Kellogg’s Strengthens Presence in Africa with $420million Investment

The $420million investment comes from Kellogg’s option to acquire a stake in packaged food manufacturer Tolaram Africa Foods (TAF), a subsidiary of Tolaram Group.

Image: Raihana Asral / Shutterstock.com

 

The $420million investment comes from Kellogg’s option to acquire a stake in packaged food manufacturer Tolaram Africa Foods (TAF), a subsidiary of Tolaram Group.

Kellogg’s formed a joint venture agreement with Singapore-based Tolaram in 2015, which saw both companies take a 50% stake in distributor Multipro, with part of the deal stating that Kellogg’s had the option to acquire a stake in TAF in the future, which it has now exercised.

President of Kellogg’s Asia-Pacific, Amit Banati said: “We have been delighted with our partnership with Tolaram. Multipro is an unrivalled distributor in West Africa, with best-in-class logistics and consumer activation capabilities.”

He added: “Our investment in TAF links us to a leading packaged foods company in that market, with key brand building capabilities and share leadership in the noodles category.”

Tolaram Africa Foods operates a distribution channel allowing it to have access to several other countries such as Ghana, DR Congo, Côte d’Ivoire and Ethiopia.

The investment will enable Kellogg’s to strengthen its presence in Africa and give greater access to the African market.

In addition to the producers of the world’s top cereals, Kellogg’s is also the world’s second-largest supplier of biscuits, crackers, and salted snacks, and operates popular brands such as Corn Flakes, Keebler, Pop-Tarts, Special K, and Pringles.

Amit Banati added: “Together, with Tolaram, we are excited about the potential to expand cereal and snacks across West Africa, and noodles across the entire continent.”

In partnership with Tolaram Africa Foods, Kellogg’s is seeking to diversify its business and find other solutions to address the dropping demand for cereal in the US by catering to the needs of the African market.

Kellogg’s Chairman and Chief Executive Officer, Steve Cahillane, said: “Expansion in emerging markets is an important element of our growth strategy.”

He added: “Africa offers incredible growth opportunities, and our experience partnering with Tolaram over the past couple of years have confirmed that we have a strong relationship, attractive brands, local expertise, and a proven business model.”

As Americans are turning away from cereals and looking to replace their cereal mornings with Greek yogurt, now a popular breakfast choice in the United States, the Kellogg’s investment will additionally, compensate for the drop in demand of cereals in the American consumer market by focusing on the expansion in West Africa.

The move to invest in Nigeria’s Tolaram Africa Foods, will allow Kellogg’s to focus on growing its snack brands in the international markets, an alternative to the reliance on sales of cereals in the US.

Amit Banati added: “Together, with Tolaram, we are excited about the potential to expand cereal and snacks across West Africa, and noodles across the entire continent.”

In the first three months of its 2018 financial year, Kellogg’s achieved a turnover of $3.4billion and a $444million net income, compared to $266 million a year earlier.