Nampak Limited, a South African glass maker for the beverage industry has agreed with partners to build glass bottle manufacturing plants in two of Africa’s most populous countries, Nigeria and Ethiopia.
The company said that it wants to take advantage of growing demand for packaged consumer goods and bottled drinks in Nigeria and Ethiopia.
Nampak, which is based in Johannesburg, said that it has reached a preliminary agreement with a partner for a factory in Ethiopia and is now seeking financing for the project with potential cost of $68 million, Chief Executive Officer, Andre De Ruyter, 47, said in an interview with Bloomberg Business News.
He added that it will help supply drinks makers, Heineken NV and Coca-Cola, Inc. He also said that Nampak has “made good progress” on a Nigerian factory.
“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 good companies such as US retailer, Walmart and brewer SABMiller are expanding in Africa because of rising household incomes. Many people are moving away from subsistence existence and becoming consumers of packaged goods for the first time, De Ruyter said, creating a growing market for can and bottle manufacturers. Nampak is Africa’s largest beverage can manufacturer.
“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 percent of its population under the age of 15 while 46 percent of Ethiopia’s 97 million people are below that age, according to US Census Bureau data. That compares with 16 percent of the 403 million people who live in the Euro.
Nampak is expanding outside of South Africa to help offset declining profit margins in its home market.
The company said that it has signed a Memorandum of Understanding with a local partner in Nigeria. They added that a site for the factory has been identified, with access to natural gas and water and they have commenced a feasibility study. The company plans to spend about $100 million in the Nigerian plant, which it hopes to be completed in about three years.
The company is also looking for an Angolan glass factory although it’s still “very early days,” according to De Ruyter.
Nampak will consider expanding its can production by doubling capacity in Nigeria and looking at potential third can line in Angola, De Ruyter said.