic of Congo, Gambia, Lesotho, Namibia, Qatar, Swaziland, and the United Arab Emirates. Most of these countries mandate fortification of wheat and maize flour with at least iron and folic acid. Very recently, The National Fortification Alliance of Pakistan, NFA is partnering with the United Nations World Food Program, WFP and the government of Australia to launch a pilot project to fight malnutrition by fortifying wheat flour in Islamabad
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and Rawalpindi. According to World Health Organization, WHO and Centers for Disease Control and Prevention, CDC; Iron deficiency anemia is the most widespread nutritional deficiency in the world and has importance consequences for child development and enormous economic costs. Likewise, according to WHO, CDC and International Clearinghouse for Birth Defects Surveillance and Research, ICBDSR; Neural tube defects are among the most common structural congenital anomalies worldwide, with an estimated 300,000 cases per year and contribute to 10% of deaths during the first 28 days of life. Obviously, the best way of preventing micronutrient malnutrition is to ensure consumption of a balanced diet that is adequate in every nutrient. Unfortunately, this is far from being achievable everywhere since it requires universal access to adequate food and appropriate dietary habits. From this standpoint, food fortification has the dual advantage of being able to deliver nutrients to large segments of the population without requiring radical changes in food consumption patterns. Definition of Food Fortification and Flour Fortification There always has been a confusion between enrichment and fortification terms and most of the times, they are used interchangeably. Pyler and Gorton describes “enrichment” as the practice of adding back vitamins and minerals lost during processing while “fortification” as
supplementation with nutrients not previously present in the food or not naturally occurring at such high levels. They also indicated that enrichment describes the addition of the B vitamins and iron to flour because losses in these materials range from 60 to 80% in flours with an extraction rate of 70 to 75%. WHO/FAO defines food fortification as “the addition of one or more essential nutrients to a food, whether or not it is normally contained in the food, for the purpose of preventing or correcting a demonstrated deficiency of one or more nutrients in the general population or specific population groups.” This process usually takes place during the processing of staple foods at a central level so that it reaches a considerable proportion of the atrisk populations without requiring their active participation. Flour Fortification adds nutrients to flour to help people thrive throughout their lives. Food fortification is one of the leading public health interventions recommended to prevent and control micronutrient deficiencies. Staple foods and condiments are among the foods most commonly fortified with vitamins and minerals. Wheat flour was the first cereal grain product to be widely fortified, and the first cereal grain recommendations issued by the WHO pertained to maize and wheat flour. Fortification of industrially processed flour, when appropriately implemented, is an efficient, simple and inexpensive strategy for supplying vitamins
MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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MILLING TRENDS | FORTIFICATION
and minerals to the diets of large segments of the population. Adding iron to flour during the milling process helps reduce the risk of iron-deficiency anemia since it is caused by iron deficiency and wheat flour is the staple most commonly fortified with iron in large-scale fortification programs. The mandatory fortification of wheat flour with iron significantly furthered the reduction in the prevalence of inadequate intake, except among women of reproductive age, and changed the main contributors to this nutrient in the studied population. Therefore, monitoring of iron addition in flour is essential to assess compliance to the fortified flour policy and to guarantee a safe iron intake for all the population. Iron, zinc, folic Acid (B9), thiamine (B1), riboflavin (B2), niacin (B3), B12, vitamin A and vitamin D are minerals and vitamins commonly used in flour fortification. The most common practice is to add multiple vitamins and minerals using a single ingredient called a premix and premix includes: fortificants (powdered vitamins and minerals), excipients (carriers, fillers), and free-flow agent. Premix manufacturers usually include nutrients at levels approximately 2% to 5% higher than listed on the label. This accounts for potential nutrient loss and ensures that the premix meets the label claims. During fortification process in the mill, use of micro dosing and proper mixing mechanism are important for correct amount and uniform distribution of fortification agents in flour. The most common way to 38 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
fortify flour is to use the equipment called feeder or in practice a micro doser machine, which is used at flour blending stage just before packaging operation. This adds premix to flour precisely at predetermined rates in the process of flour production. The micro doser device is easily reachable that it is supplied by Alapala, Henry Simon and other leading milling equipment manufacturers. Three types of feeders are available: screw, revolving disk and drum or roller. Mills generally need one feeder per for each type of flour or meal line to be fortified, and the size and number of feeders needed depends on the amount of flour produced per hour. The operating principle of micro doser unit is basically pre-mixing of product and ingredients with a steel palette mixer, then adding into flour sensitively in gram levels with a discharge mechanism. The unit is also an electronically controlled for a sensitive adjustment of feeding speed and amount etc. according to the process. Example of Global Grain Fortification Progress: Africa Case In Africa, 26 countries have mandates to fortify wheat flour. Nine of these countries also require fortification of maize flour. Six countries in this region fortify more than half of their industrially milled wheat flour even though it is not mandatory. In early 2011, FFI conducted an exhaustive analysis of flour fortification opportunities in Africa and found that seven countries were fortifying at least 75% of their industrially milled wheat flour. FFI believes that currently 19 countries are fortifying at least 75% of their industrially milled wheat flour with at least iron and folic acid at levels that are expected to make a health impact. In Africa, South Africa and Nigeria were the first two countries to fortify flour.
preventive food-based approach to improve micronutrient status of populations over time that can be integrated with other interventions in the efforts to reduce vitamin and mineral deficiencies when identified as public health problems. Wheat flour fortification programs could be expected to be most effective in achieving a public health impact if mandated at the national level and can help achieve international public health goals. Decisions about which nutrients to add and the appropriate amounts to add to fortify flour should be based on a series of factors including the nutritional needs and deficiencies of the population; the usual consumption profile of “fortifiable� flour (i.e. the total estimated amount of flour milled by industrial roller mills, produced domestically or imported, which could in principle be fortified); sensory and physical effect of micro ingredients on flour and flour products; fortification of other food varieties; population consumption of vitamin and mineral supplements; and costs. Flour fortification programs should include appropriate Quality Assurance and Quality Control (QA/QC) programs at mills as well as regulatory and public health monitoring of the nutrient content of fortified foods and assessment of the nutritional/health impacts of the fortification strategies. In addition, those requirements, to have a sustainable and successful flour fortification program, local culture and multi-sector national fortification alliance are also utmost importance. In conclusion, as flour millers we have a responsibility of to feed billions of people throughout the world, not only satiate them but also make healthier. Fortified foods have health and nutrition value added so it will increase the competitiveness of the industry.
Future Strategies Wheat flour fortification is a Milan Shah is the Technical Director at Alapala FOODBUSINESSAFRICA.COM
Edible nuts: Nutty nutrition with abundant benefits to human health
N
uts have been part of the human diet since Palaeolithic times and there has been increasing interest in their consumption due to the associated health benefits and outcomes. They are nutrient dense foods with each having a unique composition. Botanically, tree nuts are dry fruits with one seed in which the ovary wall becomes hard at maturity. The most popular edible tree nuts include almonds, Brazil nuts, cashews, hazelnuts, macadamias, pecans, pine nuts, pistachios and walnuts. Ground nuts, commonly known as peanuts, are actually legumes but are identified as part of the nuts food group as they share similar nutrient profile with tree nuts. On the other hand, although chestnuts are botanically tree nuts, they differ from other nuts because they are starchy and have a different micronutrient profile. One other commonly asked question while classifying nuts is whether coconuts are a nuts or not. Botanically speaking they are not nuts but a one-seeded drupe. A drupe such as an olive, almond, or apricot is a fruit with a central stone containing the seed and has three layers: the exocarp, mesocarp, and endocarp. Even if coconuts and nuts seem to have a hard shell and a seed, true nuts are indehiscent, that is, they don’t split open to release their seeds when ripe. In the case of a coconut, the seed germinates and then sprouts from the end of the shell, which eventually splits (dehisces).
FOODBUSINESSAFRICA.COM
MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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NUTRITION & HEALTH | NUTS
Nutrients packed offering Nuts are consumed either as snacks or part of a meal. They are eaten whole (fresh or roasted), in spreads (peanut butter, almond paste) or hidden (e.g. commercial products, mixed dishes, sauces, baked goods, and oils). In whatever form you can enjoy your nuts to bring texture, crunch, and flavour to so many of your favourite cookies, pastas, salads, pestos, and even fish, chicken, and beef recipes. Combined with honey, sugar, maple syrup or chocolate, these savoury nuggets become sweet while retaining their bite and base flavours. The extraction of oil content in nuts is presented as an interesting alternative due to its high lipid content, such as almonds (53%), pistachios (50%), and walnuts (65%). This oil can be used in food and cosmetics industry, which would add value to them. More than just nutrition In terms of their nutritional composition, nuts are well known for their generous contents of healthy monounsaturated (MUFA) and polyunsaturated (PUFA) fatty acid profiles. They are also famous for having high quality proteins, soluble and insoluble fibers, vitamins E and K, foliate, thiamine, minerals such as magnesium, copper, potassium and selenium and substances such as xanthophyll carotenoids, antioxidants, and phytosterols compounds, with recognized benefits to human health. As important sources of food however, it is their especially high content of MUFA and PUFA, linoleic and alpha-linolenic fatty acids that adds the extra punch to their contribution to human health. These fatty acids have various exceedingly important functions in the human being, from improving the development and proper function of the brain, plus extra benefits on inflammation, immunity and mental health. Prior reviews and epidemiological/clinical trials have suggested that regular nut consumption has beneficial impact on health outcomes, such as obesity, 40 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
hypertension, diabetes mellitus, and cardiovascular diseases with reduction in mediators of chronic diseases such as oxidative stress, inflammation, visceral adiposity, hyperglycaemia, insulin resistance, endothelial dysfunction and metabolic syndrome. Due to the increasingly demonstrated health benefits, nuts are currently considered fundamental to several dietary guidelines worldwide. In 2003, a qualified health claim (QHC) was approved by the FDA for nuts and cardiovascular disease, which read, “Scientific evidence suggests but does not prove that eating 1.5 ounces (42 g) per day of most nuts, as part of a diet low in saturated fat and cholesterol, may reduce the risk of heart disease.” Trends in global production and consumption According to the International nuts and dried foods statistical year book, global tree nut production has kept growing at a steady pace over the last decade, reaching around 4.6 million metric tons in the 2019/2020 season. Almond and walnut were the top produced crops, accounting for 31% and 21% of the world share respectively, followed by cashews (17%), pistachios (14%) and hazelnuts (12%). The remaining 5% was distributed among pecans, macadamias, Brazil nuts and pine nuts. With 38% of share in 2018/2019, the USA kept leading world tree nut production with almonds accounting 62% of the share, pistachios (19%) and walnuts (15%). Turkey produced 11% of the world tree nut crops. Hazelnuts accounted for 78% of Turkish tree nut production, followed by pistachios (17%). The third biggest producing country was China, which added up to 10% of the world share. Walnuts amounted to 96% of the country’s tree nut production. Iran, India and Cote d’Ivoire accounted for the following 6%, 4% and 3% of the global production respectively. Iran stood for its pistachio production while India and Cote d’Ivoire for their cashew crops. World peanut production reached over 41 million metric tons in the season under review which was 3% FOODBUSINESSAFRICA.COM
down from the previous season. But this was 7% above the prior 10-year average reflecting the total production growing trend observed over the last decade. The average growth rate for this period was estimated at over 1.1 million metric tons/year. China accounted for 38% of the world peanut crop, followed by India with 15%. The next 20% was produced by Nigeria (8%), the USA (6%), Senegal (3%) and Argentina (3%). In terms of the 2019/2020 production by region, North America was the biggest tree nut producer worldwide accounting for 40%, followed by the Middle East (18% of global volume), whose production consisted of mainly hazelnuts (50% of the region share) and pistachios (37%). In Asia, tree nut production was dominated by walnuts (56%) and cashews (36%), while cashews amounted to 88% of the African crop. As for peanuts, 70% of world production was concentrated in Asia (mostly China with 67% of the region share and India with 27%). Consumption wise, almonds and walnuts accounted for half of the total tree nut estimated consumption worldwide in 2018 (30% and 20% of the world share, respectively), followed by cashews and pistachios with 16% each one. After Europe, which was the chief consumer, North America and Asia were the second and third biggest consuming regions with similar shares.
FAT AND FATTY ACID PROFILE OF COMMON NUTS Total Fat Saturated fatty acid
Monounsaturated fatty acid
Poly-unsaturated Linoleic fatty acid acid
Alphalinolenic acid
Almonds
50.6
3.9
32.2
12.2
12.2
0
Brazil nuts
66.4
15.1
24.5
20.6
20.5
0
Cashew nuts
46.4
9.2
27.3
7.8
7.7
0.15
Hazel nuts Macadamia Pea nuts
60.8
4.5
45.7
7.9
7.8
0.09
75.8
12.1
58.9
1.5
1.3
0.21
49.2
6.8
24.4
15.6
15.6
0
Pecan nuts
72
6.2
40.8
21.6
20.6
1
Pine nuts
68.4
4.9
18.8
34.1
33.2
0.16
Pistachio nuts
44.4
5.4
23.3
13.5
13.2
0.25
Walnuts
65.2
6.1
8.9
47.8
38.1
9.08
Africa. India imported 993,021 MT of Cashew nuts mainly from Western Africa (78%) and Eastern Africa (10%) to be processed therein. Likewise, Vietnam imported 522,198 MT, from which 87% came from Western Africa. Global macadamia production keeps increasing year on year. The 2019 total crops amounted to over 60,000 metric tons with South Africa leading the world’s production accounting for 29% of the world share. Malawi and Kenya accounted for 12% and 2% production share respectively. The USA accounted for almost half (47%) of the South African overseas shipments, followed by the European Union (33%). Other than macadamia, South African production of pecans keeps growing at a steady pace as new plantings begin to bear nuts. In 2019/20 the crop was increased by 5% compared with the previous season and doubled up from the prior 10 years average. Africa’s position in the US$88.94bn South Africa, Australia, and Brazil accounted for 10% of the world’s market Some of the notable statistics production of pecans. With the world peanut in regards to nuts production in production slightly down Africa according to the report compared to the previous season, are, cashews amounted to 88% of the African crop during the African producing regions such 2019/2020 season. Cote d’Ivoire as Nigeria and Senegal also remains as the biggest producing registered a decline of between country from Western Africa with 21% and 24%. World nut production continues its crop amounting to 136,000 MT, to rise year on year. The global followed by Ghana (65,340 MT). edible nuts market accounted for Estimated at 55,000 MT, Tanzania US$ 88.94 billion in 2018 and is led the production in Eastern expected to reach around US$ FOODBUSINESSAFRICA.COM
92.1 billion by 2026, at a CAGR of around 3.5% between 2019 and 2026. The market is likely to grow notably in the years ahead, owing to their growing use in the global food industry worldwide due to their high nutritional value. Bakery and confectionary and breakfast cereals are the major products that use edible nuts. Some key players operating in the edible nuts market globally include Diamond Foods, Olam International, Waterford Nut, Farm Breeze International, Just Almonds, Blue Diamond Growers, Mariani Nut, Select Harvests, Global Nut and Archer Daniels. FBA
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NUTRITION & HEALTH | PULSES
10 reasons why you should include pulses in your diet
I
n many cultures, pulses are considered as ‘protein for the poor’ and their high nutrient content makes them ideal for vegetarians and vegans to ensure adequate intakes of protein, minerals and vitamins. We see them at the grocery store, the farmer’s market and as side orders served with our favourite dish. In many countries, they are part of the cultural heritage and are consumed on a regular or even daily basis. In other parts of the world, they hardly garner a mention except when served in a soup on a cold winter’s day. However, these tiny, multi-coloured seeds have been one of nature’s nutritious foods since time began. Here is why: 1. Pulses are naturally low in fat and contain no cholesterol, which can contribute to reducing the risk of cardiovascular diseases. 2. Pulses are also low in sodium. Sodium chloride or salt - is a contributor to hypertension and can be avoided by consuming foods with lower sodium levels such as pulses. 3. They are a great source of plant-based protein. Surprisingly, 100 grams of dry lentils contain a remarkable 25 grams of protein! During cooking, pulses absorb considerable amounts of water thus reducing their protein content to around 8 percent. Yet, you can still increase the protein quality of cooked pulses by simply combining them with cereals in your meal, for example, lentils with rice. 4. Pulses are a good source of iron. Iron deficiency is considered one of the most prevalent forms of 42 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
malnutrition and is one of the most common types of anaemia. To help optimize the absorption of iron in our bodies from pulses, combine them with foods containing vitamin C (lemon juice on lentil curry for example). 5. Pulses are high in potassium, which supports heart health and plays an important role for digestive and muscular functions. 6. Pulses are often quoted among the top high fibre foods, necessary for supporting digestive health and helping to reduce the risks of cardiovascular diseases. 7. Pulses are an excellent source of folate – a B-vitamin naturally present in many foods – that is essential to the nervous system function and especially important during pregnancy to prevent foetal defects. 8. Pulses can be stored for a long time and therefore can help to increase the diversity of diets, especially in developing countries. 9. Pulses are low glycaemic index foods. They help to stabilize blood sugar and insulin levels, making them suitable for people with diabetes and ideal for weight management. 10. Finally, pulses are naturally gluten-free. This makes them an ideal option for coeliacs. The United Nations declared 10 February World Pulses Day, keeping alive the positive momentum surrounding these healthy, nutritious and proteinrich legumes after FAO's successful International Year of Pulses Campaign in 2016. FBA Source: FAO FOODBUSINESSAFRICA.COM
COVER STORY
INNOVATION CENTRE TO NURTURE UGANDA’S NEXT FOOD ENTREPRENEURS
Makerere University’s Food Technology and Business Incubation Center (FTBIC) provides the platform to improve value addition of Uganda’s agricultural produce. The Food Business Africa team set out to Kampala, Uganda to have a chat with Professor William Kyamuhangire, the Manager of the Centre to hear about its beginning, growth and future plans. By Ronald Onsare
I
n a continent heavily reliant on foreign investment and technologies, and for a long time, that has shipped its commodities in the raw form to the rest of the world, Uganda is a country bulging with an abundance of agricultural produce that has long been sold in its raw form internally and externally yet the need for innovations on value addition, financial and institutional support is glaringly stark to turn around this potential into locally produced goods through sound and competitive investments. The government of Uganda has in the last decade encouraged, promoted and supported business incubation centers with the aim of stimulating local innovations, technologies and investments. One of the country’s standout incubation centers is found at Makerere University. The Makerere University’s Food Technology and Business Incubation Center (FTBIC) is the leading agro-processing incubation center in the country and prides itself in having built the capacity of graduates, the youth, women and even ordinary farmers in rural Uganda over the years. FOODBUSINESSAFRICA.COM
The Center has set the pace, from being the brain child of a university department to attracting full government support and stirring the President to let out a clarion call to all universities in the country to set up incubation centers in their stables. The Incubation Centre is home to hundreds of incubatees and employees of the various enterprises trained in market-responsive standards in agribusiness, producing well packaged, valueadded foods which are displayed at the Food Parlour at Makerere University and marketed to all major supermarkets and agribusiness outlets on the market, where the brands have gained high-level demand from buyers in the country. Nascent beginning ‘‘To nurture and sustain food and allied businesses especially among women and young graduates by providing innovative research, practical solutions, linkages, entrepreneurship development and outreach leading to wealth creation and nutrition enhancement.’’ This is the mission statement of MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY | FTBIC
One of the incubatees labels yoghurt for delivery to the market
the FTBIC, which is housed at the School of Food Technology, Nutrition and Bioengineering (STFNB) and prides itself in nurturing business start-ups on food value addition, food processing as well as catering. While Makerere University, sitting on one of Kampala’s original seven summits, is the oldest and arguably the most prestigious universities in East Africa, the STFNB equally scored a first by being resident to this premier incubation center of its kind in the region. “The Center began from the point of view that the University had been blamed for a long time for producing theoretical graduates,” begins Professor William Kyamuhangire, who manages the centre, in retrospect, adding that they were increasingly concerned about that blame. “We began the incubation center purposely to translate from rolling out theoretical graduates to practical graduates; graduates who can go out there and create 44 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
their own employment. Secondly, to translate the research findings from our academic work into actual products themselves. The other reason was to serve the wider community.” Riding on this conviction the “WE BEGAN THE INCUBATION CENTER TO TRANSLATE FROM ROLLING OUT THEORETICAL GRADUATES TO PRACTICAL GRADUATES, TO TRANSLATE THE RESEARCH FINDINGS FROM OUR ACADEMIC WORK INTO ACTUAL PRODUCTS THEMSELVES AND TO SERVE THE WIDER COMMUNITY"
University is no longer a university for the sake of it; it’s a university that is serving the public. Through the initiative, the Professor tells us, they can go out and work with the community to set-up food facilities in line with the right food processing and value addition essentials. Those were the cardinal issues they had envisaged to address in setting up the center. The Center was started by the Makerere University team that
planned and created the space on their own. However, around 2009 an appeal to government for partnership passed through with a ministerial visit. Consequently, the initiative caught the attention of President Yoweri Museveni’s ear, who in turn visited the nascent center personally. “We were able to present our proposal to him; for the support and equipping of the center. He took it wholesale and indeed from 2009 to date, this is a project that is directly and fully funded by the Government,” Kyamuhangire beams. Citing examples such as the Kiira EV (a vehicle design project) and a variety of quality products produced under the FTBIC, he added that Makerere University had earned the trust of Government that has provided funds. He expressed hope that the progress would encourage Government to allocate further funds for requisite expansions to meet the ever-growing demand. To go by the Professor’s insights, the Center’s results have been tremendous. When they began, they were the darling of every exhibition, but this has changed with time. The technologies and products that they exhibited then have been taken up by the small and medium industries and they are churning them out the same way the FTBIC did and are doing. “When we go for exhibitions there are so many other people alongside us. This incubation concept has caught on in such a manner that the Government directed that all universities setup incubation centers. Within Makerere University, we were the first to set an incubation center. This has been positive to the university, positive for us and it has moved on. If you look at the number of people we have nurtured, many have come out and set up their own industries, including farmers. So, the issue of community challenges have been addressed,” elaborates Kyamuhangire, an indicator that FOODBUSINESSAFRICA.COM
WE KEEP THE INCUBATEES LONGER THAN WOULD BE REQUIRED BECAUSE OF EXISTENCE OF LACK INFRASTRUCTURE OF A SIMILAR KIND OUTSIDE THE INCUBATION CENTRE IN UGANDA. THE INCUBATEES ALSO LACK FINANCING TO SOURCE THE STATE-OF-THE-ART EQUIPMENT THAT THEY UTILISE AT THE CENTRE.
Prof. William Kyamuhangire in his office during the interview
the University has been demystified; that it’s not only for academic work but also for development of society. “When you see a farmer coming from the grass roots to our Center and going back to set up a business or industry back home, then the University is playing its developmental role alongside that of Government. In that same process the Government realized that the University is a partner as opposed to being an academic island,” he adds. More than an Incubator The FTBIC is arguably, in terms of capacity, the best equipped incubation center in the East Africa and Central Africa region. It has five processing lines: meat, fruit and vegetables, dairy, bakery and extrusion lines, with capability to process various products in these areas. The Center has also acquired a mobile fruit and vegetable processing plant which is capable of processing the produce at the farm level, thereby is reaching out to the people who need its services in that respect in the remotest of locations. This has facilitated processing of fruits and vegetables within the production areas right next to the farms, reducing substantially the vast post-harvest loss that permeates the sector. Using the abundantly available local raw materials and adopted technologies, the Incubator facilitates value addition in food processing as well as supporting analytical activities to assess the quality of food products. With this wide array of modern food processing equipment, the FTBIC focuses on developing worldclass products from local raw materials and to contribute to the overall food industry development, the Center provides technical support to existing food processing SMEs and conducts hands-on training to prospective entrepreneurs. It has also trained over 500 youth and women in the areas of fruit and vegetable processing, dairy FOODBUSINESSAFRICA.COM
processing, cereal processing and entrepreneurship in Uganda. Many of those trained have created or improved their enterprises. The processing units have been consistently equipped and revamped to a level that most food processing operations can be carried out in-house with regard to meat processing, dairy processing, fruit and vegetable processing, extrusion technology, confectionery and bread processing, he reveals. Overwhelmed by demand However, the facility’s capacity is constrained by the ever-increasing number of groups and people seeking services there. “We can only host as much at a given time,” laments Kyamuhangire. “Another niggling drawback is that those who complete the incubation and nurturing process have nowhere to go to set-up their hatched ventures. Whereas it has been successful, it has created a new problem of people not having a place to launch their businesses.” So, what creates this bottleneck in transitioning from the center to the next level? “We keep them a little bit longer than would be required. What is necessary for them to move out are two or three things. One, is the existence of infrastructure of a similar kind. Food processing is not done in a home. You have to play within the stipulated standards for a food processing premise to have the premise approved by the authorities as well. Food processing has to be done in a purpose-built facility. It’s not like repairing a car that can be done from anywhere, provided one is skilled. “Two, is financing. Whereas, here we have stateof-the-art equipment on our processing lines that produce products that can compete with any other product in the market, the incubatees may not have the financial muscle to replicate that outside the Centre. We need venture capital funds to support this. Thirdly, we need institutional support. The incubatees need to be assisted to settle in the new environment outside the center, in the real world of business. When they leave here, the task is different for, they have to scale up, they will meet competition in the market out there. So, how do they position themselves on that path to success?” Kyamuhangire weighs in, as he breaks down the challenges post the incubation process. Nonetheless, with the ballooning number of incubatees, including those on the queue, the Centre has endeavored to coordinate specific groups to fully benefit from the its services. Normally it has around MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY | FTBIC
IN NUMBERS
3,000 SQ. METRES
SIZE OF THE CENTER AFTER THE ADDITION OF TWO NEW BUILDINGS
20 incubatee groups, with four groups working at a given time. While the Center is open for business day and night, even with this arrangement, each group is allowed a maximum of two days in a week. With this approach the Center has been able to accommodate more people.
Our team is taken through the processes at the Incubation Centre
The Centre's shop has a number of products on sale to customers
The baking unit is busy churning out bread, scones and more 46 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
R&D with market penetration The FTBIC carries out Technology and Food Product Development and value-addition, riding on the research conducted at Makerere University. Buoyed by the wide array of modern food processing equipment, the FTBIC continues to focus on developing world class products from locally abundant raw materials. It has nurtured Enterprise Development and Outreach Young graduates’ ideas that have translated and transformed them into businesses that are delivering products. The products have reached most upscale market outlets with a number of them have graduated from the Incubator to go and set up their own businesses outside. He informs us that the project has led to creation of more than 100 direct jobs in production and marketing of value-added foods and has created jobs for over 500 raw material suppliers, with these numbers growing steadily. According to Prof. Kyamuhangire, who is also teaches at the School, the products are developed by start-up enterprises nurtured by the FTBIC with a unique product range including traditional products that are produced through the value addition processes carried out by the incubatees. The production of nutritious, safe and quality products such as the energy biscuits, Ntalike smoked beef, obushera, omulondo liqueur, ntuntunu and ensenene, among others, highlights the destination of Uganda’s budding agricultural industrialization to which Makerere University has a major contribution. Success story One such success story out of the Incubator is Smart Foods Limited, a firm that started in the Food Technology Laboratories of Makerere University. Its backdrop was a result of exciting lab work on transforming whole soybeans into tofu that is acceptable to the African taste. The company’s CEO, Martin Ssali, had precociously ventured into the novel theory of soybean, on the way, ingeniously perfecting the art of tofu making over time while still a student at the University. Started in 2008, FOODBUSINESSAFRICA.COM
One of the incubatees is busy cutting and portioning meat for further processing
a year before the Government came fully on board for the Center, the company’s products are found in leading retailers that include Capital Shoppers, Tuskys, Quality Supermarket, Italian Embassy, Jazz Supermarket among other outlets, just to underline the effect the Incubator has had. “The idea hatched when I was in the third-year of my Food Technology course. We had been encouraged to come up with new ideas that could move the Ugandan food processing industry to another level,” says Martin, a benefactor of the Mandela Washington Fellowship. The firm has rolled out tofu that is variedly spiced, soy yoghurt and soy nuts. Speaking at the inaugural Makerere University Food Science and Technology Career Day held in February 2020, Dennis Kasirye, the proprietor of Elma Foods Consults, spoke glowing of the role the Center had played in developing his business. An alumnus of the University, he passed through the Center and now produces pineapple juice among other products as he prides in running a successful business thanks to the FTBIC. He encouraged the graduates in-waiting to take full advantage of the FTBIC. The Career Day was fully sponsored by the producers of this magazine, FW Africa through the AFMASS FOODBUSINESSAFRICA.COM
Food Expo program, and is part of the mentorship program that are held in the region by the company to improve industry-academia linkages. Prospects for the future The incubation activities have reached an exciting time since the Center was officially opened, with tremendous progress on all fronts, says Prof. Kyamuhangire. Given the history and the achievement the Center has made so far one would like to probe into what the future holds for the Center and the agro-processing industry in Uganda. “First and foremost, we want to have a sustainable incubation center. For that matter, we are expanding the space at the Center to deliver on our mandate better and to take on more incubatees. We have a new building which is phase 1 of its construction and another one coming up later. These two buildings will give us a total working space of about 3,000 square meters that will be adequately and appropriately equipped. They will accommodate, to a certain extent, comfortably the 20 groups of incubatees on a daily basis. Secondly, we have put a proposal to the government to establish a Science and Technology Park that will have bespoke facilities where the incubatees can
rent at subsidized rates and can seek funding to equip and run their enterprises,” the Professor delves into the Center’s future prospects. The Center had, by mid-2019, initiated the Phase II of the FTBIC that was valued at US$ 4.06 million (UGX 20 billion) and had already secured US$1.25 million (UGX5bn) under the Presidential Initiative on Science and Technology that was earmarked for Phase I, apart from the amount now required for Phase II. Once completed, the facility will allocate 1,200 of the total 7,000 square meters space to the FTBIC; a huge boost to the current 1,200 square meters achieved by Phase I, to facilitate innovations and boost food business entrepreneurship in the country. Professor Kyamuhangire reiterates that the University, through the Center, has society in mind as a whole and would like to call upon society to be free to come in and get the necessary skills to add value, process food products and take them to the market. “FTBIC is a unit of Makerere University that is open to all staff, students and the greater public with no strings or qualifications attached. We want to move away from selling raw commodities from Uganda to the outside world; the end game is in value addition,” he quips while appealing for partners who can take the project to a higher level. “We are talking of a science and technology park; we are talking about indigenous technologies so that we can upgrade our traditional products to another level like it happened with obushera. Obushera started here; how to process it, package it and market it. Right now, it has proliferated into each and every corner of Uganda.” However, he maintained that applicants must present a product with an aim of value addition, upon which the Center will offer training and necessary skills to allow for effective commercialization of the product. FBA
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The emergence of the plant-based food and beverage industry By Clement Muriuki
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or quite some time, the global food and beverage industry has experienced relatively stable conditions, with minimal change around key product categories sold through the various retail and food service channels. However, the skyrocketing demand of sustainable food options as well as changing consumer trends has ignited a new revolution in the food and beverage industry. From burgers and meatballs to milk, yoghurt and fish products, recent industry changes illustrate that the phrase ‘plant-based’ has been a game changer in the food industry, and more so in the meat and dairy sectors. Plant-based foods - simply defined as food and beverage products entirely derived from plants without any animal constituent - have been in the market for decades, but until recently has the sector been coined as the epicenter of a revolutionary and sustainable food and beverage industry. A few years 48 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
ago, the plant-based diets were only adopted by a handful of people popularly known as vegetarians, and later expanded to include flexitarians. However, this is currently not the case. Adoption of plant-based foods has registered exponential growth in the recent past and subsequently evolving from a niche market to a stand-alone industry. The ever-growing need for a sustainable ecosystem has been one of the major drivers in the sector. Companies across the spectrum are now investing heavily in existing brands as well as creating new products and brands which will appeal to the surging consumer demand for plant-based products. “Plant-based foods aren’t new, but what’s happening now is it’s gone from being a niche industry targeting mostly vegetarians and vegans, who are still an important part of the market segment, but now it’s grown into a mainstream industry that is targeting everyone, and that’s really what’s causing it to explode, combined with the innovation that’s happening,” FOODBUSINESSAFRICA.COM
MARKET TRENDS
affirms Michele Simon, founder and executive director of the Plant Based Foods Association. Fast growth and adoption According to the Plant Based Foods Association and The Good Food Institute, in 2018 U.S. retail sales of plant-based foods grew 11% over the 2017 figures, bringing the total plant-based market value to US$4.5 billion, growing faster than the total U.S. retail food market which grew at only 2% in value, showing that plant-based foods are a key driver of growth for the retail industry in the country. “Plant-based foods are a growth engine, significantly outpacing overall grocery sales,” said PBFA Senior Director of Retail Partnerships Julie Emmett. “We are now at the tipping point with the rapid expansion of plant-based foods across the entire store, so it is critical for retailers to continue to respond to this demand by offering more variety and maximizing shelf space to further grow total store sales.” According to the study, the plant-based meat category was worth more than US$800 million in 2018, up 10% in the past year, and accounting for 2% of total retail packaged meat sales, led by refrigerated plant-based meat, where sales jumped 37%, driving the category growth. “PLANT-BASED FOODS AREN’T NEW, BUT WHAT’S HAPPENING NOW IS IT’S GONE FROM BEING A NICHE INDUSTRY TARGETING MOSTLY VEGETARIANS AND VEGANS, WHO ARE STILL AN IMPORTANT PART OF THE MARKET SEGMENT, BUT NOW IT’S GROWN INTO A MAINSTREAM INDUSTRY THAT IS TARGETING EVERYONE, AND THAT’S REALLY WHAT’S CAUSING IT TO EXPLODE, COMBINED WITH THE INNOVATION THAT’S HAPPENING." MICHELE SIMON, FOUNDER AND EXECUTIVE DIRECTOR OF THE PLANT BASED FOODS ASSOCIATION
In the plant-based segment plant-based milks; plant-based dairy such as cheese, yoghurt, and ice cream have seen a surge in consumer demand as more and more consumers ditch regular milk for a growing list of plant-based milk alternatives. According to the report, the sales of plant-based milk alternatives grew 6% in the year, making up 13% of the entire milk category in the US, at a time that cow’s milk sales declined 3%. It also adds that plantbased yogurt has grew a massive 39%, while sales of conventional yogurt declined 3 percent; plant-based cheese upped 19%, while conventional cheese sales remained flat; while plant-based ice cream and frozen novelty grew 27%, when conventional ice cream and frozen novelty grew a paltry 1%. FOODBUSINESSAFRICA.COM
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US$800M RETAIL VALUE OF PLANT-BASED MEAT CATEGORY IN THE US IN 2018. Understanding the plant-based food industry With growing demand comes market segregation as players look to achieve greater margins. The plantbased food industry has not been spared from this. Like whey and curd, the market has clearly defined itself into a modern industry majorly comprising of plant-based meats, dairy alternatives and plantbased meals in general. According to research by Barclays and JPMorgan, the alternative protein market is valued at US$19.5 billion and is expected to capture 10% of global meat market in a few years, reaching US$100 billion in value in 15 years. Plant-based meat, also termed as meatless meat, meat analogous, meat alternatives or meat aisles is one of the major categories in the overall plantbased food. Plant-based meat products are made to mimic properties found within natural meats and are therefore, considered to be meat substitutes. Alternative meat companies are working to develop plant-based meat with the same texture and functionality as natural meat, presenting a product that cooks and tastes just like animal meat. The meat analogous can hence be used as a stand-in for real beef, pork, fish or chicken. Plant based meat is just getting traction with consumers and food service operators. While there have been vegetarian meat options for decades (Morning Star Farms launched in 1975), there have not truly been meat-like products until the entry of Beyond Meat (2012) and Impossible Foods (2016). Plant based products have been used in burgers, meatballs, tacos, meatloaf and pretty much any other recipe that calls for ground meat. Almost every plantbased meat has different ingredients, but they're usually made from extracted plant protein, spices and binding ingredients. Nutrition-wise, while they typically are higher in sodium, plant-based meats are similar to ‘real meat’ in terms of calories and have more fiber and less to no cholesterol. Alternative meat is the second biggest category by sales in the plant-based food industry. With one-third of consumers choosing to actively reduce their meat consumption, the demand for plant-based innovation is expected to grow at a rapid pace. MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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MARKET TRENDS | PLANT-BASED FOODS Leading the pack in the plant-based food and beverage industry are dairy free products, also referred to as dairy alternatives. Plant-based dairy free products, ranging from yoghurts, ice creams, milk and cheeses are gaining wide popularity among vegan population as well as consumers with lactose intolerance condition. The products are however providing unparalleled competition due to their lactose free nature. Plant-based dairy products are majorly sourced from soy, coconut, cashew, oat, almond, pea, quinoa, flax, rice and in some cases hemp. However, unlike plant-based meats, dairy alternatives have a relative difference compared to animal sourced milk especially in terms of taste. They are also considered to have a much dense nutritional profile compared to bovine milk. Other emerging plant-based categories include spreads, dips, sour cream, sauces and ingredients. Start-ups take the pie “There are a significant number of start-up and disruptor companies in many geographies that are launching new and exciting products into the market to meet the increasing consumer base and demand for innovative products and flavours,” observes Deloitte in one of its recent report on plant-based alternatives. From big corporates to startups, the plant-based food market has amassed greater investment FIRMENICH SAYS IT IS PREPARED TO BE A LONGTERM PASSIVE SHAREHOLDER IN ROBERTET BUT MAY CONSIDER TAKING A CONTROLLING STAKE IN THE FUTURE BUT MAY CONSIDER TAKING A CONTROLLING STAKE IN THE FUTURE FUTURE BUT MAY CONSIDER TAKING A CONTROLLING STAKE IN THE FUTURE
and further stoked the appetite of the investment community boosted by the promising growth prospects in the sector. According to Michele Simon, founder and executive director of the Plant Based Foods Association, plantbased food and beverage start-ups have raised more than US$17 billion in funding in the last ten years. Recently, Silicon Valley-based foodtech startup, Impossible Foods raised US$500 million in a Series F funding round, which brought the total capital that the industry-leading plant-based food company has raised to nearly US$1.3 billion, since it was established in 2011. Impossible Foods said that it will use the funds in part to invest in fundamental research and innovation; accelerate its manufacturing scaleup; expand its retail presence and its availability in key international markets. This followed a previous announcement from global plant-based food company, Food United that it had raised US$200million in a founders’ 50 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
funding round to fuel the company’s ambitions of becoming one of the world’s largest plant-based food companies. Canadian plant-based foods and beverages manufacturer, SunOpta has also secured a financing agreement amounting to US$60 million to support its expansion. Perfect Day, a California-based dairy alternatives startup raised US$140 million in its Series C Funding. Califia Farms, a Los Angeles-based plant-based food and beverage company has also closed its Series D financing raising US$225 million. Last year, the US-based beef alternatives producer, Beyond Meat was seeking to raise US$183 million in funding, in a deal that would have valued the company at US$1.2 billion. Startups are warming up to brace the plant-based revolution. This year alone, US-based Rebellyous Foods raised US$6 million in a Series A funding round; Alpha Foods, a New-York based maker of convenient plant-based foods has raised US$28 million in a Series A round; Hodo has secured an investment; Noquo Foods, based in Sweden, raised US$3.7 million in a seed funding round; while Australian plant-based meat startup, v2food has raised US$35 million in Series A funding. Startups such as New Wave Foods, Nutriati and Israeli Yofix Probiotics have also received capital injections to support their expansion. A recent FOODBUSINESSAFRICA.COM
intensive sources that are plant-based,” said Jeremy Coller, founder of FAIRR. The three giants were awarded top marks for their work in understanding the impact and reducing risks associated with intensive animal agriculture, such as the emission of greenhouse gas; and they also had strong sustainable sourcing programs and had targets to reduce emissions. The report found 87% of retailers were increasing their own-brand plant-based products, while 64% of the 25 firms had referred to “vegan” and “plantbased” in their annual reports. After investing US$7 billion globally in animal protein in the last five years, the global food and agriculture company, Cargill has now forayed into the alternative meat market. In February this year, Cargill announced that it is introducing its new private label plant-based patties and ground products. Marfrig Global Foods, one of the world’s leading beef producers and the world’s largest beef patty producer, has also made a debut of its plant-based burger in the Burger King chain in Uruguay. Another meat giant, JBS has also announced that its will be launching a range of plant-based foods and further expand its Friboi portfolio. Other companies that have joined the bandwagon include Nestle, ADM, Conagra Brands, Unilever, Maple Leaf and Kroger among others. For Nestle, already the world’s largest food and beverage company, the alternative meat industry is invention, Impossible Foods has also launched the Impossible Sausage and Impossible Pork, which debuted in January 2020 to expand its plant-based offering. Industry titans seek a piece However, the plant based sector has not only attracted start-ups. Food industry titans such as Danone, Tyson Foods, Kraft Heinz, Nestle, Unilever, Müller and Maple Leaf have either directly invested in new investments or brands, set up venture capital arms to invest in emerging plant-based food brands or sought alliances with start-ups to ensure they are not left behind. A new report lends credence to the big giants taking a shot at the emerging sector. The report by the Farm Animal Investment Risk and Return (FAIRR) coalition revealed that 25 major retailers and manufacturers were developing strategies for sustainable protein products, due to the risk of a strategy reliant on animal protein. The study showed that Unilever, Tesco and Nestlé are among the best prepared companies to capitalize on the trend for plant-based meat substitutes. “Many have now begun a journey to diversify the protein products away from being predominantly animalbased, and towards low carbon and less resource FOODBUSINESSAFRICA.COM
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US$12.5B AMOUNT DAIEY COMPANY DANONE PAID TO ACQUIRE US PLANT-BASED MILKS PRODUCER WHITEWAVE IN 2017 of critical importance. In 2017, the company acquired Sweet Earth, a plant-based foods manufacturer based in California, USA, adding such products as frozen meals, burritos, breakfast sandwiches to its portfolio. In mid 2019, it launched a plant based burger in Europe and plans to introduce plant based sausages in the US and Europe. In the dairy alternative market, Arla Foods, one of the world’s largest dairy cooperatives based in Denmark, announced an entry into the dairy alternative market with the launch of new oat drinks under a new brand called JÖRĐ. Arla says that JÖRĐ is an umbrella brand for 100% plant-based products and plans to expand the brand to provide an entire MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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MARKET TRENDS | PLANT-BASED FOODS
selection of plant-based food products. Arla joins Danone, which has made significant advancements in providing plant-based products. Danone, which bought WhiteWave Foods, the US-based leader in plant based foods and beverages in 2017 for US$12.5 billion, recently expanded its offering with the launch of dairy free ready-to-drink coffee lattes, DHA Omega-3 plant-based beverages, a new dairy-free half & half alternative and the Silk Dairy Free Heavy Whipping Cream. Danone’s largest acquisition ever, the deal offered the leader in dairy products a fast way to gain significant market share in the growing dairy alternatives market. The future of the industry According to a report by BIS Research, the plantbased food and beverage alternatives market is expected to reach US$80.43 billion by 2024, rising at a CAGR of 13.82% during the forecast period from 2019 to 2024. The report states that the global food and beverage industry is undergoing “unparalleled technological disruption”, which is driven by the enormous growth of viable plant-based alternatives. In 2019, data released by the Plant Based Foods Association and The Good Food Institute (GFI) shows U.S. retail sales of plant-based foods grew by 11.4%, bringing the total plant-based market value to US$5 billion. Research indicates that Asia is already a leader in the plant based food and beverage industry with Europe following closely. Increasingly health conscious populations, investments by food and beverage industry giants, animal and environmental concerns among the consumers are the factors supporting the growth of plant-based food and beverage alternatives products, globally. Regulatory bottle-necks The regulatory framework in what has been termed as the next big thing in the food industry is on its early stages of development. In fact, there is little to be shown as most of the efforts have been initiated by the companies themselves, on the back of resistance by the leading dairy and meat companies on the way such alternative meat and dairy products should be labelled. 52 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
PLANT-BASED FOOD & BEVERAGES MARKET IS EXPECTED TO RISE TO US$80.43 BILLION BY 2024. THE INDUSTRY IS UNDERGOING UNPARALLELED TECHNOLOGICAL DISRUPTION AS CONSUMERS BECOME MORE HEALTH CONSCIOUS AND ANIMAL AND ENVIRONMENTAL CONCERNS RISE.
In December last year, the industry leader in plant-based food advocacy, The Plant Based Foods Association (PBFA) introduced a voluntary standard to promote consistency in labeling across the plantbased meat category. PBFA noted that as consumers are increasingly seeking out plant-based meat options, the labeling standard suggests clear labeling terms that consumers understand. PBFA’s meat alternative standards allow for references to the type of animal-meat (such as meat, chicken, hamburger) and the form of the product (such as nuggets or burger) along with a qualifier that clearly indicates that the food is plant-based or vegetarian. These qualifiers include: plant-based, vegan, meatless, meat-free, vegetarian, veggie, made from plants, and other similar phrases. In addition to the voluntary labeling standards, PBFA says that it is also actively engaged in policy battles to defend its members constitutional rights to common sense labeling. The US Food and Drug Administration (FDA) has also approved the use of soy leghemoglobin as a color additive in uncooked ground beef analog products. The approval, which was granted in August 2019, follows meat-alternative company Impossible Foods’ 2018 petition to have the ingredient accepted as a color additive. The additive imparts a reddishbrown color and is used by Impossible Foods to give an optimized beefy flavor. The approval now allows Impossible Foods to use soy leghemoglobin in its plant-based burger and sell the products directly to consumers, instead of cooked via restaurants. While there are little regulations developed around plant-based food and beverages, experts argue that balancing consumer understanding and perception against the laws on the books will be key in shaping the regulatory framework in this sector. FBA FOODBUSINESSAFRICA.COM
FORMULATIONS
Jack of all trades - Hydrocolloids & Gums show their might in food and beverage industry Hydrocolloids and gums provide unique taste, texture and mouthfeel to many foods and beverages. A versatile lot, these ubiquitous ingredients appear in all manner of products where they add unique benefits, even in some of the most challenging conditions
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very food and beverage has a unique characteristic that determines its degree of excellence and acceptability. This measure of quality is attributable to the type, quantity, formulation and combination of ingredients and additives used. One group of food additives that can be termed as the “Jack of all trades and master of all� in foods are Hydrocolloids, also referred to as Gums. Creating foods and beverages with certain viscous, textural, thickness and mouth feel qualities is the job of hydrocolloids. In addition to that they inhibit crystallization, act as emulsifiers, stabilizers,replace some food
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components such as fats, act as films and even extend product shelf life. As a food additive, hydrocolloids can be used alone while others are used in synergistic combinations in a range of foods and beverages to yield the most advantageous results. They originate from plants, seaweeds, microbial, insects and crustaceans and can also be synthetically made. Some of the notable hydrocolloids include starch, cellulose, hemicellulose, pectins, exudates, mucilage, fructans, alginates, carrageenans, agar, xanthan, pullulan, gellan, chitin and chitosan, among others.
Multifunctional ingredients The multi-functionality of hydrocolloids is attributed to its molecular structure and its behaviour in an aqueous medium. They are a heterogeneous group of long chain polymers (polysaccharides and proteins) characterised by their property of forming viscous dispersions and/ or gels when dispersed in water. Presence of a large number of hydroxyl (-OH) groups markedly increases their affinity for binding water molecules rendering them hydrophilic compounds. Further, they produce a dispersion, which is intermediate between a true solution and a suspension, and exhibits the properties of a colloid. In these regard, they are chiefly used to modify the rheology of the food system, specifically viscosity and texture. As a thickening agent hydrocolloids are added to foodstuffs such as sauces, gravies, instant soups, cake batters, jam and other salad dressings to promote evenly textured thickening. This is also applied to the processing of puddings and desserts. The thickening effect produced by the hydrocolloids depends on the type of hydrocolloid used, its concentration, the food system in which it is used and also the pH of the food system and temperature. Hydrocolloids that have been used as thickening agents in various food systems include starch, modified starch, xanthan, galactomannans like guar gum and locust bean gum, gum Arabic or acacia gum, gum karaya, gum tragacanth and carboxymethyl cellulose. Starch
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FORMULATION | HYDROCOLLOIDS & GUMS THE EXTENSIVE SERIES OF FUNCTIONS PERFORMED BY HYDROCOLLOIDS IN FOOD INDUSTRY, COUPLED WITH INCREASE IN HEALTH AWARENESS AND GROWTH IN DEMAND OF CONVENIENCE FOOD ARE KEY DRIVING FORCES FOR THE GROWTH OF THE MARKET.
Healthy option applications With the rise in consumption of gluten free products by many dieters across the globe, addition of hydrocolloids to food is used to create low-fat, lowcalorie products. They can be used to retain qualities such as texture and stability in the absence of fat and help with taste when alternative sweeteners are used.
is the most commonly used hydrocolloid thickener, as it is relatively cheap, abundant and possibly it does not impart any noticeable taste if used at a low concentration of 2% to 5%. As a gelling agent, the gelation is a phenomenon involving the association or cross-linking of the polymer chains to form a three dimensional network that traps or immobilises the water within it to form a rigid structure that is resistant to flow. In other words, it becomes visco-elastic exhibiting both characteristics of a liquid and a solid. Different food stuffs use different hydrocolloids to form gels depending on the characteristics of the agent. For example, alginate can form gels without prior heating because sodium alginate is cold water soluble and these cold-formed gels are heat stable. This makes alginate a preferred gelling agent for re-structured foods and for cold-prepared instant bakery custard that are bake-stable. Carrageenan is a hydrocolloid that finds maximum application in dairy desserts like puddings, milk shakes, ice cream and chocolate milk because of its ability to form gels in milk at much lower concentrations.
Growing demand The extensive series of functions performed by hydrocolloids in food industry, coupled with increase in health awareness and growth in demand of convenience food are key driving forces for the growth of the market. The hydrocolloids market was estimated at US$8.8 billion in 2018 and projected to grow at a CAGR of 5.3%, to reach US$11.4 billion by 2023. The growth of the hydrocolloids market is also driven by factors such as the expansion of the processed food industry in the emerging countries of the Asia Pacific, South America, and the Middle East & African regions. North America is expected to be the most lucrative region in the global gum hydrocolloid market. The growing consumption of processed foods and rising nutritional trends in the US and Canada will continue to drive the growth of the North American hydrocolloids market. The changing lifestyle and food consumption in developing countries such as China and India are also anticipated to develop the expansion of the hydrocolloid market in Asia Pacific. In order to increase the consumption demand,
Emulsification properties and more Other useful functions of hydrocolloids include emulsification i.e. they help prevent the separation of oil droplets from water. This is important when products such as margarine are produced as their ingredients contain both water and fats. The same case applies to the production of ice cream. On the other hand they also act as crystallization inhibitor. Manufacturers of ice cream, candies, sugar syrups etc. use hydrocolloids such as guar gum to prevent ice crystallization. Hydrocolloids are also used as stabilizers. Their ability to hold together components of a food product thus preventing physical changes from occurring make them great stabilizers. They increases the shelf life of processed foods, keeping them fresh for longer and they are also good at retaining moisture. This has vital applications in the baking industry to keep the dough from drying out. They also retain moisture in frozen foods, which prevent a common problem in such products, syneresis, or the release of water. Hydrocolloids like xanthan gum can be used in dough production to prevent lumps from forming when it is kneaded; it also improves consistency and final product volume.
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US$11.4B
PROJECTED MARKET FOR HYDROCOLLOIDS BY 2023 DRIVEN BY EXPANSION IN PROCESSED FOODS manufacturers are aimed at inculcating scientific developments in the production techniques of gum hydrocolloids. The leading competitors in the global gum hydrocolloid market include Cargill, Kerry Group, Archer Daniels Midland Company (ADM), Ingredion, Du Pont, Royal DSM, and Danisco, among others. Shortage of natural raw materials can be observed as a major challenge restraining the growth of the hydrocolloids market. The irregular supply of such raw materials will subsequently hike their prices, and increase the production costs of using gum hydrocolloids as additives. The seasonal production nature of hydrocolloids can also limit the usage of available raw materials and affect the growth of the global hydrocolloids market. FBA FOODBUSINESSAFRICA.COM
COVER STORY
How consumer goods companies can prepare for the next normal after Covid-19 By Raphael Buck, Tracy Francis, Eldon Little, Jessica Moulton, and Samantha Phillips
Consumer-packaged-goods manufacturers must anticipate changes in consumer behavior and set up plan-ahead teams to guide and accelerate decision making. have withstood the initial economic shock, all will need to prepare for the longer-lasting effects, including an erosion in consumer confidence that will drive recessionary behavior. In this article, we describe five trends in the consumer and retail landscape that have emerged during the crisis and, we believe, will persist in the aftermath. We then recommend the creation of a plan-ahead team to equip CPG companies for whatever the next normal may turn out to be.
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s the coronavirus pandemic spreads across the globe, threatening both lives and livelihoods, consumer-packagedgoods (CPG) manufacturers continue to play an important role: producing essential items we all rely on for our health and well- being. CPG leaders have focused on meeting this demand while guarding the safety of employees and customers. At the same time, forward-thinking CPG companies have begun to think about the “next normal”—what the world may look like after strong virus-control measures are lifted. The measures in place are expected to lead to the largest quarterly decline in economic activity since World War II. An unprecedented 40 to 50 percent decline in discretionary spending will translate to a roughly 8 to 13 percent drop in GDP. While many CPG companies
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CONSUMER TRENDS AND CHANNEL SHIFTS We map four horizons of the crisis and beyond. At the time of this writing, most countries around the world—with notable exceptions in Asia— are still navigating the crisis. The questions many are now grappling with include: What will the next normal look like? And how long will the intervening period of partial restrictions last? It’s increasingly clear that the intervening period will be lengthy. Consumers and retailers will need to adjust to ongoing physical distancing and travel restrictions. Outlets and venues where physical distancing cannot be achieved will be among the last to reopen. Current sentiment, the trends we are seeing in Asia, and lessons from the last recession lead us to anticipate at least five behaviors to “stick” through the prolonged recovery and the next normal: increased price sensitivity, higher digital engagement, rise in attention to wellness and hygiene, “nesting” at home, and a redefinition of brand purpose. We also expect to see important channel shifts: a smaller food-service sector, retailer consolidation, the rise of value retailers, and Amazon’s growth in grocery (a sector in which the e-commerce giant has historically had lower share). Economic insecurity, leading to price sensitivity Already, two-thirds of consumers are pessimistic or unsure about the pandemic’s lasting effect. Despite their comparative optimism for economic recovery, MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY | COVID-19 46 percent of US consumers and 28 percent of Chinese consumers said they plan to reduce spending in the coming weeks. The 2008 recession is an imperfect analog to the COVID-19 crisis—which is more of a shock, with many governments introducing bold, unprecedented fiscal measures—but we believe it offers valuable lessons about how consumers behave under financial stress. That recession had a lasting effect on consumer confidence, which didn’t return to prerecession levels until 2011 in Germany, 2014 in the United Kingdom and the United States, and 2017 in China. Consumers reduced their spending in several ways: • Refocusing on home occasions - Many consumers spent less outside the home; 55 percent of Germans and 63 percent of Americans said they ate out less. • Cutting back on nonessentials - Two-thirds of US shoppers said they cut back on high-end luxury goods; one-third cut back on cosmetics. • Deal seeking - Shoppers became increasingly promotion conscious. In the United Kingdom, the percentage of products sold on discount climbed from 26 percent in 2002–06 to 36 percent in 2011. • Trading down - Consumers switched to cheaper brands or private labels. UK privatelabel sales increased by 10 percentage points from 2008 to 2010. • Shifting channels - Many consumers began shopping at value retailers. Discounters now account for 10 percent of grocery sales in the UK market, up from 3 percent in 2006.
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A seismic shift in digital engagement Physical-distancing rules have increased consumption of online media and significantly accelerated e-commerce, particularly in markets that already had a head start. In the United Kingdom, for example, where online’s share of grocery shopping was 7 percent before the crisis, grocers are furiously increasing capacity to meet demand: the three largest grocers have added more than 500,000 new delivery slots—an increase of more than 30 percent. For many discretionary categories, e-commerce has become the channel as stores have closed. We expect this channel shift to endure to some extent, especially in countries where retailers had enough preexisting capability to offer a positive online experience. Early lessons from China suggest that three to six percentage points of online market share will be “sticky,” driven by older generations newly comfortable
with digital channels and by new consumer segments who have overcome barriers to trial (such as account setup). Also, in the medium term, we expect shoppers to prefer the “safe” experience of shopping online to the prospect of shopping in crowded stores. Amazon is likely to build momentum in fresh food and packaged goods, especially in markets where the major grocers lack e-commerce “legs.” In the month leading up to March 14— even before governments issued shelter-in-place guidance— Amazon US saw year-on-year growth of 41 percent in household goods, 25 percent in health products, and 23 percent in groceries. Rise in attention to wellness and hygiene The wellness trend has endured— and even gained strength—during the outbreak. “Healthy eating” has remained FOODBUSINESSAFRICA.COM
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55%
SHOPPERS WHO HAVE A NET POSITIVE SCORE FOR HEALTHY EATING IN EUROPE AFTER COVID-19 OUTBREAK bought equipment for new hobbies and routines. Next to groceries, the category that saw the highest growth in US e-commerce in recent weeks has been bread makers (652 percent growth). Other nonessentials, such as weight-training gear (307 percent), computer monitors (179 percent), and craft kits (117 percent) also made the top-100 list. Redefinition of purpose Large CPG companies have prioritized crisis-related communications (such as announcements of new safety protocols and charitable donations). Digitalnative brands have nimbly connected with their social-media communities about how they’re helping people affected by COVID-19. Consumers may expect companies to continue this heightened emphasis on the highest priority of food shoppers across Europe: social responsibility after the crisis ends. net sentiment (positive responses less negative) was In the previous recession, more than 75 percent of 55 percent, rising to 82 percent in Italy. consumers agreed that “corporations should operate Consumers are also investing in at-home exercise: in a way that aligns with society’s interests, even if in Germany and the United Kingdom, Amazon’s fitness-equipment sales spiked by approximately 60 EARLY LESSONS FROM CHINA SUGGEST THAT percent each week in March. THREE TO SIX PERCENTAGE POINTS OF ONLINE We expect this upward trajectory to continue into MARKET SHARE WILL BE “STICKY,” DRIVEN BY the next normal. Hygiene will become a core element OLDER GENERATIONS NEWLY COMFORTABLE of wellness. The speed of the virus’s spread has WITH DIGITAL CHANNELS AND BY NEW highlighted the level of connectedness in society— CONSUMER SEGMENTS WHO HAVE OVERCOME and the associated risk. Brands should consider the BARRIERS TO TRIAL implications for their strategy and communications (for instance, reassessing manufacturing processes that means sacrificing shareholder value.” That said, and packaging, as well as emphasizing health and brands must be careful to strike the right tone. During cleanliness in marketing messages). The battle to this pandemic, 77 percent of consumers said they eradicate COVID-19 will be a long one, and CPG appreciate CPG companies communicating how their manufacturers will need to prove their safety and brands can be helpful in daily life, but an almost equal trust credentials. percentage said brands shouldn’t “exploit” COVID-19 as a commercial opportunity. Nesting at home It will be essential for companies to balance existing Staying in is the new going out. Once restrictions are focus areas with emerging consumer concerns. lifted, we expect consumers to continue spending Sustainability, for instance, continues to be important more time at home, driven by a desire to save money, to consumers in many markets (60 percent of UK persistent safety concerns, and a newfound pleasure consumers cited it as a top consideration when food in nesting. Through the crisis period, many have shopping). Yet consumers who have become more invested in upgrading their homes and gardens or price sensitive or more concerned about hygiene may FOODBUSINESSAFRICA.COM
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COVER STORY | COVID-19 favor single- use packaging. CPG companies should examine the potential impact of these trends on the categories in which they play. Besides these, we are also monitoring two other trends, whose longevity is less clear: deurbanization and big-brand growth. With cities becoming COVID-19 epicenters, urbanites may move to the suburbs, or cities could see a significant reduction in traffic as people stay local. Big brands may benefit over the longer term, as retailers’ current focus on high-volume SKUs will change the consumer decision set. (In the United States, for instance, large and midsize brands captured 60 percent of recent growth, compared with only 20 percent in previous years).
crisis-response teams monitoring the situation and reacting accordingly. Preparing for the next normal, however, calls for a distinct working group: a planahead team tasked with planning across multiple time horizons. WHILE THE IMMEDIATE NEED DURING THIS CRISIS IS AN OPERATIONAL SUPPLY CHAIN, THE NEXT FOCUS WILL BE TO BUILD A SMARTER, MORE FLEXIBLE, AND, ESPECIALLY, MORE RESILIENT ONE.
As our colleagues explain in a recent article, “Getting ahead of the next stage of the coronavirus crisis,” the plan-ahead team should work through five frames: a realistic starting position, scenarios, a broad direction of travel, strategic moves, and trigger Channel shifts These consumer trends will have channel implications, points. In the remainder of this article, we discuss CPGeach of which will have varying impact on different countries and categories. Most significantly, food- specific considerations for each of these frames. service operators — particularly independents — will experience substantial contraction and consolidation 1. Gain a realistic view of your starting position as a result of physical-distancing restrictions and The plan-ahead team should review the company’s the recessionary environment. Food-service closures financial assumptions, ongoing initiatives, and have accounted for 10 to 20 percent grocery growth strategic choices, and sort them into three buckets: in Western markets; when the food-service sector “still about right,” “wrong,” and “unsure.” CPG companies should reevaluate their 2020 reopens, we expect a few percentage points to remain growth expectations and key drivers, including the in grocery. We also expect to see significant retailer markets, categories, and customers that will deliver consolidation, especially in sectors that were less growth; the role of planned product launches and well capitalized and struggling before the outbreak, campaigns in light of store closures and recessionary such as small US quick-service restaurants. Some pressure; and the allocation of resources, including distributors will go out of business, creating route-to- talent. This exercise will clarify your starting point market challenges for some CPG players, especially and provide a clear picture of the challenges you need to address. in the fragmented trade. Amazon and other e-marketplaces were already growing by 25 percent a year from 2013 to 2018 2. Develop scenarios for multiple versions of your but had previously struggled with the supply-chain future complexity of fresh food and the economics of Scenario planning for the next normal is a daunting delivering CPG products. During the crisis, however, task, with many macroeconomic possibilities, vast these players are likely to capture an outsize share of differences in markets (and even regions or cities), and only an early view of the consumption implications. core grocery. In offline grocery, discounters and other value “Bound the uncertainty” by considering at least four retailers will benefit from the downturn, as they did in discrete scenarios—each covering country, category, 2009. Major grocers will rationalize their assortments and channel outcomes— underpinned by clearly based on learnings during the crisis. They will also stated assumptions about containment measures likely invest more in neighborhood proximity formats: and financial aid. in China, for instance, convenience-store sales were 8 percent higher in March than in January. And grocers 3. Establish your posture and broad direction of will ask CPG companies for support in making the travel After a detailed scenario-planning exercise, it may economics of e-commerce work. seem odd to make macro choices—but they help to align companies on the direction of travel. CPG Getting ahead of the next phase By now, most CPG companies have well-established companies might consider their stances on the 58 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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following: • Global business. Will you focus on your previous priority growth markets or review your segmentation based on new behaviors and economic outlook? • Portfolio. Will you continue to prioritize at-home essentials or invest in rebuilding demand for products that consumers largely held off buying? • Value proposition. Will you reposition premium offerings or prioritize cheaper brands? • Discretionary categories. Is your primary aim to restart operations and manage your bottom line, or will you invest—for example, in marketing or direct to consumer (DTC)—to capture share? • Essential categories. Will you focus on traditional retail partners or on growth channels, such as e-marketplaces? • Challenger brands. Will you wait to bounce back or create a marketing and promotional growth plan? • Think about how to align your operating model with these stances and about which new “muscles” you might have to build. Establishing your posture and broad direction of travel will help you decide on strategic moves.
hard-to-come-by digital talent. Revisit your channel strategy and customer segmentation In light of the aforementioned retail dynamics, reset your channel strategy around both the enduring global trends and smaller, local shifts. This will in turn require a review of your customer-segmentation strategy and growth targets, and an understanding of the capabilities you may need for new partnerships. Rebase overall investment across tiers as needed and build up new priority customers with stronger ways-of-working agreements. Decide how you’ll manage the trade spend you’d previously allocated to now-lower-priority customers, while maintaining those relationships and your fair share of sales. Also, decide how you’ll support the return of food service, if it’s important to your mix—especially in the difficult period immediately after lockdowns are lifted.
Revise assortment and pricing After the crisis, retailers are likely to want to reevaluate their category vision and assortment, which could be good news for CPG companies that play in multiple categories and price tiers. To prepare action plans, know your category consumer better than anyone else: test ranging and new promotional mechanics, 4. Determine actions and strategic moves that are revisit insights from the previous recession, and, later, supplement in-store learnings with primary robust across scenarios The plan-ahead team can then draft and pressure- consumer and shopper research to understand posttest action plans for each scenario. CPG players have crisis perspectives. Reprioritize your portfolio based on shifts in a range of commercial, operational, and strategic consumer and customer needs and on changes in areas to cover. sourcing and the supply chain. And get granular: one size will not fit all. Build shopper-, occasion-, channel-, Accelerate e-commerce and digital marketing The specific actions will depend partly on your and customer-specific plans. posture and business model, but all CPG companies should deepen their relationships with third-party Strengthen your purpose orientation e-commerce partners and work with them in new A company’s actions during times of crisis are ways, such as category captaincy, deeper data written into its history and make a lasting impression on consumers. To lead with purpose, understand exchange, or shared warehousing. At the same time, avoid overreliance on the your stakeholders’ needs and review the trade-offs e-marketplace giants—strengthen your relationships in addressing them. Think about how to bring your with second-tier e-tailers and owned e-commerce greatest strength or “superpower” to bear, perhaps (such as DTC websites, owned marketplaces or more creatively than before. Communicate frequently and clearly, but you don’t ecosystems, or partnerships in which you control your brand presence and own the consumer relationships need to have all the answers—you can crowdsource ideas and involve your employees. Your jointly created and data.) With customer decision journeys encompassing purpose can then be a source of energy and renewal. more digital touchpoints and increasing in complexity, Finally, use purpose as a filter for your action plans. If shoppers will expect CPG companies to have a they don’t stack up against your values, identity, and consistent presence online and offline. Capturing and legacy, look for alternatives. managing data will be essential and can help deliver precision marketing at lower cost. Finally, despite the Build a resilient supply chain uncertainty, consider actively recruiting otherwise While the immediate need during this crisis is an FOODBUSINESSAFRICA.COM
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COVER STORY | COVID-19 operational supply chain, the next focus will be to build a smarter, more flexible, and, especially, more resilient one. Heads of operations and CIOs should review the strategy, footprint, assets, processes, and tools along the entire supply chain. They will have to decide whether efficiency and centralized footprints remain the answer to manage future risk. They will also need to determine whether legacy infrastructure and systems should be upgraded to autonomous end-to-end planning systems or to a combination of advanced analytics and end- to-end visualization THE CONSUMER TRENDS THAT ARE CRYSTALLIZING DURING THE CRISIS AND WILL MOST LIKELY PERSIST WILL AFFECT EVERY CPG CATEGORY. BY ESTABLISHING PLAN-AHEAD TEAMS AND ACTING ON THE FIVE FRAMES, CPG COMPANIES CAN EMERGE STRONGER FROM THE CRISIS
Accelerate the role of digitization and automation in supply chain, back-office functions, procurement, and even route to market. Done right, automation transformations can have an impact on both the top and bottom lines in as little as three months. Stay abreast of regulatory changes Pay close attention to government mandates and regulatory actions, which may become more interventionist in areas such as consumer health, control over national or local food ecosystems, and employee safety. If you lack an experienced publicaffairs department, consider temporarily devoting resources to government relations and making it part of the crisis-response team’s remit.
Scan for small-brand M&A Consider updating your M&A strategy in the context of your posture—for example, buying rather than building new capabilities or reframing priorities solutions, for better complexity management. Embed new ways of working based on lessons from (for example, resilience over pure efficiency). If you the crisis. Complement monthly sales and operations decide to look for complementary assets, focus planning (S&OP) cycles with weekly control towers, on strategic acquisitions: brands that expand your which help balance service, cost, and cash (that is, portfolio, challengers within your major categories, or resilient adjacent players. inventory). While industry players are balancing many Last year’s sales and traditional forecasts will be less valuable, so dial up planning across sales challenges, private-equity firms are single-mindedly and operations and jointly make decisions about focused on preparing for transactions. Make sure demand—for example, is a huge order a true uptick that any asset-valuation work is risk-managed and in demand, a one-time effect of new ranging, or the rooted in your scenarios. Also, consider divestments of your own underperforming or less-strategic assets same demand pulled forward a week? For priority customers, short- term solutions (such to free up cash and ensure longer-term resilience. as connected inventory or simplified routes from factory to store) could be leveraged on a more regular 5. Set trigger points that drive your organization to act at the right time basis to manage new demand levels. Finally, time is of the essence. Lay out key indicators and set clear trigger points for each scenario; ensure Define the next level of productivity Any short- to medium-term falloff in spending that your teams have the data and processes to (resulting, for example, from store closures and travel identify these trigger points as soon as possible. restrictions) should be swept into updated budgets. It’s then up to the top team to give the go-ahead to Rigorously allocate all remaining funds toward the execute the plans. The consumer trends that are crystallizing during highest-ROI activities. Steer demand to customers and brands with excess supply, and functional the crisis and will most likely persist—recessionary behavior, greater digital engagement, attention capacity to more urgent needs. Given COVID-19’s immediate impact, planning to wellness and hygiene, nesting, and heightened for the next normal can feel like a real-time zero- expectations of corporate purpose—will affect every based- budgeting effort. Analyze performance at the CPG category. By establishing plan-ahead teams and acting on lower spend levels and then build back investment the five frames, CPG companies can emerge stronger in priority categories, brands, and channels, with monthly monitoring of triggers to start “investment from the crisis and be well positioned to succeed in spend” as you emerge from the crisis. In the 2008 the next normal. FBA downturn, the top 20 percent of performers reduced costs more quickly and were faster to invest as the economy recovered. Source: McKinsey 60 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY
6 Lessons from China’s recovering food and beverage sector after Covid-19 By Ming Rodrigues – Kerry
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s China emerges from COVID-19, food and beverage manufacturers worldwide can learn from the country’s recovery efforts and changing consumer landscape As one of the world’s largest manufacturers of ingredients and commodities, China’s lockdown from the COVID-19 pandemic delivered a major hit to every aspect of life, from the economy to day-to-day tasks. In the food and beverage industry, the long arm of disruption tightened its lock around the global supply chain, foodservice sector, commodity prices and demand for essential and nonessential items as China’s major cities shut down for several months. China is now entering the recovery phase of postCOVID-19 life, with food and beverage operations beginning to resume some normal activity. As COVID-19 continues to spread and impact other locations, food and beverage manufacturers from around the globe can look to China for lessons on how plan for the future.
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A brief recap of China’s COVID-19 outbreak China was the epicentre of the COVID-19 outbreak which gained global attention in mid-January 2020 though, according to the Chinese Center for Disease Control and Prevention (CDC), the first known patient experienced symptoms on December 1, 2019. The situation escalated rapidly and by January 23 Wuhan, the capital of Hubei province, went under lockdown. This was just before the start of lunar new year holiday period, which lasted from January 25 to 30. By January 29, provincial regions had activated first-level emergency responses to the epidemic and the majority of China's residents remained home to avoid infection. The central government also extended the lunar new year holidays to February 2, with many local governments stretching it till February 9 to prevent mass travel back to the cities. The move proved effective. By March 9, though China reported a total of 80,754 infection cases, the day's increase of new cases stood at just 19, signalling that efforts to contain the epidemic were finally gaining ground. MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY | COVID-19 China eventually lifted its lockdown on March 25, with Wuhan following on April 8. As of April 7, for the first time since January, China reported zero deaths from COVID-19, thanks in part to tightening restrictions on foreign travellers amidst rising imported and asymptomatic cases. China’s food and beverage sector during COVID-19 With the COVID-19 situation evolving at unprecedented levels, it was not business as usual for China's food and beverage industry. Just as quickly as the virus spread, by February, both manufacturing and non-manufacturing sectors bore the brunt of the pandemic fallout, with the non-manufacturing sector taking the biggest blow. During the lunar new year period, the Chinese Cuisine Association reports that 93% of foodservice companies ceased operations, while BCG data saw the retail sector (including grocery stores, ecommerce and department stores) taking an overall drop of 50%. A Kantar report revealed that food and beverage fell 46% between January 25 and February 7 alone. More recent insights from the Streetbees COVID-19 Human Impact Tracker indicate that 80% of Chinese citizens have changed their consumption and shopping habits. In early February, Kantar market research showed people were stocking up on ‘necessity foods’ and non-perishables like instant noodles, instant soups and frozen foods as these are long-lasting and easy-to-store, minimising frequency of grocery purchases and thereby the risk of infection.
IN NUMBERS
80%
PORTION OF CHINESE CONSUMERS WHO HAVE CHANGED THEIR CONSUMPTION & SHOPPING HABITS POST CORONA Meanwhile, demand for liquid dairy, confectionary, beverage and alcohol, regarded as unnecessary foods, saw a sharp decline for that same period. Food and beverage in China after COVID-19 Today, even with the trajectory of COVID-19 shifting heavily to western nations and the situation gradually improving in China, the country’s GDP growth rate for 2020 is projected at below 6%. The outcome will depend on how other major economies including the U.S. and Europe manage the epidemic. Business in China is gradually resuming, but we’re seeing a different tack across the value chain. From expanded group purchases for corporations; the 62 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
launch of automated, contactless coffee machines to address food safety concerns; packaged products to meet the rise of in-home consumption; safe online purchasing and offline food delivery involving ‘no touch’ technology to the surge in immune health foods and products, the food and beverage industry is rolling out new initiatives and offerings to meet the seismic shift in consumer mindset and purchasing behaviour. Here's a look at how COVID-19 has changed shopping habits in the Chinese market, what and where people are choosing to eat and the implications for the food and beverage sector and consumers everywhere. Outcome 1: Opportunity for tasty, convenient and nutritious DIY home meals Despite the spike in instant foods, the tide appears to be turning as people start to explore more nutritious meals beyond canned or frozen. To avoid crowds and control what goes into their food, consumers are spending more time in the kitchen cooking from scratch. A Mintel survey of Chinese consumers who are grocery shoppers found 69% are spending more on in-home food and 49% are spending less on eating out. In addition, with more people working from home, 40% of that segment are now cooking dinner from scratch, compared to just 26% pre-COVID-19, as highlighted in Streetbees. This shift has led to the increasing popularity of online cooking videos as consumers rediscover the pleasures of whipping up wholesome meals at home, according to Ipsos ‘Insight of consumer purchase behavior on daily necessities during coronavirus FOODBUSINESSAFRICA.COM
of the virus has made consumers in China wary of fresh meat and fish. With the COVID-19 outbreak threatening consumers’ trust in meat, the spotlight may well turn to plant-based proteinsources like soy, mushroom and rice. This is not a new concept to the Chinese palate, which has been familiar with mock meat ever since the Tang dynasty, some 1,400 years ago, when an imperial official served vegetarian mutton and pork at a banquet. Also popular among consumers in China are protein bars as a meatless and convenient protein source. Outcome 4: Health and foods supporting wellness and immunity are priority With so much at stake, a fact that cannot be overlooked in the Ipsos report is that health and wellness rank high for 75% of consumers in China today. People are paying more attention to their nutrition and what they eat, looking at supplements that support wellbeing and immunity, and underlining all that is the paramount importance of food safety. Consumers are also seeking out natural ingredients believed to enhance health and fight infections such as ginger outbreak’. Couple that with 58% saying they ‘care and lemon. Products recently launched include drinks more about daily life’, and the implication is that with functional ingredients, for example milk with while dining out may be still enjoyed, the balance will immune globulin and vitamin C fruit tea. continue to tilt as consumers gravitate increasingly PREVIOUSLY AMBIVALENT ABOUT ONLINE towards preparing home-cooked meals and place PURCHASING, MORE CHINESE ELDERLY greater stock in simple joys like dining in with family HAVE DISCOVERED HOW QUICK, EASY AND and friends. CONVENIENT SHOPPING CAN BE WITH APPS This changing consumption landscape can be AND SOCIAL MEDIA. viewed as an opportunity for the industry. Food manufacturers and brands can help consumers enjoy Pre-COVID-19, the importance of good health was better-for-you home meals, whether it’s providing already evident in the Chinese market. According healthy yet delicious and easy-to-prep meal solutions to a 2019 Kerry global consumer survey on immune or devising nutritious menus, which would come as health, 90% of respondents in China identified a boon to consumers new to cooking and looking themselves as “health conscious”, with supplements, for guidance. Even companies specialising in frozen sports nutrition and yoghurt products with immunity meals can educate consumers on the nutritional benefits seeing the highest interest. value of frozen fruits, vegetables and fish. A key factor motivating consumers to buy healthy foods and products was transparent information on Outcome 2: Demand for visibility on product ingredients—around half of people want to see the sourcing and safety benefits and efficacy explained and supported clearly With consumers keenly aware of the importance on the packaging. of strict hygiene and food safety, technologies like blockchain in supply chain processes are critical in allowing better visibility and transparency on product Outcome 5: Seniors are catching on to online buying Previously ambivalent about online purchasing, more sourcing and manufacturing. This dovetails with 62% of Chinese consumers Chinese elderly have discovered how quick, easy and saying that they are now more rational in their convenient shopping can be with apps and social purchases, preferring to take a long-term view and media. What this means for manufacturers is that putting more thought into what goes into their to-buy clear images and easy-to-read product names and list. descriptions are crucial to ensure a smooth buying Outcome 3: Potential growth in plant-based protein experience, especially as more easy ordering apps become available and the popularity of food delivery as a clean and safe meat alternative The fear that animal products are the root cause continues to rise. FBA Source: Kerry
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FOOD SAFETY
Stopping corona virus a huge challenge at crowded us meat plants By Josh Funk
D
aily reports of giant meat-processing plants closing because workers tested positive for the coronavirus have called into question whether slaughterhouses can remain virus-free. According to experts, the answer may be no. Given that the plants employ thousands of people who often work side by side carving meat, social distancing is all but impossible. Because of that, the risk of catching the virus will likely remain even as companies take numerous steps to increase protections for workers. “It’s not that people aren’t 64 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
trying. It’s just that it is very difficult to control this illness,” said Dennis Burson, an animal science professor at the University of Nebraska-Lincoln. The list of companies dealing with infected workers has been growing every day at plants across the country. Among the latest was the closure Wednesday of Tyson Foods’ huge pork-processing plant in Waterloo, Iowa, after numerous workers tested positive. That follows closures of a Smithfield Foods pork plant in Sioux Falls, South Dakota; a JBS beef plant in Greeley, Colorado; and many others. Some, including the Tyson pork plant in Perry, Iowa, FOODBUSINESSAFRICA.COM
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"WE ARE LOOKING FOR COUNTLESS WAYS OF ENSURING WE HAVE GOOD HEALTHY SOCIAL DISTANCING IN OUR PLANTS. IT’S NOT IMPOSSIBLE DESPITE THE NUMBER OF PEOPLE IN OUR PLANTS" HECTOR GONZALEZ - SENIOR VP, HUMAN RESOURCES, TYSON FOODS
cases, plants may be able to spread workers out by slowing down operations, but the feasibility of the change depends on the layout of each plant and would reduce a plant’s capacity. “They were constructed to have people stand next to each other and work, and that’s very difficult to change,” he said. Edgar Fields, president of the Southeast Council of the Retail, Wholesale and Department Store Union, which represents thousands of poultry workers, said it’s hard to know if the precautions at plants will protect workers. “We say 6 feet … but what is enough?” Fields asked. “What else is it that we can ask them to do to try to protect their employees when they walk in the door and when they walk out. I don’t know. All of this is new.” Alejandra Wehunt, 22, of Gainesville, Georgia, said she stopped going to work at a poultry processing plant as soon as she found out a male worker she knew had tested positive for COVID-19, the disease caused by the coronavirus. “I have a young daughter. I live with my grandmother.
have reopened after deep cleanings. The closures shouldn’t cause any immediate meat shortages or big price jumps at supermarkets, but as Purdue University economist Jason Lusk noted, “It’s a very fluid and volatile situation to keep an eye out for in the days to come.” Iowa Gov. Kim Reynolds, whose state leads the nation in pork production, acknowledged the likelihood of “clusters of positive cases” at meatprocessing plants but said the operations must remain open. “Without them, people’s lives and our food supply will be impacted,” Reynolds said. In an attempt to protect workers, companies have started checking employee temperatures before they start their shifts, staggering breaks and altering "WE SAY 6 FEET … BUT WHAT IS ENOUGH? WHAT ELSE IS IT THAT WE CAN ASK THEM TO DO TO start times. Owners said they have also done more to TRY TO PROTECT THEIR EMPLOYEES WHEN THEY clean plants, added space for workers to spread out WALK IN THE DOOR AND WHEN THEY WALK on breaks, slowed production lines so workers can OUT. I DON’T KNOW. ALL OF THIS IS NEW.” spread out and added plastic shields between work stations. EDGAR FIELDS, PRESIDENT OF THE SOUTHEAST “We are looking for countless ways of ensuring COUNCIL RETAIL, WHOLESALE AND we have good healthy social distancing in our plants. DEPARTMENT STORE UNION It’s not impossible despite the number of people in our plants,” said Hector Gonzalez, Tyson’s senior vice I have seizures and heart problems. I can’t catch president of human resources. anything,” said Wehunt, a single mother who trims and marinates the chicken with seasoning at the Taking precautions Major meat companies, including Smithfield, Tyson, plant. “If one person got it, probably many others have Cargill and JBS, said they also relaxed their attendance it too. He was around other people.” Wehunt said the and sick leave policies to encourage sick workers plant manager at the Gold Creek Foods plant had told to stay home and allow them to be paid. The North workers that, despite the pandemic, they had to show American Meat Institute trade group says companies up to work or they could risk losing their jobs. “Why are sharing information about their safety practices are we losing our jobs because we don’t want to put our health in jeopardy,” she said. to help the industry respond to the outbreak. A Gold Creek Foods spokesman did not respond to Still, workplace safety expert Celeste Monforton phone calls seeking comment. said some companies are doing more than others, Joshua Specht, a University of Notre Dame history and it’s difficult to ensure people working so closely professor who has studied the meat industry, said it together won’t spread the virus. “The scary thing is relies on workers at the margins of society — including you know if it could happen in one plant, the potential recent immigrants — who don’t have a safety net and is there for a lot of other plants,” said Monforton, a therefore feel pressure to continue working even if lecturer in public health at Texas State University. they are ill. “Unless you’re super vigilant, this is a recipe for “With workers in close proximity, working long disaster.” hours, and feeling pressure to continue even when Even companies with the best intention may have sick, the meat industry is at particular risk for trouble given that plant layouts make 6-foot distancing pandemic-related disruptions,” Specht said. FBA difficult, said Jim Roth, director of the Center for Food Security and Public Health at Iowa State University. Precautions like face masks and plastic shields can help but likely won’t stop the risk, he said. In some Source: CNN
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Covid-19 and food safety - guidance for food businesses
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he world is facing an unprecedented threat from the COVID-19 pandemic caused by the Covid-19 virus. Many countries are following the advice from the World Health Organization (WHO) regarding the prevention measures such as physical
distancing. Food industry personnel, however, do not have the opportunity to work from home and are required to continue to work in their usual workplaces. Keeping all workers in the food production facilities and supply chains healthy and safe is critical to surviving the current pandemic. Maintaining the movement of food along the food chain is an essential function to which all stakeholders along the food chain need to contribute. It is reasonably expected that the food industry should have a Food Safety Management Systems (FSMS) based on the Hazard Analysis and Critical Control Point (HACCP) principles in place to manage food safety risks and prevent food contamination. The FSMS is underpinned by prerequisite programmes that include Good hygiene practices, Cleaning and sanitation, Zoning of processing areas, Supplier 66 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
control, Storage, Distribution and transport, Personnel hygiene and fitness to work. These are the basic conditions and activities necessary to maintain a hygienic food processing environment. The Codex General Principles of Food Hygiene lay down a firm foundation for implementing PRPs. There is now an urgent requirement for the Food Industry to ensure compliance with measures to protect food workers from contracting COVID-19, to prevent exposure to or transmission of the virus, and to strengthen food hygiene and sanitation practices. The purpose of these guidelines is to highlight these additional measures so that the integrity of the food chain is maintained, and that adequate and safe food supplies are available for consumers. NO POTENTIAL TRANSMISSION OF COVID-19 VIA FOOD It is highly unlikely that people can contract COVID-19 from food or food packaging. COVID-19 is a respiratory illness and the primary transmission route is through person-to-person contact and through direct contact with respiratory droplets generated when an infected person coughs or sneezes. Alternatively, as the FOODBUSINESSAFRICA.COM
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respiratory droplets are too heavy to be airborne, they land on objects and surfaces surrounding the infected person. There is no evidence to date of viruses that cause respiratory illnesses being transmitted via food or food packaging. It is possible that someone may become infected by touching a contaminated surface, object, or the hand of an infected person and then touching their own mouth, nose, or eyes. It is imperative for the food industry to reinforce personal hygiene measures and provide refresher training on food hygiene principles to eliminate or reduce the risk of food surfaces and food packaging materials becoming contaminated with the virus from food workers. Personal protective equipment (PPE), such as masks and gloves, can be effective in reducing the spread of viruses and disease within the food industry, but only if used properly. In addition, the food industry is strongly advised to introduce physical distancing and stringent hygiene and sanitation measures and promote frequent and effective handwashing and sanitation at each stage of food processing, manufacture and marketing. FOOD WORKERS: AWARENESS OF COVID-19 SYMPTOMS Staff working in the food sector need to be aware of the symptoms of COVID-19. Food business operators need to produce written guidance for staff on reporting such symptoms and on exclusion from work policies. The most important issue is for staff to be able to recognise symptoms early so that they can seek appropriate medical care and testing and minimise the risk of infecting fellow workers. The most common symptoms of Covid-19 include: a fever (high temperature – 37.5 degrees Celsius or above; a cough - this can be any kind of cough, not just dry; shortness of breath; breathing difficulties and fatigue. PREVENTING THE SPREAD OF COVID19 IN THE WORK ENVIRONMENT It is important for staff to be provided with written instructions and training on how to prevent the spread of COVID-19 and they must practice personal hygiene and appropriately use of PPE at all times to prevent Covid-19. Food businesses must introduce a high level of security and staff management to maintain a disease-free working environment, while staff who are unwell or who have any symptoms of COVID-19 should not work and their contacts (those with exposure to confirmed cases) must be excluded from food premises. Meanwhile, a procedure to allow staff to report illness by phone (or email) should be established so that workers with early stages of COVID-19 can receive reliable information and be quickly excluded from work environments. It is critical that food safety practices in food FOODBUSINESSAFRICA.COM
IT IS IMPERATIVE FOR THE FOOD INDUSTRY TO REINFORCE PERSONAL HYGIENE MEASURES AND PROVIDE REFRESHER TRAINING ON FOOD HYGIENE PRINCIPLES TO ELIMINATE OR REDUCE THE RISK OF FOOD SURFACES AND FOOD PACKAGING MATERIALS BECOMING CONTAMINATED WITH THE VIRUS FROM FOOD WORKERS
premises should continue to be delivered to the highest hygiene standards in line with established FSMS, while proper hand hygiene – washing with soap and water for at least 20 seconds as per WHO’s advice is maintained and enforced for all employees and visitors to the premise. The use of alcohol-based hand sanitizers must also be enforced. Workers must be adviced to practice good respiratory hygiene while cleaning/disinfection of work surfaces and touch points such as door handles must be done frequently. USE OF DISPOSABLE GLOVES BY FOOD WORKERS Gloves may be used by food workers but must be changed frequently, but it’s important that hands must be washed between glove changes and when gloves are removed, while gloves must be changed after carrying out non-food related activities, such as opening/closing doors by hand, and emptying bins and the workers should avoid touching their mouth and eyes when wearing gloves. Disposable gloves should not be used in the food work environment as a substitute for handwashing. Food businesses need to ensure that adequate sanitary facilities are provided and ensure that food workers thoroughly and frequently wash their hands. Normal soap and warm running water is adequate for handwashing. Hand sanitizers can be used as an additional measure but should not replace handwashing. PHYSICAL DISTANCING IN THE WORK ENVIRONMENT Physical distancing is very important to help slow the spread of COVID-19. All food businesses should follow physical distancing guidance as far as reasonably possible. WHO guidelines are to maintain at least 1 metre (3 feet) between fellow workers. Employers should also consider other measures to protect employees including staggering of workstations on either side of processing lines so that food workers are not facing one another; provision of PPEs such as face masks, hair nets, disposable gloves, clean overalls, and non-slip safety shoes for staff; space out workstations, which may require reduction in the speed of production lines; limiting the number of staff in a food preparation area at any one time; and organise staff into working groups or teams to facilitate reduced interaction between groups.
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COVER STORY | COVID-19 COVID-19 ILLNESS IN THE WORKPLACE If a food worker becomes unwell in the workplace with typical symptoms of COVID-19, they should be removed to an area away from other people, into a room or area where they can be isolated behind a closed door such as an office with an open a window for ventilation and arrangements made for the unwell employee to be removed quickly from the food premise. National guidelines for reporting cases/ suspect cases of COVID-19 must be then followed by management. All surfaces that the infected employee has come into contact with must be cleaned and sanitized, including toilets, door handles, and telephones, desks, tables, plus all surfaces and objects visibly contaminated with body fluids. All staff should wash their hands thoroughly with soap and water after any contact with someone who is unwell with symptoms consistent with coronavirus infection. If an employee is confirmed to have COVID-19 it is necessary to notify all close contacts of the infected employee so they too can take measures to minimise further risk of spread by going into quarantined for 14 days. The company should draft a return to work policy for staff who have been infected and recovered from COVID-19. WHO recommends that a confirmed case could be released from isolation once their symptoms resolve and they have two negative PCR tests at least 24 hours apart. If testing is not possible, WHO recommends that a confirmed patient can be released from isolation 14 days after symptoms resolve. IF A FOOD WORKER BECOMES UNWELL IN THE WORKPLACE WITH TYPICAL SYMPTOMS OF COVID-19, THEY SHOULD BE REMOVED FROM OTHER PEOPLE, INTO A ROOM OR AREA WHERE THEY CAN BE ISOLATED BEHIND A CLOSED DOOR SUCH AS AN OFFICE WITH AN OPEN A WINDOW FOR VENTILATION
TRANSPORT AND DELIVERY OF FOOD INGREDIENTS AND FOOD PRODUCTS To avoid any risk of contamination, it is important that drivers and other staff delivering to food and from premises be made aware of the COVID-19 transmission and preventive measures, including potential hot spots, including steering wheels, door handles, mobile devices, etc. Drivers and other delivery staff should be supplied with an alcohol-based hand sanitizer, paper towels and they must sanitize their hands before passing delivery documents to food premises staff. They must be aware of physical distancing when picking up deliveries and passing deliveries to customers; be informed of the need to maintain a high degree of personal cleanliness and to wear clean protective 68 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
clothing at all times. They must also be aware of the need to ensure that all transport containers are kept clean and frequently disinfected, foods must be protected from contamination, and must be separated from other goods that may cause contamination. RETAIL FOOD PREMISES DURING THE COVID-19 PANDEMIC The food retail sector faces the greatest challenges in maintaining the highest standards of hygiene, protecting staff from the risk of infection, maintaining physical distancing when dealing with large numbers of customers, remaining open, and ensuring that adequate supplies of foods are available on a daily basis. Employers should stress the importance of more frequent handwashing and maintaining good hygiene practices, and of more frequently cleaning and disinfecting surfaces that are touched regularly. They need to be aware of symptoms of COVID-19 and inform their employer and seek medical advice if they think they have symptoms of the disease. Maintaining physical distancing in retail food premises is critical for reducing the risk of transmission of the disease. Some practical measures that may be used by retailers include the following: • Regulating the numbers of customers who enter the retail store to avoid overcrowding; • Placing signs at entry points to request customers not to enter the shop if they are unwell or have COVID19 symptoms; FOODBUSINESSAFRICA.COM
IN RETAIL ESTABLISHMENTS, CONSUMERS SHOULD ALWAYS BE ADVISED TO WASH FRUIT AND VEGETABLES WITH POTABLE WATER BEFORE CONSUMPTION. BOTH CUSTOMERS AND STAFF SHOULD STRICTLY OBSERVE GOOD PERSONAL HYGIENE PRACTICES AT ALL TIMES AROUND OPEN FOOD AREAS
• Managing queue control consistent with physical distancing advice both inside and outside stores; • Providing hand sanitizers, spray disinfectants, and disposable paper towels at store entry points; • Using floor markings inside the retail store to facilitate compliance with the physical distancing, particularly in the most crowded areas, such as serving counters and tills; • Making regular announcements to remind customers to follow physical distancing advice and clean their hands regularly; • Introducing plexiglass barriers at tills and counters as an additional level of protection for staff; • Encouraging the use of contactless payments; • As consumers increasingly bring their own shopping bags, advice to consumers to clean their shopping bags before every use shall be posted in the food retail premises (shops, outlets, supermarkets). • Minimise the risk of transmitting COVID-19 by identifying high touch points in the retail premises and ensuring these are cleaned and disinfected regularly. These include shopping trolleys, door handles, and weighing scales for customer use.
fruit and vegetables with potable water before consumption. Both customers and staff should strictly observe good personal hygiene practices at all times around open food areas. In order to hygienically manage open food displays and to avoid the transmission of COVID-19 through surface contact, food retailers should: • Maintain frequent washing and sanitizing of all food contact surfaces and utensils; • Require food service workers to frequently wash hands, and, if using gloves, these must be changed before and after preparing food; • Require food service workers to frequently clean and sanitise counters, serving utensils and condiment containers; • Make available hand sanitizer for consumers on their way in and out of the food premises; • Should consider not openly displaying or selling unwrapped bakery products from self-service counters. Bakery products on open, self-service displays in retail stores should be placed in plastic/ cellophane or paper packaging. Where loose bakery products are displayed in retail stores, these should be placed in plexiglass display cabinets and placed in bags using tongs when customers are served.
Food workers in staff canteens Workplace canteens in essential frontline services, such as food processing and food retailing, need to remain open where there are no practical alternatives for staff to obtain food. High standards of the public health measures for handwashing and respiratory etiquette need to be maintained in work canteens. Operational standards staff canteens should include: • Maintaining a physical distance of at least 1 metre between an individual and other workers, including in seating arrangements; • Staggering staff work and break times to reduce staff numbers in a canteen at any one time; • Restricting non-essential physical contact as much as possible; • Visible notices for staff promoting hand hygiene and physical distancing; Cleaning and disinfection procedures for Open food display in retail premises It is important to maintain good hygiene practices equipment, premises, contact surfaces/ high touch around open food displays, such as salad bars, fresh points, e.g. counter tops/tongs/service utensils/open self-service displays/door handles. FBA produce displays, and bakery products. Consumers should always be advised to wash Source: FAO FOODBUSINESSAFRICA.COM
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The food and beverage industry steps us efforts to combat covid-19 By Virginia Nyoro
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he Covid-19 pandemic has impacted the food industry in Africa and beyond more than anyone could have imagined possible. Even some of the most outrageous predictions on calamities of this kind had never thought the world could face such uncertain and unprecedented times, threatening human life and thereby upending the very nature of food industry supply chains that are important for trade. Beyond supply chain disruptions, food companies in the Continent continue to face challenges with getting vital supplies in, be they agricultural produce, packaging, ingredients and other vital industry services as travel bans and quarantine take their toll on operations. Retailers have not been left behind, with shortened operational hours and reduced sales in most categories due to low customer numbers, which could be further strained if the current situation continues into May, June and the rest of the year. The pandemic will surely hit Africa’s poor food supply chains harder than most regions on the world, with most companies putting in measures to put the well-being of their employees’ health; safety of production and distribution facilities; adopting remote working for non-essential workers; serving their customers; ensuring product safety and
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availability; stopping business travel and supporting communities in which they serve during the crisis period. “This pandemic is perhaps the greatest challenge our country has faced since democracy and calls on business, the private sector and communities to work together to overcome the virus,” says Richard Rushton, CEO of South Africa-based Distell Group. The outbreak of the Coronavirus, which has devastated the global economy and subjected millions of consumers into economic hardships, has indeed called for sector-wide collaboration, and the food industry has not been left behind. As government and corporates team up in efforts seeking to bring to a close this period of uncertainty, the food and beverage industry across the continent has also been on the fore front in mobilizing resources to provide the much needed support. From alcoholic beverage manufacturers, canned food producers, milk processors and millers, food and beverage companies have brought to the table their strengths in the fight against Covid-19, with hundreds of companies providing support and relief to communities most affected by the pandemic as well as strengthened efforts to mitigate the spread of the virus. A vital part of managing the pandemic, many food FOODBUSINESSAFRICA.COM
COVER STORY
companies also used their TV advertising platforms, bill boards and social media platforms to pass on critical information on how communities could keep themselves free from the virus, including hand washing tips – one of the key actions to control the spread of the virus. Below are some examples, not exhaustive of how the food industry has come together to support the communities Enhancing consumer safety In the East African region, The Uganda Manufacturers Association (UMA) has unveiled plans of using up to 7.3 million litres of alcohol in the stores of their members to produce affordable sanitizers in efforts to fight spread of coronavirus. In Kenya, members of the Kenya Association of Manufacturers have provided essential items such as water storage tanks, hand-washing facilities, alcoholbased sanitizers and soaps, to create awareness on the importance of washing hands and facilitate the public actualize hygiene. "THIS PANDEMIC IS PERHAPS THE GREATEST CHALLENGE OUR COUNTRY HAS FACED SINCE DEMOCRACY AND CALLS ON BUSINESS, THE PRIVATE SECTOR AND COMMUNITIES TO WORK TOGETHER TO OVERCOME THE VIRUS" RICHARD RUSHTON, CEO - DISTELL GROUP
Kenya Breweries, a subsidiary of brewing giant, East African Breweries Limited (EABL) committed KSH 50 million (US$500,000) to facilitate the production of 135,000 litres of sanitisers by two Nairobi-based industries to distribute free sanitisers to vulnerable Kenyans, while leveraging its extensive supply and logistics network to distribute the hand sanitizers across the country. It also distributed awareness posters. In Uganda, Uganda Breweries, its other affiliate donated sanitizers, food, mattresses and fuel to be used by the authorities to facilitate and feed the community. In Tanzania, leading sugar producer Kilombero Sugar Company donated 30,000 litres of alcohol to the Tanzanian government to aid in the production of hand sanitizers amid the spread of the corona virus in the country. “One of the major challenges facing the country during this crisis is limited availability of affordable hand sanitizers as well as increased demand for alcohol for manufacturers of the sanitizers,” said Fimbo Butallah, KSC commercial director while making the donations. In Kenya Wine Agencies Limited (KWAL) is also contributing to efforts to fight the spread of the Coronavirus. The company donated 105,000 litres of ethanol to Kenya Pipeline Company (KPC) who are mandated to oversee a government initiative for the FOODBUSINESSAFRICA.COM
mass production and distribution of hand sanitizers. Other breweries that donated sanirizers include Accra Brewery while Ghana Guinness Breweries donated 1,500 Malta Guinness packs to the Ministry of Information and also supported the Ministry with the printing educational materials to be distributed across the country using its existing distribution channels. Further, Delta Beverages, Zimbabwea’s leading beverage producer, donated USD$100,000 to Red Cross Zimbabwe for COVID-19 fight on behalf of The Coca-Cola Foundation. Food donations to vulnerable communities Restriction of movement, as part of the containment measures imposed by governments, has posed a major challenge to majority of families who need to leave their homes daily to earn an income to feed themselves. To cushion the vulnerable communities, companies have provided support in form of food donations. In Kenya, leading bakery and milling group Broadway Group of Companies that brings donated KSH 25 million (US$250,000) to the National Covid-19 Emergency Fund. The donation consisted of 10,000 bales of wheat flour and cash to the national and county to feed vulnerable communities. Pearl Dairy Farm Limited, the largest dairy processor in Uganda marketing its products under the flagship brand LATO, donated liquid milk worth UGX 345 million (US$91,600) to help in the fight against the coronavirus pandemic, while Uganda’s leading beer manufacturer, Nile Breweries donated 25,000kgs (25 tons) of maize flour to the ministry of Health. The company said that the 4,166 bags each containing 6kgs of maize flour will go towards catering for the feeding needs of vulnerable Ugandans whose lives have been disrupted by the on-going coronavirus lockdown in the country. In addition, NBL also donated 1,600 litres of fuel to the local coronavirus task forces
IN NUMBERS
US$1.51M
TRADE KINGS CONTRIBUTION IN ZAMBIA FOR COVID-19 ACTIVITIES to facilitate movements of the district task forces. Further strengthening community resilience was Unilever East Africa, which spelt out a wideranging set of measures in the fight against Covid-19 pandemic that focused on people’s safety, essential supplies and community support. The move came at the back of Unilever’s global announcement that it will contribute a total of US$649m through cash flow relief as well as donations. MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COVER STORY | COVID-19 (US$3.22m) as a result of the incentives and staff transport arrangement during the 21-day shutdown.
Bidco Africa, one of the leading consumer good company in East Africa also provide the much-needed boost to the Covid-19 Emergency Response Fund with a KSh25 million (US$233,000) donation. Capwell Industries, based in Thika Kenya, contributed food products and other essential supplies worth KSH 20 million (US$200,000) while in Rwanda, Africa Improved Foods offered free delivery services to its customers across Kigali, Rwanda. Distell, Trade Kings in the south Distell, the South Africa-based producer and marketer of wines, ciders, spirit and ready-to-drinks (RTDs) has also joined its peers in the Southern Africa region. The Amarula and Four Cousins brands owner has adopted its production process to produce hand sanitizers and other hygienic products at its production facilities. As a result, the company committed 100,000 litres of alcohol, which will be used to produce sanitisers as well as a variety of other hygienic and sanitising products. The company also has taken further measures to ensure it supports the government-sanctioned lock-down by cancelling all events and closing all its experiential and product tasting facilities until further notice. Distell also announced a work-from-home policy for all its employees who are not involved in the production. Trade Kings Group, a leading manufacturer of fast-moving consumer goods in Zambia, through its foundation has partnered with the Ministry of Health and the Ministry of Information to launch the “Trade Kings Foundation Campaign against the spread of Coronavirus.” The company committed to providing US$1.51 million towards this endeavour which have been channeled into prevention efforts, providing medical supplies and spreading awareness. While the crisis has led to increase in prices of necessities in retail outlets, South African processed foods producer, Tiger Brands has made a commitment not to increase the prices of any of its products during the lockdown period. The company revealed that the move would result to additional costs of R60million 72 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
Nigerian giants come to the fore Nigeria, Africa’s most populous country, stands out as a sore thumb in the continent, considering the vast country and challenges the healthcare system in the country could face in case of a significant corona virus outbreak. It is therefore encouraging to see the strong support food companies have provided to the government to mitigate and manage the pandemic in the country, where numbers have been steadily rising. Flour Mills of Nigeria (FMN), one of Nigeria’s leading food business and agro-allied groups, has strengthened the fight to curtail the spread of the pandemic by redeeming a US$2.8 million pledge to the Nigerian Private Sector Coalition Against COVID-19 (CACOVID). FMN revealed that it is procuring US$1.5 million worth of medical supplies, which will rapidly beef up Nigeria’s COVID-19 testing capability. The company has also commenced deployment of US$840,000 worth of food relief packages in 12 states across the nation to vulnerable communities hit by the lockdown. Nigeria’s industrialist and the founder of BUA Group, Abdul Samad Rabiu, has donated N1billion (US$2.73 million) in cash through the BUA Foundation to support the Federal Government’s bid to effectively tackle the coronavirus scourge in the country. He also donated testing kits and medical protective gear to nine states in the country. In his address at the presentation of the money and medical equipment, the BUA Chairman said that it was very important for the private sector to support the government’s effort to curb the spread of the coronavirus pandemic. Honeywell Flour Mills, a flour-milling company in Nigeria is partnering with the government in feeding 200,000 low-income families during the COVID-19 crisis. Other companies in West Africa such as Accra Brewery Limited in Ghana have launched their support to the communities to fight the spread of COVID-19 with 10,000 Bottles of Hand Sanitizers in 150ml containers. Efforts in the continent is also set to benefit from a US$7.2 million donation from American food and beverage firm, PepsiCo, which will be channeled into Africa, the Middle East, and South Asia. PespsiCo said that it will be is investing to scale meal distribution among the most food insecure populations in partnership with leading NGOs and to support government-led responses to local needs. As countries continue to impose more measures aimed at curtailing the spread, experts have called for more industry-wide collaborations in order to strengthen these measures and accelerate recovery of the global economy. FBA FOODBUSINESSAFRICA.COM
COUNTRY FOCUS
Uganda's Food, Beverage & Milling Industry Makes it Mark By Francis Juma
Uganda’s food, beverage and milling industry has made great strides, with increased investments by local, regional and international companies. Food Business Africa reviews the trends in investments in one of the most promising African countries.
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he East African country of Uganda has a unique profile: vast agricultural potential, a young and fast growing population and a country that is well located at the entry point to one of Africa’s remaining frontiers: the Great Lakes region. After decades of war and poor governance after its independence, the country has increasingly become one of the best options in Africa to set up businesses related to the food industry Uganda offers a wonderful location for businesses that are looking at the emerging Great Lakes region market - which comprises Uganda, Rwanda, Burundi, Democratic Republic of Congo and South Sudan. Its vantage position at the entry point to the Great Lakes region provides businesses with access to a market
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size of more than 120 million in one of the remaining frontiers in Africa. Uganda’s food industry has existed for a long time, with some of the leading sectors like sugar industry, where leading lights like Kakira Sugar and Sugar Company of Uganda (SCOUL) having been established in the early 1900s. Uganda is a leading coffee and tea producer, as well as a leading oilseeds producer in the region. The country continues to draw in investments led by a strong local entrepreneur base; regional giants like Mukwano Group, Bakresa Group, Pembe Flour Millers and Bidco Africa who have significant operations in the country; and international giants including Coca-Cola, PepsiCo, AB InBev and Diageo.
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COUNTRY FOCUS | UGANDA
Uganda's dairy sector has become one of the most vibrant in Eastern Africa, with investors lining up to boost the sector's performance
The fundamentals With a population of nearly 45.5 million according to the United Nations, the population of Uganda is expected to rise to nearly 60 million in less than a decade to 2030 and pass the 100 million people mark by 2050, by which time it will be 18th in the world in terms of countries with the highest populations, and number 6 in Africa. The fast-paced population growth rate in Uganda is due to the country’s exceedingly high population growth rate of 3.32% per annum and the total fertility rate of 6 children per woman – some of the highest in Africa. Uganda stands to gain great economic dividends in terms of stable economic growth and available work force due to its very young population. According to the UN, 48.5% of its population is aged 0-14 years, while 21.2% is between the ages of 15-24, meaning that a whooping 69.7% of the country’s population is below 25 years. Only 2% of its population is aged 65 years or older. To add to the impressive population growth numbers, is the surge in urbanization being experienced in the country. According to the World Bank, Uganda’s annual urban growth rate of 5.2% is among the highest in the world and is expected to grow to 22 million people by 2040, from 6.4 million in 2014. The country therefore provides an abundant resource base and a young consumer market for food companies targeting the youth market. Uganda is a country blessed with vast agricultural potential, driven by good quality soils and a tropical climate that opens up the country to abundant rainfall and many water sources, including lakes, rivers and swamps. The country has a substantial portion of Lake Victoria, which is the source of River Nile, 74 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
Africa’s longest river and a lifeline to many countries along its 6,400 km journey to the Mediterranean Sea. Despite the agriculture sector lagging behind in the adoption of the latest technologies, agricultural productivity country has grown enormously with the return of peace in the country over the last 30 years, with the country becoming a leading producer of meat, poultry, fish, pork, coffee, tea, grains, milk, fruits and vegetables, maize, oilseeds and may more, which has earned the country the distinction of a leading exporter of such commodities into the East African market and beyond. The vast agricultural resources have attracted a growing list of local, regional and international companies to set foot in the country to add value to the produce, buoyed by the strong economic prospects of the country and a young population. In this analysis, we are reviewing some of the emerging and interesting sectors to invest in in Uganda.
KEY FOOD INDUSTRY PROSPECTS Grain milling and bakery The grain milling sector has grown extensively in Uganda over the last 10 years, following the changes in consumption habits as urbanization takes its toll. Although bananas and other tubers including cassava, continue to be part of the diet in the country, the growth in consumption of maize (locally called posho), rice and wheat flour continues to thrive as young urban consumers dictate more of the consumption habits in the country. According to the United States Department of Agriculture (USDA), in the latest available estimates, FOODBUSINESSAFRICA.COM
Milled flour products on the shelf in one of the many supermarkets in Kampala
Uganda produced about 2.8 million tonnes of maize, with consumption of just above 2 million tonnes, while rice production stood at 238,000 MT, compared to 346,309 MT consumed in the country. Wheat consumption stands at 500,000 MT compared to 20,000 MT produced locally. From the above figures, Uganda fails to meet its demand for rice and wheat from local production, key commodities where local demand is forecast to rise substantially, while although local processing of maize is increasing, the country is a critical supplier of the commodity to the East African market, especially to Kenya, South Sudan and other countries. The grain milling industry in Uganda is in its nascent stages, even as regional giants Bakhresa and Pembe continue to lead the sector, and having invested more than a decade in the country. The recent entry of Mandela Millers, with a new 300 tonnes per day wheat and a 48 tonnes per day maize milling plants, is an indication that the country’s milling sector has many untapped opportunities. Another recent investment in the sector was by Master Grain Millers based in the FOODBUSINESSAFRICA.COM
second city of Jinja, which was a 300 TPD plant. Uganda has also seen the entry of tens of small scale millers, which are increasingly visible at the retail trade across the country, to meet the rising demand for maize meal and rice. The sector has also witnessed some exits, with Unga Millers closing its loss making maize milling plant in the country in 2017. In the rice sector, one of the largest rice growing and processing plants in East Africa, the Kibimba Rice factory, which packages the popular Tilda rice, has been in operation for nearly 20 years. The rising demand for wheat flour in Uganda is largely driven by the surging demand for baked goods, including bread, biscuits, cakes and cookies, as home
consumption of wheat flour lags behind other East African countries like Kenya and Tanzania. The bakery sector in the country is thriving, but from a lower base and phase of sophistication. Some of the most popular brands are owned by Ugandan entrepreneurs, including Hot Loaf, Ntake and many others. Specialty bakeries and cake shops, mainly located within high end malls that dot the main city Kampala, are also growing in prominence. An important component of the grains sector, the animal feed manufacturing industry in Uganda is still at the development stage but with huge potential, considering the country is the leading supplier of animal feed grains, oilseeds and cakes to the region. A 120 tonnes per day chicken feed plant by HRM-Rainbow a few years ago at their farm indicates the huge potential that investments of this kind can help add value to the livestock sector in Uganda. Soft and alcoholic beverages The soft and alcoholic beverages industry in Uganda is one of the most vibrant in Eastern Africa, with a mix of local and international brands sitting side by side in the many retail outlets and bars that give Uganda’s urban and rural areas the famed fun and entertainment hot spots in the region. In the soft alcoholic sector, Coca-Cola Beverages Africa (CCBA) and PepsiCo through their local bottling partners Century Bottling and Crown Beverages
Fresh Cuts is one of the leading meat processors in Uganda. MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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COUNTRY FOCUS | UGANDA UGANDA HAS UNMATCHED COMPARATIVE ADVANTAGE FOR GROWING FRUITS & VEGETABLES DUE TO ITS WARM, LESS HUMID TROPICAL CLIMATE. SOILS OF pH 5 TO 6.5 ARE MOST IDEAL FOR THE FRUITS AND VAST AREAS OF THIS TYPE OBTAIN IN UGANDA - UGANDA INVESTMENT AUTHORITY
Uganda's brewing industry is vibrant, with AB InBev and Diageo
respectively, have invested heavily in the country, with each seeking to be the leading producer of carbonated soft beverages, energy drinks and water, but they are not alone. An increasing number of local companies led by the Hariss International, the makers of the Riham brands have made their mark in the growing and highly competitive market that has seen several entrants in the last 10 years. CCBA, which had acquired the country’s leading water brand Ruwenzori from SABMiller, recently invested in 2018, breaking ground on a new US$8.35million (UGX30.7 billion) packaged water bottling line more, part of its US$15 million investment plan for Uganda in 2018. Recent entrants in the soft beverage sector include Kiri Bottling. The alcoholic beverages sector in Uganda has also witnessed a resurgence of investments, as the two leading multinationals AB InBev (Nile Breweries – 2 brewing plants) and Diageo (Uganda Breweries – one brewery and a distillery) jostle for the leadership position. The sector has seen phenomenal growth in the spirits market where tens of companies have entered in the last 10 years, with one of them Premier Distilleries recently investing in a new modern processing and packaging plant, that takes the sector into new territory, where other players include Chief Distillers, among many more new entrants. Uganda’s alcoholic beverages sector is also unique for its proliferation of cottage makers of wine from local produce, some of which have become known brands in the region e.g. Bella Wine.
with pineapple the most widely developed and grown commodity in the country, with mango not far behind. “Uganda has unmatched comparative advantage for growing fruits and vegetables due to its warm, less humid tropical climate, plentiful rainfall and vast opportunities for irrigation. Soils of pH 5 to 6.5 are most ideal for the fruits (such as oranges, mangoes and pineapples) and vast areas of this type obtain in Uganda. These soils are rare in the world,” notes the UIA. There are about 4 main fruit processing companies in Uganda, led by Britania Allied Industries and House of Eden, while about 15 companies export fruits to the European market regularly, leaving huge potential for investments in the fruits and vegetables value chain in the country. Opportunities exist in the production and processing of a number of fruits and vegetables in the country, including banana, avocado, macadamia, tomato, onions and hot pepper. The government has been a keen player to the development of the fruit processing sector in the country to tap into the huge potential, recently commissioning a US$12.88 million pineapple processing plant in Soroti and another one in Nyakihanga worth US$380,000 to improve the fruit supply chain in the country.
Meat, poultry and fish The meat, poultry and fish value chains in Uganda are very vibrant due as the country takes advantage of vast land and water resources, abundant feed stock from the crop value chain and a population that consumes such products in many forms. Uganda is a regional leader in the production of fish, chicken, eggs, pork and other products, while the livestock sector is thriving again after many decades of low production. Opportunities exist to produce and process poultry and meat products for the growing local demand, regional and export markets, especially for those markets that are seeking organic products. However, apart from fish and some poultry processors that have grown accustomed to the strict requirements for the export market, the potential in the poultry and meat value chain in Uganda to enter the export market faces many barriers, including failure to meet these requirements. Fruit and vegetables processing Some of the leading companies in this sector According to the Uganda Investment Authority, include HMH-Rainbow, Fresh Cuts, Ugachick, Uganda is the leading producer of fruits in Africa, Biyinzika, Uganda Meat, Sokoni Africa, Lake Bounty, 76 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
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Greenfields Uganda, Fresh Perch, Infra Uganda and Nyanza Perch among others. The entry of RCL Foods, South Africa’s largest chicken producer and marketer into the Uganda poultry industry has changed the game, with the firm’s products currently being sold into the regional markets in East Africa. Dairy processing The dairy industry has made great strides in less than 15 years to be the fastest growing and the number two player in Eastern Africa in the dairy sector. With a production of about 2.4 billion litres per year, Uganda is performing way below the 10 billion litres that the Dairy Development Authority says is its true potential due to a myriad of challenges, chief of which is the lack of adoption of the latest practices and technologies at the farm level. However, on the processing side, Uganda has made extremely good progress, with leading player Pearl Dairy, having an installed capacity of 800,000 litres per day and producing a array of products including fresh and long life milk, milk powder, butter, yoghurt, flavoured milk and ghee for local, regional and export markets. USbased Rise Fund managed by TPG Capital recently took a 34% equity investment in the company, joining another investment by Kenyanbased Brookside Dairy that took over the operations of Sameer Agriculture and Livestock. Danone, the French dairy giant owns a 40% in Brookside Dairy. Other players in the dairy sector include Amos Dairy that processes anhydrous milk fat, ghee, casein, and whey for the export market; Jesa Dairy, Rainbow dairy and many others. The dairy industry in Uganda continues to offer stiff competition to other dairies in the region, with milk products from the country on sale and loved by consumers across Eastern Africa. FBA
UGANDA - FACTS & FIGURES GEOGRAPHY & POPULATION Bordering Countries – DRC, South Sudan, Kenya, Tanzania, South Sudan 2020 Population – 45.5 million; Number 31 in the world Population Growth Rate - 3.32% Population distribution: Uganda’s population density is relatively high in comparison to other African nations; most of the population is concentrated in the central and southern parts of the country, particularly along the shores of Lake Victoria and Lake Albert; the northeast is least populated Total Area - 241,550 km2 Capital City – Kampala Other important towns – Entebbe, Jinja, Mbarara, Gulu, Mbale and Masaka. Languages - English, Swahili Total Area – 241,550 km2; Land - 197,100 km2; water: 43,938 km2. Capital city – Kampala Currency – Uganda Shilling Geographical features of note: Uganda is a landlocked country with fertile soils. The country is has an abundance of water resources, with many lakes and rivers. The country relies on neighbouring countries Kenya and Tanzania to access port services, with which it also shares Lake Victoria, the world's largest tropical lake and the second largest fresh water lake. Climate – Uganda’s climate is tropical. The country is generally rainy with two dry seasons (December to February and June to August). It is semiarid in northeast, near the border with Kenya ECONOMY Economic prospects - Uganda has substantial natural resources, including fertile soils, regular rainfall, substantial reserves of recoverable oil, and small deposits of copper, gold, and other minerals. Agriculture is one of the most important sectors of the economy, employing 72% of the work force. Substantial investments have been made in the nascent oil sector, with production expected to begin within 5 years, providing substantial potential uptick in the economic prospects of the country. GDP (IMF) - US$33.62 Billion GDP Per Capita - US$735.01 Macroeconomic issues: The Ugandan economy reported strong growth in 2019, estimated at 6.3%, largely driven by the expansion of services. Services growth averaged 7.6% in 2019, and industrial growth 6.2%, driven by construction and mining. Agriculture grew at 3.8%. Retail, construction, and telecommunications were key economic drivers. Inflation is expected to remain below 5%, strengthening the domestic economy. More than two-thirds of the working-age population is in agriculture. The country is an important exporter of food to the East Africa region. Land use: Agricultural land: 71.2%; arable land: 34.3%; permanent crops: 11.3%; permanent pasture: 25.6%; forest: 14.5%; other uses: 14.3% Natural resources: Uganda has a number of natural resources including copper, cobalt, hydroelectric power, limestone, salt, arable land, gold. GDP composition - agriculture: 28.2%; industry: 21.1%; services: 50.7% Agricultural products: Coffee, tea, cotton, tobacco, cassava, potatoes, maize, millet, pulses, cut flowers; beef, goat meat, milk, poultry and fish Key Industries - Sugar processing, brewing, tobacco, milk processing, grain processing; textiles; cement, steel production Exports destination - Kenya 17.7%, UAE 16.7%, Democratic Republic of the Congo 6.6%, Rwanda 6.1%, Italy 4.8% (2017 figures) Main export commodities - Coffee, fish and fish products, tea, cotton, flowers, horticultural products; gold
Source: World Bank; CIA, Government of Uganda, IMF
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South Africa coronavirus lockdown: is the alcohol ban working?
The ban on the sale and transportation of alcohol during the coronavirus lockdown in South Africa has emptied hospital beds, ruined businesses, provoked violence and political disputes, and has led to a surge of interest in pineapples, writes the BBC's Andrew Harding from Johannesburg.
T
he idea was simple. Ban all booze, and you'll prevent drunken fights, reduce domestic violence, stop drunk driving, and eliminate the weekend bingedrinking so prevalent across South Africa. Police, medics and analysts estimate - conservatively - that alcohol is involved in, or responsible for, at least 40% of all emergency hospital admissions. In normal times some 34,000 trauma cases arrive at emergency departments in South Africa every week. But since the nationwide lockdown came into force last month to prevent the spread of coronavirus, that figure has plummeted, dramatically, by roughly two thirds, to about 12,000 admissions. "It's a significant impact," said Professor Charles Parry, with some understatement. He has been modelling the extent to which the alcohol ban has been responsible for the decline in those numbers for South Africa's Medical Research Council. "If we end the prohibition on alcohol sales, we're going to see about 5,000 alcohol admissions
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in trauma units coming back into the system [each week]," he predicted. Police minister 'gone rogue' The fact that those 5,000 extra hospital beds now stand empty could soon prove invaluable if the pandemic - which has been held, impressively, in check here for several weeks - begins to spread again exponentially, as government advisors predict it may. But medical experts, while urging the government to keep the alcohol ban in place, also point out that heavy drinking weakens the immune system and may have a particular effect on respiratory conditions. "Covid-19 is going to have a more severe impact on heavy drinkers… and in South Africa many people live in crowded conditions. "So, alcohol sales… may increase community transmission [as people often drink socially]… and we're likely to see an increase in gender-based violence and harm towards children," warned Professor Parry. But how to enforce such a draconian and unprecedented clampdown for five weeks, or possibly FOODBUSINESSAFRICA.COM
THE ARGUMENTS AGAINST LIFTING THE BAN MAKE SENSE. A LOT OF PEOPLE ARE UNEMPLOYED AND USE ALCOHOL AS A GET-AWAY DRUG. BUT AN APPROACH THAT ALLOWS LIMITED SALES MAY SAVE THE INDUSTRY - APIWE NXUSANI-MAWELA CHAIR, SOUTH AFRICA BEER ASSOCIATION
more if South Africa's lockdown, due to end on 30 April, is extended once again? The man responsible for policing the new prohibition has provoked anger in some quarters by appearing to encourage the security forces to take heavyhanded, and potentially illegal, action against those caught breaking the rules. There have already been numerous worrying examples, including the alleged beating to death of a man caught drinking in his own yard. Police Minister Bheki Cele, wellknown for his abrasive language and his swaggering enthusiasm for the alcohol ban, recently warned that his forces would "destroy the infrastructure where the liquor is sold". "It's deeply concerning when you have senior political leaders encouraging police officers to use violence or force, or to break the law. It seems as if the police minister has gone rogue," said Gareth Newham, a crime expert at South Africa's Institute for Security Studies. South Africa's alcohol industry initially sought to challenge the ban in court, arguing that it was unconstitutional and introduced without consultation. It has since backed down. But while many in the industry acknowledge the importance of supporting national efforts to fight the virus, there is frustration about a "one-size-fits-all" approach that is causing significant damage to many businesses. FOODBUSINESSAFRICA.COM
'It could be game over' "It's not looking good at all," said Apiwe Nxusani-Mawela, the country's first black female brewery owner and chair of South Africa's Beer Association, who fears her small business may go under if the ban continues for much longer. "The arguments against lifting the ban do make sense. A lot of people are unemployed and use alcohol as a get-away drug," she acknowledged, but she said a more sophisticated approach perhaps allowing limited alcohol sales - could save her industry from collapse. "It could be game over for us," agreed Nick Smith, an American who owns a craft brewery outside Cape Town. "This one-size-fitsall rule is having a major impact on smaller businesses like ours," added Mr Smith. Rise in home brewing That argument is echoed by South Africa's official opposition party, the Democratic Alliance (DA), which is in favour of a "smart lockdown model" that would allow people to buy alcohol for a few hours each day. But another party, the radical Economic Freedom Fighters (EFF), has called the DA's proposal "murderous" and "racist" since the current ban appears to be having the most positive impact on health in poorer, largely black, communities. Many people have compared South Africa's prohibition to the US's famous, decade-long crackdown which began in 1920 in response to campaigning by religious and moral groups, and was immortalised by Hollywood in films like Some Like It Hot and The Untouchables. As with Chicago's notorious gangster, Al Capone, there are concerns that the alcohol ban could push the sector here into the hands of criminals who already control a lucrative chunk of South Africa's cigarette industry.
"The longer the lockdown goes on, the more criminal networks will be able to entrench their ability to sell and distribute alcohol," confirmed Gareth Newham, warning that the government was already losing a fortune in taxation because of the ban. The ban has certainly tapped into deep undercurrents here in South Africa - a country with a history of apartheid where black citizens were once banned from drinking in public, and some workers were even paid in alcohol, causing huge social problems. "We, South Africans, don't have a good relationship with alcohol. Over the years, it's something that has to a certain extent got out of control," said Ms NxusaniMawela. But as things stand, one aspect of the ban does appear to be uniting people from different walks of life. It has created a new enthusiasm for home brewing, which has always been a firm fixture in rural communities. Videos and recipes for pineapple beer and the more traditional corn and sorghum known as "umqombothi", are now being widely touted on social media, alongside warnings that such drinks, if wrongly prepared, could prove dangerous. FBA Source: BBC
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INVESTMENT
M&A
Neogen acquires food safety assets of Australia-based Austrian packaging manufacturer Alpla sets up Cell BioSciences a new plant in South Africa USA – Neogen Corporation, an under Neogen’s name from Cell SOUTH AFRICA – Alpla, an international manufacturer of plastic packaging based in Austria, is building a new production site near Johannesburg, which will combine activities from its five existing plants. As part of the consolidation, the production at its plants in Harrismith, Denver, Isando, Kempton Park and Samrand will be transferred to the new plant with more than 50 employees impacted. The factory aims to simplify and optimise manufacturing processes while also contributing to improving logistics and transport. Construction of the new plant began in February 2020 and is expected to be completed by next year. Standard bottle solutions and tailor-made packaging for the food, personal care, home care, chemical, detergent and pharmaceutical industries will continue to be manufactured at the new plant. “Our new plant in Lanseria gives us the opportunity to produce according to modern, globally applicable corporate standards,” said Christoph Riedlsperger, Alpla regional director for Africa, the Middle East and Turkey. “In this way, we not only improve the quality of our products, but also meet the high demands of our global customers.” In the past five years, Alpla has significantly expanded its market presence in Africa with several acquisitions, in particular SouthAfrican based Boxmore Packaging, which specialises in creating PET bottles, PET pre-forms and closures for drinks bottles. With the construction of the new site, the company aims to create longterm growth and competitiveness in the Sub-Saharan African region.
America food safety test kits supplier, has acquired the food safety assets of Australia-based Cell BioSciences, a major supplier of food safety and industrial microbiology products. With these asset acquisition, Neogen will now have a direct sales presence across Australasia for its entire portfolio, including food safety, animal safety and animal genomics. The US-headquartered company founded Neogen Australasia when it acquired The University of Queensland-Animal Genetics Laboratory in September 2017 and subsequently added animal safety and life science products to its offerings. Neogen noted that it will continue to operate Cell BioSciences’ food safety business
BioSciences’ existing Melbourne location to ensure excellent customer continuity, as Neogen Australasia looks to centralize its expanding operations in a future location. “This acquisition completes the Neogen food security trifecta of our genomics, animal safety and food safety businesses under the umbrella of our Neogen Australasia operations,” said Dr. Jason Lilly, Neogen’s VP of international business, adding the ability to directly sell to our food safety customers allows us to promote, market, and sell our Neogen solutions throughout the region, including to the large vertically integrated beef and dairy companies across Australia and New Zealand.”
M&A
Tate & Lyle invests in Zymtronix’s enzyme immobilization technologies UK – Tate & Lyle has partnered with Zymtroxin and made an undisclosed sum of investment in its cutting edge enzyme immobilization platform that will enable the US-based company to drastically scale up its production. Zymtronix has developed an enzyme immobilization platform that helps to transform ingredient manufacturing by improving the productivity of biocatalysis. This is achieved through the immobilization of enzymes onto magnetic metamaterials to increase the efficiency and sustainability of enzymebased industrial processes. The technology, originating from Cornell University in Ithaca, New York, has broad applications in the food and beverage, flavour and fragrances, pharmaceutical, chemical and agricultural
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industries. Tate & Lyle’s investment in Zymtronix will enable the company to improve and innovate upon their technology, with the goal of scaling up their platform to support process scale production. Zymtronix is initially working with Tate & Lyle to improve the use of enzymes in the production of certain ingredients and improve cost efficiency. “We are excited to harness the power of Zymtronix’s enzyme immobilization platform, which will make our manufacturing processes more efficient. The platform also has the potential to accelerate our ability to make our ingredient solutions accessible to more consumers,” said Andrew Taylor, President of Innovation and Commercial Development, Tate & Lyle. FOODBUSINESSAFRICA.COM
SUPPLIER NEWS & INNOVATIONS INVESTMENT
BASF opens Customer Experience Centre in Kenya to support application of food solutions
KENYA – German human nutrition company and food ingredients supplier, BASF has opened a Customer Experience Centre in Nairobi, Kenya to provide tailormade support for formulation and application of food solutions. The center offers an open space architectural design that fosters closer collaboration and nurtures cross industry pollination, allowing BASF and its customers to develop tailor-made solutions. BASF said
that the Customer Experience Centre, strategically located in the capital of East Africa’s most vibrant economy, will service the East Africa market providing customers with formulations and applications that blend with local functionalized solutions adapted for local taste, texture and products. “We know that food is closely linked to culture – and that culture is local. With our concept, we are able to stay in close contact with our customers and thus meet their specific needs,” said Diana Wairimu, Account Manager, Human Nutrition. “Furthermore, we can proactively work on new food concepts to show our customers how their future products could potentially look like.” The company said that it will also be able to proactively work-out food concepts with its customers.
The food performance ingredients manufacturer said that its experts will support and work together with customers to develop applications for the specific needs and trends in the food industry such as in the development of cake, muffins, creams and desserts. BASF noted that facility is open to offer support to all customers in East Africa and will further enable the company to work collaboratively with distributors and other partners, including universities. The Nairobi Customer Experience Centre joins a global network of application centres that BASF operates in various continents. Including the Kenyan centre, the company has a total of 8 application centres worldwide.
INVESTMENT
Bühler and Givaudan team up to open plant-based food innovation center in Singapore
SWITZERLAND – Bühler has partnered with flavor and fragrance house Givaudan to open an Innovation Center dedicated to plant-based food in Singapore. The new facility, located at Givaudan Woodlands site, will be jointly run by the two companies, bringing together a pilot plant featuring Bühler extrusion and processing equipment and a kitchen and flavor laboratory by Givaudan. FOODBUSINESSAFRICA.COM
The facility will be supported by experts from both companies and is planned to open in Singapore later this year to enable the companies better serve the Asian market. The companies said that the innovation center will welcome food processing firms, start-ups and university researchers looking to develop novel plant-based food products. The investment will leverage Bühler’s equipment and processing expertise combined with Givaudan’s flavor, taste, ingredient, and product development expertise. Both firms believe that this combination will create a unique offering and synergy that will be greatly advantageous to those developing new products, particularly when using wet or dry extrusion.
“We are very proud to launch this initiative. It is a testament that industry leaders can come together to the benefit of the whole food innovation ecosystem,” says Fabio Campanile, Head of Science and Technology at Givaudan. “We are especially excited that this project will take place in Singapore, a diverse country at the heart of Southeast Asia with strong ambitions for the future of food. The firms forecast a lot of market potential for plant-based products in the coming years in Asia, in particular, the alternative meat sector. The Innovation Center is currently under construction at Givaudan Woodlands site in Singapore while the full facility opening is planned for the fourth quarter of 2020.
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PARTNERSHIP
Symrise joins KitchenTown Berlin to support creation of a new sustainable food system food products. KitchenTown Berlin is the European platform and second location of the global innovation network, KitchenTown founded in 2014 in the San Francisco Bay Area, USA. Kitchen Town supports food startups from initial product concept, to scaling and market fit through providing entrepreneurs with access to facilities and industry know how on product development, commercialization, and market launch. It creates an EUROPE – Symrise has teamed up active global community of food with KitchenTown Berlin, a food entrepreneurs and innovators to and foodtech innovation network support one another and create a set up to positively impact the new sustainable food system and food system, to strengthen the in addition offers an accelerator platform’s concept of scaling program where startups an impact driven and transformational apply for funding and venture development.
Through the partnership with Symrise, KitchenTown will provide the infrastructure and network in EMEA while the ingredients supplier will contribute expert guidance, to jointly deploy the right tools at the right time. Symrise said that it will leverage its state-of-the-art food facility and co-working spaces to facilitate collaboration and cocreation between its taste experts, foodies, entrepreneurs and their customers, the manufacturers of food and beverage products. “We have entered the innovation network to ideate, create, and grow new food and beverage ideas in the smartest way possible and we look forward to partnering with KitchenTown Berlin and its startup ecosystem,” Heinrich Schaper, President Flavor at Symrise said.
INVESTMENT
Green Plains opens high protein ingredient production facility in the US
USA – Agricultural commodity processing company, Green Plains has kick-started operations of its high protein ingredient production facility located at its Shenandoah Biorefinery in Iowa. The company revealed that it has also made the first shipment of the product from the facility destined for one of the premier ingredient processors and suppliers in the pet food industry. “The completion of our first high protein ingredient production project represents a major milestone in our strategy to diversify our earnings and transition towards the creation of more sustainable high value products,” said Todd Becker, president and CEO of Green Plains. “We can now provide a high-quality 82 MARCH/APRIL 2020 | FOOD BUSINESS AFRICA
protein feed product to the pet and aquaculture markets, extracting additional value from each kernel of corn we process in order to meet the growing worldwide demand for protein and novel feed ingredients.” The high protein feed ingredient is produced using Fluid Quip Technologies’ patented Maximized Stillage Co-products system which the company said adds a high value product to its portfolio. According to a statement released by the company, the newly constructed MSC system at Shenandoah represents a US$38 million investment. Shenandoah now has capacity to produce up to 50,000 tons of high protein feed ingredients annually and has increased the annual corn oil production capacity at Shenandoah by 20%. Green Plains said that the Shenandoah Biorefinery is now a complete end to end biorefining campus with the capacity to process approximately 28 million bushels of corn annually and produce 50 thousand tons of high protein pet and aquaculture feed ingredients. The facility also has the capacity to produce 82 million gallons of low carbon, closed loop biofuels, 160 thousand tons of post MSC dried distillers’ grains and 31 million pounds of corn oil. FOODBUSINESSAFRICA.COM
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