M a r k e t N e w s

Pioneer Foods enters East African cereal market

Posted on : Tuesday, 22nd November 2016

 JSE listed Pioneer Foods is acquiring a 49.8% interest in UK food processing company Weetabix’s East Africa distributing company.

 

The Kenya-based company has been in operation for over 40 years and has about 13 brands in its portfolio. Last year, the business invested £1.6-million in a capacity upgrade programme at its facilities, giving it 60% more capacity.
 
Weetabix East Africa produces about 12 t of cereal, or 670 000 cereal biscuits, a day.
 
The acquisition offers Pioneer Foods, which owns brands such as Liqui-Fruit, Bokomo and Sasko, the opportunity to build a significant breakfast position in the region by targeting consumption growth of Weetabix, which enjoys a significant market share of 76.3% in Kenya and is available in one in every three outlets in the country.
 
Sales revenue for Weetabix East Africa saw a compound yearly growth rate of 14% between 2011 and 2015, despite facing an erratic economic environment, a depreciating local currency and higher operating costs.
 
In 2005, the company introduced single-serving packs of Weetabix to cater for the market that could not afford larger packs. In the first year, it sold 3 000 cases while today it sells 30 000 cases a month.
 
Meanwhile, Pioneer Foods said the breakfast product portfolio will be expanded over time, highlighting that Weetabix East Africa also exported to neighbouring countries.
 
The transaction is subject to Kenyan regulatory approvals.

Source : www.engineeringnews.co.za
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