fbpx

Attracted By High Margin Indian Dairy Firms Beeline To African Markets

Attracted By High Margin Indian Dairy Firms Beeline To African Markets

India is the world’s largest milk producer with a production of about 140 million tons each year, but even with this dairy firms from the Asian nation of over a billion people is looking for better margins for their produce in African markets.

Demand for milk has surged in Africa over the recent years as more people leaving farming in rural areas and head to urban areas in search for better jobs and income levels rise in line with improving economic activity.

Indian firms, like many other global dairy giants, are looking for acquisitions across Africa to consolidate their market share through aggressive buyouts.

According to the World Dairy Summit 2012, Africa’s food and beverage consumption could to reach $544 billion by 2020 from $175 billion in 2010.

Two Indian firm, Hyderabad-based Dodla Dairy and Punjab-based Amos Dairy, have already set up processing plants in East Africa.

“African expansion will help us understand new markets and help expand our presence globally,” Dunil Reddy, managing director of Dodla Diary, a company that raised private equity in 2012 and entered the Ugandan market through an acquisition in 2014, told Economic Times.

“The profit margins will be at least double in Uganda compared to India.”

Another Indian milk company in Uganda sold out to Brookside Dairy, Kenya’s largest dairy firm owned by President Uhuru Kenyatta’s family, earlier this year.

Yet another Indian diary firm, Parag Milk Foods, that exports its products to African markets, is weighing the option of entering the market with a processing plant, its chief executive Mahech Israni told Economic Times.

“Kenya is a big market and is a milk deficit country and Rwanda, South Sudan and Congo offer similar opportunities,” Punit Pruthi, managing director at Amos Diary, said.

“In fact, West African economies, which heavily depend on milk imports, also offer attractive business opportunity but we need to compete with the strong European brands.”