SOUTH AFRICA – Dairy group Clover Industries will wrap up talks with potential partners in the next few months as it seeks to expand into faster-growing economies in the rest of Africa.
Although limited opportunities exist in most African countries for Clover’s fresh product range due to the lack of refrigeration and poor infrastructure, the company sells long-life products that could appeal to urbanised middle classes with higher incomes.
“We want a network in sub-Saharan Africa through minority shareholding in existing companies at first … as we grow, we’ll become majority shareholders and eventually make the ‘rest of Africa’ a subsidiary of Clover.
We’re looking at Zimbabwe, Zambia, Angola, Mozambique, Nigeria, and then East Africa,” Marcelo Palmeiro, the group’s executive for corporate and brand development, said on Tuesday.
Partnering with a local company negates some risk and provides companies with on-the-ground insight. By moving into the rest of Africa, where there was long-term growth potential, Vunani Securities analyst Anthony Clark said, the group was getting its brand known in the hope of keeping a small advantage against multinationals that were too scared to go in at this stage.
“People have the mentality that if it’s Africa, you do something simple or cheap, but that’s not Clover; we want local manufacturing, good quality and distribution. You have to have a full setup there,” Mr Palmeiro said.
Pioneer Foods this month announced its first foray into Nigeria with Lagos-based partner Food Concepts.
“It wouldn’t surprise me if in Nigeria or Angola they initially do an agreement with a large retailer like Shoprite or Massmart to get their products on the shelf to get consumer acceptance,” Mr Clark said.
At home, Clover is spending about R75m on installing another yoghurt production line because the one it bought from DairyBelle has run out of capacity two years earlier than expected. The new processing and packaging line will be installed at the same Bloemfontein facility from September.
Clover bought DairyBelle’s yoghurt and UHT “long-life” milk businesses in January, after its service agreement with Paris-based Danone ended and it was allowed to start making high-margin products such as yoghurt and custard. The yoghurt and custard markets are estimated at R3.6bn and R675m.
Also on Tuesday, Clover, headed by CEO Johann Vorster, said it was on track to launch a new range of desserts which include tiramisu and pudding, under its Bliss brand, over the next four to six weeks.
The double-cream yoghurt brand was acquired by Clover when it bought DairyBelle. Clover will also launch an on-the-go “smart drink” in partnership with Futurelife.