It has been four years since South African consumer goods and foods group arrived in Ethiopia. In its African expansion strategy it took a huge step to impact the African market with an African brand. Signing an agreement with the East African Group of Ethiopia in 2010 it established a new food, household and personal care and cosmetics joint venture which has been operating in the booming new East African market—Ethiopia. Acquiring 51 percent of the joint venture, the continent’s largest consumer goods and foods group has begun its strides towards building an African trademark. The East African Group is the largest manufacturer of detergents in Ethiopia, and this business will also form part of the joint venture. The acquisitions are expected to generate a combined annualized turnover of approximately 665 million birr in the first year. Henok Reta of The Reporter caught up with Joachim Yebouet, CEO of East African Tiger Brands—Ethiopia, to discuss the African market. Excerpts:
The Reporter: What attracted Tiger Brands to come here when you already have a big market in Kenya?
Joachim Yebouet: Ethiopia, which has a population of approximately 90 million, has experienced high GDP growth rates for a number of years. Most categories in the packaged consumer goods sector are enjoying good growth, stimulated by the fast- growing economy. So, our presence here is significant in terms of benefiting from the growing economy and carrying out our social responsibility in a sense of pan-Africanism. Our market in Kenya is doing well this time as well but Ethiopia is considered to be the new emerging market in the region.
What was the result of your assessment of the local market and how is the feed-back?
Well the market has been very positive for the last few years and our business is not something new to be introduced to Ethiopia. Moreover, we had learned that more imported goods are dominating the market here so that our decision was right, I would say.
What makes African companies different from the rest of those who came from the West or the East?
I hope this is not comparing the quality or the standard of African companies and others outside Africa. Since we are still struggling to maintain pace with the developed world we need more quality production and standard application. However, we are different when we are African. This is our continent and we share more common culture, identity and history. When we do business here, we have to make that we are not here for business only. There are more things we have to look at. We should work in the pan-Africanism spirit here. We have to assist our people and we need to have an Afro-talent mentality with universal standards and values. So, I would say this makes us different from others coming from outside of Africa.
We should share the problem here and we always want to remain closer to the larger public more than the profit we aim to make here. Usually, these companies coming outside Africa don’t worry much about the problems our people have been having for many years and they are keen on giving more attention to the business. But I think African companies have to be different in this regard and Africans are the ones who should work hard for their own development and prosperity.
What is the ultimate goal you have towards the African market?
I think our ultimate goal should always be adding value to the local production. We have been making it in South Africa, Nigeria and a few other African markets. And we need to expand that concept all over the continent and want to inspire other African companies be able to keep that notion up. This time, we are witnessing the more African investors are taking initiatives to take part in the growing African market but the ultimate goal of the business should always be the same among the bigger and smaller ones.
Your area of focus is producing personal care and cosmetics products here. What about food and other brands?
Yes, we are still producing detergents and cosmetics here so that we can make the brand familiar with the people. If you know some of our brands like hair food and soap they have already become familiar brands throughout the country. When the brands for soap and cosmetics are associated with the community then we will expand to other products.
These days the country is seeing more entrepreneurs in cities and most of them are producing liquid soaps at home. How much do you support them? Can you take them as real contenders with your business?
We have not yet started training and supporting these youth to open their small industries but the plan is to enroll them into our on-the job training and capacity building schemes. Once we are able to do that then they can emerge as real contenders with our business. We have created jobs for those youth who have some traditional knowledge of preparing those products and, of course, for the university graduates who have educational skills.
Last year you donated sanitary products to the Bishoftu Hospital in the Oromia Regional State where your factory is located. The products are to be used for a year. Was it part of your social responsibility? Would you elaborate on that?
Yeah, we did that and that is our company’s basic business principle. We are in the community and the community is with us. So we have to see what the community lacks. Many people of Africa live without access to basic necessities and our mission should be assisting some of these people to get access to water, health and some agricultural inputs to feed themselves. In this regard, the Bishoftu Hospital has long suffered from lack of these sanitary materials which should have been available anytime there.
Moreover, we assisted members of the community to get clean water. This is not the only way we engage with the community. We would also like to take part in their cultural and social activities. This will increase our acceptance much more than offering assistance.
You have been here for the past few years since production kicked off in the factory. Can you compare the Nigerian and Ethiopian markets since they are the two most populous nations in Africa?
With its large population and a strong and growing consumer market, Nigeria offers excellent growth opportunities for fast moving consumer goods companies. The Deli Foods acquisition is therefore seen as a first step in entering this important market. In Ethiopia, we are seeing a huge potential to boost our brand and it has been so good so far that the size of the population is so big to get more impressive market but it would take a few more years to figure out the impact of population size in comparison with Nigeria. Tiger Brands believes that the proposed transaction with all African partners will provide the two partners (Nigeria and Ethiopia) with a sound strategic platform which will mutually benefit the respective parties. The two markets can share experiences, skills and expertise in the manufacture, marketing and distribution of branded food and beverage products in emerging markets.