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CSM enters African market with new alliance

By Jane Byrne , 17-Jan-2011

Leveraging its proficiency in nutrient fortification is one of the objectives of CSM’s newly announced foray into the African bakery market.

The global company claims a joint venture with Tunisian bakery ingredients supplier, GIAS, will provide it with access to a distribution network serving key markets in the continent.

A communications spokesperson for CSM told BakeryandSnacks.com that its complete ingredients portfolio along with its expertise in fortification would be exploited to the full in this market to improve the nutrient intake of African consumers.

Programmes such as the Flour Fortification Initiative, which is a multi-governmental and international agency supported effort to enrich flour with nutrients such as folic acid and vitamin A, are well underway in Africa.

The current poltical crisis in the country would not damage the plans of the newly formed partnership, continued the spokesperson, when questioned on the implications of the country's turmoil for the nascent alliance.

"We see this as a long term investment, with the expected reach of the joint venture to be wider than the Tunisian market," she added.

GIAS, part of the Slama group, has a leading position in bakery ingredients and margarines in North Africa. Operating since 1983, with an annual turnover of €30m, its ambient distribution activities include a partnership with Kraft Foods.

CSM chose its new partner, continued the spokesperson, based on the Tunisian firm’s critical local market knowledge in a continent where diversity rules, in addition to its well established supply chain links in countries such as Libya, Algeria, Mauritania, Guinea, Congo, and Angola.

“Forging alliances with local producers and distributors plays a pivotal role to entry in new markets, particularly in a region with little uniformity in baked good consumption patterns,” she observed.

Meanwhile, according to industry analysts, expanding sales in this region might prove a key strategy for both bakery ingredient suppliers and manufacturers in overcoming current market maturity in regions such as North America and Western Europe.

Euromonitor International predicts that sustained economic and demographic growth will continue to drive sales of bakery products in the Africa and Middle East region. The analysts forecast that sales of these products will grow by 11 per cent in retail volume terms over the 2010-2015 period.

This will be well above the predicted average growth at world level (+7 per cent), continue the market specialists.

While basic staples such as artisanal bread are likely to maintain a firm grip on sales, Euromonitor expects the gradual expansion of semi-premium and health lines from upper-tier to lower-tier cities.

“Although this premium trend is set to consolidate the current divide in the market between rural and urban areas, it will provide bakery manufacturers with a 'golden opportunity' to invest in high added-value products,” comment the analysts.

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