Scandinavian dairy cooperative Arla Foods has announced two new distribution joint ventures with Nigeria’s Tolaram Group and Senegalese company Attieh Group, as it seeks to expand its presence in West Africa.
The move is part of Arla’s strategy to develop new markets outside the European Union (EU) and marks another step towards the company’s ambition in sub-Saharan Africa to grow its annual revenue by more than 400% – to around €460m – during the next five years.
It includes an entry to the Senegalese market for the first time, where Arla expects that the partnership with Attieh, to be known as Arla Senegal, will build annual revenues of €32m by 2020. The joint venture will handle packaging, marketing, sales and distribution of Arla products in Senegal, and is expected to be operational by the end of the year, Arla said.
Denmark-based Arla will also bolster its position in Nigeria, described as “a crucial market for Arla in Africa”, with the announcement of a second joint venture with Tolaram Group. Arla’s current business in Nigeria – Africa’s most populous nation – turns over approximately €80m every year and is built on various distribution agreements. By placing all of its current and future business into the new partnership, the firm expects to grow this to around €240m by 2020.
Both ventures will concentrate initially on powdered milk and liquid milk, which is in high demand among the countries’ rapidly growing middle classes and urban population, before expanding to cover butter and cheese.
Steen Hadsbjerg, head of Arla’s business region in sub-Saharan Africa, said: “Nigeria is one of the biggest markets for dairy products in Africa. For Arla to succeed in Africa we must succeed in Nigeria. The population is growing at a rate of 2–3% per year, and people are young, ambitious and increasingly well educated. This makes Nigeria a perfect market for Arla’s Africa strategy, and we expect the new joint venture to start up its sales in the market in September.”
“With the improved living standards, families are increasingly demanding safe and affordable nutrition. West Africa faces a milk deficit, which gives Arla an opportunity to provide milk powder and other dairy products that meet the consumers’ needs. We are here to build a long-term business, and that requires strong local partners. We are therefore pleased to join with two experienced partners in Senegal and Nigeria.
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