Food Business Africa Jan/Feb 2020 by FW Africa

Food Business

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YEAR 8 | NO. 39 | FEBRUARY 2020

AFRICA’S NO.1 FOOD, BEVERAGE & MILLING INDUSTRY MAGAZINE

EXECUTIVE INTERVIEW

MONICA MUSONDA

FOUNDER & CEO - JAVA FOODS COUNTRY FOCUS

DAIRY INDUSTRY IN KENYA

INVESTMENTS RISE BUT CHALLENGES MOUNT

MY FACTORY • MY STORY

KALPA PADIA

MD - RAKA MILK PROCESSORS EVENT PREVIEW AFMASS FOODTECH UGANDA EDITION

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EVENTS PREVIEW

Event: AFMASS FoodTech Uganda edition When: March 25-27, 2020 Where: UMA Multi-Purpose Hall, Kampala, Uganda Timings: 09.00 am to 06.00 pm daily

AFMASS FoodTech Uganda set to showcase progress in Uganda and region's food industry

he inaugural edition of AFMASS FoodTech Uganda edition is set to for March 25-27, 2020 in Kampala, Uganda to showcase the rise and sophistication in one of Africa's fastest growing regions - Eastern Africa and the Great Lakes region of Africa. Uganda and the Great Lakes region - compriing of Rwanda, Burundi, DRC, South Sudan - have gone through trying times, with war and conflict ravaging the region post-independence for decades. However, after a number of years of recovery, the region has become one of the hottest locations for new investments in the food, beverage and milling industry - facilitated by strong support from governments and the region's huge agricultural productivity, rising economies and a young and upwardly mobile population. 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 latest processing, packaging and food safety technologies, market trends and investments opportunities in the region. Further, it provides the key stakeholders in the region to meet and network with peers, industry leaders, suppliers, financiers and more from across Africa and the World. Excellent venue in Kampala Set to be held the perfectly-located UMA Multi-Purpose Hall in Lugogo, Kampala 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 1,000 delegates and visitors from across Uganda and the Great Lakes region are expected to grace the event, where there will also be a high-level conference addressed by some of the most important industry leaders, consultants and academicians. "We have always wanted to host this event in Uganda, where we have witnessed

the fantastic growth of the food industry in general over the years. We hope that this event will continue our tradition of delivering value for the key stakeholders that attend the events across Africa," says Francis Juma, the team leader at FW Africa Conferences & Events, the organisers of the event. "We are excited with the preparations so far from across the industry, with hundreds of delegates already confirmed, while the list of sponsors, exhibitors and partners continues to grow," Juma added. So far, the Uganda Manufacturers Association, Uganda Small Scale Industries Association, Makerere University, Uganda Industrial Research Institute and Kyambogo University have confirmed their partnership with the organisers, adds Juma. Strong speaker and panelist profiles A number of industry leaders, Government policy makers and other vital contributors to the growth of the food industry in Zambia and Southern Africa, consultants and suppliers have confirmed their participation as speakers and panelists at this year's event, to contribute to the growth of the food industry in the region. You can sign up to attend this edition of the events at www.afmass.com/ uganda2020

WEDNESDAY, MARCH 25, 2020 HOURS: 09.00 - 18.00

FOODTECH CONFERENCE & EXPO KAMPALA • UGANDA

MARCH 25-27, 2020

UMA MULTI-PURPOSE HALL, LUGOGO, KAMPALA, UGANDA

THURSDAY, MARCH 26, 2020 HOURS: 09.00 - 18.00 FRIDAY, MARCH 27, 2020 HOURS; 09.00 - 18.00

FREE ENTRY

Uganda & Great Lakes Region’s Largest Food, Beverage & Milling Industry Conference & Expo

Discover the latest milling, processing, packaging, food safety and other solutions to the growing food, beverage and milling industry

HIGHLIGHTS OF THE EVENT: • NETWORK with 2,500+ local, regional and industry peers at the region’s most critical networking forum for the food industry. • DISCOVER the latest investment opportunities and market trends in Uganda and Great Lakes region’s food, beverage and milling industries • LEARN the latest technologies on food safety, nutrition, automation, processing, milling, packaging and sustainability. • SOURCE from leading local, regional and international suppliers of equipment, packaging, laboratory, ingredients and supply chain solutions for your next projects; • DISCOVER more at LIVE demonstrations on DAIRY, BAKERY & BEVERAGE applications. CONFIRMED PARTNERS

ORGANIZED BY:

For more info on participation, exhibition and sponsorship: HELLEN:+254 725 343 932 Email: info@fwafrica.net

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WWW.AFMASS.COM/UGANDA2020

CONTENTS ON THE COVER KALPA PADIA - MD, RAKA MILK PROCESSORS LTD Raka Milk Processors Ltd is one of the leading processors of cheese in Kenya. We have a discussion with Kalpa Padia, the MD of the company to delve into the intricacies of cheese making, the market trends in the sector and some of the challenges the company and the sector faces. Read this and other issues of this magazine for free on www.foodbusinessafrica.com

REGULARS 2 AFMASS FoodTech Uganda - Uganda Edition Preview 6 Editorial 8 Events Calendar 10 Africa Food Safety & Quality Summit Preview 12 Africa Dairy and Drink innovations Summit Preview 14 Latest food, beverage and milling industry News 27 Sustainability Business Africa News 30 AFMASS FoodTech Zambia Edition 2019 pictorials 30 Africa Foodex Awards 2019 pictorials 51 Dairy Business Africa 51 Beverages Tech Africa 67 Supplier News & Innovations

COUNTRY FOCUS: DAIRY INDUSTRY IN KENYA 53

INTERVIEW: Monica Musonda – Founder & CEO, Java Foods 44

NEXT ISSUE: MARCH/APRIL 2020 MY FACTORY • MY STORY Corporate profile of a factory in the food, beverage and milling industry in Africa COUNTRY FOCUS Food, Beverage & Milling Industry in Uganda MILLING & BAKING: Extrusion | Ancient grains

MY FACTORY • MY STORY: Raka Milk Processors 46

DAIRY BUSINESS AFRICA: Trends in dairy/juice blends in Africa BEVERAGE TECH AFRICA Brewing enzymes technology FOOD NUTRITION & HEALTH Nuts & Seeds FOOD SAFETY & QUALITY Allergens management TRENDS: Plant-based foods

JAN/FEB 2020 | FOOD BUSINESS AFRICA

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JAN/FEB 2020 | FOOD BUSINESS AFRICA

EDITORIAL

Food safety concerns rise up in consumer’s mind. It is time for food businesses to up their game And as corona virus ravages China, African countries must ask tough questions about their preparedness

awrence MacDougall is retiring as the CEO of Tiger Brands, the South African behemoth with operations across the bakery, milling, animal feed, meat processing, and other sectors of the food industry, across South Africa and into a number of countries in Africa: Cameroon, Mozambique, Zambia, Zimbabwe and Nigeria. As MacDougall retires from Tiger Brands after 4 years, there is one thing that am sure will keep him ‘awake’ for a long time to come: The outbreak of listeriosis – a disease caused by the Listeria monocytogenes bacteria – which exploded into the scene in South Africa December 2017, and that was said by the authorities to have originated at a meat plant owned by the company. The listeriosis outbreak, which was declared by the World Health Organisation to be the world’s largest documented outbreak ever, saw a total of 1,060 people get infected with 216 deaths reported at the end of the outbreak in June 2018. WHO supported South Africa to carry out the epidemiological assessment that led to the determination that the outbreak was over. Of course, South Africa is miles ahead of the rest of the continent of Africa in terms of food safety regulations and its preparedness to tackle any major disease outbreak. The rest of the continent lacks basic infrastructure, skills and systems to sort out

any emerging food safety issue. And as the corona virus ravages China, with the risk of African countries reporting the virus continues to arise by the day, as China has become part and parcel of Africa, with thousands of Africans studying or carrying out business in China, and at the same time, thousands of Chinese people running businesses or involved in government projects in Africa. It is such times that such leaders of MacDougall’s caliber are in great demand. Having led Tiger Brands during the company’s most trying moment must have left an indelible mark on him, with the company’s reputation battered, investors in panic mode, while the country, and the region, were on edge as to what course the outbreak would take next. As managers and investors in the food business in Africa, we owe it to ourselves, our employees, our communities and to our governments to ensure that we put in place a safe and secure food safety management system wherever we are in the food supply chain – a warehouse, a farmer, a retailer, a food manufacturer or a distributor. Africa needs true and patriotic leaders who can be relied upon to lead us into a future that our kids and our kids children would be proud that we bestowed upon them

IN THIS ISSUE Welcome to a new design and concept for the Food Business Africa magazine. As we celebrate our 7th year of bringing this magazine to you, we are thrilled that we have made some great progress with the support of our readers, partners, writers and advertisers over the years. This issue has been redesigned to improve the experience of our readers. We have also incorporated more content including technical articles, industry reports, company features and more to better serve our growing constituency of readers out there in Africa and beyond. It is our sincere hope that you shall appreciate the new design and content.

We wish you a good read Francis Juma Publisher

SUBSCRIPTION

Email: info@fwafrica.net

www.foodbusinessafrica.com Year 8 | Issue 1 | No.39 • ISSN 2307-3535

FOUNDER & PUBLISHER Francis Juma EDITORIAL Clement Muriuki I Virginia Nyoro ADVERTISING & SUBSCRIPTION Jonah Sambai | Hellen Mucheru CONTRIBUTORS Ronald Onsare DESIGN & LAYOUT Frank Bett

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FWAfrica INFORMING AFRICA’S BUSINESS GROWTH

FoodWorld Media

P.O Box 1874-00621, Nairobi Kenya Tel: +254 20 8155022, +254 725 343932 Email: info@fwafrica.net Website: www.fwafrica.net RELATED PUBLICATION

AFRICA Inc.

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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Dubai World Trade Centre

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EVENTS CALENDAR February 12 – 15, 2020. Biofach Germany Nuremberg, Germany Focus: Organic Foods www.biofach.de/en

February 16-20, 202

Gulfood Dubai, UAE Focus: Food & Beverage www.gulfood.com

February 18-21, 2020

Dairy and Meat Exhibition Moscow, Russia Focus: Dairy, Meat www.md-expro.ru

February 24-25, 2020

AmericaPack Summit Las Vegas, USA Focus: Processing & Packaging www.americapacksummit.com

March 2-3, 2020

America Food Innovation Summit Chicago, USA Focus; Food & Beverage www.americanfoodinnovate.com

March 3-4, 2020

Pack Expo East Philadelphia, USA Focus: Packaging Technologies www.packexpoeast.com

March 15-17, 2020

Seafood Expo North America Boston, USA Focus: Seafood www.seafoodexpo.com/north-america

March 17-19, 2020

Food Ingredients China Shanghai, China Focus: Food ingredients en.fic.cfaa.cn

March 24-26, 2020 Agrofood Nigeria Lagos, Nigeria

May 18-21, 2020

Focus: Food & Beverage www.agrofood-nigeria.com

Sweets & Snacks Expo Chicago, USA Focus: Snacks & Confectionery www.sweetsandsnacks.com

March 25-27, 2020 AFMASS FoodTech Uganda edition Kampala, Uganda Focus: Food, Beverage & Milling www.afmass.com

June 5-6,2020

Plant Based World Conference & Expo New York, USA Focus: Plant based foods www.plantbasedworldexpo.com

March 30-April 1, 2020 FoodEx UK Birmingham, UK Focus: Food & Beverage www.foodex.co.uk

June 8-11, 2020

April 15-17, 2020

World Tea Confrence & Expo Denver, USA Focus: Tea www.worldteaexpo.com

April 21-23, 2020

Africa Dairy & Drink Innovation Summit Nairobi, Kenya Focus: Dairy & Beverages www.afmass.com/dairydrink

Anufood China Shenzhen, China Focus: Food & Beverage www.anufood.com

June 17-19, 2020

Seafood Expo Global Brussels, Belgium Focus: Seafood www.seafoodexpo.com/global

February 19-20, 2020

International Conference on Food and Beverages Dubai, UAE Focus: Food & Beverage www.ift.org

May 01-05, 2020

Canton Fair Guangzhou, China Focus: Food & Beverage www.cantonfair.net

March 15-17, 2020

Food Ingredients Africa Cairo, Egypt Focus: Food Ingredients www.figlobal.com

May 4-7, 2020

Illinois, USA Food Safety Summit Focus: Food Safety www.foodsafetystrategies.com

March 31-April 03, 2020 FHA Singapore Expo Singapore, Asia Focus: Food & Beverage www.fhafnb.com

May 7-13, 2020

Interpack Expo Düsseldorf, Germany Focus: Processing & Packaging www.interpack.com

April 19-22, 2020

Craft Brewers Conference Philadelphia, USA Focus: Alcoholic beverages www.brewersassociation.org

May 13-15, 2020

SIAL China Shanghai, China Focus: Food & Beverage www.sialchina.com

Ethiopia & North East Africa’s Largest

FOODTECH Food, Beverage & Milling Industry CONFERENCE & EXPO ETHIOPIA • EDITION

NOVEMBER 18-20, 2020 ADDIS ABABA, ETHIOPIA

Conference & Expo

AFMASS FoodTech Ethiopia edition is the first substantive food, beverage and milling industry conference and exhibition to bring the key decision makers from across this vast and changing region to learn the latest technology, network and be inspired about the future of the industry in the region.

WWW.AFMASS.COM/ETHIOPIA

We think about your caps, so you can think of everything else.

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EVENTS PREVIEW

Nairobi to host Africa’s industry-focused food safety and quality summit in July 2020

frica’s first industry-focused, regular food safety Summit is slated for mid-July, as African countries grapple with food safety challenges and consumer interest in the subject rises exponentially. The Africa Food Safety & Quality Summit is planned to be the Africa’s only regular food safety, regulatory policy, quality and laboratory management conference and exhibition. It will be held at the Nairobi Hospital Conference Centre in Nairobi, Kenya with delegates already signed up from across Africa, indicating the growing importance Africa has taken food safety matters. The Summit brings together regional and global experts 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 contamination, food poisoning, heavy metals contamination, to emerging issues including new bacteria, toxins and antibiotic resistance, the Continent is disproportionately affected by food safety challenges. There is an urgent need to find new ways and technologies to protect Africa’s consumer due to changes in consumer habits, a rapidly globalising food supply chain, changes in testing protocols for diagnosing food borne illnesses and challenges with regulating and policing food systems in the region. Attendees from food companies, Govt. agencies and more Over 1,000 delegates from Africa and across the World are expected to grace the 2020 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. “Food safety issues have tend to be associated with food manufacturers for a long time, leaving out vital parts of the chain. We realise that by incorporating the entire value chain actors, including hotels, restaurants and catering companies; hospitals and other institutions and even animal feed manufacturers, we shall create a more impactful forum that can make a real difference in the region,” says Francis Juma, from FW Africa Conferences & Events, the organisers of the event. Excellent venue The 2020 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 May 1, 2020. 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 JAN/FEB 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 JULY 15-17, 2020 • 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, retailing and distribution; 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: HELLEN:+254 725 343 932 Email: info@fwafrica.net FOODBUSINESSAFRICA.COM

www.foodsafetyafrica.net JAN/FEB 2020 | FOOD BUSINESS AFRICA

EVENTS PREVIEW

AFRICA

Dairy&Drink INNOVATIONS SUMMIT

SUSTAINABILITY • TECHNOLOGY • QUALITY

he dairy, soft and alcoholic beverages sectors in Sub-Saharan 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 June 17-19, 2020 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 and innovative industry in the Continent. High level platform The Summit is a high level platform for world-class education, capacity building and networking with a focus on the technical/

First regional sustainable dairy and drink innovations forum set for Nairobi in July 2020 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, 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. During the high-level event, topics covered include raw materials handling, formulations management, processing and packaging efficiencies, sustainable utilisation of water, energy and waste, new products development and brand management, food safety, quality management, among others will be presented.

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 May 1, 2020) to attend the Summit, 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. The Africa Dairy & Drink Innovations Summit will cover critical market trends and how the dairy and drink industry in Africa can take advantage of new technologies and ideas to stay ahead of the game.

More information about the event and registration details can be found at www.afmass.com/dairydrink 14 JAN/FEB 2020 | FOOD BUSINESS AFRICA

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EARLY BIRD

AFRICA

Dairy&Drink INNOVATIONS SUMMIT

SUSTAINABILITY • TECHNOLOGY • QUALITY

Regular Delegate Rate $149

$99/

Person

Supplier Delegate Rate

$599/

Person

Group Rates Available >3 delegates = 10% off >5 delegates = 15% off

JUNE 17-19, 2020 | SAFARI PARK HOTEL, NAIROBI, KENYA

TOWARDS AN AFRICAN DAIRY, SOFT & ALCOHOLIC DRINKS INDUSTRY THAT IS MORE SUSTAINABLE, EFFICIENT AND INNOVATIVE

Packaged, Fermented & Value-added Milk

Cheese, Butter & Ice Cream

Beer, Wines, Spirits & Ciders

Plant-, Cereal-based & Dairy Blends

Juice, Carbonated, Still & Energy drinks

Hot & Cold Beverages, Cocktails & Drinks

Sign up to attend the first Africa-wide premier dairy and beverage industries innovations Summit, where cutting-edge processing, packaging, engineering and automation technologies will be showcased by some of world’s leading suppliers. Discover new insights on new products development and formulation expertise, sustainable ways to utilise locally available raw materials, energy, water and waste. The event will be addressed by leading consultants and thought leaders from Africa and the World. Sign up today!! SIGN UP TODAY TO SPONSOR, EXHIBIT OR ATTEND:

Contact: +254 725 343 932 ; info@fwafrica.net

www.afmass.com/dairydrink

UPDATES PEOPLE

Ardent Mills picks Angie Goldberg as its first Chief Growth Officer

USA – Leading American flour-milling and ingredient company Ardent Mills has appointed food industry leader Angie Goldberg as the company’s first ever Chief Growth Officer to further drive its plans for long-term, diverse and sustainable growth. The newly created position focuses on innovation, transformation and change to sustain meaningful value for customers, vendors and team members, said the milling giant, and is a key strategic addition to the leadership team. “Angie brings deep knowledge of the food industry, as well as strong marketing and transformational experience. She will be essential as we continually reshape our approach to innovation and relationships,” said Dan Dye, CEO of Ardent Mills. “We have made changes to the leadership team to become more customer-focused; we are excited about where we are headed as we make proactive investments and meet consumer demands for different flours, specialty grains and plant-based foods.” Angie will oversee innovation, research, quality and technical services, marketing, sales, and the Annex by Ardent Mills. She joins Ardent Mills from Dawn Foods, where she spent more than eight years, most recently as Chief Transformation Officer and Chief Marketing Officer. Previously, Goldberg spent more than nine years at Barilla, where she managed the company’s growing pasta business to achieve market share leadership.

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INTO AFRICA 16 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FINANCIALS

East African Breweries reports a 9% rise in profit after tax to US$71.6m

KENYA – East African Breweries Limited (EABL), has reported a 9% increase in profit after tax to Kshs 7.2 billion (US$71.6m) for the half-year period ended 31 December 2019. The company’s performance was boosted by increased investment and operational efficiencies across markets and segments, despite increases in alcoholic beverage taxes. Net sales rose 10% to Kshs 45.9 billion (US$456m), driven by higher volumes which rose by 5% across the Group and categories, and better price mix across all brands. Net sales in EABL’s largest market, Kenya, grew by 8%, with beer and spirits growing by 6% and 11%, respectively. The market leader registered an outstanding performance in Senator keg, with the iconic, low-priced beer growing by 20% and benefiting from the recent investment in the new Kisumu plant. Mainstream spirits and Scotch whisky sales increased by 17% and 23% respectively, with remarkable performance of Black & White brand, while the increase in excise duty drove bottled beer to decline 1%. Regional business shines In the regional front, Uganda Breweries’ premiumisation agenda delivered better mix and margins, helping lift net sales by 10%, driven by 15% growth in beer and 1% in spirits, the latter also impacted by the country’s ban of the sachet packaging format. The company says that the launch of Black & White whisky helped lift Uganda’s

Scotch performance with net sales rising by 84%, while the ready-to-drink category grew by 18%. Serengeti Breweries in Tanzania, the Group’s fastest growing business, expanded by 19%, lifted largely by a consistent performance in local executions to drive the Serengeti beer trademark. The brewer says that it leveraged several innovation initiatives during the half year, with new brands contributing a significant 28% of the net sales. The company recently launched brands such as Hop House 13 Lager, Guinness Smooth, Sikera Cider, Black & White whisky and Triple Ace vodka across the region, marking a busy year for the brewer. During the year, EABL also revealed that it spent KSh300 million (US$3m) to acquire an additional 4% stake in Serengeti Breweries Limited, raising its ownership in the Tanzanian subsidiary from 39.2 percent to 40.2 percent. Commenting on the first half, EABL Group Managing Director and CEO, Andrew Cowan, said that he remains cautiously optimistic about the second half of the year, although unpredicted tax and regulatory changes and challenges in the operating environment continue to present potential risks in the horizon. EABL will invest further during the financial year to consolidate gains so far made in its production, commercial and sustainability capacities across the region, he said. FOODBUSINESSAFRICA.COM

INVESTMENTS

Nespresso invests in reviving Mozambique coffee industry

MOZAMBIQUE – Nespresso, a coffee operating unit of the Nestlé Group, has signed an agreement with Mozambique’s Gorongosa National Park to promote the local coffee industry, as part of the Nespresso’s Reviving Origins program. The program aims to restore high quality coffee production in regions around the world where it has been under threat due to political conflict, economic hardship or environmental disasters. Through the implementation of its AAA Sustainable Quality Program, Nespresso will support coffee farmers in the Gorongosa National Park to increase the quality of their coffee. In addition, the business will promote sustainable farming practices and agroforestry while improving farmer’s livelihoods through capacity and skills building. THE COLLABORATION WITH NESPRESSO IS EXPECTED TO HELP THE GORONGOSA COFFEE PROGRAM ACHIEVE ITS AMBITION TO DEDICATE 1,000 HECTARES TO ARABICA COFFEE, TRANSLATING INTO OVER 5,000 HECTARES OF PROTECTED AND RESTORED RAINFOREST AND SUSTAINABLE LIVELIHOODS FOR OVER 2,500 FAMILIES The Gorongosa Project, established 25 years ago by the Carr Foundation and the Government of Mozambique, has been working for the last decade on implementing a program called the Gorongosa Coffee, which is dedicated to creating employment for smallholder farmers and promoting rainforest reforestation. The collaboration with Nespresso is expected to help the Gorongosa Coffee program achieve its ambition to dedicate 1,000 hectares to high quality shade grown Arabica coffee, translating into over 5,000 hectares of protected and restored rainforest and sustainable livelihoods for over 2,500 families, says Matthew Jordan from the Gorongosa National Park. Nespresso aims to make the new coffee from Mozambique available, as a limited edition in 2022. Through its Reviving Origins program, Nespresso is investing US$10.3m over a period of five years (2017-2021) to revive the coffee industries in selected countries to encourage rural economic development, while giving coffee lovers access to the world’s rarest, highest quality coffees. The Reviving Origins program is part of Nespresso’s overall commitment to invest US$515m from 2014-2020 in sustainability initiatives as part of its The Positive Cup sustainability strategy. Coffees launched under the Reviving Origins program include Tamuka Mu Zimbabwe, Esperanza de Colombia and Cafecito de Puerto Rico.

TECHNOLOGY

Danone and Microsoft partner to accelerate adoption of AI in the food industry

FRANCE – French dairy giant Danone and technology provider Microsoft have partnered in an artificial intelligence (AI) program dubbed ‘AI Factory For AgriFood’ that seeks to support sustainable food and regenerative agriculture in France. Through the program, Danone and Microsoft will jointly support startups specializing in AI in the agrifood sector, and will benefit from a 3-month acceleration period. The aim of the program is to accelerate the digital transformation of the agrifood sector while supporting young companies to continue their development in artificial intelligence and cloud computing. The companies noted that as a veritable accelerator of start-ups, this program aims to be a co-innovation laboratory that links start-ups, the world of research and the various players in the sector. The start-ups will benefit from Danone’s “One Planet, One Health” vision, which links human health and global health across its entire value chain. They will also benefit from access to real cases under demanding conditions of quality and performance. Microsoft said that it will provide personalized support through its technological skills and the services of the Azure platform as well as its sales network. Inria, the national research institute in digital sciences, France Digitale, Fabernovel, EIT Food and Seventure partners are also teaming up alongside Microsoft and Danone. The companies will intervene during the different phases of the program. Agnès Van de Walle, Director of the Partner Entity of Microsoft France: “Our ambition is to help develop a digital intelligence for healthy food and sustainable agriculture. This partnership with Danone will provide this promotion with in-depth expertise and personalized support, thus accelerating innovation throughout the agrifood sector.” 18 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FINANCIALS

Coca-Cola sustains growth vibe as net revenues shoot 9% to US$37.3b

Company to invest US$1.11bn in France over the next five years

USA – The Coca-Cola Company reported a 9% growth in net revenues to US$37.3 billion and a 6% growth in organic revenues for the full year ending December 31, 2019. The company also managed to achieve or exceed all full year guidance and grew its annual operating income by 10%, as the beverage giant continued to deliver strong revenue and profit growth, which was driven by concentrate sales growth of 1% and price/mix growth of 5% and continued to gain value share in total non-alcoholic ready-to-drink (NARTD) beverages. In sparkling, trademark Coca-Cola grew 6% retail value globally as it continued to scale innovative offerings such as CocaCola Plus Coffee, now available in more than 40 markets, while achieving a double digit volume growth for its Coca-Cola

Zero Sugar. During the period, Coca-Cola also continued to expand its portfolio and capabilities through strategic acquisitions of brands in on-trend categories and most recently acquired full ownership of the value-added dairy business, fairlife. Sparkling soft drinks grew 2% in the year, driven by strong growth across Asia and Europe, Growth was led by trademark Coca-Cola, with volume growth across all geographic segments. Coca-Cola’s juice, dairy and plant-based beverages were even in the year, as strong performance by Chi in West Africa and innocent juices in Europe was offset by a decline in Rani in the Middle East. Meanwhile, the company and CocaCola European Partners (CCEP), the primary bottling partner in the France, have unveiled plans of investing upto €1 billion (USS$1.11b) in its production operations over the next five years. Coca-Cola said that the investment will be used to introduce new products in the French market, expand its bottling capacity, modernize CCEP’s manufacturing plants, support innovations and the company’s brands.

M&A

Qatari Investment Authority invests US$225m in American natural foods maker USA – Califia Farms, a Los Angeles-based plant-based food and beverage company has closed its Series D financing raising US$225 million in capital led by the Qatar Investment Authority (QIA). The funding, which counts as one of the largest private capital raisings within the natural foods sector, will support the company’s rapid expansion in the exploding plant-based food and beverage market. Other investors in the financing include Singapore headquartered investment company Temasek, Canada based Claridge, Hong Kong based Green Monday Ventures, and a Latin America based family. The new investor group will take a minority stake in Califia Farms, with representatives from QIA, Temasek, and Claridge joining the Board of Califia, alongside founder Greg Steltenpohl and existing investors Sun Pacific, Stripes and Ambrosia. This latest funding round will help Califia Farms build on the success of its oat platform, launch other lines, invest in increased production capacity, substantial R&D, deepen its US penetration and

continued global expansion. Founded in 2010, Califia is now looking forward to working with a more global investor base, as the company continues to grow and fulfill its mission of helping consumers transform their health and adopt a lower carbon foodprint. Greg Steltenpohl, Califia’s Founder and CEO commented, “The more than US$1 trillion global dairy and ready-todrink coffee industry is ripe for continued disruption. Individuals all over the world seeking to transform their health & wellness through the adoption of minimally processed and nutrient rich foods that are better for both the planet and the animals. Califia’s role is to help plant the future.” Speed to market is critical for companies at Califia’s stage and hence the partnership will propel the company’s vision to be the leading independent brand in the plantbased sector. Califia produces refrigerated plant milk, dairy free creamer and readyto-drink coffee brands in the natural and specialty channels. FOODBUSINESSAFRICA.COM

FOODTECH CONFERENCE & EXPO

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INVESTMENTS

Ethiopia’s food and agro processing industry attracts US$8.67m investment

ETHIOPIA – Three farmers unions in Ethiopia are investing a total of US$8.67 million (280 million Birr) n setting up food and agro-processing factories in Ethiopia, as they take the forefront in revolutionizing the country’s food industry landscape. The Assosa Farmers Multipurpose Cooperative Union is set to break ground on construction of an edible oil refinery plant and a fruit and vegetable processing plant, with a combined investment of 230 million Br (US$7.17m). The oil refinery plant will have a capacity of processing 45,000 quintals of niger, 85,500 quintals of soybean and 19,500 quintals of groundnut seeds to produce 1.3 million, 1 million and 741,000 litres of edible oil, respectively yearly. This is expected to significantly boost edible oil production in the country, which has an annual production capacity of 784,809 tonnes of edible oil and an average per capita consumption of 8.9 litres of oil a year. The second plant, a mango and tomato processing plant, will have a capacity of processing 18,000 tonnes of mangoes and 10,800 tonnes of tomatoes a year to produce 954 tonnes of mango jam, 13,305 tonnes of mango juice and 1,922 tonnes of tomato paste. The main objective of the179.4 million Br (US$5.9m) plant is to minimise the post-harvest wastage of the fruits by adding value, offer preservation and storage facilities, addressing the market problem and increasing the productivity of the farmers and their income, reports Addis Fortune. The Oromia Coffee Farmers Cooperative Union in Ethiopia is also set to commission its first coffee roasting and packaging complex at Gelan town in Oromia Regional state. The coffee roasting complex worth 50 million Br (US$1.5m) of investment will have a capacity of roasting, grinding and packaging 120 kg of coffee an hour. 20 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FINANCIALS

Flour Mills grows profit before tax for Q3 to US$10.2m Integrated agribusiness operator to issue medium-term bonds worth US$55m

NIGERIA – Flour Mills of Nigeria Plc, a diversified Nigerian agribusiness company has reported a 23% increase in profit before tax to N3.7 billion (US$10.2m) in the third quarter for the year 2019/20. The group’s revenue in Q3 2019/20 was N152.7 billion (US$422.4m), compared to N130.9 billion (US$362.1m) in Q3 2018/19 which was 17 per cent YoY growth. For the nine months ended 31st December 2019, Group revenue was N423.5 billion (US$1.17b), representing a 6%increase compared to same period last year, according to the group in a statement Gross profit increased by 11 per cent in Q3 and by three per cent YTD. YTD gross profit is N47.8 billion (US$132.2m), compared to N46.6 billion (US$128.9m) last year. Finance cost reduced by 20% to N4.3 billion, a significant drop compared to N5.3 billion (US$14.6m) in Q3 2018/19 (21 per cent – YoY decline), while profit before tax increased by 23 per cent to N3.7 billion (US$10.2m) in Q3 and by nine per cent to N12.3 billion (US$34m) YTD. Net cash generated YTD was N7.9 billion (US$21.8m), compared to N7.2 billion (US$19.9m) in the prior year. A review of Q3 2019/20 results shows impressive performance across key segments of the business. The group recorded remarkable growth in its volumes

from 6% during 1st of the year to 8% in the period under review. The agro-allied, sugar and food value chains all had impressive results this quarter, with the food business now moving towards expected projections. Gains in the sector can be attributed to a combination of ongoing brand loyalty and refined regional strategies that are designed to increase market penetration, said the company. These strategies have been boosted by recent improvements in the domestic market as a result of gains from the boarder closure. The management’s strategy on increasing the efficiency of its balance sheet and improving working capital continues to yield the desired result, with finance cost recording a steady decline. The group also plans to issue a N20 billion (US$55.16m) medium-term bonds, which is subject to appropriate pricing. In a statement to the Nigerian Stock Exchange, the maker of Golden Penny spaghetti said that the proposed issuances are expected to be senior unsecured fixed-rate bonds with tenors of 3 and 5 years, respectively. The latest issuance is part of Flour Mill’s previously approved N70 billion (US$193m) issue programme. The firm intends to use the proceeds from the bond issuance to refinance its existing short-term debt, increase the efficiency of its balance sheet and ultimately increase the wealth of the company’s shareholders.

INNOVATIONS

Kenyan state-owned dairy processor ventures into goat and camel milk processing

KENYA – The New Kenya Cooperative Creameries (KCC), the state-owned dairy processor has announced plans to open a goat and camel milk production line at its Nanyuki processing plant, Central Kenya following high demand of the dairy products in the country. Goat and camel milk are highly sought after due to their high nutritional value. This has pushed up the prices of the milk into as much as double the price of the readily available cow milk in the country. This will be the first time in Kenya that

a major processor will be venturing into goat and camel milk production in large scale. The move appears to be in line with its expansion drive which saw President Uhuru Kenyatta recently direct the Treasury to release US$5.69m for the modernization of the Cooperative’s factories in Nyeri and Nyahururu. In addition, the Treasury will dish out a further US$5m for the dairy processor to mop up excess milk from farmers and convert it to powder milk which will be stored in strategic reserves for future us and stabilize milk prices in the country. Milk volumes in the country have increased significantly to hit a month intake of approximately 65 million litres from an average of 55 million. Recently, Kenya inked a KSh.112m (US$1.12m) dairy farmers training agreement to raise productivity and help improve the country’s food security. FOODBUSINESSAFRICA.COM

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INVESTMENTS

M&A

Uganda opens new fruit processing facility worth US$ 380,000

Private equity firms consolidate their stakes to focus on Africa’s food sector

UGANDA – The Uganda Industrial Research Institute (UIRI) a parastatal company wholly owned by the government of Uganda has commissioned the Nyakihanga Fruit Processing Facility worth UGX 1.4 billion (US$380,000). The processing facility is an establishment of the Nyakihanga Fruits Vegetable Growers Co-operative Society Limited established in 2016 majoring in orange and pineapple fruits. The factory having a capacity to process 1,000 liters of pineapple juice per hour and will be supported by 3,222 pineapple farmers in the region, producing 80,000 pineapples every day during peak season. The UIRI Director, Prof Charles Kwesiga in his remarks said that, through industrialization and value addition farmers gain more profit from their produce. “Adding value means that you are moving away from the open market approach where you just sell products straight from the farm. We have the capacity and knowledge to make sure that what we are producing is of high quality,” he added. The facility was commissioned by the First Lady of Uganda, Hon. Janet Museveni and comes a year after the US$13.4 million Teso Fruit Factory in Soroti District was officially opened. The Teso Fruit Factory has a capacity of processing between 12,000 tonnes and 25,000 tonnes of mangoes and oranges annually. Uganda is the second largest producer of fresh fruits and vegetables in subSaharan Africa, after Nigeria, producing about 5.3 million tonnes per year according to recent FAO statistics, with production in all the districts of Uganda. According to the Uganda Investment Authority, pineapples are the most developed and widely grown fruit in the country, covering some 5,000 acres of the country, but a lack of adequate post-harvest and processing infrastructure has hindered the realisation of the full potential of the sector. 22 JAN/FEB 2020 | FOOD BUSINESS AFRICA

Private equity funds Fanisi Capital and Ascent sign merger deal to build investment muscle

KENYA – Africa’s booming food and beverage market has stood out as a delicious opportunity for investors marked by an upsurge of interests from private equity firms, both foreign and homegrown. With the rapidly rising level of industrialization, opening up of the formal retail sector and an explosion of creativity by manufactures, deep-pocketed investors are now betting on the growing food and beverage industry in all the corners of the continent. The private equity firms, which control billions of dollars have done more than just invest in brands and companies, they have acquired them. To mark this, Fanisi Capital, a fund which makes direct investments and Ascent Capital, a growth capital provider have proposed a merger that will enable the investment firms raise funds for bigger deals in the region, including in the food, beverage and retail sectors. Fanisi has already made several investments in this space by acquiring stakes in Ngare Narok Meat Industries, Nairobibased pizza-maker European Foods Africa and Tanzanian agro-processing company

Kijenge Animal Products. Merging Fanisi and Ascent will result in a fund size of at least US$155 million, going by their capital raising plans, for investment across East Africa. The interest of private equity funds have spilled into the grocery and retail sector with Amethis Fund II, Paris-based private equity fund agreeing to acquire a minority equity stake in Kenyan retail chain Naivas Limited. In other deals Maghreb Private Equity Fund IV has acquired an additional 16.2% stake in Tunisian agrifood firm Land’Or, while zdehar Management, a private equity fund manager has acquired an undisclosed stake in Egypt’s Rich Food Industries. DOB Equity, a Dutch family-backed impact investor in East Africa has invested in Coconut Holdings Limited, producer and owner of Kentaste while Twiga foods has received multiple investor backing to expand its online food and grocery platform. The investments are expected to bring more funds, more ideas and more attention to different areas of the industry and further propel the sector into greater heights.

RETAIL

French retailer Carrefour opens its first store in Uganda

UGANDA – Carrefour Group, through its regional franchise holder Majid Al Futtain Group (MAF) has officially opened its first hypermarket store in Uganda, following successful launch of the retail business in Kenya. Opened at the Oasis Shopping Mall in Uganda’s capital, Kampala, the store covers 2800 m² area, housing more than 20,000 local and international branded products. The entry of the retailer into the second East African country, has boosted its

economy as they have so far recruited 130 Ugandan employees, contracted 60 external local companies and engaged 230 Ugandan suppliers to stock the store. Patrick Lasfargues, Carrefour’s Executive Director for International Partnerships said Carrefour’s arrival in Uganda through our Partnership with the Majid Al Futtaim Group, is another milestone following the successful set up of Carrefour in Kenya, where the retailer has opened 7 stores since 2016. Hani Weiss, Managing Director of Majid Al Futtaim Retail said that this new store in Uganda is evidence of the Group’s long-term aim to bolster its presence in East Africa. “We are delighted to be able to help further develop the retail sector, and Carrefour is here to modernise it, providing our customers with products that offer the best value for money,” Weiss said. Majid Al Futtaim operates almost 300 Carrefour stores, serving more than 750,000 customers daily and employing over 37,000 individuals. FOODBUSINESSAFRICA.COM

CELEBRATIONS

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M&A

PepsiCo acquires majority stake in Ethiopian Crisps processing company Senselet

Rwandan government sells Burera Dairy Ltd to Zimbabwean investor Afrisol

ETHIOPIA – PepsiCo, one of the world’s leading food and beverage companies has acquired a majority stake in Senselet Food Processing Plc, a crisps processing company, in Ethiopia from Veris Investments. The deal will enable the company to cement its lead in the market with its SUN Chips brand available in a number of flavours: Habesha Spice, Paprika and Natural and in various pack sizes. PepsiCo has joined Veris Investments to further grow the business and develop potato sourcing programmes in the country. Senselet was founded by Veris Investments in 2015. It’s factory, located around 65km from Addis Ababa, is a modern production facility operating in line with high food safety and quality standards. Veris Investments set up Senselet with the aim to build a business that would contribute to the development of the potato value chain in Ethiopia. The company now employs more than 150 people. “PepsiCo shares our commitment to work with small and medium scale Ethiopian farmers as well as developing the potato value chain and sustainable farming in Ethiopia,” said Juliette de Wijkerslooth, managing director of Veris Investments. “Having PepsiCo as a partner will enable Senselet to leverage their extensive global expertise on potato cultivation, manufacturing and go-tomarket capabilities as to further grow the company,” she added. In 2018, Veris teamed up with Dutch owned FrieslandCampina to invest in the operations of leading dairy processor, Holland Dairy Ethiopia, as it expands into dairy production such as milk and yogurt. 24 JAN/FEB 2020 | FOOD BUSINESS AFRICA

The East African country to have its first milk processing factory

RWANDA – African Solutions Private Ltd (Afrisol), a Zimbabwean firm which has been investing in Rwanda over the past two years, has bought off the 98.3% shareholding in Burera Diary Limited from the Rwandan Government. Mid last year the Rwanda Development Board (RDB), put three government owned companies up for sale, calling for expression of interest by private players in its efforts of promoting efficiencies in the agribusiness companies. Burera Diary Ltd was one of three public firms, alongside Nyabihu Potato Company and Rutsiro Honey Ltd. Sources say that the firm was sold at around Rwf 270 million (US$290,000). None of the parties involved agreed to disclose the figure, with operations are expected to begin in February with some products expected to hit the market thereafter, under ‘Burera Dairy’ brand name. Afrisol has indicated that they intend to boost the milk-processing industry and buy milk from farmers, train them on best practices, as well as work with farmers in availing animal feeds to boost productivity in both quality and quantity. Ruvimbo Chikwava, the CEO of Afrisol said that over the next five years the company intends to inject Rwf1.6 billion (US$1.6m) in the dairy, split between capital expenditure to increase capacity and introduce new products into the market as well as working capital to secure raw materials and supporting farmers. More products are expected to debut the market over time to be traded. The plant will have the daily capacity to process 10,000 liters of milk into various

finished products such as soft and hard cheese, yogurt, long-life milk, butter, ice cream as well as fermented milk. Meanwhile, TRIOMF East Africa, a joint venture firm owned by South African and Rwandan investors in collaboration with dairy farmers in Gicumbi District, Northern Province of Rwanda are set to establish a U$38m (Rwf37 billion) milk powder processing plant.

IN NUMBERS 252,000 THE INSTALLED CAPACITY OF THE PROPOSED EAST AFRICAN DAIRY'S MILK POWDER PLANT, FROM RWANDA'S 2.2 MILLION DAILY PRODUCTION The factory, said to have an installed capacity to process 252,000 litres per day, will be owned and operated by a company called East African Dairies, a shareholding between TRIOMF East Africa and dairy farmers in Gicumbi District. TRIOMF East Africa will have 80 percent, while farmers will own 20 percent of the shares of the factory, with construction of the plant expected to start by the 2019, according to Antoine Juru Munyakazi, Executive Chairman of TRIOMF East Africa. Rwanda produces more than 2.2 million litres a day, while only about 10 per cent of it gets processed, according to data from the Ministry of Agriculture and Animal Resources.

INVESTMENTS

Cargill invests US$29.1m to expand animal nutrition plant in the US USA – Diamond V, an animal nutrition business owned by Cargill, has opened its expanded manufacturing plant in Cedar Rapids, Iowa, to complete all production and packaging of its natural immune support products in one facility. This follows a US$29.1 million investment that added two production lines to the site. According to the company, the expansion is large enough to house up to eight production lines, as the business grows to meet rising consumer

and customer demand. As a result of this expansion, Diamond V will close its north plant and transfer all 20 employees to the south facility, with production scheduled to begin in February 2020. Cargill acquired Diamond V in 2018 creating a leading natural animal health and nutrition business. The company claims that the acquisition has accelerated growth in the US$20 billion global animal feed additives market. FOODBUSINESSAFRICA.COM

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PEOPLE

Nigerian Coca-Cola bottler appoints Matthieu Seguin as new Managing Director

NIGERIA – The Nigerian Bottling Company (NBC) Limited, the franchise bottler of the Coca-Cola Hellenic Bottling Company has announced the appointment of Matthieu Seguin as its new Managing Director. Seguin succeeds Georgios Polymenakos who took office in July 2016 to October 2019. According to a statement from the company, Seguin was until his recent appointment the General Manager for Coca-Cola HBC Ireland and Northern Ireland for almost four years. He will now lead Nigerian Bottling Company and its over 2,700 employees to deliver growth, business optimisation and profitability for Coca-Cola Hellenic business in Nigeria. Seguin has a multi-industry experience and a remarkable track record in business turnaround as well as a strong passion and commitment to people development and is not new to the Nigerian business environment, having previously worked in NBC as the commercial director between 2011 and 2016.

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M&A

Memphis Meats lands historic US$161m funding to accelerate cell-based meats

USA – Memphis Meats, a pioneer in the production of cell-based meat, poultry and seafood has raised a landmark US$161 million in its series B funding round, which will enable the company to bring its products to consumers for the first time. The funding round counts as the largest funding moment in the history of the cellbased meat industry and brings the total capital raised by the company to more than US$180 million. Based in Berkeley, California, Memphis Meats is developing methods to produce meat directly from animal cells, without

the need to breed or slaughter animals. The company released the world’s first cellbased meatball in February 2016 and the world’s first cell-based poultry in March 2017. Memphis Meats intends to use the funds to build a pilot production facility, continue to grow its team, and to hit a major milestone of launching products into the market. The company did not announce a date for product launch, but revealed that it is working with regulatory agencies to ensure a timely and safe market entry. The Series B round was led by SoftBank Group, Norwest and Temasek. Also joining the round are new and existing investors including Richard Branson, Bill Gates, Threshold Ventures, Cargill, Tyson Foods, Finistere, Future Ventures, Kimbal Musk, Fifty Years and CPT Capital. This round extends the Memphis Meats coalition to Asia, which is a strategically valuable market for cell-based meat and which faces significant challenges in meeting growing demand for meat. “We are excited to welcome these investors into our Big Tent,” said Uma Valeti, M.D., co-founder and CEO of Memphis Meats. “Memphis Meats is revolutionizing how meat is brought to every table around the world. We are providing compelling and delicious choices by producing real meat from animal cells, its natural building blocks. Cell-based meat is poised to dramatically expand humanity’s capacity to feed a growing global population while preserving our culinary traditions and protecting our planet.”

FUNDING

CCBA secures US$50m in funding for its Ethiopian expansion project ETHIOPIA – Standard Bank, financial services group, has successfully arranged and structured US$50 million in financing facilities for Coca-Cola Beverages Africa (CCBA) to support its expansion strategy in Ethiopia over the next five years. Ethiopia – a high growth region for Coca-Cola, boasts the second-largest population on the African continent, said to top 110 million. While consumption of soft drinks is low compared to major markets, demand is expected to swell as the middle class rises and consumers are empowered.

The bottling company, East Africa Bottling S.C, has already invested US$70 million in a new plant that is set to become its largest in Ethiopia with a manufacturing capability of 70,000 cases per day. “The CCBA deal holds significance as new FDI will be realised for Ethiopia, set to positively influence the country’s economic trajectory,” says Taitu Wondwosen, Head of Ethiopia for Standard Bank Group, while Daryl Wilson, Managing Director of CCBA Ethiopia added that CCBA’s expansion in the country complements the government’s plans. FOODBUSINESSAFRICA.COM

PEOPLE

MARKET TRENDS

Nestle Zimbabwe appoints Eunice Ganyawu as first woman Managing Director

ZIMBABWE – Nestlé Zimbabwe has appointed Eunice Ganyawu-Magwali as its new Managing Director for Zimbabwe, Zambia and Malawi. Endorsing her appointment, the food and drink processing company stated that Eunice has an exceptional record working in the FMCG sector, believing that Eunice’s

vast experience in the dairy, beverage and cereals industry, her passion and results driven approach, will be invaluable in driving the business forward. Ganyawu-Magwali’s appointment makes her the first woman to be appointed to the role in 60 years of the company’s operation in the country, reaffirming the firm’s commitment to gender parity in the workplace. This comes as the company’s headquarters committed to ensuring that the proportion of women in senior executive positions globally will increase to 30% by 2022. “Eunice’s appointment is not only a clear demonstration of Nestlé’s leadership towards this agenda, but also to the development of local talent in all areas of our operations,” Nestle said. Ganyawu-Magwali takes over from Ben Ndiaye Ndiaye, who has moved to the company’s global headquarters in Vevey, Switzerland.

M&A

Zomato acquires Uber’s food delivery business in India to accelerate growth INDIA – Zomato, the food delivery company backed by Alibaba’s Ant Financial, has acquired Uber Eats India in an all-stock transaction which will give Uber a 9.99% stake in Zomato. The companies did not disclose the value of the transaction, but preliminary reports place the deal at between US$300350 million. The American food delivery platform has been struggling with its Indian business following Zomato’s entry into the multibillion dollar market in 2017. It has also encountered major competition from other companies, including Swiggy, who have in the recent past received enormous backing from investors to expand their operations as the food delivery business in India continues to hit up. Following the acquisition, Uber Eats in India will discontinue its operations and transfer its customers including restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform. “We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category,” said Deepinder Goyal, Founder and CEO of Zomato. FOODBUSINESSAFRICA.COM

India adds to the list of markets that Uber Eats has retreated from in the recent past, following the company’s decision to terminate its restaurant delivery business service in South Korea and exiting the market in September last year. The acquisition of Uber Eats comes close on the heels of Zomato raising US$150 million in funding from existing investor Ant Financial, an affiliate of Alibaba. Zomato’s latest round of funding currently values the company at over US$3 billion. As the online food delivery is projected to hit US$200 billion by 2025, players in the sector are seeking to broaden their global presence and strengthen their competitive position. With the deal, Zomato joins a list food delivery companies that have been consolidating their operations in the global food delivery market. This has seen Takeaway.com propose to merger its operation with British online food ordering company, Just Eat. German online food ordering and delivery marketplaces, Delivery Hero has also sought to acquire South Korea’s leading online food delivery platform, Woowa Brothers Corp.

Demand for pulse flour to gather pace with increasing penetration of flour variants

WORLD – Heightened demand for plantbased and gluten-free foods from the food industry across the world is projected to give traction to the pulse flour market, making it a hub of profitable growth up to 2026. According to a recent report on pulse flour market launched by Fact.MR, the global pulse flour market is forecast to accelerate at a stupendous CAGR of over 10% (double that of global flour market) during forecast period 2019 – 2026. The new research report indicates that the global pulse flour market is registering significant growing demand, both at household as well as industrial capacities, a factor that is anticipated to drive robust growth in this market, making the landscape highly competitive. Pulse crops such as lentils, beans, peas and chickpeas are a great source of amino acids and plant based proteins. The crops are now being incorporated to increase the health attributes of gluten-free products. This has seen consumption of pulse flour in several processed food categories including instant noodle, pasta, extruded snacks and breakfast cereals increase in the recent years. Manufacturers are also actively focusing on development of processes that allow preservation of the nutrient density of pulse flour used in food items while at the same time adopting advanced technologies that help boosting commercial capacity for value-added pulse flour. On this backdrop, demand for pulse flour is expected to soar exponentially. Fact. MR projects that the market will create an absolute dollar opportunity of around US$15 billion during forecast period 2019 – 2026, with applications in bakery, confectionery and animal feed industries rising. JAN/FEB 2020 | FOOD BUSINESS AFRICA

AGRIBUSINESS

Delta injects $11m into sorghum contract farming to boost production

ZIMBABWE – Delta Corporation, Zimbabwe’s largest beverage manufacturer, has injected more than $11 million into its Beverages Sorghum Contract Farming Scheme (BSCFS) during the 2019/2020 farming season, as it moves to support local farmers. Delta requires about 11,400 tonnes of red sorghum and 2,400 tonnes of white sorghum annually but requirements vary every season, depending on projected domestic beer consumption levels, reports News Day. Delta corporate affairs executive Patricia Murambinda said that 6,949 farmers across the country had been contracted to produce sorghum this season. “Our current season input finance on the sorghum contract scheme is $11,481,416. Total contracted hectarage for the season is 10,673,” she said. During the 2018/19 agriculture season, the company invested at least $2.8 million to facilitate the production of 10,500 tonnes of sorghum. Sorghum beer has grown in importance within Delta’s product mix, as demand for clear beers and sparkling beverages continues to weaken due to a slothful economy. In its latest trading update, Delta said sorghum beer volume declined 15% as the prices of the major inputs such as maize and imported packaging materials rose ahead of disposable incomes. This had put pressure on the sorghum beer prices which has resulted in consumers switching to more affordable brands and packs within the category. Lager beer volumes declined 48% compared to the same the previous year while the sparkling beverages volumes declined 56% mainly due to the prolonged stock outs at the beginning of the financial year. 28 JAN/FEB 2020 | FOOD BUSINESS AFRICA

NEW MARKETS

Pizza Hut, KFC restaurants expand presence in Tanzania TANZANIA – Dough Works Limited, the franchise owner of Pizza Hut restaurants in Tanzania has opened its eighth outlet in the country at Mikocheni Plaza in Dar es Salaam. This comes barely a month after the franchisor opened two new Pizza Hut restaurants in the country in December 2018. To expand its portfolio, Dough Works acquired the KFC franchise in October 2019 from Kuku Foods Tanzania, comprising of four restaurants in the country, after which it added two new outlets, making a total of six KFC restaurants by the end of 2019. It currently employs over 400 staff. “We are excited to grow and reach more people. Between KFC and Pizza Hut, a total of 14 outlets serve over a thousand of diners daily for lunch and dinner, while also providing home and office deliveries, bringing the world’s most favourite pizza and chicken conveniently to their doorsteps,” the company said in a statement. The company’s Director, Vikram Desai shared his enthusiasm for the restaurant openings saying, “Our team at Dough

Works could not be any more excited and honoured with the addition of the four new Pizza Hut & KFC locations.” He further revealed plans of opening new outlets and having identified locations for the branches, carrying out more feasibility studies on Mwanza and Dodoma. Pizza hut, the American restaurant chain made an entrance in the Tanzania market in 2016 becoming its 100th host country. The Yum! Brands subsidiary celebrated the milestone by setting a Guinness World Records title for the highest pizza delivery on land to the summit of Mt. Kilimanjaro.

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Sustainability

BUSINESS AFRICA

AB InBev to start brewing using renewable energy for its South African operations

SOUTH AFRICA – Anheuser-Busch InBev (AB InBev), the global beverage giant is set to start brewing using renewable energy, by rolling out solar plants at its seven major South African brewing plants. The solar power plants projects followed the signing of seven multi-tiered Power Purchase Agreements with around 8.7-megawatt (MW) capacity with the Sola Group, a company focused on developing solar plants. The project has 2.6 MW that have already reached practical completion, with the remaining projects in advanced stages of construction. Taryn Rosekilly, the VP procurement and sustainability at SAB and AB InBev Africa, said the solar power would partially power each facility which represents 7% of the business’s electricity requirements. “Not only is solar a viable and cost-effective option for us, but it also aligns to our global sustainability strategy, which entails going 100 percent renewable by 2025,” Rosekilly said. This installation will allow for all electricity consumed for the production of its global brand, Budweiser, at its Rosslyn Brewery north of Pretoria, to be sourced from Renewable Energy. According to Rosekilly, InBev Africa had achieved its 50% target in key markets across the globe ahead of schedule and was well on track to achieve its 100% ambition with good progress being made in Africa. The company has also signed a 10-year Virtual Power Purchase Agreement (VPPA) with global renewable energy developer, BayWa r.e to purchase 100% renewable electricity for its European brewing operations. Under the deal, BayWa r.e will supply the Budweiser brewer with over 130 megawatts of solar power from two solar farms with a combined power output of almost 200 MW. The deal makes it the largest pan-European corporate solar power deal in history, covering AB InBev’s 14 breweries in Western Europe and over 50 brands brewed and sold across 12 countries, including global brand Budweiser. BayWa r.e. will also fund and develop two new solar sites in Spain, one of which will be called the Budweiser Solar Farm, which will provide 250 gigawatt hours of renewable electricity per year for AB InBev’s breweries. The solar plants are in line with the group’s global renewable energy commitment to acquire half of the company electricity from renewable energy sources by 2020 and 100percent by 2025. FOODBUSINESSAFRICA.COM

TRENDS IN RENEWABLE ENERGY • WATER • WASTE • AIR • MANUFACTURING • MOBILITY • INFRASTRUCTURE • COMMUNITIES • RESOURCES • POLICY & REGULATION

Conagra Brands unveils sustainable packaging goal to shape a better planet USA – American packaged foods company Conagra Brands, has committed towards making 100% of its current plastic packaging renewable, recyclable or compostable by 2025. This goal accompanies current efforts to reduce the overall use of plastic and is part of the company’s broader commitment to shaping a Better Planet, one of the four pillars of Conagra’s corporate social responsibility and ESG efforts. While packaging serves a critical role in maintaining both food freshness and safety, Conagra Brands acknowledged that plastic packaging waste is a growing issue. The company has introduced its sustainable packaging goal as commitment to producing packaging that takes environmental impacts into account while continuing to ensure food quality and safety. It aims to reduce waste derived from packaging through thoughtful design and by using renewable and more readily recyclable or compostable materials. OVER THE NEXT FEW YEARS, THE COMPANY AIMS TO AVOID THE USE OF AN ADDITIONAL 33 MILLION POUNDS OF PLASTIC THROUGH FURTHER DEVELOPMENT OF PLANT-BASED PACKAGING OPTIONS. IT ALSO PLANS TO ENSURE ALL PACKAGING FEATURES A HOW2RECYCLE LABEL TO GUIDE CONSUMERS

Conagra has already made progress against its sustainable packaging goal with the introduction of plant-based bowls used in Healthy Choice Power Bowls products. Made from fiber, these bowls have helped Conagra avoid the use of more than 2.1 million pounds of plastic packaging since being introduced in 2017. Over the next few years, the company aims to avoid the use of an additional 33 million pounds of plastic through further development of plant-based packaging options and other packaging innovations. Conagra also plans to ensure all packaging features a How2Recycle label to provide clarity to consumers, so that more materials are put into recycling bins. Corey Berends, senior vice president, R&D for Conagra Brands said that they look forward to working with suppliers and others in the industry to identify innovative solutions that maintain food safety and freshness while also reducing their packaging footprint.

JAN/FEB 2020 | FOOD BUSINESS AFRICA

Beyond Meat and Roquette sign a multi-year pea protein supply agreement USA – Alternative proteins maker Beyond

Meat has announced a multi-year pea protein supply agreement with Roquette, a leader in plant-based ingredients and a pioneer of plant proteins. The supply agreement builds on a previous partnership between the companies and significantly increases the amount of pea protein to be supplied by Roquette to Beyond Meat over the next three years as compared to the amount

supplied in 2019. Ethan Brown, Beyond Meat’s Founder & CEO commented that the latest contract with Roquette reflects Beyond Meat’s commitment to further scaling the plant protein supply chain as global demand for our products continues to rise. “Along with our supply chain partners, including Roquette, we are driving innovation and access to existing and new plant protein feedstocks as we provide consumers around the world with plant-based meats that delight taste buds while contributing to important health, climate, natural resource, and animal welfare goals.” The partnership will also support Beyond Meat’s ambitious expansion efforts both domestically and globally and introduction of new innovative products into the marketplace. In May 2019, Beyond Meat also expanded its partnership with Zandbergen World’s Finest Meat to produce the brand’s innovative plant-based meats at a new manufacturing facility being constructed by Zandbergen, the Netherlands. The firm’s executive chairman, Seth Goldman, recently revealed that the company plans to expand into mainland China and Europe this year. The company has significantly benefited from its expansion across various markets, with the company registering a 250% growth in net revenues to US$92 million in the third quarter of 2019 compared to US$26.3 million in the third quarter of 2018. Currently, the company’s portfolio of fresh and frozen plant-based proteins are currently sold at about 58,000 retail and foodservice outlets in more than 50 countries worldwide, as interest and demand for alternative proteins surge. It is also ramping up its partnerships with major restaurants chains including Dunkin’, McDonald’s, Subway, Del Taco, Carl’s Jr, and A&W Restaurants.

Tyson Foods initiates global coalition to advance the future of sustainable protein USA – America’s leading meat company Tyson Foods, in collaboration with other stakeholders in the food industry, has launched the Coalition for Global Protein – a multi-stakeholder initiative to advance the future of sustainable protein. The Coalition seeks to ignite transformative change in the food system by uniting stakeholders across the food and agriculture sector to identify and implement new and creative solutions to sustainably feed the world’s growing population. To mark the launch of the Coalition, Tyson Foods convened leaders from the global protein industry in Davos, Switzerland, alongside the 50th World Economic Forum Annual Meeting. Noel White, chief executive officer of Tyson Foods said that as one of the world’s largest food companies, the company wants to help ensure the responsible production of affordable, nutritious food for generations to come. “We’re introducing this Coalition because we know that we cannot achieve this alone. Collective commitment and immediate action are needed to deliver the greatest impact on the future of sustainable food production,” he commented. The expected objectives of the Coalition will be to increase understanding around the challenges of feeding a growing population with more varied and sustainable protein options. It will identify new and creative solutions and activate those solutions through pilot programs. Potential focus areas the Coalition could address include reducing food loss and waste, increasing access to protein and safeguarding ecosystems. As part of the initial work of the Coalition, stakeholders will work together to align on the focus areas. The Coalition will publicly report on commitments and progress in 2020.

Nestlé plans US$2b investment to boost sustainable packaging & innovation The food and beverage giant also creates a venture fund to invest in innovative packaging start-ups

SWITZERLAND – Nestlé has committed to invest up to

CHF 2 billion (US$2.1bn) to lead the shift from virgin plastics to food-grade recycled plastics and accelerate the development of innovative sustainable packaging solutions. The commitment builds on the company’s 2018 pledge to make 100% of its packaging recyclable or reusable by 2025, while cutting its use of virgin plastics by 33% in the same period whilst working with other partners to advance the circular economy and endeavor to clean up plastic waste from oceans, lakes and rivers. Acknowledging that most plastics are difficult to recycle for food packaging, the Swiss food and beverage giant plans to foster a circular economy with stakeholders across the industries aimed at increasing assimilation of recycled plastic. The food giant has therefore committed to sourcing up to 2 million metric tons of food-grade recycled plastics and allocating more than CHF 1.5 billion (US$1.56bn) to pay a

30 JAN/FEB 2020 | FOOD BUSINESS AFRICA

premium for these materials over the next five years. It is also launching a CHF 250 million (US$259m) sustainable packaging venture fund to invest in start-up companies that focus on providing innovative packaging solutions including new materials, refill systems and recycling solutions. This will complement the company’s significant inhouse research through the Nestlé Institute of Packaging Sciences, on the path towards a waste-free future. These initiatives come in addition to Nestlé’s major ongoing efforts in research, sourcing and manufacturing to make its packaging recyclable or reusable and contribute to its goal to achieve zero net greenhouse gas emissions by 2050. Nestlé said that it will continue to outline further initiatives and provide regular progress updates. “We are taking bold steps to create a wider market for foodgrade recycled plastics and boost innovation in the packaging industry. We welcome others to join us on this journey,” said Mark Schneider, CEO of Nestlé. FOODBUSINESSAFRICA.COM

MB PLC INTERVIEW

PepsiCo to use 100% renewable electricity for its US operations

USA – PepsiCo has unveiled plans of using 100% renewable energy for its US direct operations in 2020, as part of the company’s progress towards switching to renewable electricity across its global operations. According to PepsiCo, US is the food and beverage company’s largest market and accounts for nearly half of its total global electricity consumption. PepsiCo’s noted that shifting to renewable electricity in the US this year is expected to deliver a 20% reduction in companywide direct operations (Scopes 1 and 2) greenhouse gas (GHG) emissions relative to a 2015 baseline, representing a significant contribution to the company’s goal of reducing absolute GHG emissions across its global value chain by 20% by 2030. “We have entered a decade that will be critical for the future of our planet’s health,” said Ramon Laguarta, Chairman and Chief Executive Officer, PepsiCo. “PepsiCo is pursuing 100% renewable electricity in the U.S. because the severe threat that climate change poses to the world demands faster and bolder action from all of us.” "WE HAVE ENTERED A DECADE THAT WILL BE CRITICAL FOR THE FUTURE OF OUR PLANET’S HEALTH. PEPSICO IS PURSUING 100% RENEWABLE ELECTRICITY IN THE U.S. BECAUSE THE SEVERE THREAT THAT CLIMATE CHANGE POSES TO THE WORLD DEMANDS FASTER AND BOLDER ACTION FROM ALL OF US" - Ramon Laguarta - Pepsico Chairman & CEO

To achieve 100% renewable electricity, the company plans to target a diversified portfolio of solutions including Power Purchase Agreements (PPAs) and Virtual Power Purchase Agreements (VPPAs), which finance the development of new renewable electricity projects such as solar and wind farms. The company also intends to pursue use of renewable energy certificates (RECs), which are credits certified by independent third parties that support existing green electricity generation from renewable sources. It said that its portfolio will feature more RECs by the close of the year and then will gradually move toward PPAs and VPPAs by 2025. Alongside these measures, the Lay’s, SunChips, bubly, Gatorade and Pepsi brands owner said that it will continue to expand its onsite renewable electricity. The company recently installed new solar panels at its global headquarters in Purchase, New York complementing other solar energy installations throughout the country.

FOODBUSINESSAFRICA.COM

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Contacts us on: Tel: +254 20 8155022; Cell: +254 725 343932 Email: info@fwafrica.net JAN/FEB 2020 | FOOD BUSINESS AFRICA

EVENT REVIEW

AFMASS FOODTECH ZAMBIA EDITION 2019

The Chairman of the Grain Millers Association of Zimbabwe, Tafadzwa Musarara in a one-on-one discussion with organisers

The high-impact panel discussion that brought together industry leaders from Zambia to discuss the state of the food industry.

National Foods Managing Executive for maize division, Mr Chipo Nheta answers a question at the conference arena

Expo Hall visitors have a moment to sample food products from Java Foods

The team from Buhler are all ears as a potential customer makes a point to them at their booth at the Expo Hall

Expo Hall visitors hold conversations at the Atlas Copco booth at the Expo Hall

The tesm from Diversey engage with potential clients at the Expo Hall 32 JAN/FEB 2020 | FOOD BUSINESS AFRICA

The team from occupational safety and health providers from South Africa Nhlupo discuss their progress at the Expo Hall FOODBUSINESSAFRICA.COM

Delegates keenly follow proceedings at the conference arena

The team from GMACH - GENC from Turkey pose for a moment at the Expo Hall

Delegates keenly follow proceedings at the conference arena

Delegates from Zimbabwe keenly follow proceedings at the conference arena

The Chairman of the Grain Millers Association of Zimbabwe, Tafadzwa Musarara delivers his keynote presentation

The team from GMACH - GENC from Turkey engage with a potential client at the Expo Hall

The team from Pingle Group discuss with a potential customer at the Expo Hall FOODBUSINESSAFRICA.COM

An Expo Hall visitor has her questions answered at the Expo Hall by a YGT Khunshan manager JAN/FEB 2020 | FOOD BUSINESS AFRICA

EVENT REVIEW AFRICA FOOD INDUSTRY EXCELLENCE AWARDS 2019

A representative from Bidco Africa receives Investment of the Year Award from Chetan Shah, Director, Capwell Industries

Ronald Wakhu from KIBO Capital Partners receiving the award for Deal of the Year from Eelco Weber, CEO Bio Foods Products Ltd.

The Bio Food Products Ltd team is all smiles as they receive their dairy product of the year award for one of their new yoghurts

A delighted New KCC management team receiving their award for dairy product of the year - UHT Lactose Free milk

An excited team from Sameer Agriculture Livestock with their award for dairy product of the year - Daima yoghurt with real fruit pulp 34 JAN/FEB 2020 | FOOD BUSINESS AFRICA

Coca-Cola Beverage Africa management team receiving their award for beverage product of the year for Powerade FOODBUSINESSAFRICA.COM

The team from Dormans Coffee receive their award from Amir Parpia, the Finance Director at Alpha Fine Foods

Happy faces from Capwell Industries celebrating their win for SOKO home baking flour

Lawrence from National Foods Zimbabwe hands over the award for the Investment of the year to Kenafric Bakeries team

Grace Mugwe, Hino Marketing Manager hands over the winning trophy to Sheena and Jasleen from Mjengo Ltd Ltd

The team from KWAL Ltd led by Munee Mwakio receive their award for Hunters Gold from Rozzy Rana the CEO of Dormans Ltd

The EABL team celebrate their win for beverage products of the year - Tusker Premium Ale, Guiness Smooth & Sikera Apple Cider.

Daniel Bishof with his team from BDELO receive their award for their new Bdelo tortilla chips in the Bakery and Snacks category

Mr. George Kiune of Fayaz Bakery happily receives the award for their new Coconut cookies from Martin Schlauri of Buhler

FOODBUSINESSAFRICA.COM

JAN/FEB 2020 | FOOD BUSINESS AFRICA

AFRICA FOOD INDUSTRY LIFETIME ACHIEVEMENT AWARDS WINNERS 2019

Martin Schlauri – Founder CEO & Principal, African Milling School

Charles Mukora – Former Chairman, Githunguri Dairy Cooperative Society Ltd

Gulamabas Dewji - Chairman and Founder, METL- Tanzania

Sina Gerard - Director and Founder, Urwibutso Enterprises - Rwanda

Jeremy Block – Chairman, C. Dormans Ltd

Peter Cotan - Chief Executive Officer, Superior milling and National Milling Corporation - Zambia

AFRICA FOOD INDUSTRY DISTINGUSHED LEADERS AWARDS WINNERS 2019

Fatma Abdulrehman – Founder CEO Quality Plus & QZone Ltd

Amir Parpia – Finance Director, Alpha Fine Foods

Patrick Nderitu Kamugi – Supply Chain Director, Kenya Breweries Ltd

Duncan Kimani – Manufacturing Director, Coca-Cola Beverages Africa, Ethiopia

Moses Musisi – Brewing Manager, Nile Breweries Ltd (AB InBev, Uganda)

Samuel Macharia – CEO, Kinangop Dairy Ltd

36 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FOODBUSINESSAFRICA.COM

INVESTMENTS OF THE YEAR WINNERS 2019

Kellogg-Tolaram Breakfast Cereals Plant – Lagos, Nigeria

Bidco Industrial Park – Nairobi, Kenya

Kenya Breweries Plant – Kisumu, Kenya

Heineken Brewery Plant – Maputo, Mozambique

Kellogg-Tolaram Breakfast Cereals Plant – Lagos, Nigeria

The Investment of the Year Award was bestowed upon new investments in the food, beverage and milling industry in Africa that stood out for their unique and important impact on the economy and job creation in the country they were located, plus potential effects at the regional level in the Continent. The five investments across the Continent, and which were done by regional and international giants, are a true reflection that Africa's food, beverage and milling industry is on the rise, and that more investments of these kinds are on the way.

NEW PLANTS OF THE YEAR FINALISTS

Kenya Breweries Ltd brewing plant in Kisumu, Kenya - PLATINUM

Kenafric Bakery plant in Ruiru, Kenya GOLD

Dormans Coffee processing plant in Ruiru, Kenya - GOLD

Bakex Millers wheat milling plant in Thika, Kenya - GOLD

Sayona Drinks fruit processing and beverage plant in Chalinze, Tanzania GOLD

Amor Coco coconut processing plant in Kilifi, Kenya - SILVER

FOODBUSINESSAFRICA.COM

JAN/FEB 2020 | FOOD BUSINESS AFRICA

NEW PRODUCTS OF THE YEAR WINNERS SPONSORED BY

Palsgaard is the world’s only full-service emulsifier and stabiliser company, creating sustainably produced ingredients with specialised performance characteristics that transform everyday foodstuffs into extraordinary products on supermarket shelves in over 100 countries. Confectionery, dairy, ice cream, bakery, mayonnaise, margarine and meat can all perform better and be loved more with our input, just as their plastic packaging can be made more sustainable with our plant-based additives. More info: www.palsgaard.com

BIO GREEK STYLE YOGHURT – BIO FOOD PRODUCTS LTD - PLATINUM

DAIMA THICK & CREAMY YOGHURT WITH REAL FRUIT PULP – SAMEER AGRICULTURE & LIVESTOCK - PLATINUM

DAIMA FLAVOURED MILK – SAMEER AGRICULTURE & LIVESTOCK - GOLD

BIO ACTIVE PROBIOTIC YOGHURT FRUIT DRINK – BIO FOOD PRODUCTS LTD - GOLD

SUPERLITE YOGHURT WITH SUPER FRUITS – BIO FOOD PRODUCTS LTD - GOLD

BIO TINGA TINGA DRINK YOGHURT – BIO FOOD PRODUCTS LTD - GOLD

GOLD CROWN LACTOSE FREE LONG LIFE MILK – NEW KCC LTD - GOLD

WHEY2GO RTD WHEY (PROTEIN) BEVERAGE – PAMAEDGE LTD - GOLD

DAIMA WHOLE MILK – SAMEER AGRICULTURE & LIVESTOCK - GOLD

FAMILY MILK (UHT) – MB PLC LTD - SILVER 38 JAN/FEB 2020 | FOOD BUSINESS AFRICA

ASAS UHT MILK – ASAS DAIRIES LTD SILVER

The highly competitive Dairy Products of the Year Awards celebrated some of the most striking innovations by the dairy industry in the region as the industry strives to meet rising consumer needs for healthier/more nutritious products, unique product formulations and packaging and other unique attributes. This year also saw the entry of long shelf life milk products from Tanzania and Ethiopia, which were the first long shelf life milk products ever made in these two East African countries - opening the path to more innovations of this kind in new territories in the Continent FOODBUSINESSAFRICA.COM

SOFT BEVERAGE PRODUCT OF THE YEAR SPONSORED BY

At Kerry, we know success in the food and beverage industry requires an ability to stay ahead of ever-changing consumer demands, and we’re empowering our customers to do exactly that. We have food and beverage experts around the world from a range of backgrounds including chefs, baristas, bakers, food scientists and nutritionists, to name but a few. They each bring a deep passion and commitment to their work, making us a trusted supplier to the world’s leading food, beverage and pharma companies. More info: www.kerry.com

YOLA CEREAL MILK DRINK – CAPWELL INDUSTRIES LTD - GOLD

COCA-COLA PLUS COFFEE – COCA-COLA BEVERAGES AFRICA, KENYA - GOLD

MINUTE MAID NUTRIDEFENSES NECTAR PLUS – COCA-COLA BEVERAGES AFRICA, KENYA - GOLD

ALCOHOLIC BEVERAGE PRODUCT OF THE YEAR

GUINNESS SMOOTH – KENYA BREWERIES LTD - PLATINUM

SIKERA APPLE CIDER – KENYA BREWERIES LTD - GOLD FOODBUSINESSAFRICA.COM

TUSKER PREMIUM ALE – KENYA BREWERIES LTD - PLATINUM

KENYAN ORIGINALS CIDER – SAVANNA BRANDS - GOLD

HUNTERS GOLD CIDER – KENYA WINE AGENCIES LTD - GOLD

The highly sought after Alcoholic Products of the Year Awards saw a number of new products that are defining the changing face of the alcoholic industry in the region, as young Millenials and the everchanging consumer trends change the narrative in the industry. The Awards entries highlighted the emergence and growth of the cider category as one of the hottest areas in the sector and the premiumisation trend that is sweeping the region, even as the bottom of the pyramid consumer still makes the largest consumer demographic in the region. JAN/FEB 2020 | FOOD BUSINESS AFRICA

MILLED, CEREALS & PULSES PRODUCT OF THE YEAR SPONSORED BY

Hino trucks are available across more than 90 countries and regions, supporting the working lives of people all over the globe in line with the needs of every customer. We provide customers worldwide with products optimally suited to their needs, and we help our customers make the most of their HINO trucks by providing comprehensive follow-up service in the spirit of “Total Support.” Our goal is to make the world a better place to live by helping people and goods get to where they need to go - safely, economically and with environmental responsibility - while focusing on sustainable development. More info: www.hino-global.com

PHULKA WHOLE MEAL FLOUR – BAKEX MILLERS LTD - PLATINUM

PEARLENTA MEALIE MEAL – NATIONAL FOODS ZIMBABWE - GOLD

NUTRIPRO FAMILY PORRIDGE – TROPIKAL BRANDS AFRIKA - GOLD

SOKO BABY WEANING COMPOSITE FLOUR – CAPWELL INDUSTRIES LTD - GOLD

SOKO HOME BAKING FLOUR – CAPWELL INDUSTRIES LTD - GOLD

NUVITA CEREOS – MJENGO LTD - GOLD

BAKERY & SNACKS PRODUCT OF THE YEAR

MANDO BITES – BROADWAY BAKERY GOLD

FESTIVE CREAM ROLLS – DPL FESTIVE LTD - GOLD

BDELO TORTILLA CHIPS – BDELO LTD GOLD 40 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FAYAZ COCONUT COOKIES – FAYAZ BAKERY LTD - GOLD

NUVITA FLAP JACKS BISCUITS – MJENGO LTD - GOLD FOODBUSINESSAFRICA.COM

TEA, COFFEE & OTHER HOT BEVERAGES PRODUCT OF THE YEAR

KERICHO GOLD HEALTH AND WELLNESS RANGE – GOLD CROWN BEVERAGES (K) LTD - PLATINUM

SPECIALITY TEAS AND INFUSIONS RANGE – GOLD CROWN BEVERAGES (K) LTD - GOLD

BARAKA CHAI – GOLD CROWN BEVERAGES (K) LTD - GOLD

DORMANS 3 IN 1 – DORMANS COFFEE LTD - GOLD

SAFARI LOUNGE COMPOSTABLE COFFEE CAPSULES – TEA & COFFEE CONNECTION LIMITED - GOLD

THE BIG FIVE COFFEE – AFRICAN COFFEE ROASTERS - SILVER

CULINARY & CONDIMENTS PRODUCT OF THE YEAR

BIO FAMILY SIZE JAMS, MARMALADE AND HONEY – BIO FOOD PRODUCTS - GOLD

The Milled, Pulses & Cereals Products of the Year category saw the entry of a number of innovations in the sector, as the milling industry strives to meet the ever changing requirements for their customers, especially their quest for more wholesome, nutritious products. Phulka, the wholemeal wheat flour stood out for its application of the latest technology to produce whole meal flour of the highest quality, while National Foods Pearlenta high fibre maize meal range was also unique in its concept of adding fibre into the milled maize to boost its nutritional profile. Capwell Industries Soko Baby Weaning flour's addition of beta glucan into the porridge mix is the first in the region and seeks to meet the nutritional needs of young children. In the Bakery & Snacks category, the range of snacks from Bdelo were unique for their incorporation of local grains including sorghum, sweet potato and for their unique texture. The company's products also stood out for their packaging and taste. DPL Festive's Festive Cream Rolls played into the consumers' quest for flavourful and conveniently packaged products. Broadway Bakery's Mando Bites have opened the window for a common snack in Kenya, mandazi, to be availed in convenient packaging, a trend that has seen more entrants into the emerging category. Change is blowing in the Tea, Coffee & other Beverages sector as Millenials define the future of the beverage industry in the region. Exquisite flavour combinations, use of herbs and infusions and outstanding packaging are some of the ways the tea companies are seeking to stand out in the eyes of the consumer, who is spoilt for choice on the shelves. The coffee sector is not left behind, with local value addition driving the sector to greater heights

FOODBUSINESSAFRICA.COM

JAN/FEB 2020 | FOOD BUSINESS AFRICA

NEW PRODUCT OF THE YEAR - INGREDIENTS INNOVATION SPONSORED BY

SOKO BABY WEANING COMPOSITE FLOUR – CAPWELL INDUSTRIES LTD

Promaco has established itself as a leading supplier of specialty ingredients for the food processing sector in Eastern Africa. Partnering with world leading manufacturers, we support our customers' mission to innovate and add value by providing access to leading edge food technology. local technical support and in-country warehousing of the key specialty ingredients required to produce high quality, innovative products, consistently. We service our customers through office and warehouse facilities in Nairobi, Kampala and Dar es Salaam staffed by a team of technically trained food scientists. More info: +254 733556571/723708032

BDELO TORTILLA CHIPS – BDELO LTD

NEW PRODUCT OF THE YEAR - INGREDIENTS INNOVATION

KENYAN ORIGINALS CIDER – SAVANNA BRANDS

BIO FRUIT ON THE BOTTOM – BIO FOOD PRODUCTS LTD

MINUTE MAID NUTRIDEFENSES NECTAR PLUS – COCA-COLA BEVERAGES AFRICA, KENYA

KERICHO GOLD HEALTH AND WELLNESS RANGE – GOLD CROWN BEVERAGES (K) LTD

PRODUCT RELAUNCH/REPACKAGED PRODUCT OF THE YEAR

BIO FRUIT ON THE BOTTOM – BIO FOOD PRODUCTS LTD - PLATINUM

EEZEE SUPA CEREAL – JAVA FOODS LTD, ZAMBIA - GOLD

FAYAZ PREMIUM COOKIES – FAYAZ BAKERY LTD - GOLD

The Packaging Redesign of the Year Award celebrates the best application of new design concepts and ideas, sustainability and customer convenience by the food manufacturing industry. Bio Food Products rejuvenated packaging for its fruit on the bottom took top honours, while Java Foods Ezee Supa Cereals range to give new life to its reformulated cereals range stood out for its excellent concept and design. OLE’ COOKING OIL – UNIFIED CHEMICALS, ZAMBIA - GOLD 42 JAN/FEB 2020 | FOOD BUSINESS AFRICA

FOODBUSINESSAFRICA.COM

NEW PRODUCT OF THE YEAR - NUTRITION INNOVATION

GOLD CROWN LACTOSE FREE LONG LIFE MILK – NEW KCC LTD

SUPERLITE YOGHURT WITH SUPER FRUITS – BIO FOOD PRODUCTS LTD

PHULKA WHOLE MEAL FLOUR – BAKEX MILLERS LTD

The New Product of the Year - Nutrition Innovation celebrate some of the most outstanding new products that meet latest trends that coincide with consumer needs for taste, nutrition and health, convenience etc. New KCC Ltd's Lactose Free Milk range stood out for the product's opening up the opportunity for a significant part of the population to access nutritious milk products, while Bio Food Products's Superlite with Super Fruits offered yoghurt with added superfruit benefits, on a fat free and sugar free base, as consumers seek low/no sugar and fat products. Phulka's wholemeal flour enables consumers to take in the full benefits of wheat flour, including its critical vitamins and minerals. SUSTAINABILITY INITIATIVES OF THE YEAR WINNERS

PLATINUM – ENERGY DEDICATED 11 KV POWER SUPPLY LINE INSTALLATION – COCA-COLA BEVERAGES AFRICA (KENYA) GOLD – WASTE WASTE MANAGEMENT INITIATIVE – COCACOLA BEVERAGES AFRICA (KENYA)

PLATINUM – COMMUNITY IMPACT LOCAL MAIZE SOURCING & QUALITY IMPROVEMENT – AFRICA IMPROVED FOODS

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GOLD – COMMUNITY IMPACT MILK PROCUREMENT & EXTENSION SERVICES – BIO FOOD PRODUCTS LTD

GOLD – WATER CONDENSATE RECOVERY ON PACKAGING LINE – KENYA BREWERIES LTD

GOLD – ENERGY SOLAR ENERGY AND HOT WATER INITIATIVE – BIO FOOD PRODUCTS LTD

SILVER – ENERGY CONDENSATE RECOVERY ON PACKAGING LINE – KENYA BREWERIES LTD

GOLD – DIGITAL/SOCIAL MEDIA BIO MILK QUEST CAMPAIGN – BIO FOOD LTD

As the World changes to embrace a sustainable future, so does the food industry in Africa. This year saw the submissions of entries from some of the leading players in the sector. Coca-Cola Beverages Africa Kenya's dedicated 11KV powerline has enabled the plant to run more efficiently while saving the company huge sums of money, while its World Without Waste initiative has seen the setting up of collection points across the country together with other partners, and is already having an impact on the environment in the country Bio Food's milk procurement and extension services stand out for their focus on improving productivity on the farm, increasing farmer's incomes and boosting the quality of milk that is delivered to the processor, while the firm has also embraced solar energy, generating upto 35% of its total energy requirement from this renewable resource. Rwanda's Africa Improved Foods; maize sourcing and quality improvement initiative has reduced the prevalence of aflatoxin in Rwanda while guaranting better incomes for its farmers, while Kenya Breweries demonstrated the huge impact energy saving initiatives can have on the bottom line and the environment.

JAN/FEB 2020 | FOOD BUSINESS AFRICA

AFRICA FOOD INDUSTRY DEALS OF THE YEAR WINNERS 2019

Goldman Sach’s and IFC led US$ 30 million investment in Kenya’s fresh produce distributor Twiga Foods

AgDevCo’s US$ 3 million investment in debt and equity in Great Lakes Coffee, Uganda

DOB Equity’s undisclosed investment in Kenya’s coconut processor Coconut Holdings (Kentaste products)

PepsiCo’s acquisition of Pioneer Foods for US$ 1.7 billion

DUET Private Equity’s acquisition of a majority stake worth more than US$ 50 million in Nigeria’s soft drinks maker, AJEAST Nigeria, makers of Big Cola beverages

FMO and Finnfund’s US$ 16.5 million double investment in Africanfocused, Zambia-based aquaculture producer Yalelo Ltd

A new addition this year, the Deals of the Year celebrated recent investments or acquisitions by other food companies, private equity funds, venture capital firms or other sources in food, beverage and milling companies in Africa. The winning deals are chosen for their potential impact on the economy and job creation in the country it is located, plus potential effects at the regional level in the Continent, with the winning deals chosen from those in Zambia, Mozambique, Nigeria, Kenya, South Africa and Uganda.

Investments by Amethis, Kibo Capital and Proparco in Mozambican miller Merec Industries 44 JAN/FEB 2020 | FOOD BUSINESS AFRICA

The deals, across several sectors, indicate the appetite that deal makers are increasingly having for Africa's food industry.

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MY FACTORY• MY STORY

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My Factory, My Story is an excellent platform to celebrate new factory or factory expansion; new products and services; new markets; new people; recent award or major achievement by sub-Saharan Africa’s leading companies in the food, beverages, milling, animal feed, retail and foodservice industry. These FREE high quality editorials provide your brand with unrivalled reach that could unlock crucial business networks and opportunities for FOODBUSINESSAFRICA.COM

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Why not give us a call to tell your story in the next issue? Contact us on info@foodworldmedia.net or +254 20 8155022/ +254 725 343932 JAN/FEB 2020 | FOOD BUSINESS AFRICA

EXECUTIVE INTERVIEW

MONICA MUSONDA – FOUNDER & CEO, JAVA FOODS

Monica Musonda’s journey since founding Java Foods in 2012 is truly inspirational. One of the most visible large women entrepreneurs in Zambia, she shared her journey so far – and huge ambitions – at the recently held AFMASS FoodTech Zambia edition

How did you get into food processing and what has been the experience with Java Foods? My journey started in 2011, when I started coming home more often to visit my parents. I noticed many things in the market: retail was becoming more formal, there was growth in more malls and supermarkets with more people getting into them for shopping. There was also increasing consistency in prices for goods irrespective of the location one was shopping at in Zambia. We noted that Zambia had a very young population; it’s said that 70% of Zambia population is below 30 years and this shapes how you model your business in terms of who your market is going to be. The young population is definitely looking at different foods. They are young and influenced by social media and international trends. This means we had a different market that needed to be served differently. I knew I wanted to participate in the growth of Zambia, and the growth was not going to happen in the office: it was going to happen in what I believe is manufacturing. What was I going to manufacture? The points I talked about are what encouraged me to think of our 46 JAN/FEB 2020 | FOOD BUSINESS AFRICA

first product, which people know today as eeZee Noodles. When we started in 2012, everyone said we were going to fail, thinking that with a lot of people eating nshima (the Zambian staple made from maize), noodles was nothing but an expatriate thing. There were questions on how to cook them and why should they be eaten. The competition for noodles, then, was bread. When I started, one packet of the noodles was 1.9 Zambian kwacha and bread was 3 Zambian kwacha. People were saying they weren’t buying something that could not feed their family. The market actually corrected itself. The truth is that we didn’t make any money for the first three years. We learnt a bitter lesson, that you may have this great idea, but you have to cook it. The market was not welcoming; they didn’t know what it was. We persisted and made good relationships with the retailers. We started when the retailers were under pressure to stock more Zambian goods. They gave us a pretty hard time on stocks, quality, delivery and pricing. In 2015, something happened. Everything changed and evolved because we had finally solved the problem of young and lowincome people who had nothing for a meal. Bread was expensive, nshima took too long, chips and chicken was 15 kwacha. But now FOODBUSINESSAFRICA.COM

TRENDS

they had an option; for 5 kwacha they bought an egg and eeZee and called it a day. Everything changed particularly if you were a student and that changed the numbers and eventually the brand. For us it was really a take-off moment and we realized we had to keep up, and therefore introduced the vegetable flavor and later the spicy chicken flavor. The new introductions were not easy, but we were lucky that we understood the market and that really helped us. We have grown and now we do Supa Cereals which is fortified with vitamins and is in a new package now. With questioning on the nutrition preposition of the noodles by the market, we thought there was a demand for nutritious products thus ended up with a corn-soy blend that is entirely made from Zambian products apart from the packaging. It is good for 3-year olds upwards. How unique was it as a woman business leader dealing with with retailers, government and everyone at the start of your business? I am only among the few women entrepreneurs at scale in Zambia, but even the women you see in the streets are entrepreneurs. We want to see more women running businesses at scale. I have a legal background and I have worked on many transactions; I am used to bullying my way through. I am not afraid of challenges and I like taking them on. This was a personal challenge. At times you could not even get to the door of a South African retailer. They questioned who you were, whether I could deliver because Zambians ‘don’t deliver’. We persisted, went back again and again and used every bit of ammunition we had – we used every network we had. If you have a product that answers a need and you’re consistent with the right price, they can’t avoid you. How did you raise money to scale up to where you are now? I had to use everything to get started, but even with growth, funding wasn’t forthcoming. Without qualms, banks do not support SMEs. Their facilities are too expensive, their money is for big businesses; they don’t understand small businesses. The big retailers pay you in 60 days, but you have no cash flows in between! How do you bridge the gap? Loans are too expensive, at 40%. I would like to advice young entrepreneurs to be careful with borrowing money from commercial banks with high interest rates they offer in this market. Don’t take money at even 30%, you will fail, you will be under strain just as the consumers. You will not make enough money to pay back your debt and all your expenses. Find softer money; long term credit. In Zambia we are looking more into venture capital rather than private equity. PE are looking at much bigger deals and if your business is at least US$3 million. If you’re below US$750,000 don’t waste your time, they will not get out of bed. We must look for venture capitalists who are into smaller deals and PE will come later. My experience was when I started looking for a strategic partner, I started at $1.5 million. But with the capacity and good business, no one was interested. So, if you’re looking for $750,000 and below, go after impact funds, go see venture capitalists if they exist, for their presence is not visible in Zambia. This is the hard truth. Are there any things that the government has done in facilitating investments in Zambia’s food industry?

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retailers and asking to be shown Zambian products on their shelves. Alongside this, I would like to see the government probing whether they are paying Zambians enough. There is more on the shelf, but the suppliers are getting less money. There is still a lot of work to be done What is your experience with the role of boards in businesses? We have a fairly new board. We are transitioning in learning about corporate governance, which has been helpful because we have technical and financial people on the board. Having a board of directors or an advisory board is good because you can get broad views, especially from those who understand the industry. Personally, I have been fortunate to sit in boards of large listed companies. This has brought a lot of experience into Java Foods from systems around people, cost saving and growth. How do you perceive the giving away element of an entrepreneur say to PE, venture capitalists, boards etc..? It’s interesting, but it’s a concept of understanding that you’re really going to grow. It might take you long to reach those growth levels but it’s not impossible. It is only now that he (Africa’s richest man) Dangote is diversifying and listing his businesses, but for many years his was very much a family business. He had the capacity - the cheque book and he had the technical expertise. If you have none of the above, there is nothing wrong in bringing in a partner who brings value to your business. Being a shareholder of a successful business is better than being a 100% owner of nothing. I took in partners last year. I sold 49% of the business. I am still the majority shareholder and the CEO but it’s important to us because we didn’t have the capital to take the business to the next level. This also put Java Foods in a different space because of the distinguished well-known partner – an impact fund. It has put the company at a table we could not have sat at before. It’s because of all these forces that we are going to succeed. If you have an opportunity to have a strategic partner, don’t think you’re giving away, but think how it can work for you. How do we get people to think nutrition where money is also involved; what’s the balance? The reality is, as processors we have a social responsibility. We cannot accept to put out bad or non-nutritious food to consumers. That harms our population, particularly our children. If we are going to be street manufacturers then we should all forget it. We have to assist government efforts on nutrition. It has always been our mission at Java Foods to provide nutritious foods using locally available products at affordable prices. We plan to fortify our noodles – a first in Southern Africa. What is the future of Java Foods? The next 12 months will really be a turning point for us. We are expanding our factory, hoping to open a new factory in May 2020. We will increase our production with more product offerings. We will be a champion for nutrition and excellent products in the market. We look forward to doing our first export to Botswana early 2020. In the next 5 years we will be a much bigger business

There is always the feeling that they could do better. The Ministry of Commerce, Trade & Industry is now actually coming to the FOODBUSINESSAFRICA.COM

JAN/FEB 2020 | FOOD BUSINESS AFRICA

TWO DECADES OF CHEESE REVOLUTION Raka Milk Processors, one of the top cheese maker in Kenya nestled at Nyeri, Central Kenya has been feeding Kenyans appetite for cheese for over 18 years. The Food Business Africa team recently took a trip up the central Kenya highlands to see and hear the story of this cheese maker performing the daily alchemy of turning perishable milk into durable and dense protein. 48 JAN/FEB 2020 | FOOD BUSINESS AFRICA

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isiting Raka Milk Processors was was always going to be an interesting and stimulating discussion because the cheese maker was the very first special feature we ran this fledgling publication back in 2013. We were back to find out how important the new plant had been for Raka and how the journey had been for the last nearly 7 years of operations, having moved to a new plant after our original visit and interview. “We moved here to become more independent. Before we were at a rented premise and had to work in line with the rules and regulations of the lessor,” Kalpa Padia, the Managing Director opens up, reiterating that the starting site had limitations for they couldn’t for example work on Sundays. “The cow couldn’t say it wouldn’t give milk on Sundays too; we couldn’t collect milk on Sundays”. The new facility has given the company the freedom and flexibility to do things at their own time, including extended hours and additional shifts, if needed. According to Kalpa this has helped them grow while also enabling easy access for their partners. That, and thanks to a growing middle class and expatriate community, have continued to support robust growth in retail volumes in turn giving Raka and other players a pull from the market to scale up. Historically cheese has been an expensive food and a reserve of the wealthy, but that is changing. “There are more people travelling now and getting exposed to different tastes and preferences. The present-day consumer is getting to understand different cheeses due to education, social media and Western lifestyle influences,” says Kalpa. True to her musing it’s not a rarity anymore to encounter a Kenyan family nibbling at a selection of cheeses in meals, for cheese never featured in Kenyan local meals.

“WE ARE AMONG THE FEW IN THE INDUSTRY TO HAVE A FULLYFLEDGED R&D FUNCTION WHICH WE HAVE TAKEN AS A CORE FUNCTION. IF YOU LOOK AT THE CORE VALUES OF OUR COMPANY, INNOVATION IS ONE OF THEM”

The demand for luxury foods and beverages including cheese has been fueled further by improved incomes which has equally seen the springing up of more fast food outlets that has been driving up the consumption of cheese via pizzas and burgers. More international brands are coming into the country that need cheese for their recipes and Kalpa relishes the prospects of the cheese industry under this backdrop. “We are motivated to come up with new innovative FOODBUSINESSAFRICA.COM

products to suit the tastes and preferences of this informed consumer and service the food service clientele,” she declares exuberantly.

An unpretentious start

Looking back, Raka Cheese was born when in 2002 Kalpa and her late husband Rajesh Padia became increasingly passionate about cheese and especially making it in Nyeri, Kenya. They began with Raka Cheddar and distributed it to one of the country’s leading supermarket chains then and have now grown their offering to over ten varieties with nearly two decades experience in that food space. Raka is already shaping up to be a market leader in Kenya and according to Euromonitor, they command a near 20% share of the local cheese market, which ranks them second in that respect with the market leader having a 22% of the pie. While in 2010 Raka lost Rajesh (the name Raka comes from Rajesh and Kalpa), Kalpa took over and has handled it brilliantly with her team of excellent and loyal workers who have stayed on, grown and are raring to keep the fire in their bellies burning and the sun rays soaring for Raka. Kalpa and her dependable team has seen the business grow over time beyond the Kenyan frontiers and has also penetrated into the export markets of South Sudan, Rwanda, Ethiopia, Eritrea, Uganda and Tanzania proof of expanding tastes and appreciation of Raka products. “All these begun from a chat about our favorite cheeses and before we knew it, we were making our own and supplying to our friends and neighbors”, Kalpa explains, in

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retrospect and radiantly on the birth of Raka Cheese. Known more for its coffee plantations, Nyeri is not your normal cheese processing town. However, with cool weather almost all year round, Nyeri is also an area with many decades of dairy farming, with most households owning at least one dairy cow. The abundance of milk in Nyeri and its environs gave Raka Milk Processors a head start as they had high quality milk from the start, hence the rich cheese products associated with Raka. The original business, known as Mweiga Cheese Makers was started in 1988-89, after Rajesh Padia came back from further studies in the UK. The time spent in the UK introduced Rajesh to cheese, and he started to think of one day processing his own cheese back in Nyeri, where his family was running the family business. The customer base was originally 4-5 families, who would order some few packs of cheese that would then be made and delivered to them. The business grew in leaps and bounds, with the company starting to deliver cheese to a few hotels in Nairobi and Nyeri area over time. However, the 1991 Gulf War put an end to Mweiga Cheese Makers, when the hotel orders dried up suddenly. Rajesh went back to the family business, but with his dream. The dream would remain in ‘hibernation’ till 2001, when Rajesh was convinced by one of his former employees to awaken his dream from the slumber. At the start, the company had to locally fabricate the vats and molds using local materials and manpower. Starting with 200 JAN/FEB 2020 | FOOD BUSINESS AFRICA

litres of milk per day that yielded about 20 kg of cheese the company had a difficult time establishing itself in the market considering low levels of consumption, at one time having over 7 tonnes of cheese with nowhere to sell. However, in 2002, the Innscor fast food chain opened shop in Nairobi, and with the introduction of its Pizza Inn line, Raka all of a sudden was being asked to supply up to 500 kg per week to Innscor, way above what the company could supply. A visit in 2007 to Holland organized by PUM, a Dutch organization, opened the eyes of Rajesh and Kalpa as to the real opportunities in cheese making, and how to grab the opportunity provided by Innscor. They visited some of the smallest and the biggest cheese makers in Holland, with one of the factories processing 11 tonnes of cheese per hour! Coming back from the visit, Rajesh and Kalpa put in more effort to upscale the operations of the cheese plant. The company has an installed capacity of 8000 litres of milk per day at present, yielding about 800 kg per day of cheese.

The Process

Raka procures its milk from a number of dairy co-operatives, large farmers and middlemen who aggregate milk from small holders from around Nyeri town and its hinterland. The dairy has negotiated contracts with raw milk suppliers, ensuring they meet the quality specifications that have been agreed by the dairy and themselves. “We reject quite a lot through our internal testing and verification process”, declares Kalpa. “Unfortunately, what we reject is taken and

“WE MAKE SEMI-HARD CHEESES. OUR MAIN FLAGSHIP PRODUCT IS RAKA CHEDDAR, WHICH IS MILD FOR THE LOCAL PALATE UNLIKE THOSE IN THE EUROPEAN MARKET THAT ARE STRONG. RAKA PIZZA IS AN INHOUSE RECIPE, WHILE RAKA PANEER CHEESE IS AN INDIAN COTTAGE CHEESE THAT IS QUITE BLAND ” sold to other processors”, she adds mirroring some of the poor practices bedeviling the dairy sector. Raka has, however, taken upon itself to educate the farmers on the importance of raw milk quality because of the direct impact on final product quality and income to the farmers. On receiving milk in the dairy, the milk is standardized then pasteurized up to 74°C, before the addition of culture and rennet. Once the separation is complete, the curd is cut and depending on the product, the cheddaring process of water removal is done. Once the appropriate moisture content has been achieved, milling and salting is done and then the cheese is placed in molds. Further processes including pressing, turning, packing and ripening are carried out, depending on the product.

Product Mix

“We make semi-hard cheeses. Our main flagship product is Raka Cheddar, which is mild for the local palate unlike those in the European market that are strong. Raka Pizza is an inhouse recipe inspired by my late husband while Raka Paneer cheese is an Indian cottage cheese that is quite bland and acquires the taste of seasoning and spices in recipes. Raka Feta, made from goat milk, is a bit more expensive than the cow milk equivalents”, Kalpa highlights some of the varieties they churn out. Others that are similarly available in various forms, sizes and types are Raka Mozzarella, Halloumi, Gouda, Cream Cheese Original, Cream Cheese Black Pepper, Cream Cheese Garlic, Nyeri Blue, Chevre de Nyeri and Raka Shrikhand – an Indian sweet dessert milk. The company’s cheeses are processed to serve a wide range of consumers, from those who love low fat cheese to full fat cheese. The target market is mainly A, B and Upper C class. Raka endeavors to introduce new products into the market, which are constantly under consideration. The sales and marketing team have done a great job in 50 JAN/FEB 2020 | FOOD BUSINESS AFRICA

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MY FACTORY, MY STORY | RAKA MILK PROCESSORS

Kalpa says that the demand for cheese is increasing due to the changing consumer tastes and preferences due to better expoxure, and the exploding quick-service restaurants that dot the country's major cities.

IN NUMBERS

8000

THE CHEESE MAKER'S INSTALLED MILK INTAKE CAPACITY PER DAY, PRODUCING 800 KG OF CHEESE making sure the presence of Raka cheese is felt in the whole country with inroads in markets abroad. In line with their innovative spirit, the firm has launched a whey drink, Whey-2-Go, under a different company, PalmEdge Ltd. “I got a new partner three years who wondered what I did with the whey from the cheese making. We were giving it to pig farmers for their animals. It was an effluent issue to us; a waste nuisance”, laments Kalpa. The partner felt that the whey wasn’t the by-product; he thought the cheese was! Ten liters of milk yields 1kg of cheese and 9kg whey. That could have been the ground of his reasoning and the resolve to develop a drink out of the whey that was wasting away. “Whey is rich in protein and good for children, especially”, justifies Kalpa. “It took us three years to come up with this product with a lot of R&D work. We started small with the aim of testing the market. We got a lot of consumer feedback”. The drink is a wholly natural product, with some added non-refined sugar. It’s a bit light and not like the whey in shakes, with a thick mouthfeel, that athletes are used to. “Ours is more of a light beverage and not a shake targeted at children and the elderly”, she explains.

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Quality Matters

With a master’s in fine art, Kalpa is not your ordinary cheese maker but her focus on quality and staff welfare has ensured that Raka continues to soar. The company is passionate about making quality products, and for this reason they take extra care in hygiene, nutrition, packaging and overall factory wellness for both staff and equipment. Raka’s cheese making process puts a lot of emphasis on quality, perseverance, hard work and teamwork, which has in a big way won the hearts of many customers who have gone ahead and introduced Raka cheese to their friends and families. Raka believes in research and embracing new ideas from the MD to the people on the ground. This coupled with regular food sampling and questionnaires in the outlets, the company is able to know the needs and expectations of the market. The company also receives regular feedback from its distributors and customers. Raka has put in place documented systems and operational processing standards that guide the daily operations of the company that ensure all stages in production are followed to maintain consistency. These include check lists in production stages, packing and transportation of the product to the market. The quality department also tests the laid down parameters when receiving milk to ensure that only high-quality milk is received. Raka cheese products are certified by the Kenya Bureau of Standards and are Halal certified. The company also consults with a cheese expert from Holland.

Challenges and opportunities

The company has continued to grow in an increasingly challenging environment. Inconsistent supply of milk and questionable milk quality have been a perennial setback. This is the biggest challenge today that has been brought about by competition from the major dairy companies who control the flow and prices of milk. Erratic weather conditions reduce supplies of milk and poor production practices JAN/FEB 2020 | FOOD BUSINESS AFRICA

a headache for Raka has been mitigated to some extent by absorbing the whey into making the new Whey-2-Go drink and the future can only be bright from that front with anticipated growth in the new product line. There is an expectation that the mooted dairy regulations will come into play sooner or later. The regulations are welcome according to Kalpa, although she thinks more consultation and consensus should have been sought from the stakeholders, which was anyway done after the initial suspension of the rules. Her shared belief is that the regulations are aimed at bringing order into the industry, which is a progressive direction. When we asked Kalpa on what future she paints of the cheese industry in Kenya, she had this to say. “It is exciting with a lot of innovations happening. Ours is a drop compared to the sea of more than 3000 types of cheese worldwide. Our market will be driven by more exposure from travels and experiences by consumers from other markets particularly Western culture influences. The health consciousness of the consumer is shaping what is availed and how it is made. Sustainability and animal welfare issue are now with us and impacting the face of the dairy industry at large. Many people are converting to vegan lifestyle because of consciousness to these issues, as we see increased activism from animal rights groups”.

Community Initiatives

The company produces a range of cheese products to meet the rising demand for cheese in the country. A recent addition to its portfolio is the Whey-2-Go drink that is made by a sister company

continue to distort milk quantities and quality available for processing. Kalpa says that difficulties in introducing new products into the market still linger considering that the majority of the population are not cheese consumers meaning the company has to spend time and money to encourage consumption. Cheese largely remains something of a niche product in Kenya, albeit the gains made in broadening the market, mainly due to being perceived as expensive by many local consumers. Hence, it largely appeals to middle- and upper-income households. However, Raka attracts consumers in all income brackets by offering their cheeses in a range of different sizes and formats. The market is also being disrupted by many informal cheese makers. “There are a number of informal cheese makers coming up and selling their cheese at a very cheap price; I don’t know how and why”, wonders Kalpa dejectedly. Sadly, as she views, people are willing to go for the cheap price without considering the quality or packaging. The presence of cheaper cheese imports on Kenyan shelves is slowing down the growth in the dairy segment. “We have a lot of imports coming in. Even with heavy taxation, the imported cheese is interestingly cheaper than ours. Why? I think this could be due to the value chain inefficiencies that have hiked production and operational costs”, observes Kalpa, adding that this is not a reserve of cheese only but most Kenyan products that are generally costlier than those from Europe and other markets. “It makes it attractive, easier and cheaper to get cheese from Europe, repackage and sell,” she decries. In a broader perspective on the dairy industry, Kalpa finds the dairy farmer unhappy and offers that several have closed down because of high production costs – animal feed and other inputs – that they cannot sustain. The milk uptake prices by processors is way below production costs, the farmers say. While agreeing that the sector has great potential, she thinks it will come down to the government and related bodies coming together to help industry players to reinvigorate and bolster the industry to a sustainable position for producers and processors, and not forgetting consumers. On the positive side, the waste management problem that had been 52 JAN/FEB 2020 | FOOD BUSINESS AFRICA

The company is involved in small charity work especially related to staff, for example assistance in education for their children and the provision of good health insurance. It also has a regular programme of donating to girl-child projects, women empowerment and education for children. Raka is a member of the Mt. Kenya Trust which is an organization dedicated to preserve and protect Mt. Kenya from encroachment and poaching.

The Future

Kalpa is confident that the future of cheese making is bright and is therefore investing for the future. The company is at an advanced stage of relocating to a new modern factory which will make the operations easier and systematic. The move to the new factory is expected to double the company’s production capacity. They plan to buttress their export intentions while looking keenly at trends in the market and what is sustainable for the country’s dairy subsector. Their vision is to constantly innovate by doing something different from the rest of the pack in the segment.

“WE HAVE A LOT OF IMPORTS COMING IN. EVEN WITH HEAVY TAXATION, THE IMPORTED CHEESE IS INTERESTINGLY CHEAPER THAN OURS. WHY? I THINK THIS COULD BE DUE TO THE VALUE CHAIN INEFFICIENCIES THAT HAVE HIKED PRODUCTION AND OPERATIONAL COSTS" Raka prides in low personnel turnover and sees its future growth pegged on growing with its workforce. “We have people who have grown with the firm since inception. Michael (Dairy Manager) and Charity (Procurement Manager) joined us as casuals; we want to maintain our workforce as long as possible”, states Kalpa. What’s her take on partnerships, private equity and other sorts of funding? “I would consider selling or bringing private equity funding; I have actually been looking for one. The process is however involving and some requirements daunting on the face of the investors and our expectations. The thinking has to match depending on what the investor wants to bring on board and if we are ready to accept that. It has taken 18 years to be where we are with all the ups and downs. I can only say dream, dream and dreams do come true” FOODBUSINESSAFRICA.COM

Dairy

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TRENDS IN FORMULATING, PROCESSING, PACKAGING & CONSUMPTION OF DAIRY PRODUCTS

MARKET TRENDS

INDIA’S DAIRY AND SOY FOOD SECTOR POISED TO GROW AT 8.5% CAGR THROUGH 2023 - REPORT industry is generated from several valueadded products such as butter, curd, paneer, ghee, whey, flavored milk, ultra-high temperature (UHT) milk, cheese, and yoghurt.

ndia stands head and shoulders above any other country in the production of milk, an important source of nutrition to billions of the World’s population, in steep contrast to the declining consumption of milk in developed markets, especially the United States of America Milk production continues to rise substantially due to the fact that India has one of the world’s largest bovine population of nearly 300 million cattle, buffalo, mithun and yak. Despite the challenges with cold chain, milk production in India increased astronomically from 55.6 million tonnes in 1991-92 to 176.3 million tonnes in 201718, at an average annual growth rate of 4.5 percent, one of the highest in the World, and accounting for about 20% of the total world milk production. The country’s states of Uttar Pradesh, Rajasthan, and Gujarat have been the major milk producing states in India. Uttar Pradesh is the largest dairy and milkproducing state because it is home to the FOODBUSINESSAFRICA.COM

highest buffalo population and the secondhighest cattle population in the country. The majority of the rural population in this state is engaged in livestock rearing and dairying. Gujarat has numerous cooperative dairy milk unions, private dairy plants, and primary milk cooperative societies, which play crucial roles in the production of milk in the state, adds according Research&Markets. The milk processing industry in India is expected to expand at a compound annual growth rate (CAGR) of about 14.8% between 2018 and 2023, hitting INR 2,458.7 billion (US$35 billion) in 2023. On the other hand, India has seen its milk demand rise steadily from the increase demand for milk in the country is owed to the increasing population. Per capita consumption has risen steadily in tandem with production, doubling to 375g/ day in 2017/18 from 170g/day from 1991-92. Apart from white milk, the revenue of the Indian dairy and milk processing

Explosive growth in dairy deman The Indian dairy and soy food sector is forecast to grow at a compound annual growth rate (CAGR) of 8.5% from US$19.4 billion in 2018 to INR1,993.6 billion US$26.8bn by 2023, says GlobalData, a leading data and analytics company, driven by the large, young population base with rising disposable incomes. GlobalData’s report, ‘Country Profile: Dairy & Soy Food in India’, reveals that milk was the largest category with value sales of US$17.3 billion in 2018. The soymilk & soy drinks category is forecast to register the fastest value growth at a CAGR of 10.6% during 2018–2023, closely followed by drinkable yogurt (10.4%). GlobalData predicts that the cheese category will register the fastest CAGR of 6.7% in volume terms, followed by butter and spreadable fats (5.9%), during the forecast period. Sneha Singh, Consumer Analyst at GlobalData, says: “Rapid urbanization will lead to increasing acceptance of dairy and soy food products in the daily diets of Indian consumers.” The per capita consumption of dairy & soy food in India grew from 16.4 kg in 2013 to 19 kg in 2018, which was higher than the regional level (17.1kg), but lower when compared to global level (31.6kg) in the same year. The per capita consumption is expected to grow further and reach 21.5kg by 2023. Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), Mother Dairy Fruit & Vegetable Pvt. Ltd. and Karnataka Co-Operative Milk Producers` Federation Ltd. were the top three companies in the Indian dairy and soy food sector, accounting JAN/FEB 2020 | FOOD BUSINESS AFRICA

(GCMMF), the maker of the famous Amul brand has announced a INR 50 billion (US$ 700 million) investment plan till 2022 to boost its processing and distribution capacity, while Heritage Foods, one of the biggest dairy players in Southern India plans to add its capacity in curd, cheese and yoghurt after a few years of acquisitions of smaller dairies including Reliance Dairy, Shah Monital Foods and Vaman Milk Foods. However, India continues to be a hard nut to crack for multinational giants, who have faced well-publicized entries and exits after a few years of trying to make a mark, a factor that has failed to dampen the ambitions of the world’s major players to enter this huge market. Early 2019, the French dairy giant Danone announced its re-entry into the market after its Danone Manifesto Ventures for value shares of 20.6%, 10.5% and 6.8%, respectively in 2018. While GCMMF offers products in butter and spreadable fats, cheese, cream, dairy-based & soy-based desserts, drinkable yoghurt, milk and yoghurt categories, Mother Dairy has products positioned in butter and spreadable fats, cheese, cream, drinkable yoghurt, milk and yoghurt categories. Singh concludes: “Indian consumers, with growing health consciousness and rising purchasing power will spur demand for dairy and soy food products with health and wellness claims such as ‘naturally healthy’, particularly in milk, butter and spreadable fats and yogurt categories.” Increased investments in dairy To take advantage of the projected rise in dairy products consumption, local, as well as regional and international groups have recorded strong interest in the Indian dairy market, seeking a toe hold, even as the market continues to challenge those brands perceived to be from outside the country. According to leading information provider CRISIL, the value of investments in the organized dairy sector was expected to grow spending by INR14 billion (or about US$2 billion) over the three to 2021 – similar to the previous three fiscals – mainly through investments to enhance processing capacity by 25-30% and strengthen milk procurement infrastructure. "INDIAN CONSUMERS, WITH GROWING HEALTH CONSCIOUSNESS AND RISING PURCHASING POWER WILL SPUR DEMAND FOR DAIRY AND SOY FOOD PRODUCTS WITH HEALTH AND WELLNESS CLAIMS SUCH AS ‘NATURALLY HEALTHY’, PARTICULARLY IN MILK, BUTTER AND SPREADABLE FATS AND YOGURT CATEGORIES” - Sneha Singh, Consumer Analyst, GlobalData It also foresees revenue from value-added dairy products growing at a healthy 14-15%, annually over the next three fiscals, or about 50% faster than the overall dairy sector’s growth rate. “We believe value added products (VAP) revenues will continue to benefit from rising urbanisation. And with more women joining the workforce, fewer homes would continue the chore of processing milk into curd and butter in the urban and semi-urban areas,” said Anuj Sethi, Senior Director, CRISIL Ratings. “Firms with higher VAP share are better placed to take advantage of this.” Gujarat Cooperative Milk Marketing Federation Ltd. 54 JAN/FEB 2020 | FOOD BUSINESS AFRICA

IN NUMBERS

US$700M

VALUE OF PLANNED INVESTMENT BY INDIA'S LEADING DAIRY AMUL BY 2022 TO BOOST ITS PROCESSING & DISTRIBUTION CAPACITY invested in a third round financing deal at high end yoghurt maker Epigamia. The move came one year after the leading yoghurt maker folded its Indian operations following seven years of disappointing operations. New Zealand dairy giant, Fonterra, made its comeback to India in 2018 through Future Group, one of leading retail chains at the start of the year, making a comeback after earlier efforts were unsuccessful. The joint venture has launched new products in the market, seeking to ride on the retail chains vast network of cold stores across India. In July this year, CDC, the UK’s development financial institution and a local an impact investment venture capital firm Lok Capital announced a co-investment in HR Food Processing Pvt Ltd, the largest private dairy processing company in the eastern Indian state of Jharkhand, India. CDC invested US$8 million alongside US$2.4 million from the Lok Capital to the dairy company, with aims to boost incomes for local farmers in the region, improve milk quality and expand manufacturing facilities. Foreign investments have continued to flow, albeit not to the extent that matches the vast market potential. Lactalis, another giant, acquired the food business of Prabhat Dairy for US$239 million through its local subsidiary Tirumala Milk Products, which it had previously bought in 2014 for US$275 million in 2014 as it entered the Indian market. The future of the dairy industry in India is bright. With a stronger focus on value added products, it remains to be seen how the big international giants will strategise to take on the very strong and vitally important local cooperatives and regional players in the vast country in the future

FOODBUSINESSAFRICA.COM

COUNTRY FOCUS: DAIRY INDUSTRY IN KENYA

INVESTMENTS SOAR TO TAP RISING DEMAND FOR MILK PRODUCTS IN KENYA BUT CHALLENGES MOUNT The dairy industry in Kenya remains one of the most critical sectors of the economy. With rising innovations, investments and sophistication of the sector, the last few years has seen the emergence of new threats even as there is growing interest by local and international investors in the sector. We review some of the latest trends in the sector since we ran a similar report in this magazine in 2013.

he dairy industry in Kenya is one of the most lucrative agricultural and manufacturing activities, with great potential to turn around the economic potential of the country. With an estimated population of over 4.5 million dairy cows, Kenya is well-known as one of Africa’s biggest milk producers, contributing 30-40% of the 5% that Africa produces into the global numbers. Dating back to the early 1900s, the dairy industry has weathered many storms, rising to become the third-largest milk producer after Ethiopia and Sudan with 5.2 billion litres annually. The country also has one of the highest per capita consumption of milk in Africa, at 120 liters compared with the African average of 50 liters, and is projected to nearly double to 220 liters by 2030, backed by a milk demand growth rate of 7% per annum. Contributing an estimated 4% of the national GDP, 14% of agricultural GDP and 44% of livestock GDP, the dairy industry is well poised to significantly contribute to the Kenyan government’s FOODBUSINESSAFRICA.COM

Big Four Agenda items of food and nutrition security and manufacturing. A steady rise in demand for processed and packaged milk products in the country, changes in consumer preferences for conveniently packaged and flavourful milk products, rising urbanization and incomes, the emergence of innovatively formulated and packaged dairy products and changes in the retail industry, where malls owners and big retailers are investing to make shopping fun, are all creating the best opportunities for the dairy industry to thrive beyond the imagination of keen observers from just a few years back. The sustained demand is also projected to grow as a result of increased demand for quality and safe milk products by consumers, regional integration and cross border trade, diversification in consumption (yoghurt and cheese) and uptake by industrial consumers in baking, confectionary and fast food/cafe sectors. The country’s industry faces many challenges, including milk JAN/FEB 2020 | FOOD BUSINESS AFRICA

Milk Production in Kenya 2009-2017 YEAR 2016 2009 2010 2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2017 2018 QUANTITY 5,275,345,000 4,758,967,000 4,849,694,000 4,924,705,000 4,973,274,000 4,888,246,000 4,481,597,000 4,550,558,000 5 24,705,000 4,973,274,000 4,888,246,000 4,481,597,000 4,550,558,000 4,759,526,000

Milk Intake in Kenya 2009-2018

700

Billions

Millions

Billions

Milk Production in Kenya 2009-17 5

650

5 600

5 5

550

4 500 4 4

450 2009 2010 2011 2012 2013 2014 2015 2016 2017

production volumes that have stagnated due to changes in usage of agricultural land, low productivity per cow per day (7-9 liters per day), attributed to genetics and poor feeding among other poor animal husbandry practices, ageing infrastructure at the farms and a general lack of new investments in dairy farms to offset the other challenges at the farming level. According to the Kenya Dairy Board (KDB), the industry regulator, milk production in 2009 was 4.7 billion while that for 2017 was also reported as 4.7 billion, with the country crossing the 5 million barrier, when 5.2 million litres was produced in 2016. On the processing front, milk intake has fared much better, rising from 406 million litres to 634 million litres, a 56% rise in milk processing volumes in the country. Investments surge in the dairy industry The dairy industry in Kenya faces a dichotomy of sorts: stagnating and even

56 JAN/FEB 2020 | FOOD BUSINESS AFRICA

utilized, where raw milk intake by the small, medium and large-scale processors Milk Production in Kenya 2009-17 stood 5at 636 million liters (11.35% of total annual production). The milk production 5 in Kenya is estimated to grow to 12 billion liters 5by 2030 with a growth intake to the formal processing sector rising to 1 billion 5 liters in 2025. Notable developments in the sector have 5 been with firms like Brookside, Sameer 4 Agriculture and Livestock Limited (SALL), New 4KCC, Bio Foods and Eldoville have invested in new plants and plant extensions 4 in the recent past. SALL, in 2017, 2009 2010 2011 2012 2013 2014 2015 2016 2017 commissioned a modern processing plant in Nakuru valued at US$30 million (KSH3 billion), which it says is the first in Eastern Africa that uses flash heating technology, ensuring long shelf-life products without any need for refrigeration. “Our product are unique as they have been processed and packaged aseptically, with a shelf life period of 6 months, it has no added preservatives, with 100% goodness of milk guaranteed. They are conveniently packaged in PET bottles,” says the company.

2010 2011 2012 2013 2014 2015 2016 2017 2018

declining investments at the farm level and a strong surge in processing infrastructure and new plants, as new entrants enter the previously lucrative sector, including cooperatives that were formerly okay with supplying milk to major processors, and which are themselves becoming processors of milk, as the call for value addition in the country reaches a crescendo. Further, even as new entrants have entered the dairy industry, existing dairy companies have invested billions of shillings in new plants, capacity expansion and other infrastructure, including cooling centres, in the last five years – recording an unprecedented period of sustained investments never before experienced in the dairy sector in Kenya. According to the KDB, over 30 milk processors and 67 mini dairies with a total processing capacity of about 3.75 million liters per day have been licensed to package and process milk in the country. In 2018 approximately 46% of this capacity was

AS NEW ENTRANTS ENTE THE SECTOR, EXISTING DAIRY COMPANIES HAVE INVESTED BILLIONS OF SHILLINGS IN NEW PLANTS, CAPACITY EXPANSION AND OTHER INFRASTRUCTURE, INCLUDING COOLING CENTRES, IN THE LAST FIVE YEARS The country’s largest milk processor, Brookside, has also upped its game in the sector, investing US$35 million (KSH3.5 billion) in the country’s second milk powder plant in 2014, in its quest to tap into the excess milk volumes during the flash period in the country, when it was common for milk to be drained off, as the country lacked adequate milk processing capacity. Upgrade the processing capacity to cope with increase of demand for long-life milk and to create market outlet for dairy farmers, job creation, linkages to financial institutions and other services providers through extension services. The country’s first dairy processor New KCC, is in the middle of a process of rejuvenating its ageing plants as it seeks to reassert itself in a bid to restore its previous premier position despite stiff competition. The firm has undertaken a KSH1 billion upgrade of its facilities located strategically in the country. This has seen the company increase its milk intake and processing FOODBUSINESSAFRICA.COM

TRENDS

capacities with newer, more efficient processing machines. So far, the company has re-tooled its plants in Dandora, Eldoret, Kiganjo, Sotik plants, with plans to roll out investments at the other plants. The newly modernized Dandora factory saw an investment of over US$400,000 go into its modernization. The move more than doubled the processing and packaging capacity which now stands at 160,000 liters per day. It was officially commissioned in July 2019. The factory has an installed capacity of 360,000 per day, according to the firm. Earlier on before the Dandora plant commissioning, the New KCC Kiganjo had received US$1.5 million 3-in-1 equipment with a processing capacity of 10,000 liters per hour in line with the modernization drive. In June 2017 the government revived the New KCC Eldoret that had collapsed in 1999 at a tune of US$5 million. But the investments wave has not only hit the major dairies. Meru Dairy Cooperative has announced a KSH 1 billion loan to DANONE BOUGHT A 40% STAKE IN THE MARKET LEADER BROOKSIDE IN 2014, OPENING THE WAY FOR MORE OUTSIDE INVESTORS TO ENTER THE DAIRY INDUSTRY IN KENYA, AFTER DECADES OF GOVERNMENT, COOPERATIVES, AND THE LAST TWO DECADES, PRIVATE FAMILY-OWNED ENTERPRISES double its milk processing capacity from 300,000 to 600,000 litres per day. Following on the run-away success of Githunguri Dairy Cooperative, the owners of the Fresha brand of milk and beverage products, several cooperatives across Kenya have entered the dairy processing arena in the last five years or so, to enable their members to derive maximum returns from their milk, including Kinangop, Wakulima, Ndumberi and many more. A new entrant, Kangema Unity Investment Cooperative is in the proicess of setting up a US$300 million milk processing plant in Kangema, Central Kenya to improve the farmers’ incomes. Having established in 2015 Highland Creamers and Foods (HCF), a family owned business, started active operations in July 2017 with diary processing in the heart of Kisii highlands, in Nyamira County. The plant has a capacity to process a minimum of 200,000 liters of milk per day and is currently processing fresh milk, long-life ESL milk, yoghurt and fermented milk, with plans to go into high value dairy products such as cream, butter and cheese. The processors capacity is the biggest in the Western part of Kenya. Buoyed by the new county government dispensation in the country, a number of county governments have also invested in the dairy value chain, especially in the milk cooling plants to reduce post-harvest losses and improve local milk production. For example, the county of Muranga went a step further by setting a milk processing plant in Makuyu on top of the cooling centres it had installed around the county. Away from the various private sector initiatives and drives, the Government of Kenya has embarked on a US$22 million national wide exercise of installing coolers as part of a national implementation which the government intends to use to boost the FOODBUSINESSAFRICA.COM

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production of milk. Livestock Principal Secretary Harry Kimutai indicated in June 2019 that the government had bought 180 coolers, each with 3,000 litres capacity, and was on course to import 170 more. However, he lamented that less than 80 milk coolers had been installed due to infrastructural challenges faced by most counties that include power and water, with more than 100 milk coolers lying idle in government stores as county governments delayed to build structures for their installation. This setback purportedly held back the procurement of a further 600 coolers, highlighting some of the infrastructural challenges bogging down the sub-sector. M&A activities increase in the industry The dairy industry in Kenya has witnessed a surge in interest from leading private equity funds, venture capital firms and other big players in the international food and dairy industry, attracted by the strong fundamentals of the sector’s growth. Having been on an acquisition path over the last 10 years in which it took control of such local brands as Spin Knit Dairy, Buzeki Dairy, Ilara and Delamere, Brookside Dairies, the country’s leading milk processor, saw Danone take a significant 40% stake in the market leader in mid 2014, opening the way for more outside investors to enter the dairy industry in Kenya, after decades of government, cooperatives, and the last two decades, private family-owned enterprises. In May 2015, Brookside Dairies paid KSH3.5 billion (US$35 million) for 51% shareholding in Sameer

Agriculture & Livestock Uganda Limited, a dairy processing company in neighbouring Uganda, in which the Ugandan government maintains a 49% shareholding, marking the first time a local dairy ventured out of Kenya. The processor has also been in news that for eyeing the Nigerian and Ethiopian markets. In 2017, a Dutch family fund, DOB Equity (DOB) invested an undisclosed sum in Countryside Dairy that was said would enable them access to the world-renowned dairy processing technical capabilities in the Netherlands. By investing in Countryside Dairy Ltd, the Nyahururu based milk processor, the private equity fund sought a slice of the KSH100 billion (US$1 billion) Kenyan dairy sector. They currently receive raw milk from more than 20,000 farmers drawn from Nyandarua and Laikipia Counties and plan to expand their catchment area. The firm has a processing capacity of 100,000 liters per day. Bio Food Products, a leading premium dairy food company in Kenya in the recent past received an investment of an undisclosed amount from TBL Mirror, an equity fund that facilitates and manages combined investment of capital and know-how in promising companies in East Africa and Nigeria. This investment JAN/FEB 2020 | FOOD BUSINESS AFRICA

has given Bio Foods the muscle and impetus to be a leader in innovations in the sub-sector leading to roll out of several innovative brands in the fresh milk and yoghurt categories, including convenient packaging focused on sustainability. Pearl Capital Partners, a private equity firm, bought a minority stake in Eldoville Dairies Limited, a leader in multi-partner initiative that has become a model for inclusive dairy businesses, for Sh200 million (US$2 million). Leading players in the dairy industry Kenya’s dairy industry is the largest agricultural sub-sector, which is largely private sector driven with about 30 active milk processors; Brookside, New KCC, Githunguri and Sameer being the largest ones processing together 85% of the 1.5 million kilograms of milk processed daily. Other notable players are Meru Central Dairy, Kinangop Dairy, Uplands Premium Dairies and Bio Food Products. The bulk of the other players are located in the various milk producing regions in the country and serve their proximal markets due to inferior distribution muscle and limited capacities to compete with brands with national presence. Some of these outlying processors handle goat and camel milk, hailed as the next superfood by health enthusiasts, that they equally process into fresh milk and yoghurt with those in goat milk doing cheese too. Kibiciku Farm, the proprietors of Kibidav Dairies in peri-urban Nairobi, produces Toggs goat milk and cheese. Some of the notable camel milk processors are Kulan Foods Ltd and White Gold Camel Milk whose CEO, Jama Warsame, clinched a US$75,000 investment recently 58 JAN/FEB 2020 | FOOD BUSINESS AFRICA

to buttress his US$ 2 million venture. Worth of note are the other players in the niche segments. In the cheese category, Raka Cheese, Sirimon Cheese and Brown’s Cheese have created a niche for themselves, selling premium cheese products to consumers in the country, whose appreciation for cheese has grown tremendously, driven by the surge in investments by quick service restaurants such as KFC, Galitos, Pizza Hut and more. Other significant players in the sector include Razco, who have a focus on premium yoghurts, plus their recently acquired drink yoghurt brand from Alpha Dairy Products; and Glaciers Products, which is the leader in the ice cream category in the region. Innovations increase in high value products White milk is clearly seen to be driving the dairy category, as Kenyans preferred white tea for their breakfast. The milk is marketed in ambient, chilled and powder forms. Other segments include flavoured milk, drinking yoghurt, traditional cultured milk (maziwa lala), set yoghurt, butter, cheese, cream and other products, including blends. With a tightening market and changing consumer palettes, the dairy industry in Kenya has witnessed some of the most vicious battles to get the consumer’s attention. No other dairy has taken the innovation path more than Bio Food Products, which in the process has won a growing list of awards at the regional Africa Food Industry Excellence Awards. The company was the first to introduce Greek-style yoghurt in the region, unique flavour combinations and also leads on the sustainability front for its introducing

of lightweight milk bottles for their long life milk, while extending the agenda into signing partnerships with recyclers to help the company get back the used bottles for recycling. As the first in East Africa, Bio Food also launched Bio Superlite with Super Fruits in 5 different variations, bringing consumers a super healthy option that is: fat-free, has no added sugar, is all natural. Sameer Agriculture and Livestock has also focused on new, lightweight packaging for its line of white milk, flavoured and fruit yoghurt products with an extended shelf life in the country, a first in the region. The other major player, New KCC has launched the country’s first major lactose free products line to meet the needs of its consumers for lactose-free milk. The country’s largest dairy Brookside has not been left behind either, after introducing a newer more affordable Delamere fruit yoghurt line that was originally retailing at KSH 110 (US$ 1.10) for a 450 ml cup, undercutting popular fruit yoghurt brands on the shelf. The new brand has since grown to be one of the country’s leading yoghurt products. Consumers are pushing processors to go clean on their products. Although there is no universal definition of what constitutes natural, clean label and healthy products, dairy companies have joined the worldwide phenomenon of producing products that are deemed by consumers to be better for them. To tap into this trend, a notable move towards products with no preservatives, or artificial colours and flavours has become common place, as dairies tap into the consumers’ concerns over artificial additives, WITH A TIGHTENING MARKET AND CHANGING CONSUMER PALETTES, THE DAIRY INDUSTRY IN KENYA HAS WITNESSED SOME OF THE MOST VICIOUS BATTLES TO GET THE CONSUMER’S ATTENTION, THROUGH NEW PRODUCT INNOVATIONS especially in yoghurts. Delia’s All-Natural ice cream by Sun Power Products, is one example that have taken the clean label route on a product that is infamous for it extremely long ingredients list. The brand, the first in Kenya has just 5 ingredients – milk, sugar, eggs, double cream and acacia gum. Sour milk or fermented milk is common in the most communities in FOODBUSINESSAFRICA.COM

COUNTRY FOCUS: DAIRY INDUSTRY IN KENYA Kenya as a staple food. Brands are realizing that millennials still want to consume sour milk products but would prefer if there was flavouring or an improvement in the taste, to suit their changing needs and preferences; hence the trend to flavour and add some sugar to sour milk products in the country. Capwell Industries Ltd, one of the most diversified food processing enterprises in Kenya added a new innovative beverage, YOLA, a cereal milk drink. It is first of its kind in the Kenyan market, that tends to mimic the packaging, taste and look of yoghurt, but based on a cereal base, with milk powder added. Organo Milk Ltd launched what it calls real free-range milk, Organo Fresh, that is creamy and nutritious with an organic freshness. Kulan Foods Ltd has launched camel milk and flavoured camel milk yoghurt whereas in 2015, Eldoville Dairies, had launched Whey Cool – Kenya’s first bottled whey aimed at low-income families and schoolchildren as a healthier alternative to soda. In 2019, Raka Cheese, a leading cheese maker, through an affiliate, Palm Edge, launched their own whey drink called Whey-2-Go. There has been marked activity on innovative packaging that has been angled at cost reduction, convenience and sustainability too. The Bio Fruit on the Bottom with embedded spoon in cap is first ever in the dairy yoghurt section in the East African Region. “The new packaging was designed to enrich our consumers experience of the Fruit on the Bottom Yoghurt as they can take the product with them on the go,” states the innovative milk processor. They claim it offers the consumer an innovative complete unique consumption experience. Brookside Dairy signed rights agreement with the US-based animation company Walt Disney, Disney-Pixar and Marvel characters on fresh dairy products targeting children. Brands are becoming increasingly aware that age, gender and life stage play a big role in market segmentation. To sort out the weak cold chain infrastructure in the country, a number of major dairy players have also introduced long shelf life products in the country, with plastic and carton pouch options becoming common to serve the rising demand for milk products in far-flung areas. Milk imports upset local processors The dairy industry in Kenya, after decades of being the main supply hub for processed milk products, has ove the past few years faced its biggest emerging threat: milk imports from Uganda. Buoyed by lower milk production costs due to abundant rainfall, good soils and animal husbandry that relies largely on open, lush grasslands, Uganda’s meteoric rise in milk production and processing capacity has turned the tables on Kenya’s quest to be the regional milk sourcing giant. With reports indicating that the value of milk imports from Uganda had risen to KSH10.5 billion (US$105 million) by the end of 2019, compared with KSH2.5 billion (US$25 million) in 2016 and KSH8.1 billion (US$81 million), Kenya’s dairy sector has been shocked by the flooding of milk products from Uganda, with 110.7 million litres imported into the country between January and September 2019, from a low of 3 million litres in 2016. The milk sector players and the government in Kenya is worried that Uganda poses a significant threat to the sector, considering the huge advantages that Uganda has, and the increasing incapability of Kenya to remain competitive at the farm and processing levels. At the time of going to press, in some disturbing development, sizeable quantities of liquid and powdered contraband milk was FOODBUSINESSAFRICA.COM

seized by Kenyan authorities in some parts of the country. A fact finding mission to Uganda has yet to verify claims that Uganda lacks the capacity to produce and process adequate milk for its own consumption, plus export the excess into Kenya in significant quantities. There are reports that Kenya could impose a 16% VAT on milk imports from Uganda. Meanwhile, the sector continues to be impacted by imports of cheese, butter, cream and milk powder from European countries, which because of their lower prices, impacts the viability of the dairy industry in the country for years to come. Changing retail environment a key factor to growth Modern retailers are the leading distribution channels for packaged premium milk and milk products in Kenya, with the bulk of the lower value products reaching consumers through informal kiosks and dukas that dote the country. cheese with supermarkets leading because cheese focuses on upper- and middle-income consumers. While Kenya records some of the highest formal retail penetration in Africa at about 30% of all purchases, a significant development in the last five years has been the upheaval and drastic changes in the retail industry, significantly impacting the dairy operators in the country. Nakumatt Supermarkets, which was at its peak just a few years back and had grown into Eastern Africa’s largest retailer, has been reduced to a shell and is in administration as we went to press, while Uchumi Supermarkets has dwindled to a shadow of its former shelf. The fall of these two giants, which was in quick succession hot the sector hard, with reduced sales of premium products such as yoghurts, and leaving the companies with piles of debt, with reports that Nakumatt owes Brookside Dairy KSH 457 million (US$4.57 million) while New KCC is owed KSH 290 million (US$2.9 million). However, with the giants falling, the last three years has seen the emergence of Naivas Supermarket, Quickmart Supermarket and other regional retailers; and the strengthening of Tuskys Supermarket, while the entry of international giants Carrefour and Shoprite Supermarkets has opened new opportunities for the sector to thrive. The dairy industry in Kenya faces many threats and challenges but the future is bright for those companies with adequate resources and skills to weather the new dispensation, which will require strong partnerships with farmers, retailers and suppliers of various technologies to the sector JAN/FEB 2020 | FOOD BUSINESS AFRICA

INGREDIENTS & FORMULATIONS: SUCRALOSE

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CUTTING DOWN SUGAR WITH SUCRALOSE DID YOU KNOW?

Like many artificial sweeteners sucralose was discovered by accident in a laboratory. In 1976 Tate & Lyle and the Queen Elizabeth College in London were conducting a joint research project that involved chemically modifying sugar. One of the researchers misunderstood “test” for “taste” and by accident sucralose was discovered. Currently, Sucralose is produced by a multi-step patented chemical process that replaces three hydrogen-oxygen groups with three chlorine atoms. The replacement with chlorine atoms intensifies the sweetness to 600 times more than table sugar and contain zero calories.

ith more consumers turning away from sugar, whether it’s to cut down on the number of calories they consume or any of a variety of other reasons, synthetic sweeteners with low calorific values have been sought by food and beverage manufacturers at a more accelerated pace. In the long list of these sugar substitutes is Sucralose, a low-calorie high intensity sweetener that has now been used in the food as well as pharmaceutical industry for than more than two decades. Sucralose is an artificial sweetener sold under the brand name Splenda. Like most of the commonly used sugar substitutes, Sucralose was approved by Food & Drug Administration of the United States for use in 15 food categories as a non-nutritive sweetener in 1998. A year later, the substitute was permitted to be used as a general-purpose sweetener for foods but restricted to certain applications. Sucralose is classified as a non-nutritive high-intensity sweetener - since it is very low in calories (less than two percent of the calories in an equivalent amount of sugar) and at the same time provides high degree of sweetness in very small amounts. This is a major distinguishing factor between this class of sweeteners as compared to natural sweeteners such as sugar, honey, or molasses, which add calories, and in most cases flavours in the foods. Sucralose in 600 times sweeter than sucrose. The sweetener is among one of the most highly sought amongst its peers which include Saccharin, Acesulfame potassium (Ace-K), Neotame, Advantame, Stevia and Luo Han Guo fruit extracts, all of which have been approved for use by the FDA. Preliminary studies have also shown that Sucralose and other high-intensity sweeteners generally do not raise blood sugar levels. For these reasons, the sweetener has been used as a sugar substitute in diverse applications in the food and beverage industry. Currently, it is being used in beverages, chewing gum, gelatins, and frozen dairy desserts, confections and frostings, frozen desserts, gelatins and puddings, jams and jellies, processed fruits and fruit juices, toppings, and syrups. Sucralose is also among the few known heat-stable sweeteners, a property that has further expanded its applications into baked goods. The sweetener is currently being used by multinational companies such as PepsiCo in its Mountain Dew and Pepsi brands, dairy producer Yoplait, which switched from using aspartame for Sucralose in 2014; some chocolates by Nestle, Unilever’s frozen dairy dessert, Kraft Heinz tomato ketchup, Hershey’s chocolate syrup, Danone’s yogurt and Murray’s cookies just to mention but a few. 60 JAN/FEB 2020 | FOOD BUSINESS AFRICA

In February 2019, Splenda one of the prominent brands of sucralose launched a new line of sucralose infused low-calorie coffee creamers. With continued innovations in the industry, sucralose is expected to benefit from the growing sugar substitute market. In 2016 the sugar substitute business was valued at over US$13.7 billion and is expected to continuously grow, according to a Grand View Research. Alone, the global sucralose market was valued at US$3.901 billion in 2018 and is projected to grow at a CAGR of 5.43% to reach US$5.357 billion in 2024, a report by ResearchAndMarkets shows.

IN NUMBERS

600

SUCRALOSE IS 600 TIMES SWEETER THAN REGULAR SUGAR, SUCROSE Despite sucralose having been extensively studied and more than 110 safety studies and reviewed by FDA before approving the use of sucralose as a general purpose sweetener for food, the sweetener has also drawn critics from various research institutions. Most recently, The Center for Science in the Public Interest, a non-profit food safety and nutrition watchdog group, downgraded its safety rating of sucralose, from “caution” to “avoid” in the group’s Chemical Cuisine glossary of food additives. The group, citing a newly published study from Ramazzini Institute, an independent laboratory based in Italy, found that the chemical caused leukemia and related blood cancers in male mice. This was the second time CSPI downgraded its rating of the sweetener. In 2013 the group downgraded sucralose from “safe” to “caution” after the Ramazzini Institute presented the then-unpublished findings of the study at a conference. However, other long-term feeding studies conducted on sucralose manufacturers and regulatory bodies have not found a major risk. In May of 2016, The European Food Safety Authority (EFSA) published a study confirming Sucralose is safe and does not cause cancer. Today, the use of sugar substitutes is more strictly studied, regulated and monitored than at any other time in history. The FDA has set the Acceptable Daily Intake (ADI) of sucralose at 5 milligrams per kilogram body weight per day (mg/kg bw/d). FOODBUSINESSAFRICA.COM

Beverage TECH TRENDS IN FORMULATING, PROCESSING, PACKAGING & CONSUMPTION OF BEVERAGE PRODUCTS

LOW AND NO ALCOHOL BEVERAGES

WORLD SEEKS LOWER OR NO ALCOHOL ALCOHOLIC DRINKS As major players focus on the emerging sector for growth by launching new products

“

Probably, as Dry January ebbs away and you get into the real vibe for 2020, you might have either avoided alcohol altogether due to your fairly lighter purse (who has money anyway in January?), or have shied away from drinking for lifestyle reasons. According to a 2019 Distill Ventures data study, 58% of consumers are drinking more no-and low-alcohol content drinks than last year, adding that globally, consumers explicitly mention “non-alcoholic” 81% more often than they did one year ago, according to a Google Trends survey that was done between May 2018 and 2019. Further, according to leading research company Global Data, 59% of global drinkers ensure they do not drink too much alcohol in general and about 50% are concerned about the longterm health impact of drinking too much alcohol. The company also adds that moderation and avoidance of alcohol is a key trend driving demand for adult soft drinks among alcohol drinkers. Pushed on by the rising focus on health and wellness, majority of 18-24 year olds in a survey in the US were found to aim at reducing their alcohol consumption, with a focus on lower alcohol or lower calorie products – while seeking to mark a moment with something more than club soda, creating a demand for even more spirit alternatives. Research company Global Market Insights (GMI) opines that strong growth prospects in Islamic countries owing to religious concerns are expected to further drive market growth, riding on popularity of these beverages in the Middle Eastern countries, while stringent regulations in many countries due to the legal alcohol consumption age will promote further demand. Lower taxes imposed on lower alcohol beverages will also push the introduction of these drinks across the world. GMI reveals that the demand for low alcohol beer variants is becoming more popular among women and geriatric population in North America and Europe, while vital benefits such as negligible post-drinking side effects, addition of healthy antioxidants and enzymes to the drinks and a reduction in the effect of insomnia after consumption will lead to further industry expansion.

Drinkers shy away from high alcohol drinks He is right. Young, millennial consumers, and adults who are adventurous are turning the tide on the trends in the alcoholic beverages market – be they beers, spirits or wine - around the World, as consumer demand for complex, flavorful and interesting alternatives to alcohol surges and as more people choose not to drink alcohol or go for lower alcohol alternatives.

Surging demand for no/low alcohol beverages The global non-alcoholic beer market size was valued at over US$ 13.5 billion in 2016 and is expected to see growth of 7.5% CAGR, according to a study by GMI, hitting US$ 25 billion by 2024, out of the total US$ 600 billion beer market. In terms of volume, global sales of non-alcoholic beers and alcohol-free mixed beers beverages totaled 4,091 million liters in 2018, with sales of 4,353 million liters for 2019 projected. While mainstream beer volumes are at best, stagnant, in many developed markets, including the US and Europe, Global Data low alcohol beers are projected to grow 3.5% while that of no alcohol ones to surge 4% across the World. According to GMR, Europe dominates the non-alcoholic beer

This is a movement,” pronounced Marcus Sakey, the founding partner and chief brand officer of Ritual Zero Proof, as the World’s largest spirits maker Diageo announced a minority investment in the US-based alternative spirits producer, that replace gins and whiskies in cocktails. “Just like almond milk and veggie burgers, spirit alternatives are changing the landscape,” he added, predicting that within 18 months, the non-alcoholic options will be on every menu and the shelves of every grocery store in the US. He further added that Ritual Zero Proof is the only Americanmade spirit alternative that echoes the taste, smell and burn of a spirit – without the alcohol or calories.

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JAN/FEB 2020 | FOOD BUSINESS AFRICA

LOW AND NO ALCOHOL BEVERAGES

market with over 30% revenue share in 2016 owing to wide-ranging CONFUSING DEFINITION ABOUNDS product availability, established distribution channel, and a large As happens in any new food product category, the no/ low alcohol category continues to beset by lack of proper classification across many countries. Generally speaking, alcohol free and low alcohol drinks (mainly beers) are those considered to have an ABV (Alcohol by Volume) of between 0% to 3.5%, or if you stretch it 4%. This classification can also extend to include wines and spirits. However, the definition varies depending on the market, where in most markets low alcohol beers are generally considered to have an ABV of 3.5% or less – and alcohol-free beer have a maximum of 0.5% ABV. However, in the UK, alcohol free beers have a maximum of 0.05% ABV. Alcohol-free beer holds just about 55% of the overall market share across the World, although the low alcohol segment is anticipated to grow at a CAGR of over 7.5% between 2017 to 2024. No/Low alcohol beers are produced through two pathways. The dealcoholization technology, which is done through a single-pass removal procedure. This process, which accounts for more than 80% of the industry share in 2016, according to GMI, enables faster separation of alcohol and water, has lower operational costs and produces final products with strong and natural flavor. The other technology, restricted fermentation provides better retention of aroma compounds, particularly heat-sensitive contents requiring low-temperature processing. number of product launches. The UK is among the key markets in Europe due to high adoption rates and increasing penetration of events such as Dry January. The Asia Pacific region is expected to experience the highest CAGR growth rate of about 9.5% during the years to 2027 due to stricter government regulations on alcohol consumption, drunk driving norms, growing inclination towards adoption of western lifestyles and increasing health awareness regarding the ill effects of alcohol consumption. The U.S. accounts for over 20% of worldwide non-alcoholic beer sales, with consumption high in Middle East, Latin America and Africa, according to GMI. Alcohol majors innovate to grab market share As demand for these novel products surge and consumers get the chance to taste first-hand new products from the alcohol majors, strategic alliances, new product launches, product portfolio expansion, and mergers and acquisitions to tap into innovative start-ups are gathering pace across the World. Major technical breakthroughs in the production processes have boosted the product quality, thereby positively influencing consumer adoption and consumption of low and no alcohol beverages, leading such industry giants such as AB InBev, Heineken, Carlsberg and Diageo to launch new non-alcoholic beer variants, or re-launch previous brands, to expand their product portfolio and target this emerging consumer category – while expanding their goals and sights on a bigger pie of the market. The World’s biggest beer maker AB InBev has been quite forthright in expanding its low and no-alcohol beer business, announcing that it’s goal is to have 20% of its total sales by 2025. The company has a growing list of beer brands in this space in various countries, including Budweiser 0.0, Bud Prohibition and Hoegaarden 0.0, Jupiler 0.0. The company has since rolled out some of these brands across other geographies, for example, Budweiser 0.0 and Hoegaarden 0.0 in India. Beer major Heineken launched its zero alcohol beer variant, Heineken 0.0 in the European market in 2017 and has since expanded it to the US and Asia, particularly 62 JAN/FEB 2020 | FOOD BUSINESS AFRICA

TRENDS

FOOD SAFETY

OPERATIONS

FORMULATIONS

REPORT

“AN ALCOHOL-FREE BEER OFFERS PEOPLE THE FREEDOM OF CHOICE TO STILL ENJOY THE TASTE AND THE SOCIABILITY OF A BEER, AND THE SENSE OF BELONGING OF HAVING A DRINK WITH ONE’S FRIENDS, BUT WITHOUT THE ALCOHOL” - Zoleka Lisa, vice president for corporate affairs at SAB India. It reports that low and no alcohol beers have opened for it new drinking occasions including lunch time, after sports or those that want to stay sober during driving; with volumes rising to 13.1 million hectoliters in its last financial reports. The other beer major, Carlsberg, has also rolled out Carlsberg 0.0 and Carlsberg Nordic Golden Brew with 0.5% alcohol by volume. The company saw an 11% surge in alcohol-free brew volume growth of 11% in Western European markets in its latest 9-month financials for 2019. Kirin Beverages, Japan’s secondlargest brewer has launched its Kirin Karada Free, a non-alcoholic beer with a Food with Functional Claim (FFC) label. In addition to the zero percent alcohol by volume, the beer has low calories (5g per 100 ml) and scarcely any sugar (under 0.5 grams), zero fat, 0.4g protein and is said to have ingredients that help to reduce abdominal fat. One of Africa’s leading breweries, South African Breweries (SAB) recently said that the company will innovatively focus on aligning its products with the changing consumer trends as it further cements its position in the alcoholic beverage market. The AB InBeV-owned brewer is looking to add more non-alcoholic beers to its portfolio. Among no and lower- alcohol beer brands available in South Africa under the SAB stable are Castle Free and Becks’ Blue, while Hansa Golden Crisp, Flying Fish CHILL LITE, Castle Lite, and Lion Lager all contain 4% alcohol or less. “An alcohol-free beer offers people the freedom of choice to still enjoy the taste and the sociability of a beer, and the sense of

IN NUMBERS

20%

TARGET BY AB INBEV OF INCOME TO COME FROM NO AND LOW ALCOHOL BEERS BY 2025 belonging of having a drink with one’s friends, but without the alcohol,” Zoleka Lisa, vice president for corporate affairs at SAB says. Namibia Breweries Limited (NBL) recently launched the Windhoek Non-Alcoholic beer with less than 0.5% alcohol Namibia’s only non-alcoholic beer, brewed locally. As the innovative spirit abounds in the beer category, several strategic alliances and M&A activity have been seen in other segments. Diageo’s acquisition of a minority interest in Ritual Zero Proof comes after the spirits major also took a significant majority shareholding in Seedlip in 2019, the world’s first distilled nonalcoholic spirits brand, having made a minority investment in the company in 2016. Both deals, done through Diageo ventures, give Diageo the lead in the emerging non-alcoholic spirits segment. In the wines category, most major wine producers have joined the chase for the non-alcoholic wine drinker, with several brands available, including Torres Natureo De-Alcoholised Muscat, with 0.5% ABV, by Spanish wines major, Torres; Australian brand Rawsons Retreat Cabernet with 0.5% ABV, and G.D Vajra Moscato d'Asti with ABV of 5.5% available in the market FOODBUSINESSAFRICA.COM

PERSPECTIVE: POULTRY INDUSTRY IN AFRICA Time for Africa: The Opportunities Remain Wide Open for African Poultry By Nan-Dirk Mulder

lobal poultry and egg markets are expected to grow by 50-60% in the next 20 years with emerging markets taking more than 90% of this market growth for poultry and eggs. This is attracting increasingly more interest from global investors who are trying to capture this market growth by investing in production in the faster growing poultry markets of the world. Global investors who wanted to capture this emerging market growth have been so far focussing mainly on Eastern Europe, Southeast Asia, the Middle East and Latin America but changing market conditions in Sub Saharan Africa has put this region much more on the radar screen of local and international investors. The African poultry and egg investment opportunity is there Rabobank has identified the Africa investment opportunity in its Time for Africa report which was published end of 2016. Via this new report we are providing an updated view on how markets

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have been moving over the last 2.5 years and how this will impact investment flows in the industry in the next years. The report will also provide an overview on trends in the egg industry which was not included in the last edition. The key investments rationales for investments in African poultry are still in place. Urbanisation is continuing with now 43% of African population living in big cities while this figure was in 2015 41% and is expected to grow until 60% in 2050. Although economic conditions have been a bit volatile, Africaâ&#x20AC;&#x2122;s middle class keeps expanding with now 12% of population above an income of US$5,000 per year, while this figure was only 7% in 2000. At the same time, the African population who lived below poverty line dropped from 38% in 2000 to 19% in 2018. These economic improvements are leading to a rising buying class who is substituting gradually from a plant protein rich consumption pattern into an animal protein rich consumption pattern. JAN/FEB 2020 | FOOD BUSINESS AFRICA

THE CHANGING MARKET CONDITIONS IN AFRICA WILL URGE THE INDUSTRY TO UPGRADE LOCAL VALUE CHAINS FROM HISTORIC MORE TRADITIONAL STRUCTURES INTO A MUCH MORE MODERN VALUE CHAIN WITH USE OF MORE MODERN BREEDS, EQUIPMENT AND ANIMAL NUTRITION It also leads to a gradual change in distribution models Africa further away from traditional markets and gradually more towards modern distribution, although in many low-income Sub Saharan African wet markets represent still more than 90% of the market. Supermarket chains, butchery stores and restaurant chains are currently expanding over Africa, partly by local investors and partly by international chains. Even faster is the growth of online food distribution especially via home delivery. This changing and modernizing food distribution will lead to big changes in poultry and egg distribution in the coming years and therefore opportunities for investors who can tap into these markets. Poultry meat and eggs are very much the best positioned proteins to supply Sub Saharan Africaâ&#x20AC;&#x2122;s rising animal protein demand due to their low-cost price positioning, short production cycle and a traditional preference for poultry and eggs in African culture. Aquaculture would be its main competitor, but investments so far are relative limited in Africa with only sizeable investors in Egypt and Nigeria. The changing market conditions in Africa will urge the industry to upgrade local value chains from historic more traditional structures into a much more modern value chain with use of more modern breeds, equipment and animal nutrition. Short term review: recovery after 2016/2017 economic volatility The economic volatility of the last years has had impact on investment flows in the region. Investment appetite was lower in 2016-2017 when economic conditions in Sub Saharan Africa worsened and some exchange rates experienced major depreciation. This economic slowdown has had some temporary impact on local market demand for poultry and eggs but also on supply of inputs to countries like genetics, equipment and feed ingredients which were usually bought in USD or ZAR. It also caused a situation where the lower oil and mineral dependent countries in Sub Saharan Africa has become more solid performing, which is especially the case in East Africa and some of the West African countries like Senegal, Cote dâ&#x20AC;&#x2122;Ivoire and Cameroon. All these regions are showing solid expansion of poultry and egg production by 5-10% per year with eggs a little more focused on West Africa and poultry meat more towards East Africa. Current economic conditions are certainly better, and this supports the investment climate, although some slower growth in line with weaker global conditions is expected in 2020. Important here is also some move in governmental strategies to supply more towards local food security which leads to some shifts from imports towards local production which is an alternative supporting factor for more local production in sub Saharan Africa. Lots of investment opportunities for local and international investors This ongoing growing demand for poultry and eggs with changing distribution and product demand will offer lots of investment opportunities for local and international investors. Investment flows usually start with companies investing in feed mills and hatcheries and building from there. We are seeing a trend

64 JAN/FEB 2020 | FOOD BUSINESS AFRICA

of building a smarter poultry value chain, encompassing breeding, grow out farms, processing facilities and cold chain distribution. In some cases, poultry and egg companies in Africa will invest also in distribution, through butcher shops or restaurant chains to secure and develop market outlets for their products. The growth of the poultry and egg sectors in Africa has also a big impact on other sectors in Sub Saharan Africa. Especially, there will be a need for an upgrade in local feed grain value chains. This is not easy as in some cases these value chains are highly policy driven because of some crops (like maize) are considered to be staple crops in many countries. Having said this, the growth of the poultry and egg sectors will offer opportunities to establish stronger, more efficient value chains and this will also make poultry and eggs in Africa more affordable and international price competitive. At the same time, the poultry and egg industry will also further support development of the backyard and smallholder production in the region. For many smallholders, raising poultry and producing eggs are important sources of income. These producers tend to use increasingly more multi-purpose chicken which provides big benefits in terms of yields and income as egg productivity and meat yield are significantly higher as by using traditional breeds. Breeding companies together with local investors as well as NGOs has introduced successfully multipurpose breeds in Africa and this has certainly improved the position of smallholders and this might also offer these farmers opportunities to create enough cash flow to move to at some stage to more commercial farming. Capturing the African poultry industry investment opportunity will require a long-term investment perspective We think the opportunities for investors in the African poultry and egg industries are bright but capturing the African investment opportunity is not easy. It requires a pioneering spirit, a good market and risk assessment, capable local patterns and patience, as investment risks can be high. If done well, the rewards can be large, especially for companies that move early and are well prepared. Rabobank has built up a significant knowledge and experience in the African poultry industry and is ready to support investors with market and industry assessments. Export Finance, Mergers & Acquisitions activities, leasing and full-service local banking are products Rabobank can deliver for investing companies in Africa Nan-Dirk Mulder is the Senior Global Specialist Animal Protein at Rabobank

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ADD SOME HERBS AND SPICES TO THE MIX

esides adding flavor, texture and aromas to food, both herbs and spices help define a culture’s identity. They give the rest of the world a glimpse into that specific culture through their national dishes that utilize these flavoring agents. Apart from exciting your taste buds, spices have been known to constitute an exciting and extraordinary list of phytonutrients, essential oils, antioxidants, minerals and vitamins. All these compositions are believed to be essential for overall wellness. Arabs and European explorers broadcasted spices from their place of origin to the rest of the world and have been since then an integral part of our food for centuries, showing that the use of herbs and spices has been incredibly important throughout history. Thanks to the explorers, the spices have become more relevant for us in nutrition and health and their popularity has widened and usage has reached almost all households on the earth. Records show that several were celebrated for their medicinal properties, well before culinary use with modern science now showing that many of them do indeed carry remarkable health benefits. Spices can be grouped, botanically, by their source of plant part into leaves, fruits or seeds, roots or bulbs and bark. In the spices circles, you will come across leaves of rosemary and thyme, fruits and seeds of nutmeg, coriander, mustard and the common black pepper. Roots and bulbs of garlic, turmeric and ginger have been a long mainstay in our kitchens and food processing. The bark of cinnamon and cassia is also common in use. The plant-derived chemicals contained in spices – essential oils, phytochemicals, antioxidants, vitamins and phyto-sterols - are known to have disease preventing and health promoting properties which include anti-inflammatory, carminative and anti-flatulent attributes. The components in spices have been found to help ease blood flow, preventing stroke and coronary artery disease because of their anti-clotting function that prevents clogging of platelets in the blood vessels. Spices help in smooth digestion by boosting intestinal tract mobility and by stimulating excessive secretion of gastrointestinal enzymes in the gut therefore heightening the digestion power. Thyme, other than being used as an antiseptic mouthwash in managing caries and gingivitis can also help relieve sore throats and bronchitis symptoms when its tepid water is throat gargled. Infusion of some healthy spices is used to treat colds, influenza, mild fevers, indigestion, stomach upset, and painful menstruation. Traditional medicine has equally employed spices to treat worm infestation in the gut. Essential volatile oils from spices like cloves and peppers may work as a rubefacient (a substance for topical application that produces redness of the skin e.g. by causing dilation of the capillaries and an increase in blood circulation). The oils are being applied as popular home remedy for arthritis and sore muscles other than their use in hot baths not forgetting use in aromatherapy. The minerals like potassium, manganese, iron and magnesium

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contained in spices are important components of cell and body fluids which control heart rate and blood pressure, especially potassium. The body uses manganese as a co-factor for the antioxidant enzyme, superoxide dismutase. In culinary, for their aromatic or pungent flavor; and peppery or slightly bitter taste, spices have been employed in the preparation of soups, barbeque sauces, pickling and as a main ingredient in a variety of curry powders. Spices are mainstay flavor and taste enhancers of vegetable, chicken, fish and meat dishes whereas the healthy types like cloves, cardamom, coriander…etc., are used in flavored drinks. Many spices aficionados and flavor and taste devotees will contend that while a meal of say grilled chicken breast is good for your diet, could hitherto be kind of boring without something on it to excite the taste buds and possibly add to your health. Their encouragement is that spicing up a plain-but-healthy meal is good for your taste buds and your health. According to NaturalNews, herbs and spices, especially in India are more than just a delicious way to enhance your favorite curry dishes. They've always been valued in some cultures for their healing properties, and now some of these herbs are being used to develop affordable drugs that can fight cancer with fewer side effects than traditional cancer medications. They inspire you to experiment with spices and herbs to find a combination that is satisfying to your palate and beneficial to your body. Start your day with some black cumin seed oil mixed into honey, add a generous sprinkling of cinnamon to your oatmeal, sip some refreshing ginger tea, make a flavorful curry with turmeric or add some crushed, raw garlic to your salad, they implore. It is their view that, in a hectic world dominated by Big Pharma, it is often tempting for patients and health care providers alike to treat stress and mental issues with medications that oftentimes will only make matters worse. However, the good news is there are alternatives - natural alternatives, of course – to dangerous mood-altering drugs – foods and spices that can boost your mood and reverse even chronic depression. So, there is every good reason to spice-up our diets and lifestyles and reap these immense nutritional and healthy benefits that herbs, and spices carry. Some would say spices and herbs can be quite expensive and because of their distinctive aromas and flavors, putting too much on food can make food taste very unappealing. Naturally, not everyone likes every type of spice equally, but the combination of seasonings and spices that can make food as delicious as it should be and on the way provide the desired nutritional and health benefits is a mandatory skill that every cook and food processor must be equipped with to reach the nutritional and health goals

JAN/FEB 2020 | FOOD BUSINESS AFRICA

LAST WORD

TRADE WARS ARE HUGE THREATS TO FOOD SECURITY Dr. Mukhisa Kituyi, Secretary-General of UNCTAD

nternational trade has proven to be a critical mechanism for growth and development. It helps build stronger value chains, mitigate conflict and provides access to higher quality and quantities of goods and services. It has also provided consumers with access to a more diversified and nutritious food basket. However, for trade to improve food security to the greatest number of people across the globe, greater international cooperation is necessary. More than 820 million people equivalent to more than 10% of the worldâ&#x20AC;&#x2122;s population - were hungry and about 2 billion people experienced food insecurity in 2018. This challenge exists in the context of a global population that is projected to grow from the current 7.7 billion to 8.5 billion in 2030 and rise to 9.7 billion in 2050. Developing countries most affected The majority of those facing hunger and food insecurity live in developing countries. These countries, including many least developed countries (LDCs), depend critically on the agricultural sector for employment, production and exports. For instance, 57% of the labour force in LDCs was employed in agriculture in 2019, compared with only 3% in high-income countries. Within developing countries, poverty is higher in rural areas and the rural poor depend on agriculture. Smallholders in developing countries face challenges that preclude them from benefitting fairly from global value chains. Enhanced international and national measures on transparency and regulation are needed to ensure incomes arising from agriculture value chains are fairly shared by all actors. We also need improved market access and risk management tools for smallholder farmers, including for female farmers, to expand opportunities and reduce income volatility. Less distortion, more inclusion needed The international agricultural trading system needs to become less distorted, more inclusive and sustainable, as well as take the specific needs of developing countries into account. The high volume of agricultural subsidies given to producers in developed countries must be reduced. For instance,

66 JAN/FEB 2020 | FOOD BUSINESS AFRICA

OECD countries provided US$315 billion worth of support and protection for their agricultural producers in 2017. Instead of improving fair and transparent market access, growing antiglobalization sentiments and moves towards protectionism threaten to undermine the substantial benefits of global trade, particularly for food systems and nutrition. At the same time, anti-globalization and protectionist approaches do nothing to address the problems they claim to respond to. For example, what began as heated rhetoric over trade between the United States and China has evolved into a potential trade war, with negotiations foundering and both countries proposing trade barriers. This environment is likely to make it more difficult to overcome barriers to the improvement of global trade. Multilateral action critical The collapse of agriculture negotiations has tremendously limited the scope for the use of trade for development and developing countriesâ&#x20AC;&#x2122; optimism about the potential of agricultural trade as a vehicle out of poverty is eroding. Adequate multilateral trade negotiations would have led to substantial gains for both developing and developed countries, including increased global production of food and industrial goods, better trade infrastructure, more efficient customs procedures, lower tariff protection, and reduced production- and trade-distorting

domestic support policies. Trade agreements on agriculture also go far beyond food security â&#x20AC;&#x201C; the special and differential treatment called for by developing countries on agriculture are a key requirement for them to continue to want to support the global trading regime in all sectors. We also need stronger market information and reduced trade costs associated with non-tariff barriers to agricultural trade, including those measures that are more important today in light of the sustainability imperative. The proliferation of non-tariff measures needs to be addressed and the costs of compliance with them brought down to ensure poorer countries benefit from market access for their agricultural products. A proliferation of these measures is conceivable as countries develop and in the context of the implementation of 2030 Agenda. To avoid potential adverse and unintended effects of this trend, policy coherence and convergence are essential. Traceability compliance must be sensible and support development. These instruments, and the multilateral approach as a whole, provide important advantages for trade liberalization and should continue to be supported. The role of trade in reducing hunger and ensuring food security must be prioritized. To do so, we must enhance international cooperation on a multilateral scale FOODBUSINESSAFRICA.COM

MARKET TRENDS: FOOD DELIVERY

E-COMMERCE AND ONLINE FOOD DELIVERY RESHAPE THE FOOD AND BEVERAGE INDUSTRY

he retail industry across the globe is rapidly evolving as players in the sector continue to explore innovative ways of improving consumer experience. The food and beverage industry, which accounts for a significant share in the retail market, has been on the forefront of this revolution. Primary producers, manufacturers and retailers are continually seeking innovative ways of lifting profitability, adopting to changing lifestyles and improving consumer experience and definitely, sales. This has seen the retail industry take a new course and slowly migrate from the predominantly used physical stores to more convenient shopping systems. Arguably, e-commerce and last mile delivery seem to be wading their way into the market with analysis signaling that this retail space might grow into becoming one of the largest and fastest growing trends in the food and beverage industry. According to Statista, the revenue in the worldwide online food delivery segment shall hit US$18.9 billion in 2020, with revenue expected to show an annual growth rate (CAGR 2020-2024) of 8.2%, resulting in a market volume of US$25.95 billion by 2024. It adds that the segment’s largest segment is restaurant-to-consumer delivery with a market volume of US$13.1 billion in 2020, with China generating the most revenue at US$45.9 billion in 2020. North America is already host to over 10 online food delivery companies with Grubhub, the largest player, accounting for over a one third share of the market. Europe also has over 10 providers, with Dutch company Just Eat having a presence in eight countries in the region, and an over 83% share of the UK market. In this market, the Asia Pacific region is emerging as a clear leader with four of the top global online grocery markets while accounting for 55% of the global food delivery market in 2018. Online grocery in is predicted to reach US$176 billion by 2022. China leads the pack while Japan, South Korea, Indonesia and India are following closely. In India, the market is projected to reach US$10.5 billion by 2023. Major players in the market include Zomato, Bigbasket, Swiggy, MilkBasket and Walmartowned Flipkart. According to a recent trends report by Jumia Food, Kenya’s growth in food and accommodation services (10.6%) outpaces the real GDP growth (5.6%) and the growth in the services sector (6.6%), quoting the World Bank Economic Update. The estimated market size for the total food and beverage sector in the country stands at KSH 830-880 billion (US$8.3$8.8 billion, while across Africa the demand for food delivery and other on-demand products – and with it, service providers that are providing the last-mile connectivity services - has grown significantly. Africa embraces online food delivery Uber Eats, the food delivery service of the world’s leading ride hailing company Uber, is proud of its success in delivering pizza, FOODBUSINESSAFRICA.COM

chicken and chips, fish and famous local food across Africa’s burgeoning urban centres. Driven by rising access to the internet and mobile phones, increasing economic prospects and a youthful population that takes convenience at the push of a button as a priority, the food delivery company reported in September 2019 that it had delivered one billion food orders to more than 500 cities around the world in less than four years of operation. With more than 60,000 restaurants across Europe, Middle East and Africa in over 250 cities, the company notes that ‘with the rapid modernization of the food industry, the rise of food delivery’ has been tremendously felt across this region. Reporting that it had over 420 restaurants across Kenya by the end of 2019, the giant says that it is confident that it will continue to grow its network of restaurants to meet the rising demand for food delivery. But, as Uber Eats pulls its weight to be the leader in the food delivery space across major cities in Africa, several local, regional and international giants have joined the fray. Jumia Food, the online business giant also reports to having thousands of customers across JAN/FEB 2020 | FOOD BUSINESS AFRICA

the major cities in Kenya, just as it does across other countries in the Continent, including Nigeria, Tunisia, Ivory Coast, Ghana, Morocco, Algeria, Senegal and Nigeria. Even though the company has made the news recently for closing its operations in Rwanda, Cameroon and Tanzania, it continues to grow its influence in the Continent, launching its Jumia Prime service late 2019 - a subscription package allows customers to pay a standard fee and receive guaranteed unlimited free deliveries on all orders placed on its app or website. In South Africa, Mr. D, which is a food delivery service owned by e-commerce giant Naspers, prides itself for its service to more than 1 million customers across 2500 locations to access over 5000 restaurants across the country.

IN NUMBERS

US$25.95B

PROJECTED VALUE OF THE ONLINE FOOD DELIVERY MARKET BY 2024, FROM US$18.9B IN 2020 Beyond the restaurant-to-consumer segment, leading food and grocery distribution platform, Twiga Foods recently raised funding lead by top American investment Bank to enable the five-year-old start-up accelerate its market penetration. In a deal that counts as Africa’s largest e-retail investment year to date, Twiga Foods raised US$30 million lead by Goldman Sachs, which the online grocery platform intends to use on expansion in Kenya and select African countries, including Nigeria. Even as the big giants hog the headlines, there are other significant local players across the continent that are also. In Kenya, Yum says it work with over 250 restaurants and over 10,000 customers in Nairobi and has also launched in Kampala, Uganda. Glovo, a Spanish startup was the most recent to stake on the

GLOBALLY, THE ONLINE FOOD ORDER INDUSTRY HAS GROWN INTO A HYPER-COMPETITIVE FIELD, WHICH HAS LED TO CONSOLIDATION AS COMPANIES CLAW FOR A BIGGER SLICE OF THE SECTOR. IN 2018, US$9.6 BILLION WAS INVESTED IN ONLINE FOOD DELIVERY COMPANIES IN THE WORLD East African nation’s vibrant ecommerce market. Glovo officially set base in the country in January 2019 and has aggressively expanded into the country’s capital. The grocery and food delivery platform has also tricked retailers like Naivas Supermarket and fast food chains into biting the cake. Competition leads to buy-outs Globally, the online food order industry has grown into a hypercompetitive field, which has led to consolidation as companies claw for a bigger slice of the sector. In 2018 alone, more than US$9.6 billion was pumped into these companies, with Asia receiving almost 60% of these funds, with heavy tech titans like Alibaba, Tiger Capital and SoftBank Group being among the leading investors in the online food delivery businesses. In India, Zomato, the food delivery company backed by Alibaba’s Ant Financial, acquired Uber Eats India in an all-stock transaction which will give Uber a 9.99% stake in Zomato, as the American food delivery company had struggled with its Indian business following Zomato’s entry into the multi-billion dollar market in 2017. In the UK, the Dutch food delivery company Takeaway completed the acquisition of the UK’s largest food delivery company Just Eat for US$ 7.8 billion, creating Europe’s largest food delivery company. Experts opine that more mergers and acquisitions should be expected in the sector, as scale and profitability start to be key determinants of further growth in the sector – and as investors seek returns from these tech enabled enterprises

Chicken, pizza and burgers drive Kenya’s appetite The food delivery market in Kenya is set to grow by 3.5% per year until 2021, according to McKinsey, as a surge in deliveries for Kenya’s favourite foods continues unabated. According to Jumia Foods, in 2019, Kenyans preferred chicken as the most popular cuisine for delivery, followed by pizza and burgers. The delivery firm notes that burgers have strongly grown in popularity from 5th in 2017. Affordability, convenience and availability of these food categories have been the main driver for these trends. On affordability, Jumia Food says that restaurants are increasingly offering meals in lower price categories (below 300 KSH – US$ 3) and as a result breakfast and lunch are gaining popularity as delivery meals. However, dinner is still the most popular meal representing over 50% of all orders. The worldwide trend of virtual kitchens (establishments that primarily make food for direct delivery purposes only, without any physical restaurant set up) is increasingly a popular operating model for restaurants to take advantage of a growing demand for convenience and to manage their costs In 2020 Jumia Food expects the growth in on-demand deliveries to accelerate by over 50%, on the back of a continuation of the trend of more affordable menu items, enhanced availability of popular vendors, increased mobile penetration and a growing awareness of convenience. The company says it expects to see the availability of lower priced menu items to increase. It further adds that 2020 is poised for a strong growth in on-demand deliveries of non-restaurant items like groceries, pharmacare products, alcohol products and other on demand categories such as cosmetics, gifting and flowers. 68 JAN/FEB 2020 | FOOD BUSINESS AFRICA

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Bosch Packaging Technology rebrands as Bühler sells Chinese flour ingredient Syntegon Technology business to Swiss company Bakels SWITZERLAND

GERMANY – Bosch Packaging Technologies, the former packaging machinery business of Bosch, has rebranded as Syntegon Technology, following its recent acquisition by Luxembourg-based CVC Capital Partners. Bosch agreed to sell the business to CVC Partners in July 2019, in a transaction that included its 6,100 associates in 15 countries. The deal closed on 2 January and Bosch Packaging will now operate as an independent entity – Syntegon Technology. Whereas the Bosch Packaging had been part of a large corporation with diverse divisions, Syntegon now claims that it is well positioned to create a business framework that is an “even better fit for the industry.” The company will move forward with a strong focus on “intelligent and sustainable technologies for the pharmaceutical and food industries”. Syntegon claims that this new setup will enable it to enhance its profile as a leading processing and packaging company. In line with its fresh brand, Syntegon Technology aims to set new priorities for services and improve its processes by reducing response times to customer enquiries and further increase the availability of service technicians. The company is also looking to invest in a customer and technology center at its Waiblingen headquarters, while also aiming to attract mire medium-sized enterprises and startups.

Neogen Corporation acquires Italian food safety company Diessechem USA – Neogen Corporation has acquired Diessechem S.R.L., an

Italy-based distributor of food and feed safety diagnostics, for an undisclosed amount. Diessechem is a supplier of food safety diagnostics to public authorities for food safety, food industries, grain companies, feed mills, and private laboratories operating in food and environmental test and measurement market across Italy. Diessechem’s operations will remain in Milan but will be managed through Neogen’s European operations while its employees will be joining Neogen, ensuring a smooth transition and continued strong revenue growth. Diessechem has been an authorized distributor of Neogen since its inception 27 years ago and is already a leading supplier in Italy of diagnostic kits and instruments used in laboratory analysis and food safety. The acquisition comes shortly after Neogen recently announced the acquisition of Products Quimicos Magiar, its food safety diagnostics distributor in Argentina and Uruguay.

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– Bühler Group has sold its China-based flour ingredient business, Buhler Bangsheng Food Ingredients (Guangzhou) Co. Ltd. to Bakels Group. Bakels, a Swiss group which manufactures and distributes innovative bakery ingredients and application solutions said that the deal will strengthen its position in the Asian country. It’s main focus is on ingredients for bakery and confectionary. Armin Ulrich, Bakels’ chairman said that the acquisition of Bühler Guangzhou will also enable the company to expand into the flour ingredients business. “Flour ingredients have been a missing link in our portfolio so far,” Ulrich said. “We are excited to close that gap now by taking over Bühler’s well-positioned business and strengthen our position in China.” Ulrich noted that Bakels will partner with Bühler to develop the flour ingredients business. The two companies will cooperate strategically to offer flour ingredient solutions under Bakels’ lead to milling and bakery customers.

IMCD acquires Israel-based chemicals supplier NETHERLANDS – Dutch supplier of speciality chemicals and food ingredients, IMCD, has completed the acquisition of the Israeli distributor Zifroni Chemical Suppliers Limited. Zifroni, based in Rishon Le-Zion, Israel was founded in 1950 and is a leading distributor of specialty chemical ingredients in the country. The company generated a revenue of €10.2 million (US$11.36 million) in 2019 through their representation of world leading producers from the US, Europe and Asia. Commenting on the acquisition, John Robinson, a Director at IMCD said that Zifroni will further strengthen IMCD’s globalisation agenda, adding that the company is a perfect fit for IMCD. According to the terms of the acquisition, the company will continue with its present management and staff. While this is the first acquisition the company has made this year, IMCD has closed 8 buyouts in the past one year, further consolidating its global footprint in the specialty chemicals and food ingredients market. JAN/FEB 2020 | FOOD BUSINESS AFRICA

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French yeast manufacturer Lessaffre opens first Baking Center in West Africa IVORY COAST - Lesaffre, the French yeast and bread improvement manufacturer has inaugurated its first Baking Center of West Africa at its subsidiary, Lesaffre Ivoire in Abidjan, Ivory Coast. This new Baking Center, the first of its kind in West Africa, aims to support customers in this region in the development of their expertise and new innovative bread-making solutions. The new facility, built on a surface area of more than 120 m², will bring together a team of breadmaking specialists who will be able to help professionals in the development of new products or breadmaking processes. It will also offer training and provide technical support on the use of on-site equipment or direct intervention with customers’ workshops and production sites. David Jousselme, Director of the Overseas region of Lesaffre added that in close collaboration with its clients and partners, Lesaffre is able co-develop products that meet requirements for various consumers and markets. The Baking Center, whose concept was created in 1974 by Lesaffre, is a real centre of expertise, technology and innovation in bread making for the bakery trade, and currently comprises 47 centres spread over the 5 continents.

Arla Foods breaks ground for US$44m ingredients innovation centre in Denmark DENMARK – Danish dairy cooperative, Arla Foods, has started

construction of a new €40 million (US$44m) modern innovation centre for the ingredients business in Denmark. The new innovation centre will be home to international scientists and innovators that will enable the company to further intensify its innovation efforts in development of dairy and whey ingredients. Located in Nr. Vium, Denmark in close proximity to the key production site in Arla Foods Ingredients, Danmark Protein, the centre will cover a 9,000 square metre space with open office spaces, labs and a pilot plant. Arla said that the close interaction between the new Arla Foods Ingredients Innovation Centre and Danmark Protein will create a unique environment for process development and pilot production to unleash “all the wonders of whey”. The facility is also expected to enable Arla Foods Ingredients continue to grow at a high rate in the coming years, especially as the global demand for highly specialized products and ingredients continues to increase. The centre will accommodate up to 90 scientists, technicians and innovators covering all aspects of research and development within whey and milk, involved in a range of activities including advanced separation technologies, isolation of specific components of the whey or milk, heat treatment and pasteurization technology and improved functionality and shelf-life. The new AFI Innovation centre is expected to open in summer 2021 and complement its efforts at the Arla Innovation Centre (AIC) in Skejby, Denmark which the company opened in 2017.

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Firmenich invests in green packaging pioneer LOOP to support global expansion SWITZERLAND – Flavors

and fragrances company, Firmenich, has made a coinvestment with Quadia in LOOP, a green packaging pioneer, in Series A funding round. Supported by some of the largest consumer brands, with early partners including Procter & Gamble, Unilever and Nestlé, LOOP is a new, disruptive e-commerce and retail distribution service based on reusable packaging. The company says the investment is a step further in demonstrating the group’s commitment to the circular economy and addressing sustainability in a single-use era. “As a global environmental leader with a unique legacy in responsible business, we are firmly committed to eliminating non-recycled plastics in our operations and supply chains,” said Gilbert Ghostine, CEO Firmenich. “Our participation in LOOP’s pioneering model to remove waste marks a new milestone in our journey to foster sustainable production and our active support for the circular and regenerative economy.” LOOP allows brands to redesign the packaging of their most consumed products in line with a circular e-commerce model that maintains the two main benefits of disposability: convenience and affordability. The company modernizes the traditional “milkman model” in an efficient and durable way by tackling the issue of single-use plastic waste. By managing the collection, storage, cleaning and delivery of clean packaging to manufacturers, LOOP is the first of its kind global packaging and shopping circular solution. The funds raised in this equity round will finance the initial deployment of LOOP before expanding global operations in the UK, Japan, Germany and Canada in 2020, and Australia in 2021.

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