Tuesday, February 15, 2011

Zambian Beef Processor Expands to Nigeria to Cater to New Tastes as Incomes Climb

Have you been reluctant in making that decision to do business in Nigeria or elsewhere in Africa? Then, read the success story of a Zambian farmer that took the plunge two years ago. Story was by Will Connors, Wall Street Journal Reporter in Lagos, Nigeria.

In a brief discussion with him at the 50th independence anniversary of Benin Republic in Lagos, he came across to me as someone with great hope in the future of Africa...Now he is showcasing the continent in his Africa Rising series for Wall Street Journal. Well done! Ndudi Osakwe

Zambian Beef Processor Expands to Nigeria With Aim of Spreading Out Across the Continent.

IKENNE, Nigeria—After driving two hours—skirting truck-size potholes, fording a flooded town and dodging a body—Pieter Swanepoel arrives at a dilapidated farm about 50 miles from Lagos, Nigeria. He has reached the launching pad for Zambeef Products PLC's $10 million expansion into Africa's most populous country. A few hundred yards from where the South African accountant stands, neat rows of soybeans grow and a new meat-processing facility buzzes with activity where once there was a collection of derelict buildings. "There was sweet blow-all in terms of infrastructure," he says.

Under Mr. Swanepoel's leadership over the last two years, Zambeef has built an efficient supply chain and opened a handful of bustling retail stores in one of Africa's toughest but most promising markets. His goal is to turn the Zambian meat-and-produce company into Africa's Coca-Cola for meat, with Zambeef's Master Meats brand in shops and market stalls across the continent.

With annual revenue of $162 million, Zambeef is a bite-size example of companies small and large expanding in Africa, transforming the world's next billion-person market in similar ways to how earlier economic booms changed China and India.While U.S. and European companies are waking up to the continent's accelerating growth, scores of African companies like Zambeef also are expanding.

Telecommunications company MTN Group Ltd. has scooped up 116 million subscribers in 21 African countries on the continent from its headquarters in South Africa. Nigeria-based Dangote Cement PLC has acquired land and opened plants in Ghana, Cameroon and Ethiopia. Togo-based Ecobank Transnational Inc. set up branches in 30 African countries, doubling its presence in five years.

While the economies of U.S., Europe and Latin American contracted in 2009, Africa's grew. The International Monetary Fund in October forecast that growth in the 47 countries of sub-Saharan Africa will reach 5.5% this year. That growth is creating legions of consumers.

Around 10 million Nigerians moved into the middle-income bracket, meaning they could buy more than just necessities, in the past five years, according to an estimate by London-based private-equity firm Actis LLP. Nigeria's estimated $9 billion market for red-meat products is the continent's second biggest, after South Africa, according to a recent study sponsored by the British government.

Zambeef expects that as the middle class in this country of some 150 million people grows, so, too, will the number of people shopping in Western-style stores. The company hopes to lure customers used to buying meat in open-air markets by offering clean, packaged products while charging only slightly more than the markets. While a pound of beef might cost around $4.10 at a Lagos open-air market, Zambeef might charge about $4.75.

Multinationals also have high hopes for Nigeria. "We see Africa, with its one billion inhabitants, as a continent of limitless possibilities," Nestle SA Chief Executive Paul Bulcke said last week as he opened an $80 million factory in the same state as Zambeef's farm.

No one, however, is discounting the perils of investing in a continent rife with corruption, short on dependable infrastructure and heavy with unstable governments, as Northern Africa has shown in recent weeks.

Mr. Swanepoel's experience as Zambeef's managing director in Nigeria shows that doing business in Africa will be just as messy as in other emerging markets. To deal with an unreliable power supply, Zambeef runs its equipment here on its own diesel-powered generators 24 hours a day at a cost of tens of thousands of dollars a month. As he travels among Zambeef's 11 stores and plants, Mr. Swanepoel (pronounced SWAH-nuh-pole) spends several hours a day stuck in Lagos traffic jams.

"A lot of the time you say to yourself, 'My god, how can we make this work?,' " Mr. Swanepoel says. "But eventually you figure the puzzle out. In Nigeria, you need logic and lots of patience. A bottle of good wine doesn't hurt, either."

For more on the Africa Rising series go to: http://online.wsj.com/article/SB10001424052748704422204576130064161822374.html

By WILL CONNORS, Wall Street Journal / Dow Jones Newswires Correspondent
Lagos, Nigeria

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