Kellogg, maker of Froot Loops and Corn Flakes cereals, is looking abroad for growth. Chief Executive Officer John Bryant said in a statement that sub-Saharan Africa is a “tremendous opportunity” for Kellogg, with a population of almost 1 billion and an economy expected to more than double in the next 10 years.
In the recently released statement, Kellogg Co. said that it was paying $450 million to buy a 50% stake in Multipro, a sales and distribution company in Nigeria and Ghana. As part of its expansion plan, Kellogg said it created a joint venture with African food company, Tolaram Africa, to develop snack and breakfast foods for the West African market. The Tolaram venture includes an option for Kellogg to buy a stake in the African company in the future, the Battle Creek, Michigan-based foodmaker said.
Costs associated with the Multipro deal will reduce earnings per share by 1 cent in the third quarter, Kellogg said.
Tolaram Africa Foods owns 49% stake in Dufil Prima Foods, the maker of Indomie noodles, Minimie Snacks, Power Oil and Power Pasta. These deals are expected to bring in a total of $750 million in sales this year.
Additionally, the company 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.
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