• Thursday, July 18, 2024
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Manufacturers can source savory flavors without FX exposure – Freddy Hirsch WA MD

Africa is central to $36bn global flavour, fragrance market – Brifo

Kojo Brifo is the Managing Director of Freddy Hirsch Nigeria and West Africa. In this interview with BusinessDay Endurance Okafor, he speaks on how the food and flavors industry can ride on backward integration in sourcing raw materials can help reduce exposure to FX. Excerpts:

The global food and flavors market is expected to grow at a value CAGR of 4.9% and reach close to $20bn by 2032. What does this mean, especially in Africa?

The growth in the food and flavors market in Africa is because of new trends, changes in purchasing patterns of consumers, the rise of a middle-class with more disposable income, and rapid urbanization. Other reasons include the fast-paced lifestyles and their impact on dietary habits, and emerging new flavors and seasonings. Health concerns of consumers are also another factor increasing the sales of products with natural ingredients, additives, and coloring agents. The continuous innovation and developments in the flavor markets have been deepening the emerging food and beverage industries, for instance, plant-derived vegan flavors in food ingredients. The increasing support from regulatory bodies and government policies have also aided the growth in the food and flavors industry, and the outcomes should begin to show over the next 10 to 15 years.

The African market is booming, thanks to the tourism that it attracts. The food market is growing and so is the spice and seasoning market. These are gaining popularity due to tourism and the rising number of working women within these markets. The market is growing at a fast pace and consumers are becoming more aware of the benefits of using spices and seasonings, especially local spices. This rise in demand has increased innovation from food and flavor companies, to innovate new ways of satisfying market demand while striving to increase market share.

What are the growth opportunities for the food and flavor industry in Africa? Where are the sources and what are the triggers?

Increasing urbanization, rising disposable incomes, a growing regional population, growing demand for food, and evolving lifestyle changes are driving the African food flavor and enhancer ingredient market and increasing the consumption of processed foods and beverages. The African food flavor and enhancer market is a small but growing market forecasted to witness a CAGR of 5.12% during the forecast period (2020 – 2025). The global flavor and fragrance market is forecasted to reach US$36 billion in 2022 with Africa expected to play one of the biggest growth opportunities.

With ethnic foods becoming increasingly mainstream, consumers are developing an appetite for new and exciting spices and seasonings. This is broadly due to the growing multicultural population and increased tourism expeditions to exotic destinations. We are seeing a rise in the commercialization of traditional delicacies and recipes, emergence of local snacks such as plantain chips, chin-chin, cassava chips, and varying flavors, all targeted at meeting the demand of consumers. Despite the seasonality of the source fruits, these demands have triggered the development of innovative solutions, making them available in and out of season. Thanks to these triggers, more food, and flavors companies are creating new, healthy, relevant, and locally sourced options to meet the nutritional needs, and the shift in demand of consumers.

Harnessing raw materials such as ginger, garlic, onion, and tomato, empowers consumers with locally sourced materials and non-FOREX exposure, that is assuring quality, authentic and natural flavors at affordable prices. These locally sourced raw materials birth the production of new categories and flavors for products especially those consumers grew up with and help them relive the taste of home with each bite. An example of this is noodles, but in spices, Africans grew up with, such as goat meat pepper soup, African Peri-Peri Chicken, and Suya Chicken flavors. Other applications are seen in the creation of boullions, flavors, and ingredients such as locust beans (iru) crayfish, chicken, etc. used in cooking food and serving as food flavor enhancers.

Read also:  Investment in food drives retail rebound

Where are the vulnerabilities across the food chain, from farm to fork and what do you recommend can be done?

The COVID-19 pandemic placed unprecedented stress on food supply chains, with bottlenecks in farm labor, processing, transport, and logistics. Many of these disruptions were due to the containment measures applied during the COVID-19 pandemic, which impacted the essential flow of food from farms and producers to consumers.

The farm is the first point in the food chain and the goal of every producer is to get food from the farm to the fork. However, there are critical steps in between the farmer and consumer. It’s said that “a chain is only as strong as the weakest link” and this goes to show that when any phase in this chain is disrupted, every other phase is affected. These disruptions make the chain vulnerable and some of such include lack of storage facilities and processing factories to preserve and process farm produce. Distribution is another part of the chain where disruption occurs and this is common in most countries in Africa, including Nigeria. Bad roads also disrupt the seamless transportation of the farm produce, whether in their raw or processed state to the end-user.

Largely, a more sustainable model to improve the food chain needs to be put in place. This will entail not just innovative initiatives but also improving the technical know-how of the farmers and workers to holistically increase the yield of the farm through efficient and effective processes.

How is your company solving these challenges?

Freddy Hirsch Nigeria is a fast-growing African manufacturer of extracts for spices, ingredients, and flavors. Our parent company has been at the forefront of the production and distribution of food extracts, ingredients, and flavors in South Africa. To achieve our vision of creating authentic African flavors and tastes, we have invested in a Research, Development and Application laboratory and a manufacturing facility with world-class quality management systems, in West Africa, Nigeria, where our experts develop flavors for various application areas, especially savory foods, sweet applications, and beverages tailored to the African market. This is significant because these facilities allow us to tap into the pulse and gain valuable insights from our customers, meet the unique taste preferences of the regional market and develop competitive solutions in culinary, bakery, confectionery, and dairy.

To deepen our penetration in the region, we also partnered with Germany-based fragrances, care, flavorings, and nutrition manufacturer, Symrise, to boost food innovation and nutrition in West Africa. With this partnership, our companies will focus on the development, launch, and commercialization of transformational food products: general seasoning, bouillon meat, snacks, and instant noodles. This innovative partnership harnesses the flavor technology platform to deliver authentic regional and hyperlocal African flavors and ingredients. Symrise is a global multi-billion-dollar fragrance, care, flavor, and nutrition supplier with >10% global market share and presence in 100+ countries.

In terms of our savory ingredients and flavor, our focus is localization. By this I mean, utilizing local raw materials such as Turmeric, Chilli, Thyme, Paprika, African Basil, etc., as a base in our flavor development. We are currently leveraging on processing the natural form of these raw materials. For example, we dry, sterilize Ginger, and keep it in powdered form for industrial uses, such as Ginger powder or Ginger extracts.

Most food companies (FMCGs) import these flavors, to act as base notes in their food development. Unfortunately, the fluctuating dollar to naira rates has significantly affected their profit margins. The unpredictable FX rates, the long lead time of imported products, long sail time, loss of potency, and pungency (the products are not as fresh as you would like them to be) are major issues that affect food and flavors importers. And these flavors have shelf lives, outside which they are useless.

Also, historically, manufacturers import noodle and bouillon flavors from Asia and Europe. However, we can offer the same quality of noodle and bouillon flavors and have been able to provide local manufacturers with these flavors, thus improving their supply chain resilience while saving forex.

As the preferred partner of choice to local and global food and manufacturing companies in West Africa, we empower our customers with locally sourced materials and non-FOREX exposure. We also offer our customers Naira trading and predictable OPEX, speed to market, due to local sourcing, non-FX issues, and shorter lead times, among others. With this, customers can save their forex for more critical purchases and procure their raw materials in Naira.

You mentioned the FOREX challenges many Nigerian companies have and what you are doing: can you explain that a bit?

Africa is a highly complex FX market, fraught with significant currency management challenges which limit commercial opportunities for many business operators playing on the continent. During the lockdown, several products disappeared from store shelves, due to sourcing problems. Many companies had to frantically source local alternatives, thanks to closed borders and no-fly policies. While these measures have been reduced, food companies realized that they needed to design their supply and production chains for resilience. For many food companies, sourcing ingredients and spices abroad is no longer the default model. Companies must develop an end-to-end supply chain management that reflects a wider pool of suppliers, including regional ones while keeping larger strategic stocks. Other alternatives are to simplify offerings, resulting in a leaner, more manageable product range, less risk, and lower costs.

It is because of these limitations that Freddy Hirsch invested in a state-of-the-art manufacturing plant, Research, Development, and Application laboratory, and global partnerships, to derive authentic insights from customers, meet their unique taste preferences of the regional market, and develop competitive solutions in culinary, bakery, confectionery, and dairy. Freddy Hirsch has become the preferred partner of choice to local and global food and manufacturing companies in West Africa.

What is the benefit of sourcing flavors locally?

Sourcing locally has so many benefits including customer service, a better quality of product (you get what you ordered), or tailored insight and solutions developed for customers. Our customers also save on Forex and use their Forex for more critical things such as equipment’s etc. There is also room for real-time product innovation and collaboration, improved product customization, and cheaper prices. And finally, local flavors are readily accessible. Sourcing locally also ensures spices are sourced responsibly and deliver positive outcomes for local communities and the economy in the long run.

Our West African operation, based in Nigeria has innovated into the fastest-growing African producer and distributor of extracts for spices, ingredients, and flavors with expanded capabilities as a full-scale concentrate backbone creating authentic flavors through local insights in the regional culinary market.

“The unpredictable FX rates, the long lead time of imported products, long sail time, loss of potency, and pungency are major issues that affect food and flavors importers.