Producing for Madagascar
Habibo Group is determined to supply Madagascar and beyond with quality FMCG products at a fair price as the nation seeks to reduce reliance on imported goods
Writer: Marcus Kääpä | Project Manager: Donovan Smith
The Republic of Madagascar is commonly associated with tropical conditions, teeming groups of lemurs, and the iconic baobab trees that tower above forest floors. As well as harbouring a perfect climate to grow fruit, the nation is home to a wide variety of natural resources and valuable commodities (graphite, chromite, bauxite, coal, tar sands, fish, vanilla, and hydropower, to name a few).
But with a population of over 27.5 million as of 2020, Madagascar relies heavily on imports to provide its people with the produce, products, and resources the country needs.
The largest of these imports is petroleum oils that make up over 15 percent of total imports to Madagascar. Rice (six percent), vehicles (more than four percent), medicine (over two percent), and palm oil (around another two percent), are just some of the primary import produce that the nation is reliant upon.
These products are brought in from its major trading partners: Europe (mainly France and the Netherlands), Asia (China and India), the UAE, the USA, and of course South Africa (with a closer proximity than any other partner).
But the nation is seeking to gradually move away from this reliance on imports.
As it has many important and widely used resources to offer (an example being bauxite, used in aluminium production, or tar sands, used in the production of petroleum), Madagascar is aiming to further develop its exportation industry to access lucrative markets abroad.
And there is one company in particular that is trying to reduce the nation’s reliance on imports.
The Habibo Group is a major player in Malagasy fast-moving consumer goods (FMCG) production and distribution, and has more than 80 years of experience in the industry.
Since 1936, Habibo has been owned and operated by CEO Malik Karmaly’s family, and has concentrated on the importation, exportation, and distribution of various consumer goods and food stuffs. In 2009 it added SOFIA, the distribution company under the banner of Habibo, to its business.
“The vision is to provide continuing quality goods with consistent and reasonable prices to the market. If the sales of certain products grow, the company will think of expanding into industry goods,” Karmaly says.
Habibo Group is subdivided into four businesses. Habibo Compagnie produces spices, vegetable fibres, and beeswax (on top of fabric goods like mattresses) for distribution. Another branch, Habibo Mills, stands as the leading producer of pasta goods in the Indian Ocean, and as a franchisee of French brand Panzani, it is equipped with high-tech machines capable of meeting international standards for recipes and quality.
Habibo Dairy is the only local producer of UHT Tetra pack milk, a product that is franchised in Madagascar under the well-known French brand CANDIA. The factory provides different milks (additional flavoured options) and produces fruit juices for the brand LeFruit.
But the jewel in the company crown is Sofia, the aforementioned distribution company of the Group. Sofia’s primary focus is the importation, sale, and exportation of produce all over the Indian Ocean.
“The Group’s distribution network supplies more than 60 high-quality family brands at the best prices to consumers covering Madagascar’s 22 regions and 33 countries across the world,” Karmaly continues.
“This is why our company motto is: The best for you.”
Collectively, Habibo employs 600 individuals and focusses on the food and beverage industry in line with over 50 international brands.
Challenges and opportunities
The events of 2020, paired with the nation’s recent history, have been significant factors which have slowed Madagascar’s growth.
COVID-19 has brought industries across the board, and indeed across the world, to a halt. The logistical adaptations required alone amid new safety and restriction practices have slowed companies in their tracks. For Karmaly, the pandemic significantly reduced business for the company.
“COVID-19 made planning difficult for the company and has considerably impacted our sales; they have not been following a steady trend. And on top of this all marketing activities were completely ceased. The effects of the virus meant that we could not directly address our customers,” Karmaly explains.
With the pandemic still very present, the growth of Madagascan exports has been slower than desired.
“But fortunately, even during the worst of the virus, Habibo was able to maintain its activities, keep its workforce in employment, and hold onto the demand for its products in its operating regions,” Karmaly says.
Another issue faced is that such an industry requires an environment of long-term stability in order to thrive, and several political crises that have occurred within Madagascar in the past decades have potentially limited this development.
An example of this was the 2009 Malagasy Crisis that lasted almost a year and saw a split of national control between the government and an aspiring faction vying for power. This crisis disrupted industry development across the board and threw into question whether Madagascar was (and still is) a nation reliable and stable enough to invest into its aspiring industry.
However, despite the pandemic and politically related challenges, Karmaly insists that the optimistic future plans of the company will be based on the needs of the market, the needs of the Malagasy people, and local pricing analysis. Madagascar export trade is expanding and reaching out for opportunities where they present themselves. Despite its past disruptions, the chance to develop and move forward in the exportation industry is a very viable and attainable goal.
“Investing in Madagascar is an exciting challenge despite all risks because the market is very responsive,” Karmaly adds.
He ends on a positive note regarding the opportunities the company provides to the Malagasy people.
“We have expanded our reach in society, helping out the local communities at least once per week,” the CEO says.
“As part of this outreach programme, the company decided to cover the tuition fees of the 20 best students coming from rural colleges for the next three years to take them up to their exams. This is aimed to increase youth integration for those who will end up potentially leading their own businesses and moving our country forward.”
As for future plans among the highs and lows of the past year, Habibo Group aims to maintain its position as a leader in the FMCG sector through its existing practices of best quality, availability, and priced products.
The wider African market sits in the company’s sights as a future industry to expand into, and all the while the firm seeks to maintain a healthy and attractive working environment for all stakeholders.