French dairy products giant Groupe Danone has said it is strengthening its position in North Africa and the Middle East through the acquisition of a fresh dairy product business in Egypt and the signature of a partnership agreement in Tunisia for the development of biscuit business in Algeria.
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In Egypt, Danone is buying Olait, a maker of plain and fruit-flavoured yoghurts and dairy desserts. Created in 2003, the company owns a production plant near Cairo with an annual capacity of nearly 25,000 tons and backed up by a distribution fleet. Its products are to be marketed under the Danone brand.
The Egyptian market for fresh dairy products represents some 110,000 tons in 2004. Danone said prospects are very promising given average per-capita consumption of only 1.5 kg a year compared with 23 kg in Western Europe.
Danone has also signed a new agreement with Tunisian company Sotubi, its partner since 1998, for the development of a biscuit business in Algeria. Danone and its Tunisian partners in Sotubi are setting up a joint venture in Algeria with respective equity interests of 51% and 49%.
Danone will be responsible for operational management, while Sotubi will contribute its knowledge of market and distribution channels. The new company will be investing in the construction of a new plant in Alger within a few months.
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By GlobalDataThis agreement for expansion into the Algerian market is associated in Tunisia with a rise in Danone’s interest in Sotubi from 20 to 49%. Sotubi is the leading biscuit maker in Tunisia with over 60% of the domestic market.
These transactions will further strengthen Danone’s presence in North Africa and the Middle East, where it generates annual sales totalling over €1bn (US$1.19bn).
