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Business

Ajinomoto to invest in South African food giant Promasidor

Ajinomoto condiments have an established presence in Thailand and other parts of Southeast Asia.

TOKYO -- Ajinomoto will purchase a 20%-plus interest in Promasidor, with the Japanese condiment maker hoping to strengthen its presence in Africa by taking advantage of the South African food company's sales channels.

The stake is seen costing an estimated 20 billion yen to 30 billion yen ($191 million to $286 million). Ajinomoto is now coordinating the deal with Promasidor shareholders.

Promasidor makes such items as baby formula, dairy products, tea beverages and cereals, with its annual sales estimated at the equivalent of about 80 billion yen. Its sales network spans 30 markets on the continent.

Ajinomoto already offers its signature MSG in Nigeria but is eager to sharply increase sales elsewhere in Africa to have its brand penetrate the market.

The continent's middle-income population numbered some 350 million in 2010 and is seen reaching 440 million in 2020 and 550 million in 2030, according to the Nomura Research Institute. Gross domestic product per capita doubled over a decade from 2000, highlighting increased purchasing power. Demand for Japanese foods is likely to grow as more people seek out richer culinary experiences.

By fully cultivating the African market, with its robust growth prospects, Ajinomoto seeks to catch up with such Western rivals as Switzerland's Nestle.

The Japanese company has business bases in 27 overseas markets, and its offerings are sold in more than 130. Foreign markets already account for more than 50% of its sales -- a share it plans to raise to 70% around fiscal 2020. Ajinomoto has cultivated a presence in Southeast Asia and North America. To solidify its footing as a global company, it cannot ignore Africa.

But Ajinomoto's operations on the continent have struggled. An instant-noodle joint venture in Nigeria with Toyo Suisan Kaisha will be dissolved next year. The nation's economy has been unstable, in part because of low crude oil prices, so business did not flourish as hoped. Ajinomoto also sells nutritional supplements for babies and toddlers in Ghana, but more as a social service.

Ajinomoto stands to accelerate expansion efforts in African markets by quickly absorbing know-how through investments.

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