Food and Drink sector in Ethiopia

An Expert's View about Food , Beverages and Tobacco in Ethiopia

Posted on: 5 Jun 2013

Demand for processed food and drink is growing rapidly due to rising incomes, favourable demographics and behavioural changes linked to urbanizations that are increasingly evident in Ethiopia.

Food and Drink sector in Ethiopia Demand for processed food and drink is growing rapidly due to rising incomes, favourable demographics and behavioural changes linked to urbanizations that are increasingly evident in Ethiopia. This is just beginning and will no doubt gather substantial momentum in the next five years. Market overview Demand for processed food and drink is growing rapidly due to rising incomes, favourable demographics and behavioural changes linked to urbanizations that are increasingly evident in Ethiopia. Economy-wide incomes, if proxied by real GDP growth, have been rising by 10 percent annually in the past 9 years and are set to rise by a somewhat reduced but still-high 8 percent in the coming years. Ethiopia has a huge population size (second largest in Africa, 14 largest in the world) and a very young demographic (44 percent of the population is under 15 and 73 percent under 30) which stands out favourably from the consumer goods space perspective. Adding to the impact of rising incomes and demographic changes, will be increasing urbanization and emerging living patterns evident across the country, most notably in the form of condominiums, organized neighbourhoods, and other high-density living arrangements. Ethiopia‘s urban population has, for instance, recently crossed the 10 million threshold according to national statistics, with 5.1 million of these employed and 2.5 million engaged in salaried, wage-earning occupations. Some illustrative examples on the combined effect of these favourable trends include the following: ξ Average annual per capita consumption of beer in Ethiopia is 4 litres against 12 litres in Kenya and 59 litres in South Africa. But demand for beer is expanding by 15% per annum. ξ The recent entry of two global multinational beverage companies – Diageo and Heineken, in to the domestic market, even if this meant paying higher premium prices to acquire state owned enterprises reveals also the opportunities available in the beer market. ξ The size of the market for pasta and macaroni is increasing by 20% per annum. There is also a huge potential to process wheat, maize, teff, and barley by-products for an urbanizing population with rising demand for products such as different types of bread, pastas, baby food products, and confectionery products. ξ Reflecting the still limited number of producers, edible oil imports have risen 24-fold from just $18 million in 1999 to $440 million in 2012. Despite a huge supply of different oil seeds, most of this is exported in seed form rather than consumed domestically as edible oils. Soft drinks are chronically in short supplies relative to demand, especially in areas outside the main cities. Key opportunities Key opportunities include: ξ Export of pastas, baby food products, dairy products and confectionery products. ξ Local Value addition and processing of many agro-commodities (cereal products, edible oils etc.); and ξ Establishment of packaging and other associated industries Latest export opportunities in the Food and Drink sector Latest export opportunities in Ethiopia Getting into the market Market entry: ξ Personal visits by company representatives for initial market surveys. ξ Contact with UKTI and local representatives knowledgeable about future plans and market potentials. ξ To conduct business effectively and participate in local tenders, it is advisable for UK companies to appoint local agents to represent their products in Ethiopia. More about doing business in Ethiopia
Posted: 05 June 2013

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