By Prudence Minayo
KenAfric Industries Ltd is the largest confectionery manufacturers in Kenya. From Creamy Yogurt lollipops, VeVe, Muguka, Mooz Maziwa sweets, Fruit Drops, Ting Ting, Big Bang lollipops to Toffees, they have commanded a huge part of Kenya’s sweets industry. Before establishing itself as a leading confectionery manufacturer, the company had its fair share of ups and downs. The business empire was built from scratch by Bharat Shah with the help of his brothers Nilesh Shah, Mikul Shah, and Mayur Shah.
Here is the business journey of KenAfric as told by WoK.
The Beginnings of KenAfric
Back in the 1980s, what would later be KenAfric Industries Ltd began as a wholesaler that distributed sugar, confectionaries, maize, sanitary towels, cooking oil and pharmaceuticals. They added furniture into their portfolio and business generally booming.
However, things took a turn in the wrong direction following the political upheavals that hit the country in the 80s. The East African reported that their shop was looted in the 1982 attempted coup. This sent them back to the drawing board. They also sold the furniture business as it wasn’t as profitable as earlier anticipated.
They ventured into PVC footwear, making slippers, shoes and gumboots. They manufactured a very popular shoe brand called Dancing Queen, a ladies’ sandal. The shoes were a hit but unfortunately, a lot of copycats emerged. They did not give up despite facing stiff competition and when other shoe companies went out of business, they sailed through the tough times.
In 1989, they faced another hurdle when the Iran-Iraq war caused oil prices to soar up. PVC (the compound they use to manufacture the shoes) is a byproduct of petrochemicals.
Their dependence on imported PVC meant a strain on their business activities. This meant shoe prices went up and customers declined.
Diversifying to confectionary
Having always dreamt of manufacturing sugar, they ventured into confectionery manufacturing in 1989. They bought second hand equipment and began making candies, bubble gums and white mints. The business grew as children love sweets and make up a huge percentage of the population in Kenya.
However in 1991, they would face yet another challenge; the significant fluctuation of the dollar. They were required to have foreign exchange so as to import their gum base from Belgium. All they had was the Kenyan Shilling.
“Fortunately, the supplier was an owner-operated company and understood the dilemma,” Bharat remembered.
They began exporting their products in 2000 and by 2009 were exporting to about 34 countries. The financial crisis that hit the world meant an increase in the cost of transportation and markets’ rationalization. Their imports dropped and they currently export to about 12 countries and own a manufacturing plant in Uganda.
In 2010, they began making stationery as they introduced envelopes and bags.
With the success of sweets manufacturing, they diversified to chocolates. The growing middle class made the company diversify into chocolate making. They invested about US$10 million in marketing and equipment.
Unfortunately, the chocolate line flopped and the losses greatly affected the main business. It took them a year for everything to get back on track.
This experience taught them some hard lessons. Today, they also manufacture juice and food additives, biscuits, powdered juices and snacks. Their famous biscuits are milk and glucose. They also have stakes in Oyo Mchuzi mix.
In 2017, Amethis Finance and Metier bought 40% stake in KenAfric’s packaged foods business. They had been previously approached by companies but did not want to sell a part of their family run business. However, with the need for growth and the politics involved in sugar, they opted to sell a part of their company.