An interview with Bruce Hamilton, Director of Verde Beef Processing PLC

Posted in Interviews

Established in 2014, Verde Beef Processing PLC is an agribusiness company with an established feedlot in Adami Tulu, Oromia, Ethiopia on a 1,300 hectare farm.

For our members who are not yet familiar with your company, can you tell us a bit more about the activities of Verde Beef?

Our company seeks to become the largest beef production firm in Ethiopia and to be locally and internationally recognized as a premier producer of high quality beef. To do so, our business model focuses on buying young calves locally and to grow them, through a mix of appropriate care and great quality feed, to full size A grade steers of which their high quality meat with be exported to Middle East markets.

Our herd is currently 6,000 head on feed but once fully operational, we aim to be tenfold bigger, at around 60,000 heads. This will generate an annual slaughter in the region of 100,000 head. Our USD 25 million investment includes a USD 10 million first-class abattoir, which, once constructed, will be up to western standards for meat processing.

Why did you decide to invest in Ethiopia?

First of all, our experienced management team knows the market, having collectively managed several agribusinesses in Ethiopia over the recent years.

Also, Ethiopia has a very large livestock population, the biggest in Africa, which allows us to source from the local market. The climate in Ethiopia allows for two crops per annum under irrigation, this is a competitive advantage over most other beef producing nations.

Ethiopia is also a great location for our business, as we can reach our Middle East markets quickly and cost-efficiently, through air and sea freight.

Finally, Ethiopia is a growing market on its way to becoming the power house of East Africa. Although we intend to sell only 5% of our production in the local market, it is still a great market to be in.

How is your relationship with the Ethiopian administration and its agencies?

The Ethiopian administration has been very cooperative and efficient in the investment phase of our project. We were able to secure land, Investment Permit and other requirements quite swiftly, which allowed us to begin our operations within 6 months of establishment. We definitely benefited from the fact that our activities are very aligned with the government economic objectives (agro processing, use of Ethiopian’s large livestock resource and an export-oriented business).

However, it seems that the big picture, as outlined and understood by top officials at the government agencies, is often misunderstood at lower levels. The rationale behind our business model and business decisions is often less understood at this level. As such, we do face many challenges in our everyday operations which cause delays and can sometimes impact significantly our business.

How did you recruit employees and how is your interaction with the local community?

I believe we have a good relationship with the community. We currently employ 300 people (full-time, part-time and contractors) but we aim to reach 1,500 full-time employees once we get to full capacity. These employees were primarily hired in the local communities around our farm. We also hired from other regions, when we could not find specific expertise in the area. We intend to provide appropriate training and technology transfer as our procedures and processes become fully implemented.

We also provided easy access to drinking water for the communities and a forum was set up to facilitate dialogue between our company and the local population though the forum of community elders..

Finally, we buy locally around 40% of what is required for the feed and we created demand for young calves, allowing farmers to generate revenue earlier on their cattle investment. This also facilitates de-stocking which is vital to improving range land quality and the reproductive potential of the herds. As such, there is significant spill over effects from our investment that benefit the local community.

What would be your recommendations to other EU businesses investing/willing to invest in Ethiopia?

It is very important to do your preliminary research well and to make sure that your business activities will align with the long term economic goals that Ethiopia set for itself, notably in its second Growth and Transformation Plan (2015/2016 – 2019/2020). This country has a clear view on how its economic and social development should occur and it has carved out a specific role for foreign investors.

You also need to be careful not to rely too much on assumptions, past experience and previous business models. Ethiopia is a very specific country and local knowledge is essential in order to do business efficiently in the country.

An interview of Johan Doyer, Managing Director of Heineken in Ethiopia

Posted in Interviews

After less than 4 years from the acquisition of the Bedele and Harar breweries, which were acquired from the GoE in 2011, Heineken have now inaugurated in January 2015 the biggest brewery in Ethiopia.

The €110mln brewery is part of a total investment program of €310mln in the country since 2011. Why Heineken first decided to invest in Ethiopia?

Ethiopia is a young and dynamic beer market with per capita consumption of about 5L, a population of 92 million people and is one of the fastest growing economies in the world. It is therefore no surprise that HEINEKEN is investing for the future and preparing for a more competitive and demanding market. Our objective is to create a leading brewery group in Ethiopia, through a strong portfolio of national and international brands and best in class people, processes and performance, and at the same time be a partner for growth in the communities in which we operate.

Why Heineken decided to invest into building a new facility in Kilinto?

The demand for our beers is growing and we predict will continue to grow over the years to come. We already have breweries in Bedele and Harar, but we needed to add capacity in the Addis Ababa area. It was part of our business plans when we bought Harar and Bedele brewery to build additional capacity closer to the heart of the beer market to

become a truly national player. In the new brewery, we produce Walia, Bedele and Harar, and other new brands including Heineken will follow.

How is the relationship of the GoE and its agencies? Which is the preferred channel to communicate with the GoE?

The Ethiopian Government has been very supportive starting with the purchase of previously state owned Bedele and Harar breweries which formed the basis of our operating business in Ethiopia. The Government also paved the way to build our new state of the art brewery in Kilinto and has been very supportive through the whole process of acquiring the land and building the brewery. On a wider scale, we have two on-going Public Private Partnerships which have the Government as a key stakeholder. Establishing relationships with key stakeholders in both the government and private sector is very important in Ethiopia.

Which have been the preferred channels you used to recruit the personnel? (Specialized newspapers and/or website, direct link with universities…)

We source talent using various channels like recruitment websites (eg. Ethiojobs), Open Job Fairs, Newspapers, Universities and vocational colleges.

Were you looking for highly skilled employees or for people to be trained? Do you have training programs?

Our focus is not necessarily on the number of years of experience the candidate has but making sure the candidate has ‘Drive to Win’; Integrity; Passion and a high level of Accountability. We also have a Management Trainee Program which aims to build the talent pipeline with University Graduates. They are provided various assignments and development workshops along with on the job training. So far we have recruited from AAU, Jimma and Haramaya University for this program.

We provide functional, leadership and technical trainings both locally and internationally. We also send key staff on international benchmarking visits to other breweries. In addition, there are on-goingtrainings on safety & health, responsible consumption and Code of Business Conduct. HEIENEKEN has online learning academies geared towards all disciplines available for all staff across the globe.

How do you retain Talents? Do you have any special program?

In addition to offering a competitive remuneration package, we offer a wide range of benefits to include free treatment at brewery clinics, medical insurance, transportation, bonus pay-outs, loan options, local and international training opportunities, career prospects to name a few.

What would be your recommendations to other EU businesses investing/willing to invest in Ethiopia? Any other important messages you are willing to share with our Members.

In 2013 HEINEKEN signed a 4 year Public Private Partnership called CREATE (Community Revenue Enhancement Through Agricultural Technology Extension), in partnership with the Agricultural Transformation Agency (ATA) and Ethiopian Institute of Agricultural Research (EIAR), aimed at improving quality and quantity of malt barley grown in Ethiopia as well as improved access to markets for farmers. This has already enabled HEINEKEN to support local smallholder farmers to supply our breweries and drive this desired increase in local sourcing. After only two years in operation, the CREATE Project is already supporting more than 6,000 farmers, and by 2017, this will grow to 20,000 farmers.

Contact Us