Partnership between Faffa Foods of Ethiopia and New Zealand dairy giant Frontera will introduce processing and packing the latter’s Anchor brand of powdered milk in Ethiopia starting in September 2015.
Anchor, the new brand will also fully replace the Abay brand, which Faffa had been packing using ingredients supplied by Fonterra.
The two entered into partnership forming New Zealand Milk Products Ethiopia with a 10 million dollar capital investment, 30pc equity owned by Faffa Foods Complex S.C. and 70pc by Fonterra. They concluded the deal in December 2014, according to Zeco Kassim, general manager of the new company.
As part of the deal, Fonterra brought in machinery from Japan and New Zealand, while Faffa contributed other machinery it had been using as well as 1,200sqm of land for the construction of the plant in Kality.
Faffa will benefit from the much higher production of the new company, replacing the very small amount of Abay milk that had so far been produced, says Zelalem Kumlachew, Faffa’s manufacturing director.
Faffa has been importing two containers of powdered milk a month, which is 50tn, while the new company, for the first year, has planned to produce 2,000tn of powdered milk a year. It will have an optimal capacity of producing 6000tn of milk a year by 2018, which will then be covering 45pc of the total national demand.
The new company will employ 120 people as well as 10 production and 15 sales experts, who will be coming from Sri Lanka to train the employees for one year.
For the next five years the company has also allocated 50 million dollars for expansion projects.
“Enabling Anchor Fortified Milk Drink to begin production as the first ever milk powder dry blending plant in Ethiopia will play a significant role in the national goal of ending child malnutrition by 2030,” said Mebrhatu Meles, state minister for Industry during the launching ceremony of the product held on August 16, 2015 at Sheraton Addis Hotel.
The press release issued by the company states that the product contains more than 30 nutrients essential for a child’s growth and development, including protein, calcium, vitamins A and D, iron and zinc.
Products that are suitable for children older than one year will have 60pc of the inputs imported from New Zealand and the rest will be sourced from the local market.
New Zealand Milk Products says it will spend five million dollars to promote the product in Ethiopia. This will be invested in media promotion, door to door advertisements, and billboards. The promotion will use 200 actresses that are designated brand ambassadors. The money will also be used to conduct marketing.
“Prices will be cheaper than other products in the market as our primary goal is to make the product accessible through affordability,” Zeco told Fortune.
The company expects to sell 30 million dollars worth of powdered milk in its first year, Zeco says. In three years it expects to start packaging liquid milk with an investment of 30 million dollars.
The Anchor brand is known in 140 countries worldwide, including neighbouring Sudan and Somalia, as well as Egypt. New Zealand Milk Products Ethiopia plans to export 20pc of its annual production to other African countries in which Anchor products are not yet available.