One of Bakhresa Group's milling plant in Dar es Salaam, Tanzania. The Group is one of the largest operators in Tanzania's growing food industry.

Tanzania offers unique opportunities for the growth of the food, beverage and milling industry in East Africa. Abundant land, fertile soils and good rainfall has made Tanzania an agriculture powerhouse. Food Business Africa reviews the trends in the manufacturing sectors in the country.

With abundant arable land, water resources and fertile soils, most of which are virgin, Tanzania has a huge advantage in the agriculture sphere. It is an agriculture powerhouse in East Africa, not only meeting its local requirements but also contributing to food security in the region.

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Tanzania offers huge opportunities for regional and international investors to the agriculture, agro-processing, manufacturing, retail and hospitality industry.

The food manufacturing/processing industry in Tanzania constitutes 24% of the entire manufacturing sector.

The main sectors are beverage and dairy products, canning and preserving of fruits and vegetables, canning fish and similar foods, manufacture of vegetable oils, grains milling and baking, sugar and confectionery as well as animal feeds.

The beverages include the distilling and blending of spirits; manufacture of wines, cider and beer; production of soft drinks and bottled waters. 

The history of the food industry in Tanzania stems from enterprises that were owned by the Government, but which were privatised from the late 1980s into the early 2000s, with private investors moving in to streamline operations of mills, breweries, bakeries and other food companies.

Privatisation not only improved the efficiency of these companies, but also led to significant new investments in the industry by the private sector, changing the face of the food manufacturing sector significantly.

As a result of the privatization, two giants emerged: the Bakhresa Group and Mohamed Enterprises Group, which are the country’s largest and most diversified food industry operators, covering the milling, beverages, bakery and other sectors of the industry.

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As a result of the privatisation and opening up of the sector to other players, local, regional and multinational companies have increased their presence in Tanzania, including the beverage giants like Coca-Cola, PepsiCo and AB-InBev, where each of these companies operates 4 plants around the vast country. Diageo, the producers of Guinness and Serengeti beers, also has 3 plants in Tanzania.

The pace of direct local and foreign investments have risen significantly over the last 15 years, while small and medium players continue to pop up, with some of them growing into significant players, for example in the dairy sector, local players Tanga Fresh, Asas Dairies and Milkcom have defined the pace of the dairy industry in a country where milk processing has taken a bit longer to come of age.

Projections show that the levels of investments will grow strongly in the next 5-10 years, driven by rising incomes and urbanisation and changing consumer habits towards conveniently packaged and processed food products. More local, regional and international players, private equity funds and other players are also expected to enter the country. 

Most of the consumer-oriented food processing industries use local ingredients but because of the wanting agricultural and industrial development in the country some rely on imported food ingredients and supplements such as soy, rice, wheat and industrial processed products.

The food processing sector is characterized by micro and small-scale processors, with a number of medium and large size processors, most of which are in Dar es Salaam, Tanga, Kilimanjaro and Arusha. 

Overall, for food manufacturers and suppliers to the food, beverage and milling industry in Tanzania, this is the right time to strategically position themselves in the food industry that is on the upswing and equally in need of a number of solutions to reorganize the agro-processing industry in the country from its fragmented nature and lead it to its rightful positioning if to go by the potential there in. 

Dairy Products

The dairy industry in Tanzania has the most potential in Africa with the ability to improve food security, nutrition and incomes of farming communities in the country. The sector contributes 30% of the livestock sector GDP, showing its impact on the economy of the country if its full potential can be harnessed.

Despite the huge potential and rising demand for milk products, the country remains a net importer of milk and milk products including milk powder, long life milk, cheese and butter, among other products.

The country produces about 2.4 billion litres of milk a year, with a targeted production of 4 billion litres per annum, with the Government planning to improve milk consumption per capita from the current 47 litres to 70 litres in a few years, driven by increased local production.

The cost of imported dairy products amounted to US$7.7 million in 2009, with most imports mainly originating from Kenya, South Africa and the Netherlands.

Key factors to the future growth of the Tanzania dairy sector are an increase in the number of improved dairy cattle, increasing consumption of milk products and changing consumer trends towards convenience and health awareness. On the flipside low production and high animal mortality rate are the biggest factors which may curtail progress in the sector.

The Tanzania Dairy Processors Association said in a brief in 2011 that there was a narrow product range in the country which was concentrated on liquid and fermented milk, while demand for processed milk products, particularly in urban areas, was far from being satisfied, with imports of about 15-20 million litres of Liquid Milk Equivalents (LME) per annum, valued at US$5 million and increasing at a rate of 9% annually.

This situation still holds, although significant progress has been made, with the number of dairy processors rising again after a deep decline in the 1990s to the 2000s.

Significant investments have been made in the dairy sector in the last few years, with the Bakhresa Group entering the sector with a UHT milk plant in Zanzibar and Milkcom dairy constructing a new plant near Dar es Salaam recently, capable of producing UHT and fermented products.

Tanga Fresh, the country’s largest dairy continues to grow, with a focus on UHT milk. It is expected that more dairy plants will be set up in Tanzania in the next 5-10 years to fill the rising gap between demand and locally produced products.

The dairy industry in Tanzania needs milk storage, cooling and processing solutions; affordable packaging equipment and materials; laboratory and food safety technologies; formulations technology that can deliver safe, nutritious and affordable products and technologies that can improve efficiency and reduce waste. 

Oilseeds, Nuts & Spices

Tanzania is a significant player in the oilseeds, nuts and spices market in the world. In Africa, it ranks third behind Nigeria and Ivory Coast and eighth globally. The major sources of edible oil in Tanzania include sunflower, palm, groundnuts, sesame, soya beans and cotton, which are produced in almost all the regions in the vast country. 

With current consumption of 500,000 tonnes per annum, compared to local supply of only 180,000 tonnes, the country offers strong incentives to investors in the oilseeds sector, considering that it is also one of Africa’s largest growers of oilseeds.

In a notice recently, the Tanzania Investment Centre (TIC), a government agency that promotes local investments, called for investors to explore the opportunities to venturing into edible oil processing industries in order to help Tanzania bridge the supply deficit gap of 320,000 tones and slash the import bill, which currently stands at US$294 million.

TIC forecasts that the demand for edible oil is set to increase to 700,000 tonnes by 2030.

The country has seen a significant increase in cashew nut production over the last few years, with production doubling to over 300,000 tonnes in just two years, catapulting the country to among the top ten producers of the nut in the world. Used in various snacks, cashew nuts consumption is rising in the world as consumers seek healthier snack options.

Tanzania’s increase in production has attracted the attention of the government, which is seeking for investors to add value of the oilseed in the country instead of exporting raw nuts.

The country has 14 million hectares of land dedicated to cashew plantation, mainly in Mtwara, Lindi, Ruvuma, and Tanga regions. Less than 10% of the raw cashew produced in the region is processed locally. 

In the spicy business, the country is the leading producer of cloves and other spices used in culinary dishes. Zanzibar is still the old famous Spice Islands, and leaders have vowed to maintain the name by encouraging farmers to increase production, improve quality and double exports. Between 1995 and 1999, Tanzania ranked third by exporting 5% of Least Developed Countries total spice exports. 

The country is a top ten world producer of peanuts, with production rising dramatically from about 350,000 tonnes in 2009 to 1.8 million tonnes in 2015 accounting about 1.7% of the world production.

In 2013, Tanzania ranked 9th in peanut production globally. However, the yields, dogged by drought, disease and lack of improved varieties, are still low, ranking 69th globally at slightly above 1 ton per hectare.

Despite the country being also a top ten exporter of the nut in the world, it receives the lowest price of the top 20 exporters due to stringent aflatoxin standards set by importing countries.  Farmers do not have incentives, nor do they have the ability to grow aflatoxin free groundnuts. The peanut industry has inadequate value addition and agro-processing activities.

Tanzania is a significant player in sunflower production, producing 350,000 tonnes per year according to UNIDO, translating to about 90,000 tonnes per year. 

Several players including Mount Meru, East Coast Fats and Oils, Bidco Africa and Murza Wilmar play significant roles in the oilseeds processing and refining industry in Tanzania. Local cottage refiners are also available, mainly in the refining of sunflower. Cashew nuts and spices are mostly exported into the Asian market.

It is expected that with the Government’s move to localise value addition, there will be a significant investment in the processing of oilseeds and spices in the country in the next 5-10 years.

Milling, Baking & Animal Feed

Tanzania is the grains powerhouse in East Africa. It is the largest producer of maize in East Africa, producing 5.4 million tonnes in 2018, though this is a dip from a high of 6.7 million tonnes in the 2014 season. Consumption in 2018 was forecasted at 5.3 million by USDA.

Maize, which is a staple across several countries in the region, is traded across national boundaries, with Tanzania a source of maize into Kenya, plus other grains, including sorghum and millets with a production of 800,000 tonnes and 350,000 tonnes respectively in 2018. Other countries receiving Tanzania’s grains include Zambia, Malawi, Rwanda, Burundi and the Democratic Republic of Congo (DRC).

Despite huge potential for exports, Tanzania’s grains export trade is largely opportunistic, often illegal, and depends on many internal and external factors, says USDA. Periodic export bans discourage traders from seeking large export contracts.

The country is not a significant wheat producer, producing about 100,000 tonnes per year, but has some of the largest wheat milling plants in the region, with Bakhresa Group starting off in the country, but has grown substantially into the greater eastern and southern Africa.

Other significant milling players in wheat milling include METL, Coast Millers and the Azania Group. With constrained local production, the country relies on Russia, Australia, Canada, Germany, and Brazil to meet 90% of its wheat requirements, with wheat import bill estimated at US$225 million per year. 

According to USDA, growth of major cities like Dar es Salaam, Mwanza and Arusha is expected to increase demand for wheat products from the current about 1 million tonnes.

The main growth categories for the wheat industries are pasta, biscuits, and breakfast cereals. A shift towards consumption of wheat from traditional staples such as coarse cereals and tubers has been observed in rural and peri-urban areas of the country, notes the USDA.

The maize milling and bakery sectors, driven by a rising demand for conveniently packaged maize meal and baked goods, continues to thrive on the back of rising urbanisation, incomes and a more sophisticated consumer.

Rice production in Tanzania has risen steadily, hitting 2 million tonnes in 2018 but the country is way off from meeting local demand that was 2.8 million tonnes, with the bulk of imports from Pakistan and other Asian countries.

The country is a significant exporter into Eastern and Central African countries of paddy, while local packaging and processing has also seen a number of investors set up plants in the southern corridor and other areas. Cassava, sorghum and other cereals are also important contributors to Tanzania’s food basket. A recent investment has been made in a cassava starch processing plant in Mtwara.

The animal feed industry has picked up significantly as the demand for quality and cost-effective feed rises due to investments in the livestock industry, largely driven by the poultry sector.

According to the Tanzania Animal Feed Association, more than 40 animal feed factories exist in the country to meet this demand, with total production hitting 290,000 tonnes according to Alltech.

It is projected that there will be significant new investments in maize, rice, pulses, wheat, barley and animal feeds processing in Tanzania in the next 5-10 years to meet demand, and to utilise increasing local production of grains. 

Meat, Poultry & Fish

Tanzania has the third largest livestock numbers in Africa, with a reported 25 million cattle, 16.7 million goats, 8 million sheep, 2.4 million pigs, and 36 million chickens, according to the Ministry of Livestock & Fisheries Development. 

Vast and sparsely populated land, abundant water resources, a long coast line and large lakes and a thriving grain sector provide a huge incentive for the growth of the meat, poultry and fish industry in Tanzania.

The livestock population in the country both from traditional and commercial production is increasing as some farmers adopt improved production systems such as feedlot ting and commercial producers respond to demand for quality meat niche and export markets.  

The red meat value chain is considered to produce various products that need to be recovered and processed into valuable products in order to generate higher value, better prices for producers and reduce environmental pollution.

The potential which the livestock rearing, and meat production sector offers have only been utilized marginally. The government has placed priority in developing value addition in this sector.

For example, according to the TIC in 2018, investors were being sought to set up meat processing plants in Dodoma, Iringa and the Coast region in a joint venture with the government worth a total of US$76.6 million, with the projects constituting feedlots and back grounding ranches, slaughter houses and packaging and distribution facilities.

The country has seen the establishment of ranches and increase in poultry and aquaculture farms to meet the rising demand for meat products in the country and region.

For example, in the recent past, Silverlands Tanzania, owned by a private equity fund, opened a day-old chick and one of the largest feed mills plant in East Africa, angling for the Tanzanian and regional market.

It is expected that the meat and poultry husbandry and processing industry in Tanzania will receive significant investments in the next 5-10 years to meet rising local demand and that the country will become a significant player in the exports market as the sector gets streamlined once investments stream in.

Tanzania’s poultry industry is set to benefit from a four-year US$21.4m grant, aimed at enhancing the country’s poultry production. The grant is provided by the Bill & Melinda Gates Foundation to the World Poultry Foundation (WPF), which will disburse the funds to Tanzania and Nigeria to improve their poultry industries. 

Alcoholic & Soft Beverages

Tanzania has one of the most vibrant alcoholic and non-alcoholic beverage industries in East Africa. A competitive environment due the presence of world-leading multi-nationals and local entrepreneurs make Tanzania’s beverages space one of the most exciting in the region. 

In the alcoholic beverages space, AB-InBev (formerly SABMiller)-owned Tanzania Breweries Ltd (TBL) holds sway at it competes aggressively with Diageo-owned Serengeti Breweries Ltd, the makers of Guinness and Serengeti brands in the country.

TBL operates 4 breweries and a distillery in the country, while Serengeti Breweries Ltd has three plants in the country. 

In the soft drinks space, Coca-Cola operates four bottling plants in the country, while PepsiCo has a similar number of plants operated by SBC. Local players are not left behind in the quest to quench the thirst of the 55 million Tanzanians who yearn for either water, juice, drinks, soda or even beer across the country.

The Bakhresa Group, METL Group and new entrants including the Jambo Group are significant players in the soft beverages space, with significant market share. Packaged water is also widely produced in the country.

Significant increase in investments is expected in within the next 5-10 years into Tanzania’s beverage industry, in tune with growth of the economy, urbanisation and incomes.

Horticulture

The potential contribution of the horticulture industry in Tanzania, with a focus on the fruits and vegetables segment, often goes unnoticed.

The country is a significant producer of tomatoes, onions, potatoes, avocadoes, mangoes, and oranges, supplying the regional markets in East Africa, plus increasing quantities for export markets.

It produced more than 6 million metric tonnes of horticultural produce in 2015, but with huge potential, especially as several players have entered the sector in recent times including, for example, Africado, which has invested in the avocado value chain, becoming the largest fruit exporter in the country.

Significant investment in the horticulture value chain has occurred in the northern and southern highlands of the country, with potential in the coastal lowlands still largely unexploited.

It is expected that the value of investments in the horticulture industry – from farming, packaging and processing – will rise significantly in Tanzania within the next 5 years as the value chain challenges get sorted by the Government and the private sector takes its rightful place. 

Sugar & Confectionery

In Tanzania, the sugar industry is the largest agro-processing industry. This industry started early in 1924 when Tanganyika Planting Company Limited in Moshi started.

This was followed by two other sugar companies situated in Kilombero and Mtibwa in 1961 and 1962 respectively. The industry had grown to five sugar producers, but the country now has four millers in Kilombero Sugar Company Ltd, Tanganyika Planting Company Ltd (TPC), Mtibwa Sugar Estates Ltd and Kagera Sugar Ltd. 

Based on existing data, sugar production in the country has increased from the initial 2,000 to more than 300,000 metric tonnes per year with the country importing the deficit of about 100,000 tonnes.

The Government has called out for investors to meet the deficit through new investments in sugar plantations and new plants across the country.

For example, according to the TIC, the government is seeking joint ventures for the Ruipa Sugar project in Kilombero District to grow sugarcane on 13,950 hectares of land with potential of producing 100,000 tonnes, expandable to 200,000 tons per annum, potentially bridging the gap the country currently imports.

According to the Sugar Board of Tanzania (SBT) several small-scale to large scale sugar projects are in the pipeline, past feasibility studies and into advanced stages of procurement, installation and commissioning.

These projects are spearheaded by Mkulazi Holding Ltd (Mkulazi & Morogoro), Purandare Industries(T) Ltd (Dodoma), Suba Agro Co. Ltd (Manyara), Bagamoyo Sugar Ltd (Bagamoyo) and Nile Agro Industries Ltd (Tarime).

These new developments are expected to yield over 200,000 tonnes per annum when operational. Other potential sites for large scale sugar plants are Kisaki & Mvuha (Morogoro), Rufiji Basin, Kibondo (Malagarasi Basin) and Songwe Basin. 

The confectionery sector is increasing in importance in the country, as population rises, and young people take to consuming more sugary snacks. It is expected that in the next 5-10 years, significant investments will come through in sugar cane farming and processing while the confectionery industry will increase significantly due to a rising, young population and higher incomes.

Dar es Salaam’s unending trade tiff with Nairobi, that escalated when Tanzania slapped a 25% duty on Kenya-made sugar confectionery in early 2018, claiming use of zero-rated industrial sugar which tilted competition in favor of Nairobi factories has ostensibly opened an estimated over TSH 3 billion market to be grabbed by local players.

Coffee & Tea

Tanzania is an important producer of coffee and tea, mainly in the southern and northern highlands. Coffee production in Tanzania is a significant aspect of its economy, as it is Tanzania’s largest export crop.

Tanzanian coffee production averages between 70-80,000 metric tonnes annually, of which approximately 70% is Arabica and 30% is Robusta.

It is the fourth largest coffee producer and exporter in the continent after Ethiopia, Uganda and Ivory Coast and ranks 17th globally. In 2018, Tanzania produced 69,000 metric tonnes of green coffee, exporting 61,800 metric tonnes (90%); only 3,000 (4%) metric tonnes was consumed domestically.

Tea is a high impact sector in Tanzania. It is the fourth largest export crop and more than 30,000 smallholder farmers collectively produce a third of the country’s output. It is harvested all year round and provides a regular, dependable source of income, lowering farmers’ vulnerability to extreme weather shocks, notes Gatsby.

Tanzania is one of the most important tea-producing countries in Africa, and also borders Kenya and Malawi, two other major African tea-growing countries.

In 2008, Tanzania was the world’s 14th largest tea producer, producing about 0.73% of global production, and placing it 4th among African countries behind Kenya, Uganda and Malawi with about 29,000 tonnes according to 2010 projections.

Most of Tanzania’s tea is exported in bulk and sold for a low price. Some of the major tea companies in Tanzania include Chai Bora, Rift Valley, Tanzania Tea Blenders and 

Although the bulk of the crops are destined for the export markets, the demand for coffee and tea continues to thrive in the country, which has seen the setting up of local tea and coffee processing plants.

It is expected that the coffee and tea industry in Tanzania will receive significant investments in the production, processing and retailing value chains, as local consumption increases substantially.

This story appeared in the January/February 2019 issue of Food Business Africa magazine. You can read the entire magazine HERE

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