PepsiCo shines a brighter light on Ethiopian snack market
PepsiCo bought a stake in the Ethiopian crisps company in 2020, joining Senselet’s Dutch founder Veris Investments as a major shareholder. Veris set up Senselet in 2015 with a mission to contribute to the development of the potato value chain in Ethiopia.
The company’s processing site, located outside the country’s capital Addis Ababa, was constructed in 2017 and commercial production started later the same year. Today, Sun Chips are sold in approximately 10,000 retailers – predominantly souks (small market shops) – across Ethiopia, available in Original Salt, Habesha (regional spices), Tomato and Paprika flavours in three pack sizes.
PepsiCo’s $40m injection will fund the construction of an additional production line, along with a completely new snack production line. This will create up to 500 ‘direct’ jobs, but PepsiCo contends “the indirect impact on farmer employment will be even bigger.”
Ethiopia – officially the Federal Democratic Republic of Ethiopia – is a landlocked country in the Horn of Africa and home to 113.5m inhabitants, making it the second most populace country in Africa after Nigeria.
Over the past 15 years, Ethiopia's economy has been among the fastest growing in the world (at an average of 9.5% per year). However, the Russia-Ukraine conflict has had a major impact on the country’s rising energy and food costs. Ethiopia is heavily reliant on both countries for wheat and fertilizer.
The country, however, has a thriving agricultural sector, producing coffee, pulses (beans), oilseeds, cereals (Africa’s second biggest maize producer), sugarcane and potatoes.
Potato is an important cash crop, with high potential to improve the livelihoods of small-scale farmers, who account for 83% of the total population. Some of the potatoes find their way into the snacks segment, which – prior to the Russia-Ukraine conflict – was projected to be worth $74.72m by 2025, according to Statista.
“Currently, Ethiopia is very small for PepsiCo in total, but we aim to grow the business significantly over the coming years contributing heavily to the country,” said Chris Wijnterp, GM of PepsiCo’s foods unit in Ethiopia.
“The snack market is currently very much underdeveloped and PepsiCo is only producing potato chips where we also see significant growth potential.”
The investment is aligned to the company’s pep+ strategy, “to help build a more sustainable food system in Ethiopia – one that can meet human needs and continue to drive global economic and social development, within the planet’s natural boundaries.”
PepsiCo Positive (pep+) is the company’s strategic end-to-end transformation that puts sustainability and human capital at the centre of how it will create value and growth by operating within planetary boundaries and inspiring positive change for planet and people.
Senselet has established strong partnerships with local farmers and even facilitates a farmer training programme to help them increase yields and income, build a more stable potato value chain and fight food insecurity. Partners that have substantially contributed to the success of Senselet include the Dutch Government – Netherlands Enterprise Agency, Ethiopian Institute of Agricultural Research and Wageningen University and Research.
New snacking categories
“This cash injection will allow us to increase our production capacity for snacks tenfold,” said Wijnterp.
“It also allows us to further leverage PepsiCo’s expertise to help accelerate the growth of Senselet in Ethiopia by boosting its potato sourcing programmes, as well as its manufacturing and go-to-market capabilities.”
The company is planning to diversify into new snacking categories, but Wijnterp was not prepared to “share any competitive information on new products.”
However, he did say, “During this growth, the broader foods portfolio of PepsiCo will be considered, reaching to other crops such as maize, oats and wheat."
Ethiopian Investment Commissioner Lelise Neme has welcomed PepsiCo’s commitment, noting it is “testament to the work the Ethiopian government has done in creating a conducive investment environment for foreign companies.
“The Ethiopia Investment reform process has also improved the opportunities for investment and widened the range of sector and economic activities open to Foreign Direct Investment (FDI).
“We look forward to witnessing the growth of PepsiCo in Ethiopia and the subsequent benefit to our economy, communities and agricultural sector.”