This private equity company is betting big on Africa’s food and beverage sector

Duet Private Equity Limited is in Africa to exploit opportunities in the continent’s consumer-led growth. After more than six years investing in Africa, its recent $50 million investment in AJEAST Nigeria shows the company’s interest in the continent has not waned but it is not aimed at helping BigCola fight a cola war in Nigeria, it is to build a bigger, all-round beverage company serving other markets in Africa.  

When AJEAST started producing Big Cola in Nigeria, not many gave the subsidiary of Peru-headquartered AJE Group a chance in the market controlled by Coca Cola, the popular carbonated drink bottled by the Nigeria Bottling Company.

Regardless of who was winning in the market and how much influence they had, AJE Group, the parent company of AJEAST Nigeria would not mind playing the underdog. The company has been successful in Indonesia, a market similar to Nigeria and knew it could easily replicate the blueprint which made it successful in the Asian country and thrive. Three years on, the company has recorded significant growth, riding on the young demographic of “Nigeria’s growing socioeconomic segments”. These segments capture both the significant advance of middle-income households in the country, as well as its expansive youth base.

AJEast Nigeria has shown promise and Duet Private Equity Limited(DPEL), a principal investor in emerging and frontier markets has noticed, committing $50 million to take up majority stake in the company.

“Duet’s strategy is to focus on investments in sectors which are most likely to benefit from the consumer-led growth in Africa,” says Manish Rungta, Managing Director DPEL, as he rationalises Duet’s huge investment to The Nerve Africa.

“A key sector in the consumer space is the beverage sector. It addresses both the top and bottom end of the consumer pyramid and is well positioned to benefit directly from growth in consumer spending,” he adds.

Manish, who likes taking up new challenges, such as learning a new language, — he already speaks five languages and wants to learn how to speak Swahili — fancies AJEAST Nigeria’s chances in the Nigerian beverages market. He does not see why Big Cola cannot thrive in Nigeria despite the dominance of brands like Coca Cola. “BigCola is present in over 20 emerging markets globally and most of them also have other large competitors,” Manish says.

Is BigCola’s $50m enough to knock Coca Cola out?

But DPEL has no sights on helping BigCola start a cola war in Nigeria. Apart from the fact that no one has ever won a cola war against Coca Cola, Manish believes the Nigerian market is big enough for everyone.

“Nigerian market for beverages (excluding water) is now over $2 billion in annual sales and we believe there is more than enough room for multiple players to thrive and prosper,” he adds.

Duet is not new to the African beverages industry, with previous investments in Ethiopia (Dashen Brewery) and Ivory Coast (SAPLED). The company has been keen on increasing investment in the sector across Africa and AJEAST offered the best opportunity.

As Duet’s involvement in the management of AJEAST Nigeria increases following its $50 million investment, the company will expand its business and focus on being an all-round beverage company.

“Going forward, we see ourselves as a beverages business in Nigeria, not just focused on the carbonated drinks category but the overall beverages segment and we believe there is a good opportunity to grow and prosper,” Manish says.

Duet will continue to watch the food and beverage sector in Africa for new opportunities, as well as the continent’s pharmaceutical sector. Manish notes that these sectors have the key ingredients to benefit from consumer-led growth in Africa.

“We are looking closely at opportunities in Nigeria, Ghana, Ethiopia and French Speaking Africa, including DRC,” he says.

Duet will continue to focus on specific consumer sectors in Africa as the continent’s middle class grows, with belief that there lies a massive opportunity in consumer facing businesses across Africa.

“As the income levels of African consumers increases over time, we believe all key consumer sectors in Africa will witness significant growth and the demand for options and choices in case of brands from younger consumers will increase even faster,” Manish says.