Joint Venture biscuit factory begins production

ETHIOPIA – A biscuit factory, owned by Ahadu Plc and a UK-based company called Vasari Group, started production of seven varieties on May 2, 2015.

The factory is based on a 42,000sqm plot of land leased by Ahadu Plc in Bishoftu, Oromia, 40Km south-east of Addis Abeba. Ahadu, producer of Ahadu tea, and other businesses in packaging and real estate, had already started construction on its land in November 2012.

The factory was inaugurated on Tuesday May, 2015, in the presence of President Mulatu Teshome and Muktar Kedir, president of Oromia Regional State.

Vasari, an equity firm, which holds shares at Dashen Brewery, joined Ahadu in September 2013, to form a new company which they named Ahadukes Plc which is also the brand name of the biscuits produced by the factory, established with capital of 36 million dollars, said Solomon Wondimneh, owner of Ahadu.

The machinery, imported from Italy and construction of the facilities were factors that raised the cost of the project, he added.

Solomon declined to say the shares that each party had in the new company. However the biscuit factory is the first phase of the project which, in the next three years will include the production of flour and pasta, he said. The company has already received an additional 36,000sqm for these expansion projects.

The flour factory will have a capacity of 6,500qt and will supply the two other factories. The biscuit factory has the capacity to produce 500qt of biscuits a day while the pasta factory will have the capacity to produce 900qt of pasta, says Esubalew Kefale, project manager of Ahadukes Food Products S.C.

The production of biscuits, wheat flour and sugar are the largest food processing sectors in Ethiopia. In 2013, there were 14 factories engaged in pasta and biscuit production.

The growth of this sector, according to a study done on behalf of the Netherlands Embassy in 2013, has led to a comparable increase in the import of raw materials. The import of raw materials for bakery products has reached 20pc in 2010 from eight percent in 2009.

The low cost of investment to launch a biscuit factory has contributed to the growing number of factories in this business. According to the study, the main accessory for the establishment of the business could be as low as 20million Br.

Ahadukes, has employed 600 people, Esubalew says, and has already concluded deals with 10 distributors for its products in Ethiopia.

The company largely uses inputs available in Ethiopia, relying on the domestic production of wheat, according to Esubalew.

In the 2012/13 fiscal year, 1.6 million hectares of land was cultivated, producing 34 million quintals of wheat. Since 2006, the area used for wheat production has shown an average growth rate of 2.63pc annually while the wheat production has shown average annual growth rates of 5.25pc, according to the Central Statistical Agency.

May 13, 2015; http://addisfortune.net/articles/a-joint-venture-biscuit-factory-is-to-begin-production-at-36m/

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