Olam’s heritage lies in the origination and traditional supply chain segment, sourcing ingredients and raw materials for our global customers in the food and beverage, textile, wood, rubber and other industries. However, the evolution of our business model over recent years has led us to develop new competencies in the upstream, midstream and downstream parts of the value chain. This selective integration, using our adjacency-based growth strategy, enables us to take advantage of our competencies and expertise to benefit from excess returns and to take greater control from seed to shelf of our value chain.
Building on existing and new capabilities, we identified excess return integration opportunities in the upstream segment of the value chain and began making investments on a selective basis. These investments have resulted in plantation ownership and management (perennial tree crops), farming (annual crops), dairy farming and forest concessions management, as well as a major initiative in fertiliser manufacturing.
These opportunities have been both organic and through acquisitions. Our upstream segment now consists of: palm (Roundtable Sustainable Palm Oil certified) and rubber plantations in Africa; almond plantations in Australia and California; coffee plantations in Tanzania, Ethiopia and Laos; a cocoa plantation in Indonesia; peanut farming in Argentina and South Africa; rice farming in Nigeria; dairy farming in Uruguay and Russia; the development of tropical forest concessions (Sustainable Forest Management certified) in The Republic of Congo, and a fertiliser manufacturing plant in The Republic of Gabon.
A solid base in origination
As supply chain managers, we were engaged in the sourcing of various agricultural commodities from the producing countries which we provided to customers in the destination markets. This sourcing and supply involved primary processing, warehousing, transporting, shipping, distributing and marketing and managing the risks at each stage of the supply chain.
From our founding in 1989, we evolved from a single country, single product trader to a multi-country, multi-product supply chain manager. In that process of evolution and development, the Olam business model has grown both in depth as well as breadth, pursuing selected value chain adjacencies which both complement and enhance our core supply chain model. The key to our strong core business is a repeatable and scalable formula that has allowed us to reinforce and expand in different ways.
In the midstream part of the value chain, we are pursuing initiatives in value added processing and manufacturing activities that are relevant to our existing portfolio.
Our initiatives aimed at enhancing the midstream part of our model include investments in: wheat milling in Nigeria, Ghana and The Democratic Republic of Congo; sugar milling and refining in India and Indonesia; rice milling in India; cocoa processing in Cote d’Ivoire and Nigeria; tomato paste manufacturing in California; dehydrates manufacturing in USA and China; peanut ingredient manufacturing in USA; palm oil refining in Cote d’Ivoire; mechanical processing of cashews in Côte d’Ivoire and Nigeria; cashew ingredients manufacturing in Vietnam; spice grinding and soluble coffee processing in Vietnam and saw milling in Republic of Congo and Republic of Gabon.
We have invested in building a consumer franchise and distribution infrastructure in many African markets. The foundation for this downstream activity is based on our knowledge and capabilities related to the management of food supply chains and the common distribution pipeline that we have built for related commodity products in West Africa.
Our Packaged Foods Business division manufactures, markets and sells a range of branded packaged food products to consumers across multiple African markets. This business started with the launch of tomato paste products in Nigeria and has since expanded across 10 countries in South and West Africa marketing a basket of 8 products under 6 well established brand names.
We have also embarked on a fertiliser manufacturing and distribution business through a joint venture with the Government of The Republic of Gabon. We will leverage our relationships with growers and farmers together with our direct upstream plantation and farming investments as a source of fertiliser demand.