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MALAWI MANGOES: TRANSFORMING MALAWI’S HORTICULTURE INDUSTRY

Background

Malawi Mangoes was founded in 2009 by two English men Craig Hardie and Jonathan Jacobs, and it is one of the success stories of investment in Malawi. Although many people in Europe and the West would struggle to place Malawi on a map and, even if they could, there is a widespread assumption that it is hard, if not impossible, to do business there, Hardie and Jacobs believes otherwise. Malawi is acknowledged universally to be one of the safest places in Africa and the prospects for continued stability and economic growth are promising.

‘’They say Malawi is a land locked country but to me Malawi is not necessarily a land locked country, actually it is a hub of opportunities for both investments and trade activities’’, explains Jacobs.

Core Business

Malawi Mangoes’ core business proposition is to source bananas and mangoes from a blended supply chain comprising its own anchor farms and a significant smallholder outreach programme, focused in the early years on the Salima District of Malawi. The fruit is then processed into a single strength pulp or puree, and double strength concentrate in an international class facility constructed in Salima and the resulting product is then exported to regional and international fruit drinks manufacturers.

Malawi Mangoes is not a direct retail juice brand, it sells the core ingredient to juice brands and blenders for use in their retail products. Even not taking into consideration the expansion opportunities into other fruit products, the fresh markets, irrigation distribution and other geographic agro-opportunities, the core Malawi Mangoes business model will become a US$50m + revenue pa business by the end of 2018. Malawi Mangoes success is due to the engagement that it has with the local communities of the Salima District.


Location

Located in the lakeshore district of Salima, in the central region of Malawi, Malawi Mangoes aims to implement the first large scale fruit processing facility in Malawi. The company has secured a 126ha site for a banana and mango plantation in the district, commenced the development of its second farm of 310 hectares close by, and is on the course to commence commercial trials with major regional and international drinks brands for the export of banana and mango puree, using both commercial and smallholder fruit suppliers. Agriculture trials for pineapple are due to start within year 2014.

The commercial driver for the business is the strong growth in demand for mango and banana pulp in both global and regional markets. The business capitalizes on low production, excellent conditions and access to water from Lake Malawi for irrigation purposes.


Export Marketing

 


The global demand for mango and banana puree continues to increase significantly year-on-year fueled by two factors: the first is the increasing trend among developed nations (primarily in Europe and the United States) to drink more fruit products. The second is that as more middle classes emerge in previously developing nations (India, China, Central America and in particular Africa), the demand from these geographies is on the sharp increase as well. At the same time, the areas which have traditionally supplied both mango and banana for export are finding it increasingly difficult to meet existing demand, let alone the market expansion.

In the case of mango the global market is driven by India, which accounts for over 60% of all export production (both fresh fruit and processed). However India’s ability to supply those export markets is being hampered. With respect to banana’s, the bulk of the World processed market is supplied from seasonal producers in South and Central America whose overwhelming priority is to supply the ever increasing demand from the domestic, regional and global fresh marts.

Given the above, Malawi Mangoes has received widespread interest from regional and international customers. Following formal commissioning of the processing facility in Salima in November 2013, commercial trials for banana and mango NFC and concentrate commenced in Q4 2013/Q12014 with Innocent drinks, Froosh (owned by Unilever), the Coca Cola Corporation (Minute Maid), PepsiCo (Tropicana and Naked), Ceres, Compal, Doehler and Aujan (the largest juice manufacturer in the Middle East).

It is also important to note that, in a product market where end-customers are becoming increasingly interested in product sourcing and traceability, Malawi Mangoes strong sustainability credentials have also acted as a great attractor for its potential customers.


Investment Climate

The decision to export pulp products mitigates the geographical and infrastructure challenges faced by Malawian exporters since they do not demand rapid access to major transport hubs that fresh produce requires.

Lying in The Great Rift Valley, Malawi’s tropical volcanic soil is relatively underdeveloped and remains some of the most fertile in the world suitable for any agricultural activity.

In his opinion Jonathan Jacobs who is co-managing director of Malawi Mangoes thinks that besides the good soils, water, and climatic conditions prevailing in Malawi, the country has a great human resource. The only challenge that Malawi faces is lack of big investments and markets needed to utilize the full potential of the available human resource.

Jonathan Jacobs: Co-managing Director Malawi Mangoes

‘But with various business reforms being implemented by the government of Malawi and the establishment of the Malawi Investment and Trade Centre, Malawi will be the most preferred destination for big investments in the next ten years’, adds Jacobs.

Besides all other factors like good soils, water and good climatic conditions, Malawi has the best competitive advantage in the region and that is, its people. People in Malawi are hardworking and eager to be engaged whenever an opportunity arises,’’ comments Jacobs.

The realization that Malawi has some of the best conditions in the world for growing tropical fruit together with resourceful, hard-working people looking for the opportunity to be self-sufficient, but who haven’t had the means to tap into export markets, is the main driving force that made Jacobs and Hardie to set up their business in Malawi. What was needed was a little joined up thinking in:

Harnessing the existing knowledge  of Malawians to grow fruit fit for the export market

Gaining investment to set up and run a World Class processing facility

Using technical expertise to export finished products safely to customers

And most importantly, investing back into the fruit and local community


Corporate Social Responsibility

The company works with local communities to graft material of preferred mango varieties to local trees, thereby increasing the yield, quality and marketability of the mango puree product; Malawi Mangoes then guarantees to buy all the mangoes grown on these trees.

And in an area where less than 15% of the population has regular employment, the company generates over 1,000 jobs in farm work and at their processing plant. The activities of the business impact the livelihoods of up to 12,000 local households.

Locals working at the nursery

Today the six billion dollar investment is slowly transforming Malawi’s agricultural sector especially horticulture. With a processing factory almost completed the future for Malawi Mangoes looks promising.

With an objective of producing world class mango and banana concentrate pureé for export to African, Western and Asian beverage and retail markets, Malawi Mangoes is an example of how such a value-added business development opportunity can be created in Malawi, potentially encouraging other industry players to copy their approach and generate further export opportunities with associated pro-poor impacts.