Nairametrics|Why Tiger Brand Got It Right With UAC Foods Despite losing over $200 million in its acquisition of Dangote Flour Mills, South Africa’s Tiger Mills is still keen on investing in Nigeria. Its partnership with UAC Foods is profitable, and the company is keen on more opportunities.
Tiger Brands spent almost $200 million in 2012 for a 65.7% stake in Dangote flour mills, but sold it back to Aliko Dangote for $1 in 2015. It also wrote down $76 million worth of loans it granted the company. The partnership with UAC may be succeeding because food products tend to have a higher margin compared to the milling business. UAC also has a firm stake in the business, and has experience running into decades in the Nigerian market.
Nigeria remains a compelling case for investors, despite the economic slowdown. A large population, with a significant proportion made up of young people means it’s a huge market. It also serves as a gateway to the West African market. Expenditure on food takes a large chunk of household expenses after energy costs. Despite the difficult operating environment, several South African firms like Multichoice, MTN, and Shoprite continue to operate profitably. Tiger Brands may have decided to persevere till the clouds brighten.
Tiger brand in 2011 acquired a 49% stake in UAC’s Food and Beverage business in 2011. Products made under the joint venture include Gala sausage rolls, Supreme Ice Cream and Swan water. The company also acquired Deli Foods a biscuit manufacturer for 276 million rand. Tiger brands also has operations in Cameroun, Ethiopia, Kenya and Zimbabwe.
No wonder swan water came back with a great new look.