Tanzania. Food and Beverages. Executive Summary SECTOR OVERVIEW IN TANZANIA

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1 Tanzania Food and Beverages Executive Summary SECTOR OVERVIEW IN TANZANIA TRADE African countries spend more than USD60bn annually importing food for their growing populations, but the continent has the potential to become a major food exporter. Maize was the leading processed crop and livestock product produced in Tanzania valued at I$759m in Tanzania s food sales increased in 2015 by a double digit 11.1% and will continue to do so in line with rising incomes and a rising population growth. The compound annual growth rate (CAGR) from 2015 to 2020 is projected to be 12.9% p.a. The highest food sales in Tanzania are expected in cereals (TSZ10.6trn in 2016 to TSZ22.4trn in 2020). Beer is the largest alcoholic beverage sales product in Tanzania and is forecast to grow from 641m litres in 2016 to 942m litres in In terms of spirits, Tanzania s best performing spirit is liqueur, which picked up in 2013 to reach 5.6m litres in 2015, overtaking whiskey which is now in second place with 5.3m litres. Tanzania s exports of food and beverages were valued at ZAR24.17bn in, where Tanzania was a net exporter. South Africa and the Western Cape are net exporters of food and beverages to Tanzania. In, South Africa exported food and beverages valued at ZAR451m to Tanzania. The leading export product from South Africa to Tanzania was wine, valued at ZAR86m, followed by undenatured ethyl alcohol (ZAR48m). The Western Cape accounted for 34% of South Africa s exports of food and beverages to Tanzania in. In, food & beverage exports from the Western Cape to Tanzania were valued at ZAR155m. The Western Cape imported ZAR24m worth of food and beverages from Tanzania in. FDI Between January 2003 and December 2015 a total of 23 FDI projects were recorded into Tanzania s food and beverage sector. These projects represent a total capital investment of ZAR10.23bn Tanzania is a net recipient of FDI in the food and beverage sector. The United Kingdom was the leading source market for Tanzania s food and beverage sector investments with 8 investment projects. Between January 2003 and December 2015 a total of 5 FDI projects were recorded into the food and beverage sector from Tanzania. These projects represent a total capital investment of ZAR1.23bn. There was no FDI from Tanzania into the South African food and beverages sector.

2 TABLE OF CONTENTS 1. Definitions/descriptions Overview of food and beverage market in Tanzania SWOT analysis of Tanzania s food and beverage sector Trade Tanzania s Global Trade of Food and Beverages South African Trade of Food and Beverages with Tanzania Western Cape Trade of Food and Beverages with Tanzania Trade Regulations Markings and Standards Standards & Labelling Tariffs for South African food and beverages FDI Inward FDI into the Tanzanian food & beverage sector Outward FDI from Tanzania into the food and beverage sector

3 1. Definitions/descriptions According to FDI.net (2012), the food and beverage processing sector refers to the manufacturing, processing and preservation of meat, fish, fruit, vegetables, oils and fats; manufacture of dairy products; manufacture of grain mill products, starches and starch products and prepared animals feeds; manufacture of other food products (e.g. bread, sugar, chocolate, pasta, coffee, nuts and spices); and the manufacture of bottled and canned soft drinks, fruit juices, beer, wines, etc. This analysis includes unprocessed food and beverages such as raw fruit and vegetables, seeds and nuts. African countries spend more than USD60bn annually importing food for their growing populations, but the continent has the potential to become a major food exporter. Large areas of unused arable land, low fertiliser use and poor irrigation mean there is scope for improving yields in Africa, which are among the lowest in the world. A rising middle class continues to boost African demand for food products, especially for processed and packaged food, creating a continental food market in MENA that the World Bank estimates could be worth USD1trn in 2030 (Gulford Manufacturing, 2015). 2. Overview of food and beverage market in Tanzania The agricultural sector is vital to national well-being, employing around 80% of the working population, accounting for 60% of exports and contributing to around 40% of the country's GDP. On a national level, Tanzania is generally self-sufficient in maize, its most important food crop; several regions frequently produce a surplus of the grain, and the country exports to neighbouring states such as Kenya. Through its Agricultural Sector Development Programme, which is backed by international donors, the government is implementing a food security project; this has potential to significantly raise the quality and yield of major food crops over the next few years (BMI Research, 2016). According to the Food and Agriculture Organization, rice consumption represents 10% of the total caloric intake in the average Tanzanian's diet and is the most important food crop after corn and cassava. Annual per capita consumption of rice has risen by about 20% in the last decade, with consumption currently at 30kg per year. Maize was the leading processed crop and livestock product produced in Tanzania valued at I$759m in Bananas and beans were ranked second and third valued at I$754m and I$670m respectively. Other top products include rice (I$612m), milk (I$560m) and cassava (I$497m). 3

4 TANZANIA VALUE OF AGRICULTURAL PRODUCTION, 2013 Maize Bananas Beans, dry Rice, paddy Milk, whole fresh cow Cassava Non Food (PIN) Groundnuts, with shell Vegetables, fresh nes Potatoes Sunflower seed Sesame seed Mangoes, mangosteens, guavas Sweet potatoes Cotton lint Tomatoes Plantains Tobacco, unmanufactured Pigeon peas Sorghum Gross Production Value (constant I$m) 4 Source: FAOSTAT, 2016 Tanzania has a young and rapidly growing population in excess of 45million. As such, its positive demographics are a contributing factor in the growth forecasts of food sales. Per capita GDP of around USD700 in 2015 suggests that consumer spending is coming from an extremely low base relative to wealthier African economies such as Botswana, Namibia and South Africa. However, as the spending power of the middle class rises, there should be an increase in sales of non-essential food goods such as confectionery and cheese (BMI Research, 2016). Like other East African nations, such as Kenya and Uganda, food consumption is growing from a very low base in Tanzania. By 2019, per capita consumption should grow to USD426, indicating there is still much room for growth. One key factor behind how rapidly the sector will grow is the level of investment into infrastructure to support the expansion of retail outlets. As regional players look for new markets to expand into, it is possible that investment into consumer industries within the poorer African nations will happen sooner rather than later. The graph below shows Tanzania s food sales increased in 2015 by a double digit 11.1% and will continue to do so in line with rising incomes and a rising population growth. The compound annual growth rate (CAGR) from 2015 to 2020 is projected to be 12.9% p.a. Staple food sales will remain resilient, led by rice, owing to the country's rising investment in agricultural production (BMI Research, ).

5 Value (TZSbn) TANZANIA FOOD SALES, f 2017f 2018f 2019f 2020f Food Sales (TZSbn) Growth (%) Growth (%) Source: BMI,

6 Value (TZSbn) The highest food sales in Tanzania are expected in cereals (TSZ10.6trn in 2016 to TSZ22.4trn in 2020) which is not reflected on the graph below due to its high values. Corn consumption is expected to increase by 2% in 2016 to 5.0mn tonnes. Demand should recover further over the forecast period as corn prices fall and rising incomes lead to greater demand for grain-based products (but still making meat largely unaffordable). Out to 2019, it is expected that corn demand will reach 5.33mn tonnes. The second highest value for food sales is for beef (TSZ1.7trn in 2016 to TSZ2.7trn in 2020), followed by bacon & ham (TSZ1.8trn in 2016 to TSZ2.3trn in 2020) and sugar & sugar products (TSZ1.5trn in 2016 to TSZ2.3trn in 2020). A list of the top food sales in Tanzania is presented in the figure below. Rice consumption will largely grow in line with production, as Tanzania is now almost wholly self-sufficient in the crop and rarely imports rice. That said, some companies and country initiatives have entered into the Tanzanian rice sector with a view to immediately export rice. For example, Japanese companies have invested heavily in rice agriculture in the country with the aim of sending part of the resulting output back home. The production deficit is forecast to decline by Tanzania Food Sales, f 2017f 2018f 2019f 2020f beef bacon and ham sugar & sugar products fresh vegetables fish & fish products oils & fats rice poultry milk lamb baked goods meats & preparations crispbread & biscuits other food products fresh & preserved fruit bread egg milk products pork ice cream pasta Source: BMI, 2016

7 Volume (litres mn) Note: cereals have been excluded from the graph due to their high sales values. Tanzania is the most profitable major African beer market based on the operating performance of Tanzania Breweries Limited. A population above 40mn, relatively low per capita commercial beer consumption and a favourable economic outlook will ensure Tanzania remains amongst the most profitable regional markets over the 2020 forecast period. Beer is the largest alcoholic beverage sales product in Tanzania and is forecast to grow from 641m litres in 2016 to 942m litres in The demand for beer will be largely driven by strong growth in disposable incomes and the expanding youth population (BMI Research, 2016). TANZANIA'S BEER SALES, f 2017f 2018f 2019f 2020f Beer Source: BMI, 2016 In terms of spirits, Tanzania s best performing spirit is liqueur, which picked up in 2013 to reach 5.6m litres in 2015, overtaking whiskey which is now in second place with 5.3m litres. Fermented drinks and vodka come in second and third revealing that the Tanzanian market is not a strong market for wine consumption. Red wine is favoured above white wine with 1.1m litres in 2015 as opposed to 0.9m litres. 7

8 Volume (Litres (mn) TANZANIA ALCOHOLIC BEVERAGE SALES, f 2017f 2018f 2019f 2020f Liqueur Whiskey Fermented drinks Vodka Red Wine Gin White Wine Other Spirits Other Wine Vermouth Rum Sparkling Wine Source: BMI, 2016 The graph below shows that carbonated drinks are forecast to rise to reach TZS232bn in Booming demand for carbonated drinks in Tanzania has increased competition in the country. Local players are likely to win market share in the short term, as the slower-than-expected emergence of a stable middle class in the country is likely to push consumers towards these companies' lower-value soft drinks offerings. The carbonated soft drinks sector has grown strongly over the past few years, driven by consumers' rising incomes and increasing investment into the segment. Growth will be supported by the fact that soft drinks also appeal to lower-income consumers, as carbonates are often cheaper than bottled water, and prices of core carbonates rarely rise at the rate of inflation. The Coca-Cola Company announced a USD187mn expansion in Tanzania in 2012 and still dominates the local soft drinks market with its vast soda portfolio. However, several family-owned businesses have recently introduced their sodas to the market. Coca-Cola's most successful competitor so far in Tanzania has been the Bakhresa Group, which has launched its Azam Cola.

9 Value (TZSbn) 250 TANZANIA'S NON-ALCOHOLIC DRINKS SALES, Source: BMI, f 2017f 2018f 2019f 2020f Carbonated Drinks Fruit and vegetable juices Coffee Mineral or spring waters Tea

10 2.1 SWOT analysis of Tanzania s food and beverage sector The table below shows the SWOT analysis of Tanzania s food and beverage Sector: STRENGTHS Per capita food consumption is forecast to increase by 8.4% in Between and 2019, compound annual growth of 9.4% is forecast. Increasing disposable incomes Food consumption is forecast to increase by 11.7% in Between and 2019, compound annual growth of 12.7% is forecast. Mass grocery retail sales are forecast to increase by 24.0% in Between and 2019, compound annual growth of 24.0% is forecast. Growing urban population Large youth population. Expansion opportunities. OPPORTUNITIES Opportunities for MNC s to enter the market. Rising middle class boosts African demand for food products. Premiumisation will play a major part in the growth of many segments of the Tanzanan food and drink industry. Through its Agricultural Sector Development Programme, which is backed by international donors, the government is implementing a food security project; this has potential to significantly raise the quality and yield of major food crops over the next few years. Progress with strategies aimed at improving food security and increasing food surpluses has the potential to expand Tanzania's current position as a regional exporter of grains. Tanzania is Africa's fourth largest producer and exporter of coffee beans. A long-term plan - which we believe is viable - aims to raise production through improving infrastructure, access to credit and production yields. The government is negotiating the possibility of leasing land to foreign companies hoping to grow rice in Tanzania that can then be shipped to their home markets. Deals such as these have potential to generate income for the government, as well as employment for locals. Currency depreciation will benefit exports of agricultural produce, such as coffee. WEAKNESSES The distribution of products across sub-saharan Africa to retailers remains challenging, hampered further by poor infrastructure and refrigeration systems. Very low mass grocery retail penetration rate indicates that Tanzania s mass grocery retail market is still dominated by informal trading channels and lacks centralised distribution mechanisms. Undeveloped physical infrastructure. THREATS Increased production surpluses in key Asian nations could reduce Tanzania's opportunities to supply these countries. Any negative changes to Tanzania's macroeconomic situation could have potentially negative implications for sugar and coffee consumption levels. A forecast weak currency (against the US dollar) over the next few years will make imports and agricultural inputs more expensive. Unless Tanzania can address some of the problems associated with its poor infrastructure, efforts to improve the quantity and quality of coffee exports will fall short of expectations. Although increased investment in biofuel crops could lift industry investment, it could also serve to undermine the availability of food crops such as rice. Urban migration is increasing; this has potential to reduce Tanzania's rural workforce, as well as the age and output of the average rural worker. The illegal duty-free importation of rice from Thailand and Pakistan could potentially add volatility to the commodity price, thus adding an extra dimension of uncertainty. 10 Source: Business Monitor International, 2015

11 2.2 Companies in Tanzania s food and beverage sector As of November there are twenty-two listed companies, five corporate bonds and eight government bonds on the Dar es Salaam stock exchange. The table below summarises the top food and beverage domestic listed companies: TOP DOMESTIC COMPANIES IN THE DAR ES SALAAM STOCK EXCHANGE, COMPANY SECTOR MARKET CAPITAL (TZS sh) Tanzania Breweries Ltd. Beverages 5,013,783,871,000 Tatepa Company Beverages 11,607,157,250 Tanzania Cigarette Co. Food & Tobacco 1,676,000,000,000 Source: The Dar es Salaam Stock Exchange, 11

12 Value (ZARbn) 3. Trade 3.1 Tanzania s Global Trade of Food and Beverages Tanzania is usually a net exporter of food and beverages, with a surplus of ZAR11.48bn in. Tanzania s exports of food and beverages were valued at ZAR24.17bn in compared to ZAR11.38bn in 2013, increasing by a 112%, while imports were valued at ZAR13bn in increasing by 37%. The growth in exports was mainly driven by increased exports of brazil nuts and palm oil. 30 TANZANIA'S GLOBAL TRADE OF FOOD & BEVERAGES, Exports (ZARbn) Imports (ZARbn) Trade Balance Source: Trade Map, India was the leading export market for food and beverages from Tanzania in, valued at ZAR7.36bn and growing by an average growth rate of 59% per annum between 2010 and. China and Congo were ranked second and third, valued at ZAR3.11bn and ZAR3.04bn respectively. Other top export markets were Kenya (ZAR2.84bn), Japan (ZAR0.95bn) and the DRC (ZAR0.88bn). The top food and beverage exports to the top two destination markets are shown alongside: TANZANIA S EXPORT MARKETS OF FOOD & BEVERAGES, RANK DESTINATION MARKETS VALUE (ZARbn) % GROWTH India China Congo Kenya Japan Democratic Republic of Congo Source: Trade Map, Viet Nam United Arab Emirates Italy Switzerland South Africa TOTAL EXPORTS India: Brazil nuts, ZAR3.5bn Dried vegetables, ZAR1.6bn Cereals, grouts, meals pellets, ZAR931m China: Oil Seeds, ZAR2.9bn Fixed vegetable fats & oils, ZAR114m Frozen fish fillets, ZAR17m Congo: Palm oil, ZAR2.19bn Sugar, ZAR662m Wheat/meslin ZAR150m

13 Malaysia was the leading source market for food and beverages to Tanzania valued at ZAR3.32bn, followed by Russia and Australia valued at ZAR1.2bn and ZAR0.95bn respectively. South Africa was ranked as the 7 th largest source market with ZAR0.48bn. The top food and beverage imports from the top source markets are as follows: TANZANIA S SOURCE MARKETS OF FOOD & BEVERAGES, RANK SOURCE MARKETS VALUE (ZARbn) % GROWTH Malaysia Russia Australia Kenya Canada Indonesia South Africa Zambia Germany Malaysia: Palm oil ZAR3.2bn Fixed vegetable fats & oils, ZAR57m Animal fats & oils, ZAR20m Russia: Wheat & meslin ZAR1.2bn Wheat & meslin flour, ZAR27m Dried shelled vegetables, ZAR9m Australia: Wheat & meslin ZAR825m Wheat & meslin flour, ZAR108m Bran sharps & other residues, ZAR6m 10 India TOTAL IMPORTS Source: Trade Map, 2016 Brazil nuts were the leading export product from Tanzania in, valued at ZAR4.3bn. This was followed by oil seeds worth ZAR3.66bn and palm oil worth ZAR2.2bn. Tanzania is the 29 th largest global exporter of tea, coffee, mate and spices. Although brazil nuts are Tanzania s largest agricultural export, the largest producers of this nut globally are Bolivia (50%), Brazil (40%) and Peru (10%). The leading import product into Tanzania was palm oil, valued at ZAR3.9bn. Wheat & meslin (ZAR3.46bn) and sugar (ZAR1.05bn) were the second and third largest imported products in the sector. The strongest growth of imports over the 5 year period were seen for flour & meals of oil seed and wheat or meslin flour. 13 RANK TANZANIA S GLOBAL EXPORTS OF FOOD & BEVERAGES, TANZANIA S GLOBAL IMPORTS OF FOOD & BEVERAGES, PRODUCT VALUE (ZARbn) % GROWTH RANK PRODUCT VALUE (ZARbn) % GROWTH Brazil nuts, cashew nuts & coconuts Palm oil & its fraction Oil seeds Wheat and meslin Palm oil & its fraction Cane or beet sugar and chemically pure sucrose, in solid form Dried vegetables, shelled Wheat or meslin flour Fish fillets and pieces, fresh, chilled or frozen Malt, whether or not roasted Coffee Flour and meals of oil seeds Maize (corn) Maize (corn) Cereal grouts, meal and pellets Oil-cake nes Cane or beet sugar and chemically pure sucrose, in solid form Sugar confectionery (incl white choc), not containing cocoa Milk and cream, not concentrated nor sweetened Fish, frozen, whole TOTAL EXPORTS TOTAL IMPORTS Source: TradeMap, 2016

14 Value (ZARm) 3.2 South African Trade of Food and Beverages with Tanzania As depicted in the graph below, South Africa has a positive trade balance with Tanzania and is a net exporter of food and beverage products to the country. In, South Africa exported food and beverages valued at ZAR451m compared to ZAR471.13m in 2013, representing a decrease of 4.2%. South Africa imported food and beverages from Tanzania valued at ZAR96m in compared to ZAR140m in 2013, representing a decrease of 31%. SOUTH AFRICAN TRADE OF FOOD & BEVERAGES WITH TANZANIA, Exports (ZARm) Imports (ZARm) Trade Balance (ZARm) Source: Quantec, 2016 The leading export product to Tanzania was wine, valued at ZAR86m, followed by undenatured ethyl alcohol (ZAR48m). The third largest export was fruit juice (ZAR42m). Looking at the growth trends over a longer period, from 2010-, the highest average annual growth in the top ten exports were found in the following: Sugar; 4707% p.a. Malt extract; 74% p.a. Other fermented beverages; 47% p.a. 14 The leading import product into South Africa from Tanzania was coffee valued at ZAR32m followed by tea (ZAR31m). The largest growth over 5 years (2010-) was seen for coffee, growing at 51% p.a. and dried leguminous vegetables 44% p.a. SOUTH AFRICA S EXPORTS OF FOOD & BEVERAGES TO TANZANIA, RANK PRODUCT VALUE (ZARm) % GROWTH Wine of fresh grapes Undenatured ethyl alcohol of an alcoholic strength by volume of 80 per cent vol. or higher Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit Food preparations not elsewhere specified or included Cane or beet sugar and chemically pure sucrose, in solid form RANK SOUTH AFRICA S IMPORTS OF FOOD & BEVERAGES FROM TANZANIA, PRODUCT Coffee, whether or not roasted or decaffeinated; coffee husks and skins VALUE (ZARm) % GROWTH Tea, whether or not flavoured Oil-cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extract Dried leguminous vegetables, shelled, whether or not skinned or split Coconuts, brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled

15 Value (ZARm) SOUTH AFRICA S EXPORTS OF FOOD & BEVERAGES TO TANZANIA, RANK PRODUCT Milk and cream, not concentrated nor containing added sugar Other fermented beverages (for example, cider, perry, mead) Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or contai VALUE (ZARm) % GROWTH RANK SOUTH AFRICA S IMPORTS OF FOOD & BEVERAGES FROM TANZANIA, PRODUCT Cane or beet sugar and chemically pure sucrose, in solid form VALUE (ZARm) % GROWTH Vanilla Apples, pears and quinces, fresh Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, em Sugar confectionery (including white chocolate), not containing cocoa Food preparations not elsewhere specified or included Grain sorghum TOTAL EXPORTS TOTAL IMPORTS Source: Quantec, Western Cape Trade of Food and Beverages with Tanzania As depicted in the graph below, the Western Cape also had a positive trade balance with Tanzania from 2005 to. In, exports were valued at ZAR155m compared to ZAR135m in 2013, increasing by 14%. The Western Cape accounted for 34% of South Africa s exports of food and beverages to Tanzania in. 180 WESTERN CAPE TRADE OF FOOD & BEVERAGES WITH TANZANIA, Exports (ZARm) Imports (ZARm) Trade Balance (ZARm) Source: Quantec, The leading export product from the Western Cape to Tanzania in the food and beverages sector was wine, valued at ZAR71m. The second largest export to Tanzania was fruit juice (ZAR41m) followed by apples, pears & quinces (ZAR19m). In terms of the top 10 exports one can see that in value terms it is beverage heavy, with beverages making up 81% of the top 10 exports. The Western Cape s largest import from Tanzania in was oil cake worth ZAR14.4m followed by coffee (ZAR7m) and tea (ZAR1.4m).

16 WESTERN CAPE S EXPORTS OF FOOD & BEVERAGES TO TANZANIA, RANK 1 2 PRODUCT Wine of fresh grapes, including fortified wines; grape must (excluding that of heading 20.09) Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether VALUE (ZARm) % GROWTH RANK WESTERN CAPE S IMPORTS OF FOOD & BEVERAGES FROM TANZANIA, PRODUCT Oil-cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extract Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee VALUE (ZARm) % GROWTH Apples, pears and quinces, fresh Tea, whether or not flavoured Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 per cent vol.; spirits, liqueurs Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of f Birds' eggs, in shell, fresh, preserved or cooked Prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, corn flakes); Food preparations not elsewhere specified or included Vanilla Grapes, fresh or dried Fish, fresh or chilled (excluding fish fillets and other fish meat of heading 03.04) TOTAL EXPORTS TOTAL IMPORTS Source: Quantec, 2016 Olive oil and its fractions, which has not been included in the graph below for scaling purposes, was the fastest growing export products in the short term (2013 to ), growing at 24400% followed by other sugars. In the medium term (2010-), the fastest growing export product category was citrus fruit, followed by crustaceans. 16

17 WESTERN CAPE FOOD & BEVERAGE EXPORTS TO TANZANIA BY GROWTH, WESTERN CAPE FOOD & BEVERAGE EXPORTS TO TANZANIA BY GROWTH, Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form Other fermented beverages (for example, cider, perry, mead) Citrus fruit Crustaceans, molluscs and other aquatic invertebrates Tea Guts, bladders and stomachs of animals Cinnamon and cinnamon-tree flowers Locust beans, seaweeds and other algae, sugar beet and sugar cane Cocoa powder Other nuts, fresh or dried Yeasts (active or inactive) Mushrooms and truffles Fish, fresh or chilled Pepper Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices Meat of sheep or goats Coconuts, brazil nuts and cashew nuts, fresh or dried Other sugars, including chemically pure lactose, maltose, glucose and fructose Milk and cream, concentrated or containing added sugar Wine of fresh grapes Yeasts (active or inactive) Fruit juices (including grape must) and vegetable juices Dried vegetables, whole, cut, sliced, broken or in powder Food preparations not elsewhere specified or included Carrots, turnips, salad beetroot, salsify, celeriac, radishes and similar edible roots, fresh or chilled Waters, including natural or artificial mineral waters and aerated waters Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices Locust beans, seaweeds and other algae, sugar beet and sugar cane Birds' eggs, in shell, fresh, preserved or cooked Fruit, nuts and other edible parts of plants Coffee Vinegar and substitutes for vinegar obtained from acetic acid Cereal grains otherwise worked Prepared foods obtained by the swelling or roasting of cereals or cereal products Sausages and similar products, of meat Source: Quantec, 2016

18 3.4 Trade Regulations Markings and Standards Currently there is no FTA between South Africa and Tanzania. In October 2008, SADC joined with the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) to form the African Free Trade Zone, including all members of each of the organizations including South Africa and Tanzania. The African Free Trade Zone, consists of 26 countries with a GDP of an estimated USD624bn Standards & Labelling The Tanzania Bureau of Standards (TBS) manages information on technical regulations, adopted and proposed standards, conformity assessment procedures, and sanitary and phytosanitary measures. TBS is also a member of the East African Community Bureau of Standards and the South African Development Community Committee of Experts for Standards, Quality Assurance, Accreditation and Metrology. Importers in Tanzania are required to establish whether or not the goods to be imported are subject to Pre-Shipment Inspection (PSI). In general, any shipment valued at over USD5,000 is subject to PSI. Some goods are exempt from PSI. 1.2% of FOB value must be paid to a designated commercial bank when submitting the Import Declaration Form (IDF) for the bank, for consignments requiring PSI. Importers must provide full contact details of actual suppliers. Tanzania follows international (ISO) standards for labelling and marking of imports and does not impose special requirements. 18

19 3.5 Tariffs for South African food and beverages Tanzania imposes the highest tariffs on the import of sugar & sugar confectionary with an ad valorem tariff of 13.1%. All of the other food categories have a tariff of 0% TARIFFS IMPOSED BY TANZANIA TO SOUTH AFRICAN FOOD AND BEVERAGE IMPORTS, HS EQUIVALENT AD PRODUCT CODE VALOREM TARIFF 02 Meat and edible meat offal Fish, crustaceans, molluscs, aquatic invertebrates nes Dairy products, eggs, honey, edible animal product nes Edible vegetables and certain roots and tubers Edible fruit, nuts, peel of citrus fruit, melons Coffee, tea, mate and spices Cereals Milling products, malt, starches, inulin, wheat gluten Oil seed, oleagic fruits, grain, seed, fruit, etc., nes Animal, vegetable fats and oils, cleavage products, etc Meat, fish and seafood food preparations nes Sugars and sugar confectionery Cocoa and cocoa preparations Cereal, flour, starch, milk preparations and products Vegetable, fruit, nut, etc. food preparations Miscellaneous edible preparations Beverages, spirits and vinegar 0.0 Source: TradeMap,

20 Value (ZARm) 4. FDI 4.1 Inward FDI into the Tanzanian food & beverage sector Between January 2003 and December 2015 a total of 23 FDI projects were recorded into Tanzania s food and beverage sector. These projects represent a total capital investment of ZAR10.23bn which is an average investment of ZAR444.08m per project. During the period, a total of 4,550 jobs were created. Tanzania is a net recipient of investment in the food and beverage sector. INWARD FDI INTO TANZANIA'S FOOD & BEVERAGE SECTOR, Projects Capex Projects Source: FDI Intelligence, 2016 The United Kingdom was the leading source market for Tanzania s food and beverage sector investments with 8 investment projects representing a capital investment of ZAR3.6bn followed by China and India with 2 (ZAR2bn) and 2 (ZAR880m) investment projects respectively. GLOBAL FDI INTO TANZANIA S FOOD, BEVERAGE & TOBACCO SECTORS, RANK SOURCE COUNTRY PROJECTS % PROJECTS CAPEX (ZARm) % CAPEX COMPANIES 1 UK China India Thailand Belgium Croatia Egypt Kenya Netherlands Norway TOTAL Source: FDI Intelligence, 2016

21 In terms of inward FDI into Tanzania s subsectors by projects the largest recipients were: Breweries & distilleries accounting for 35% projects and 31% capex, Sugar & confectionary accounting for 13% projects and 20% capex, and Pesticides, fertilisers & other agricultural chemicals accounting for 9% projects and 22% capex INWARD FDI INTO TANZANIA'S FOOD & BEVERAGE SECTOR BY SUB SECTORS, Breweries & distilleries Sugar & confectionary products Pesticide, fertilisers & other agricultural chemicals Crop production Soft drinks & ice Plastics packaging materials & unlaminated film & sheets Fruits & vegetables & specialist foods Food & Beverage Stores (Food & Tobacco) Animal production Animal food All other food Agriculture, construction, & mining machinery % capex % projects Source: FDI Intelligence, 2016 The table below shows the companies investing into Tanzania s food and beverage sector by number of projects from January 2003 to December SABMiller was the largest investor in the sector, with 6 projects worth ZAR2.4bn. The main business activities for 78% of companies investing into Tanzania was manufacturing, followed by 9% in sales, marketing and support. Nigel Fairbrass, head of media relations said that SABMILLER, which is the world s second-largest brewer, is focusing on Africa in a bid to tap into a market worth USD3bn. The brewer will also be opening four new breweries this year as it seeks to benefit from countries economies growing at about 4% and 5%. COMPANIES INVESTING INTO TANZANIA S FOOD & BEVERAGE SECTOR, INVESTING COMPANY COUNTRY PROJECTS CAPEX (ZARm) SABMiller United Kingdom Charoen Pokphand Group Thailand Associated British Foods (AB Foods) United Kingdom Candico Belgium City Energy & Infrastructure Dubai

22 COMPANIES INVESTING INTO TANZANIA S FOOD & BEVERAGE SECTOR, INVESTING COMPANY COUNTRY PROJECTS CAPEX (ZARm) Coca-Cola United States Diageo United Kingdom Egyptian African Company for Investment and Development Hainan Zhongchen Biologic Engineering Egypt China Heineken Netherlands TOTAL INVESTORS Source: FDI Intelligence,

23 4.2 Outward FDI from Tanzania into the food and beverage sector Between January 2003 and December 2015 a total of 5 FDI projects were recorded into the food and beverage sector from Tanzania. These projects represent a total capital investment of ZAR1.23bn which is an average investment of ZAR246.06m per project. During the period, a total of 636 jobs were created. FDI FROM TANZANIA INTO THE FOOD & BEVERAGES SECTOR, DATE INVESTING DESTINATION SECTOR INDUSTRY VALUE JOBS SUB-SECTOR COMPANY COUNTRY ACTIVITY (ZARm) CREATED Jan Techno Software publishers, except Education & Kenya Software & IT services 2013 Brain video games Training Aug Mount Meru 2012 Group Uganda Food & Tobacco Grains & oilseed Manufacturing May 2011 Bakhresa Rwanda Food & Tobacco Grains & oilseed Manufacturing Oct 2010 Bakhresa Mozambique Food & Tobacco Grains & oilseed Manufacturing Jun Mount Meru 2009 Millers Uganda Food & Tobacco Grains & oilseed Manufacturing Source: FDI Intelligence, 2016 There was no FDI from Tanzania into the South African food and beverages sector. There was no FDI from South Africa into the Tanzanian food and beverage sector. For more information on this publication and other Wesgro publications please contact research@wesgro.co.za or for more publications visit the Wesgro publications portal on our website at 23