French dairy producer Danone is continuing its push into Africa with a $25m investment, together with private equity firm Abraaj Group, in west Africa-based Fan Milk, the companies said on Tuesday.
The investment in Fan Milk’s Ghana business will help the company meet growing demand for yoghurt and other dairy products in west Africa’s second-biggest economy. In June, it will launch FanMaxx, a new vitamin-enriched yoghurt drink with a four-month shelf life.
Danone, the world’s largest yoghurt maker, anticipates demand for dairy in sub-Saharan Africa will increase steadily in the coming decades. It has spent more than €1bn since 2013 building a production and distribution network across the continent through acquisitions in countries from Kenya and Nigeria to Ivory Coast.
The group, which reported a 2.9 per cent rise in like-for-like sales last year, the slowest pace in 20 years, is searching for new avenues of growth in emerging markets and the US.
Last year, revenues in the Asia-Pacific, Latin America, the Middle East and Africa region rose 6.7 per cent on a like-for-like basis to €8.8bn, and accounted for 41 per cent of Danone’s group sales. Revenues in Africa hit €1.4bn last year.
Despite the severe slowdown in Africa’s largest economies sparked by the collapse of oil prices in 2014, Danone remains bullish about its own growth prospects on the continent.
Pierre-André Térisse, Danone’s executive vice-president for Africa, said the company was close to meeting its target of 20 per cent annual revenue growth in west Africa until 2020.
“Everything we’ve seen has been a confirmation of our strategy, even though we are facing volatility in some markets” including Nigeria and Egypt, he said.
Abraaj, a private equity fund based in the United Arab Emirates, has investments from consumer goods to infrastructure across Africa.
In 2016, Danone became the majority shareholder in Fan Milk, which also operates in Nigeria, Ivory Coast, Ghana, Burkina Faso, Togo and Benin. It initially acquired 49 per cent of the company, in 2013, while Abraaj bought 51 per cent.
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