As part of its strategy to accelerate growth in markets outside of Europe, dairy cooperative, Arla Foods, announced it has extended its reach in West Africa with the formation of two joint ventures with the Tolaram Group in Nigeria, and the Attieh Group in Senegal.
As sub-Saharan standards of living improve, incomes increase, and food tastes shift, West African consumers are beginning to demand safe, high quality food products, giving Arla the opportunity to gain early market share.
The resulting entities, TG Arla Dairy Products LFTZ in Nigeria and Arla Senegal will assume the packaging marketing, sales and distribution of Arla products in Nigeria and Senegal.
This is not the first time that Arla has pursued expansion in Africa through a local joint venture. In August 2013 Arla joined with Ivorian distributor, Mata Holdings.
“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 Nigeria and Senegal,” says Steen Hadsbjerg, head of the sub-Saharan Africa business for Arla.
Currently, Arla has sales in the sub-Saharan African market of €90 million, with €80 million coming from its Nigerian market alone, but is targeting sales of €460 million by 2020 through the concentrated increase in sales of liquid milk, its Dano brand powdered milk, and in the future, the sale of cheese and butter.
“Nigeria is one of the biggest markets for dairy products in Africa,” says Hadsbjerg. “For Arla to succeed in Africa we must succeed in Nigeria. The population is growing at a rate of two to three percent per year, and people are young, ambitious, and increasingly well educated. This makes Nigeria a perfect market for Arla’s Africa strategy…”
After the establishment of its joint venture with Tolaram, Arla expects its Nigerian revenue to increase to €240 million by 2020, and following the establishment of its venture with Attieh, the cooperative expects its revenues in Senegal to increase to €32 million over the same time period.