May 31 , 2020
By GELILA SAMUEL ( FORTUNE STAFF WRITER )
Abebe Dinku Water & Non-Alcoholic Beverages, a bottler of one of the newest waters, Top Water, has closed a 20-year deal with a Saudi Arabian company to export water.
Abebe Dinku signed the deal with Al Naba Jeldi Water Company last month and has geared up to ship the first batch of bottled water. The firm is expected to deliver the supplies as soon as Saudi Arabia lifts its lockdown. Al Naba Jeldi Water Company, a subsidiary of Al Naba Commerical Enterprises, was established in Najran, Saudi Arabia, in 1999 and has its plant located near Najran’s valley.
Before inking the deal, the two parties completed a three-month testing and sampling process. The agreement was to export bottled water in 350ml and 600ml sizes with the first shipment, which is worth one million dollars. The first batch of the delivery will consist of 10 40-foot containers filled with 1,000 of the 350ml size and 6,668 of the 600ml size bottles.
“We opened a letter of credit (LC) to ship the first batch," said Abebe Dinku, founder of the company, "but due to the Novel Coronavirus (COVID-19), we haven’t been able to ship the first batch since Saudi Arabia has closed its ports."
Established with an investment of 273 million Br in Tatek Geffersa Nono Wereda of Burayu town, 18Km north of the capital, the company operates with 512 employees. It can produce 126,000 bottles of water an hour.
“We were also asked to supply a 200ml size,” said Shimelis Ajemma, marketing manager of the company. “With the current moulds we have, we aren’t able to bottle 200ml.”
The company ordered a new 200ml size mould two weeks ago, according to Shimelis, who said they expect it to be delivered in two months.
“The export benefit isn’t much compared to the local sales, but it has its own perks since it will give us foreign exchange, and value added tax (VAT) and excise tax are also completely revoked if a bottler is engaged in exporting," he added.
The bottler has also received a new order to ship bottled water to Oman last week, and the management sent a pro forma invoice to the company, according to Shimelis.
“We're waiting for their response,” said Shimelis.
Earlier this year, South Spring Water also embarked upon a deal to export bottled water to England with a value of one million dollars at the first shipment. Bottled by Garanba, South Spring Water was established with an investment of 410 million Br in Aregobena Wereda of Sidama Zone with 310 employees and can produce 16,000 bottles of water an hour.
A few months ago, the Ethiopian Bottled Water, Soft Drink, Fruit & Vegetable Processing Manufacturing Industries Association, upon the request of bottlers, sent a letter to the Business Diplomacy Directorate of the Ministry of Foreign Affairs to accelerate the export of bottled water to neighbouring countries. Currently, there are close to 97 bottlers operational in the country.
The rising competitiveness of the burgeoning bottled water industry has to look for another market abroad, according to Zewdie Shibere (PhD), assistant professor at Addis Abeba University's School of Business & Economics.
"It's a commendable effort from the bottlers since the venture is a source of foreign exchange," Zewdie said. "But bottlers should also move to a more environmentally sustainable model of bottling water to have a long-run chance in the business."
Shifting to glass or plant-based plastics are the way forward for the future of bottled waters, recommended the expert.
PUBLISHED ON May 31,2020 [ VOL 21 , NO 1049]
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