Food processing firm Proctor & Allan East Africa is angling for a bigger pie of the ready-to-eat cereals market with the completion of a Sh2 billion factory.
The plant, which is based in Limuru town, produces breakfast cereals, oats and pre-cooked fortified flour as the company moves to fight off growing competition from multinationals.
Proctor & Allan East Africa Chief Executive Officer David Kamau told Weekend Business that the construction of the new plant is driven by the need to satisfy growing demand in the region and changing lifestyles.
“This is to meet market demand,” he told Weekend Business, adding that there is also growing middle class and Kenyans looking for convenient food offerings. “Mothers countrywide want to prepare a meal for the family in the shortest time possible.”
Mr Kamau said more Kenyans are now consuming breakfast cereals and pre-cooked meals, a demand that has also attracted more multinationals such as Weetabix, Pioneer Foods and Kellogg’s into the market. The demand for ready-to-eat cereals has been growing in line with Kenya’s upgrade to a middle-income status when the country rebased its economy in 2014.
The breakfast cereals market alone is estimated to be worth about Sh2 billion annually, said.
The new plant has increased the firm’s production capacity to seven tonnes per hour and created additional jobs. The company is recruiting wholesalers to reach more consumers, who might be out of reach of supermarkets where these products are currently stocked.
“With the expansion, we have an opportunity to get our products to shops to reach a lot more Kenyans. We also need to empower Kenyans who are entrepreneurs to make money by offering them the opportunity to sell our products,” said Mr Kamau.
Proctor & Allan is one of the oldest food processors, founded in 1940s in Nakuru but later moved to Nairobi. In 1999, it was bought from Unga Group by a group of local investors and The Acacia Fund.
A number of firms are also angling for a stake in the ready-to-eat cereals market. Two years ago, it was reported that Kellogg’s, an American multinational food manufacturing company was planning to enter Kenya. The firm’s sub-Saharan Africa unit is headed by former East African Breweries Managing Director Gerald Mahinda.
ACQUISITION
Last year, South Africa’s Pioneer Foods Group entered the Kenyan market through acquisition of a stake in Weetabix East Africa in a deal with UK’s Weetabix Food Company. The British food firm took more than half of the shareholding, with Pioneer taking up 49.89 per cent stake.
Weetabix Food had bought a controlling stake in Weetabix East Africa from Kenyan businessman Ahsan Manji - grandson of Madatally Manji, the founder of food manufacturing firm, House of Manji.
Other competitors in the ready-to-eat segment include Nestle and Mondelez (formerly Kraft Foods).
With globalisation, more Kenyans are looking for a variety of food offerings. “This investment has enabled us to start new product lines to provide consumers with a variety of products,” said Mr Kamau.
The firm currently has operations in Uganda, Tanzania and Rwanda through distributors. It plans to enter Burundi and Ethiopia.
“We are also looking at deepening our presence in the countries we operate. We are currently in Dar es Salaam, Arusha and Moshi but we want to expand into Mwanza,” said the CEO.
