Food firms look to expand further in Africa

Hennie Heymans. Image: DHL website

According to a report by the World Bank released in March‚ the size of Africa's food and beverage market is projected to reach US$1trn by 2030 - more than three times the current market estimated at US$313bn.

South African consumer goods and food and beverage companies have been growing their exposure to the rest of the continent‚ targeting countries offering strong economic growth and rising consumer demand. Last year‚ Tiger Brands bought a majority stake in Nigerian flour milling company Dangote Flour Mills‚ adding to its other food interests in the country.

For the six months ended March‚ Tiger Brands reported strong demand from southern African countries for exports and said its east and central African businesses in Kenya‚ Ethiopia and Cameroon achieved strong turnover growth.

Opportunities abound in Africa

Meanwhile‚ Pioneer Foods has prioritised Africa for growth‚ flagging the continent as a significant opportunity for the group in the medium-term. Pioneer's African operations span Botswana‚ Namibia‚ Zambia and Uganda.

Brait said earlier this month it was looking for opportunities for its Premier Foods company in the fast-moving consumer goods market in the rest of Africa‚ while other companies such as AVI say they have built a strong presence in some African countries and are eyeing further opportunities.

DHL see significant growth for food producers. Image: DHL website

Heymans said the agribusiness sector in particular was an industry showing significant growth in Africa. Agribusiness referred to agricultural production by farmers‚ as well as secondary processing‚ distribution and retailing.

"The expected growth of Africa's food and beverage market highlights the growing market and many opportunities for South African agribusiness and related value chain role players to expand into Africa‚" Heymans said.

However‚ a lack of infrastructure was a constraint‚ as the lack of access roads hindered the delivering of produce to the market. "Removing logistical barriers will increase productivity and improve service delivery greatly‚" Heymans said.

Agribusiness Development Corporation's chief executive Hennie van der Merwe says farmers in SA and other agribusinesses were increasingly looking to Africa for growth largely because of stifled local markets. He said lack of skills in Africa provided opportunities for local businesses and farmers to set up operations there.