Business Plan for Imported Food Products Wholesale Business in Ethiopia

Business Name: Ethiopia Food Imports Wholesalers

Business Location: Addis Ababa, Ethiopia

Business Structure: Limited Liability Company (LLC)

Industry: Food & Beverage Wholesale

Products: Imported cooking oil, pasta, rice, canned food, and other packaged
food products.

Target Market: Retailers, hotels, restaurants, and small food stores across
Ethiopia

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1. Executive Summary

Ethiopia Food Imports Wholesalers aims to import and distribute high-quality

food products (such as cooking oil, pasta, rice, canned goods, etc.) to
Ethiopian retailers and food service businesses. Given Ethiopia’s rapidly
urbanizing population and growing middle class, demand for affordable,
quality imported food products is on the rise. Our wholesale operation will
help bridge supply gaps in the local market, offering efficient and reliable
access to these products.

Our strategy involves forming strong partnerships with international

suppliers, using cost-efficient logistics to ensure timely product delivery, and
creating a broad distribution network that covers Ethiopia’s major cities and
regions.
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1. Introduction

Agriculture is a priority sector for the GOE, which sees enhancing agricultural
production and productivity as a way to increase export revenue and
strengthen global competitiveness. To achieve these targets, the GOE seeks
to leverage unutilized arable land, modernize production systems, and
enhance the uptake of modern technology. Please see the following table for
agricultural priorities in the Ten Years Development Plan: A Pathway to
Prosperity 2021-2030. Under the ten-year plan, the Ministry of Agriculture
(MOA) has prioritized commodities for investment and production expansion,
including wheat, soybeans, sesame seed, onion, tomato, avocado, banana,
poultry, milk, and red meat. In addition, the MOA plans to boost domestic
production of rice.

Nevertheless, Ethiopia is a net importer of food and agricultural

commodities, and in 2022 imported $3.4 billion worth of these products. The
top imported commodities were: Palm oil ($888 million), Wheat ($511
million), Cane sugar ($474 million), Rice ($447 million), and Sunflower seed
oil ($442 million).
 In 2022, food imports made up 23.8% of Ethiopia's total merchandise
imports. The top countries from which Ethiopia imports food products
include:

India, Egypt, Arab Rep, France, United States, and Belgium.

There are several regulations and requirements for importing food products
into Ethiopia, including:

 Third-party inspection: Approved third-party inspection bodies can certify

that products meet national standards. Pre-certified products can clear
arrival inspection without delay, but the Ministry of Trade and Regional
Integration (MOTRI) can conduct random testing.

 Currency exchange permit: Trading companies must obtain a currency

exchange permit certificate from the MOTRI or regional authorities. This
includes obtaining a letter of credit for the total value of the import
transaction.
 Import permit: An import permit must be applied for.

 Registration with the Ethiopian Food and Drug Authority

(EFDA): Medicines, medical supplies, and medical equipment must be
registered with the EFDA.

 Certificate of Analysis (COA): Processed food and pharmaceuticals

require a COA.

 Ministry of Agriculture registration: Plants or plant products, including

seeds, agricultural inputs, chemicals, pesticides, and fertilizers, must be
registered and authorized for import by the Ministry of Agriculture

2. Business Goals and Objectives

1. Establish Reliable Supply Chains: Partner with suppliers from countries

such as Malaysia (for cooking oil), Italy (for pasta), and Thailand (for rice) to
ensure a consistent supply.

2. Build Distribution Network: Develop a strong network of distribution to

major cities and rural areas.

3. Achieve Market Penetration: Capture at least 20% of the wholesale market

for imported food products within the first three years.
4. Ensure Competitive Pricing: Achieve cost efficiencies through bulk buying
and optimized logistics to provide competitive prices.

Business Strategy

1. Identify and Build Supplier Relationships

Source Reliable Suppliers: Establish strong partnerships with reputable

suppliers in countries known for quality and competitive pricing, such as
India, Thailand, Turkey, or the UAE.

Negotiate Long-Term Contracts: Negotiate for consistent supply at favorable

prices to help stabilize your costs and maintain quality control.

Diversify Suppliers: Source from multiple countries to minimize risks related

to supply chain disruptions or regulatory changes.

2. Understand Ethiopian Import Regulations and Compliance

Adhere to Import Tariffs and Duties: Familiarize yourself with Ethiopia's tariff
structures on food imports, as taxes and duties can vary.

Obtain Necessary Licenses: Register your business and obtain import

licenses, such as those required by the Ethiopian Ministry of Trade and the
Ethiopian Food and Drug Administration (EFDA).

Ensure Compliance with Health Standards: Follow all food safety regulations
and labeling standards for imported goods to avoid penalties and build trust
with Ethiopian consumers.

3. Optimize Logistics and Distribution Channels

Establish a Distribution Network: Consider distribution points in Addis Ababa

and key regional cities to efficiently reach retailers across Ethiopia.

Warehouse and Cold Storage: Secure warehousing with storage conditions

suitable for preserving product quality, especially for sensitive products like
cooking oil.
Leverage Local Transport: Use a mix of owned and third-party logistics to
manage distribution and reach remote areas without high upfront capital
costs.

4. Pricing Strategy

Competitive Pricing: Pricing should be competitive yet profitable, with

consideration for high-demand, price-sensitive products like rice and pasta.

Volume Discounts: Offer discounts for bulk orders to incentivize larger

purchases from retailers and distributors.

Adjust for Fluctuations: Incorporate buffer margins to handle currency

fluctuations and potential tariff changes without disrupting profitability.

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3. Market Analysis

Background

Ethiopia's food products import and wholesale market has undergone

significant changes recently, driven by both policy shifts and economic
conditions. The Ethiopian government has opened previously protected
sectors to foreign investment to boost economic productivity and global
competitiveness. This includes the retail, import (excluding fertilizers and
petroleum), and export markets (for products like raw coffee, khat, oilseeds,
pulses, hides and skins, forest products, poultry, and livestock),
(https://www. trade.gov/country commercial guides/ethiopia agricultural
sectors) and (https://www. capitalethiopia.com/2024/04/15/Ethiopia opens
commercial sectors to foreign investors in bid to boost economy/).

The country's imports of agricultural and food products have been

substantial. In 2022, Ethiopia imported $3.6 billion worth of these goods, a
5% increase from the previous year. Major imported commodities included
palm oil, wheat, cane sugar, rice, and sunflower seed oil
(https://www.trade.gov/country commercial guides/ethiopia agricultural
sectors).

The wholesale market, traditionally dominated by domestic investors, has

also been liberalized to allow foreign participation. Foreign investors must
meet specific criteria, such as having relevant experience and fulfilling
minimum capital requirements. This move is expected to address
inefficiencies and illegal practices that plagued the market under the
previous protectionist policies
(https://www.capitalethiopia.com/2024/04/15/ethiopia opens commercial
sectors to foreign investors in bid to boost economy/) and (https:
//tbestlaw.com/ foreign investment inflows new era for wholesale retail
import and export sectors/).

These policy shifts are part of Ethiopia's broader economic reforms aimed at
fostering a more competitive and efficient market environment, ultimately
benefiting both consumers and the economy as a whole
(https://www.trade.gov/country commercial guides/ ethiopia market
overview), (https://tbestlaw.com/foreign investment inflows new era for
wholesale retail import and export sectors/).
Market Opportunity:

Ethiopia has seen an increasing demand for imported food products, driven
by urbanization, changes in consumer taste, and population growth.

Currently, there is a gap in the availability of affordable, quality imported

goods, particularly in rural and underserved areas.

Target Market Segments:

1. Retailers: Grocery stores, supermarkets, and small-scale retail outlets.

2. Hotels and Restaurants: Food service establishments seeking high-quality

imported products.

3. Institutional Buyers: Schools, hospitals, and catering companies.

Competitor Analysis:

Existing wholesalers largely focus on local products or have limited imported

product ranges.

Key competition may come from large, established importers and regional
distributors.

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4. Products and Services

1. Primary Products:

Cooking Oil (from Malaysia, Turkey): Premium sunflower, palm, and

vegetable oils.

Pasta (from Italy, Turkey): High-quality varieties of spaghetti, penne, and

other pasta forms.

Rice (from Thailand, Pakistan): Various types including long-grain, basmati,

and parboiled rice.

Canned Foods: Canned vegetables, sauces, and fish.

2. Additional Services:

Delivery Service: Quick and reliable delivery options within major Ethiopian
cities.

Bulk Discount Program: Special pricing for larger orders.

Promotional Support: Marketing materials for retailers to help drive sales.

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5. Business Model and Revenue Streams

Revenue Streams:

1. Wholesale Sales: Bulk sales to retailers and institutions at competitive

prices.

2. Contract Supply Agreements: Long-term contracts with major clients for

stable revenue.

3. Value-Added Services: Delivery fees for locations outside primary delivery

zones.

Pricing Strategy: Price products competitively while factoring in import

duties, logistics, and market demand. Profit margins will be maintained
through bulk buying and efficient logistics.

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6. Marketing and Sales Strategy

Marketing Strategy

1. Brand Positioning and Product Differentiation

Quality Assurance: Position your products as high-quality, safe, and reliable.

Emphasize quality certifications or standards from the country of origin.

Product Accessibility: Highlight your availability and consistency, which is a

strong selling point in markets where imported goods can sometimes be
irregular.

Value Proposition: Emphasize the affordability of your products, especially

for staples like rice and pasta, which are often price-sensitive.

2. Target Market Segmentation

Retailers and Wholesalers: Focus on supermarket chains, mini-marts, and

local wholesalers who can push products directly to consumers.

HORECA Sector (Hotels, Restaurants, and Cafes): Engage with hotels and
restaurants, as they have high and consistent demand for staple products.

Institutional Buyers: Establish relationships with organizations like schools,

hospitals, and government bodies that require bulk food supplies.

3. Sales Channels

Direct Sales Team: Employ a sales team to establish relationships with key
retail clients, wholesalers, and distributors.
Online Presence for B2B Orders: Create a simple website where retail clients
can view your catalog and make bulk orders or inquiries.

Agents and Distributors: Use local agents or distributors in different regions

of Ethiopia to expand reach without having to invest in local offices.

4. Promotions and Advertising

In-Store Promotions: Collaborate with supermarkets and mini-marts to run in-

store promotions for your products, such as discount bundles on cooking oil
and pasta.

Sampling Campaigns: Offer sampling programs to introduce your brand,

especially for rice and pasta, which consumers may need to taste to
appreciate quality.

Seasonal Promotions: Use major holidays or events in Ethiopia (like Meskel or

New Year) to run special promotions, as food consumption tends to increase
during these times.

5. Brand Awareness Campaigns

Social Media Marketing: Promote your products on social media platforms

like Facebook, Instagram, and TikTok to reach Ethiopian consumers and
retail clients.

Radio and Local Media: Radio is widely used in Ethiopia, so ads on local
stations can help create brand awareness, especially in rural areas.

Point of Sale (POS) Displays: Invest in attractive shelf and display materials
for retail outlets, emphasizing your brand’s benefits and product information
in Amharic.

6. Customer Loyalty and Feedback

Loyalty Programs for Retailers: Offer incentives for retailers who regularly
purchase large volumes from you.
Feedback Collection: Gather feedback from retailers and end consumers to
understand market trends and preferences. This can help in making
adjustments to product selection or packaging.

1. Market Penetration: Conduct initial market outreach with direct visits and
presentations to potential retail and institutional clients.

2. Trade Shows and Expos: Participate in local food and trade expos to gain
exposure.

3. Digital Marketing: Establish a website and leverage social media platforms

to increase visibility among retailers.

4. Promotions and Discounts: Offer introductory discounts for new clients to

encourage trial and bulk purchases.

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7. Operational Plan

1. Imports and Customs Management: Establish relationships with customs

brokers to ensure smooth import operations.

2. Warehousing: Rent warehousing facilities in Addis Ababa and other major

cities to ensure easy distribution.

3. Transportation and Logistics: Contract with local transport companies to

manage distribution across Ethiopia.

4. Staffing Needs: Hire experienced staff for operations, sales, customer

service, and logistics management.

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8. Financial Plan

Initial Funding Requirements:

1. Inventory Purchase: $150,000 for initial stock (cooking oil, pasta, rice).

2. Warehousing and Storage Costs: $30,000 for facility rentals and utilities.

3. Transportation and Logistics Setup: $20,000 for initial delivery setup.

4. Marketing Budget: $10,000 for website, branding, and promotional

material.

Projected Revenue (Year 1):

Sales Revenue: $500,000

Gross Margin: 25%

Break-even Analysis:
Expected to break even within the first 18-24 months based on initial sales
projections.

Funding Sources:

1. Owner’s Investment: $100,000

2. Bank Loans or Investors: $150,000 to cover remaining initial costs.

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9. Risk Analysis

1. Currency Fluctuations: Manage through financial hedging strategies and

pricing flexibility.

2. Import Regulations and Tariffs: Maintain up-to-date knowledge of

Ethiopian import laws to avoid delays and additional costs.

3. Supply Chain Disruptions: Diversify suppliers and establish buffer stocks to

prevent shortages.
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10. Conclusion

Ethiopia Food Imports Wholesalers is positioned to capitalize on the growing

demand for quality imported food products in Ethiopia. By focusing on
reliable imports, efficient logistics, and competitive pricing, we aim to
become a leading supplier to Ethiopian retailers and food service providers.
With careful planning and a strong distribution network, our business will
contribute to improved food supply in Ethiopia and generate significant
returns for our investors.
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Appendices

1. Detailed Financial Projections (3-year forecast)

2. Market Research Summary

3. Supplier Contracts and Product Specifications

This business plan outlines a comprehensive strategy to launch and grow a

successful imported food wholesale business in Ethiopia.