Breakfast cereal maker Kellogg to invest $450m to tap African market

North American breakfast cereal maker Kellogg has agreed to pay $450m for a 50% stake in Multipro, a Nigeria-based food sales and distribution company that is owned by Singapore-based Tolaram.

Additionally, it is establishing a joint-venture with the African unit of Tolaram to advance its offerings in the West African region.

Besides acquiring a 50% stake in Multipro, Kellogg will have the option to buy a stake in Tolaram’s African unit, called Tolaram Africa Foods.

Tolaram Africa Foods has a 49% stake in Dufil Prima Foods Plc, the manufacturer of Minimie snacks, Power oil, Power pasta, and Indomie noodles.

Multipro, which was set up in 1997 in Lagos, has a strong sales and distribution infrastructure in Nigeria, offering access to around 1,000 distributors, and operating 19 warehouses across six locations.

Additionally, it is setting up distribution networks in other core African nations, such as the Democratic Republic of Congo, the Ivory Coast, Cameroon, and Ethiopia. This distribution network will help Kellogg to market snacks and breakfast items to the West African market.

The world’s leading breakfast cereal producer expects costs related with the Tolaram transaction to cut down its third-quarter earnings by one US cent per share.

Kellogg Company chairman and CEO John Bryant said: "As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next 10 years, Sub-Saharan Africa provides tremendous opportunity for our company."

The food companies in the US have been increasingly exploring other markets, as domestic consumers have been opting for cheaper private-label foods.