Market Potential for Agro Products in Angola

Overview

The Agro-processed sector in Angola is still very under-developed. Although local production in
agriculture and food processing is expanding, it is important to note that the country imports the
majority of its food and has almost no industrial capacities to process what it produces into
agricultural consumer goods. According to the International Trade Centre, the agro & agri sector is
growing at a compound annual growth rate (CAGR) of 12.7% per annum. In 2013, Angola’s total
imports stood at USD 973 million as shown in the below diagram.

Imports of Agro & Agri (2008-2013)

958

CAGR+12.
1000
900
800 546

700
USD Million

600
500
400
300
200
100
0
2008 2013

Source: TradeMap

Table 1 shows that with 200% growth, rum is the highest growing product category, followed by
sugar confectionary (143%) and canned food (63%). On the other hand, pasta (1%), wine (27%) and
animal feed (39%) have experienced a modest growth rate.

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 Table 1 - Imports of Agro & Agri by product categories (2008-2013)

Products Category 2008 CAGR1 (%) 2013 % of total for % Change (2008-
USD USD 2013 2013)
Sugar Confectionary 35,317 19.4 85,822 9.0 143%

Pasta 71,848 0.3 72,828 7.6 1%

Biscuits 74,973 7.6 108,158 11.3 44%

Canned Food 17,193 10.3 28,011 2.9 63%

Beer 154,671 7.0 216,662 22.6 40%

Wine 136,378 4.9 173,316 18.1 27%

Rum 440 24.6 1,319 0.1 200%

Animal Feed 6,607 6.8 9201 1.0 39%

Source: TradeMap

Angolan Consumption Patterns

The below graph indicates that Angolans spend on average 58.5% of their income on food and
alcoholic beverages, which equals to AOA 3,259 (USD 33).

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CAGR – Compound Annual Growth Rate

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Grocery Retail Market

According to key players met in the industry, Angola is dominated by Portuguese and Brazilian
chains which have expanded into the market. The major players are:

Angolan Main Supermarkets Market Shares

Kero Hyper Market 40%
Alimenta Angola (Cash & Carry) 20%
Maxi Supermarket 10%
Mega (Cash & Carry) 10%
Others (including Nosso Super) 20%

These supermarkets have managed to target consumers from all income categories and are
currently supplying all agro commodities from fresh produce to dry foods. The majority importers
claimed that these products are usually of Portuguese and Brazilian origin. Moreover, during the
course of our field investigation we found out that a few of these supermarkets are planning to open
more outlets in Angola this year. The informal sector, however, sources mainly from the bigger
chains and distributes the products into the suburban cities or into rural areas.

Competitive Analysis
Our research revealed that the price structure of agro commodities is in line with the overall pricing
structure of the major supermarkets. The supermarkets usually aim to achieve a profit margin of
30%, thus leaving the importers and distributors with a margin of around 20% for the products sold
to the supermarkets. On the other hand, agents selling to rural areas normally adopt a mark-up
between 50 -100%.

Profit Margin at different levels:

Retailers (Supermarkets) 30%
Importers/Distributors 20%
Agents 50-100%

For the sake of evaluating the competitiveness of Mauritian products, we will assume that importers
charge on average 50% of profit margin on the final retail price.

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The below table illustrates the estimated price of Mauritian agro products by taking into consideration the following customs duties and local taxes that are
applied in Angola:

1. Consumption Tax (10% of CIF Value)

2. Stamp duty (5% of CIF Value)
3. Clearing costs (2% of CIF Value)
4. Brokers fees (3% of CIF Value)
5. Port Charges (USD 500 for 20ft container)
6. Corruption Fee (2% of CIF Value)
7. Custom duties (on average 15% applied on FOB, for Textile & Apparel around 15%-21% and Alcohol 80%)
8. We have assumed Insurance rate of 1% applied on FOB.
Moreover, the estimated prices are calculated based on a 20ft container with an estimated profit margin of 50%.

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 Estimated Landed Budgeted Selling Price Price of existing products on the
Costs market (Angolan Supermarkets)

With a combined operating cost and a

A packet of Noodle of profit margin of 80%, the retail selling
85g price can be estimated at around USD
= USD 0.26 0.51 which is similar to competitors’
offerings. However, it is highly Price – USD 0.51
recommended that Mauritian suppliers
review their prices down at the beginning
to penetrate the market.

A Packet of Pasta of With a combined operating cost and a

500 g profit margin of 80%, the retail selling
= USD 0.56 price can be fixed at USD 1.10 which is
87% cheaper when compared to
competitors’ products.
Price – USD 2.06

Canned peas of 500 g With a combined operating cost and a Koo Canned peas of 500g
= USD 1.06 profit margin of 80%, the retail selling
price can be at USD 2.08. Hence,
Mauritian canned foods have good
potential to penetrate the Angolan
Price- USD 2.78
market.

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Market Analysis – Beverages

Atlanfina Liquor Company

Angolans are considered to be both wine and beer

drinkers because of their historical background and
also for adopting a social life which is inclined
towards the western lifestyles. Among the importers
we have met, we have noted that the majority of
them import their goods from Portugal, France,
South Africa and Brazil.

Wine

During the civil war, Angola’s wine imports were negligible. However, since the end of the war,
imports have started to grow. In recent years, Angola has imported significant quantities of wine on
the back of increased demand among Angolans and increasing disposable incomes as a result of
profits from the country’s extractive sectors.

Portugal is the main international exporter of wine to Angola, supplying 64% of the Angolan wine
market. The dominance given to Portuguese wine in Angola is largely due to the fact that Angola is a
former Portuguese colony and Portuguese is the official language of Angola . Spain represents
another prominent wine exporter to Angola, supplying 23% of the wines available in Angola. In
comparison, South Africa’s share of the Angolan wine market is small at just 4%. Along with low-
priced European and South African wines, the bulk of wines from Latin America are also entering the
country on an increasingly frequent basis.

There are around 30 wine companies involved in importing, distributing and wine bottling. Some are
devoted to wine, while others are large supermarket groups that do their own importing. The key
importers are Angolan, although there are some Portuguese expatriates running wine import
businesses in Angola.

In terms of retail prices, the price of wines in Angola range from USD 1.80 per litre to around USD 50
for a good quality bottle of red wine. Mark-ups on wines of 25% are common among importers,
while retailers typically add another 25% to 50% onto the importers price to set the final retail price.

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In contrast, mark-ups on wine in the Angolan hospitality sector are considerably higher, with this sector typically adding mark-ups of anything from 70% to
250% onto the original import price.

Currently, the market for wine has reached a degree of saturation following a period of rapid growth. In this respect, the introduction of new wine on the
market might not be profitable for Mauritian companies.

The below table provides an indication on the price positioning of Mauritian products in comparison to that of similar products we have noted in Angola’s
retail stores.

THE POTENTIAL FOR MAURITIAN WINE IS LOW

Feedback on Mauritian Spirits Samples

EM officers met with two beverages companies to appraise their interest in sourcing products from Mauritius. The feedback is summarized below. The
study revealed that product categories that are poised to perform well in the future include beer. Angola’s per capita beer consumption is relatively high in
an African context at around 45 litres per annum and there is scope for this average to increase further.

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 1. Atlanfina Liquor Company

Atlanfina is a company specialised in the representation, distribution and promotion of quality wine/spirits with international standings. The company has
been in business for 30 years and has one distribution centre and one warehouse outside Luanda. Atlanfina distributes mainly to supermarkets and mega
stores. The company has 25 sales agents in supermarkets. Mr. Filipe Santos was approached to gauge his interest in importing wine from Mauritius. Mr.
Santos pointed out that the company’s product portfolio comprises of 400 product lines. He stated that the company is one of the market leaders in Angola
with 40% market share. In the course of our meeting, Mr. Filipe Santos mentioned that Angolans consume Portuguese wine mostly due to historical
connections. Moreover, he stated that wines from Portugal cost around USD 1.5 and was sold with a 30% profit margin. Mr. Santos also stated that taxes on
wines were around 80%.

In evaluating the Mauritian wines, Mr. Santos found the Mauritian wines’ FOB prices to be affordable but stressed on the fact that the wines need to be of
high quality.

2. Riofriosa

Rio Frio SA is a big importer of alcoholic drinks and one of the largest distributors in Angola. The company has four branches in Luanda and one in other
provinces. The company distributes mainly to supermarkets such as Shoprite, Kero, Alimenta and so on. Sam Sabra, the Commercial Director of Riofriosa
informed EM officials that the company imports mainly Crystal, Super Boc, Carlsberg and assorted wines from Portugal whereas Ciders (Savanna and Esprit),
assorted wines, Gin and Amarula Cream from South Africa.

He underlined the fact that duties on alcoholic drinks are around 80%. He further mentioned that there is an inspection fee (Pro-mango) of USD 3,000 and a
fee of USD 600 per container . Mr. Sabra stated that there are around 50 players in the market and that the selling price of a case of 24 costs around AOA
1,600. Upon presentation of samples of beer, he claimed that Angolans prefer to drink from bottles rather than cans. He further stated that its high end

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consumers are more interested in imported alcoholic drinks whereas the low end consumers prefer local production. The most popular beer in Angola is
the Hookah beer.

Price Positioning of Beer:

Landed Costs Budgeted Selling Price Price of existing products on the Angolan market

Beer Bottle of 330 ml USD If we assume that Mauritian Beer will export 33,024 units of bottled
1.01 beer, then the CIF will be around 129% of the FOB price. With all
the various costs involved, the landing price for a bottle of 330 ml
beer will be USD 1.01 and with a combined operating cost and
profit margin of 80%, the retail selling price can be around USD 1.97
which 27% more expensive when compared to competitors’
product which cost around USD 1.44. Price – USD 1.44

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