What Kelloggs’ spread to other African countries really mean


In January, Kelloggs partnered with Egyptian biscuit company, Bisco Misr, to extend their services to Egypt. As at January 12, 2015, Kelloggs had completed acquisition of majority stake for up to 85.93 per cent in Bisco Misr. Then in May, the latter company’s shareholders took a decision to de-list from Egypt’s stock exchange.

Now, Kelloggs has partnered with Tolaram Africa foods, which owns 49 percent of Dufil Prima, the makers of indomie, mimmie snacks, power oil and power pasta. Other countries  of interest for the multinational food company include Nigeria, Ghana, Ivory Coast, Democratic Republic of Congo, Cameroon and Ethiopia.

The company will buy a 50 per cent stake in Lagos based Multipro for $450 million. Multipro was established in 1997, and has a strong sale and distribution infrastructure in Nigeria. It provides access to approximately 1,000 exclusive distributors, 2600 employees, and operates 19 warehouses across six locations.

In recent years, more foreign multinationals are expanding their businesses to Africa, as the continent is forecast as a fertile ground for business growth. As a result, indigenous Fast Moving Consumer Goods companies like Nasco, might take a direct market hit as they have been one of the major providers of breakfast cereal for West African consumers. Nestle is another cereal company currently providing breakfast options for West Africa and Central Africa. A regression may not necessarily occur in their profit margin because they are also makers of beverages.

What the spread to other parts of Africa could mean for Kelloggs

Nigeria has the largest economy on the continent, this could boost profit margins for Kelloggs. Although, Ghana has recently joined the list of HPIC (Heavily Poor Indebted Countries), business could still be profitable for the company. A business analyst, Samuel Ampah says, that hitting a debt to Gross Domestic Product ratio of 70.4 per cent is not as problematic if the monies owed are used for profitable ventures.

Brand name is one of the reasons why foreign companies who offer same products as indigenous companies in Africa, often do better than the latter. Kelloggs also offers a wide variety of breakfast cereal for consumers and this will aid in the build-up of a strong consumer base in sub-Saharan Africa.

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