Developing a tropical juice processing plant in Ethiopia is a promising opportunity. Here we feature a potential greenfield investment in a juice processing plant, where a $16.5 million investment could yield a 25-30% IRR over 10 years.
The global fruit juice, nectar, & soft drinks market was valued at $149 billion in 2014, and sales are expected to grow at 2.7% CAGR from 2013-2018. In Ethiopia, the fruit and vegetable sub-sector has seen over 17% average growth over the last 10 years, and the government aims to increase production by an additional 47% from 2015-2020.
WHY INVEST IN ETHIOPIAN JUICE?
Favorable agro-ecological climate for tropical fruit :- Ethiopia has no winter, offering the unique opportunity to become a core year-round supplier of tropical fruits. The Upper Awash valley in particular can easily produce fruit all year round. Most land available for tropical fruits is suitable for organic certification.
Geographic proximity to key export markets :- Ethiopia’s proximity to Middle-Eastern markets by sea freight lowers costs, but more importantly, increases shelf-life versus other producing countries, particularly for 100% juice products. For retailers, shelf-life is critical to profit margins, and a major selling-point: Ethiopian producers can get juice on shelves only 5-7 days after production, whereas Latin American or Asian producers can take 2-3x as long.
Low factor costs for processing :- For juice, processing comprises a major component of costs. Processing costs in Ethiopia are highly competitive due to low input costs for water, electricity, and land costs. Electricity costs are half of Kenya’s and likely to fall further due to government investments. Labor costs are a major advantage, with a minimum wage half of Tanzania’s and less than one-fourth of Kenya’s.
SPOTLIGHT ON A POTENTIAL INVESTMENT
Get in touch
The Agricultural Transformation Agency is an initiative of the Federal Government of Ethiopia Off Meskal Flower Road, across from Commercial Graduates Association