6 December 2016

Ethiopia: Awash Winery Aspires to Crack World Market

Photo: Addis Fortune
Awash Winery S.C hopes to place Ethiopian wines on the world map as it speeds ahead with a capital expansion project to improve its capacity.

Awash Winery S.C hopes to place Ethiopian wines on the world map as it speeds ahead with a capital expansion project to improve its capacity. The expansion, which began in late 2014 and cost 200 million Br, has now reached one-third completion, pushing the winery's production capacity from seven million to 10 million litres.

By 2020, the company hopes to see its annual production capacity doubled to 20 million litre.

It includes expansion of the vineyards and farming mechanisation. New vines have been planted on a 100ha plot, which doubles the company's cultivated farm land, located in Merti Jirsu, on the upper Awash stream.

The expansion is based on additional storing tanks for fermenting and ageing wines. It is taking place at three of the company's locations; Lideta and Mekanisa factories in Addis Abeba, and the 500ha farm in Merti Jirsu.

Notable contractors in beverage industry including Marast Equipment Leasing Services and LEHUI group are involved in the expansion. LEHUI, is the same company who involved in in brewhouse setup and the installation of fermentation and storage tanks for Heineken Ethiopia's expansion project.

So far, out of the total funds allocated for the project, about half have been used.

"Ethiopian consumers have eagerly responded to a wider selection of a higher quality, mainly triggered by new Ethiopian wine producers like GEBETA, Awash, from Awash Wine or Rift Valley and Acacia," said Herve Duranton, CEO of Awash in an email to Fortune.

Awash Wine has seen an increase in sales over the years. Last year, it reached more than 15pc as a consequence of the company's improved capacity to respond to the market dynamics.

The demand for wine has increased at a national level. In 2014, Ethiopia's annual wine consumption was around one million litres, six times lower than Kenya's. In addition the import volumes are increasing over a years, showing the rising demand.

In 2015, Ethiopia has imported close to 270,000 litres of wine, at a cost of 53.6 million Br. This is an increment from its preceding year where the volume and value of imported wine witnessed a 58pc and 17.3pc increase, respectively.

The production capacity increase will allow the company to look into export opportunities, according to Duranton. In the coming 18 months the company plans to begin exporting its product.

Awash Wine's aim is to present the opportunity to a large number of consumers to find affordable, quality, wines that suit their tastes, he said.

The company's origins go back to 1943 when an Italian investor first established the vineyard. The company was nationalised following the 1974 revolution, and stayed under state ownership until 2012. The company was then sold to a private company for 459.9 million Br. It is now owned by Blue Nile Investment Plc; a company established by Mulugeta Tesfakiros, owner of Muller Real Estate, and 8 Mile, an equity-firm chaired by Bob Geldof, an Irish rock star known for his humanitarian contribution to Ethiopia in the 1980's.

Following its privatization, Awash was involved in a court battle with then Privatization Agency over an unsettled payment for the transfer of the ownership. In May 2016 the federal High Court ordered Blue Nile to pay the remaining 115 million Br.

There are two wine factories in Ethiopia, Awash and Castel Winery. Awash currently has over 550 employees and produces four core brands - Axumit, Camilla, Saris (Awash) and Gouder.

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