Profile of the Ethiopian Bottled water, Soft drink, Fruits and Vegetable Processing / Manufacturing Industries Association(EBSFMIA)
Ethiopian Beverages Manufacturing Industries Association (EBMIA) was legally established with its members coming from the sector.
EBMIA has got its license from FDRE Ministry of Trade & Industry as per Proclamation 341/2003 part 5(23) that allow the foundation of Sectoral Associations. As per this, the Association will have the following main objectives:
- Creating a conducive environment for producers in the sector to be organized and strengthened at the country level
- Providing necessary support to upgrade the quality of products;
- Disseminating and compiling information on products;
- Encouraging the participation of members in the economy by coordinating their knowledge, wealth, and labor;
- Creating a conducive environment for members to safeguard their common interests;
- Serves as a bridge between the government and the sector.
- Bargain on policy reforms in the sector
- Organize trade fairs and facilitate the participation of members in local and foreign exhibitions;
- Facilitate industrial matchmaking through arranging business-to-business meetings (Joint venture);
- Build the capacity of members in terms of knowledge and technology transfer,
- Publish Directory, journals, and various sector-specific publications in a bid to promote the sector;
- Undertake Advocacy, research, and development activities;
- Beef up capacity and awareness of members on government policies, proclamations, regulations, and directives;
- Provision of sector-specific information with regards to product, technology, innovation, fairs, conferences, trade, and investment information to members;
- Maintain strategic relations with foreign industries that are engaged on similar sector in order to share best experiences and information.
The trend in the changing life style of the Ethiopian people in drinking bottled water at home, work place, recreation and travel in the country provided another opportunity to sale bottled water as a product in the market and expand the number of factories working in the sector. The number of factories involved in the mineral water and soft drink is also enormous.
A decade ago, the idea of bottled water for many Ethiopians was a trend that characterized the Diaspora and the modern, wealth driven way of life.
It was in the early 1990’s that Ethiopia first got its own bottled water, when the local apex Bottling Company introduced the iconic” Highland Spring water”. Any brand bottled water has known in fact continued to be known as simply “highland” until very recently.
Now, after almost a decade of growth in the sector, it’s very common to see multiple alternatives in the country. Recent data shows that currently there are up to 81 brands of bottled water and 4 mineral water have now entered the market. The number continues to grow every year. The number of consumers too has escalated over the years; to a point where some have stopped drinking tap water altogether.
Many factors, such as the growing number of conferences and summits in Addis Ababa, the increased tourist’s traffic, and the expansion of the hospitality sector have contributed for the growth.
The operator’s number is very insignificant as compared to neighboring country Kenya which has more than 350 players in 2018, only in the water sector as Kenyan Bureau of Standards (KEBS) sources indicated.
Soft drink companies such Coca Cola is also a member of this Association. It is a company that has been refreshing Ethiopians with quality beverages for the past 60 years.
There are also about 22 fruits and vegetable processers/ manufacturers that are directly a member to the association. They mostly engage in manufacturing of Juice, Jam, concentrate, etc.
Generally speaking the contribution of those companies in terms of job creation for the youth and GDP, as well as carrying out its corporate social responsibility is far-reaching.
Challenges of the sector
The main challenges in the sector are the regular interruption of electricity. During the production of bottled water and soft drink items, a five minutes disruption in electricity supply does not just cause five minutes of trouble. If quality is to be maintained, all the materials in the process are discharged and new inputs added. This takes not only time but also money, as companies incur additional costs while replacing the inputs.
Excise Tax is presumed to be leaved on luxury goods as well us on those that might have health impact. Especially bottled water is neither luxury nor has an impact on health. Currently, Bottled water companies are paying 20% of while Soft drinks are 30% of their production cost. This is an indirect tax purposely designed to be collected from all manufacturers of the sector. Recently, the government has started to change the tax base from cost of production to cost of total sales. Accordingly, we might not have any problem in changing the base, but, the shift in the tax base has to be equivalent or less to what has been paying in the prior base. Otherwise, the impact might force companies of the sector to withdraw of doing business as usual.
- Lack of coordination among the government bodies is another challenge that is hampering the existence of the industries. Inconsistence of directives, high intervention and control, disengaging of the sector in any decision making, etc.
- Lack of timely response from government bodies to our demands. For Example.
- Foreign Currency shortage to import inputs for the sector
- Giving less attention to the sector by the concerned government bodies
- Expensiveness of the cost of laboratories to test qualities
- Almost all inputs to the sector are imported from abroad
- Inconsistency of customs duty and taxes on imported inputs to the sector.
The way Forward
It’s only a year since the Association has been formed and hence special attention and support has to be given to the sector by the concerned bodies. Among others member’s participation in every aspect is vital. It is only through this Association that members have to come together and create a unified voice to promote their demands and interests or lobby the government in policy matters that affect their interest.
Obviously, the Association is serving as a medium between the government and its members. Government bodies might pass information and new orders that could affect Association members, and the same is true for the Association.
Genuine Association like that of ours helps to facilitate in creating credible private sector that be able to carry out its obligation.