Unpacking the real need for quality packaging in southern and east Africa
In several southern and east African countries, there is a shortage of quality, locally-produced packaging material, which means companies often have to rely on imports or settle for subpar solutions.
Ethiopia’s horticultural industry requires local solutions
Jacie Jones is the managing director of Perennial Foods Group, a producer of fresh fruits and vegetables in Ethiopia. She highlights an opportunity for domestic manufacturers to produce packaging for the country’s horticultural industry. “There is a captive market of countless companies that currently import all of their packaging (boxes, liners, bags and punnets). With quality local suppliers, Ethiopian companies could avoid using precious foreign currency,” she says.
“If a company in Ethiopia were to specialise in environmentally innovative packaging, there could also be interesting opportunities to export. Sustainable packaging is extremely limited across the continent and still fairly nascent across the world, despite growing demand from global consumers,” adds Jones.
Gap for alternative packaging in Tanzania
Sustainable packaging is also in short supply in Tanzania, according to Tahira Nizari, co-founder of Tanzanian agribusiness Kazi Yetu, which produces organic and fair-trade tea for export. The company uses eco-friendly packaging and tea bags for its products, some of which must be sourced from abroad. “A lot of the local options in the country are still plastic or boxes that are not food-friendly. If you are packaging food, it must be sealable and meet the relevant health and hygiene standards,” she explains. “It cannot go directly into the box without first being sealed.
“There are a couple of representatives from European suppliers of alternative packaging in the country at the moment, but this option is quite expensive and not local.”
Nizari believes new players would be successful if they lower their minimum order quantities. This would make their products viable for smaller businesses that don’t have the working capital for the large single orders currently required; often around 20,000 units per order.
To meet the demand of small businesses, a packaging company could raise its per unit cost slightly but gain loyal customers willing to pay if their order numbers can be smaller. “I don’t think the initial investment would be too high. It really is a great opportunity and I am not seeing enough interest,” she says.
Greater choice needed in Malawi
Malawi’s packaging suppliers are not meeting the demands and specific requirements from new and growing businesses in the country. According to Victoria Mwafulirwa, founder of Homes Industries – a processor of sunflower seeds, groundnuts and rice – this means companies are turning to imports to find what they need to get their products packaged and ready for the market.
“Packaging is definitely a business opportunity,” she notes. Mwafulirwa believes a packaging venture would not require a lot of start-up capital to get off the ground. “You don’t need to start big. If someone can just make the required packaging readily available – even through imports – and then grow it into a fully-fledged plant as the business expands; that would work,” she says. “The demand for packaging is so high. At the moment, we are making do with an imperfect system, so any way of getting the local businesses what they need is already a start.”
Homes Industries is looking at upgrading its packaging to ensure better visibility and awareness on the supermarket shelves.
“There is some low-hanging fruit. For example, everything in Malawi that comes in a bottle currently looks like it is using the same bottle; peanut butter, achar, you name it. Businesses would pay a premium per unit if only they could have more choice in packaging material.”
Mwafulirwa believes the opportunity exists across the board, whether it is large-scale or small-scale packaging, traditional or biodegradable.
Zambian retailers have high standards
In Zambia, too, one of the main problems for food processors is the lack of packaging solutions. For companies targeting supermarkets, there is low availability of higher-grade packaging that meets the strict requirements of formal retailers.
“This is one thing we have been battling for a number of years since we started the company in 2014,” says Rodney Miselo, CEO and co-founder of the Ronipam Group, a diversified company with subsidiaries in agro-processing and commodity trading. “And it’s not just us, it affects all food processors here.”
According to the CEO, there are only a few packaging companies available to local producers in Zambia. Despite being approved by Zambian regulators, these companies’ packaging does not meet the requirements of large supermarkets like Shoprite.
With no other solutions on offer, local companies are effectively shut out from high-end superstores that provide easy access to Zambia’s middle- to higher-income earners. “If you are going to sell to the local guy, they won’t know the difference. But it limits your access to affluent customers because they shop in Shoprite and, if your product cannot get into Shoprite, then you are out.”
As it stands, supermarkets in Zambia sell mainly imported goods that meet packaging standards from countries such as Zimbabwe, Kenya and predominantly South Africa.