Ivory Coast Report

InterviewsDecember 03, 2014

Carré d'Or: Food Processing, Packaging and Cardboard Manufacturing

Zouheir Ezzeddine, General Manager of Carré d'Or

: Written by Ben Novak; Published: December 03, 2014

Interview with Zouheir Ezzeddine, General Manager of Carré d'Or

Food processing products are very important at the moment for the industry.

Yes, food processing is, as is packaging and cardboard manufacturing.

Is the current market competitive in Côte d'Ivoire? How are sectors evolving? Is there a sector which is experiencing growth?

The food production industry is a competitive market these days. There are local industries manufacturing several products and there are products imported into the marketplace. There are lots of importers. I am going to talk about the importation of rice. Previously we had 3-4 importers now we have around 20. Importation in Côte d'Ivoire is still increasing. However, previously we imported 70-80% and now we are importing between 50 and 60% due to the current competitive market. We are even in the flour industry and previously there was just one large mill on the market. Today we still have one large mill LMCI and MMCI (Modern Mills of Côte d'Ivoire). There is no importation of flour as it is the local factories that produce it and as for pasta, we are the sole producers of it here in Côte d'Ivoire. We have some imported products but those are dairy products not consumer products.

We have dairy products here too but the products we import are slightly cheaper. We know how to stabilise the market. We do not increase prices, not even of imported goods. There is no competition with our products, such as semolina and pasta, as we produce them ourselves.

You have competition in the sector you have developed. Do you see this trend continuing in the future years and do you see other problems in the future marketplace? How do you view potential competition from abroad?

It is an open market and anyone can enter it. If there are people who come and try to get into the market, there are no margins these days with food produce. The margins are too narrow. After one or two years people trying to get into the market find there are no margins - there are not the profits that there should be. In other sectors such as construction, there are bigger margins than with food production. Imported produce has higher margins. We are at 10% which is nothing. However, as we have high volumes we are still in there. With small quantities of imported products you are unable to leave the market.

Now we have been through the sectors, let’s talk a bit about the groups. You are involved in several areas– evidently you have food production but what are the group’s global activities?

As for groups, we were previously in a product manufacturing company. At the same time we import and distribute products. We import food produce from other countries. We distribute products for Nestlé who import and export products from here and we are the distributors for farmers and companies too. Previously we started with a company that produces confectionary, biscuits and pasta, which all used to depend on one large mill. We subsequently entered the distribution business and in 1990 we started to import small quantities of tomato concentrate and batteries. We did not start with large quantities. In 2000, we started importing rice. In 2004-2005 we were the first importer in Côte d'Ivoire. We formed partnerships and distributed for our partner in Geneva and subsequently set up industries.

The industries were established in 1998 and we started out with pasta. Initially we imported pasta but afterwards we set up a pasta industry here too. After that we went on to produce mineral water here with Céleste, after which we constructed modern mills in Côte d'Ivoire and we went global in 2000 and we started distributing and transporting products to the group and our clients. In 2010, we started manufacturing cardboard. We have factories to produce cardboard packaging and to do the printing. We paid existing factories in Côte d'Ivoire and also invested in them.

We make packaging for our rice and we grow the majority of our rice. We are in also the process of investing in tomato concentrate. We are waiting for machines and it will take a year to a year and a half to start up the factories.

Is it about politics? What is your strategy? Is there a more diversified strategy? You said that your margins are low at 10%, you can improve this but what is your strategy behind this?

We are involved with all things to do with food production but now we have branched out to cardboard as our business activities depend on it. For example our pasta, water, rice and dairy factories all need cardboard. Normally 30-35% of our cardboard factories’ output goes towards helping the group and the rest is for our clients. We have clients such as Nestlé, farmers and clients from the cosmetic industry as there are several cosmetic factories in Côte d'Ivoire. We have clients from the biscuit and confectionary sectors too.

So you have cardboard manufacturing to complement your activities?

Yes.

You also have a presence in the housing sector. That has nothing to do with your other business activities?

As far as housing goes, for a long time we have had pieces of land for investment. We have been looking at building property there since 2010 but after the situation in the country we had to wait to launch it, so this year we are starting on the property ladder. We will build apartments, not independent housing to begin with. We have 8 flats to build, we also have other pieces of land to invest in where we will build independent housing. We will hopefully start this in 2015. We have plans to build in the city as we have lots of commercial land. We will build shopping centres and we will have apartments up for rent. So we have many projects. 2015 will be when we hope to launch our housing business.

Quite rightly you have spoken about housing. Do you have partners or are you alone in this?

At the moment we are on our own but I think we will have partners in the future. If not, banks will help us with loans and insurance which will keep our group independent.

So your strategy is to keep your independence and to have full control over your activities. Is it a family business?

Yes it is a family business and a family group. We would prefer to do things alone without any partners.

I imagine you don’t want to go onto the stock exchange as it is not part of your strategy?

No.

What competition do you have in this market? What are your group’s competitive advantages?

Our competitive advantage demonstrated for example in the rice sector. We have shops which belong to us. We have logistics, lorries and another company who does transportation. We have the finances to support others. We can do it with the volumes we produce - it is the volumes which make us competitive and allow us to enter the marketplace with good, reduced prices for new importers.

You also import. When you have a product to import, how do you make sure the group you have is international. You work with some big names, can you tell us about the supplier businesses you work with?

We have several suppliers. We have suppliers in China who provide us with Chinese products such as batteries and tomatoes for example. We have several products we import from China. We deal with the offices not the factories themselves. In Europe, we have groups who provides us with wheat, biscuits, rice and powdered milk. We import some dairy products from Ireland. We bring in quantities of around 4-5 thousand tonnes a year in big 4/5 kilo packages. We have several importers and suppliers.

Do you have other suppliers?

There are several suppliers who come to us but we are happy with our existing suppliers. We have good prices and a good relationship with them, which is the most important thing these days. Due to the good prices there is no problem with the market here. We have many propositions from suppliers of rice, dairy and all manner of products, but we are happy with our own suppliers.

In terms of clients, who are your clients?

Our clients are the big distributors. We work with all kinds of clients in Côte d'Ivoire except for retailers. We do not have any retailers, just businesses and distributors.

Are there are lots of them? What is the situation?

Competition means working with the entire world and also the Ivorian market is a credit-selling market. You can not trade in cash these days in Côte d'Ivoire. If you trade in cash you cannot sell - you can not enter the market.

So you finance yourself with your clients?

Yes.

You need a big financial capacity to be stable and to be able to supply your paying clients.

Of course, yes. Clients these days must be financed. It is necessary to help them with everything. If they find a supplier who pays less than us they will leave. They will leave to pay cash and earn a bit more.

It is a transient market- it can change.

Yes it can change day by day.

So big distributors and some of the large groups count for a lot?

Those importing small amounts can disrupt the market. With rice, for example they import small quantities, they distribute it to clients and they are slow to pay. This creates competition on the market.

If you keep that vision you have for development. What are your plans for three years time, which groups would you like to be a part of in three years? What objectives would you like to achieve? With all possible means, if you had a magic wand, what would be the ideal scenario?

Our group today is one of the largest groups in Côte d'Ivoire. For many years we have been fifth in terms of business figures. Competition may alter our business figures slightly but we are becoming involved in different activities to keep our presence in the market. It is not easy with the world’s current economic crisis. It is not easy to have new investments so we are trying to keep our current investments and increase them. We would like technological machines in order to make high quality and cheaper products, which are much better than our existing machines. We want better technology. We are trying to change our technology. With the current crisis, we have a problem, not with all of our clients, but some of them have problems with payment. That is why we try to maintain our stability in the market, instead of looking for investments which could cause us more problems.

So, instead of looking for new investments, you are maintaining your current position?

We are going to expand our existing activities instead of looking to another area such as hardware products. We prefer to remain in our area of food production.

But you want to develop them?

Yes, we want to develop them more. We have lots of problems nowadays with several clients who are experiencing difficulties paying their credit.

Even with clients from Côte d'Ivoire?

Yes.

In Côte d'Ivoire there do you see a big economic growth, unlike in Europe?

We do not see much growth. There’s a lot of talk of investors coming in but we do not see much apart from former investors developing.

What is your biggest challenge? Do you sleep well at night?

We don’t sleep- we are still thinking about the economic situation of the country. It is not just in Côte d'Ivoire, but the economy in Côte d'Ivoire is a bit more stable than that of other countries. We import and export. Côte d'Ivoire is more developed and more stable than other countries, for example the sub-regional countries such as Burkina Faso, Mali and Niger where there is nothing. We have cacao, cotton, oil and gas in Côte d'Ivoire and agriculture is good here. We want to maintain our economy. We do not see many developments in our economy but it is better than in other countries.

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Ivory Coast Report

Carré d'Or: Food Processing, Packaging and Cardboard Manufacturing

Zouheir Ezzeddine, General Manager of Carré d'Or

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