Beverage manufacturers are pumping millions of dollars into expanding their production capacity in Ethiopia where soft drinks and beer consumption is poised for growth.
Amsterdam-based brewer Heineken is scheduled to open a US$127m brewery on the outskirts of Ethiopia’s capital Addis Ababa in a few weeks.
Last year, Coca-Cola Sabco invested $20m in refurbishing its plant in the city of Dire Dawa and building a new returnable glass bottling line. Meanwhile, Pepsi bottler Moha Soft Drinks is setting up a new bottling plant 780km north of Addis Ababa. Through its seven operating units Moha manufactures Pepsi Cola, Mirinda Orange, 7Up, Mirinda Tonic and Mirinda Apple.
Beverages industry growing
Brooks Washington, principal at business development fund Roha Ventures, says the beverages industry in Ethiopia is “growing insanely”. Roha is setting up glass bottle manufacturing plant Juniper Glass Industries in Ethiopia to meet growing demand.
“Ethiopia has a great consumer story. It is growing so quickly but there is still so little that is manufactured locally. One of the industries that people are really excited about is beverages but right now they import almost all of the glass bottles that they use for soda and beer. Currently between 120m empty bottles are imported into Ethiopia, [yet] you have everything that you need to manufacture glass bottles in Ethiopia.”
Juniper is expected to start production in the second half of 2015 and will manufacture between 120m and 150m glass bottles every year. Roha is pumping an investment “shy of $50m” into its Ethiopian venture.
Washington explains that some beverage manufacturers have expressed interest in purchasing bottles from Juniper once it starts production.
“Soda and beer consumption levels are growing and all the leading brands are making huge investments in Ethiopia. There is clear demand. Additionally, importing glass bottles is very difficult and expensive.”
The American investor says Ethiopia is an interesting investment destination for Roha Ventures due to its fast growing consumer market, expanding middle class and rapid urbanisation.
Ethiopia is Africa’s second most populated country with more than 90m people and is one of East Africa’s fastest growing economies.
“Ethiopia has the building blocks to be able to do this business well. The electricity is cheap, land is cheap, labour is cheap and all these things make it a really exciting place to do business.”