Engineer finds fortune in milk ATMs

Vending using automated machines is a technology that has been evolving over the years, easily making items such as stamps, newspapers, beverages, snacks and foodstuffs available.

In Kenya, vending machines have become a staple in most residential areas, shopping centres and especially supermarkets dispensing essential liquid products such as milk and cooking oil.

One such company in Kenya has been at the centre of this automation with their milk vending Automated Teller Machines (ATMs).

Julius Mwaura, the proprietor of Tassmart Limited locally assembles and distributes milk ATMs.

He started the business in 2012 after seeing a gap in the milk supply chain.

He noted that for long, the industry had been under the mercy of brokers who were hurting farmers and giving consumers a raw deal.

Mwaura shares his story and the opportunities in the multi-billion milk industry.

How did you settle on this business idea?

I am a trained computer engineer who stumbled on automated vending by chance.

In the course of my work developing programmes and designing software systems, I dealt with imported vending machines which lacked after-sales support and availability of spares. That was my eureka moment.

The machines were mainly from China and Italy and were costly.

After thorough research, I realised that locally fabricated machines loaded with the correct technology and backed up by proper after-sales support would be a boon to farmers and consumers. This would push down milk prices by eliminating the middleman.

After developing a business plan and determining how much capital I would require to set up, I secured a credit facility from a local bank. I then hired a few welders and set up shop. Business picked up immediately. Today, the firm has employed over 20 welders as well as other technical staff.

Setting up is the hardest thing, however, if you plan meticulously it shouldn't be that difficult.

A business such as ours doesn't depend much on location because we fabricate and deliver. However, there are dynamics such as expansion and growth. One should be prepared to adjust accordingly whenever the market dictates - we pride ourselves in fashioning bespoke machines exclusive to the taste and needs of our clients.

Was marketing a challenge?

We categorise our services as essential because Kenya is a big milk producer and consumer. Ours is a business that links farmers to consumers. This is portrayed in the quality of the milk ATMs we manufacture. Now being an industry that helps the farmers and clients link up is quite a noble task for us which we take up with a lot of humility and our gratitude for the privilege is portrayed in the quality of machines that we manufacture.

Such a type of business hardly requires shouting from the rooftops - people will come to know about it and show appreciation.

Many of our business comes from client referrals and that is how we have managed to get our products all over the country.

Customers are satisfied with our products as we also offer after-sale services.

How do you stay competitive?

We follow up on the performance of our clients. The data we collect helps us make informed decisions such as knowing the profit margins and great locations for the ATMs.

For example, we have a vendor who dispenses over 3,000 litres daily. Depending on the going price of a litre of milk, this particular client makes a comfortable living just out of the vending machine.

We collect such information to help others venturing into this business to set their targets.

We also offer a complete package by following up with after-sales support to ensure a client gets their return on investment. We ensure that clients are set up in the right location and educate them on business modalities including the right hygiene protocols and qualified personnel.

Milk is a delicate product that has to be handled properly and vendor must be licensed by the Dairy Board of Kenya. The equipment and containers for use are non-corrosive and easy to clean with an easily accessible layout, we also offer information regarding effective and safe sanitisation agents.

In keeping up with cutting-edge technology, our machines have undergone a mechanisation and automation revolution. Today, we are able to install programmes that allow the vending of any amount of milk and the machine will calculate the cost accurately, unlike in the past when they were only calibrated to sell milk in pre-programmed volumes. That is why investors in milk bars around residential areas are able to cater for all customers, including the 'kadogo' economy clients.

How do mitigate risk in the business?

As they say, every cloud has a silver lining. For us, the Covid-19 pandemic was no different. People were at the time looking for new businesses in which to invest that wouldn't contravene the containment measures and we stepped up for them.

Nowadays, we have machines that operate cashless in line with some of the more stringent requirements making our business model among the safe businesses that could still operate at the time. And even during the recession when the economy was hardest hit - at the time milk was almost tripling its price - milk ATMs managed to hold their prices stable which not only increased the popularity of the vending machines but also gave us more business.

We have partnered with financial institutions to offer our clients options whenever they require to purchase one of our machines. Our machines are attractively priced.

Prices of our milk ATMs range between Sh80,000 and Sh250,000 depending on the litres of milk they can hold. The lowest is 100 litres and the highest is 400 litres.

However, we are also able to customise a machine for a bigger capacity.

What's your parting shot to budding enterprises?

Any business that hopes to succeed must have a guiding principle and operate by it. Ours happens to be integrity. We deliver what we promise and do not in any way cut corners in the course of how we conduct our business.

Besides ensuring that milk is easily accessible to Kenyans around the country, we also make sure that we are a brand that our customers can trust.

Building trust has been the foundation of our success and all my employees are aware that we shall never compromise on that.