Fortune News | Aug 31,2019
November 7 , 2020
By BEMENET WONDEWOSSEN
Boss Amesada Industry Plc has operationalised its 250-million-Br water bottling company in the small city of Menagesha in Oromia Regional State. Dubbed Boss Mineral Water, the product hit shelves two weeks ago.
Located in the West Shewa part of the Regional State, 31Km from the capital, the 7,500Sqm bottling plant was only recently completed after five years of construction. The total area of the compound is 8,500Sqm and includes an office for the commercial and administrative staff, as well as a warehouse for product storage.
Mekonen Aberahm Construction Engineering, a firm owned by one of the shareholders of the bottling company, has built the facility at a total cost of 100 million Br and the remaining investment was channeled into importing the production machinery from Taiwan and China.
Boss Water obtained the green light for its operation from the Ethiopian Conformity Assessment Enterprise and the Ethiopian Food & Drug Administration two months ago. The company, which has the capacity of bottling 54,000lt of water an hour, bottles 0.3lt, 0.6lt, 1.5lt, two litre and 18lt sizes.
As a competitive edge and marketing strategy to make headway in the competitive water market, Boss distributes its bottled water at a slightly lower price rate than competitors, according to Mekonen Haile, CEO of Boss Amesada.
"We have a one Birr price difference with other products for each bottle," he said.
The company currently is in its first production phase and has 100 employees who work one shift daily, bottling around 18,000lt an hour. The company also owns 15 vehicles, each costing 1.2 million Br, for distributing the product in the capital. It also contracts third-party distributors to market the product across the country.
It has plans to increase the number of its employees to 300 and triple its production capacity in the next production phase. The company also intends to expand into bottling fruit juice products in the future, according to Mekonen.
Boss Amesada is the 100th and latest bottled water production company to join the market since 1999 and, like most of its competitors, its found in Oromia Regional State. Africa Bottled Water was among the last to join the industry in June 2020. Located in Holeta, Africa inaugurated its plant that bottles 66,000lt of water an hour.
Companies are not using their full capacity due to the low demand in the market, according to Ashenafi Merid, president of the Ethiopian Bottled Water, Soft drink, Fruits & Vegetable Processing Industries Association.
"Before the pandemic, hotels, cafes and restaurants were their customers," said Ashenafi, "but they are limited to most shops now."
Foreign currency shortages and a lack of raw materials are also challenges the companies are facing, according to him.
"For the companies to produce using their full capacity and satisfy the demand, the 10pc excise tax must be removed," he said.
Electric power disruption and a lack of foreign currency to import machinery and materials for production were significant challenges, according to Mekonen.
"Even though we're working with generators, we can't import the generators duty-free," he added.
However, despite these challenges, Boss is going to go ahead with the expansion of the plant, and the company is also planning to export its products to Djibouti, according to Mekonen.
Though the number of water companies is increasing, there is a big gap between demand and supply in the market, according to Gete Andualem (PhD), assistant professor of marketing management at Addis Abeba University.
"It's also difficult to differentiate between the companies by their quality, because the only difference they have is their brand name," he said. "It's clear that these companies won't face marketing problems, but they have to work hard on their network marketing and efficient production."
Gete also says that the price of bottled water is costly and providers ought to reduce it by half.
PUBLISHED ON Nov 07,2020 [ VOL 21 , NO 1071]
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