Singapore-based global agricultural and food company Olam last week announced that it has bought Titanium Holding Company SA for US$167 million, thereby acquiring OK Foods, one of the largest manufacturers of biscuits and candies in Nigeria.
From its three factories in Nigeria, OK Foods produces biscuits, wafers, candy and gum under the “OK” brand umbrella.
Olam said in a statement that biscuits and candies are two of the most attractive and fast growing consumer goods in the Nigerian market. OK Foods has 18% share of Nigeria’s market for biscuits and a 28% market share in the candies category.
The next big thing?
Olam’s acquisition is part of a bigger trend of other investments into African biscuit manufacturers.
Last year, South African food giant Tiger Brands bought Deli Foods Nigeria Limited, a company engaged in the manufacturing and marketing of biscuits for the Nigerian market. “With its large population and a strong and growing consumer market, Nigeria offers excellent growth opportunities for fast-moving consumer goods (FMCG) companies,” Tiger Brands said at the time.
In addition, Tiger Brands has formed a joint venture with the East African Group of Companies of Ethiopia, which also comprises the manufacturing of biscuits, among various other food products.
UK-based Silk Invest, through its Africa Food Fund, a private equity fund focusing on processed food, beverages and quick-service restaurant companies, has invested in a confectionary company in Egypt. In a recent webcast, Silk Invest said that it is also looking to invest in a biscuit and pasta manufacturer in Ethiopia.
Large quantities of packaged food consumed in Africa are currently being imported. This presents major opportunities for local manufacturing. “If you take Ethiopia. Ethiopia is a big consumer of biscuits – they love biscuits. 60% to 70% of the annual consumption of biscuits in Ethiopia is imported. There is one small company based in the UAE . . . that has quadrupled its earnings within three years by exclusively exporting biscuits to Ethiopia,” noted Waseem Khan, Silk Invest’s head of private equity.
Opportunities for packaged food
Commenting on its investment, Olam said that Africa’s “competitive landscape is still favourable and consumer tastes and preferences are still evolving”.
Olam’s packaged foods business is initially focusing on five key markets, namely Nigeria, Ghana, South Africa, Côte d’Ivoire and the MBTN cluster (Mali, Burkina Faso, Togo and Niger). “This choice is based on the relative size and scope of these markets on a stand-alone basis, as well as Olam’s significant presence and back end strengths in these markets.”
In 2007, Olam launched Tasty Tom tomato paste in Nigeria. According to the company it is currently West Africa’s second largest player in the tomato paste category. Olam also produces numerous other food products in West Africa, including noodles, biscuits, pasta and seasonings.