Spear Capital, a Norwegian-South African private equity fund, has invested $4.5m for 40% equity in South African meat processing company Peries Foods. The deal values the company, which specialises in chicken, at $11.25m, will help fund expansion across sub Saharan Africa.
Spear Capital primarily invests in the consumer goods sector and in agribusiness SMEs. Peries Foods, aims to use the investment to expand out of South Africa’s $400m, 8% year on year growth, processed meat market and into other sub Saharan African markets. The processed meat sector in southern Africa is recovering after the major listeriosis outbreak through 2017 and 2018, and which caused 183 deaths and involved major players Enterprise (Tiger Brands) and Rainbow Chicken.
Peries Foods specialises in chicken, a key growth sector in Africa. Trendtype tracks more than 13,000 chain fast outlets across Africa. One fifth of those outlets are chicken outlets (fried, grilled chicken), not including that other outlets will have chicken burgers, sandwiches, salads on the menu.
Lessons learnt from the South African listeriosis outbreak will be critical for Peries Foods. At the time, Botswana, Kenya, Namibia, Mauritius, Mozambique, Malawi and Zambia all suspended imports. It is likely that, given the growth and number of players in the wider processed meat sector, that there will be another public health scare in sub Saharan Africa within the next five years, which will place larger and safer companies in a more advantageous position.
The rapid modernisation of both the grocery retail and fast food markets also favours larger processed meat players with more assured quality control and supply chains. Zambeef, for example, the the largest beef producer in Zambia, has been Shoprite’s in-store butchery partner for West Africa since 2016.
There is also an intersection between grocery retail and fast food: Shoprite operates the Hungry Lion fried chicken chain, Spar operates Chikka Chicken, Choppies operates Choppies Fried Chicken. There are more than 500 outlets of these three brands alone. Supermarket takeaway outlets can account for up to 10% of store revenues, making them a supercharged channel for meat processors.
