Africa needs scaled-up suppliers, regulatory overhaul for food security: Danone’s Fan Milk

Creating African companies which can supply food in markets across the continent will require more standardisation of regulatory requirements, Ziobeieton says on the sidelines of the Africa CEO Forum in Abidjan. 

“The same standards everywhere would be a big help,” and the African Continental Free Trade Agreement (AfCFTA) is “a good way to bring this together,” he says.

Supply-chain disruption caused by Covid-19 and food inflation triggered by the Russia-Ukraine war have pushed regulatory standardisation up the agenda of policy makers, Ziobeieton says. 

Standardisation of rules would open the door to suppliers to sell to Danone and other big companies across Africa, he argues. “There’s a growing awareness of the need for this to happen. I think there is the will to do it.”

The United Nations Food and Agriculture Organization (FAO) warned in April that acute food insecurity in West and Central Africa was on track to reach a 10-year high in June. 

The RPCA Food Crisis Prevention Network estimates that 2.5m people in the Sahel and West Africa may need emergency food and nutrition assistance between June and August alone.

A policy brief from the RPCA in April argues that humanitarian assistance on its own cannot provide a lasting solution. Regional bodies ECOWAS and UEMOA need to urge member states to reduce obstacles to regional trade, such as export bans on food products and border closures.

Factors currently harming business for Fan Milk are the depreciation of Ghana’s cedi, as well as inflation, which is pushing up the cost of inputs including packaging, Ziobeieton says. 

Stronger local supply chains, he says, will in future reduce the company’s exposure to currency movements. Fan Milk is looking for more local partners in West Africa, which Ziobeieton says can be a “game changer” for the company and its consumers.

Long John Bicycles

Fan Milk was started by a Danish entrepreneur as Ghana Cold Store in 1959, and was renamed Ghana Milk Company in 1960. Vendors would distribute milk using container-carrying bicycles known as the ‘Long John Bicycles’. 

The company was bought by Dubai investment group ABRAAJ in 2013, with global dairy giant Danone taking majority control of Fan Milk in 2016.

The company currently operates in Ghana, Nigeria, Benin, Côte d’Ivoire, Togo and Burkina Faso, with Danone holding majority stakes in each of the separate national businesses. Products are sold by independent street sellers working on commission, who have the chance to climb the ladder and become distributors.

Fan Milk is now considering expanding into new west African markets including Cameroon, Mali and Senegal. Dairy product distributors in Cameroon, which Ziobeieton describes as a “fabulous opportunity”, and Mali have been regularly approaching the company to try and persuade it to enter, he says.

Liberia and Sierra Leone are also on the radar for possible expansion, Ziobeieton says. He didn’t give a timetable for tapping new markets and says the current focus is to increase local sourcing in the company’s existing operations.