On Friday 1st of December 2017, Kellogg’s-Tolaram Nigeria Limited, a joint venture of the world’s biggest cereal maker, Kellogg’s and Singapore’s Tolaram Group, commissioned a 6 billion naira factory, with a capacity to produce 10,000 metric tonnes of cereals per year.
This comes two years after both companies signed a joint venture in 2015 to develop snacks and breakfast foods for West African markets. As part of the agreement, Kellogg’s acquired a 50 percent stake in Multipro (a premier sales and distribution company in Nigeria and Ghana) and has a right to acquire a stake in Tolaram Africa Foods, which holds a 49 percent stake in Dufil Prima foods. Dufil Prima manufactures and markets several leading food brands, including Indomie noodles, which are often consumed at breakfast, as well as Minimie snacks, Power Oil and Power Pasta.
Kellogg’s agreed to pay approximately $450 million for a 50 percent stake in Multipro and the option to purchase a stake in Tolaram Africa Foods. Total sales are expected to be approximately $750 million in 2015. Kellogg’s will fund the acquisition using international cash and an increase in commercial paper of $350 million.
The sole arranger and lender of the six billion naira medium-term facility to Kellogg’s-Tolaram Nigeria Limited is Stanbic IBTC Capital and Stanbic IBTC Bank respectively. The companies which are both subsidiaries of Stanbic IBTC Holdings PLC provided the finance for the construction of the new cereal manufacturing plant in the Lekki Free Trade Zone, Lagos.
According to the Tribune newspaper, the Chairman of Tolaram Group, Mohan Vaswaniname, stated that this factory is an important milestone for the company as the factory will ensure that the globally popular Kellogg’s brand of cereal can now be enjoyed by the Nigerian consumers in a much greater scale. This will enable Nigerian consumers to benefit from the healthy offering from the Kellogg’s range of breakfast cereals. He also commended Stanbic IBTC for providing an innovative debt financing solution to support the completion of the factory. The Group Chief Executive Officer, Tolaram Group, Deepak Singhal, said that the project is expected to save Nigeria significant foreign exchange as the project has huge backward integration potential in terms of the supply of locally sourced raw materials which will further support the local industries and farmers. In addition, over 2,000 direct and indirect jobs would be created, ensuring a source of livelihood for many Nigerians.
Do we see a huge competition for Nigeria’s famous Nasco cornflakes and all other breakfast cereals? Should Nigerians expect Kellogg’s of the same quality as that of the United States being sold at a cheaper price now that it would be produced in Nigeria?