As the manufacturing sector struggles with a panoply of issues, SBG Industry Plc, the bottler behind "Arki" water brand, has completed a five-million-dollar expansion project to boost its marketing and production capabilities. Within a couple of months, the company is getting ready to launch a new juice brand "Smiley," with its executives planning to increase the market presence

SBG management anticipates long-term growth. With plans to begin operation with mango-flavoured drinks, Dagmawi Getachew, the plant manager, hopes to gradually expand the flavours to guava.

He said that although operations were initially planned to begin last year, they were delayed due to bureaucratic and security issues. He said this product diversification is critical in a highly competitive water industry that threatens their market share.

"Relying solely on the water business isn't sustainable," Dagmawi told Fortune. "We needed to diversify."

The new machinery, imported from Europe and India, includes bottle washers, fillers, corkers, and extractors, installed at the plant. Once operational, the new facility will add 100 employees to the existing workforce of 150, substantially increasing the company’s production capacity. When fully equipped, the company executives plan to produce 24,000 bottles in an hour.

The company plans to distribute 60pc of its products in Addis Abeba, with the remaining 40pc targeted at regional markets. SBG, which holds less than a six percent share of the local water market, embarked on this expansion despite facing difficulties that have undermined its production and market position.

Dagmawi highlighted severe power outages and security challenges as major obstacles. Although a generator was considered as a solution to power issues, rising fuel prices forced the company to reconsider. The company faced further setbacks due to operational halts and limited market access, reducing its capacity to less than 20pc. Recent improvements have increased capacity to 40pc, but ongoing challenges require careful navigation.

Operating at only a fifth of its capacity, SBG's woes illustrate the struggles of the sector, grappling with a competitive market and limited resources. The company’s plant, covering 15,000Sqm in Oromia Regional State, has a daily production capacity of 500,000 water bottles, but recent events have hindered full utilisation.

Founded in 2016 by Henock Mulat and his family, SBG Industry Plc has been in the industry for over eight years. It was established with a 40 million Br capital. However, difficulties in sourcing raw materials led to intermittent operations, prompting Henock to transfer ownership to the Saudi-owned Seqa Group, for 200 million Br. For three decades, Seqa has been a hallmark in water production and is owned by more than 10 companies and joint ventures.

Dereje Terefe, the deputy manager, noted that the new management, with easier access to foreign currency, has revived the factory. He expressed optimism about the new juice line, citing the Group's experience as an advantage.