Pioneer Foods enters East African cereal market
JSE-listed Pioneer Foods is acquiring a 49.8% interest in UK food processing company Weetabix’s East Africa distributing company.
The Kenya-based company has been in operation for over 40 years and has about 13 brands in its portfolio. Last year, the business invested £1.6-million in a capacity upgrade programme at its facilities, giving it 60% more capacity.
Weetabix East Africa produces about 12 t of cereal, or 670 000 cereal biscuits, a day.
The acquisition offers Pioneer Foods, which owns brands such as Liqui-Fruit, Bokomo and Sasko, the opportunity to build a significant breakfast position in the region by targeting consumption growth of Weetabix, which enjoys a significant market share of 76.3% in Kenya and is available in one in every three outlets in the country.
Sales revenue for Weetabix East Africa saw a compound yearly growth rate of 14% between 2011 and 2015, despite facing an erratic economic environment, a depreciating local currency and higher operating costs.
In 2005, the company introduced single-serving packs of Weetabix to cater for the market that could not afford larger packs. In the first year, it sold 3 000 cases while today it sells 30 000 cases a month.
Meanwhile, Pioneer Foods said the breakfast product portfolio will be expanded over time, highlighting that Weetabix East Africa also exported to neighbouring countries.
The transaction is subject to Kenyan regulatory approvals.
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