Jun 20 , 2020

Adas Trading Plc, a local livestock export company, has started bottling Setit Purified Spring Water in the Western Zone of Tigray Regional State after investing 60 million Br.

Built on 10,000Sqm of land, the plant is located at Rawian town, eight kilometres from Humera. It distributes the water in half-litre, one-litre, two-litre and 20-litre bottles. Setit, which operates with 59 permanent and 11 contract employees, produces 18,000lt of water an hour and plans to increase its production capacity in the coming months.

The company is the 15th water bottler in Tigray Regional State, 10 of which are operational. It also joins the 97 other bottlers operating at the national level. After being certified by the Ethiopian Conformity Assessment Enterprise last April, the bottler started supplying its products to the market.

The company has chosen Rawian due to the existence of natural spring water, an abundance of water resources, and the availability of an important geological resource to the industry, sandstone, according to Kibrom Mulugeta, CEO of the company, which was established in 2015 and exports livestock to the Middle East.

The construction of the factory began in 2014 and was completed late last year. The construction was delayed due to a foreign currency crunch, power supply shortage, and delays in electricity infrastructure development, according to the managers.

The company imported the bottling machinery from China for 33 million Br. It invested 27 million Br in the civil work of the construction. The Development Bank of Ethiopia (DBE) covered 70pc of the investment through lease financing.

The factory operates for nine to 10 hours a day because of the hot weather conditions in the area that make it difficult for employees to work the whole day, according to Kibrom.

The marketing strategy of the bottler is granting franchises to organised youth. It is working with municipal governments to organise unemployed youth to receive loans in exchange for distributing its products, according to Kibrom.

It has already co-organised 57 youth in Meqelle and 20 in Humera to retail its products. It began distributing its products in Western and Northwestern Tigray three months ago and started sales in Meqelle two weeks ago.

“We've so far given the franchises to organised youth in Humera, Shire, Sheraro and Meqelle,” Kibrom said.

Hailemariam Kebede (PhD), an assistant professor of marketing management at Addis Abeba University's School of Commerce, appreciates the marketing strategy of the company.

"It's a viable strategy since the youth are familiar and have close contacts with the public," he said.

The bottler will be benefiting from the local market, according to Hailemariam.

"Most of the bottlers in the country are located around Addis Abeba, and thus Setit can take advantage of the lower transport cost to penetrate the market," Hailemariam said.

Being the pioneer in western Tigray, the bottled water manufacturer is benefiting from the large demand for its products, according to the CEO.

“We found the market very encouraging since there is a demand for our product," Kibrom told Fortune.

The huge demand and high returns are encouraging businesses to join the water bottling business in the Regional State, according to Daniel Mekonen, deputy commissioner of the Tigray Investment & Export Commission. He adds that many bottlers located in Addis Abeba and the surrounding area are still supplying their products to the Regional State, indicating that there is huge market potential for the sector.

"Most of the bottlers in the Regional State are expanding their businesses," said Daniel.

The bottler should compete in terms of quality and packaging by introducing new techniques and modern technologies, Hailemariam recommended.

PUBLISHED ON Jun 20,2020 [ VOL 21 , NO 1051]

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