…as multinationals make strong push into African food market
By Ada Anioji
Workers within the employ of the pan-African food giant, Promasidor, in Nigeria and elsewhere are slowly adjusting to the entry of the Japanese seasoning giant, Ajinomoto into their turf, The Difference checks have revealed.
In what is clearly a record deal in the sector that was conducted at the close of 2016, the Japanese deriving confectioner which had already established a toehold in Nigeria with its MSG seasoning brand, had signalled its intention to push even further into the 1.1 billion consumer African food market with a massive $532 million investment in Promasidor.
With this, Ajinomoto took a hefty 33 per cent stake in the Johannesburg-registered firm which however has its largest market in Nigeria where its brands like Cowbell and Top Tea are already very well accepted household products.
Faced with a crippling recession and with a very huge food import bill, a number of food producers have lately been making strong forays into aligning with the current moves in Africa’s biggest economy to improve on its food security situation through boosting local production efforts. Some other firms that have already entered into the lucrative sector are Olam, Coscharis, Erisco and the Dangote Group.
Analysts however say that much beyond the Nigerian market, Ajinomoto may presently be tapping into a developing trend where global multinationals, sensing a renewed boost of pan-African political and economic cooperation are already taking positions on the collective pan-African economy so they can tap into the growing potential offered by this development. Other than Ajinomoto, firms like Uber, UBA, Dangote and Orange telecoms have also recently boosted their stakes in the continental market arena.
In undertaking its landmark investment in Promasidor in November, the Japanese food and ingredients maker was signalling its intention toward becoming a top-10 global food company.
In that particular exercise, it had successfully bidded against the likes of PepsiCo and the price paid even then established the total value of Promasidor at about $1.6 billion, which is 16 times Promasidor’s earnings before interest, tax, depreciation and amortization (EBITDA).
In the view of market analysts, this sum is clearly much higher than several other deals in the African food and drink sector, which have included the purchase of a stake in Nigerian drinks company Chi by Coca-Cola and in Nigeria’s Multipro by the US-originating Kellogg.
Before now, Promasidor operated mainly in Nigeria, Algeria, Ghana, the Democratic Republic of Congo and Angola with its star offerings being powdered milk and drinks, seasonings and other food products.
The purchase of the current stake gives Ajinomoto access to a large distribution network that spans 36 countries in Africa and it is through this vast network that Ajinomoto hopes to score its enhanced distribution targets.
Indications that the new pan-African thrust does indeed have some pragmatic political mettle was confirmed in August 2016 when the African Union introduced a new pan-African passport regime that inaugurated a new regime of visa- free movement of Africans across the continent, with member nations given two years to ratify and implement same within their immediate jurisdictions.
Beyond the acquisition however, the jury is still out on whether the move will in any way help Ajinomoto to mitigate long-running criticism over the ‘health deficit’ that critics have continued to impute onto its flagship MSG brand.
For example, the firm’s association with the Kuala Lumpur Games 2017 where it is signed on as title sponsor is being resisted by critics who query ‘how to build sport with this brand?’
On the company side however, it is affirming that the association ‘will be a great platform for Ajinomoto to further create the brand experience to over 622 million people in the region, affirming that ‘Ajinomoto will be supplying its food products and nutrition to cater to the food and beverages needs during the @KL2017 Games.’
Promasidor President, Takaaki Nishii