2020: A Review: Investments in new plants continue in Africa but Covid-19 impacts pace

Africa’s food and beverage market is worth more than US$313 billion and is projected to reach US$1 trillion by 2030. To spearhead growth, players in the industry have been raking in huge amounts of investments channelled towards upgrading facilities and systems, product innovations, expansions, technological advancements, among many others, with the anticipation of more efficient and cost-effective operations, which ensure higher returns and leadership in the market place.

By Catherine Wanjiku

Nigeria

In Nigeria both local companies and multinationals with subsidiaries in the country invested in their organizations and the economy at large.

Spanish culinary products manufacturer GBfoods inaugurated a N20 billion (US$51.9m) tomato-processing factory in Kebbi state, aimed to help the country achieve self-sufficiency in production of tomatoes and its related products. In addition, the food manor also opened a N5.5 billion (US$14.3m) state of the art production factory for its leading mayonnaise brand, Bama Mayonnaise in Ogun State. Still in the quest of promoting tomato farming in the country, Dangote Tomatoes Processing Limited, commissioned a N2.8 billion greenhouse nursery in Kano to supply tomato seedlings to Nigerian farmers.

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The country also witnessed an investment by Nigerian Bottling Company (NBC), franchise bottler of Coca-Cola, with the installation of a new high-speed canning line at its Ikeja plant. Another beverage maker, Nigerian Breweries Plc opened its newly built N5.1 billion (US$13.3m) ultra-modern automated PET line at the Ijebu Ode brewery, Ogun State. The facility is fully automated to meet world-class safety and quality requirements and has the capacity to produce 24,000 bottles of drinks per hour, especially the malt beverage Maltina brand.

In the grain and milling sector, BUA Food, one of the leading agribusiness and food processing companies headquartered in Lagos, Nigeria penned an agreement with Milleral, a Turkish manufacturer and installer of milling equipment, to build the company’s new flour milling plants with a total milling capacity of 2,400 tonnes per day. The plants, expected to be complete in 2021 will bring BUA’s total installed flour milling capacity to 4,000 tonnes per day.

In the same vein, the food manufacturing conglomerate inked another agreement with Italian maker of pasta production equipment, FAVA spa, to install a new pasta processing plant with a processing capacity of 720 tonnes per day of pasta across 5 lines. It is scheduled to be completed in 2021 and will bring the company’s total installed pasta processing capacity to 1,440 tonnes per day across 10 lines.

The grains sector also welcomed a partnership between WACOT Rice Limited, the subsidiary of Tropical General Investments Group, and USAID through its West Africa Trade & Investment Hub, to support the company’s rice out grower scheme in Kebbi State. Under the partnership, the rice miller is investing US$8.6 million and the Trade Hub is issuing a grant of US$1.48 million aimed at enabling WACOT to on-board an additional 5,143 rice farmers into its program over the next 2 years.

The poultry sector, despite it being one of the hardest hit industries in the country in 2020 due to shortage of animal feed caused by scarcity of maize, saw the ground breaking of N4.2 billion (US$10.8m) egg processing factory at Ondo State. The facility will produce egg powders, pasteurised liquid eggs and the shells that will be utilized for manufacturing of poultry feeds. Meanwhile, Premium Poultry Farms, Nigeria’s largest egg producer entered into an agreement with renewable energy supplier, Rensource Energy to install a solar photovoltaic system at its facility. The 700 KWp solar photo-voltaic plant will generate 1 gigawatt hour of clean energy annually, saving up to 25,000 tonnes of CO2 in its lifetime, expected to operate for at least 25 years, thus contribute to Nigeria’s fight against air pollution.

In the dairy sector, consumer goods manufacturer Promasidor Nigeria invested US$5m (N2bn) in Ekiti State to reactivate the Moribund Ikun Dairy Farm in partnership with the Central Bank of Nigeria, to ensure a daily production of about 10, 000 litres of milk. Other companies that undertook developmental projects in the sector in partnership with the government include FrieslandCampina WAMCO, CHI Limited and Fan Milk to discourage over reliance on imported dairy products. During the year under review, FrieslandCampina WAMCO commissioned a state-of-the-art plant for local production of Peak Yoghurt drink.

 South Africa

The South African economy is one of the hardest hit by the COVID-19 pandemic due to the skyrocketing rate of infections. Its food and beverage sector has received blows following restrictions of operations imposed by the government, including the ban on alcohol sales. Such impairments forced food industry players to shy away from making any investments or shelf the plans to a later time when the dust settles.

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However, the likes of Tomra, a Norwegian multinational corporation and provider of reverse vending machine and sensor-based sorting solutions, defied the odds and opened a new regional headquarters in Johannesburg. The move strengthens its commitment to its customers in South Africa, Kenya and Tanzania.

Coca-Cola Beverages South Africa (CCBSA) ramped up its solar power generation capacity with the beverage giant rolling out solar photovoltaic panels at its Premier plant in KwaZulu-Natal as well the Bloemfontein Tannery plant and Bloemfontein Gutsche plant in 2020.

The packaging sector witnessed the breaking ground of Alpla’s new production site in the province of Gauteng, Lanseria near Johannesburg. Alpla is an international manufacturer of plastic packaging based in Austria. By the same token, Wilmar Processing South Africa kick started construction of the R1.3 billion (US$81m) crude vegetable oil refining facility in the country. The Coega Development Corporation (CDC), a public entity wholly owned by the Eastern Cape Provincial Government of South Africa also followed suit commencing construction of the R206 million (US$12.6m) Coega Aquaculture Development Zone (ADZ).

In the animal feed sector, the Animal Feed Manufacturers’ Association (AFMA) of South Africa launched the continent’s first research and training feed mill to be located at the University of Pretoria’s (UP) Miertjie le Roux Experimental Farm near Bronkhorstspruit.

Furthering technological advancements, German flavour and fragrance manufacturer Symrise entered into a special partnership with South African white grapefruit supplier Klaus Böcker to modernize the production line of white grapefruit of the Nkwaleni Processors factory in the KwaZulu-Natal province. The upgrade included its patented SymTrap technology, to enable the upcycling of side streams that would otherwise go to waste, turning these aroma materials into signature taste solutions.

Closing the year was GES Labs, a world-class active ingredient extraction company completing the establishment of a state-of-the-art pharmaceutical laboratory in Cape Town. The new facility is targeting to serve domestic and international markets with plant extracts including cannabinoids for use in food, beverages and pharmaceuticals.

 

Ethiopia

Ethiopia’s beverage sector is rapidly growing, characterized with stiff competition as rising demand pulls more players to grab the rising opportunities.

Meta  Abo Brewery, subsidiary of Diageo, completed the expansion of its US$14m non-alcoholic beverage factory, which commenced production of its first Malta Guinness packed in plastic bottles to increase their reach and foster convenience. In addition to that, Coca-Cola Beverages Africa (CCBA) secured a US$50 million financing facility from Standard Bank to support its expansion strategy in the country over the next five years.

The soft beverage sector also saw the burgeoning of the bottled water sub-sector with Risiq Group setting up a mango juice processing and water bottling business with an investment of Br 150 million (US$3.8m). Adad Trading Plc, a local livestock export company joined the competitive industry with an investment of Br 60 million (US$1.75m) and Kefeta Spring Water, a new water bottling company was launched following the construction of a 62 million Br (US$1.9m) processing plant.

Shifting eyes to the grain and milling sector, Kiya, a local food processing company, operating as Soror General Trading invested 350 million Br (USS$10.3m) to expand it flour processing, pasta and biscuit manufacturing plant in Adama, Oromia regional state. Vita Hydro Agro-Processing Plc, sister company of Belayab Food Production Plc, franchise owner of Pizza Hut and Cold Stone Creamery brands in Ethiopia also constructed a flour and biscuit processing plant worth 210 million Br (US$6.3m). Last but not least, the sector saw the input of Horizon Plantations Plc, an agro-processing venture company set up a 900 million Br (US$26m) state of the art Sheger Bread & Flour factory.

In the packaging sector, new investments were noted with agro-allied company Yhaenu Plc further diversifying its operations by venturing into production of packaging materials. The company invested close to Br 121 million (US$3.15m) in the establishment of a packaging making plant. Meanwhile, coffee processing and brewing company, Haro Coffee expanded its offering with the addition of disposable food and beverage packaging after investing Birr 20 million (US$ 500,000) in development of a packaging plant.

 Ghana

In Ghana, the government was in the front-line championing the food industry investment agenda. Under the state’s flagship project dubbed One-District-One-Factory (IDIF), both greenfield and brownfield projects were launched to include maize, rice, cashewnut, beverages and cassava processing plants, among many others.

The notable investment was the commissioning of Kasapreko water, juice and soft drinks factory worth US$25m, with a production capacity of 35,000 bottles per hour of juices and non-alcoholic soft drinks, and 15,000 bottles per hour of water. This is in addition to the US$15m Ekumfi fruits and juices factory, with a processing capacity of 10 tonnes of juice per hour.

One of the biggest investments in Ghana’s food sector in 2020 was when global agribusiness company, Bunge Limited through its specialty oils and fats business, Bunge Loders Croklaan (BLC) inaugurated a state-of-the-art shea butter processing facility in Tema.

 Kenya

In East Africa’s largest and most vibrant economy Kenya, German human nutrition company and food ingredients supplier, BASF opened a Customer Experience Centre in the country’s capital, Nairobi to provide tailor-made support for formulation and application of food solutions. The center offers an open space architectural design that fosters closer collaboration and nurtures cross industry pollination, allowing BASF and its customers to develop tailor-made solutions.

A noteworthy investment in the country was made by Bidco Africa Group, one of the leading consumer good company in East Africa in collaboration with Danish firm partner, Co-Ro foods with the inauguration of US$2.5 million (KSH.267 million) juice production line in Ruiru town, near Nairobi.

The beverage sector also saw the contribution of Makueni County government in Eastern Kenya, which set-up a second fruit juice processing line at the Makueni Fruit Processing factory in Kalamba town with a production capacity of 8,000 litres per hour of ready to drink juice.

Leveraging on technology to modernize and digitize operations, leading Kenyan meat processor Farmer’s Choice Ltd adopted cloud solutions offered by the giant tech company Microsoft, to give it unmatched visibility over its entire life cycle of meat production, allowing it to respond to supply and demand changes proactively.

In the grain sector, Geothermal Development Company (GDC) installed a semi-commercial cereals dryer with reduced emissions at the Menengai Geothermal project funded by the Icelandic International Development Agency, with a capacity to dry 20 tonnes of cereals per day.

In South Africa, The Animal Feed Manufacturers Association Launched Africa's first Research and Training Feed Mill in collaboration with the university of Pretoria.

Meanwhile, at the industrial town of Thika, Mjengo Limited commissioned two state of the art wafers and sponge cake snacks plants to add to its grains and biscuits business lines. In Nairobi, the region’s leading confectionery manufacturer Kenafric Manufacturing entered the soft beverages and water business lines after opening their new plant.

 Uganda

Uganda, the only country in East Africa that has attained self-sufficiency in sugar production, inaugurated the multi-billion Atiak Sugar Factory in Northern Uganda aimed to boost production, stabilise prices of the commodity and create enough stocks for export.

The country’s largest dairy processor Pearl Dairy Farms diversified into commercial honey production, investing more than USH.10 bn (US$2.7m) into the venture. The company also expanded its yoghurt range by launching five new flavours: apricot, peach, butterscotch, coconut and plain, an addition to its pioneer flavours vanilla and strawberry, giving consumers a variety to choose from.

Meanwhile in the meat sector, Uganda completed the construction of a new abattoir with a capacity to handle 400 cattle per day, targeting the export market including regional and global destinations.

 Zimbabwe

The world’s largest food and beverage company Nestle inaugurated US$2.5m cereals manufacturing line in Zimbabwe, which will result in over 30% incremental volume through put as the company expands capacity, targeting to triple its US$400,000 monthly exports in the medium term.

The country’s largest grower and producer of tea and coffee, Tanganda Tea Company Limited completed the construction of US$15m solar plant to power its production facilities as a backup from the many power shortages the country is battling with.

In the land of a thousand hills Rwanda, the government partnered with Unilever Tea and The Wood Foundation Africa (TWFA) to commence the second phase of the Nyaruguru tea project in the Southern province of the country, injecting US$20 million in the developmental initiative. The aim of the project is to enable farmers to effectively plant to scale and produce quality tea for both domestic and export market boosting their earnings.

Meanwhile in the same year 2020, beer manufacturer SKOL Brewery inaugurated its state-of-the-art water production line with a processing capacity of 40,000 bottles of water per hour. The launch of the production line coincided with the introduction of its new water brand dubbed Virunga Water, bottled in eco-friendly returnable glass bottle in line with the country’s law relating to the prohibition of single-use plastic items.

In Mozambique, the Mozambican subsidiary of AB InBev completed the construction of its factory worth over US$100m, with a production capacity of 2-million hectolitres of beer a year. Its rival, Heineken, inaugurated a new production line worth US$20 million at its Mozambique plant to produce Heineken beer in the country for the first time. The new production line has a production capacity of 350,000 hectolitres per year (35 million litres) and can fill 16,000 bottles in an hour.

 North Africa

Some of the notable investment by food industry players in the North Africa region include, Flour Mills company in Morocco installed a new mill with the processing capacity of 300 tonnes per day of local semi-hard wheat and three different variants of bakery flour mainly for domestic consumption.

In Egypt, LuLu International Holdings (LIHL), one of the leading hypermarkets and supermarket chains in the Middle East entered into a non-binding agreement with Abu Dhabi headquartered investment firm, ADQ to acquire US$1 billion for expansion. Under the terms of the agreement, ADQ and LIHL will work to collectively develop up to 30 hypermarkets and 100 express minimarket stores in the North African country.

Tunisia welcomed a new production center established by Spanish flavour and fragrance company, Iberchem Group, which opened under its flavour division, Scentium. The site features a production plant, two warehouses, application labs, testing rooms, administration offices and extra room to accommodate future growth.

In the rest of Africa, Puratos, a global provider of solutions for bakery, patisserie and chocolate opened four new subsidiaries in Kenya, Ivory Coast, Ethiopia and Nigeria through a joint venture initiative with local partners in the respective countries. The move is aimed to further establish its local presence in the key countries, strengthen customer relationships, localise production as well as develop new products and concepts using local raw materials.

In East Africa, Tanchoice, Tanzania’s largest and most modern slaughter house and meat processing plant commenced operation of its new US$10m meat processing facility with a capacity to handle 1,000 herds of cattle and 4,500 goats and sheep per day. Taking a few steps to the North, National Flour Mill Company in Somaliland inaugurated the country’s first flour mill with a processing capacity of 110,000 MT wheat annually.

Cruising to West of Africa, Lesaffre, the French yeast and bread improvement manufacturer inaugurated a baking center at its subsidiary, Lesaffre Ivoire in Abidjan, Ivory Coast. The first of its kind in the region, the center aims to support customers in the development of their expertise and new innovative bread-making solutions.

Shifting gears to Southern Africa region, Namib Mills Ltd, the largest grain processing company in Namibia, opened a new state-of-the-art bakery plant, situated North Windhoek. The plant worth N$134.6m (US$9.2m) has enabled the company to expand its processing capacity with the launch of a new bread brand, Bakpro Superior Loaves, as it seeks to cement its market share in the country’s bakery sector.

In neighbouring Zambia, Trade Kings Group, leading manufacturer of Fast-Moving Consumer Goods (FMCG) in the country, commissioned a new milk processing plant at its subsidiary, Dairy Gold Limited to produce full cream fresh milk products.

This feature appeared in the January/February 2021 issue of Food Business Africa. You can read this and the entire magazine HERE

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