Egypt ripe for Britannia biscuits expansion
The company, which is best known for its biscuits, aims to add one new international market each year, and is currently in the process of implementing its first unit in Nepal.
“We are keen to increase our international business, which now stands at INR7bn [US$109m],” said managing director Varun Berry.
Speaking to The Hindu, he said that the company had its eyes on investing in a nation like Egypt, from where it could easily reach out to other countries in North Africa.
While Britannia has tended to build its own units in India and overseas, Egypt’s current investment climate might offer foreign investors like the bakery specialist an opportunity to acquire more established companies there.
Food and beverages businesses look to have the most to gain from a new Investment Act, which may prompt a rush for foreign companies to enter the market.
The law, implemented in May, sets out to streamline doing business in Egypt and create incentives it hopes will bring back investors’ dollars after years of turmoil.
It includes a raft of new incentives, such as a 50% tax discount on investments made in underdeveloped areas, and government support for the cost of connecting utilities to new projects.
“It could be one of the best times for mergers and acquisitions because during periods of severe cost inflation some smaller players are forced to exit the market,” says Renaissance Capital analyst Mohamed Zein.
Moreover, acquisition by other local companies is unlikely given that most food companies are family-run firms, and are keen to attract interest among foreign companies looking to capitalise on Egypt’s new investment incentives.
The fragmented nature of the food sector is already making it appealing. Kellogg Company acquired Egyptian cereal company Mass Food Group back in 2015, and the state-owned National Company for Maize Products apparently has a host of private-sector suitors right now.
