Take a powder
Powder has been in the news this week, as Switzerland’s Hochdorf buys dairy powder Pharmalys, and Irish concern Ornua purchased CoreFX Ingredients in the US. This is giving both companies access to the ever-increasing sports nutrition and baby formula markets, both are seeing strong growth globally.
Interestingly, the Hochdorf buy also ties into a forming of an African subsidiary – which, as we’ve recently in reports from Rabobank, is an area of much interest. Powder production is a natural in a continent where a large portion of the chill chain can’t be guaranteed. As Peter Mwaniki Ngaruiya, executive director of the Eastern and Southern Africa Dairy Association, notes, “The economic growth, coupled by urbanization and population growth in sub-Saharan Africa continue to drive the demand for milk and milk products. Milk production is also growing albeit slower than the demand for milk.
“These opportunities have elicited a lot of interest from multinational who have invested in the region either by taking over existing businesses, merging with local companies or establishing operations from scratch.”
Kevin Bellamy, a dairy strategist for the food and agribusiness research team at Rabobank reported at the IDF World Dairy Summit that Africa is not a monobloc when it comes to looking at dairy. In eastern Africa, growth in milk and dairy consumption is higher, with Kenya at 93 litres per capita annually as a frontrunner, followed by Uganda at 42 litres. Meanwhile Ngaruiya notes that despite tough times caused by a dip in commodity prices, sub-Saharan Africa will be seeing 3.4 per cent economic growth, which much higher than developed economies.
It seems that dairy companies are gearing up for moves into areas where there the increased urbanisation and younger demographic are a good fit for the qualities of dairy products no matter what format it arrives in.
