Current political stability and economic recovery led Euromonitor International to give a positive outlook on the Nigerian food industry for the next five years in a recent market report. It said consumers are becoming more sophisticated in their tastes and have higher disposable incomes, meaning that packaged food previously regarded as a luxury is becoming more standard.
“The reason for the joint venture is that the parties have perceived an opportunity to create a new, profitable food ingredients business in Nigeria,” said Wilmar, which has its global HQ in Singapore and is the owner of palm oil plantations in Asia.
The partners plan to establish two new businesses in Nigeria. The first, called PZ Wilmar Ltd, will be a palm oil refinery business in which Wilmar subsidiary Wilmar Africa Investments Pte will have a 51 per cent share, and PZ Cussons a 49 per cent share.
The second will be a branded consumer edible oils, spreads and margarines business, in which PZ Cussons will have the 51 per cent share and Wilmar Africa the 49 per cent share.
PZ Cussons said it is investing US$27m over the next 24 months, and Wilmar, which owns palm oil plantations in Asia, will invest around $27.5m.
It is not clear whether the whole capacity of the refinery business will be dedicated to developing products for the oils and spreads business, or whether third party manufacturers may also be served.
However PZ Cussons believes the venture will be making a positive contribution to global earnings within a year of the refinery’s completion.
The joint venture is subject to EU competition approval within the next 25 days.
PZ Cussons is best known as a manufacturer and distributor of soaps, detergents, toiletries and pharmaceuticals, and for its tailored approach to local markets that aims to cater to specific needs. The JV is not its first foray into the Nigerian food market. It also has a joint venture in the country with Glanbia for nutritional beverages called Nutricima. Nutricima is unaffected by the Wilmar JV and operates entirely independently.