Africa and Nigeria are the two countries where a quarter of the population of Africa lives.
The Johannesburg-based company has reached a preliminary agreement with a partner for a factory in Ethiopia and is now seeking financing for a project with a potential cost of $68 million, Chief Executive Officer Andre de Ruyter, 47, said recently in an interview. That will help supply drinks makers including brewer Heineken NV and soft drinks producer Coca-Cola Inc, he said. Nampak has also “made good progress” on a Nigerian factory, the CEO said.
“Africa is the story for us,” De Ruyter said. “People talk about Latin America, they talk about India, China or other emerging markets, but we think the opportunity that we’ve got in Africa is so big and this is what we know we can do well.”
Consumer-goods companies such as US retailer Wal-Mart Stores Inc and brewer SABMiller Plc are expanding in Africa to take advantage of economic growth and rising household incomes. Many people in the sub-Saharan region are moving away from subsistence existences and becoming consumers of packaged goods for the first time, according to De Ruyter, creating a growing market for can and bottle manufacturers. Nampak is also the continent’s biggest maker of beverage cans.
“There’s a youth bulge of people reaching drinking age” in Africa, De Ruyter said. Producing glass bottles and cans “makes a lot of sense.”
Nigeria, with a population of about 177 million, has 44 per cent of its population under the age of 15 while 46 per cent of Ethiopia’s 97 million people are below that age, according to U.S. Census Bureau data. That compares with 16 per cent of the 403 million people who live in the euro area.
Nampak is expanding outside of South Africa to help reverse declining profit margins in its home market, where it’s cutting costs.