Fan Milk in West Africa, 1950s to 2014 1 the new countries, available infrastructure from the colonial and local heritages, strong agriculture bases, Fan Milk: “We share the dream about a brighter and potential for new industry paved the way for high future for Africa and West Africa in particular” hopes. Although refrigerated dairy products were not part of consumers’ tastes or broader cultural values at the time, Emborg decided it would be worth experimenting with producing and distributing small containers of refrigerated milk directly into local communities, which he hoped would be attractive in the hot climates. By 2012, Fan Milk International reached sales of about $150 million across its Fan Milk businesses in West Africa. Sales had increased from $108 million in 2008. Photo source: Tech-solutions.dk Fan Milk is a manufacturer and retailer of In 2013, Fan Milk International, the Danish parent of refrigerated beverages and frozen dairy products, the Fan Milk businesses in West Africa, was acquired with leading positions in several West African by Danone (global food products, with a 49% stake) countries, including Ghana, Nigeria, Togo, Benin, and the Abraaj Group (a Dubai-based growth markets Burkina Faso, and Cote d'Ivoire. Its products include private equity investor, with a 51% stake) for about FanYogo (one of the world’s first frozen yogurts), $300 million. In the coming years, Danone plans to FanExtra (frozen yogurt with vitamins), Fanice acquire a controlling stake in the Fan Milk business. (frozen dessert), FanGold (ice cream), Fantastic The acquisition is part of Danone’s expansion in (flavored yogurt drink), FanChoco and FanVanille Africa. In 2012, for instance, Danone paid $700 (flavored beverages), FanDango (energy fruit drink), million to increase its 29% stake of Centrale Laitiere and Tampico (fruit drink). Most products are sold in in Morocco (the country’s leading dairy business, single-serving pouches and stackable containers. with about $750 million sales and $50 million net revenue) to a 67% holding. Fan Milk offers its frozen dairy products, juice, and juice drinks in countries with a total population of almost 300 million people – including 120 million Ghana urban consumers – inhabiting six West African nations. Overall, in 2013, Fan Milk distributed Combining his skills in trading with his connections through a network of regional agents and 31,000 to people in Denmark with expertise in dairy independent vendors in West Africa, selling 1.8 technology, Erik Emborg created one of the first million products daily. dairy businesses in Ghana in 1960. Dairies and fresh milk were not widely available in West Africa, so the The sight and sound of blue-shirted sellers pushing manufacturing process reconstituted milk from milk white Fan Milk carts and riding bicycles with coolers, powder, sourced from Denmark. while ringing their bells looking for sales, is part of the landscape of most cities in the region. Brand The company, initially specializing in pasteurized recognition for Fan Milk is high: reaching 94% in milk, was called the Ghana Milk Company. In 1962, Nigeria, 97% in Ghana, and 100% in Togo in a 2012 the Fan logo was introduced and the company survey. Across its markets, consumers view the brand became known as Fan Milk Limited, offering ice as being affordable, fresh, tasting good, and for cream, yoghurt, and ice lollies in addition to milk. everyone. The company quickly became profitable. Fan Milk’s business in West Africa dates back to the Fan Milk’s Ghana business is headquartered in the 1950s. During several visits to West Africa in the capital, Accra, whose 2.3 million people are about mid 1950’s, a Danish entrepreneur, Erik Emborg, 9% of the country’s population. Fan Milk also has a saw a potential market for locally produced dairy distribution center in Kumasi, about 250 kilometers products. Several West African countries had and a three and a half hour drive inland of Accra. recently gained independence and the region was Kumasi, which also has more than 2 million people, thriving. The combination of national pride within is the only other metropolitan region in Ghana with population of more than 1 million. Fan Milk distributes its products through a network 1 This note was prepared from public sources by Will Mitchell (September 2014), with thanks to Bendikt Wahler. of bicycle vendors, pushcarts, and kiosks throughout 1 the country. Fan Milk supplies the carts, bicycles, and holding 37% and the Danish Industrialization Fund refrigerated containers for the products, typically for Developing Countries holding 25%. selling or renting them to the vendors. Vendors In 2013, the managing director of Fan Milk Limited purchase the items and then sell them at a mark up, was a Danish ex-pat, supported by local executives in with their earnings based on sales. roles such as sales, human resources, IT, internal Fan Milk has since become a household name in audit, project management, and production. Board Ghana. It is a common sight to see ice cream carts members include several highly experienced leaders and bicycles with Fan Mark logo on beaches and from Ghana and elsewhere in Africa, as well as the streets selling the products. Managing Director of Fan Milk International and Emidan in Denmark. Following the acquisition by Danone and Abraaj in 2013, two executives from Abraaj joined the Fan Milk Limited board. Photo source: SpyGhana.com Following the acquisition by Danone and Abraaj, Fan Milk Limited announced that it would reduce its investment in Ghana during 2014. The country’s managing director said that the board had made this decision owing to recent electricity shortages in the country that had caused storage and distribution problems in Ghana and, in turn, had affected revenue. Early years in Ghana (photo source: www.fanmilk.com) Nonetheless, he stated that Fan Milk remained committed to Ghana. Nigeria In 1961, Erik Emborg created a sister company to the Ghanaian business, Fan Milk Nigeria Plc. The Nigerian company began operations in 1963 with a recombination plant in Ibadan (the capital city of Oyo State, 125 kilometers north of Lagos, about 90 minutes by road) and a distribution center in Lagos, with fewer than 30 employees. Initially, the product range was white milk, chocolate milk, cottage cheese, and set yoghurt. As in Ghana, the main outlet was bicycle vendors, who were supplied with cold Today (photo source: cp-Africa.com) products from a group of smaller depots. Fan Milk Limited was the first foreign invested company in Ghana to become a Public Limited Liability company, in 1967, and among the first Companies to be listed on the Ghana Stock Exchange, in 1990. As of the 2000s, Fan Milk’s top two shareholders held more than half of the equity, with the Danish parent Fan Milk International 2 fruit drink, Tampico. Photo source: http://www.modernghana.com Photo source: https://twitter.com/fanmilklg Tampico succeeded rapidly in Nigeria and was introduced to Fan Milks’ other markets. The Fan Milk in Nigeria expanded during the 1970s and investment in distribution and logistics supported Fan 1980s. In the 1970s, Fan Milk introduced yogurt Milk’s spread throughout Nigeria. The expansion and drink, ice lollies, ice cream, and recent advances in rehabilitation program returned the Nigerian business Tetra Pak packaging (developed in Sweden). The to profitability by the early 2000s. new products became popular and generated financial resources to set up more distribution depots. In 1981, With the new investment, and following Fan Milk established a second recombination plant in democratization of Nigerian politics in 1999, control Kano (about 1,000 kilometres north-east of Lagos). of the company returned to Danish hands. In 2011, Fan Milk International, which continues to maintain its headquarters in Aalborg, Denmark, held controlling interest of 62% of the shares of Fan Milk Plc, while the Internationalization Fund for Developing Countries held 19%. Fan Milk Plc has continued to expand in Nigeria. In 2011, for instance, the company set up a distribution center in Benin City (300 km east of Lagos), by leasing a one-million liter capacity cold room in the city to serve markets in east Nigeria. By 2014, Fan Milk had 21 offices and distribution outlets in Nigeria, including 13 of the country’s 36 states and Fan Milk in Nigeria (photo source: Odemsay.com) Federal Capital Territory of Abuja. Seven of the offices were in Lagos State, which has 12% of the When the Nigerian company was established, the country’s 175 million people. (Nigeria has 12 urban foreign owners held 96 per cent of Fan Milk Plc. In areas in 10 states with a population of more than 1 the late 1970s, though, the government introduced the million). Nigerian Enterprises Promotion Decree, which required major local ownership. In response, Fan Fan Milk Plc now directly employs about 400 Milk Plc increased its capital and invited Nigerians to employees in the country, while providing indirect invest, which led to 60 per cent Nigerian employment to thousands of others, from bicycle participation. distributors to agents and franchise holders, as well as suppliers and vendors across the spectrum of its During the 1980s and 1990s, import restrictions, business activities. In 2011, the managing director of economic difficulties, political coup d’états, the Nigerian operation was a Danish ex-pat, devaluations, and shortages of fuel in Nigeria – and supported by a board that included Danish, Nigerian, throughout West Africa – weakened Fan