Beer, flour drive N93bn investment in food, beverage industry

Beer and flour segments have posted robust performances in the first half of 2014, having largely driven the N92.67 billion worth of investments recorded in the food, beverages and tobacco industry within the period, the Manufacturers Association of Nigeria (MAN) has said.

“As usual, the food, beverages and tobacco group took about 19 percent of the total share, with the group’s activities highly driven by the beer and flour mills, as well as confectionery subsectors,” MAN says, in its January to June 2014 Economic Review.

The food, beverages and tobacco group comprises segments such as beer, starch, flavouring, soft drinks and carbonated water as well as flour and grain milling. Others are tea, coffee and other beverages, dairy products, fruit juice, tobacco, biscuits and bakery products, animal feeds, sugar, distillery and blending of spirit, cocoa, chocolate and sugar confectionery, vegetable and edible oil, as well as poultry.

Key players in the beer group that made these investments are the Nigeria Breweries plc, Guinness Nigeria plc and SABMiller.

SABMiller, a recent entrant into the brewery industry, has invested hugely in its Onitsha, Anambra State, plant. In January 2014, the firm pledged to triple its production capacity at the plant with an investment of $110 million.

“We are targeting a 4 percent to 10 percent market share in Nigeria over the medium term,” Alan Clark, SABMiller CEO, said in an interview, during the World Economic Forum (WEF), in Davos, Switzerland.

Guinness Nigeria had, before the period under review, invested $225 million (N55bn) into its Ogba and Benin City breweries.

In the flour milling segment, Flour Mills of Nigeria (FMN) plc has been on the lead. It announced plans to invest $1 billion between three and five years to expand into the West African sub-region.

In November 2014, the firm unveiled Golden Penny Multi-purpose flour, a bread and baking flour, which is a combination of wheat flour and 10 percent high quality cassava flour.

During the event, Paul Gbededo, group managing director, FMN plc, said the company had significantly invested in some food and agro-allied value chains to align with government’s Agricultural Transformation Agenda (ATA), create group synergies, support and protect supply chains of its core food business while also ensuring long-term sustainability.

He said the firm had acquired Thai Farms in Ogun State for the cultivation and production of cassava tubers.

The firm has an ultra-modern 70,000MT integrated Eastern Feed Mills in Calabar, Cross River State.

John G. Coumantaros, chairman, Flour Mills plc, disclosed that the mill is the largest in sub-Saharan Africa, with capacity to create 1,000 direct and indirect jobs.

Honeywell Flour Mills (HFM) recently unveiled a milling plant in Lagos , built at a the cost of N10 billion. Its automated warehouse has a capacity to hold about 100,000 bags of 50kg flour. The flour milling giant has also invested nearly N1 billion in modifying its plants to add high quality cassava flour to the composite flour it currently produces, Real Sector Watch has learnt.

It likewise has wheat storage capacity of about 42,500MT, with a monthly usage of about 40,000 metric MT.

The state-of-art facility has upgraded Honeywell’s production capacity by 63 percent. The firm further plans to build a 66-hectare Flour-gate Estate in Ogun State, which will house new factories for the production flour and pasta, a recent statement by the company said.

Confectioners such as Cadbury Nigeria plc and Deli Foods, United Biscuits, among others, have also been expanding operations.

In February 2014, United Biscuits acquired a state in A&P Foods in the viable Nigeria’s biscuit market.

“The (Nigerian ) market has strong potential for United Biscuits,” said Jeff van der Eems, after the deal.

ODINAKA ANUDU