19 September 2004

Ethiopia: Bure Baguna to Resume Production Under Moha's Management

The first privately owned mineral water company, Bure Baguna Mineral Water and Soft Drinks Factory, is to resume production next month after an interruption of four years, but under new ownership and management.

The troubled Bure Baguna was bought off by Moha Soft Drinks Industry last year from the Ethiopian Development Bank. The Bank had taken possession of the factory after the owners, who first established the factory in 1998, in Bure town, West Gojam, 379Km north -west of Addis, in the Amhara Regional State, defaulted on a 20 million Br loan.

Moha bought the factory for 27.5 million Br in April, after four successive foreclosure announcements by the Bank failed to attract any interested buyers since 2001. Moha bought the Company through negotiations.

The new owner now wants to resume mineral water production, enabling it to enter a growing local industry of similar manufacturers.

When it starts production, Moha will become the fourth mineral water product next to the state owned, Ambo, Babile and Crystal, produced by its rival in soft drinks market, East Africa Bottling Company, which also produces Coca Cola, Fanta and Fanta Tonic.

Getachew Birbo, chief executive officer (CEO) of Moha, confirmed to Fortune that production will resume in October 2004. Whether the table water will be produced under the same trademark is yet to be decided.

"Whatever our decision will be on the trademark, we will be in the market in October," said the CEO.

To help the plant run again, experts from KHS, a German company, which erected the plant, will be coming soon, disclosed Getachew. These experts will renovate the plant which has a capacity to produce 10,000 bottles a day. They will also recommend any necessary spare part procurements.

Getachew told Fortune that his Company is also planning to start manufacturing soft drinks in the plant. It is projected that this will increase its market size by 20pc.

Moha, established by Sheik Mohammed Al-Amoudi and his wife in 1996, after purchasing Pepsi plants in Addis, Dessie and Gondar from the government, has expanded its plants to six. Its newest plant in Awassa, 273Km south of Addis, is yet to start production following a 60 million Br investment.

Moha manufactures Pepsi, Seven Up and Miranda soft drinks in these plants, which will become four with the addition of Bure Baguna.

Prior to the launch of Bure Baguna, the mineral water market had been dominated by the state owned Ambo, with its factory 120Km west of the capital. Whatever little market was left was filled by another state owned factory, Babile, located 570Km east of Addis, covering the market in Harar and its environs.

Although the Royal Crown brand was unsuccessful, a second private company, Apex Bottling, attempted to enter this market in early 2002. This Company, located in the east of Addis, switched to the successful and pioneering venture of producing table water, Highland.

Bure never attempted a product switch during its life under its previous owners, and, unable to service its loans to the DBE, its total debt reached 45 million Br at the time of foreclosure. It was also indebted to other claimants such as Nyala Motors S.C. and Tana Plastic Factory which claimed it had not been paid 1.7 million Br for plastic containers.

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